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    Published on: January 14, 2016

    Article Text. 

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

    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

    I was interested to read the other day that Roche Bros.' unique Brothers Marketplace in Medfield, Massachusetts, has won a commendation for best retail store design from the International Council of Shopping Centers. The retailer was cited for “excellence, innovation and creativity” in developing the store, which essentially sits in the middle of the town and has what appears to be an edited grocery selection designed to appeal to local shoppers, with a strong emphasis on fresh.

    I've been to the store, and like it a lot. But let me tell you, in a few words, what I liked most about it.

    When I walked into the store, not that long ago, I noticed that the company had installed what amounts to an old-fashioned soda fountain against one wall. I was a little surprised by its presence, since many companies probably would devote that kind of space to a program that might feature more products and generate more sales.

    But then I noticed something else. Sitting at the counter were three or four girls who clearly went to a local parochial high school - I recognized the plaid skirts from my old Catholic school days. (I didn't wear a plaid shirt, to be clear ... I wore a maroon blazer in elementary school, and then a jacket and tie in high school.) Those girls were all chatting even as they were looking at their smart phones, and they all had milk shakes or ice cream sodas on the counter in front of them.

    And at that moment, I realized that the counter was a certain kind of genius - because it was establishing the store as a kind of community center in a way that goes beyond where it is geographically located. Not just for parents, but also for their kids ... and that gives Roche Bros. an important competitive advantage.

    If you're going to operate bricks-and-mortar stores, they have to be stores with a difference. Sometimes it'll be a soda fountain, and often it will be something else. But it has to be an advantage with a difference.

    That's what Roche Bros. seems to have done ... and in my book, that's reason enough to give the company an award.

    That's what on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: January 14, 2016

    The Washington Post has an interesting story about the so-called "Amazon tax" - the name given to sales taxes that now are being collected by online retailers - and the impact that such taxes have on Amazon's sales.

    The story says that Ohio State University researchers have concluded that "when the so-called Amazon Tax was put in place, shoppers spent 8.3 percent less on products on Amazon after the tax went into effect."

    According to the Post, " The researchers described that dip in spending as a 'permanent decline' even though shoppers’ total tabs remained essentially unchanged. In other words, shoppers were shelling out the same amount overall on purchases on Amazon, but because a share of that tab was now going to taxes, the shopper was getting less product for their spending and Amazon was pulling in less revenue from that transaction ... That Amazon lost some sales dollars when it began charging the tax would seem to support what a chorus of retail industry voices have long contended: Amazon enjoyed a tailwind by not having to charge a sales tax in many places."

    The researchers also found that when a sales tax is imposed, "low-income households reduced the amount they spent on goods on Amazon by 12 percent, while high-income households pulled back by 9 percent. The researchers suggested this makes sense given that low-income shoppers generally tend to be the most price-sensitive.

    "The Amazon Tax had an especially chilling effect on big-ticket purchases that totaled more than $250, the study found. On these transactions, Amazon sales declined 11.4 percent once the tax was put in place. It seems fairly logical that a shopper might give more consideration to sales tax on a large purchase for which the dollar value of that figure is going to be relatively high."

    Amazon has not commented on the research, so there is no way to know whether the conclusions are accurate.

    But let's assume they are in the ballpark.

    I don't think there is any argument with the notion that a lack of sales taxes gave Amazon - and other online retailers - a tailwind that propelled them during the early days of their existence. When the sales tax issue started to get traction, I actually thought it was sort of fair for Amazon to have to collect them ... after all, the roads on which their trucks travel, and the utilities used by their facilities around the country, are supported by tax dollars. Fair is fair, and at a certain point a business like Amazon doesn't need the help anymore.

    I suspect there will be some who see these numbers as an indication that there is some sort of fundamental flaw in the Amazon business model, and that eventually Amazon will go away and its disruptive impact on the marketplace will dissipate.

    But I think that's the wrong conclusion.

    It was inevitable that Amazon would have to shift into new gears as it evolves and matures, and I think that its "ecosystem" approach to growth is symbolic of that. It wants to be the first, best choice for almost any product and for almost every consumer ... and it seems to me that Amazon is doing so quite effectively.

    Will there be bumps in the road and miscalculations? Of course. But I continue to believe that Amazon's broader "today is day one" culture, untethered to legacies but rather focused relentlessly on using customer data to help make it easier for shoppers to buy stuff, will allow it to continue to grow in sales, influence and, yes, even profits.

    We have a story below about how half of all boxes delivered to students at the University of Pennsylvania are from Amazon. With all due respect to the Ohio State researchers, I wonder how much time they spent in their campus mailroom. I suspect that if they had, it might've affected their conclusions, or at least colored their thinking. It might've been an Eye-Opener.

    I also thought about it, and I don't think my Amazon behavior has changed one iota since they started charging sales taxes in Connecticut. For me, just as for a lot of other people, Amazon was never just about price ...
    KC's View:

    Published on: January 14, 2016

    The Wall Street Journal reports that pure play e-grocer FreshDirect "is making a play for more last-minute shoppers" and is launching "a new service called FoodKick that it said will be able to deliver meals, ingredients and alcohol in as little as an hour after the order has been placed. FoodKick will be available in some Brooklyn neighborhoods and Queens’s Long Island City, with plans to expand to other parts of the city and possibly nationally, the company said."

    While FreshDirect has been in business since 2002 and has gradually been growing its geographic coverage beyond New York City, CEO Jason Ackerman tells the Journal that it has become clear that "the vast majority of the marketplace actually aren’t planners," and that FreshDirect would benefit from being able to cater to spontaneous shopping.

    According to the story, "The company will offer free FoodKick deliveries for the first 30 days, then $3.99 for delivery within a two-hour or longer window and $5.99 for one-hour delivery. Food and other merchandise will be priced similarly to what is on FreshDirect’s main site ... Customers can place orders through a mobile app and get items delivered to their current location, not just their home."

    “Different generations have different behaviors, so you have to constantly update yourself," says Ackerman.
    KC's View:
    I'm not saying that FreshDirect wouldn't have done this if Amazon had not brought one-hour delivery to New York City ... but I have to believe that the competition had to have some impact.

    I do think that some of the stuff that FreshDirect is offering makes a lot of sense. Here's another excerpt from the story...

    "FoodKick’s offerings will include an on-site sushi chef making rolls to order out of its warehouse in Williamsburg, and croissants from New York City bakery Mille-Feuille.

    "It will also sell suggested 'bundles,' like for taco night, in which customers can pick their rice, beans, protein and wraps, and cocktail kits, like a margarita one that comes with agave, limes, fresh-squeezed lime juice, sea salt and a recipe card. (The tequila is sold separately.) Other packages might be seasonally tailored, like a winter package of chicken soup, orange juice and cold medicine..."

    I love these ideas ... it means that FreshDirect and FoodKick are really in the business of selling solutions, not just food ... and that the company wants to be a resource for ideas, not just a source of product. Such an approach can be a game changer.

    Published on: January 14, 2016

    Publix Supermarkets Ed Crenshaw said yesterday that he plans to retire in April and move into the role of chairman of the board.

    The current chairman, Charlie Jenkins Jr., will become chairman emeritus.

    Crenshaw will be succeeded as CEO by company president Todd Jones.

    "I've been privileged to lead what could quite possibly be the best company in the world," Crenshaw said in a statement. "Company ownership provides our associates amazing opportunities and with that comes the responsibility to continue to grow our company and invest in each other. The time has come to turn over the reins, and I am pleased to have a leader with the experience of Todd who is ready to take the next step in his career. I am confident in his ability to lead our company into the future and to continue to make Publix a great place for both customers and associates."

    Crenshaw joined Publix 42 years ago, starting out as a store clerk.

    Jones joined Publix in 1980 ... also as a store clerk.

    The Orlando Sentinel notes that while Publix "is employee-owned, it has been run by a member of the founding Jenkins family since 1930. Crenshaw is a cousin of the Jenkins family, while Jones is not related."
    KC's View:
    Between April and this time next year, expect Crenshaw to receive a series of awards and accolades ... all well-deserved for a lifetime of service to one of the industry's standards for retail excellence.

    Published on: January 14, 2016

    Advertising Age reports this morning that Chipotle plans to launch a "fresh marketing campaign," presumably designed to reinforce the safety and quality of its fresh food, sometime after a February 8 company meeting. According to the story, "a variety of efforts will be used, including reaching out to the chain's most loyal customers with a detailed story about what happened. In December, the company said its plans would include more traditional marketing than it has done before and increased use of direct mail, which could include offers such as a buy-one, get-one coupon."

    Chipotle is looking to come back from a series of food safety problems across the country that have brought into question the sourcing of its fresh products and its in-store processes. The result has been a dramatic decrease in sales and the challenge of reviving a brand that was built on the image of "food with integrity."

    The company meeting reportedly will set the stage for the company's efforts, and all of Chipotle's stores will be closed so that all employees can watch the proceedings.

    The story says that Chipotle previously had said that "it would wait for a signal from the Centers for Disease Control that its investigation had concluded before ramping up its marketing and other outreach. Now, it appears more prepared to move on without that green light, though it is hopeful that the CDC will make an announcement 'relatively soon'."
    KC's View:
    It will be interesting to see the tone that Chipotle strikes in making its case to the consuming public; the Ad Age piece suggests that they will try to strike a tone of humility rather than directly addressing the food safety issues that have caused it enormous public relations and financial problems.

    I'm not smart enough to know how they should play it, but I am pretty sure that they should be careful not to be too cute by half. If it feels like they are being anything less that forthright and transparent, my sense is that they will undercut their own efforts.

    That said ... I do think Chipotle has a major advantage in its extremely strong brand image and persistent consumer loyalty. I can't tell you how many times in the last few weeks that my kids have asked me whether it is okay yet for them to return; a friend told me the other day they've started to notice Chipotle parking lots with more cars in them. So I think that people want to return to Chipotle ... they just want to be given a reason.

    Published on: January 14, 2016

    The Associated Press reports that the US Food and Drug Administration (FDA) has approved for human consumption "a potato genetically engineered to resist the pathogen that caused the Irish potato famine is as safe as any other potato on the market"

    The FDA said in a letter to J.R. Simplot Co. that " the potato isn't substantially different in composition or safety from other products already on the market, and it doesn't raise any issues that would require the agency to do more stringent premarket vetting."

    The story says that the potato still has to be approved by the US Environmental Protection Agency (EPA), which is expected to happen before the end of the year. The new potato then would be available for sale sometime next year, a Simplot spokesman says.
    KC's View:
    There is a percentage of the population that does not believe that "not substantially different" is not the same thing as "the same thing." They'll be pushing for labeling of these potatoes ... and the debate will persist.

    Published on: January 14, 2016

    The Philadelphia Inquirer reports that "Amazon is expanding its campus pickup program to the University of Pennsylvania. The online retailer plans to open a staffed location on Penn's University City campus this spring, where students can retrieve or return items purchased from Amazon ... Members of the company's Amazon Student and Prime programs will get free same-day pickup at the location for orders placed by noon and free one-day pickup for items ordered by 10 p.m., the company said."

    The story notes that "similar pickup spots are already operating at or near four other colleges, with additional locations planned for two University of California campuses later this year."
    KC's View:
    There was another interesting observation in the story - that almost half of all packages delivered to students at the University of Pennsylvania are from Amazon. That's an extraordinary number...and it is a number that will continue to exist, and probably even will grow, even after these students leave school and begin lives.

    Published on: January 14, 2016

    Mark Bittman continues his transition from New York Times food columnist to entrepreneur, as he works as chief innovation officer for startup Purple Carrot, described as "a meal kit delivery service for vegans," he's been chronicling his experiences for Fast Company. And we've been linking to them here on MNB.

    The fifth column in the series is out, entitled "Why Starting A Company Is (Literally) Like Rolling Dice: Learning (And Losing At) Backgammon Is Shaping The Way I Think About My Business."

    An excerpt:

    "In backgammon, even as a rank novice, you can spend a few hours a week studying and would, assuming average intelligence, become marginally competent in a hurry. Or at least you wouldn’t constantly embarrass yourself, as I’ve done.

    "But in startups, even in evidently successful ones, there are no such guarantees, and there is not even an illusion of competence. No matter how much work I do, it seems that just about everything is likely to make me feel like an absolute nincompoop. And no, I don’t think that this is necessarily because I’m a rank novice, because by definition that would describe almost everyone involved in startups (and success at one startup far from guarantees success at another, though of course virtually unlimited money helps).

    "As in backgammon, the moves in startups are not immediately obvious. And, like backgammon, the situation changes all the time and you have to improvise constantly: One day the priority is funding, the next day it’s hiring, the next day it’s real estate. And so on. Experience and even talent in one arena guarantees neither in any other; in fact, real experience in one field almost guarantees a lack of experience in almost every other (being good at backgammon doesn’t mean you’re good at chess, either)."

    It is a great metaphor (which I particularly understand because no matter how much I play backgammon, I'm never able to beat either my wife or son, who have been playing much longer than I), and you can read more about it here.
    KC's View:

    Published on: January 14, 2016

    • In Minnesota, the Star Tribune reports that Target says that customers are "responding well" to its efforts to offer a healthier food profile by giving better placement at checkout and on endcaps to better-for-you options.

    It is, however, a balance. “We’re testing the envelope to see how far we can push it without annoying our guests,” says Christina Hennington, Target's senior vice president of merchandising. “They don’t want us to tell them how to live their lives.”

    The test is being done in selected stores, with no announced plans yet for a national rollout.

    Reuters reports this morning that Tesco had a better-than-expected end-of-year holiday season, reporting that same-store sales were up 1.3 percent in the six weeks ending January 9; analysts had expected a sales decline for the period. According to the story, "Lower prices, 4,000 additional staff and a strong offering over Christmas meant volumes rose by 3.5 percent and transactions by 3.4 percent as more customers chose to shop more regularly at the supermarket which had previously dominated the British high street for decades."

    It doesn't mean that all Tesco's news was good, though. UK same-store sales for the quarter ending November 28 were down 1.5 percent.

    Reuters reports that Sears Holdings plans to close an unspecified number of its Sears and Kmart stores "as part of an annual review of its store network and ongoing efforts by the struggling retailer to cut costs." The company currently owns 952 Kmart stores and 735 Sears stores, and a spokesman described the closures as representing "a very small percentage" of the fleet.
    KC's View:

    Published on: January 14, 2016

    Reports out of the UK this morning say that British actor Alan Rickman has passed away from cancer at the age of 69.

    Rickman memorably played villains in movies like Die Hard and Quigley Down Under, and gained much acclaim for his portrayal of Professor Snape in the Harry Potter films. He also played, to great effect, a married man tempted by his secretary's charms in Love Actually, and a British wine expert shocked to find out that a California chardonnay can be as good - or better - than a French white wine - in Bottle Shock.
    KC's View:

    Published on: January 14, 2016

    ...will return.
    KC's View:

    Published on: January 14, 2016

    The 2015 Academy Award nominations are out this morning, and here are the nominees in the major categories...

    Best Picture
    The Big Short
    Bridge of Spies
    Mad Max: Fury Road
    The Martian
    The Revenant

    Best Actor
    Bryan Cranston, Trumbo
    Matt Damon, The Martian
    Leonardo DiCaprio, The Revenant
    Michael Fassbender, Steve Jobs
    Eddie Redmayne, The Danish Girl

    Best Actress
    Cate Blanchett, Carol
    Brie Larson, Room
    Jennifer Lawrence, Joy
    Charlotte Rampling, 45 Years
    Saoirse Ronan, Brooklyn

    Best Supporting Actor
    Christian Bale, The Big Short
    Tom Hardy, The Revenant
    Mark Ruffalo, Spotlight
    Mark Rylance, Bridge of Spies
    Sylvester Stallone, Creed

    Best Supporting Actress
    Jennifer Jason Leigh, The Hateful Eight
    Rooney Mara, Carol
    Rachel McAdams, Spotlight
    Alicia Vikander, The Danish Girl
    Kate Winslet, Steve Jobs

    Best Director
    Lenny Abrahamson, Room
    Alejandro G. Inarritu, The Reventant
    Tom McCarthy, Spotlight
    Adam McKay, The Big Short
    George Miller, Mad Max: Fury Road

    Best Original Screenplay
    Bridge of Spies
    Ex Machina
    Inside Out
    Straight Outta Compton

    Best Adapted Screenplay
    The Big Short
    The Martian

    The Oscars will be handed out on Sunday, February 28.
    KC's View: