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    Published on: January 11, 2016

    by Kevin Coupe

    I couldn't help but wince a little bit over the weekend when I saw the following ad on Craigslist:

    5 Haggen Grocery Store Men's shirts Large - $30

    "I have 5 men's Haggen work shirts size Large that were briefly used for a a few months. 3 polo shirts and 2 button down cotton shirts. Haggen closed down in San Diego. They are in excellent condition and I think its a waste to throw them out. Email me if you are interested in buying them. I live in San Diego, California so I will mail it out."


    And that's an Eye-Opener. (And a tip, in case you are in the market for soon-to-be antiquated, irrelevant retail uniforms...)
    KC's View:

    Published on: January 11, 2016

    Reuters reports this morning that Texas-based Blue Bell Creameries has revealed that listeria once again has been found in one of its production facilities, though not in its ice cream.

    The discovery comes some months after Blue Bell had to stop production and shipping of its ice cream, as well as recall all of its products from 25 states, "after 10 reported cases of listeria in four states were linked to Blue Bell frozen treats. Three of the people sickened, all hospital patients in Kansas, later died."

    Blue Bell engaged in a major cleanup effort in order to address the problem, and is once again manufacturing and shipping ice cream, with brand enthusiasts apparently welcoming it back to their freezers.

    Reuters writes that Blue Bell "did not specify in a statement in which of its three facilities listeria had been found but said that none was found in any of its ice cream. Blue Bell said it is moving to eliminate the bacteria through a 'seek and destroy' process.

    "'We expect to periodically find microbiological indications in our facilities,' said Blue Bell, which declined comment beyond the statement. The company credited its 'enhanced, robust testing system' for why it found the bacteria.

    "The company noted that because listeria is commonly found in the natural environment, 'no manufacturer can ever assume it will be entirely eradicated'."
    KC's View:
    I'm not doubting Blue Bell's sincerity, but I do have to admire how it is working to turn the new listeria case into proof that it is doing abetter job at detection and eradication.

    I am a little surprised, though, since if I recall correctly, when the original cases of listeria came to light, a common reaction was consternation, since listeria can't grow at freezing temperatures, so it was surprising to find it in ice cream. Now, Blue Bell seems to be saying that it is more common than previously admitted, that "we expect to periodically find microbiological indications in our facilities."

    And when Blue Bell refuses to say which facility is involved ... well, this sounds uncomfortably close to the ham-handed way in which it communicated about and dealt with the first contaminations. Transparency, it seems, often is not the first instinct at Blue Bell headquarters.

    I do know this. Given a choice, I won't eat Blue Bell ice cream products. Now, I gather that the only thing this really proves is that I'm not from Texas ... but I do have to wonder when these continuing problems will catch up to the company.

    Also, in a broader sense, I think this continuing food safety issue, especially when added to the problems being experienced by Chipotle, points to why retailers and manufacturers have to put a great premium on their food safety experts, adhering to and even exceeding the requirements of the Food Safety Modernization Act (FSMA).

    Published on: January 11, 2016

    The Seattle Times reports that Amazon is said to be close to acquiring the 75 percent of Colis Privé, a French package delivery service that competes there with the likes of FedEx, UPS and DHL, that it does not already own.

    If Amazon were to actually pull the trigger on such an acquisition, the belief is that it would use Colis Privé to not just deliver its own packages, but also those of other shippers. "Though the French company is small relative to the multinational giants that move Amazon parcels around the globe, the acquisition will be the biggest step yet that the online retail giant has taken to move into the business of delivering packages for others, as well as itself," the Times writes.

    It is also just one of several steps it seems to be making toward gaining greater presence in the shipping game.

    The Times writes: "Some analysts believe that Amazon is putting together the pieces across the globe to launch a package-delivery service that will one day compete with UPS, FedEx and others. In addition to the Colis Privé deal, Amazon acquired the right to purchase 4.2 percent of Yodel, a United Kingdom parcel-delivery company, in 2014. Last month, Amazon announced adding thousands of trucks to its U.S. fleet to handle the growing load of packages it is shipping ... Amazon is negotiating to lease 20 Boeing 767 cargo jets. Those jets would represent a significant expansion of an Amazon cargo trial in Wilmington, Ohio, operated by Air Transport Services Group on Amazon’s behalf.

    "Amazon wants to build out its own U.S. cargo operations," the Times says, "to avoid delays from carriers such as UPS and FedEx, which have, at times, struggled to keep up with the rapid growth of e-commerce ... Shipping, of course, is a huge expense for Amazon. In the third quarter, Amazon spent $3.2 billion on fulfillment, the costs related to delivering packages to customers. It’s a huge number that increases every year as Amazon grows and invests more and more into speeding up delivery to better compete against brick-and-mortar rivals, which offer customers something Amazon can’t: instant gratification of owning an item the second it’s purchased."
    KC's View:
    It seems to be pretty clear that Amazon believes that it can somehow move "shipping" from the cost to revenue column, which is typical Amazon - thinking it can bring new insights and efficiencies to the delivery business, disrupting it to a degree that can make a real difference to consumers.

    I guess I'm a little skeptical ... not about the broader strategy, but that Amazon will be able to reinvent the delivery business to a degree that will make a real difference. After all, FedEx and UPS have done a lot to disrupt their business model from the inside.

    That said, Amazon has been pretty good at the disruption business, so I certainly wouldn't bet against its efforts in this arena.

    Published on: January 11, 2016

    Reuters had a story saying that Walmart-owned Asda Group in the UK will spend the equivalent of $726 million (US) on price cuts ... which is in addition to previously announced $1.4 billion (US) in cuts to be spread over five years.

    The company says that the cuts are a direct response to the growth in market share achieved by aggressive discounters such as Aldi and Lidl.

    "We must take radical action to win back our customers," says Asda CEO Andy Clarke, adding, "We expect that 2016 will be another year of intense pressure at a macroeconomic level in addition to sales remaining under strain from price deflation, a continued competitive background throughout the sector and radically changing customer shopping habits."

    The Reuters story notes that "Asda was the worst performer by sales among Britain's leading supermarkets last year, with management choosing to protect profit margins rather than chase sales."

    And the BBC has quoted Clarke as saying that "we saw the change coming and responded in 2013, but we didn't move fast enough."
    KC's View:
    Anyone competing in the US - especially those in the value lane, but not just them - has to pay close attention to these competitive battles in the UK, because they're going to happen here. And they really need to pay attention to what Clarke says ... that we saw the change coming ... but we didn't move fast enough.

    Published on: January 11, 2016

    USA Today has a story about five retailers - Macy's, Nordstrom, Aeropostale, Sears and HH Gregg - all of which, it says, face major challenges in 2016.

    "Even as stores typically on solid footing, including Macy's and Nordstrom, have scrambled to keep up with the shift in shopping habits, they're finding it difficult to maintain an edge," the paper writes.

    For example, "While Macy's has implemented services such as being able to buy online and pick up in store, it's still a large department store chain that relies heavily on categories that aren't doing so hot right now, such as handbags and clothes." At Nordstrom, a retailer not known for deep discounting, the challenges seem to be coming from value-driven retailers that seem to be eroding its traditional appeal.

    Aeropostale "faces an incredibly competitive environment, up against H&M, Zara, Forever 21 and now Primark, a U.K. brand that started opening in the U.S. last year," the story says. "Compared to those stores, Aeropostale hasn't been quick enough turning out desirable apparel and relied on stamping merchandise with the Aeropostale logo for too long after that fashion went out of style." And Sears ... well, the story suggests that management has pretty much let the business wither away, and that the only thing the company has going for itself is decent real estate.

    And at HH Gregg, management "has to contend not only with falling traffic in more rural areas but stiff competition in consumer electronics, which is dominated by retailers such as Amazon and Best Buy."
    KC's View:
    Of these five retailers, I tend to be most optimistic about Nordstrom, because it has such a clear differentiated strategy when it comes to customer service. Macy's certainly has the wherewithal to survive, though it also has some investor issues that could cause it some problems. As for the other three ... well, I simply see very little that is differentiated about them, and so, very little rationale for their continued survival.

    Published on: January 11, 2016

    • In South Carolina, the State reports that Starting Jan. 13, Birmingham, Ala., startup company Shipt will begin offering Publix home deliveries from 10 Publix locations across Columbia, Cayce, Lexington, Blythewood and Irmo ... For a limited time, local customers who sign up for a Shipt membership before Jan. 13 will receive unlimited free deliveries for a year.

    Shipt, which emphasizes that it has no official affiliation with Publix, says that items purchased through its app will “vary slightly from in-store prices to help cover the costs of picking, packing and processing.”
    KC's View:
    I simply don't understand why Public would want Shipt to be exercising this degree of control of a segment of its business that is going to become increasingly important. Maybe it is just a place-holder while Publix develops a more proprietary approach ... or maybe it is just an extended test before Publix acquires Shipt.

    Published on: January 11, 2016

    • The Wall Street Journal reports that "scanner guns—the bar-code readers used in warehouses world-wide—are getting a makeover, as retailers scramble to boost productivity amid a surge in online orders.
    From 'rings' that workers wear on their hands to modified smartphones, companies are testing alternatives to the 'brick on a stick' scanners that have been the industry standard for decades."

    The goal, the story says, is to "shave a few precious seconds off the time it takes for workers to select, pack and ship items."

    The Journal goes on: "Retailers and others that sell online, as well as logistics companies, are hungry for new ways to improve efficiency to counter the added labor and transportation costs associated with filling online orders. Competition from e-commerce giant Amazon.com Inc. on both price and speed has forced them look for any possible way to cut costs and shorten delivery times, experts say. The most sophisticated of these companies already analyze the movements of their employees down to minute details."


    Newsday reports that the Great Atlantic & Pacific Tea Co. (A&P), which used to operate supermarkets, "will turn over nearly three dozen store leases to the locations’ landlords, including 11 now-vacant Waldbaum’s and Pathmarks on Long Island that it has been unable to sell.

    "The move, approved by a federal bankruptcy court judge in White Plains this week, will allow the landlords to lease the space to new tenants, who may not be grocery store operators."


    • In upstate New York, the Democrat and Chronicle reports that Wegmans is installing hearing assistance systems in all of its stores, with the goal of having them in place by the end of the year.

    The story says that "sixteen Wegmans stores currently have hearing assistance systems — with at least one store in each of the six states where the company has stores ... Induction hearing loop stations are installed at pharmacy counters, customer service desks and designated checkout lanes."
    KC's View:

    Published on: January 11, 2016

    • Rodan & Fields, which describes itself as a "premium skincare brand and unique technology-driven social enterprise platform," announced the hiring of Diane Dietz - most recently chief marketing officer and executive vice president at Safeway, and a former senior executive at Procter & Gamble - has been named the company's president/CEO. She succeeds the retiring Lori Bush.


    • Dollar Tree announced that "Howard R. Levine has completed his role in the integration of Family Dollar and Dollar Tree, and is stepping down as an officer of the Company effective January 15, 2016." Levine has been in Family Dollar management for some two decades, and has been working on the two companies' integration issue since Dollar Tree completed its $9.2 billion acquisition of more than 8,200 Family Dollar stores across 46 states last July.
    KC's View:

    Published on: January 11, 2016

    • David Bowie, who segued from glam rock to movie stardom to Broadway acting and personified the ability to change one's image in order to be relevant to an evolving audience and shifting tastes, has died after a reported 18-month battle with cancer. He turned 69 last Friday.
    KC's View:

    Published on: January 11, 2016

    Last week, in a story about drones, we had a reference that grabbed a couple of readers' attention.

    MNB reader Steve Worthington wrote:

    I understand that drones are the hot topic currently but who knew there was a Drone Journalism Lab at the University of Nebraska at Lincoln (or any university)?

    But another MNB reader wrote:

    Our son the journalism major at the University of Nebraska is going to be taking the Drone Journalism course either second semester this year or this coming fall…….I’ll keep you posted as to how it goes.

    Go figure.



    Last week, we reported on the hiring by The Fresh Market of Pamela Kohn to be its new Executive Vice President and Chief Merchandising Officer. Kohn spent a dozen years of Walmart, and before that worked for both Ahold and Delhaize.

    I commented:

    Interesting choice by Fresh Market ... because it is hard to imagine two perishables approaches as dissimilar as those of Fresh Market and Walmart. I suspect it says something interesting about CEO Rick Anicetti's plans to make Fresh Market more relevant and aggressive.

    One MNB user responded:

    The Fresh Market choosing an individual brought up in the Walmart, Stop & Shop and Food Lion culture to head up merchandising and in store experience is truly an interesting choice. Nothing against Ms. Kohn, I’m sure she is an extremely qualified retailer, but it’s my take that the aforementioned retailers in which she gained her experience are process driven regimented retailers whose identity revolves around a low price equals consumer value as the the sales driver and tend to work in an “If Then” top down, pragmatic type of merchandising environment. Low price is their primary brand equity. Retailers in the Whole Foods, Sprouts, and The Fresh Market genre usually take more of a “What if, then” approach to merchandising where price is not the primary driver in brand messaging….but where delivering a visually stimulating, customer centered shopping experience defines the primary customer value equation. Not to mention the cultural differences involved in making these two approaches work. Should be interesting.




    MNB user Chuck Jolley had some thoughts about Chipotle:

    Chipotle could be the most fascinating case history in food borne illness outbreaks since Jack-in-the-Box.  The same legal team is getting after them. Noting your comment yesterday that the Chipotle’s near you seemed to be suffering, I checked the one nearest me during last night’s dinner rush.  Usually, there is a nearly full parking lot and a line snaking out the door.  It appeared to be closed, only a few cars in the lot which might have been an overflow from the McDonald’s next door and no line.  I pulled in to see if the place was locked up.  It was open and empty.  The taco Bell across the street was doing a great business.




    On another subject, MNB reader Andy Casey wrote:

    No argument about labelling items containing GMOs, it makes sense to me. I have a niece with a Phd in something I can't pronounce who isn't terribly concerned about food GMOs so I don't typically give it much thought but the phrase "Partially produced with genetic engineering" sounds like Franken-food. Pretty sure we can do better than that.
    KC's View:

    Published on: January 11, 2016

    In this weekend's National Football League Wild Card games...

    Chiefs 30
    Texans 0

    Steelers 18
    Bengals 16

    Seahawks 10
    Vikings 9

    Packers 35
    Redskins 18
    KC's View:

    Published on: January 11, 2016

    Food Marketing Institute (FMI) recently launched its new campaign, “Everyone to the Table” for FMI Connect, food retail’s premier event. “Everyone to the Table” at a literal level, depicts the end-goal for retailers and suppliers to provide the inspiration and products that enable people to gather for meals.

    Figuratively, the proverbial table acts as a representation of what the event means for the industry – a platform for everyone to come together each year to prepare and stay abreast of new efficiencies, trends, innovations and consumer engagement strategies.

    Register & book housing!

    KC's View: