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    Published on: February 25, 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.

    So last week in this space, you may remember, I went on a bit of a rant - about, of all things, why having two spaces in between sentences is better than one space. I said that I thought that when starting a second sentence, we all ought to use two spaces. It adds separation. It adds clarity. It is like taking that extra moment to think before speaking. And so, I said, I was planting my flag and beginning a campaign for two spaces.

    To say I got a lot of email about this would be to understate the situation. It almost immediately became one of the subjects than in more than 14 years of doing MNB, generated the most email ... and what was really interesting about it was that it was pretty much 50-50. About half the folks who wrote in agreed with me wholeheartedly, and the other half thought I was totally wrong. Among this latter half was the editor of both "The Big Picture" and "Retail Rules!", who informed me that she'd gone through and changed all the times I used two spaces to one space ... because that's what editors do.

    I also got a number of emails that suggested I needed to get a life. Or at least a hobby.

    But I got an unexpected business lesson from the readers who wrote in to point out something I had not noticed - that in the text version of this FaceTime commentary, there was always one space between sentences, not two. It seems that despite the fact that I wrote it one way, technology took over and changed it to what it felt was the more efficient use of space. it didn't matter what I wanted, or what I was passionate about. It was technology 1, Content Guy 0 ... and I didn't even know it.

    I have to admit that I find this a little bit scary in that way that The Terminator warned us about what happens when technology takes over. But I also found it kind of funny ... it was like I was being chastened by forces over which I had no control to relax and worry about the important stuff. Not one spaces or two.

    That's a good business lesson, even a good life lesson. There are things over which we have control, and things over which we have none. Better not to worry about the latter ... it is a waste of time, a waste of energy, and it doesn't really matter. I'll continue to put two spaces between sentences because it makes me feel better about what I'm doing ... but since readers never complained or even noticed, maybe I should rethink my priorities, or at least the object of my outrage.

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

    KC's View:

    Published on: February 25, 2016

    by Kevin Coupe

    We've all read and heard about the burgeoning craft beer business, but in Sandy, Oregon, one landowner wants to put his money where his mouth is. Or, more precisely, his real estate where his thirst is.

    According to the Oregonian, Mark Benson owns an eight-acre piece of land that one passes on the way to and from Mt. Hood, and he's decided that it would be a perfect spot for a brewpub. But not being a brewer himself, he's posted a large sign on the land:


    Benson even is willing to become a partner in the construction of the brewpub, if he can just find someone to take him up on his offer.

    The story says that Benson originally hoped to pen a car dealership on the property, but those plans fell through. "In the meantime, he started getting familiar with Oregon's burgeoning craft-brewing industry and became convinced the property would be ideal for a large brewpub and restaurant. Knowing that Sandy's location might be an issue for some, he decided to increase the incentive to build by offering the land for free."

    He has the support of local officials, who'd like to see the town's restaurant options expanded, as well as the new jobs that a brewpub would bring. So Benson waits, with just one caveat: While he's willing to be a partner in the construction, he wants nothing to do with the actual brewing.

    "I'm a beer drinker, but I have my limitations," he says. "I don't even want an employee discount."

    It is a unique sort of entrepreneurship and, in its own way, an Eye-Opener.
    KC's View:

    Published on: February 25, 2016

    The Corn Refiners Association has sponsored a new economic analysis that says "American families will spend approximately $1,050 more per year on groceries due to Vermont’s new law requiring on package labels for foods with genetically modified organisms" The study says that "the effect of Vermont’s law would increase food costs for consumers across the country because of the cost of new labeling systems and because consumers will likely view the GMO labels as warnings, leading food companies to switch from GMO ingredients to more expensive non-GMO ingredients. The impact on the national food supply chain from Vermont’s labeling law will be immense."

    The report then goes on to say that "Vermont’s labeling law will acutely affect low-income families, who pay a higher share of their income on food and other essentials, according to the study. The increase in food costs would take nearly 2.5 percent of the median income of the poorest fifth of the population ... At a minimum, the Vermont law costs consumers across the country about $3.8 billion, or approximately $50 per family, for label changes. However, costs rise substantially as manufacturers shift to reformulate products to non-GMO."

    The Vermont GMO labeling law goes into effect on July 1.
    KC's View:
    Geez, I feel like I've beaten this dead horse before ... but let me make just a few points.

    First, it would actually be newsworthy if the Corn Refiners Association came up with a study that said anything other than this. I mean, give me a break. It isn;t like these guys don;t have a vested interest. I'm not saying they can't be objective, just that it isn't real likely.

    Second, they call for national labeling standard ... but best I can tell, that means a voluntary standard, not a national mandate. That's a perfectly legitimate position to take, but that's not what they say. They say "national standard," without being specific. Again, give me a break.

    Finally, I would suggest that all these manufacturers don't have to switch to non-GMO ingredients. They could just label them accurately and actually try to educate consumers about what GMO means and why they are important. Of course, most companies don't want to do that ... they'd rather say that GMO labeling will scare people and so let's not do it. On the other hand, if suddenly they discovered that there was an ingredient out there that would make men more handsome, women more beautiful or every kid so smart that he or she could get into Harvard, they'd bust their rear ends to a) include the ingredient in their products, b) label the products as such, and c) do whatever is necessary to educate consumers about why this ingredient is a good thing and why people should buy their product.

    But that's not how they view this. It is easier to try to scare the crap out of people about costs.

    By the way ... if manufacturer "A" changed the formulation of its products to eliminate GMOs and sales dropped, causing the stock price to go down, you can be damned sure that the executive team would figure out a way to bring prices down and revive sales, because their jobs - and high-value benefits packages - would depend on it.

    I say it again. Give me a break.

    Published on: February 25, 2016

    The Wall Street Journal reports that United Parcel Service (UPS) is leading a $28 million funding round for Same-day delivery startup Deliv Inc., described as a startup that "fetches goods from brick-and-mortar retailers to bring them to customers’ homes nearby."

    The story notes that "last-mile delivery has proven a hotly contested battleground, with dozens of startups, the U.S. Postal Service and Inc. all vying for accounts with retailers, restaurants and grocery stores to bring goods to people’s homes. Delivery is often within one hour at a fee of around $5.

    "But it can be difficult to scratch out profit without high volume ...  Deliv Chief Executive Daphne Carmeli said she avoids cost overruns by bundling orders and delivering them at set times, though the company is dependent on customers desiring the service when shopping at other retailers."

    UPS is said to see the investment as enabling it "to observe a marketplace and business model in which it doesn’t yet participate."
    KC's View:
    Interesting. At a time when there is so much disruption and competition in the delivery business, and even Amazon is trying to figure out how much of its shipping functions it can effectively and efficiently bring in-house, it simply makes sense for companies like UPS to explore the edges and see what it can learn and if it makes sense to get acquisitive.

    I suspect there will be more deals down the road, not fewer.

    Published on: February 25, 2016

    Fortune reports that Target's Q4 holiday sales were up 1.9 percent compared to the year before, and that its e-commerce sales for the period were up 34 percent - a performance that bettered Walmart's for the period and raised questions about which one is better positioned to compete with Amazon.

    According to the story, "Target’s efforts to get more people to come to its stores - notably with services like in-store pick up of online orders - helped the number of shopper visits rise 1.3%.
    Since CEO Brian Cornell took the reins in 2014, Target has focused on leading in a few key categories—baby, kids, wellness, and fashion—to stand out from the crowd. That strategy appears to be paying off."

    Target's hometown newspaper, the Star Tribune analyzed it this way:

    "During the holidays, Target worked to gain more online sales by offering free shipping on any size order. That promotion seemed to resonate with customers, helping contribute to a sizable increase in online sales. In a conference call with reporters, Chief Financial Officer Cathy Smith said that Target's 34 percent growth in online sales led the industry.

    "And while other retailers saw a dip in apparel sales during the holidays due to the warmer weather, she said Target did not see a similar drop, a fact that she attributed to the retailer's work in the last year to improve the quality and style of its offerings. Toys were another bright spot in the quarter with double digit growth, boosted by Star Wars merchandise."
    KC's View:
    One has to give Cornell credit for engineering a real turnaround at Target ... the company isn't totally out of the woods yet, but he's certainly got it headed in what seems to be the right direction, in part because he was willing to make tough decisions and not belabor them. Bad news never gets better with age, and he was smart enough to realize that.

    Published on: February 25, 2016

    MediaPost has a story saying that "wearable Internet-connected devices are shipping by the millions," and that "the wearables market grew 127% in the last quarter compared to the same quarter a year ago."

    According to the story, "The clear leader in the field is Fitbit, which shipped 8 million units in the last quarter, almost a third (30%) of all wearables, including smartwatches. It shipped 21 million for the entire year. Apple’s smartwatch follows Fitbit, but with much less, at 4 million watches shipped or 15% of all wearables."
    KC's View:
    Here's what I want ... Amazon's Echo, reduced to the size of a small lapel pin, available to take orders and make my life easier no matter where I happen to be. That'd be the ultimate in wearable technology as far as I'm concerned ... and I have to believe that this is something that Amazon has on the drawing board.

    Published on: February 25, 2016

    Fortune reports on a poll concluding that "most consumers feel they lack control over personal information on their phones, are suspicious of attempts to use it for marketing appeals, and many think the problem is getting worse, a survey in major countries of the world has found ... The survey found 75% of consumers did not trust even well-known marketing brands to take care of their data, with many of those, 55%, saying their trust had been eroded in recent years."

    The poll was conducted in Brazil, Britain, China, France, Germany, India, South Korea and the US.

