retail news in context, analysis with attitude

Published on: February 16, 2016

by Michael Sansolo

Last week the Laser Interferometer Gravitational-Wave Observatory (LIGO) detected actual proof of gravitational waves in our universe, confirming a phenomena that Albert Einstein predicted 100 years ago.

Apparently that’s great news. It means our scientists can now explore the universe in bold new ways far beyond simply stars and planets ... but to be honest, I don’t have a clue what they're talking about. Even after perusing articles that claimed to make these findings accessible to five-year-old readers, I’m still lost. I’m willing to bet that I’m not alone.

Be honest: You likely have a terrific sense of countless news stories from the past few weeks, from Cam Newton’s post Super Bowl moments to Chipotle food safety training. Now, there are numerous ways in which the news about gravitational waves is far more important, impacting our understanding of our place in the universe, than virtually any other story that has captivated the mainstream media.

But when it comes to Google searches, Einstein’s theories are merely a blip compared to Taylor Swift simply being Taylor Swift.

So why does this matter? Simple: it reminds us that people/consumers are logical and intelligent beings who still behave in ways that are anything but.

The reality is it’s hard to figure out what really matters to consumers. Sure, they constantly say they want to make all kinds of better choices when it comes to food, nutrition, budgeting, family and more. However, the gap between what we aspire to do and what we actually do is substantial.

The finding about gravitational waves is a great reminder of that challenge. Intellectually we know this stuff is important, but we aren’t the guys on "The Big Bang Theory" so we just move on to news that seems more relevant. Or at least more easily understandable.

The food industry faces more complex demands from shoppers than ever before and much of the industry response is pretty solid. It’s hard to find a store these days that doesn’t feature a growing variety of local or organic foods. We see constant news of product reformulations to eliminate specific ingredients.

No doubt shoppers really appreciate these changes even if they don’t fully understand them or how they impact their personal nutrition. It would be wonderful if they understood the power of simple improvements such as cooking more meals at home, eating together as families and simply remembering to wash their hands properly.

But it's like us contemplating gravitational waves. There are simply more immediate or more comprehensible things to fill our brains.

The challenge the industry has in some ways is just like those physicists at LIGO: explaining to the general population what everything actually means.

For the food industry that means the ongoing struggle to help consumers make better choices is far from over. It means constantly trying to understand the shifting value equation and helping shoppers see how your business is working to serve those needs. It means explaining the complex in ways that are useful and understandable.

Sure those are tough challenges, but put it in context. At least you don’t have to explain gravitational waves.

That would take a rocket scientist.

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.

Published on: February 16, 2016

by Kevin Coupe

I think I've pretty much established here that I think John Oliver is a national treasure, casting a jaundiced, perceptive eye on issues both big and small, finding humor in unexpected places.

Yesterday, as his "Last Week Tonight" returned to HBO for a new season, that place was Chipotle ... or, as he described it last night, "America's preferred over the counter laxative." It is a funny and eviscerating look at the company's food safety troubles, which lands on an essential truth about its fundamental appeal: "What are you gonna do? Go to Taco Bell?"

It is worth a look, with the usual caveat that some of the language is on the raw side.

Enjoy. As usual, John Oliver is an Eye-Opener.

Published on: February 16, 2016

The US House of Representatives voted 266-144 in favor of the Common Sense Nutrition Disclosure Act, which, as USA Today writes, would "gut a proposed Food and Drug Administration rule requiring chain pizzerias, delis, and convenience stores to list the calorie content of their meals on menus or menu boards prominently displayed on the premises. Instead, takeout restaurants and grocers could choose to disclose calories only on their websites."

The Obama administration opposed the legislation, "saying it will leave Americans — who consume a third of their calories away from home — with less information to make healthy choices." But the GOP-controlled House maintained that the FDA's position was an example of big government overreach.

The US Senate is scheduled to consider similar legislation. If it passes there, once the Senate and House versions are reconciled, the resulting bill then would be sent to the White House. If President Obama were to veto it, Congress would then have to vote to override for the bill to become law.

Support and opposition for the Common Sense Nutrition Disclosure Act pretty much broke down to business interests vs. consumer interests. It was supported by the Food Marketing Institute (FMI), National Association of Convenience Stores (NACS), National Grocers Association (NGA) and Americans for Tax Reform, for example, and opposed by groups like the American Diabetes Association, the American Cancer Society, the American Heart Association, and the Center for Science in the Public Interest (CSPI).

USA Today notes that "Congress already delayed implementation of the FDA's menu labeling rules as part of a massive "omnibus" spending bill it passed late last year. The agency had set a deadline of Dec. 1, 2016 for chain restaurants, grocery stores that sell prepared food, and other businesses with 20 or more locations to comply with the new calorie disclosure requirements. The omnibus bill eliminated that deadline and set no specific date for compliance."

Published on: February 16, 2016

In Milwaukee, the Journal Sentinel has a story about Roundy's new 90,000 square foot Metro Market there that "is built around the lives of millennials and urban professionals who want quality, fresh prepared food offerings they can't find anywhere else (and) "designed to address the earthquake-like shift in the habits of American consumers for whom pantry-stocking of long shelf-life food has fallen out of favor, having been replaced for many people by multiple weekly trips — and sometimes daily trips — to the local grocery store."

The two-level store, the story says, "will have 12 beers on tap, a rolled-to-order sushi bar, an oyster bar, a seafood market, a pizzeria, a deli, bakery, barbecue smoker, a make-your-own trail mix bar and a spice shop — all delivered in an environmentally friendly green building."

The Journal Sentinel notes that the Metro Market has significance beyond just what it will offer the neighborhood: "Roundy's, about three months into its new life as a subsidiary of The Kroger Co., has a fair amount riding on the Shorewood store rollout as it seeks to revitalize itself and reclaim market share that has eroded under withering competition in Wisconsin and Milwaukee.

"The store will include some of the most popular features of Roundy's successful Mariano's chain in Chicago.

"Industry insiders say the rollout is also being closely watched for the marriage that it will introduce, specifically the higher-end products and detail-obsessed service of a Mariano's, combined with the pricing power of Kroger, which has quietly and steadily grown to become the world's third-largest retailer behind Walmart and Costco."

Published on: February 16, 2016

The Wall Street Journal reports that Whole Foods, "which has long given its local managers and regional bosses broad discretion over everything from buying cheese to store design, is whittling away at some of that autonomy in an effort to reduce costs and boost its clout with suppliers. As stiffer competition erodes its profit growth, the natural and organic foods retailer is tweaking its management style by centralizing and streamlining some functions. The changes could be risky for the company as it tries to wring more efficiency from its stores without sacrificing the local flavor and specialty offerings that have been a cornerstone of its success."

This includes "shifting more responsibility for buying packaged foods, detergents and other nonperishable items for the more than 430 stores to its Austin, Texas, headquarters. It is deploying software to simplify labor-intensive tasks like scheduling staff and replenishing shelves.
The chain also is seeking to save about $300 million a year by September 2017, partly by eliminating more than 2,000 jobs, a plan it announced last fall."

Published on: February 16, 2016

Daymon Worldwide is out with a new study saying that "36 percent of consumers are likely to make a special trip to buy their primary retailer’s private brands. As a result, these consumers indicate that they are more satisfied and loyal to the store, are more likely to make future shopping trips, would recommend the store to their friends/family, feel positive about the value they get for their money, and prefer the store overall."

Published on: February 16, 2016

Former New York Times food columnist Mark Bittman continues his transition to entrepreneur, as he works as chief innovation officer for startup Purple Carrot, described as "a meal kit delivery service for vegans." He's been chronicling his experiences for Fast Company. And we've been linking to them here on MNB.

The latest in the series is out, entitled, "You Can't Be All Things To All People" .. and he looks at how the company is making choices between what customers want and need ... and how the company would be in the mushy middle if it tried to offer both.

Good piece ... and you can read it here.

Published on: February 16, 2016

The Motley Fool has a piece about why Amazon likely is investing in various shipping businesses, as it appears to be looking for ways in which it can compete with the US Postal Service, FedEx and UPS, even though "package delivery has been a cyclical low-margin business."

The story notes that "delivery is the one major aspect of Amazon's business that it does not control," and asserting some level of control "could pay dividends beyond small profits, as a successful system would improve customer satisfaction and loyalty."

According to Bernstein Research, the Motley Fool writes, "the company shipped close to 500 million packages last year, with USPS delivering about 40% of them. UPS owned 20-25% of the share, and FedEx 15-20%.  Inconsistency on the part of these organizations can create problems: "Not only does this leave Amazon with frustrated customers and complaints, but the company often gives out credit for purchases or months of Prime membership as a form of compensation. Some customers have even become so frustrated with delivery headaches that they've sworn off the service."

Published on: February 16, 2016

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Dayton Business Journal reports that "a medication used to reverse an opioid overdose will be available over-the-counter in Dayton area Kroger pharmacies starting Monday.
The Cincinnati and Dayton division of Kroger Co. announced ... that the medication, naloxone, will be available in the divisions 84 Ohio pharmacies and 15 northern Kentucky pharmacies.
The Columbus division of the Cincinnati-based supermarket operator will start dispensing the medication without a prescription starting Wednesday at its 112 locations, for a total 216 pharmacies in the state participating in the initiative."

It is just so sad that we've gotten to a point in our society where companies have to do this. It's necessary, but regrettable.


• The Huffington Post reports that Trader Joe's "has thrown its weight behind the growing cage-free egg movement, making it one of the few prominent grocery chains to do so." The retailer has announced that "it would begin selling only cage-free eggs in all stores by 2025. Locations in California, Oregon, Washington, Arizona, New Mexico and Colorado could see the switch as early as 2020."

Among the companies that have committed to shift to cage-free eggs, on a variety of timelines, are Costco, BJ's, McDonald's, Starbucks, Panera, Subway, Taco Bell, Nestle, Mars, and Shake Shack.


• Metro in the UK reports that Aldi "has announced plans to open up 80 new stores across the UK under incredible expansion plans. Upping its battle against supermarkets like Tesco, Sainsbury’s, Asda and Morrisons, the budget supermarket chain announced that in opening the new shops it will create 5,000 new jobs."

Published on: February 16, 2016

• In Minnesota, the Star Tribune reports that Jodee Kozlak, Target Corp.’s senior vice president and chief human resources officer, is leaving to join Chinese e-commerce giant Alibaba Group as global senior vice president of human resources.

Kozlak will be succeeded by Stephanie Lundquist, most recently senior vice president of human resources at Target.


• JC Penney announced that it has named Val Harris, the company's former vice president of product development design and trend for women’s businesses, as its new head of product design and development, replacing the retiring Ken Mangone.

Published on: February 16, 2016

The annual FoodWorx conference is scheduled to take place in Portland, Oregon, tomorrow ... and I'll be moderating a panel there on "The Future of Getting Food & Drink Products into Stores & Consumer Kitchens." In addition, I'm hoping to have the opportunity to chat - and maybe grab a cup of coffee with - any MNB readers who happen to be in attendance.

So if you're at FoodWorx on Saturday, come say hi ... Hope to see you there.

Published on: February 16, 2016

Got the following email from an MNB reader:

Just something I thought while reading the story and your comments, especially around the “treading water” comment you made on Fresh Market.

In 2015 I had a couple phone interviews with Fresh Market, who stated at the time they wanted to implement a true retail category management model, but I never got to the stage of flying out for an interview.  One thing that struck me, as it was becoming a common theme among newer or at least moderately successful but still relatively small retailers, is the lack of willingness to compensate based on experience in order to build the right foundation.  Fresh Market essentially was offering a lesser compensation package then I was getting in Chicago for a position that would have been a promotion and would have required relocating my life.  I had a similar experience with a newer concept that’s struggling in the Chicago market, Fresh Thyme (though they’ve been fairly successful in OH and IN from what I understand).  In Nov. 2014 they put me through 3 rounds of interviews, including an in person, before offering me 15% less pay and a benefit structure they still hadn’t figured out to the point that there was no 401k or bonus (since then the hiring manager I interviewed with left the company after they still hadn’t filled the position 8 months after talking with me).

The reason given in both instances is that they were smaller companies, Fresh Thyme essentially still being a startup.  And in the case of Fresh Market the comment was Asheville was less expensive than Chicago.  I’m curious what your thoughts are on companies that are so focused on having a budgeted number that they pass on viable candidates?  Have you observed a correlation between a focus on building the right foundation with the right talent and success vs. a focus on choosing candidates who fit within a certain narrow financial window and struggles? 

Things worked out and I found a great new opportunity this past August, but I wonder about companies that are more concerned with controlling costs by hiring people who fit into a preconceived notion of salary vs. being able to see how spending a bit more on the right people will provide a much better long term ROI.  Who would really want to go work for a company like that unless you're fairly junior and need experience.



And MNB reader Tony Moore had some thoughts about my comment the other day that "realities of the modern world may demand a rethinking of how companies and investors define the balance between innovation and profitability."

I saw this comment from you the other day and meant to respond.  I am not an economist though my college degree is a BA of Economics (long time ago). That said, what concerns me about your statement is that you seem to be giving a bit of a free pass to innovation that is not able to prove itself as economically viable.  If business/commercial innovation doesn’t provide improvement to overall economic results in some reasonable time frame, what is the point

Bursts of successful innovation are generally follow by burst of economic windfalls.  Why does that balance need to be reconfigured?

After more that 20 years, Amazon seems to always have one more mountain to climb to get to the "promised land”.  Not sure becoming more vertically integrated is the answer.

I'm not sure I'm giving them a free pass as much as I am suggesting that traditional measurements - especially as defined by stock analysts and the investor class - may need to be rethought.

Published on: February 16, 2016

Tomorrow, it should be noted, is the day that pitchers and catchers report to the Arizona Diamondbacks, Cleveland Indians, Philadelphia Phillies, St. Louis Cardinals and San Francisco Giants, with the rest of Major League Baseball teams starting their spring trainings as the week unfolds.