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    Published on: February 19, 2016

    by Kevin Coupe

    In Portland, Oregon, this week for the FoodWorx conference, it just so happened that I also managed to be able to attend the grand opening party for a new food market, Providore Fine Foods, which has launched in the city's northeastern quadrant.

    And it definitely is a Wow!

    Providore is the latest incarnation of a management team (Kevin de Garmo, Kaie Wellman and Bruce Silverman) that recently closed Pastaworks, about a mile away, in favor of this sparkling new location on the corner of Sandy Blvd. and NE 24th Street. But what makes Providore so unique and interesting is how it combines the operations of a number of different local retailers - Pastaworks, plus Flying Fish Company, Meat Monger, Emerald Petals, Little T Baker and Rubinette Produce Market - into a single 5,000 square foot location that seems more like an old-world marketplace than a modern food store.

    Here's what Providore does that many food stores do not: It makes you hungry.

    "Providore" is Italian for purveyor, and that's exactly what it does ... especially if you have a taste for oysters, washed down with a bit of Prosecco. Or maybe some thinly sliced imported prosciutto, or one of hundreds of varieties of cheese. There also is terrific prepared foods case, a gorgeous produce section, and a highly curated wine room..

    The business plan works this way. The five different businesses provide their own staff and product, and share the costs of the building; there is a common checkout, with those costs divided based on percentages of sales done by each business. It is a structure that Silverman tells me is designed to be transplanted to other locations, either in Portland (a city with more than its share of foodies) or other cities; he fervently believes that this is a small store/urban concept with enormous potential.

    For me, Providore represents an intelligent way to approach the small store concept - rather than trying to simply shrink down a big store, or (metaphorically) trying to jam 20 pounds of flour into a 10 pound bag, it actually creates a specifically small-store experience ... not doing too much or too little.

    But for customers wandering into Providore, the business plan won't matter as much as the accessibility of wonderful food and drink, an atmosphere that makes you hungry and thirsty, and the ability to snack a bit even while you're shopping.

    That's certainly what I did. It was delicious. And an Eye-Opener.
    KC's View:

    Published on: February 19, 2016

    Walmart announced yesterday that its annual revenues in the just-ended fiscal year were $482.1 billion — down 0.7 percent from last year's $485.7 billion, and the first time ever that its sales were lower than the year before. At the same time, profits were down 11.2 percent, to $24.1 billion from $27.1 billion a year earlier.

    The retailer said that Q4 net income was down 7.9 percent, to $4.57 billion, and revenue dropped 1.4 percent, to $129.7 billion.

    And, while Walmart's e-commerce sales were up eight percent in the fourth quarter, that also represented a slowdown - online sales had been up 17 percent in the first quarter, 16 percent in the second quarter, and 10 percent in the third.

    NPR notes that "if you read between all the lines, the earnings report had good news for workers and consumers. One factor that hurt the company's shareholders but helped its workers was the push to raise wages. In many states, lawmakers raised the minimum wage last year, helping lift the wage floor for retail workers ... And consumers benefited from factors that made Wal-Mart sales look smaller. Cheaper energy and a stronger dollar have been helping hold down the cost of goods and foods. That's great for shoppers, but for Wal-Mart, falling prices make it harder to show revenue growth."

    However, Reuters writes that the e-commerce numbers "suggest Wal-Mart is slipping further behind online leader, whose North America sales grew 24 percent and international sales grew 22 percent in the fourth quarter on constant currency terms."

    The Reuters story goes on to say that "Wal-Mart's slowing growth also highlights broader challenges of logistics and price competitiveness, including in the key U.S. market ... According to a recent Profitero survey of 2,461 products, Amazon had lower online prices than both Target and Wal-Mart across six product categories," and also "has the upper hand on selection and delivery times."

    And Bloomberg writes that "the retailer attributed the deceleration to increased competition in the U.K. as well as economic downturns in Brazil and China. As for its domestic e-commerce sales, Wal-Mart would only say that its U.S. online operations have grown faster than the companywide total. But with the retailer set to spend more than $1.1 billion this year on e-commerce, investors are getting impatient."
    KC's View:
    You'd think that, no matter what the numbers, a financial report that has good news for both consumers and employees would be seen as a positive thing. But that's not the way the markets work, since the investor class is seen as more important than both.

    There's no question that Walmart has a tough road in front of it as it looks to regain a sense of relevance in a fast-changing retail environment. This will be a test of CEO Doug McMillon's leadership ... can he keep the company on track to make the kinds of changes it needs to make while still assuaging those who will be impatient for faster and less fundamental change. (And resulting short-term benefits.)

    It could be worse. It could be Sears. Or Kmart.

    Published on: February 19, 2016

    Bloomberg reports that the US Food and Drug Administration (FDA) is saying that "some grated Parmesan suppliers have been mislabeling products by filling them with too much cellulose, a common anti-clumping agent made from wood pulp, or using cheaper cheddar, instead of real Romano."

    One such company is Castle Cheese, a Pennsylvania firm that has been found guilty of just such actions. CEO Michelle Myrter, the story says, "is scheduled to plead guilty this month to criminal charges. She faces up to a year in prison and a $100,000 fine."

    To find out how extensive a problem this is, the story says, "Bloomberg News had store-bought grated cheese tested for wood-pulp content by an independent laboratory.

    "Cellulose is a safe additive, and an acceptable level is 2 percent to 4 percent, according to Dean Sommer, a cheese technologist at the Center for Dairy Research in Madison, Wisconsin. Essential Everyday 100% Grated Parmesan Cheese, from Jewel-Osco, was 8.8 percent cellulose, while Wal-Mart Stores Inc.’s Great Value 100% Grated Parmesan Cheese registered 7.8 percent, according to test results. Whole Foods 365 brand didn’t list cellulose as an ingredient on the label, but still tested at 0.3 percent. Kraft had 3.8 percent."
    KC's View:
    Unacceptable. This is the kind of thing that can have an enormous impact on consumer trust. It also is the kind of thing that probably is much worse than it first appears.

    The government has to go after the companies that are deliberately adulterating their products, and convict as many of their CEOs as necessary to make the point that this will not be tolerated. This kind of behavior is not just bad for the companies and bad for shoppers, but also bad for the food industry because it erodes trust.

    Published on: February 19, 2016

    Fortune reports that Sears-owned Kmart is hoping to generate new sales by buying and then selling liquidated products from retailers that have gone out of business.

    Company president Alasdair James says that "the path to making Kmart great again starts with sourcing truly brag-worthy deals,” and says that the goal is to offer an “extreme value proposition.”
    KC's View:
    Well, it is an extreme something. Though I wonder how many customers will be lining up to buy merchandise that they didn't buy from other places, causing those places to go out of business.

    The good news is that once Kmart gets this strategy into place, it'll be even easier to get merchandise from Sears when it goes out of business, as it almost inevitably will. Unless, of course, it goes out of business first. Which certainly is within the realm of possibility, considering that its recent holiday sales were down more than seven percent, and it hasn't seen quarterly same-store sales go up since 2010.

    Published on: February 19, 2016

    Bizrate Insights is out with a study saying that "roughly 73 percent of all online buyers are using a mobile device to shop online, and 21 percent are using mobile devices to help them shop in stores," according to a story from Fierce Retail.

    The story goes on to say that "close to 63 percent of shoppers use mobile to shop the competition while in a store, and 58 percent are comparing prices and coupons available at their present location to that same retailer's online prices and deals ... Roughly 40 percent of shoppers said they checked item availability on their mobile device before heading to a store."
    KC's View:
    The numbers may be a surprise, but the activity itself should not come as a shock to anyone. It is why transparency is so important on virtually every level ... because consumers are going to demand it.

    Published on: February 19, 2016

    The Wall Street Journal reports that "Campbell Soup Co. is investing $125 million in its own venture-capital project to fund food startups, a move to keep up with the small, entrepreneurial companies that are driving food trends in the US ... Campbell’s project, called Acre Venture Partners, is a Delaware-based limited partnership and will be run by an outside partner. A Campbell subsidiary will be the sole limited partner, and Jeff Dunn, head of Campbell’s fresh-food division, which includes Bolthouse Farms juices and Garden Fresh salsa, will be Campbell’s representative on the investment committee."

    CEO Denise Morrison said that the move is necessary in view of the influx of venture capital disrupting the food industry; she says that "since 2010, about 400 food startups have received more than $6 billion in funding."

    Similar moves have been made by companies that include Coca-Cola and General Mills.
    KC's View:
    In my view, there is an essential truths about the future of competition - that in less than 10 years, whatever it is you do, you'll be facing competition from somebody or something that isn;t even on your radar today. Better to invest in innovative startups than to let them come back to haunt you.

    Published on: February 19, 2016

    • The Sacramento Bee reports that Save Mart Supermarkets is closing two stores in the Sacramento area, as well as "an S-Mart store in Stockton, a Save Mart store in San Jose and a Lucky supermarket in Santa Clara by the end of March."

    Company spokeswoman Nannette Miranda says, "We reviewed our operations, and we felt that some strategic moves were necessary. These stores have struggled to meet the needs of the market.”

    The story notes that "Save Mart Supermarkets operates more than 200 stores in California and Nevada. After the closures, Save Mart Supermarkets will still oversee about a dozen stores in the Sacramento region."
    KC's View:

    Published on: February 19, 2016

    • Kroger announced the retirement of Marnette Perry, the company's Senior Vice President for Retail Operations and Strategic Initiatives, who has been working for the company for 44 years. Perry started as a part-time cashier while in college, and eventually worked in roles in operations, merchandising and executive leadership.
    KC's View:

    Published on: February 19, 2016

    Just to catch up on some email...

    From MNB reader Chris Utz, about the legal battle between Gillette and Dollar Shave Club:

    Frankly, I’m bemused about all of the concern over razors.  Dollar Shave Club?  I never liked automatic subscriptions, since the trouble I had stopping my Book-of the-Month ‘Club’ subscription when I was about 8 years old.

    The multiplicity of TV ads about razors, Gillette’s lawsuit, the Pawn Shop reality show guy selling old fashioned double-bladed razors?  Please…  This is SO much ado about nothing.

    I tried some of the multiple blade razors and found they were not only expensive, but became uncomfortable much faster than simple ‘disposable’ razors.  I currently shave with a high-end Braun electric razor and trim up with whatever single-blade disposable is cheapest.  Works fine for me.

    On another subject, from an MNB reader:

    My wife bought me the Amazon Echo for Christmas and we absolutely have fallen in love with it.  There is so much it can do that we’ve yet discovered.

    I did have some fun this past week while on business. I used the app to bug my wife.  While in Phoenix I was playing my music choices back home in Ohio to her annoyance just so she wouldn’t forget who loves her.  Needless to say it didn’t take long before I got a text telling me enough was enough.  What a fun device.

    Regarding the testing of robots to make deliveries in hotels, one MNB user wrote:

    I love this idea. When I travel alone, I don't like ordering room service because I feel uncomfortable having a stranger come into my room. I suspect other female travelers feel the same way.

    But, from another reader, a less enthusiastic response, especially about the contention that it won't result in the loss of any human jobs:

    Does anybody really believe that? Or did the hotel chains (a service industry) simply not hire the proper staff to do the things those “job safe” employees now have time freed-up to do?
    Sounds to me much like “left the company to pursue other interests”, or “the merger/acquisition will be business as usual.”

    On another subject, from MNB reader Mike Overschmidt:

    You write a great deal about all the ways we can receive entertainment today.  It seems content delivery is an infinitely splintering mosaic of choices.  However I wonder if I’m the only one who as a result is also feeling content confusion?  In fairness, classify this as a first world problem.

    I’m not a big TV watcher other than when the illustrious St Louis Cardinals are playing baseball.  I do have a couple of shows at any given time I try to catch.  My problem is that with the array of choices for TV and movies, I have trouble keeping things straight.  Exclusive deals for movies, original series’ on emerging platforms, DVR/on-demand time shifting and wholly unpredictable “seasons” all serve to leave me unsure what I can watch when.  I have to try to remember “now is that movie on Netflix streaming or Netflix DVD or maybe it’s a Redbox exclusive?” 

    Sometimes I think; “I saw a preview of that new show that looked interesting but what channel was that and when?  Or wait, maybe that was Amazon Prime.”  Got a favorite show? Quick!, when does the new season start?  Frankly, it’s overwhelming trying to remember not only what I want to watch but how to watch it.  All this choice, it’s just too much work, man.

    Regarding Whole Foods' continuing problems, on MNB user wrote:

    The biggest problem (in my personal opinion) is that Whole Foods is trying to sell itself as having low prices. That is not Whole Foods is about. It is a premium grocery store and has to stop pandering to the “Whole Paycheck” people. Yes…..Yes….Yes…competition, etc…but sometimes you need to optimize your niche and stop trying to BE everyone else.

    And, about another story that keeps popping up here, MNB reader Vincent R. Alvarado wrote:

    It has been years in the making, bad decisions one after another. Sears was always looking for the magic pill as to not face the fact that as a business model they were obsolete and had to change.  It always come back to the leadership issue, the four walls, the name and people running the stores, need to have leaders that have a vision for the future and how to grow.  Sitting and waiting for the fortune to turn around by not dealing with the facts that are beating your door down is not leadership. So sad to see the slow death...

    We recently had a story about how Kroger is now selling an over-the-counter medication used to counteract opioid overdoses, and I commented that "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."

    One MNB user responded:

    From my perspective, this is quite simply a case of double standards. When the crack cocaine epidemic was at its height in the late 80s/early 90s and primarily afflicted the low income segment of the African American community the response was to jail all those involved in the drug trade (dealers and users alike).

    Now that heroin use has spread to middle-class, suburban, non-minority users, this is the response? Interesting.

    I think this is an utterly fair point.

    Finally ... I wanted to let you know that I got a lot of email yesterday responding to my "Space Odyssey" commentary. So much, in fact, and some of it so unexpected that I'll respond to it next week.

    I will tell you this much ... I've learned another valuable business lesson.

    But more next week...
    KC's View:

    Published on: February 19, 2016

    I was really looking forward to Hail, Caesar!, the new comedy from Joel and Ethan Coen; since their first feature, Blood Simple, I've been a fan of the vast majority of their movies. The Coen brothers have an enormously diverse oeuvre, with films like Fargo, O Brother, Where Art Thou?, True Grit (the remake) and Inside Llewyn Davis representative of extraordinary output. (A confession here. For some reason, I've never been able to connect to The Big Lebowski. I recognize the craft and the terrific performances, but I simply cannot understand why it has become a cult film.)

    I'm afraid that, despite my pre-screening enthusiasm, Hail, Caesar! ended up being, at least in my view, one of their minor films and ultimately a disappointment.

    Hail, Caesar! is about Eddie Mannix, a fictionalized version of a real-life Hollywood fixer; as played by Josh Brolin, Mannix finds himself spending an entire day trying to clean up various messes created by the studio system in 1951. Chief among the problems is the kidnapping of a dimwitted star, Baird Whitlock (George Clooney), who is starring in a Ben Hur-like movie.

    My problem with Hail, Caesar! is that I can't decide whether it is too thinly plotted or too densely plotted. There is tons going on, but it doesn't really add up to very much ... while Mannix is trying to find his missing star, he ends up being more spectator than protagonist. And while the movie's cast is stellar - in addition to Brolin and Clooney, the cast includes Ralph Fiennes, Jonah Hill, Scarlett Johansson, Frances McDormand, Tilda Swinton and Channing Tatum - most of them have way too little to do, and end up being character types rather than actual characters.

    In the end, I kept waiting for more. And was disappointed. I was hoping for more plot and character development, and instead just got pretensions.

    Now, this is not to suggest that Hail, Caesar! does not have its pleasures. One of the things that the Coen brothers have done is created segments from various films being shot on the studio lot where Mannix works. We see brief scenes from a Gene Kelly-style music (with a great star turn by Tatum), an Esther Williams-style aquatic dance film (with Scarlett Johansson), as well as a drawing room drama and a western - and they all show enormous affection for the Hollywood of old. There's also a terrific performance by Alden Ehrenreich, an actor I've never heard of, as a singing cowboy star suddenly cast in a drama that requires him to wear a tuxedo.

    I can't pretend not to be disappointed by Hail, Caesar!. I can't recommend it, except maybe to those who are huge fans of the Coen brothers. But I'm still looking forward to their next movie, whatever it happens to be.

    I had a wonderful beer last night - Upright #6, a dark rye beer that is rich and delicious and from the Upright Brewery in Portland, Oregon. It washed down a pepperoni and red onion pizza from Nel Centro, also in Portland ... and together they made me forget the hard rain that was falling outside.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: