retail news in context, analysis with attitude

Published on: February 11, 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, I'm Kevin Coupe and this is FaceTime with the Content Guy.

You may remember that last October 21 was celebrated in a number of circles as "Back to the Future Day," because it was the day, 30 years in the future, on which Marty McFly arrived In Doc Brown's time machine in order to save his as-yet unborn children, in "Back To The Future, Part 2." (If you've never seen the trilogy, you should. It is all too complicated to explain here. Not to mention tons of fun and enormously entertaining.)

My brother Tim is an elementary school technology teacher, and he was telling me the other day that on the occasion of "Back to the Future Day" he decided to get his 4th grade students to focus on the technologies portrayed in the film that had not been invented when the movie was released, and get them to talk about what happened and what didn't.

And then, he asked them to speculate about the things that they thought might exist 30 years from now. He was telling me about some of the predictions the other day, and I asked him to share the list with me, so I could share it with you ... it is an intriguing reflection of how nine and 10 year olds think. Among the prognostications...

• Technology that will allow people to insert themselves into video games and movies.

• The ability to travel to the moon ... for fun.

• Zero-gravity rooms.

• Hover cars and buses, and flying motorcycles. And cars that don't require any sort of fuel. (Imagine what that'll do to gas prices and the economy.)

• Food replicators and teleportation portals. (Clearly someone is a "Star Trek" fan.)

• Personal robots for everyone.

• We'll travel to Mars, and some people will live there. And we'll also travel to Pluto. And there will be aliens living on Earth. (Though this assumes that they're not here already.)

• There were a lot of predictions about holograms, including having them built into the iPhone 50.

• Self-cooking food, and food that "travels automatically from plate to mouth."

• I love this one - "robotic brains that let you live forever." (This isn't such a crazy idea ... it has been speculated about by serious scientists in books and journal articles.)

I do think there are some lessons here. One is that popular culture - whether movies, TV shows, or books - plays a significant role in shaping kids' opinions about what is possible. To paraphrase the old George Bernard Shaw quote, We used to see and read such things and wonder why and how. But young people see and read such things and ask, why not?

I also think that, for better or worse, young people are identifying their long-term priorities at an early age. They probably want robots because they believe that there are things they'll want to focus on, and things they won't ... and they'll get the robots to do the stuff they don't want to do. They want transporters and hover vehicles because when they want to get somewhere and so something, they don't want to be inhibited by the laws of gravity. And they see no reason they can't live forever ... which is probably how we all feel when we're in fourth grade.

These are all things to keep in mind as these kids get older, because even as they become the center of the marketing target, I believe their expectations and imaginations are not going to be diminished. In fact, they might expand ... and it will be up to marketers to figure out how to keep up. The alternative is to become irrelevant.

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

Published on: February 11, 2016

by Kevin Coupe

The Seattle Times has a story about how Amazon's senior vice president for its international consumer business, Diego Piacentini, is taking a two-year leave of absence from the company so he can run the Italian government's digital technology office.

According to the story, "In 2000, Piacentini, now 55, joined an upstart Amazon from Apple. More recently he has been in charge of Amazon’s ambitious overseas efforts, which include a big bet on India and a significant ramp up in Europe. He’s also a big holder of Amazon shares. Among the company’s top brass, as of early 2015 he was second only to Bezos, according to a proxy filing.

"Piacentini will work pro-bono starting this summer."

The story notes that Italian Premier Matteo Renzi has been focused on expanding Italy's digital footprint, in part so he can attract more foreign investment dollars to the country; the notion that Piacentini might be able to help took root when Renzi and his leadership team visited Silicon Valley.

As for Piacentini, he is saying that he intends to bring Amazon mentality to the Italian government - to "think big and stay focused on the customer."

Now, it seems to me that this could be part of a broader trend (that we're certainly seeing here in the US) of wealthy executives getting involved in politics, believing they can bring business acumen to the way government works. There may be some differences - Piacentini, being an Amazon veteran, inevitably will bring a "today is day one," customer-centric focus to Italy's digital initiatives.

This isn't always the case. Some senior executives tend to think it is all about them, serving as pictures of narcissism rather than of servant-leadership.

But I do think that it could be Eye-Opening if this works. And if it does, maybe we will be seeing "Bezos 2020" bumper stickers.

Stranger things have happened. (And do. Lately, almost every day.)

Published on: February 11, 2016

I am not yet persuaded. I want to be, because I admire Whole Foods' combination of mission and commerce, but I'm not there yet.

I think the plethora of challengers is going to create long-term and possibly existential problems for Whole Foods, and I'm not sure the "365" concept will do anything more than undercut its existing brand equity. And somehow, the words "fundamental transformation" create the impression that there are fundamental problems with the company.

For me, for example, the move by Whole Foods to essentially outsource its e-commerce initiatives to Instacart suggests a fundamental lack of understanding of why it is important to take ownership of the e-shopping experience.

I want to be convinced. Really.

Published on: February 11, 2016

Reuters reports this morning that European Union regulators have approved the proposed $6.3 billion acquisition of Office Depot by Staples, leaving US and Canadian regulators as the final hurdle in the two chains' efforts to combine operations and become more competitive.

The story says that Staples won the approval by promising to divest some of its European operations. The Staples-Office Depot deal now has been approved in Australia, New Zealand, China and Europe.

According to the report, "Staples had said it was willing to continue talks with the FTC to address the regulator's concerns," which include worries that the combination of the two major office supply chains will result in lessened competition and higher prices.

Published on: February 11, 2016

The Denver Post reports this morning that ITG Consumer Research is out with a new survey saying that when Chipotle's food safety problems erupted, the impact was felt by Chipotle ... but not by its competitors.

The survey says that "about a third to one quarter of the redirected Chipotle spending went for food at home or more upscale dining. But those Chipotle customers who kept eating fast food shifted in some unexpected directions," eating "hamburgers, pizza and even chicken nuggets." For the most part, however, they did not "just go out and buy burritos and tacos from rivals."

Analysis of the survey results suggests that it will take three to four months for Chipotle to regain market share and rebuild brand equity.

Published on: February 11, 2016

Sears Holdings said yesterday that after a holiday selling season that "proved to be challenging, with historically warm weather and intense competition pressuring margins and driving comparable store sales declines, particularly in our apparel and related softlines businesses," it plans to take "further actions to accelerate our transformation, which is focused on our Shop Your Way membership program and our Integrated Retail offerings.

"We will accelerate the closing of unprofitable stores, including, but not limited to, roughly 50 stores that we recently announced would be closing in the next few months. We also intend to continue to evaluate and optimize our cost structure, including optimizing store-level marketing expenditures and overall staffing levels, and we will be taking action to reduce our fixed costs, and to improve our inventory management and gross margin realization."

Published on: February 11, 2016

The National Retail Federation (NRF) said yesterday that it is projecting that "retail industry sales (which exclude automobiles, gas stations and restaurants) will grow 3.1 percent, higher than the 10-year average of 2.7 percent. NRF also announced ... it expects non-store sales in 2016 to grow between 6 and 9 percent."

“Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments — particularly in China — we think 2016 will be favorable for growth in the retail industry,” said NRF President and CEO Matthew Shay.

Published on: February 11, 2016

There's an interesting interview in the current Vanity Fair with former Disney CEO Michael Eisner, who now runs a small media investment company and has a unique perspective on how disruptive technologies can affect traditional businesses.

Two excerpts that caught my eye:

• "The theory that I have, and I have it as an executive with 40 years of experience, is that if somebody does something really good, the smartest thing you can do is stay out of their way. That’s what a really good executive does."

• "While Netflix is not only a good idea, they also got lucky. Reed Hastings got lucky hiring Ted Sarandos (the company's head of content acquisition), who did not come out of the Hollywood circuit. He is a very good executive. Lucky is good instincts, too. They put together not only a digital company, which is very complicated, but they also put together a content department, which is unheard of. Usually Silicon Valley companies don’t have that Hollywood instinct. But they really made a company that combines the right brain and the left brain. That’s rare. That’s what makes them unique. Nobody expected that they would create events like 'House of Cards' and 'Orange Is the New Black.' That wasn’t done by research."

It is a good piece ... and you can read the entire thing here.

Published on: February 11, 2016

• The Boston Globe reports that "BJ’s Wholesale Club is the latest company to announce plans to phase out the sale of eggs from hens kept in small cages in the next several years." The company says that "it will exclusively sell cage-free eggs by 2022. Liquid egg products will come from cage-free sources by 2025."

BJ's is based in Massachusetts, where "voters are expected to see a ballot question later this year that, if approved, would require egg sellers to shift to all cage-free products by 2022," the story says.


• The Seattle Times reports that Haggen has pushed back to auction of its "core" Pacific Northwest stores yet again - this time, to February 22.

The story notes that when Haggen decided to sell off the stores that it had only recently acquired (disastrously, as it turned out) after the Albertsons acquisition of Safeway, it said it planned to keep the core stores that it started with. But its agreement with creditors requires the company to also look for buyers of the core units and accept any reasonable offer as a way of raising cash to pay off its debts.


• The Cincinnati Enquirer reports that "Kroger is being sued by three former call center workers that charge the supermarket giant with illegally classifying them as exempt employees ineligible for overtime. All three former workers, Joseph Hardesty, Derek Chipman and Madeline Hickey, were employed as recruiters at Kroger's call center in Blue Ash for five to seven months last year, according to a lawsuit filed on Monday in U.S. District Court in Cincinnati ... The lawsuit accuses Kroger of violating federal fair labor standards and Ohio's wage and labor laws. The suit also is seeking class-action status for other workers in the plaintiff's situation, back pay for the workers and attorney fees and interest."

Kroger has not commented on the suit.

Published on: February 11, 2016

...will return.