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    Published on: December 22, 2015

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy ... a special Tuesday FaceTime, as well as the last FaceTime of the year, in what will be the last MNB of 2015. (More on that below...)

    Last week, you may recall, I talked about a negative experience my brother had at a FedEx office where the manager did not seem to understand the meaning of customer service. Today, I have a corollary to last week's lesson.

    One of the things that Mrs. Content Guy and I have discovered this holiday season when we've actually gone into bricks-and-mortar stores is that many of them have run out of gift boxes. It's been pretty consistent, and finally, last week, I was in Sports Authority checking out, and I asked the woman behind the counter if she had a gift box.

    "Sorry, we're out," she said.

    I'd had enough. "Okay, I have a question," I said. "I just want you to be honest with me, and I won't get mad at you, because I know this isn't your decision. But did you ever have boxes?"

    She smiled. "No," she said. "In corporate they decided not to have Christmas boxes this year, ands they told us to always say that we're out." And then she added that she didn't think this was a very good decision.

    Sports Authority, as I see it, has two strikes against it. One, no boxes. Two, they're having their people lie about it.

    I don't know about you, but I've spoken to a bunch of people who have had the same experience trying to get boxes, and finding out that retailers just don't have them.

    And the thing that I keep wondering is whether these same retailers spend any time whining about having to compete with online retailers that they may perceive as having an unfair advantage. It seems to me that one of the things you have to do it you want to compete is to actually do so ... you don;'t cut back on customer services that people want and need and expect, like gift boxes at the holidays. You do those things, maybe you do more, and you do them better. That's how to compete.

    By the way, have you ever gotten a package wrapped by Amazon? They do a great job - it costs a couple of bucks, but it is worth it ... and I've never heard anybody complain about the cost.

    If you want to be competitive, you actually have to compete.

    Anyway, that's what's on my mind this Tuesday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: December 22, 2015

    CNet has a story about why Amazon decided to open a 50,000 square foot warehouse on the fifth floor of a New York City office building just across the street from the Empire State Building.

    While this warehouse is a much different facility from the vast distribution centers that Amazon has built around the country, it was built for a simple reason: "so Amazon can send its Prime members toilet paper or a flat-screen TV in just two hours or less as part of its Prime Now rapid-deliveries service."

    "This is a pricey place for real estate, but it also means we can get to customers in less than an hour," says Stephenie Landry, worldwide director of Prime Now.

    The service, which only is available to Amazon prime members who pay $99 a year, "is quickly becoming one of the company's most significant new projects, with Amazon hoping to use the year-old service to entice more consumers to skip a visit to the grocery store or drugstore and shop on the Prime Now app instead," CNet writes, adding that it "is part of a big push by a handful of tech companies to shave down online shipments from days to hours, helping reset consumers' expectations for how quickly they should get their packages."
    KC's View:
    It is all about taking the long view, and in its own way, it is about as customer-centric approach to business. There probably are plenty of retail experts who would argue that this would be too costly approach, that it would save money to put the warehouse in Jersey or on Long Island and just extend the wait times a bit. But Amazon understand, to a degree that many other retailers do not, that this is the wrong approach to its business goals.

    Amazon wants people's wallets, plus their hearts and minds. (Check out the New Republic article we reference below...)

    Published on: December 22, 2015

    The Cincinnati Business Courier reports that Kroger is about to test a new, small-store format that would be suitable for urban markets - a concept that it calls Main & Vine, scheduled to open shortly in Gig Harbor, Washington.

    The story says that this is just "the latest example of what Kroger Co. wants to do in urban markets" as the company also looks to utilize learnings that it can glean from just-acquired Roundy's and its Mariano's Fresh Markets format.

    The story notes that this will be the third format that Kroger operates in the Pacific Northwest, as Main & Vine joins its Fred Meyer and Quality Food Center (QFC) operations. Main & Vine reportedly "will offer customers 'fresh, affordable' local produce and meat and local craft beer and wine. It will feature plenty of fresh food – some of it already prepared – that it describes as 'unique culinary experiences and taste adventures, with tasty meals made fresh in our kitchen.'"
    KC's View:
    I find it a little amusing to see Main & Vine described in the media as an urban concept, when the first iteration is going into a community of about 8,000 people.

    This doesn't mean it won't have urban applications ... just that this is only the first iteration, tested in a place where Kroger will have some room to play.

    Published on: December 22, 2015

    The New York Times reports this morning that the centers for Disease Control and Prevention (CDC) has identified two more Chipotle restaurants where the food that was served resulted in a total of five people coming down with E. coli-related food poisoning. The news comes after founder/CEO had embarked on an apology tour during which he guaranteed that the company would have the safest food in the nation.

    Apparently, though, not just yet.

    According to the story, "The CDC said that five people who had eaten in two Chipotle restaurants in Kansas and Oklahoma grew ill after eating something contaminated with E. coli STEC O26. The agency has not yet determined which food is responsible for the outbreak ... The same bacteria has sickened 53 people in eight other states, nearly all of whom said they had eaten at a Chipotle." However, the CDC believes that these new cases could be from a different strain of E. coli than affected the other folks.

    The new incidents are the fifth food safety problem to affect Chipotle customers since last August.
    KC's View:
    This just gets worse and worse for Chipotle. Hard to imagine its brand equity and value proposition coming back anytime soon.

    I do think, though, that the events at Chipotle will end up resulting in a much broader conversation about food safety. The most unnerving thing about Chipotle is that nobody really knows what is creating its problems ... which suggests issues that are bigger and broader than perhaps we know.

    Published on: December 22, 2015

    The US Food and Drug Administration (FDA) yesterday announced that it has created the Office of Dietary Supplement Programs (ODSP), which it says elevates "the program from its previous status as a division under the Office of Nutrition Labeling and Dietary Supplements."

    The move, FDA said, is recognition of the fact that "in the 20 years since the establishment of the dietary supplement program, the industry has grown from about $6 billion to more than $35 billion in annual sales. Elevating the program’s position will raise the profile of dietary supplements within the agency, and will enhance the effectiveness of dietary supplement regulation by allowing ODSP to better compete for government resources and capabilities to regulate this rapidly expanding industry.

    Among the goals of the office is taking action "to remove from the market supplement products that are dangerous to consumers" and are "falsely labeled as dietary supplements that contain potentially harmful pharmaceutical agents," as well as to "enforce the dietary supplement good manufacturing practices (GMP) regulation."
    KC's View:
    Seems to me that it is about time. Regulating the dietary supplement industry, and going after the bad actors within it, ought to be more than just a regulatory afterthought. When misdeeds have been brought to light in the supplement biz, often the comment that accompanied the stories was that the government did not have the mechanisms to regulate the industry. Now, maybe it will. Or at least, that seems to be the goal.

    Published on: December 22, 2015

    The Los Angeles Times today reports that the "bigger-than-ever e-commerce push" this holiday season "has put even more stress on delivery companies.

    "A surge of orders last month around Black Friday and Cyber Monday took a toll on timely deliveries. And last Friday, retailer told customers that it couldn't 'confidently guarantee' orders would arrive in time for Christmas unless shoppers opted for more expensive two-day delivery."

    To put this in perspective, the Times writes that "this month, United Parcel Service Inc. is expected to deliver 420 million packages in the U.S., while FedEx Corp. probably will deliver 228 million, according to data from shipping software company ShipMatrix Inc. This volume is about 8% higher compared with last year — a boost that is consistent with the growth of e-commerce, ShipMatrix President Satish Jindel said. The U.S. Postal Service is projected to handle the highest number of packages this month in the U.S., with 545 million, according to ShipMatrix."

    More context from the Times story:

    "During the week of Cyber Monday, Atlanta-based UPS had an on-time delivery percentage of 90.9%, while Memphis-based FedEx's was 95%, according to ShipMatrix. A week later, both those rates improved, with UPS at 93.2% and FedEx at 95.3%.

    "As it gets closer to the holidays, customers start using faster shipping options such as overnight and two-day delivery. ShipMatrix reported that UPS' on-time delivery percentage last week was 96.1% for overnight and two-day shipping, compared with 95.4% the week before. For FedEx, the on-time delivery percentage for those services was 98.9%, an improvement over 98.7% for the week of Dec. 6."
    KC's View:
    Generally speaking, we've been pretty happy with the way things have been delivered this year. And it probably is fair to suggest that maybe the delivery companies never will catch up, because it will be impossible to fully anticipate the growth of e-commerce in this country.

    Published on: December 22, 2015

    • The Journal Star reports that Hy-Vee has made its Aisles Online delivery and pickup service available at all of its 240 stores, offering both delivery and click-and-collect services.

    The story notes that "store pickup and home delivery are both free with a $100 order; orders under $100 have a $2.95 fee for pickup and $4.95 fee for delivery."

    Hy-Vee started testing Aisles Online in Iowa last April and has been rolling it out to the other markets in which it operates.

    • The Greenville News writes that "Greenville is the latest city to get an on-demand grocery delivery service that uses a mobile app to take orders, shop for and deliver items to customers," as Publix brings its association with Shipt to the area.

    According to the story, Shipt "will begin service in Greenville and surrounding markets Jan. 7, 2016. The delivery service will work with Publix stores in Greenville, Berea, Easley, Greer, Mauldin and Simpsonville."
    KC's View:
    Sense a trend?

    Published on: December 22, 2015

    The New Republic has a story about the kind of year that Amazon just experienced, framing it this way:

    "Writing about Amazon in the short-term is hard to do. Amazon has good quarters and it has bad quarters, it has years of good press and years of bad press, but the year in Amazon is pretty much always the same: Its revenue increases, its stock increases (with fluctuations), it reinvests that revenue in new programs, initiatives and technologies, and it grows relentlessly. Amazon resists narratives because Amazon has only one narrative: complete commercial domination."

    Two things seem clear, the story says: "One is that Amazon has shown no sign that it intends to forsake growth for profitability. The other is that Amazon has two juggernauts on its hands: its surging ecommerce division, which includes Amazon Prime, and Amazon Web Services, which posts vastly higher margins than ecommerce."

    Great and highly informative piece, and you can read it in its entirety here.
    KC's View:
    There is a sentence from the story that caught my eye...

    Amazon wants to make every aspect of human life, not just commerce, more efficient.

    But as I thought about that, I realized something ... something that ties into a theme that pervades MNB.

    True, Amazon makes me more efficient. But in doing so, I think it also makes me more effective ... it is not a matter of one or the other. And that may be Amazon's real secret sauce.

    Published on: December 22, 2015

    • The Washington Business Journal reports that "a recent report from a D.C.-based consumer organization shows Wegmans offers the best prices and food quality in Greater Washington, while Safeway is more expensive than much of its competition, including longtime rival, Giant Food.

    Washington Consumers’ Checkbook’s biennial study reveals prices at Wegmans are 11 percent lower than those at Safeway, and that 94 percent of customers rate it as “superior” for overall quality, making it the No. 1-ranked grocery store in the region."

    • The New York Times this morning reports that "workers at German warehouses of U.S. online retailer Inc were called out on a new strike by labor union Verdi on Monday as part of a long-running dispute over pay and conditions.

    Verdi said in a statement that workers at six of the nine Amazon warehouses were joining the strike, which will run until Dec. 24 at four of the centers and for shorter periods at the others. Germany is Amazon's second-biggest market after the United States with 10,000 warehouse staff plus more than 10,000 seasonal workers."

    However, Amazon said that the people who went on strike were a "small minority" of its total workforce in the facilities, and that they'd had no impact on the company's fulfillment times.
    KC's View:

    Published on: December 22, 2015

    • Kroger's Atlanta division has announced the retirement of Charles Mitchell, who joined the company as a management trainee 43 years ago, rising to the level of vice president of operations.
    KC's View:

    Published on: December 22, 2015

    ...will return next year.
    KC's View:

    Published on: December 22, 2015

    We had a story the other day about how Procter & Gamble has filed a lawsuit against Dollar Shave Club, alleging that the disruptive startup has stolen intellectual property from P&G's Gillette brand, violating its technology trademarks.

    I commented:

    Not saying that this lawsuit isn't legitimate, and I do think that patent infringement is a serious issue. But ... in these cases, my first impulse is to be sympathetic to the disruptor. I'm sure that when Dollar Savings Club started, the folks at Gillette figured it wouldn't be a threat. Then they figured it wouldn't be much of a threat. Then they figured they could dominate the online market just because they are Gillette. Then they called the lawyers.

    Sort of like Elisabeth Kübler-Ross's five stages of death, except that there are just four of them ... and unlike death, maintaining market share isn't inevitable.

    One MNB was less sympathetic:

    To quote a famous blogger:  “to compete is a verb.”  I never understand why you criticize companies for using EVERY tool in their competitive toolbox.  One tool that should not be ignored is the legal tool.  Gillette has many good lawyers who are paid well to use their skill on Gillette’s behalf.  Forcing Dollar Shave Club to expend resources, change their marketing or packaging, etc. are just other ways of competing - in ADDITION to what Gillette is also doing on the Product Development, Marketing, or Sales front.

    When my company is assessing competitive threats, we look at every aspect of the situation, not just their products and services.  We consider their financial makeup, their leadership, and yes - the legal angles.  We compete against the whole company, not just their product teams.  “Compete” is a multifaceted verb, if you’re doing it right...

    MNB reader Bob Thomas concurred:

    The theft of intellectual property is a crime.  Whether it be patent infringement or trademark infringement it is a crime of property theft.  A “disrupter” using stolen intellectual property is a criminal, not a victim.  The proceeds of trademark infringement benefit terrorists and organized crime (based upon reports by OECD, Interpol and Ernst and Young).  A company can spend millions of dollars on R&D and endorsements.  It is not legal or fair competition for a company to hijack that property.

    To be clear - because apparently I was not - I think trademark infringement is a crime, and I am not sympathetic to criminals. If that's how this case plays out, my sympathies will be with P&G ... we just don't yet know how it will play out. (Just because P&G says it is so doesn't make it so.)

    My broader point, which was obscured, is that some companies may allege trademark infringement when all that has really happened is that a disruptive company figured out how to build a better mousetrap, not an imitative one.

    By the way, there appears to be a certain amount of antipathy toward Gillette out there. One MNB user wrote:

    Gillette’s answer to Dollar Shave Club was to advertise that a man could use the same, Fusion blade for a whole month.  This would then make them more cost efficient that the Dollar Shave Club blades.
    Show me the man who uses the same blade, every day for a whole month.  Nobody does that.

    From another reader:

    As the old adage goes, “Sell them the Razor and we will have a customer for life selling them the razor blades.” Having gone through about 6 generations of Gillette razors and razor blades, the blades have become much too expensive. Go out and price the various Gillette blades, especially the newer Mach Series. One would have to take out a small loan to afford what Gillette is charging.

    Dollar Shave Club took advantage of the high priced blades that Gillette has and used Creative Destruction to find a new and better way to save on blades for the consumer. I hope they prevail in this lawsuit that P & G has brought forward against Dollar Shave Club. Obviously, P & G does not like competition.

    And from still another:

    I’m a proud member of the Dollar Shave Club because quite frankly I got tired of feeling ripped off every time I had to plunk down $16.00 for a few razor blades! Are they as good as Gillette? Maybe not, but I can either grow a beard or send my daughter to college with my Dollar Shave Club savings…or maybe save up for that elusive Porsche 911. Hmmm...

    It will be interesting to see how the lawsuit plays out, and where the line gets drawn between infringement and disruption.

    Responding to our story the other day about theme parks installing metal detectors so they can reduce the likelihood of terrorist attacks, one MNB user wrote:

    I was surprised that they WERE NOT already screening upon entry.  With all major sports venues having ramped up months ago, I find it hard to believe that they didn't do it quietly.  It may be the happiest place on earth, but that only makes it a target for the bad guys.

    And I still think it won't be long before Walmart installs metal detectors.

    Regarding some of the problems being encountered by retailers offering click-and-collect services, one MNB user wrote:

    While I can appreciate the need for new and innovative strategies to meet shoppers where they want to be/are, there are still monumental hurdles in the store.  I'm concerned these new initiatives will take needed attention from the more basic aspects of blocking and tackling at retail.  In stocks and shoppability, which should be considered retailing 101, are the worst this time of year. Is it too much to ask that a merchant have items on the floor in the merchandising vehicle for which it was designed and correctly priced?  Where is the departmental ownership of the front line? And then to get slapped with requests for markdown money for said poor execution is amazing to me.

    From another reader, Tom Murphy:

    I had the ultimate Click & Collect experience for any retailer today.  Due to the death of my desktop yesterday, today at 6:30 am during breakfast, I configured and ordered online for pickup in an Apple store.  I customized a MacBook Air and a printer, paid online, and selected the pickup to a local store...pretty much like you can do at most retailer ecommerce sites.  But that is where the similarity ends.

    As many of your readers know, the Apple in-store experience makes shopping in most other retail outlets...well...embarrassing! In this case, I walked in the door, showed the Apple associate my order barcode which he scanned, and then waited for almost 2 minutes while both were being brought directly to me where I was standing in the store.  During that two minutes, I was told about special tutorials and services, how to contact someone for help, and that I could go to the back tables to have the laptop setup and configured...which took almost 5 more minutes.  Total transaction time...7 to 10 minutes.

    When I go into a grocery store or a department store, and need to ask a question, it might take 10 minutes to find someone to ask and another 10 minutes while they search for someone that knows the answer.

    Now, to be honest, you cannot expect the Apple experience in most retail outlets...just saying, "if you want to see how Click & Collect could work...."

    And, from MNB reader Peter Grimlund:

    The article “Broken Promises Of Click-and-Collect Marketing” points to a pernicious problem in the retail industry that frankly both saddens and maddens me that it continues to exist.  The technology to solve this problem has been around for a decade but the retail industry can’t seem to get beyond their belief that current infrastructure and process are up to the task of matching on-hand inventory – what is really available, right now – not committed elsewhere, not misplaced in the store or worse not in the store because their POS system is off – with the lighting fast demands of online consumption.

    I co-founded a company in 2005 to leverage the unique opportunity provided by RFID technology to capture item level inventory in real-time - real-time mind you not hours or days later - to provide retailers with accurate and actionable intelligence to prevent out-of-stocks and customer disappointment.  We suggested that the cloud application could be married to a retailers online system in a way that would allow the consumer to select an item, see where it was available for in-store pickup and if ordered, know the serial number of the item that was purchased.  The system would generate a note to transmit to the stores personnel and its POS system alerting them to pull the item from inventory to await pickup and to prevent it from being sold through the front of the store.  The solution was and is totally automated – no store personnel running around scanning inventory.  Also no disappointed customers discovering their purchase has been sold to someone else.

    While I am no longer involved with the company, it has found traction in other industries, and I am proud to say that it is contributing to improved profits for the companies it serves because they experience fewer lost sales due to OOS. And I would assume that their customers are more satisfied when they face fewer empty shelves. 

    Retailers need to wake up.  Their inventory systems were not designed to deal with the demands of a virtual customer shopping in the same aisle as the one physically present in the store.  The person shopping in the store can see when the item they want is no longer available.  The salesperson helping that individual can also see when it’s not there.  But the stores POS system may not be aware of this fact let alone the retailers online system.  Leaving the online customer hanging and disappointed when they show up to collect their goodie, not to mention vowing to tell everyone within shouting distance about their negative experience with that retailer. 

    Kevin, sorry to rant, but it just touched a nerve.  I just thought you might want to know that solutions are available to fix the problem if the industry would take the time to lift their heads out of the sand long enough to look around.

    We took note yesterday of a Bloomberg story of some of the digital advances being made by the Washington Post since it was acquired by Amazon founder/CEO Jeff Bezos.

    MNB reader Scott Negro responded:

    I found it amusing that the first article talked about Amazon’s CEO owning the Washington Post, then the next article is a Washington Post report that traditional retailers are poorly executing online shopping.  I’m sure it’s a legit article, it’s just really funny that a paper owned by the world’s largest online retailer is reporting on how poorly the brick and mortar companies are doing with click and collect.

    Just FYI ... in every story the Post does in which Amazon is referenced, it is fully transparent about who owns the company. And I have it on good authority that he has not gotten involved in editorial coverage.

    And, from MNB reader Karen Alley:

    I admit I was wary when Bezos bought the Post. But it has been interesting to see how things have gone, and I'm glad to see your Monday Morning Eye-Opener that has a quote from Baron about taking the long view. That's very important.

    I will say that on a very personal experience, I've seen some of what Bezos is doing working. My 11 year old daughter has an Amazon Kindle. One day she asked me what abortion was, and when I asked where she heard it, she said she read something in the Washington Post. Digging a little deeper, I found out she was reading the Washington Post on the app that comes on her Kindle. Granted, she mostly reads the comics, but she is also reading other news, and is more on top of current events than ever before. This from a kid who wouldn't even think about picking up a newspaper, or even watching the evening news. Looks like Bezos is picking up a new generation to help keep true journalism alive.

    KC's View:

    Published on: December 22, 2015

    In Monday Night Football action, the Detroit Lions defeated the New Orleans Saints 35-27.
    KC's View:

    Published on: December 22, 2015

    Today's edition of MNB is the final one for 2015.

    As is the custom around here, I'm taking a little time off to catch my breath, sleep a little late, read some books, go to a bunch of movies (including my annual viewing of Love Actually, the best Christmas movie ever), and just generally recharge the batteries. I hope you’re able to do the same...or whatever it is that makes you happy...during the next couple of weeks.

    (As always, the MNB archives will be open. And if something happens, I'll be back with coverage.)

    MNB will be back on Monday, January 4, 2016 … and I trust that the coming year will be eventful, energetic, prosperous and most of all, fun for all of us.

    Michael Sansolo, Kate McMahon, and Tom Furphy, as well as Mrs. Content Guy and the entire Content Clan, join me in wishing you a happy and safe holiday … however and whatever you celebrate.

    KC's View:

    Published on: December 22, 2015

    Salt Lake City, Utah – Park City Group’s ReposiTrak® Inc., the leading provider of Compliance Management and Track & Trace solutions for food, pharma and dietary supplement safety, announces that Martin’s Super Markets has chosen ReposiTrak to manage regulatory and business documentation compliance within their supply chain.

    “Providing safe food for our customers is a top priority for Martin’s,” said Rob Bartels, president/CEO of Martin’s Super Markets. “With FSMA compliance beginning in September, we were looking for an automated system to scale and effectively manage our growing list of required documents. We know that if it’s not documented, it didn’t happen.”

    Family-owned and managed since 1947, Martin’s operates 22 full-service supermarkets in Indiana and Michigan, featuring specialty departments like Side Door Deli Cafes, which offer a full variety of hot and cold ready-to-eat menu items, as well as an unwavering focus on customer satisfaction and giving back to local communities.

    ReposiTrak, a wholly owned subsidiary of Park City Group, helps manage regulatory, financial and brand risk associated with issues of safety in the global food, pharma and dietary supply chains. Powered by Park City Group’s technology, the platform consists of two systems: Compliance Management, which not only receives, stores and shares documentation, but also manages compliance through dashboards and alerts for missing or expired documents; and Track & Trace, which quickly identifies product ingredients and their supply chain path in the unfortunate event of a product recall. It can reduce the risk in the supply chain by identifying backward chaining sources and forward chaining recipients of products in near real time.

    To learn more about how your company can adopt the ReposiTrak solution, click here.

    KC's View: