retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 28, 2016

    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.

    There have been numerous reports this week, in media properties ranging from the New York Times to Variety, that the big players at the Sundance Film Festival this year have been Amazon and Netflix.

    In addition to being a place where film aficionados can watch some of the more interesting independent films out there, Sundance is a place where film studios are able to bid for movies that they'd like to distribute. This year, the two most aggressive companies have been Netflix and Amazon ... with Amazon plopping down $10 million to acquire a film called Manchester by the Sea, which was seen as perhaps the hottest property of the festival.

    As of now, Amazon has bought four movies, and Netflix has bought three ... and in each of these seven cases, they beat out traditional movie studios.

    And the people who make these movies have learned that while in the old days they would've preferred to be seen on the big screen, consumers' viewing habits have changed, and being on Amazon or Netflix can give one an enormous audience. In the end, that's really what matters.

    Here's how the Washington Postput it: "For years, streaming giants like Amazon and Netflix have fought unsuccessfully for a place at the table of one of the film world's most lucrative events, aiming to compete with traditional distributors who buy and advertise the movies in hopes of pocketing box-office profits. But now, surprisingly, the streaming giants are starting to win, the latest sign that the tech giants' deep pockets and fast-growing ambitions are making them real players in the movie business."

    This is yet another example of the kind of disruption that can take place when companies come in to change the status quo ... which these days rarely is status and almost never quo.

    I have to say that often on weekends, even as I go through Fandango to see what's playing at the movies, I also go through Netflix and Amazon and iTunes to see what new movies and documentaries may be available ... and lately, I've found myself staying home. We make some dinner, open a bottle of wine, and settle in to watch something there, and find it to be just as much fun.

    For someone like me, who sees 40-50 movies a year, that's a major behavioral change.

    In this case, it is the entertainment content that is changing ... but the changes are far more widespread than that. And every marketer has to pay attention.

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

    KC's View:

    Published on: January 28, 2016

    by Kevin Coupe

    Money has a story about a new item being sold in some supermarkets and other retail venues - gift cards for stock in specific companies. So instead of buying products, one can actually purchase a small piece of the company that makes them.

    The concept is the brainchild of a company called Stockpile and the cards are distributed by the Blackhawk Network, which is selling them alongside more traditional gift cards.

    The Money story is a little skeptical about the concept, pointing out that "buying stocks is not very intuitive," and that for many people, investing is "best done by people who are more financially sophisticated." There's also the possibility that "buying and selling shares in this way" could have the effect of inflating stock prices or increasing market volatility, the story says. However, the story also concedes that "allowing people to buy stock in an ordinary place and in a familiar manner might play a big role in making investing in the stock market more accessible."

    There certainly is some cause for skepticism. Money suggests that selling stock in the same place where people line up to buy lottery tickets sends the wrong message ... but there's a part of me that thinks this seems like an entirely appropriate juxtaposition. (Especially lately.)

    I've often joked that if I'd spent as much on Apple or Amazon stock as I've spent on Apple products or on items I've bought on Amazon, I'd probably have a pretty healthy stock portfolio. Alas, I did neither. So there's a part of me that thinks that - properly regulated - this is a pretty interesting idea, if only because it connect consumers in more fundamental ways to the brands and products they love.

    Either way, it is an Eye-Opening concept.
    KC's View:

    Published on: January 28, 2016

    In Minnesota, the Star Tribune has a story about how Walmart's decision to close 154 stores around the country is creating food deserts in three markets and "another 31 neighborhoods in 15 states will lack any place that sells fresh produce and meat once the last of the Wal-Mart stores slated for closure turns off the lights Feb. 5. However, poverty is not so pervasive in those neighborhoods that they would qualify as food deserts, as defined by the federal government."

    According to the story, "A Wal-Mart spokesman said the company is still committed to ending food deserts. It is making donations to food banks in communities where stores are closing, increasing the budgets of stores in neighboring locations and also working with potential buyers of its stores' properties to bring other supermarkets to the affected neighborhoods ... The company also said it is sticking with its plans to open nearly as many stores over the coming year as it is closing now, although not necessarily near the locations it is leaving."
    KC's View:
    It seems to me that there are a couple of different things going on here, and it is important not to paint with too broad a brush.

    We've had a couple of stories about the Walmart closings and how local folks are bemoaning the fact that they'll be left without a nearby store, because the Walmart put the competition out of business. But some MNB readers have pointed out to me that in some of these cases, these consumers at some point made a decision to patronize Walmart and not the local stores ... arguing that they are just reaping what they sowed. That's a legitimate argument ... in so many ways, customers get the competition they deserve.

    I do think that to some degree it is disingenuous for Walmart to say it wants to address the problem of food deserts and then close stores that serve them; the whole notion of a food desert is that that it s place where perhaps one ought to apply different profitability standards than in other places.

    But that's not where Walmart is right now. I think the closings reflect a recognition of the seismic changes taking place in the retail business, and it is making the hard choices necessary to position itself against Amazon, not the local IGA or regional chain.

    Published on: January 28, 2016

    The Puget Sound Business Journal writes that when Starbucks released its most recent quarterly report, there were a couple of numbers that illustrated the degree to which the coffee company has integrated itself - or has been integrated - into Americans' lives.

    For one thing, during the just-ended holiday season, one in six Americans was given a Starbucks gift card. That's better than the one out of seven Americans given a Starbucks gift card during the 2014 holidays.

    And here's the other number worth paying attention to - the 11 million people who are members of the Starbucks loyalty program.
    KC's View:
    I haven't seen a number on this, but I'd be curious how many of those gift cards were scanned into people's smart phones and added to existing accounts. Starbucks has one of the best loyalty programs out there, combining payments systems with reward mechanisms and ordering capabilities in a way that is absolutely behavior-changing. I've been writing this for a while ... but the one-out-of-six number amazes even me.

    Published on: January 28, 2016

    Twice.com reports that Circuit City may get another chance at retail life, eight years after the electronics chain collapsed under the weight of too-tough competition, thanks to a couple of retailers who think the brand still has some equity worth exploiting.

    According to the story, "what Circuit City has in store is an ambitious, multi-tiered game plan that calls for retail outlets, web sales, branded and private-label products, licensed kiosks, mobile shops and franchise opportunities, all under the iconic red-and-white banner." The stores are expected to be between 2,000 and 4,000 square feet in size, have a strong private label presence, and "will be staffed with rigorously trained and accordingly compensated sales associates receiving salary plus commissions."

    The stores "will feature product zones that present the assortment by category and brand. Targeted directly at millennials, the mix will include pre- and postpaid smartphones, as well as tablets, notebooks, wearables, networking equipment, gaming products, headphones, drones, 3D printers, health appliances, and DIY devices, all supplemented by a service desk, electronic price tags and touchscreen terminals that link customers with what is envisioned as a million-SKU selection online."
    KC's View:
    I am not convinced. Not even a little bit.

    I'm not sure anyone has ever uttered the phrase, "I miss Circuit City." And the stores they are describing sounds suspiciously like the stores that Best Buy tested a few years ago, and eventually shuttered. The only thing that the words "Circuit City" represent is a failed, anachronistic retail concept that was unable to keep up with the times.

    I could be wrong about this. But I don't think so. I think that if these guys want to start a new electronics chain, they ought to come up with a brand name that resonates with 21st century relevance, not 20th century obsolescence.

    Published on: January 28, 2016

    There's a neat little story on NPR about an independent Georgia supermarket - Clarkston Thriftway - where the owner, Bill Mehlinger, rescued what seemed to be a dying business by figuring out what local customers wanted to buy. In this case, though, it was a little more complicated than usual, because the customers are largely refugees of more than a dozen nationalities.

    Mehlinger has gone from selling so-called traditional American foods to everything from Indian yogurt to West African cooking oil, and now his customers as well as his employees are almost all people who have come from other places. And, the story says, "with recent anxiety about the arrival of refugees in local communities," the Clarkston Thriftway story serves as a valuable reminder "of the benefits of embracing diversity."

    Good piece, and you can check it out here.
    KC's View:

    Published on: January 28, 2016

    Advertising Age reports that Amazon will drop a bundle to advertise its Echo voice-controlled virtual assistant on the Super Bowl next month.

    There's a teaser for the ad online, featuring actor Alec Baldwin and former football player Dan Marino using the Echo to plan a Super Bowl party. you can see it here.

    No word on how many ads for the Echo will run on the Super Bowl, or how long they will be, but a 30-second Super Bowl ad this year can cost as much as $5 million, depending on where it is placed during the game.
    KC's View:

    Published on: January 28, 2016

    • The Cincinnati Business Courier has a story about a local entrepreneur, Bryan Melendez, who has started a new business delivering grocery products sold online by Kroger's ClickList service.

    While Kroger's rapidly expanding click-and-collect service gives people the ability to buy online and then pick up their orders at select stores, Grocery Runners will go pick up the orders for people and deliver them: "Melendez charges $10 an order plus 4 percent of the total cost of the grocery order, so a $100 order costs $14 to deliver. Add Kroger’s ClickList fee of $4.95 per order – it’s cheaper if you pay monthly or annually – and you’re getting groceries delivered to your home for about $19."

    Kroger does offer delivery in Denver, but has not expanded that facet of the online service beyond that market.
    KC's View:

    Published on: January 28, 2016

    • The Associated Press reports that "Wendy's says it is investigating reports of 'unusual activity' on payment cards that had been used at some of its restaurants. The company says it learned from payment industry contacts this month of reports indicating fraudulent charges may have occurred on cards that had been used legitimately at some of its locations. It says it is has launched an investigation with the help of cybersecurity experts and that it is cooperating with law enforcement officials."


    • The Tampa Bay Business Journal has a story about speculation that German discounter Lidl, which has plans to expand into the US by 2018, is likely to target Florida, even though to this point it only has said that it is targeting sites between New Jersey and Florida. "As the nation's third most populous state," the story says, "Florida is an alluring place for grocers. Several grocers have expanded successfully here in recent years — including Trader Joe's and sister company Aldi US, a German discount grocer that could make consumers more willing to shop at Lidl."

    More immediately, the story suggests, North Carolina and South Carolina are expected to become a supermarket war zone - with established players such as Harris Teeter, Food Lion, and Aldi operating there, there also is the prospect of both Wegmans and Lidl coming to the region.


    • The Syracuse Post Standard reports that Price Rite "is going ahead with plans to open a supermarket in an impoverished southwest side neighborhood" there that local community leaders have described as a "food desert."

    The 10,000 square foot store "will create 10 full-time and 75 part-time jobs, according to Price Rite. Bachman said a majority of the people hired to work at the store will be residents of the local community ... It will be Price Rite's second store in Syracuse ... The company operates 59 stores in eight states, including many in urban areas."
    KC's View:

    Published on: January 28, 2016

    ...will return.
    KC's View: