business news in context, analysis with attitude

Published on: January 6, 2016

by Kevin Coupe

This past Sunday offered the return of "Downton Abbey" for its sixth and final season on public television, with fans riveted to the screen as we (yes, I am among them) waited to find out what would happen to the Crawley family, Mr. Carson and Mrs. Hughes, and whether John and Anna Bates would get beyond the personal tragedies that seem to bedevil them. (The good news is that Lady Mary continues to be the very picture of women's liberation, even in 1925 ... but I digress...)

At some level, I think, Downton Abbey is a relic of the past ... but not because of the era in which it is set. Rather, to a great degree, I think it remains appointment television. For many people - and this, indeed, may be an age thing - it is a show that they want to see when it is on, as opposed to later, on some digital device.

But times change.

The New York Times has a piece about how Julian Fellowes, who created "Downton Abbey," now is turning to more modern media.

"For his next project, 'Belgravia,' Mr. Fellowes is marrying an old narrative form — the serialized novel, in the tradition of Charles Dickens’s “The Pickwick Papers” — with the latest digital delivery system: an app," the Times writes.

“'Belgravia' takes place in London in the 1840s and opens decades earlier during the Battle of Waterloo. It explores the class divisions between the established aristocracy and newly wealthy families who made their fortunes through the Industrial Revolution. But instead of having the sweeping narrative arc of a novel, it will unfold more like a new network TV series, in 10 weekly digital installments that will arrive automatically on readers’ phones, tablets or computers. The chapters cost $1.99 each, and $13.99 all together. The app will also incorporate an audio version, music, video, character portraits, family trees, images of period fashion and maps of Belgravia."

The story notes that "app-based novels remain a relatively new and unproven format, but they could begin to catch on as some prominent authors experiment with the interactive possibilities of apps." But Fellowes and his publisher clearly hope that the project's pedigree - it will begin being posted shortly after the airing of the last episode of "Downton Abbey" - will help it gain traction.

Fellowes, it should be noted, seems to be form-agnostic. In addition to "Downton Abbey," he's written movies, stage plays and books. And I think that's a good lesson for businesses in general.

Form, in fact, may be less important than content.

As I write those words, I realize that I am to some extent contradicting myself. I am, after all, a guy who has been writing for years that stores have to be more than just the products they sell, that they have to create their own implicit value proposition that distinguishes them from the competition.

To be honest, I still think that's true. But I also think that the Fellowes metaphor can serve as a reminder that in the best of circumstances, form and content can be molded together to become a unified and distinct value proposition. That's what a great store does, and if it works, what a great piece of art does.

Unified and distinct, they can be Eye-Openers.

Published on: January 6, 2016

Amazon yesterday put out a press release noting that more than 23 million items were ordered globally ob Cyber Monday alone from its Amazon Marketplace service, which offers third parties the ability to sell their products on its website.

This represented a better than 40 percent increase over the number of items ordered on Cyber Monday in 2014.

Cyber Monday is the name given to the Monday after Thanksgiving, which traditionally has been a high-traffic day for online sales before Christmas; it follows Black Friday, which is the traditional day-after-Thanksgiving leaping off point for holiday sales in bricks-and-mortar stores.

While Amazon, as per its habit, was cagey about some specific numbers, it also revealed that is Fulfillment by Amazon (FBA) service - which provides shipping services for these third party retailers - delivered more than 1 billion items worldwide in 2015, and that "Amazon sellers from more than 100 different countries around the world fulfilled orders to customers in 185 countries."

Published on: January 6, 2016

The Wall Street Journal this morning reports that while "computer chips and wireless communications are being added to everything from doorknobs to dog collars," as technology companies look to get a piece of what is commonly referred to as the "connected home," there seems to be some resistance among mainstream consumers to these advances.

The Journal says that the caution seems to be related to concerns about hacking, which has been much in the news of late, as well as worries that government and business interests could use the smart home devices to gather information about the people who live there.

Indeed, the story says that "a survey of 28,000 consumers in 28 countries being released Tuesday by Accenture LLP found that 47% of respondents pointed to security and privacy as potential obstacles to adopting such technology.

"Among people planning to buy smart-home gadgets in the next 12 months, a significant number chose to be cautious about using them or postponed purchases, while 18% had quit using them or terminated services for lack of security guarantees, the consulting firm said. The survey found that only about 9% of respondents—about the same as a 2014 survey—planned to purchase connected devices this year."

However, these "headwinds," as they are described by the Journal, do not seem to have damped the enthusiasm for such products among exhibitors at this week's Consumer Electronics Show (CES) in Las Vegas, where "popular categories include Internet-connected sprinklers, pool monitors, security cameras, door locks, fans, blinds, washing machines, ovens and garage-door openers."

Published on: January 6, 2016

Bloomberg has a long and fascinating piece about the food safety, infrastructure, marketing and cultural issues facing Chipotle as it works to recover from the series of crises that have it its stores in terms of E. coli and norovirus incidents that have challenged the very core of its "food with integrity" value proposition.

Spoiler alert: Bloomberg creates a portrait that in some ways is at odds with conventional wisdom about the chain. For example, there is more cooking and central preparation done at Chipotle commissaries than most people realize. And, because of the large geographic spread of Chipotle's problems, it seems more likely that the contaminated produce came from a large national source, rather than local sources.

You can - and should - read the entire story here.

Published on: January 6, 2016

The Dayton Daily News reports that in Centerville, Ohio, a suburb of Dayton, Earth Fare has decided to close down the store that it opened there just four years ago, citing poor performance.

The story notes that the Earth Fare store has "faced a sudden influx of competition in the last year with the opening of other specialty grocers in southern Montgomery and in Greene counties, including a Whole Foods Market store in Washington Twp. and two Fresh Thyme Farmers Market stores in Beavercreek and in the Sugarcreek Twp./Centerville area. Meanwhile, large chains such as Kroger and Walmart are devoting more shelf space to organic and other healthy products that Earth Fare specializes in."

Published on: January 6, 2016

• Reuters reports that Minnesota-based Huisken Meat Company, which supplies Sam's Choice Black Angus Vidalia Onion brand beef patties to Walmart, is recalling some 90,000 pounds of products because of what is called possible contamination "with extraneous wood materials."

No illnesses have been reported.

Published on: January 6, 2016

• Analytics firm Custora is out with its annual E-Commerce Holiday Pulse Recap, reporting that "e-commerce revenue was up 12.1% over the 2014 holiday season," while "orders grew 10.9%" and "Average Order Value (AOV) was up 1.1%, indicating a less promotion-driven holiday season than last year."

In addition, the report says that "30.4% of online sales were placed on mobile (phones + tablets)," and that more than "three quarters of all mobile orders (76.9%) were made on Apple devices, while only 22.7% happened on Android devices."

Published on: January 6, 2016

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Cincinnati Enquirer reports that "Macy's is taking a hard look at its real estate and store portfolio as it seeks appease impatient shareholders concerned about sliding retail sales." The company is said to be ready to announce the closing of 40 stores in its current fleet of close to 800, as it seeks higher levels of efficiency and productivity.

However, the plan to shut down more than five percent of its store count also is seen as a recognition that online sales will play a larger role in Macy's future, and that it needs to begin adjusting its investment and capital allocation plans so that they are relevant to its customers.


• The Associated Press reports that meal combos seem to be all the rage in the fast food business, taking the place of value menus in terms of aggressive promotion by the chains.

According to the story, McDonald’s, Burger King and Wendy’s are falling all over themselves - and often copying each other - to create bundles that will get new customers in the store and lure regulars from the competition.

Bundled crap still tastes like crap. Chains like in-n-Out don't worry about bundles ... they just make a better tasting burger, and watch the lines form outside the door. If the burger chains really want to make a statement, maybe they should just define themselves as "not Chipotle...we sell only over-processed food in which no pathogens could survive."

Published on: January 6, 2016

We continue to get email about the $500,000 settlement by Whole Foods to resolve charges by New York officials that it was deliberately mislabeling products there ... and in one case, we got email about an email.

Yesterday we featured an email from reader Tom Kroupa, who addressed Whole Foods' defiance even as it wrote a check, saying, in part:

Because their CEO John Mackey is a libertarian, his default line is always anti-government. You may recall that he called President Obama a nazi because of his distaste for Obamacare. This may be the reason for his begrudgingly paying the fine for overcharging customers.

Which prompted MNB reader Tom Herman to write:

Someone needs to gently suggest to Tom Kroupa that the only default line in this whole thing is him equating a libertarian to anti-government.  Libertarians are not anti-government any more than liberals are anti-capitalism.  People should not be placed in boxes based on their political leanings.

Fair point. Not all libertarians are anti-government, though I wonder if all anti-government people would describe themselves as libertarians.

Probably not.

From another reader, about the broader issue:

My observation from 45 years of representing food companies in regulatory matters is there is a general lack of meaningful enforcement of consumer protection laws at the federal, state, county and local levels. NYC and Los Angeles county are the exceptions.   I have consistently advised my clients that the class action lawyers, mostly in California (mainly due to a California statute that makes private actions easier) are the primary risk.

With the exception of a recent case involving short measure mulch, I have seen almost no enforcement in my home state of Ohio.

I have to assume that what Whole Foods did in NYC also was happening elsewhere.




We also had a story yesterday about how Boston Globe employees volunteered to deliver newspapers when the company hired to make deliveries screwed up.

MNB reader Mark Boyer - who, it should be noted here, runs a company called Tippin's that makes great pies - offered the following perspective:

Your story on the Boston Globe’s staff delivering papers resonated here. We are in the pie business, and our busiest season is easily this past quarter. I encouraged all of our management team to work in the bakery during this time, and we spent quite a bit of time helping out, typically where a lot of skill or experience wasn’t required. The bakers appreciated the help.

Aside from the benefit to productivity, the learning was phenomenal. We’ve been doing the same thing the same way for a long time, and often no one thinks to ask, “Why do we do it this way?.” Or “Why are we using this ingredient, or this packaging?”

I can tell you the team is busy exploring how to improve a number of processes and ingredients that might never have surfaced had we not spent the time working side-by-side with the team. We’ll get better because of it.

Great story. Thanks for sharing. And keep making those wonderful pies!

From another reader, a different perspective:

Of course, as with anything there are at least two sides to every story… And on this one I am glad to see you focus on the positive side of this...

However, I was a bit surprised to NOT see anything about what had created the mess in the first place…. Globe “Management” (Funny how when things go bad there is almost NEVER a specific name / names associated with it) decided to switch to a new delivery service….  Well who made THAT decision in which this new service was SO ill prepared that it took this amazing effort and sacrifice just to get a Sunday paper delivered  (Wonder if this would have happened back in the newspaper heyday, as I bet many would have switched to the Herald this far into the mess….). 

Just because someone / company  CAN do something, doesn’t mean they SHOULD, and was anyone in the room saying, “Not so sure this is a good idea, can we CONFIRM that this new delivery service can jump in and IMMEDIATELY handle the new delivery….  Somehow this part of the story is not getting any attention….. Cynics would say the media tries not to point fingers at the media.

Actually, I think the Times made this point. I just decided for my own purposes to accentuate the positive.

But if you circle back around ... this actually makes the same point that Mark Boyer was making ... that sometimes upper management needs to get into the trenches to understand how the business really works and what the challenges are.

BTW...it was reported yesterday that the Globe management has re-engaged with the original delivery company to help it solve its problems.



Yesterday's MNB also featured a story about Thrive Market, the online-only store for healthier products. MNB reader Bill Kadlec responded:

Liked your piece about Thrive. I became a “healthy eater” in 2015 and once I found Thrive, I’ve changed my buying behavior on many of these goods. You do have to buy less seldom and often in larger quantities than a typical trip to the store but, that saves shipping and I consume the product anyway. And, their prices are very hard to beat. Occasionally, when something like Rao’s pasta sauce goes on sale, the store is the equivalent cost, but most times, Thrive simply is the price leader and only carries “the good stuff”.

Whole Foods absolutely should be taking a lesson here. And, Thrive needs to protect its flanks. Nothing proprietary in what they’re doing. Any of the big boys could replicate this at any time and, of course, have far deeper pockets to execute with. That is, assuming they make the commitment to doing it right and not diluting the quality of the offerings.

Lessons all around.

Published on: January 6, 2016

The Cleveland Browns, which just finished a 3-13 season and hasn't had a winning season since 2007, decided yesterday to think outside the box - it hired a baseball guy as its new chief strategy officer.

The guy was Paul DePodesta, most recently the vice president of player development and amateur scouting for the (National League Champion!) New York Mets, and the former general manager of the Los Angeles Dodgers. But perhaps DePodesta's biggest claim to fame is as part of Billy Bean's original "Moneyball" management team with the Oakland Athletics, where a unique approach to analytics has created a franchise that has had a series of winning seasons despite a relatively low payroll.

“Paul will help members of our player development, high performance and analytics departments maximize their efforts,” Sashi Brown, the Browns’ executive vice president of football operations, said in a prepared statement.

Published on: January 6, 2016

...will return in two weeks.