    "When asked about their willingness to share more personal data such as location and or interactions, just 14%, on average, said they were willing to do so," the story says. " Across the countries surveyed, 30%, on average were unwilling to share any personal information at all, the study found."
    KC's View:
    I continue to believe that the privacy and national security debate - as framed by Apple's disagreement with the federal government - is going to animate many political discussions in coming months. I think people in general are willing to give up certain things because of self-interest, but there is a Big Brother quality to the federal government's arguments about forcing Apple to create technology that will allow it to hack into multiple phones that some will find disquieting.

    Published on: February 25, 2016

    Twice reports that electronics retailer Best Buy has decided to close down its online Marketplace operation after five years, "citing product overlap, customer confusion, and minimal revenue contribution."

    The company is said to have sent an email to about 100 third-party sellers to inform them of the decision, which took effect today.

    Best Buy says there was a 70 percent overlap between the products sold on the Marketplace site by retailers and manufacturers and products it was selling on its own site.

    The story notes that "at the time of its launch, then-CEO Brian Dunn described the Marketplace as 'a key development to our multichannel platform'."
    KC's View:
    If you're going to open a marketplace online, you have to embrace the overlaps and facilitate transparency ... and I suspect that Best Buy did neither. So much for key digital strategy developments...

    Published on: February 25, 2016

    The Wall Street Journal reports that 12 states "are tired of waiting for Congress to write national rules to let them collect sales taxes from out-of-state Internet retailers. So, in a loosely coordinated effort, they are moving to impose those taxes themselves and daring merchants to challenge them.

    "The gambit is aimed at creating business blowback and a confusing national patchwork of laws that might prompt Congress to act. Short of that, the states want their moves to be questioned legally so they can ask the Supreme Court to overturn a 1992 ruling that forbids taxation of Internet sales by retailers that lack a physical location in a state."

    The story notes that a federal appeals court this week sided with the state of Colorado in a separate case. Colorado has implemented a law that "requires out-of-state retailers that don’t collect taxes to send the state a list of in-state customers.
    KC's View:
    The story also makes clear that this debate has the potential to create fissures in the GOP, where there will be business folks who want to see these taxes levied, and other folks who think that taxes are a crime against nature.

    Not that this will matter. We just have to find out what Donald J. Trump believes ... because that will then be the party's official position, which we can ruminate about while humming "Hail to the Chief."

    Published on: February 25, 2016

    • If you want to compete in the e-commerce space with the biggest and best companies, it seems that you have to be willing to spend real money on digital marketing in order to acquire customers and encourage them to spend more money on your products and services.

    That's the message of a new study from Internet Retailer, which says that some large and familiar companies "upped their collective spending" on digital marketing - including Amazon, which in 2015 spent more than $3.5 billion in this area, up 24 percent from the previous year.

    Two companies increased their spending by more than 40 percent in 2015 - Wayfair, a home decor site, and 1-800-Flowers. Netflix spent a comparatively paltry $208 million, compared to Amazon, which represented a roughly five percent increase.
    KC's View:

    Published on: February 25, 2016

    Reuters reports that Sports Authority is expected to file for bankruptcy protection "as early as next month," having "missed a $20 million coupon payment on Jan. 15, triggering a 30-day grace period to work out a compromise with creditors."

    It is believed that Sports Authority will use a bankruptcy filing to close up to 200 of its 450 stores that are deemed to be "underperforming."
    KC's View:
    I've bought a lot of baseball mitts and jogging stuff at Sports Authority over the years, but I have no sense that the chain's stores are significantly different now than they were 20 years ago. Which could be the problem.

    Published on: February 25, 2016

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

    WCPO-TV News in Cincinnati quotes Burt Flickinger III, managing director of Strategic Resource Group (and an MNB fave), as suggesting that Kroger's new Main & Vine small-format store being tested in Gig Harbor, Washington, is going to be "exceptionally profitable." Flickinger estimates that "the Gig Harbor store will generate up to $38 million annually and generate up to 350 percent more sales volume than a 'typical' Kroger store its size."

    • In Southern California, the Associated Press reports, "McDonald's is partnering with Greek yogurt maker Chobani for its parfaits and smoothies," and also has begun "offering two breakfast bowls. One is made with egg whites, turkey sausage, spinach and kale. The other is made with scrambled eggs and chorizo and includes a hash brown.

    The broader goal, the story says, is for McDonald's "to transform into a 'modern, progressive burger company'."

    Yeah, well, good luck with that. Though ... apparently McDonald's attempts to be modern and progressive and affecting at least some of the competition...

    • In an effort to compete more effectively with McDonald's, Dunkin' Donuts "is revamping its menu boards to emphasize coffee and 'all day' breakfast foods, a bid to remind America that it served eggs and sausage during afternoon hours long before McDonald’s got the notion," Bloomberg writes. "As part of the changes, which will overhaul counter menus and drive-thru windows at 8,400 U.S. shops, Dunkin’ Donuts is no longer touting combo meals."

    The story goes on to say that Dunkin' Donuts CEO Nigel Travis has cited “revitalized burger players” as hurting the chain: "The entire fast-food industry is getting more aggressive -- with deeper discounts and other promotions -- but McDonald’s decision to start selling breakfast all-day is causing particular hardship to rivals."
    KC's View:

    Published on: February 25, 2016

    Got the following email from MNB reader Russell Zwanka regarding yesterday's Innovation Conversation:

    Tom Furphy is "spot on" in regards to higher education.  Students need to either find the passion for something they will be pursuing the rest of their lives, or have a student, professor, or classroom experience that awakens that passion.  Not trying to channel Dead Poet's Society, but it does happen sometimes when you can connect with a student and show how passion, energy, and emotion can be combined with a solid skill level that will put you above the rest!

    In addition to entrepreneurship, I would add that any kind of specialization is better than a general degree.  In our food industry, the basic knowledge set that allows you to walk in the door and know at least some building blocks of both the front and the back of the operation, is almost immeasurably positive to an employer.  The universities that work to provide that food knowledge base are helping the entire industry train the next generation!  At the NGA Convention this coming week, there almost 80 students from over 15 universities (including SUNY New Paltz) attending, competing in a case competition, helping with the 5K run, and trying to get to know this business.  I would encourage all attendees to look for the students and talk to them about the industry.  It could pay back in spades.

    No argument here. I just spent some time at Portland State University this week, and the chance to hang out with smart young people is never to be missed. I'm already impatient to start the summer class that Tom Gillpatrick and I team-teach ... June can't come soon enough.

    Regarding Macy's travails, one MNB reader wrote:

    I am actually surprised sales were only down 4%. Used to spend thousands annually at Macy's, most of my Christmas shopping, clothes, baby clothes, gifts, small appliances.   It was my go-to place.  Now it is an occasional visit and invariably disappointing. The quality has gone down so much that I move on and try to find what I need elsewhere.  Except perhaps in the kitchen which is still decent but not great.  Used to be you could go there for the cut above.  Service is the mausoleum. Sometimes one person for an entire huge dept.  And they no longer know the merchandise to pick their brain. Might as well go online.  You actually get more info there.  This year was our first year we did not step foot into a Macy's all season.  In fairness part of that is contending with crowds and the prospect of their cashier lines was the game changer.  I hate to see that happen to a former lovely brick and mortar but they did  this to themselves.

    Betcha the lines weren't as bad as you thought they would be.

    The other day I used the occasion of a couple of lists that rated Apple highly in a number of areas to question whether public opinion might change as a result of the company's battle with the federal government over privacy issues. Which prompted one MNB reader to write:

    I am an avid reader of and coincide with your points of view almost 95% of the time.  The rare occasions when I have a different approach to a topic you debate on, it is not worthy of mention; however, this time I want to let you know that your comments about the subject ... were completely off and it switches the attention to a national security issue instead of the main point about admired and reputed companies.

    I would have appreciated much more to know what is your opinion about retailers/wholesalers no mentioned in the list, like Albertsons, C&S, Supervalu, AWG, Aldi, Unified Grocers, etc. and the perceived differences between the companies in the list and the ones out of it.  Or any specific aspect that have pushed some of these companies to be leading the pack.

    You force me to divulge two dirty little secrets.

    One isn't even mine. I don't really put a lot of faith in these kinds of lists. They're sort of interesting, but they tend to be rather arbitrary and don't always offer anything other than a subjective view of the companies involved and the criteria established.

    Now, I have no problem with that ... I'm rather arbitrary and subjective in my choice of stories and commentary. But I try not to suggest that anything here is definitive ...and so I don't overreact to companies not making this list or that.

    One other thing about lists. Don't trust them ... because the people putting them together usually have some sort of ulterior motive. That's why trade magazines create lists and give awards ... usually it is the only way to get certain people to open up to them.

    As for my decision to reference the privacy and national security debate ... well, my other dirty little secret is that sometimes I choose stories not because I want to comment on them directly, but because they give me an avenue to raise other questions or make other observations. Sometimes it is gratuitous, and sometimes not. Generally, it is just me being me.

    And, responding to yesterday's Eye-Opener, MNB reader Terry Pyles wrote:

    There's a great old quote which is credited to everyone from Albert Einstein, Henry Ford and Mark Twain to Tony Robbins.  It goes "If you always do what you’ve always done, you will always get what you’ve always got".  It's kind of an offshoot to the definition of insanity, which is also credited to Einstein.

    Regardless of its origin, the message is valid.  And I suggest there are many other baseball teams, as well as businesses, who should pay attention.

    KC's View: