retail news in context, analysis with attitude

Published on: December 21, 2015

by Kevin Coupe

Bloomberg this weekend had a story about the impact that Amazon founder/CEO Jeff Bezos is having in another venue ... the Washington Post, which he bought more than two years ago for $250 million.

"Bezos has shaped its digital transformation in ways big and small," the story says. "His behind-the-scene influence has yielded a milestone: The newspaper has surpassed the New York Times in unique Web visitors two months running.

"After Bezos acquired the Post -- as an individual buyer and not as part of e-commerce giant Amazon -- he said he had no formula for rescuing the declining newspaper industry, and promised an era of experimentation. 'I didn’t know anything about the newspaper business,' Bezos said last year at a media conference. 'But I did know something about the Internet. That, combined with the financial runway that I can provide, is the reason why I bought the Post'."

His ownership of the Post may be separate from his Amazon holdings, but that doesn't mean Bezos isn't using one to help the other:

"While he hasn’t expressed opinions about the Post’s journalism and has only visited the newsroom a few times, Bezos has been hands-on with its technology and instrumental in making it a more data-driven company, said Shailesh Prakash, the Post’s chief information officer ... In September, the newspaper said that Amazon Prime subscribers can get online access to the national edition free for six months, with an option to continue subscribing at 60 percent off. Late last year, the Post introduced an app that comes preinstalled on Amazon Kindle Fire tablets -- a project Bezos was deeply involved with, Prakash said.

"The Post has hired some engineers from Amazon, and its data scientists talk regularly with their Amazon counterparts, getting tips on how to recommend stories better based on Amazon’s approach to recommending products to consumers, Prakash said."

The Bezos investment also has allowed the Post to invest in better and more journalism, which allows the company to focus on its core value proposition. And, "as he’s done at Amazon, Bezos requires Post executives to write lengthy memos outlining their projects instead of using PowerPoint presentations, believing that narrative writing forces people to think more deeply."

Marty Baron, executive editor of the Post (and one of the central characters in the movie Spotlight), says that the newspaper's private ownership also is an advantage. “If you’re trying to improve your financial performance quarter to quarter, it would be very difficult to do this,” Baron tells Bloomberg. “If you take the longer view and are willing to accept the market will take the longer view as well, or you don’t care, then you can make these kinds of investments.”

Wow. A long-term view that looks at what works on Main Street. It is an Eye-Opener.

Published on: December 21, 2015

The Washington Post this morning reports that while many retailers this holiday season have been focusing on developing their click-and-collect shopping options, "many shoppers are finding it to be a big headache."

The story says that "fully 60 percent of such orders placed on Cyber Monday ran into problems, one study found. The wrong items were received, or orders were cancelled because the product was no longer in stock. Sometimes there was no notification an order was ready."

The Post numbers - generated by Forrester Research - suggest that "some 42 percent of online shoppers have used click-and-collect."

The current season's issues have "forced retailers to rewrite many pages of their brick-and-mortar playbooks. They are working to develop a more real-time and accurate understanding of their inventories, so they don’t end up promising an online customer the last 42-inch TV on the shelf, only to sell that exact set minutes later to an in-store shopper.

"They also have to rethink staffing in their stores to ensure that they are able to fill click-and-collect orders efficiently while still providing good service to in-store shoppers."

The story goes on: "If stores can improve their click-and-collect offerings, there could be a big payoff. This format could allow retailers to wring more last-minute holiday season sales out of gifters who prefer to swipe and tap their way to a purchase ... Retailers are especially hungry to lure these kinds of customers, because research shows they spend more money than those who shop just in stores. According to a survey by Deloitte, omnichannel shoppers were poised to spend about 75 percent more than store-only shoppers this season on gifts, entertaining and other purchases.

“You’ve got to get this right,” said James Prewitt, vice president of retail industry strategy for North America at JDA Software Group. “Because the consequences of getting it wrong are so significant.”

Published on: December 21, 2015

Fortune reports that Target plans "to launch a mobile payments service in 2016" that will mimic the mobile payment systems that have been rolled out by Starbucks and is in the process of being implemented by Walmart - "using barcode scanning technology to allow consumers to pay with the wallet at a terminal." with the service linked to the customer's credit or debit card.

The story says that "it’s not entirely surprising Walmart, and now Target, are choosing to create their own mobile wallets.

"Similar to Walmart, Target famously decided not to accept Apple’s mobile payments technology, Apple Pay, when it was introduced last fall. Walmart and Target instead joined the Merchant Customer Exchange, a partnership of major store and restaurant chains, with ambitions of creating an Apple Pay rival. But MCX has stumbled and only started testing its service, called CurrentC, in the past few months.

"Target would join a long list of companies pushing into in-store mobile payments including Walmart, Apple, Samsung, Google, and PayPal. These companies are clamoring to take a stake in a potentially huge mobile payments market, which is expected to handle $142 billion in transactions by 2019, according to Forrester Research."

Published on: December 21, 2015

The Indianapolis Star has a story saying that rather than being for sale as long rumored, Marsh Supermarkets instead is "planning to make its most ambitious moves in years to push back against national retail giants that have been gobbling up market share," with plans "to open as many as 13 new stores by the end of 2018 while updating 52 of the chain's 73 existing stores." And, Marsh CEO Tom O'Boyle says he is interested in acquiring other stores.

"We think we're in position to look for acquisitions to expand the Marsh brand," he tells the Star.

"If O'Boyle's plan comes to fruition, it would be an abrupt pivot for a company that has been closing far more stores than it has opened in recent years," the paper writes. "Marsh opened one store last year, but it also closed eight. It closed four more this year, and O'Boyle acknowledged additional stores could be shuttered."

While some argue that a company that has been struggling and contracting is ill-positioned for the kind of growth that O'Boyle is talking about, especially in the face of growing competition from the likes of Kroger and Meijer, O'Boyle tells the Star that the company's sales-per-square-foot are rising, and that the company is investing in beacon technology, which uses geolocation to target customers, for all of its stores, which reflects a willingness to invest when appropriate.

Published on: December 21, 2015

The New York Times has an opinion piece by marketing expert Paco Underhill in which he writes about how increasingly cluttered stores are generating diminishing returns for retailers, concluding that "stores are cluttered with merchandise and promotions like never before" are at odds with a growing consumer desire for less cluttered lives.

Here's part of what he writes:

"Here is my advice for the industry: Emulate your customers and start to cut back. First, we have too many stores. Most chains would be healthier if they closed underperforming locations, or the lowest performing 25 percent, and studied carefully their top 25 percent successful locations. Talk to the customers. Look at what they buy in-store and online, and go into their homes and listen to them. Then test."

Interesting piece at how a hit-or-miss approach to marketing may be designed, in the long run, to produce more misses than hits. You can read the whole piece here.

Published on: December 21, 2015

• Walmart announced over the weekend that it will keep its stores open on Christmas Eve until 8 pm, and that its Neighborhood Market stores open until 6 pm.

24/7 Wall St. notes that "the decision is part of a trend by retailers to expand the period during which shoppers can shop over the holidays. At one end of the holiday season, people can shop as early as Thanksgiving. At the other end, people can shop within four hours of Christmas. In almost all cases, even Amazon cannot match the advantage. Having physical store locations offers at least one edge for Wal-Mart ... The decision also may give it some leverage against Amazon.com Inc., where people can shop any hour on any day, 365 days a year."

Published on: December 21, 2015

The Food Marketing Institute (FMI) has announced a new study, conducted with Deloitte Consulting LLP and Winston Weber, suggesting that "the biggest shortcomings of category management relate to being too product-focused and too narrow in approach," and that the industry needs to move to a more customer-centric strategy.

According to the announcement, "the study found that 100 percent of retail and consumer packaged goods respondents believed some degree of change is required, a quarter of which believed that nothing less than an entire redefinition and transformation is necessary. Conversely, 85 percent of retailers have made either 'no change' or 'moderate change' to the initially prescribed, eight-step category management process."

Win Weber, chairman and CEO of Winston Weber Associates and co-author of the analysis, is quoted as saying: “Our research strongly suggests that change is necessary, especially since no major upgrades to the ECR-prescribed category management process have occurred in the last two decades. Supermarkets are facing tidal pressures from shoppers who want their stores to evolve with their tastes and habits, so businesses need to resist the urge to remain complacent.”

And Tom Compernolle, a principal at Deloitte Consulting LLP, says, “A shopper-centric approach is consistent with the opportunities we see around retailer-CPG joint business planning. The Holy Grail is data – business intelligence shared between trading partners hasn’t yet been harnessed, as evidenced by the research.”

Published on: December 21, 2015

• The Milwaukee Journal Sentinel reports that Kroger has completed its $800 million acquisition of Roundy's, noting that "Bob Mariano, chairman, president and chief executive officer of Roundy's since 2002, will continue to lead Roundy's as president and CEO. With its acquisition of Roundy's, Kroger is now the grocery market share leader in metro Milwaukee."


• The Boston Globe reports that the Boston Consumers' Checkbook has released its price/quality rankings, concluding that "surveyed consumers ranked Wegmans number one for quality (93 percent of respondents rated it 'superior' overall), and Checkbook found Wegmans’ prices are about 7 percent lower than Shaw’s Supermarket."

The story says that "Checkbook found Wal-Mart Stores, Inc. is the cheapest area supermarket, followed by DeMoulas Market Basket and Hannaford. Whole Foods Market Inc. is by far the most expensive place to shop. Sudbury Farms, Donelan’s, and Roche Bros. also are more expensive than Shaw’s ... But when it comes to quality, Wal-Mart ranked among the lowest and Whole Foods was rated highly."

Published on: December 21, 2015

• Walmart has named Tony Rogers to be chief marketing officer for its US business, succeeding Stephen Quinn, who recently announced his retirement.

Rogers is a 10-year Walmart veteran who most recently has been head of marketing and social media for its China business; before joining Walmart, he was at Pepsi-Co's Frito-Lay division.

Published on: December 21, 2015

If you did not see the piece that "60 Minutes" did last night about Apple CEO Tim Cook, check it out here and now ... it is a terrific story that focuses on innovation in ever facet of Apple's business, including retail.

Published on: December 21, 2015

Responding to last week's story about Michael Jordan donating lawsuit proceeds to charity - from lawsuits he filed and won against Dominick's and Jewel-Osco after they used his likeness in ads without his permission - MNB reader Monte Stowell wrote:

Simply Put, “Bravo to Michael Jordan.” I can only imagine what the $8.9 MM will do to help our the 23 charities that he gave this money to. Merry Christmas to all and to all a very good night. Thanks Michael, you are indeed a very classy man.



Regarding our piece about how airports are improving the travel experience even as airlines seem headed in the opposite direction, one MNB user wrote:

I enjoyed your piece on airports ... LGA is no paradise, anyone can agree. 
 
Have you traveled on Frontier via TTN, Trenton Mercer County Airport?  Frontier has some great fares (if you can stand the restrictions & fees) but the airport is the worst I’ve ever seen in the USA.  I’ll have to check if JD Power rated that airport.




Following up on last week's story about how a FedEx manager told my brother Tim that "this is your package, not my package" - one of the worst messages a business can send to a shopper - one MNB user wrote:

I haven't written in a long time, but after reading your brother Tim's tale, I felt I had to chime in.  You are maybe more correct than you know, in your opinion that poor customer service is more widespread than we realize.  Just this morning one of my co-workers told of his "encounter" at one of OUR OWN STORES.  He and his wife decided to stop at one of our Supermarket Deli's to pick up something for dinner.   He was carrying his toddler son, and the deli clerk (young male) was waiting on a customer.  So Max (not his real name) stepped up to the deli case and waited.  The clerk frowned at him and went on finishing the customer.  When he came to Max,  there were two other people in line.  He then quietly mouthed a couple expletives, so Max asked him "Are you all right?"  To which the clerk whispered... "Yeah, I'm fine, I just hate customers.".  

This, from a guy "serving you FOOD!"  Max said he wasn't sure if he should even eat it.  Fortunately, it was in a deli case, and neither the food, or the clerk were ever out of his sight.  Still, it's an eye opener to say the least.

Thanks for listening.  I'm addressing the issue even as you read this. (Obviously you'll see why I don't care to have my name published.)


Good luck with this.




Regarding the spec Johnnie Walker ad we posted on Friday, MNB reader Philip Bradley wrote:

Thanks for finding gems like this and bringing them to us in your daily column--indeed, a wonderful Friday eye-opener!

The thing is, I didn't find it. An MNB user sent it to me. For which I am profoundly grateful.

From another reader:

I have approved a lot of advertising in my past.  I would have put that on the air in a heartbeat – right after I found that darned handkerchief.

From MNB reader Yvonne Hyland:

Excellent commercial! Gave me the chills and a few tears! I am not a scotch drinker, but might try it now.
 
And MNB reader Peter Stamos wrote:

Wow – that was a great piece of work, emotional, very close to the soul of what’s important in this life – relationships.  Well done.

And, from MNB reader Joe Davis:

My brother and I spent last weekend together with our parents back in St. Louis – an opportunity that has become increasingly rare over the years.  But at the same time, our closeness and respect for each other has grown tremendously.  We shared several drinks over the weekend, and walked down memory lane in old haunts and neighborhoods we lived in.  We came across this video as the weekend was closing, and I have no shame in admitting that I ugly cried on this – and will keep the Johnnie Walker brand in mind from here on out.  Exceptional story-telling and branding.

Published on: December 21, 2015

In Week Fifteen of National Football league action...

Jets 19
Cowboys 16

Chiefs 34
Ravens 14

Texans 16
Colts 10

Titans 16
Patriots 33

Bills 25
Redskins 35

Bears 17
Vikings 38

Panthers 38
Giants 35

Falcons 23
Jaguars 17

Packers 30
Raiders 20

Browns 13
Seahawks 30

Bengals 24
49ers 14

Broncos 27
Steelers 34

Dolphins 14
Chargers 30

Cardinals 40
Eagles 17