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    Published on: February 4, 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 is a story in Fast Company that provided an extraordinary statistic about the Apple Store - that it ended last year with an employee retention rate of 81 percent.

    "Extraordinary" doesn't even seem to cover it.

    That number alone accounts for why companies like Best Buy continue to struggle, why RadioShack seems like an artifact of an ancient time, and why it makes absolutely no sense to me for people to try to resurrect the Circuit City brand.

    What's next? Crazy Eddie?

    Readers of MNB know that I'm an enormous Apple enthusiast - in my family, we all have iPhones and MacBooks and iPads and iPods and even several Apple TVs. i've written and talked about Apple often. I won't even pretend to be neutral and objective.

    But here's what grabs my attention about Apple's employee base. The company doesn't seem to take it for granted.

    One of the things I've noticed over the years is how often Apple sends out surveys after I've shopped at one of its stores. Back during the Christmas season, when I filled out one of those surveys, I wasn't pleased ... we'd had a bad experience at an Apple Store where the employees seemed more interested in talking to each other than to customers. So I told them of our experience...

    Within hours, I got a call from the store manager, and we ended up having a long conversation about customer service. I wasn't angry, just disappointed, and he took advantage of my temperament to try to drill down on my comments. I didn't tell him what I do for a living until the end of the conversation, and then he started asking questions about other retailers, about who I like and who I don't.

    In the end, I came away from a mediocre store experience with a highly positive experience overall ... and a conviction that despite missteps, they're focused on getting it right. And they want to hear what's really going on, not just have their own opinions reinforced.

    We all know of businesses not so enlightened. Michael Sansolo wrote a column here years ago about how car dealerships ask people who have bought cars to answer surveys but only give them 10s, because anything less is seen as abject failure .. which means that they really don't want honest input. I had exactly the same experience recently, and I decided not to answer the survey rather than have my answers misinterpreted or mis-categorized.

    Someone I know was tell me the other day about how their new boss was calling meetings with various departments, and among other things was asking for people's complaints ... and then essentially suggested that people who complained were whiners. This guy didn't really want to listen ... it was like he knew that "hold department meetings" was on the checklist for new bosses to do, and he needed to check that box off before moving on.

    Leadership isn't about checking boxes. These days, especially in retail where the stakes are high and the people on the front lines are critical to success, it is about making sure that they feel invested in the company and the mission.

    That's clearly what Apple does. Now, Apple has an advantage. After all, it is Apple.

    But it ought to be the goal for every retailer.

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

    KC's View:

    Published on: February 4, 2016

    by Kevin Coupe

    I didn't know Brittany Burns. But I wish I had.

    Brittany's step-mother is Cathy Burns, the president of the Produce Marketing Association (PMA), who is one of the best people I've ever known in the retailing business. Her dad is Ty Burns, who I've had the chance to meet a couple of times, and who I like a lot.

    Brittany Burns has been in the news a bit this week. At 26, she lost a three-month battle with a rare form of ovarian cancer, and passed away on Tuesday. It perhaps got more attention than it might have ordinarily because she was engaged to Tony Steward, the Buffalo Bills linebacker.

    But that connection to fame - which seems utterly meaningless when tragedy reminds us of what is really important - is less significant than what Brittany and her fiancee did when they got the diagnosis. Together they created something called "Britt & Tony's Fight Like A Girl Campaign," which is described as an effort "to help other women facing similar hardship."

    In the online stories that I've read about Britt, she sounds like an amazing person. A fighter, who could only be defeated by a disease so insidious.

    That ability to look beyond one's own personal tragedy and turn it into something positive that can help other, less privileged people, strikes me as incredibly special. It shows what the best among us are capable of, even in moments of extraordinary stress. Grace under pressure, I think they'd call it.

    I am impressed. I am humbled.

    And I would refer you to the crowdfunding page that accepting donations to the Fight Like A Girl campaign, which is just the first step toward building a 501(c)(3) charity dedicated to helping other women who are battling ovarian cancer.   You can check it out here.

    I wish I'd had the opportunity to meet Britt, and my heart goes out to her family and friends. Her life, however tragically brief, opens our eyes to what is possible when we stay in touch with what a wise man once called "the better angels of our nature."

    Rest in peace.
    KC's View:

    Published on: February 4, 2016

    Yesterday, MNB took note of a Wall Street Journal report that Sandeep Mathrani, CEO of mall operator General Growth Properties, said that Amazon is poised to open up to 400 bricks-and-mortar stores around the country.

    That report got a lot of attention. And then, Mathrani tried to walk it back, releasing a prepared statement yesterday saying that his comment "was not intended to represent Amazon's plans."

    Meanwhile, Re/code has a story about Amazon's actual bricks-and-mortar plans, describing them this way:

    "The Amazon retail store initiative is being led by Steve Kessel, a longtime Amazon executive whose team launched the first Kindle e-reader and who is very tight with CEO Jeff Bezos, according to three sources familiar with the group ... The specifics of Kessel’s project had been a secret internally for a long time, but his group has attracted more attention since it opened up Amazon’s first brick-and-mortar bookstore in Seattle in the fall ... Amazon will indeed open up more bookstores, but it also plans to eventually unveil other types of retail stores in addition to bookstores, according to two sources familiar with the plans. It’s not yet clear what those stores will sell or how they will be formatted, but the retail team’s mission is to reimagine what shopping in a physical store would be like if you merged the best of physical retail with the best of Amazon."
    KC's View:
    Y'think maybe Mathrani got a phone call from Amazon headquarters yesterday?

    As I said yesterday, I thought from the moment I heard the words come out of his mouth that he was engaging in more wishful thinking than factual reporting. I think Amazon certainly has a plan for how it can use bricks-and-mortar in innovative ways to build its brand and reach ... but the idea that it quickly wants to get to 300-400 stores strikes me as out of character. Of course, I could be wrong...

    Published on: February 4, 2016

    Supervalu announced yesterday that Mark Gross, former co-president at C&S Wholesale Grocers, as its new president/CEO. He succeeds Sam Duncan, who is retiring at the end of the month.

    The Star Tribune reports that since leaving C&S a decade ago, Gross has run Surry Investment Advisors, "which focuses on consulting for the grocery industry, notably on mergers and acquisitions." Indeed, most of the coverage of Gross's hiring notes that he is a mergers-and-acquisitions specialist, leading to reasonable speculation that he has been hired to make some major strategic moves.

    "I am thrilled to join Supervalu," Gross said in a prepared statement. "I am delighted to have the opportunity to help take the Company to the next level and to work with the Board and management team to set the strategic path for the future. I look forward to working with our great customers and the talented group of employees in this Company, including working with Eric Claus as Supervalu continues to explore and prepare for a potential spin-off of Save-A-Lot."

    The Star Tribune writes that Supervalu "was listing badly when Duncan took over and has been in a turnaround mode under his tenure. While Duncan made progress, Gross is taking the reins at a company that seems to have stalled in recent months. And he's assuming command at a time when the already contentious grocery industry is getting more competitive ... Gross' background should come in handy as Supervalu prepares to spin off its Save-A-Lot chain into a separate publicly traded company - or for that matter if Supervalu itself ends up on the sales block."
    KC's View:
    I'm a big fan of the idea that merchants ought to be running companies like Supervalu, and that when you hire someone from the financial side, or someone with M&A expertise, it suggests something about where the company is going.

    Published on: February 4, 2016

    The Financial Post reports that Walmart Canada is expanding its online grocery click-and-collect service from Ottawa, where the company says response to an 11-store test has been "phenomenal," to Toronto.

    According to the story, "In Toronto, the service will be offered initially at 12 stores. It takes orders up to 21 days in advance and carries a pickup fee of $3 ... The company will begin taking online orders for stores on the west side on Wednesday for pickups starting Feb. 9, and on the east side of the city customers can place orders starting Feb. 18 for pickup beginning on Feb. 23."

    Other companies offering online grocery ordering in Toronto include Loblaws and Longos.
    KC's View:
    Which I think is a harbinger of things to come in the US, but on a much bigger scale and rolled out much faster.

    Published on: February 4, 2016

    Accenture is out with new research saying that "retailers are failing to meet consumer demand for increased convenience while shopping with mobile devices," and concluding that "to be an adaptive retailer, the experience needs to be seamless experience for consumers who expect mobile devices to ease the shopping experience, both online and in-store."

    Here's how Accenture frames the global study results:

    "The consumer survey found that the number of consumers shopping 'on the go,' with mobile devices, grew 10 percent in the past year, from 36 percent of consumers in 2014 to 40 percent in 2015. Not surprisingly, the number of shoppers who want more retail services via mobile devices, particularly real-time in-store promotions, also grew this past year, to 47 percent, up from 40 percent in last year’s survey. However, only seven percent of retailers said they currently have the ability to send real-time promotions.

    "Furthermore, while nearly one-third (32 percent) of shoppers want to be able to scan products in-store using their mobile devices – up from 27 percent in 2014 – only 17 percent of retailers provide scanning capabilities. At the same time, 42 percent of shoppers want to receive automatic credit for coupons and discounts via their mobile phones – up from 35 percent last year – yet only 16 percent of retailers have the capability to automatically credit coupons."

    Ironically, despite these shortcomings, the study says that "67 percent of shoppers were satisfied with store environment and product quality." But, while "52 percent were happy with interaction with staff and delivery, and 51 percent with web environment and returns," that also means that 48 percent were unhappy with interaction with staff and delivery, and 49 percent were unhappy with web environment and returns.

    The study also assessed the e-commerce capabilities of retailers, saying that "when it comes to delivery, 56 percent of retailers have next-day delivery capabilities, 11 percent offer same-day, 49 percent can schedule delivery on a specific day, 57 percent allow consumers to return online orders to the physical store and 39 percent have click & collect capabilities."
    KC's View:

    Published on: February 4, 2016

    The Washington Post has a story suggesting that new sales results from Keurig - it sold seven percent fewer single serve coffee pod machines during its most recent quarter, the sixth straight period during which unit sales declined - point to the possibility that this particular coffee trend has run its course.

    Sales of the actual pods also sell during the most recent quarter.

    The story notes that "coffee pod sales grew quickly during the recession, as Americans shifted to single-serve as a cheaper alternative to buying coffee out at restaurants and other food-service establishments. It also didn't hurt that coffee pods are efficient (they are associated with less coffee waste) and convenient (press a button, and voila!)." But now, an improving economy is creating an environment in which people aren't concerned about the same things, and the coffee pod machines don't look so attractive.

    "Coffee pods aren't dead just yet — they still make up about a third of all coffee sold in the United States," the Post writes. " Nor are the machines that use them — an estimated 25 percent of American households own a pod machine. But their future isn't looking quite as bright as pod makers might hope."
    KC's View:
    If the health of the economy is a major influence on the pod sector, then maybe Keurig just has to wait a bit ... I've talked to more than a few people who think that we could be headed toward a new recession.

    For me, the Keurig machines never held much attraction. I like having my 14-cup coffee machine hot and full when I get up in the morning, and the ability to pour myself a cup whenever I need it. And the Keurig machines never seem to make as hot a cup of coffee as I like.

    But that's just me.

    Published on: February 4, 2016

    • The Wall Street Journal reports that Walmart has informed Murphy USA, which operates more than 1,000 gas stations in the parking lots of its stores, that "going forward it will build and operate its own gas stations."

    The story says that "Wal-Mart has run gas stations in front of its warehouse chain Sam’s Club since 1997 and already operates several hundred in front of its approximately 4,500 Wal-Mart stores, said company spokesman Randy Hargrove. But the largest seller of gasoline in front of U.S. Wal-Mart stores is Murphy. When building new stores, Wal-Mart plans to add its own gas stations to as many as possible, said Mr. Hargrove."
    KC's View:
    It is all about control, and about squeezing as much profit as possible out of the business. The spread sheet analysis on this must've been pretty black-and-white.

    Published on: February 4, 2016

    • In Washington State, the News Tribune has stories about the new Main & Vine store opened by Kroger this week in Gig Harbor; the store is said to be a prototype for a small format that could be adapted for urban areas where square footage is at a premium and fresh food is a magnet for consumers.

    According to the story, "More than half of the store is devoted to free-form deli, produce, bulk, meats and dairy displays. Standard grocery shelves seem almost like an afterthought ... Reflecting changes in consumer preferences, the sections of prepared and packaged foods are in abundance throughout the new store. The seafood area features trays of bulk dishes that can be bought by the pound and reheated to make bibimbap, tikka masala, smoked salmon chowder and 13 other dishes."

    The News Tribune also reports that Main & Vine has a new mobile application that notifies users of sales and events, offers members-only savings, and also provides the ability for shoppers to find thousands of items online that can't be found in-store.

    • In Florida, the Jacksonville Daily Record reports on the reopening of a Winn Dixie there that Southeastern Grocers hopes will serve as the first of many remodeled units that will help redefine the company.

    Ian McLeod, president and CEO of Southeastern Grocers, tells the paper that "the store was designed to emphasize freshness, quality, value and the 'sense of something cooking in the kitchen,' referring to the on-site food preparation. The store employees smoke meats; make sauces and rubs; bake breads, pizzas and pastries; fry mini-doughnuts; roll sushi; roast and brew coffee; and even age fresh meats to customer specifications in the butcher area."
    KC's View:

    Published on: February 4, 2016

    Responding to yesterday's story about Amazon planning to open as many as 400 stores around the country - which now has been walked back by the person who originally said it - one MNB user wrote:

    I wonder if they will buy a bunch of Radio Shacks and turn them into bookstores? These locations could also be a pick up location for Prime members who want a better price...and a drop off point for cardboard boxes, which today are going into the recycle bin or the family trash can.

    This may sound good at first, but I believe that picking up so many units from a failing retailer would put an anchor around Amazon's neck ... and this is a company that resists such legacy issues.

    MNB yesterday took note of a Bloomberg report that Bernie Sanders, the Socialist Senator from Vermont who is running for the Democratic presidential nomination, said this week that the Walton family is the nation's biggest welfare abuser because it "doesn’t pay its employees a 'living wage,' forcing many workers to turn to food stamps, Medicaid and subsidized housing funded by taxpayers." Sanders also said the Waltons exemplify a "rigged economy," and that it is "unacceptable that Walton family has more wealth than bottom 40% of Americans."

    MNB reader Kelly Dean Wiseman responded:

    I think you might be missing a key point that Sanders is making: the system should not allow such a vast accumulation of wealth at the expense of taxpayers. And this is the case with the Walton family: we have subsidized their paltry wages with Medicaid and SNAP and other programs. I’m not into demonizing either. But I don’t agree with giving a pass for such uninhibited greed on the part of an employer again, at taxpayer expense, just because we are scared of causing some kind of “class warfare”.

    Come to think of it, maybe we need a new term for rich families and executives who underpay their workers and drain the public support system: class welfare.

    From another reader:

    Remarks like that are just plain wrong! As my father use to say..."this country is going to hell in a hand-basket."

    I'm not a big fan of Walmart but they represent the American Dream and what you can do in a free capitalistic society. Unfortunately, there are people that take advantage and there are those that just don't get it!

    And another:

    Unfortunately, Mr. Sanders is pandering. His unrealistic Socialist view of the world is, at best, myopic.

    Walmart is paying $10.00 to start and benefits (to the best of my knowledge). For someone directly out of High School, with limited work skills - it seems like a good start. They are giving recent Vets, priority over all others, and paying in line with experience.

    We all agree that nothing is perfect. However, should our society move to $15.00 per hour for this type an entry level position ... we are in financial trouble. Prices will rise and there will be more unemployment in the service and retail sectors.

    Continuing with this thought ... as wages and prices rise, Customer Service will disappear (many say it is dead already). We may all end up cleaning our clothes in a stream, with a rock (we won't be able to afford Tide). And ... There won't be any retailers left in which to purchase it.

    First of all, your email makes me feel like Claude Rains. I'm shocked ... shocked ... to find out that there are politicians running for office out there who are pandering to voters. (Actually, there is a pretty good argument that since "pandering" implies inconsistency for the sake of getting people to vote for you, Sanders may be the only person in the presidential race on either side who can't be accused of pandering. He's being consistently Socialist ... like it or not.)

    I also have to say that I think your suggestion that a $15/hour minimum wage will result in Americans washing their clothes in streams is a little alarmist. There's also the possibility that a higher paid employee base will result in more productive stores that have higher sales ... even of Tide.

    Finally, regarding what looks like a coming battle between Wegmans and Publix as they move south and north, one MNB user wrote:

    I live in Florida so there are Publix stores everywhere — and I almost never shop in any of them. Yes, they are clean, well lit and staffed by friendly associates who go out of their way to help. The problem is, IMO, that the offering is mundane and uninteresting. I stopped regularly shopping there years ago when virtually all of the produce was pre-packed and I had to ask someone to divide a package so that I could buy the amount I wanted. Most of their produce is bulk now but they lost me to The Boys — a local independent that I travel 20-miles round trip for almost every week! For fill-ins I opt for the close-by Whole Foods and The Fresh Market. I’m not at all impressed with Publix meats and poultry.

    Publix prepared foods would’t stand a chance if Wegmans were in the area, If these two go head-to-head anywhere, I can’t imagine Wegmans not being victorious…

    KC's View: