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    Published on: January 26, 2016

    by Michael Sansolo

    MIAMI BEACH -- Let’s say you have a choice. You have a major bandage on your body and your doctor says he can pull it off really fast or really slowly. Which method do you prefer?

    For the vast majority of us the answer is simple. In fact it’s even a cliché for decision-making.

    Dan Ariely, a behavioral scientist and one of the first day speakers at the Food Marketing Institute (FMI) Midwinter Executive Conference here, knows first hand the bandage choice because of an accident he endured when younger. Like most of us he chose to rip it quickly and was wrong. As Ariely has learned from years of study, the problem with pain isn’t the duration of the event; it’s the intensity.

    In other words, pulling slowly and carefully is actually a much less painful strategy.

    Ariely offered that metaphor as he explained the issues that shoppers face daily and the wrong decisions they often make. He explained how marketers too often listen to reasoned comments from consumers (i.e. about eating healthier or doing more exercise) while they behave more emotionally, often out of habit. And he suggested that marketers need to seriously rethink their approach to influencing shopper decision-making in order to achieve better - and presumably more profitable - outcomes.

    The notion of rethinking old methods was a common theme through most of the first morning of the Midwinter conference. It began with FMI President Leslie Sarasin discussing challenges facing both the industry and FMI itself. Sarasin said FMI needs to find new approaches to serving its members, the industry, including working with other associations when appropriate.

    Danny Meyer, founder of the Union Square Hospitality Group (which is well known for a number of high-end restaurants and, most recently, for Shake Shack) addressed the notion of new perspectives in the world of food, reflecting on the many challenges facing the food service and retail industries.

    Meyer said the food industry needs to understand the importance of experience in all parts of customer choices. Experiences include everything from getting customers better tasting food to making sure personal connections are always reinforced.

    But Meyer added that technology challenges much of that and leaders need to be open to rethinking what customers do and don’t value. For example, Meyer said he originally shied away from letting the Open Table app handle reservations for his fancier restaurants, as he believed his company’s reservations people provided a superior experience. However, he quickly learned that the convenience of Open Table mattered far more to shoppers.

    Meyer said the food experience comes though a variety of operations, even quick serve stops like his Shake Shack chain. Customers there are showing a willingness to pay more for good food - burgers and shakes - without wanting the extra cost of full-service.

    Supermarkets can capitalize on similar needs, but only if shoppers come to feel the store where they shop is essential to their lives through the experience it delivers. If the store is simply another me-too choice, shoppers can easily drift away. Even simple transactions such as those at the front end or the deli counter can be made special with personal attention, eye contact and quick banter.

    The Monday program also featured industry panels including one on the future of food. Panel members talked about the importance of food science including genetically modified organisms to feed a global population, while recognizing the need to educate and communicate to shoppers how scientific advances impact them.

    As James McCann of Ahold USA said, “Our job is to provide (customers) the ability to make choices.”

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: January 26, 2016

    by Kevin Coupe

    I don't read Popular Science very much, but one MNB user who does sent me a story about a new strain of rice that - go figure - helps fight global warming.

    According to the story, the planet's rice paddies "produce as much as 17 percent of the world’s total methane emissions." That's not good.

    So, the story says, "Christer Jansson, a plant biochemist at the Pacific Northwest National Laboratory, spent the past 10 years developing SUSIBA2, a genetically modified rice plant that emits almost no methane. Splicing a single barley gene into common rice, his team found, changed the way the plant handles photosynthesis: Instead of sending carbon to the roots, to feed the bacteria that produce methane, the plant directs it toward the grain and leaves, increasing the starch level and yield."

    Wow. Not only am I impressed by all that information, but the degree to which I don't understand it makes me wish I'd taken some sort of science class since 1971, which was the last time I was in a science classroom.

    Of course, it also raises the labeling issue ... but if I see rice that says, "genetically modified to fight global warming," I'm buying it.

    That's what I call an Eye-Opener.

    P.S. What's the over/under on when someone points to this week's snowstorm in the eastern US as proof positive that the world isn't really getting warmer? Just asking...
    KC's View:

    Published on: January 26, 2016

    Marketing Daily has an interview with Forrester e-commerce expert Sucharita Mulpuru in which she assesses the current state of online shopping. Among her insights:

    • "E-commerce is growing at a low double-digit rate, and has been for several years, and I don’t anticipate that changing. Consumers now prefer to buy more often, and from more categories. And we continue to see the shift from desktop to mobile, in terms of traffic and even sales. I don’t think that’s going to change. And you’ll see Amazon continue to dominate the e-commerce landscape."

    • "I think companies have to look at Amazon the same way we all saw Wal-Mart back in the mid- 1990s. It seemed unbeatable. You just weather the storm and wait for the next big disruption, because it is so dominant in everything it does. If you are in that space, you’re likely facing the most competitive headwinds you have ever seen. Jet.com is out trying to compete, but it’s just a little start-up."

    • "To me, the bigger question is what happens to Amazon next ... Amazon is incredibly innovative, and there are many high expectations. A lot of its biggest successes have been outside retail, in cloud, for example, or advertising, or hardware, like the Echo and Kindle. These businesses are more lucrative than retail, and growing faster. I think Amazon is ultimately going to find more success in these other businesses, and that is the path for the future. Gradually, we may start to see that Amazon doesn’t need retail as much as it has in the past. It can start changing the business model, and raise prices, so it becomes a little less competitive. And that may finally give other retailers some breathing room."

    And finally, Mulpuru says that the best bricks-and-mortar retailers competing with Amazon and its e-commerce brethren "are focusing on the customer experience first. If collecting and using personalized data can enhance that initiative, that’s fabulous. Sending alerts that packages are ready for pickup, for example, is more focused on the customers’ needs. Retailers should ask themselves, 'What is useful to our customers?' rather than focusing on what is easiest for them."
    KC's View:
    I think the observations about where Amazon goes next are sort of interesting ... they reflect those made by an MNB reader who also isn't convinced that retailing is where Amazon is likely to make its bones long-term. I'm not sure I agree ...but we'll see.

    I do have to say that the observation about retailers needing to focus on what is most relevant and useful for customers as opposed to what is easiest for them is absolutely right on. It is the same observation we make around here all the time - that companies focusing on efficiency at the expense of effectiveness are going down the wrong path, one that will only lead to irrelevance.

    Published on: January 26, 2016

    The Associated Press reports that the Maine State Senate is about to begin debating a possible change in the law passed in January 2014 that would require labels on foods containing genetically modified organisms.

    That law only kicks in if four states contiguous to Maine pass similar legislation. But now some lawmakers want to get rid of that condition. Here's how the story frames the issue:

    "Supporters of labeling foods made with genetically modified organisms, or GMOs, are divided on whether the trigger should stay. Some label supporters, and some opponents, argue that repealing the trigger would leave Maine with different rules than nearby states, and local grocers on the hook for the cost of the labels. Others say the state should have the right to act on the labels on its own.

    "Still others on both sides have said the state should wait to see what federal lawmakers do with the issue, since industry-supported legislation that is pending U.S. Senate approval would pre-empt any state labeling requirements."
    KC's View:
    Funny. Just a few weeks ago, I was perfectly willing to jump off the pro-GMO labeling bandwagon and accept the idea that it is simply more expedient to allow products without GMOs to be labeled that way. But since then, the worm seems to have turned ... Campbell Soup has come out in favor of GMO labeling, and the pro-GMO labeling movement seems to have gained more traction.

    Maybe it is a matter of expediency be damned.

    Published on: January 26, 2016

    Time has a story about what happens when Walmart comes to town, puts a lot of smaller businesses out of business, and then - as it announced last week in 154 cases in the US - decides to close up shop.

    "What’ll happen now is that many of these towns will be left without a grocery store or pharmacy, frustrating residents with inconvenience and lower property values. For some towns, which often skew elderly, the nearest option for essentials may soon be 50 or so miles away ... It’s not just a local grocery store that was ruined, however. Walmart’s decision to storm into rural areas and destroy the competition before abruptly pulling up shop has arguably decimated entire towns.

    "To add insult to injury, some of these towns had actually tried to block Walmart from opening in the first place."
    KC's View:
    One of the points that the story makes that I think is sort of interesting is that this turn of events may make it harder for Walmart to get approvals in the future in certain communities ... people are simply going to be more suspicious about its long-term plans.

    Published on: January 26, 2016

    Business Insider reports that discount retailer Aldi is "expanding organic-food brands, removing some artificial ingredients from its products, and adding more gluten-free items in hopes of attracting more health-conscious shopper." The foray, according to the story, "signals a new direction for Aldi, and an emerging threat to Whole Foods' lower-cost chain, 365 By Whole Foods Market, which is launching this year."

    It is not an insignificant investment: "Aldi has about 1,500 stores in the US and has plans to open roughly 500 more stores over the next two years as part of a $3 billion expansion."
    KC's View:

    Published on: January 26, 2016

    The Guardian reports that expectations in the UK are that Tesco is likely to get hit with the equivalent of more than $700 million (US) in fines related to its treatment of suppliers and the accounting scandal that has preoccupied the company for more than two years.

    There are three ongoing investigations into Tesco currently taking place, including one by the Serious Fraud Office that is looking into how the company systematically understated costs and overstated revenues. Another probe, by the Groceries Code Adjudicator (GCA), "has the power to name and shame companies and issue public recommendations."
    KC's View:
    Forgive me, but only in the UK will the idea of being named and shamed be any sort of big deal. Here in the US, you get shamed and you run for a second term in Congress.

    Published on: January 26, 2016

    • The International Business Times reports that Walmart Canada will begin next month "to sell reusable bags at a discounted rate of 25 cents and will continue to offer plastic bags for five cents per bag to customers who request them." The retailer will no longer provide free plastic shopping bags to its shoppers.

    “We recognize we are asking our customers to change their shopping practices, but we strongly believe that removing plastic film from our waste stream is imperative to reaching our goal of zero waste and will encourage our customers to broaden their already existing waste-reduction efforts," said Lee Tappenden, CEO at Walmart Canada, in a prepared statement.
    KC's View:

    Published on: January 26, 2016

    The New York Times has an interesting story about Martin Shkreli, who was CEO at Turing Pharmaceuticals when it increased the price of Daraprim, a drug used to treat a life-threatening parasitic infection, from $13.50 per tablet to $750. Shkreli became a kind of cultural pariah when he defended the increase - which put the drug out of reach for many patients - as being justified, and he resigned the CEO job after he was indicted in December for securities fraud related to a hedge fund he used to run.

    The story is about how Shkreli, who is a frequent user of social media sites as a method of explaining himself and his positions, is simultaneously refusing to testify under oath before Congress, citing his Constitutional right not to incriminate himself. And the tension between social media and subpoenaed testimony has never been so palpable ... and you can read more about it here.
    KC's View:

    Published on: January 26, 2016

    • The New York Times reports that "consumer debt is rising," which is seen as a positive sign for US retailers, since people are borrowing that money to buy stuff. According to the story, "Consumer debt cuts both ways, of course. In moderation, it can help encourage economic activity. Carried too far, it can create bubbles that threaten the economy. Some analysts say debt is still in the helpful stages and consumer spending therefore has room for nontoxic growth."


    Fortune reports that office supply store Staples "laid off hundreds of corporate employees" yesterday, in a situation described by sources as a "bloodbath."

    The company is not commenting on the report. However, Staples has been trying to address weaknesses in its business model by moving to a more consultative approach while simultaneously trying to convince federal regulators that it won;t hurt competition or raise prices if it is allowed to merge with Office Depot.


    • The Wall Street Journal reports that McDonald's yesterday "posted its best U.S. quarterly sales in nearly four years," driven largely by an all-day breakfast initiative that brought customers back into its stores.

    Q4 same-store sales were up 5.7 percent, much higher than the 2.7 percent increase expected by analysts.

    CEO Steve Easterbrook, while welcoming the new results, cautioned that it "would take at least six more months of positive same-store sales growth before the company moves from a turnaround mode to a growth mode." The Journal writes that "the McDonald’s chief has enacted numerous changes at a burger chain that had been struggling to remain relevant with consumers. He has pared down the menu, provided customers with more transparency about how its food is made, raised wages for workers at company-owned stores and announced that McDonald’s will switch to antibiotic-free chicken and cage-free eggs in the U.S."
    KC's View:

    Published on: January 26, 2016

    ...will return.
    KC's View: