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    Published on: February 1, 2016

    by Kevin Coupe

    The New York Times had a story over the weekend about a startup company, Undertaking LA, that is part of a broader effort endeavoring to challenge traditional end-of-life-related businesses, "encouraging more family involvement in end-of-life rituals, including home funerals and cremations that loved ones can watch, called witness cremations."

    Since opening, Undertaking LA has "taught people how to wash and dress bodies, and when necessary, stem the flow of bodily fluids. If they receive a question like the one above, they explain that if mourners want to hold a vigil at home, ice packs or dry ice might be required to help preserve the loved one’s remains."

    The story notes that "in the last decade, a small but growing segment of the funeral industry has begun catering to those who want a more natural, intimate end-of-life experience. Home funeral advocates and practitioners link their movement to the home birth, hospice and environmental movements."

    There's a financial component to this. "The national median cost of a funeral and burial arranged through a funeral home for an adult in 2014 was $8,508," the Times reports, while "by contrast, the cost of a do-it-yourself home funeral can be $100 or less." According to the story, "Undertaking LA charges $996 for its home funeral service, which includes a three-hour home visit, a service fee, supplies, assistance washing and dressing the body, and guidance on cremation and burial options — but not the burial, cremation or cemetery plot. It charges $340 for a three-hour consultation on how to care for the body and complete the necessary paperwork and $1,470 for a witness cremation. Its modest selection of coffins includes a willow one for $1,370."

    The broader message is that the traditional gatekeepers for end-of-life rituals and procedures - the funeral home business - is going to have to find ways to compete in a marketplace where traditions are being challenged.

    Just like pretty much every other business.

    Though, to be honest, I'm not sure I want to be washing and dressing dead bodies.

    Still, it is an Eye-Opener.
    KC's View:

    Published on: February 1, 2016

    The Wall Street Journal reports that Kroger is attempting to make changes to the way in which it buys and merchandises beer, wine and spirits that has drawn much criticism from manufacturers and distributors.

    According to the story, "The proposal would do away with a decades-old system in which the biggest alcohol producers such as Anheuser-Busch InBev NV and Diageo PLC were tapped by Kroger and other grocers to be 'category captains,' dispensing advice and influence about how much shelf space and prominence to give brands ranging from Budweiser to Robert Mondavi to Smirnoff.

    "Instead, the plan, introduced late last year, calls for a privately held distributor, Southern Wine & Spirits, to oversee how much display brands get in the grocery aisles of the more than 2,600 Kroger stores in 29 states. It also asks the alcohol companies—not Kroger—to pay Southern for the service ... A spokesman for Southern said the fees would be voluntary and are designed to offset the estimated $12 million it would cost annually to provide shelf-planning services for Kroger. He said manufacturers who don’t pay into the program wouldn’t be 'adversely affected'."

    The story goes on to say that "the liquor, wine and beer industry prefer the existing system in which they have more direct say in shelf placement ... In a rare show of agreement across the alcohol industry, trade associations representing liquor, wine and beer, and several alcohol-distributor groups all sent letters to federal regulators last month questioning the legality of the Kroger plan. Prohibition-era laws ban alcohol manufacturers from giving retailers anything of value to keep them from marketing too aggressively."
    KC's View:
    I'm in no position to judge the legalities of the situation, but I do think that from a strategic point of view, Kroger is absolutely right to look to develop a system that actually gives it greater control over alcohol merchandising, especially at a time when there seems to be a lot of upheaval in the category driven by craft brands.

    If the new system results in a pay-to-play structure that drives these smaller craft brands out of the store, then that won't be a good thing ... but since Kroger has spent considerable time and money developing a consumer-centric strategy, it seems to me that this is unlikely to happen. I think some vigilance will be called for ... but if the goal is greater control and responsiveness to what shoppers want, then this is a good thing. And heaven knows we shouldn't be guided by Prohibition-era laws.

    Published on: February 1, 2016

    The Wall Street Journal this morning reports that the Centers for Disease Control and Prevention (CDC) is expected to issue a report as soon as today that declares the Chipotle E. coli outbreak to be over ... which really means that its investigation has been completed, even though the source of the problem has not been identified.

    That outbreak sickened more than 50 people in nine states and called into question Chipotle's value equation, which has hinged on a "food with integrity" message. More than two months have passed since the reporting of a new illness, though a federal investigation is being conducted into a separate norovirus outbreak.

    Chipotle is scheduled to have a company-wide meeting on February 8 - with restaurants around the country closing down for several hours so employees can attend virtually - that will set the stage for its new standards and efforts to reintroduce the brand to US consumers.
    KC's View:
    As I've said before ... I think Chipotle has a real shot at coming back because there are so many people who are looking forward to the veil of suspicion to be lifted. That is enormous brand equity, and they need to nurture it carefully. I'm not sure the company can weather another food safety crisis without a loss of equity, but for the moment, I think they're probably okay.

    This is an important lesson for every food retailer - it is absolutely critical to have the kind of relationship with customers that will survive these kinds of issue. Not to mention having the kind of internal infrastructure that can deal with food safety issues.

    Published on: February 1, 2016

    The New Yorker has an interesting snapshot of the situation in Fairfield, Alabama, where Walmart is closing its store ... and where the community now qualifies as a food desert because of the lack of local access to groceries. The piece makes the point that while Walmart's departure will be almost impossible for the community to absorb, Fairfield already was in an untenable situation ... and Walmart's departure may be more effect than cause.

    Good piece, which is exactly what one expects from The New Yorker ... and you can read it here.
    KC's View:

    Published on: February 1, 2016

    GeekWire reports that Uber’s new package delivery service, called UberRUSH, "is expanding with some big-name partners like Nordstrom, SAP, T-Mobile, and perhaps most notably, Google ... it is moving beyond helping smaller brick-and-mortar retailers deliver packages and is now working with larger businesses that need help moving product from one place to another."

    The program was successfully piloted in New York, San Francisco and Chicago, and the company says that there are more than 1,000 business partners using UberRUSH at this point.
    KC's View:
    I think it only makes sense that we're going to start seeing some merging of companies and services as appropriate. There can't be a thousand winners, and so companies will be well advised to start looking for synergies that will be good for both shoppers and businesses.

    Published on: February 1, 2016

    Advertising Age reports that a US District Court judge has ruled that Chobani must stop marketing efforts that slammed rivals Dannon and Yoplait for using artificial ingredients.

    According to the story, the judge said that Chobani cannot claim that "that sucralose renders Dannon's products unsafe to consume" or "that potassium sorbate renders Yoplait Greek 100 unsafe to consume," though it can talk in positive terms about its own use of natural ingredients.

    Chobani responded by saying that the commercials in question no longer are running, but that it plans to continue to "fight the good fight."

    "This is not a marketing campaign, it's a mindset campaign, and it outlines the difference between using only natural ingredients versus artificial ingredients," said Chobani Chief Marketing and Brand Officer Peter McGuinness. "While we're disappointed by the preliminary ruling, we're committed to continuing the conversation and it's good to see big food companies like General Mills starting to remove artificial ingredients from some of their products, like their cereals. In the end, if we can give more people more information while helping other food companies make better food, everyone wins."
    KC's View:
    I always prefer marketing efforts that are positive, not negative. And I'm not sure that slamming the competition this way does much more than poison the entire category. That's not good for anyone, long-term.

    Published on: February 1, 2016

    The Washington Post has yet another story about the decision by Walmart not to build two stores to which it had committed there, as part of development jobs designed to provide jobs and shopping options to neighborhoods that desperately need both.

    Walmart said that the three stores that it had built in DC have been underperforming, and a "frustrated" DC Mayor Muriel E. Bowser tells the Post that the decision was not driven by cost-cutting but rather by a larger national strategy that includes the paring down of urban markets and smaller stores.

    "Bowser’s anguish," the Post writes, "stems from how critical the stores were as the economic underpinning of two complex and expensive projects that have been floundering for more than a decade, leaving residents in poor communities east of the Anacostia feeling left behind while other neighborhoods enjoy a boom in new restaurants, shops and grocery stores. Since 2004, the number of grocery sellers in the District has ballooned from 36 to 55, according to the D.C. Economic Partnership, with three Whole Foods Markets and other new stores on the way.

    "Although home to nearly 150,000 people, the two sections east of the river, Wards 7 and 8, still have just two grocery stores."

    Meanwhile, the Wall Street Journal reports that one of the results of Walmart's decision to close 154 stores in the US and cut prices on merchandise there by as much as 50 percent has been the purchase of many of these items by people who then turn around, mark them up and sell them on Amazon: "Wal-Mart’s store closings presented a special bonanza," the story says.

    "The practice is known as retail arbitrage," the Journal writes. "Thousands of sellers scour store shelves with the aim of scoring narrow margins by peddling their purchases online. Many rely on mobile applications that calculate the profits, after shipping and other fees, that they can expect to make per item on Amazon based on recent online prices. And for some, it’s a big business with millions of dollars in sales, using their own warehouses and staff to process the goods."
    KC's View:
    I have no problem with closing unprofitable stores, and with adjusting strategies so that the company is more broadly positioned to better cater to a changing marketplace. But ... I have to say that the whole DC thing leaves a bad taste in my mouth. Walmart spent a lot of time pontificating about how community-focused it was going to be, while simultaneously playing hardball about the conditions under which it would open stores. I'd feel betrayed if I lived in DC, especially in a neighborhood that isn't going to get a promised store.

    Published on: February 1, 2016

    • Delhaize and Ahold this morning have announced that both companies have called Extraordinary General Meetings for March 14, at which "their respective shareholders will consider and vote on proposals to approve the intended merger between Delhaize and Ahold."


    Street Insider reports that Whole Foods has begun "pushing out digital coupons through its rewards program app in test markets (Philadelphia and Southern New Jersey)," including one that gives "$5 off any $15 purchase of Fresh Produce."

    The story quotes RBC Capital analyst William Kirk as saying that the program is designed to be shopper-friendly by "pre-loading your account with the coupons," and that it is expected that a national roll-out by Whole Foods is expected in the near future.


    The Wall Street Journal reports that Sports Authority "has laid off 100 employees, mostly from its corporate headquarters, further signaling trouble at the sporting goods chain, as the athletic retail market grows more competitive," a move that follows "a decision earlier this month by the company to skip an interest payment on a $300 million secured term loan, sparking concern among vendors and industry-watchers."
    KC's View:

    Published on: February 1, 2016

    Michael Sansolo last week wrote about how retailers have to take advantage of the opportunities to get shoppers to come back to their stores time and again. Which prompted MNB reader Deb Faragher to write:

    I was interested in your comment that supermarkets have so many opportunities to make customers want to return to their stores.  I agree wholeheartedly that personal attention, eye contact and banter are welcome in interactions—the friendliness and professionalism of the staff is important to the overall experience.

    Having said that, I thank technology every time I am going shopping for the ability to place my deli order online and pick it up in store, thereby skipping the deli counter visit.  It’s the bane of my existence. To have to wait for a long period of time for my turn then to wait longer to have my order prepared taking upwards of 20 minutes (for 4-5 items of 1/4 to 1/2 pound).  In that time, I could have completed my entire shop.  So, kudos to Publix for giving me the opportunity to sit quietly at home sipping my coffee while placing my order online.  I drive 3 times further to get to Publix when I have Kroger within a mile.  Kroger offers technology to place deli orders but standing in the lobby placing an order at a kiosk is not really saving me time and the store is so large that by the time I finish shopping I then have to walk a football field length of store to get back to the deli to pick up the order.  I will admit that, on occasion, when the online order system has been down I have gone to Kroger due to the proximity.  I know I pay more, in general, at Publix but for the deli convenience alone, I am willing to do so.  I do appreciate other conveniences made possible by technology offered by Kroger that Publix does not including self-checkout, very targeted marketing (electronic and snail mail) of products I actually buy, savings on gasoline and yet that deli draws me to Publix nearly every time.

    On another note, I was an early adopter of Open Table and love to see more and more restaurants participate.  While I appreciate the phone interaction and, generally am made to feel very welcome when reserving, it’s nice to be able to go online at my convenience to see when a table is available, make the reservation and get a confirmation in very short order without having to think if I am bothering someone at the restaurant with my call at what may not be the most convenient time for the person on the phone or the customers in the restaurant. I have yet to have an issue with any reservation made on Open Table so I am a believer.





    We had a piece last week about the rise on consumer debt, and one MNB user responded:

    Consumer debt is on the rise, up around 3% the last couple of years and currently about $12.100 trillion.  However, if you look at the components driving the increases, its mainly housing, auto and student loans, while credit card and home equity lines of credit have been more stagnant.  Student loans in particular have been growing at about 10% a year to $1.200 trillion, and have a default rate of about 10%...this can’t be good for the future of retailers.

    Not at all. The level of student debt, I think, is going to have an enormously detrimental impact on the economy in coming years. Addressing this issue ought to be a primary focus of the federal government.




    I said last week that a Walmart-Procter & Gamble Super Bowl promotion targeting women, but doing so by talking about planning parties, struck me as condescending.

    One MNB user agreed:

    In agreement on the condescending perspective – it may be more universal then you think!  Why do the middle aged men behind these concepts think that all women are interested in is cooking, cleaning, parenting and hosting parties?

    Because they are middle-aged men who apparently pay absolutely no attention to their wives, daughters and sisters ... or who have wives, daughters and sisters who are nothing like mine.




    On another subject, MNB reader Duane Eaton wrote:

    It’s interesting that Lidl’s and Aldi have announced new stores in my little town of Middletown, DE, population around 20,000.  The population did grow 206% between 2000 and 2010 and continues to grow as transplanted retirees flee the high taxes of surrounding states.  It will be fun to see how the new stores compete with the existing Wal-Mart Supercenter, Acme, Giant, Food Lion and Dutch Country Farmer’s Market.

    P.S.  Yes, the same Middletown that’s home to St. Andrews School, location for Dead Poet’s Society.

     


    Regarding Amazon's testing of kiosks that sell gift cards for specific books, MNB user Jill M. LeBrasseur wrote:

    I think this is a great idea! I have always felt that books make great presents and I love to both give and receive them. But with e-books, unless someone else gives you access to their device, I know of no way to make a gift of a book using this format. Amazon now offers me this choice again.
     



    Responding to the story about people trying to revive the Circuit City chain, one MNB user wrote:

    Wow! What a killer concept!! If this was still 1997...

    MNB user Lyle Walker chimed in:

    Could not agree with your commentary more.  What I remember about Circuit City was their sales people were commissioned and pushy.  To your point, I've no idea what positive equity there is in the brand, so am really curious of the thought process behind this.  If this story ran on April 1, it would at least make sense.




    And, we got the following email from MNB reader Harry Graham:

    Amazon's Echo is probably one of the most entertaining products I have purchased from Amazon. I got mine last week, and the wife and I, and kids and grand-kids have enjoyed talking with Alexa the entire week.

    I have not yet invested in the hardware to turn off light, control the temperature in the house or the like- but Echo has answered questions like weather, Who is Donald Trump, who was the 24the president, and what is 354 divided by 1.55.

    Set up was easy to do, engaging with my router/Wi-Fi.

    What a fabulous product that has new features/applications added weekly. I am thoroughly impressed with the product.





    And finally, from MNB reader Rich Heiland:

    I want to toss in a little bit of a spin on Millennials.

    We now have, in most organizations, four generations in the workplace which to my knowledge is unique, and you can even add in post-70-year-olds still working.

    Much of my work with leaders, managers and staffs deals with the complexity this can cause, but also with the wealth of opportunities.

    But, there is peril I think in looking at "a generation." I have found that when working with more urban clients much of what is said about Millennials in terms of smaller living space, renting vs. buying, less driving, living near friends, favorite locations etc. tends to bear out.

    However, not so much with my more rural or smaller city clients where driving is less about choice (fewer public transit options) and more about making do. The same can apply to living spaces and shopping habits.

    I do think some generalizations can be made about different social values in a larger scale sense, though even those can vary some rural to urban, one part of the country vs. another.

    I think marketers will be making a mistake if they base all their marketing on "selling to Millennials" without accepting that if Millennials are in fact a market, there are markets within the market.

    I will also add that when working with line staff, which has become my focus, I find Millennials to have a good work ethic, though focused differently than my Baby Boomer generation. I enjoy their company and find it stimulating. My challenge is to get each generation to realize the assets of the other and get past the stereotypes and misunderstandings.

    KC's View:

    Published on: February 1, 2016

    At the Australian Open this weekend, Angelique Kerber beat Serena Williams in the Women's Singles Championship for a 6-4, 3-6, 6-4 win.

    And in the Men's Singles Championship, Novak Djokovic beat Andy Murray 6-1, 7-5, 7-6.
    KC's View:

    Published on: February 1, 2016


    Fitness-conscious consumers want cereals made with nourishing ingredients they can see and taste.

    Which is why Kellogg is making such a big splash with amped-up versions of proven performers like Special K® Nourish™ and Mini-Wheats® Harvest Delights. Special K® Nourish™ has multigrain flakes made with quinoa, almond and granola, available in two flavor combinations: Apple/Raspberry/Almond and Coconut/Cranberry/Almond. Mini-Wheats® Harvest Delights is made with 100% red wheat with visible, recognizable fruit in every biscuit It’s available in two popular flavors: Cranberry with Yogurt Drizzle and Blueberry with Vanilla Drizzle.

    See the full lineup here.

    KC's View: