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    Published on: January 4, 2016

    by Kevin Coupe

    It was around 8 am on New Year's morning when my son, Brian, got a call on his cell phone. Eleven hours earlier, a college friend had been killed in an automobile accident, apparently by a drunk driver. Another friend, the driver of the car that had been hit, was in critical condition.

    Welcome to 2016.

    We knew my son's friend; he'd stayed at the house a few times when in the area, and we liked him. More importantly, he was my son's fraternity brother. My son, I think it is fair to say, loved him in the way that college friends often do, with devotion born of long nights of studying or partying and, perhaps most critically, slowly becoming adults together.

    My first thought, of course, was for Brian. How would he weather the grief that no 26-year-old should have to face? Death should be for the elderly to cope with, not the young ... or, at least, wouldn't it be pretty to think so.

    But I have to admit, my second thought was of his mother and me ... because I simply cannot imagine having to deal with the grief that young man's parents now will have to endure. There but for the grace of God go I, was the thought that went through my mind.

    Of course, grace only takes you so far. No matter how old our kids are, they are at the mercy of a world that can be surprising and devastating, thrilling and depressing, uplifting and deadly. We can only protect them so much, even if we want to protect them from everything, always. No matter how old our kids are, they remain our kids.

    We hugged our kids a little bit tighter and longer over the weekend. We spent a little bit more time on the phone with our son who lives in Chicago. And we grieved for the life that now will not be lived, for the parents who cannot possibly have seen this coming, for a new year that got old really, really fast.

    By the way ... One goes on the internet to do a little cursory research, and is gobsmacked by the results. "Each day, people drive drunk almost 300,000 times, but fewer than 4,000 are arrested," the FBI tells us. Or how about this one, from the US Department of Transportation: "About one-third of all drivers arrested or convicted of drunk driving are repeat offenders."

    As it happens, local media is reporting that the fellow driving the car that killed my son's friend had "prior alcohol-related convictions," and had even served a little time because of one of them.

    This is the worst of kind of Eye-Opener. While I hate to begin MNB's first 2016 posting in such sobering fashion, I do so because I want to urge you to hug your kids a little tighter and longer. To spend a little more time talking and listening to them. And to not let the lessons of January 1, 2016, go unheeded.

    Happy New Year. Please.
    KC's View:

    Published on: January 4, 2016

    The New Yorker has an interesting story about Amazon's test bricks-and-mortar store in Seattle, which is described as a sort of Starbucks combined with the presentation aesthetic of the company's website: "the books are all shelved cover-out, just as they appear on Amazon, and the relative prominence, proportion of stock, and pricing of best-sellers and recommended titles, including the little cardboard signs excerpting each book’s online user reviews and ratings, are calibrated to correspond exactly to what you would find online.

    But it also, the story suggests, something else: "Suspended somewhere between a tangible (albeit exquisitely staged) reality of paper and wood, and a perceptible (albeit artfully obscured) reality of pipes and machinery, the bookstore customer is able to experience a curated version of the ethical and visceral tension between front-of-house and back-of-house—between the sleek one-click seamlessness of the screen and the unceasing labor of the fulfillment center—as a kind of pleasure."

    You can read the entire analysis here.
    KC's View:
    As it happens, there were a couple of other stories about the bookstore business over the past few days illustrating two ends of the bricks-and-mortar business.

    One, in the Washington Post, was about how used bookstores, "with their quintessential quirkiness, eclectic inventory and cheap prices," are finding new energy because they offer "shoppers both a browsing experience and a money-saving one." The other was in the Los Angeles Times, and was about how a "Barnes & Noble store in New Hartford, N.Y., has applied for a beer and wine license from the state, the New Republic reports. The retailer will gauge the response from the community to determine whether to start selling booze in their other stores."

    It seems to me that the reason that the used bookstores are finding traction is that they actually are offering something different. As for Barnes & Noble, all I can do is wonder what the hell took them so long.

    In the scheme of things, Amazon generally can be counted upon to do something different. And we'll rarely wonder what the hell took them so long to do something. I look forward to seeing what they're doing in Seattle ... because what they'll be doing is rethinking the bricks-and-mortar experience, not just doing what others are doing.

    Published on: January 4, 2016

    The Associated Press reports that Target seems to be back on the right track, with five quarters of consecutive sales growth that appears to be rooted in its decision to refocus on the "cheap chic fashions" for which its customers looked to the retailer.

    The company also has managed to put missteps behind it, getting past the data hack that puts the personal information of many of its customers at risk, and closing the Canadian stores that it had opened in a major misreading of its ability to compete north of the border.

    Still, the battle is not over: "Experts say it will be key for Target to distinguish itself from other discounters while not being perceived as too pricey for its middle-class shoppers," the AP writes.

    Meanwhile, Fortune notes that Target "has laid out its plans for upcoming store openings for the next couple of years, and most of them will be smaller locations set in urban areas ... the retailer announced in August that it’s eliminating the CityTarget name and rebranding every store as simply 'Target,' but only one suburban-sized store is set to open over the next couple of years—a 122,000-square-foot space in Allentown, Penn. The next largest is 45,000 square feet in Manhattan’s Tribeca neighborhood, and the rest are less than 40,000 square feet in size.
    KC's View:
    The story makes the point that Target sees its previous grocery adventures as unsuccessful, which is why its move back to cheap chic was so important. It also makes me continue to think that it is entirely possible that Target could outsource - or even sell - its existing grocery business to some outside player. It already has done so with its drugstore and pharmacy business, which it has sold to CVS.

    I could be completely wrong about this. But I think there could be something there.

    Published on: January 4, 2016

    The Austin American-Statesman reports that Whole Foods will pay a $500,000 fine to settle accusations that it mislabeled and overcharged for products in New York City.

    According to the story, "Whole Foods said it worked closely with the agency 'over the last several months to reach an agreement that is in the best interest of the city of New York and our stakeholders. We agreed to $500,000 in order to put this issue behind us so that we can continue to focus our attention on providing our New York City customers with the highest level of quality and service' ... Whole Foods said the agency originally demanded a settlement of $1.5 million, but the terms were negotiated down to a third of that with the $500,000 deal. The retailer also stipulated that the agency’s claims were limited to stores in that city and the issue wasn’t systemic or intentional."

    Indeed, in its statement, Whole Foods said that the “allegations … were limited to New York City, and as our joint agreement states, there was no evidence of systemic or intentional misconduct by anyone in the Northeast region or the rest of the company."

    There seems to be a difference of opinion about the terms of the agreement. The American-Statesman notes that the New York City Consumer Affairs Department "claims Whole Foods agreed to conduct quarterly in-store audits of at least 50 products from 10 different departments at its New York City stores to 'help ensure products are accurately weighed and labeled'."

    But Whole Foods maintains that the city "has misrepresented this agreement ... Whole Foods has had in place pre-existing pricing and weights/measures programs including a third-party auditing and training program and a 100 percent pricing accuracy guarantee that gives customers a full refund on any item inadvertently mispriced."
    KC's View:
    I guess that Whole Foods has to stay on its high horse about this, but somehow it leaves a bad taste in my mouth. They're bigger problem is that a lot of people equate mis-pricing with extravagant over-pricing ... and I'm not sure that whining about how the New York City Consumer Affairs Department interprets a legal agreement.

    Published on: January 4, 2016

    CNN is reporting that the US Department of Justice is investigating Blue Bell Creameries "for its handling of the ice cream contamination linked to 10 reported cases of listeriosis ... examining whether company executives committed wrongdoing in their handling of the outbreak."

    At issue is the strain of listeria that was at the core of Blue Bell's 2015 recall of ice cream, frozen yogurt, sherbet and other frozen treats. However, the story says, "an investigation by the Centers for Disease Control and Prevention showed the listeria outbreak dated back to 2010. The agency connected patients from 2010-2015 to the current outbreak through comparisons to a database of bacteria DNA."

    What the government wants to determine is whether Blue Bell management was negligent in how it handled the contamination and the factory conditions that seem to have led to it.

    The story notes that "Blue Bell recently announced plans to continue its market reentry by filling stores with Blue Bell ice cream products in Tennessee, Alabama, Georgia, and Florida, among others, beginning January 18. The company has been reintroducing products since August 2015 in Oklahoma and Texas."
    KC's View:
    As an MNB reader suggested to me, the folks at Chipotle ought to be paying close attention to how all this goes down. Because it seems to him - and me - that there may be some lessons to be learned here not just about crisis management, but also about communication and food safety procedures.

    I'm also not surprised ... and I know retailers who felt that Blue Bell mismanaged this crisis almost from the start. Not sure if this mismanagement will reach the level of criminality, but it'll be interesting to find out.

    Published on: January 4, 2016

    Re/code reports that grocery delivery company Instacart has raised "both its minimum delivery and annual subscription fees by 50 percent. Minimum delivery fees are increasing in most instances from $3.99 to $5.99. At the same time, the annual fee for Instacart Express, a membership that includes unlimited two-hour and scheduled deliveries, is jumping from $99 to $149."

    And, the company reportedly has laid off 12 in-house recruiters, and in a statement attributed the move "to the company’s plans to be less aggressive in hiring in 2016 than it was in 2015, when its staff tripled, from just under 100 employees to a little more than 300."

    The story goes on to say that "a substantial portion of Instacart’s revenue originally came from marking up the in-store price of a given item, but the company now often charges the same price as the grocer, but takes a cut of the sales from the store. Earlier this year, Instacart finally began being transparent about when it was charging higher prices than its partner grocers."
    KC's View:
    The suspicion here is that Instacart may be coming up against some hard realities ... one of which is that its business methods - essentially putting retailers in the position that they have to do business with them because otherwise Instacart will just shop their stores anyway and hurt their price image - may hurt long-term and sustainable growth.

    I know of retailers that have signed up with Instacart with the full intention of working with them only until they can come up with a better option.

    These chickens may be coming home to roost.

    Published on: January 4, 2016

    Over vacation, I had a chance to catch up with the annual Consumer Reports "Naughty & Nice" list, and there were several inclusions worth noting.

    On the "Naughty" list...

    • Costco: "The warehouse club is facing a jury trial for trademark infringement for selling 'counterfeit' Tiffany diamond engagement rings. In September, a federal judge in New York agreed with the luxury jeweler’s claim that Costco confused customers by using the word 'Tiffany' in display-case signage. In doing so, the court rejected Costco’s argument that 'Tiffany' was a generic description for a type of ring setting. A jury trial has been scheduled for early next year. Costco has filed an appeal. Tiffany originally filed suit on Valentine’s Day 2013, claiming hundreds, possibly thousands, of Costco members bought rings they thought were genuine Tiffany baubles."

    • FedEx and UPS: "Why is it that companies continue to impose fuel surcharges even when prices are relatively low? According to the industry publication, the price of diesel won’t rise markedly until next year and even then, the increase is expected to average well below that recorded in 2014. Yet the two shipping titans continue to add fees, based on U.S. Energy Information Administration averages. For November, FedEx adds a 4.25 percent surcharge for ground shipping services; the add-on at UPS is 5.25 percent. Both carriers already include a surcharge for residential home delivery."

    • Tom’s of Maine: "The company made a name for itself by touting its use of only natural ingredients in its toothpaste, deodorant, lotions, sunscreen, and other products. But plaintiffs in a class action accused Tom’s of being less than pure. Earlier this year, the company, without admitting wrongdoing, agreed to create a $4.5 million fund to help settle claims that it mislabeled personal care and beauty products as natural when they allegedly contained chemical ingredients including the sweetener xylitol and cleaner sodium lauryl sulfate. As part of the preliminary settlement, which covers purchases between March 25, 2009, and September 23, 2015, consumers can claim a $4 refund on up to seven Tom’s products (without a receipt); the company also agreed to provide enhanced disclosure on its website about the ingredients it uses, and better define how it defines terms like 'natural,' 'sustainable,' and 'responsible.' A hearing in U.S. District Court for the Southern District of Florida is scheduled for late January to decide whether the settlement is reasonable and adequate."

    On the "Nice" side of the ledger...

    • Chipotle Mexican Grill and Panera Bread: "These fast-food restaurant chains were the only ones to publicly affirm that the majority of their meat and poultry offered is produced without routine use of antibiotics. (The overuse of antibiotics contributes to the problem of antibiotic resistance.) In addition, the prevalence of antibiotic misuse and overuse in U.S. meat production reflects a broader tendency of poor farm management and animal welfare practices in industrial U.S. meat production. Eliminating unnecessary uses of these antibiotics by the meat industry is an important step towards creating a healthier food system, according to Consumer Reports advocates."

    • CVS: "The drugstore chain already boasts almost 1,000 walk-in medical clinics and plans to expand its wellness commitment this fall to include hearing centers in some stores in the Dallas and Cleveland markets, and professional optical services (exams, contacts, and glasses) at select locations in the Baltimore and Washington, D.C., areas. Free audiology services will include in-store hearing loss screenings and hearing-aid checks and cleanings. All prescription glasses come with a 90-day total-satisfaction guarantee, and can be returned for any reason for a full refund. Glasses purchased for children 14 and under will be covered by a one-year guarantee that provides free replacement for pairs that are lost, damaged, or broken."
    KC's View:
    Hard to imagine Chipotle getting any "nice" reviews for anything, considering the extent to which its food safety issues have damaged the brands.

    And I'm interested to see that Costco and Tom's, ordinarily companies that get glowing reviews, are being criticized so specifically by Consumer Reports.

    I think the lesson here is that people are paying attention ... and that even the best companies can come in for such criticisms ... perhaps because they usually are seen as best companies.

    You gotta keep your nose clean.

    Published on: January 4, 2016

    Is there a less relevant piece of equipment in 2016 - a time of cell phone ubiquity - than the pay phone?

    Quick: How much does a local phone call cost when made from a payphone? The answer has to be offered without consulting Google.

    Now, the Associated Press reports, New York City and a consortium of technology companies are collaborating to convert at least 7,500 of the city's still-extant 8,200 pay phone booths into hot spots, creating "what’s billed as the world’s biggest and fastest municipal Wi-Fi network." City officials describe the project as "democratizing data access while modernizing outmoded street phones."

    The story notes that "68 percent of Americans own smartphones, according to the Pew Research Center on Internet, Science & Technology," and that more than a third of the city's pay phones are inoperable ... all of which creates a context in which the conversion makes sense.

    The $200 million cost of the conversion will be absorbed by the tech companies, which will look to make up for it by selling digital advertising on the booths, on which they'll get 50 percent of the revenue, estimated to be as much as $1 billion over the first 12 years. The city gets the other 50 percent - substantially more than the $17 million a year it gets from payphone revenue now.
    KC's View:

    Published on: January 4, 2016

    Reuters reports that Walmart "is considering closing about 30 stores and renting some of its property in Brazil next year ... as the world's largest retailer looks to exit poor-performing markets.

    "Wal-Mart declined to comment directly about store closings, telling Reuters it is 'constantly reviewing its portfolio and making decisions based on what's best for the business and clients'."

    • A grand jury has indicted Kevin Roper, the driver of the Walmart tractor trailer that was was the cause of a crash that seriously injured actor Tracy Morgan and killed another comedian last year.

    The charges include first-degree aggravated manslaughter, second-degree vehicular homicide, and eight counts of third-degree aggravated assault charges.

    The National Transportation Safety Board (NTSB) already has concluded that Roper was the primary cause of the crash, noting that he drove 800 miles from his home in Georgia to his workplace in Delaware before attempting to drive farther north on no sleep.
    KC's View:

    Published on: January 4, 2016

    Bloomberg writes that " shareholders are cheering the company’s big push to accommodate last-minute holiday orders and a coinciding shift of consumer spending from brick-and-mortar stores to websites and smartphone applications.

    "The company’s shares have more than doubled this year and are closing in on $700, with some analysts raising their price targets to $800 and higher. Investor enthusiasm suggests a strong fourth quarter will endure into 2016, enabling Amazon to continue to gobble up market share even as rivals such as Walmart Stores Inc. and Target Corp. expand their online delivery options."

    The story goes on to note that "Amazon added 3 million Prime members in the third week of December, the company announced Monday, signaling its $99 annual subscription for delivery discounts as well as video and music streaming continues to draw shoppers as spending shifts online."

    • In the UK, the Guardian reports that "Amazon is preparing to crank up the pressure on Britain’s struggling supermarkets by dramatically expanding the range of grocery products it sells" through its Amazon Pantry service. The story notes that "Pantry does not sell fresh food but the venture’s success could pave the way for the launch of the Amazon Fresh service in the UK. At present the company only offers the full grocery service on the west coast of the US and in New York, but there is speculation it could launch in London."

    • Also in the UK, the Evening Standard reports that during the just-ended holiday shopping season, Amazon "chartered a Boeing 737 to fly between Poland, the UK and Germany. The plane has made five trips a week, flying from Katowice in Poland to Luton, East Midlands or Doncaster airports and then back to Poland via Kassel in Germany. The round trips link several of Amazon’s biggest fulfillment centres in Europe."

    The story notes that "the move to flying its own parcels around Europe echoes the firm’s strategy in the US, where it is reportedly negotiating to lease as many as 20 Boeing 767s after successful air trials in Wilmington, Ohio."

    CBS News reports that "new data from eMarketer shows that American consumers bought an estimated $48 billion worth of goods and services using mobile devices this year, a surge of 32 percent from year-ago levels. In 2015, mobile accounted for 22 percent of all retail e-commerce sales in the U.S., up 3 points since last year."

    The bottom line: "Americans are getting increasingly comfortable using mobile devices to shop."

    Still, they have some distance to go before reaching the acceptance levels of other countries. Like South Korea, where "mobile sales accounted for 46 percent of of all retail ecommerce sales and 5.1 percent of total retail sales in 2015." Or China, where "nearly 50 percent of retail ecommerce sales and almost 8 percent of all retail sales occurred via mobile devices in 2015."
    KC's View:

    Published on: January 4, 2016

    • The Sacramento Bee has an interview with Raley's president/CEO Michael Teel, which which he says that some hard decisions the company has made - closing some stores, opening others, focusing on a smaller format than it used to, and using a new customer loyalty and rewards program, dubbed "Something Extra," which it using to generate what it calls "a wealth of data" - has positioned it well for the future.

    "We’re much more customer-driven now," Teel tells the Bee, adding, "We’re working to serve them, to do what they want." And Teel acknowledges that "Raley’s is positioning itself to better compete in a Northern California/Nevada marketplace that has become increasingly crowded over the past decade, with Safeway, discount grocers and Walmart Neighborhood Market stores cropping up and touting low prices."

    • The Associated Press reports that the flagship Toys R Us store in New York City's Times Square - which came complete with a 60-foot indoor Ferris wheel, a 20-foot animatronic Tyrannosaurus Rex, and a life-size Barbie dollhouse - has closed its doors for good.

    The store had been there since 2001 and was part of Times Square's vaunted conversion from a grimy neighborhood that specialized in adult entertainment to a more tourist-friendly environment complete with family-oriented and chain-owned restaurants and stores.

    Toys R Us reportedly decided not to renew its lease because of the high rent. The company made a similar decision last year when it decided to close its iconic FAO Schwarz on New York's Fifth Avenue, which gained fame when it was featured in the movie Big, in which Tom Hanks and Robert Loggia danced on the store's giant piano keyboard.

    • In Springfield, Massachusetts, the Republican reports that "Big Y Foods Inc. is expanding its Big Y Express Gas and Convenience concept with the purchase of three O'Connell Convenience Plus gas stations." The story notes that Big Y "has learned that the convenience store business has a few different wrinkles from the supermarket business," including that while small packaging is important, there also is a growing demand for quality fruits, vegetables and baked goods.

    • Finally, the beleaguered US Postal Service (USPS) gets one right ... and actually puts one foot into the future. Or at least into the final frontier.

    The cool story of the week goes to the report that the USPS will this year introduce a new set of "forever" stamps featuring Star Trek - one each with the Starship Enterprise, the Starfleet insignia, a transporter and a Vulcan hand salute.

    The stamps' release will be timed to the 50th anniversary of the debut of the original "Star Trek" series ... and the release of the newest film in the series, Star Trek Beyond.
    KC's View:

    Published on: January 4, 2016

    • The Wall Street Journal reports that JC Penney has replaced its chief information officer, hiring Therace Risch to become the company's fifth technology leader since 2011.

    According to the story, Risch replaces Scott Laverty. She comes to JC Penney from Country Financial, where she was CIO for less than two years. "Before that," the story says, "she spent 10 years in IT at Target, most recently as a vice president working on projects in merchandising, supply chain and analytics, among other areas."
    KC's View:

    Published on: January 4, 2016

    • Tracy Wolpert, the former CEO of PCC Natural Markets in Washington State and most recently VP of Operations at Bristol Farms, passed away over the Christmas break following what was termed "a sudden illness."

    Kevin Davis, CEO of Bristol Farms, released the following statement about Wolpert, who joined the company just last October:

    "While he was only with us for a short period of time, he had a big impact on our Bristol Farms family. He was one of the most customer and employee-centric executives in the industry. Tracy had a holistic mission and approach which tied together employees’ and the customers’ love of food into an unusual and fulfilling store experience. We miss Tracy deeply, but we thank and appreciate him for his vision and positive impact to us and to the industry."

    • Ron Paul, who helped to drive the development of the planned James Beard Public Market in Portland, Oregon, passed away just before Christmas. He was 65, and the cause was listed as complications from cancer.

    When he was interviewed by MNB in 2014 about his plans for the Public Market, he was asked what his goals were for the kind of impact he'd like it to have by 2020, two years after its scheduled opening. He responded that he wanted it to have "become a focal point for the community as an educational resource, an example of the local 'maker' economy succeeding--individually for the producers and in the aggregate for the Market's benefit ... It will serve as a beacon for residents and visitors alike. The Market's education program, with a focus on grandparents teaching their grandchildren about their almost-lost-forever food-ways, will reach ever-more children and families. And more people will have access to healthy, regionally produced foods than ever before."

    You can read more about Paul and the James Beard Public Market click here.

    • Wayne Rogers, best known for playing Trapper John on the TV series version of "M*A*S*H" for the first three of the program's 11 seasons, has passed away at age 82. The cause was listed as complications of pneumonia.

    Later in his life, Rogers became known for his investment and real estate expertise, appearing on the Fox Business Network and serving as a spokesman for a reverse mortgage company.

    • Natalie Cole, the Grammy-winning daughter of Nat "King" Cole who used technology to perform a duet of "Unforgettable" with her late father, passed away late last week. She was 65, and reportedly had been suffering from "ongoing health issues."
    KC's View:

    Published on: January 4, 2016

    ... will return.
    KC's View:

    Published on: January 4, 2016

    In the final regular season week of the National Football League...

    Jaguars 6
    Texans 30

    Steelers 28
    Browns 12

    Jets 17
    Bills 22

    Patriots 10
    Dolphins 20

    Titans 24
    Colts 30

    Ravens 16
    Bengals 24

    Redskins 34
    Cowboys 23

    Saints 20
    Falcons 17

    Lions 24
    Bears 20

    Eagles 35
    Giants 30

    Rams 16
    49ers 19

    Buccaneers 10
    Panthers 38

    Raiders 17
    Chiefs 23

    Chargers 20
    Broncos 27

    Seahawks 36
    Cardinals 6

    Vikings 20
    Packers 13
    KC's View: