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    Published on: January 13, 2016

    Content Guy's Note: The goal of "The Innovation Conversation" since we started it last year has been to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    This week, we want to do something a little different ... and I'll let Tom explain.

    Tom Furphy: Last week a team from CEP and Tadpole Ventures traveled to Las Vegas for the annual Consumer Electronics Show (CES). CES enables us to view first-hand the latest innovations in all things electronic and digital. We walk the show, often with our CPG and retail clients, with our eyes open for anything that might impact the future of marketing, consumer engagement and shopping.

    The main themes we observed, some of which we’ve covered in past Innovation Conversations and will continue to cover into the future, include Internet of Things, Wearables for Connected/Quantified Self, Glass and Interactive Retail Displays, Virtual and Augmented Reality, Driverless Cars, 3D Printing and Drones. Each of these areas had dozens of companies exhibiting. While many of the technologies are still a little ahead of the market – unless you are the type that’s ready now for your refrigerator to take a picture of its contents to help you plan your shopping trip – it is a great place to observe the possibilities and open your mind to the practical business applications of these technologies.

    We always bring college interns with us to provide them a great learning experience and to help us with logistics and information gathering. This year, we asked our three interns from the Class of 2016 at Babson College each to write about an innovation that they observed, that they feel will have a significant impact on marketing and/or shopping. The assignment was open-ended and designed to give us the fresh perspective of three young adults who are unencumbered with traditional business paradigms.

    Here’s what we received...

    From Kelsey Choi, of Braintree, Massachusetts, who is pursuing a BS degree in Business Management, with concentrations in IT Management and Technology, Entrepreneurship & Design (TED):

    Augmented reality will have a significant impact on shopping and marketing. Today, companies like Sony are creating products such as augmented reality glasses that can be connected to devices such as phones or tablets for a variety of uses. The glasses look similar to sunglasses with a thicker frame as the technology and the augmented reality display on the lens are built into the sides of the frame.

    In terms of use, Sony’s augmented reality glasses can allow one to look at a show or movie and get captions in front of the user’s eyes, on the lens of the glasses. The glasses can also be used with objects in motion. Sony is developing augmented reality glasses for drone operators, so when the user looks at the drone he can see details such as speed, battery life, and bits of information related to the drone, as it is flying and in motion.

    This can be applied in the world of shopping. In the future, I can see this technology being used in grocery shopping, where a shopper can look at the grocery object or price label and see if there are promotions, basic allergy facts, nutrition facts of the shopper’s choosing. On the other end of this is the retailer. The retailer can use this technology to see stock levels in inventory and expiration dates through his or her glasses as he or she looks and walks down the warehouse without having to pull up a computer. If more details are needed, the retailer or shopper can look down at their connected smartphone or tablet to read additional information.

    Augmented reality is a technology that can be applied over multiple industries but will have a significant impact in shopping. This will change the way product information is displayed and distributed to the customer and provide a new method of inventory management. Augmented reality can observe current habits and change the way shoppers and retailers behave. As the technology becomes further developed and accessible in the consumer market, it will be an important innovation for years to come.

    Tom's POV: Like Kelsey, I agree that augmented and virtual reality will impact the future of retail and marketing. It enables the store shelf to go anywhere. The immersive experience advantage that brick and mortar has owned over online retailers will shrink. Will retailers take advantage of this? And Kelsey’s points on the potential impact to productivity on the store and/warehouse environment are quite intriguing.

    From Laura Garza, of Monterrey, Mexico, who is pursuing a BS degree in Business Management; Concentration in Finance:

    Traveling to Las Vegas for the 2016 Consumer Electronics Show was a unique learning experience. During the opening ceremony, Gary Shapiro, CEO of the Consumer Electronics Association, put a strong emphasis on the industry target of saving resources and enhancing connectivity between users and devices. It was interesting to observe how this target was approached differently through the innovation and creation of distinct products and technology and the impact that these will have on manufacturing and retail.

    I found 3D printing to be specifically relevant given the fact that it addresses resource optimization and connectivity by expanding and facilitating the accessibility of products across multiple sectors. Mass customization is enabled because different products with different sizes and materials can now be produced from a single printer.

    Body Systems was a prominent player in the show particularly because of its creative involvement in partnerships with companies pertaining to industries ranging from healthcare to fashion and food. Among them were partnerships with New Balance on the design of a 3D printed running shoe, PQ for a customized eye wear line, Invisalign for dental care, and the creation of the Culinary Lab and the ChefJet 3D food printer. These partnerships not only allowed Body Systems to expand its consumer base, but served as a marketing tool in which larger brands like New Balance and Invisalign promote and educate users on 3D printing.

    Additionally, by encompassing multiple sectors, 3D printing is continuously changing the way that different products are created and delivered through the alleviation of labor and transaction costs. The effect on retail is evident because products can be produced at lower costs and delivered more effectively and in more optimal batches. It was incredible to see a concept that was once unheard of develop and continue to transform the dynamic of the workforce, manufacturing and retail on such a large scale.

    Tom’s POV: 3D printing may be just the technological leap that will enable product customization on a mass scale. Don’t merely think of it as printing. The only similarity it has with printing is that it takes data from a computer and deploys material in a way that creates something. Where traditional printing is ink on paper, in the future it could be any number of materials or ingredients coming together to create something based upon a formula. Think 3D production instead of 3D printing.

    From Jake Shaver, of Huntington Beach, California, who recently graduated with a BS degree in Business Management, with concentrations in Strategic Management and Economics:

    One of the most exciting innovations (or rather, evolution of one) that I saw at CES 2016 was the advancements made in driverless technology. I see autonomous vehicles as having a huge impact on consumer spending given their potential to drive e-commerce.

    With the driver no longer having to spend all of their attention on navigating their vehicle, this opens up a competition for the rider(s)’ attention. I believe this is why you see several large tech companies (Google and Apple, for example) diving into the space as riders will seek a new means of occupying their attention. Currently, the de-facto source will likely be internet related, given that millennials (arguably the first major demographic who will be purchasing when fully autonomous are ready) already spend nearly 18 hours a day online. Shopping is the number two most common online activity, so with an extra hour and a half per day (average time spent driving) available to browsing, it stands to reason that e-commerce will rise with the adoption of electric vehicles.

    Tom’s POV: I have always felt that driverless vehicles were going to have a significant impact on eCommerce, but on the delivery side. Once you take the labor cost of a driver out of the equation, last-mile delivery becomes much more economical.

    However, I had not thought about it from Jake’s perspective of the time that it will free up. When consumers open up an additional hour or more of their day to spend on their devices, it stands to reason that shopping across all categories will increase. In the food business, shoppers can solve the question of what’s for dinner tonight on their way home. They can order the solution, swing by and pick it up or have it delivered, whether it’s ingredients or complete meals.

    Content Guy's Note: We will expand on all of these emerging and developing technologies in upcoming Innovation Conversations. Thanks to Kelsey, Laura and Jake for sharing their thoughts.

    And, if any reader wants to get in touch with any of them, shoot me an email and I'll make that happen. They're really smart, and are worth getting connected to.

    KC's View:

    Published on: January 13, 2016

    The Oregonian has a story about how New Seasons, the Portland-based supermarket chain, is about to test new barcode technology that actually is invisible - it embeds barcodes all over product packaging, but is not visible to the human eye.

    The test initially will be done primarily with private label products, with the goal being to reduce the amount of time it takes top check out at the front end. Reducing the time it takes to find the barcode on a product may result in the elimination of just seconds, but the theory is that if you add up those seconds and multiply the number by total number pf checkouts and transactions, the number should end up being considerable.

    The technology also has an Oregon pedigree - it was developed by Beaverton-based Digimarc Corp.

    According to the story, "Digimarc says the new technology will prevent fraud by stopping consumers from pasting one barcode over another, and will enable allow for more attractive packaging that doesn't include barcodes at all."
    KC's View:
    And if you can leave off barcodes, suddenly you have room for even greater transparency about ingredients. It also suggests that maybe we eventually could have invisible QR codes, which will make it even easier for consumers to access more comprehensive information about the products they're buying.

    Fascinating stuff. And I love the idea that it is coming out of my soon-to-be-adopted home state...

    Published on: January 13, 2016

    The Dallas Morning News reports that even as it wrestles to contain a new listeria discovery at one of its plants, Blue Bell Creameries is seeking to reassure consumers that its ice cream is safe. The company sent a statement to consumers earlier this week saying that they "can be confident in our ice cream because of all the steps we have taken to ensure a safe product. Our enhanced testing program confirms that these procedures are working."

    The story notes that "Blue Bell is in in the midst of returning its products to stores after it recalled its ice cream and halted sales last year due to listeria contamination at some plants. On Friday, the Brenham (Texas)-based company said it found locations at one of its three plants where listeria might be present."

    The story notes that Blue Bell informed Texas officials that traces of listeria had been found in non-food areas such as drains and and floors.

    Blue Bell says that enhanced testing procedures identify "suspicious areas as an early warning system so we can take steps to extensively clean and sanitize the areas, refine our procedures or make additional physical enhancements in our facilities."

    It was reported earlier this month that the US Department of Justice is investigating Blue Bell Creameries management for how it handled the 2015 outbreak, and whether it had ignored listeria issues that went back several years.
    KC's View:
    Not sure why, but I can't shake the gut feeling that Blue Bell's problems may just be beginning. Maybe it's because I, personally, wouldn't want Blue Bell ice cream anywhere near my gut.

    Then again, I have no brand loyalty to Blue Bell ... which makes me very different from a lot of other people. But new revelations could test even that high degree of loyalty.

    Published on: January 13, 2016

    Fortune has a piece about Dave Vos, described as the head of Google X’s Project Wing experimental drone delivery program, in which he says that "drones will deliver toothbrushes, business supplies, and coffee beans within the next one to three years if the private sector and government work hand in hand." He also tells an aviation conference that "drones will be safer than general aviation and that they will operate quietly enough so as not to disturb anyone."

    Vos says that Google has been developing a drone program for three years, with an emphasis that is much the same as programs initiated by the likes of Amazon and FedEx - moving things from one place to another quickly and efficiently. And he points to evolving Federal Aviation Administration (FAA) rules, developed with the input of drone developers, as an example of how government and private industry can work together.

    Meanwhile, the Associated Press has a story pointing to increased consumer acceptance of drone technology.

    While there are regulatory and technological issues that need to be considered, "none of those obstacles are slowing down an industry that appears to be in full lift-off," the AP writes. "The Consumer Technology Association estimates that U.S. consumer drone spending will more than double to $953 million next year. ABI Research believes the global market for drones will hit $8.4 billion in 2018, with users ranging from the military and oil companies to farmers, journalists, and backyard tinkerers.

    "As drone capabilities continue to grow, drones may become a mass-market product for average consumers in about three years, says Patrick Moorhead, principal analyst of research firm Moor Insights & Strategy."
    KC's View:
    The thing about companies like Google is that they don't think in increments ... they like to take moon shots. Vos told the aviation conference, according to Fortune that Google already is considering ideas that go "beyond drones merely delivering routine household items. The technology is progressing to the point that giant drones could soon shuttle people like airborne taxis."

    Yikes. Cue the "Jetsons" theme...

    Published on: January 13, 2016

    The Tampa Bay Times reports that Albertsons has decided to convert its three remaining stores in Florida - in Largo, Altamonte Springs and Fort Lauderdale - to its Safeway, and will remodel the three units this year.

    "When complete, our new Safeway locations will have contemporary decor packages, new digital signs and menu boards, a natural/organic zone and living well products," Sidney Hopper, president of Albertsons' Houston division, tells the Times.
    KC's View:

    Published on: January 13, 2016

    • The Financial Times reports that new data from Kantar Worldpanel reveals that Aldi's UK sales were up 11.5 percent in December, a clear message that the discounter's growth continues to outpace that of the country's four major grocers.

    The FT story notes that during the last 12 weeks of the year, Aldi's sales were up 13.3 percent, and discounter Lidl saw its sales go up even more, by 18.5 percent.

    Meanwhile, the story says, "Tesco’s share of the market fell from 29.1 per cent to 28.3 per cent, while Walmart-owned Asda dropped from 16.8 per cent to 16.2 per cent. Sainsbury’s extended its lead over Asda after its share rose from 16.9 per cent to 17 per cent. Morrisons ... slipped from 11.3 per cent to 11 per cent."

    However, FT points to a possible silver lining: "Aldi’s sales growth over Christmas failed to exceed the rate at which it has been opening new stores, leading analysts to suggest the 'tide may be turning' in its battle with larger rivals."

    Reuters reports that "Visa Inc said several big merchants including Starbucks Corp and Walgreens Boots Alliance Inc have started accepting its digital payments service, Visa Checkout. Visa Checkout, launched in July 2014, allows shoppers to store their payment information and make payments without leaving the merchant's website."

    Best Buy, Staples and Gap already take Visa Checkout; will begin supporting Visa Checkout this year, the company said.

    • Discounter Aldi yesterday said that it is making a commitment to "better eating," saying that it will begin offering an increased selection of organics as well as checkout lanes with healthier options, where rather than chocolates and candies, consumers will find items like single serve nuts and trail mixes, dried fruits and an assortment of granola bars.

    "By introducing Healthier Checklanes and through a number of other initiatives, we are doing our part to remove temptation at checkout and stocking stores with even more nutritious options," says Jason Hart, Aldi's CEO.

    • The Times-Tribune reports that Sheetz Corp. "is offering sweeping pay raises to its store-level employees. Almost all workers will receive pay raises in 2016, the company said Tuesday in a statement. Effective this month, the starting wage is $10 per hour for sales associates, $13 for shift supervisors and $16 for assistant managers."

    The story notes that Sheetz "is seeking 8,000 new workers and moving to more full-time positions."
    KC's View:

    Published on: January 13, 2016

    • Kroger announced yesterday that Lynn Gust, the highly respected president of its Fred Meyer division, which has stores in Alaska, Idaho, Oregon and Washington, has announced his retirement after 45 years with the company.

    Gust will be succeeded by Jeff Burt, who has been running the company's Central division.

    A replacement for Burt has not yet been named.

    • Hy-Vee announced that Jay Marshall, the company's executive vice president and chief retail officer, has been named COO of the company. Marshall will retain the executive vice president title as well, and will retain operations and store development responsibilities while adding merchandising to his portfolio.
    KC's View:

    Published on: January 13, 2016

    The annual National Retail Federation (NRF) "Big Show" is scheduled to take place next week, from January 17- 20, in New York City's Jacob Javits Convention Center ... and I'm planning to spend some time there next Monday, January 18.

    If there are any MNB readers who'd like to get together, I'll be camping out from 1-3 pm at the MyWebGrocer booth, #4452 ... I'll have some copies of my books to give away, and I'm always happy to catch up with members of the MNB community. Hope to see you there...
    KC's View:

    Published on: January 13, 2016

    Monte Irvin died on Monday at age 96 ... leaving behind a legacy as one of the earliest and most accomplished black players in Major League Baseball, though one who didn't play in the majors until he was 30 and past his peak. Irvin joined the New York Giants in 1949, two years after Jackie Robinson broke the color barrier with the Brooklyn Dodgers.

    Irvin was elected to the Baseball Hall of Fame in 1973, after the rules were changed to allow the induction of players in the Negro leagues who excelled before being allowed to play in the majors.
    KC's View:
    It is worth remembering that it is less than 70 years since Jackie Robinson, with the help of Branch Rickey, first took the field for the Dodgers ... that's an extraordinarily short period of time. And, by the way, while Robinson played for the Dodgers in 1947, it was 1959 before every team in the majors was integrated.

    I've always felt that Robinson was one of the most important people - not just athletes - of the 20th century. And almost as important are people like Irvin and Larry Doby and Hank Thompson and Ernie Banks and Minnie Minoso who followed close behind and broke down their own barriers.

    Published on: January 13, 2016

    We took note the other day of an Eater report that "Danny Meyer’s Shake Shack, the upscale burger chain that has staked its success on the willingness of fast food consumers to spend a few dollars more for higher quality ingredients and better-compensated workers, has made good on its promise to hike prices in 2016, raising menu items anywhere from a couple of pennies to a quarter. The increases will help the billion dollar company continue its policy of paying staffers above local minimum wages, which are rising to $10 and beyond throughout the country, and which are pushing up food and beverage prices at restaurants everywhere."

    MNB reader Walter Peaseley responded:

    Where did the people who are calling for higher wages think the money was coming?

    These positions are stepping stones. (High school, college, in between jobs or to get out of the house when retired.) The people in management are a different story and make more than minimum wage.

    I'm not sure that I heard anyone objecting to the increases.

    But let's be clear. Not all these jobs are stepping-stones. And even people in high school and college are seeing their expenses go up even as wages remain stagnant.

    There's no way that students today can do what I was able to do - work in retail and pay my own way through private high school and college. Tuitions were a lot lower in the seventies. But they still have car payments, have to buy clothes, food, and, of course, computer equipment ... and expecting them to survive on the minimum wage may be unreasonable.

    And remember ... Meyer is raising the wages himself. This isn't government-mandated.

    So what's the problem?

    Regarding the Chobani-Dannon contretemps over ingredients and which ones are "fit for consumption," MNB reader Jerome Schindler wrote:

    Chobani has responded by "asking that a New York U.S. District Court declare that its campaign is neither false or misleading."

    As the saying goes, there are two chances that a U.S. District Court will agree to render any such declaration - slim and none. Dannon will have to bring a Lanham Act suit.  That will take a couple of years and help a gaggle of lawyers send their kids to college.

    Personally I thought the Chobani ad was misleading beginning with the allegation that there are things in Dannon Yogurt that are "bad stuff".

    In regard to potassium sorbate, Chobani says "That stuff is used to kill bugs."  When consumers read "bugs" they probably are thinking "insects" and therefore think potassium sorbate is an insecticide.  Potassium sorbate inhibits the growth of mold.*  Mold is a fungus.  

    Chobani then picks on Sucralose stating "that stuff has chlorine added to it."  When consumers think of chlorine they probably think of bleach.
    Some, maybe all, of the ingredients in Chobani also contain the element chlorine.

    Looking online I see the following ingredient list for Chobani Simply 100 yogurt: Nonfat Yogurt (Cultured Pasteurized Nonfat Milk, Live and Active Cultures: S. Thermophilus, L. Bulgaricus, L. Acidophilus, Bifidus and L. Casei), Chicory Root Fiber, Strawberries, Water, Banana Puree, Evaporated Cane Juice, Natural Flavors, Pectin, Locust Bean Gum, Monkfruit Extract, Fruit And Vegetable Juice concentrate (For Color), Stevia Leaf Extract, Lemon Juice Concentrate.

    I do not question the safety of the "natural" sweeteners monkfruit extract and stevia leaf extract but neither has been as extensively studied for safety as has Sucralose.

    Chobani uses the term "cane juice extract" to hide the fact that they add sugar.   FDA has repeatedly stated that the term evaporated cane juice is misleading.  Evaporated cane extract is just a variant of that term.

    As the saying goes, people who live in glass houses shouldn't throw stones.

    Wow. I took chemistry in 1971 and barely passed it then.

    Another MNB reader wrote:

    I haven’t been in the food business for a while, but my product being described as “fit for consumption” in this day and age doesn’t sound like a ringing endorsement.

    Speaking of fit for consumption, MNB user Ralph Madden had some thoughts about Blue Bell's new listeria problems:

    Being a native Kentuckian raised on a dairy farm, I'm somewhat familiar with problems in handling dairy. I don't condone Blue Bell's apparent lack of precautionary measures but do applaud their corrective actions. I just hope they aren't trivializing this latest discovery.

    But, when it comes to their ice cream, I have to's a winner!

    KC's View:

    Published on: January 13, 2016

    The New York Times reports that a majority of National Football League (NFL) owners have voted to allow the St. Louis Rams to return to Los Angeles, where the team played before moving to St. Louis.

    "Allowed" may not exactly be the right word, however. The Rams will pay the league "a relocation fee of $650 million, stretched out over about 20 years," the Times writes.

    The Rams expect to play in the Los Angeles Coliseum while a new stadium, in Inglewood, is built.

    Three teams were vying to move to Los Angeles. The agreement reached by the owners apparently will allow the San Diego Chargers also to eventually move to LA and join the Rams in the new facility.

    The Oakland Raiders will not be able to move to LA, though they may be allowed to move to another Northern California location, possibly sharing a stadium with the San Francisco 49ers.

    In each of the three cases, owners of the teams wanted to move because they could not generate enough public support for new facilities that they say they need.

    And here's the irony. The Times writes that "Los Angeles is merely the latest return destination for the N.F.L.; the league has put a team back in every city it has left in the past few decades, including Baltimore, Cleveland, Houston, Oakland and St. Louis, and generally succeeded."
    KC's View:
    Since it gets hundreds of millions of dollars per move, letting teams play musical cities is only profitable for the NFL. In this case, it is a win-win decision, since Los Angeles is the nation's second largest media market.