retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: February 29, 2016

    by Kevin Coupe

    The New York Times reports this morning that Disneyland and Walt Disney World are adopting a demand pricing model for single day tickets that will make the parks more expensive on busy days and less expensive when things are less crowded.

    According to the story, "At Disneyland, located in Anaheim, Calif., which attracts roughly 17 million visitors annually, single-day tickets now cost $99. Starting on Sunday, the park will charge three different prices based on the calendar. 'Value' tickets, for Mondays through Thursdays during weeks when most schools are in session, will drop to $95. 'Regular' tickets (most weekends and many summertime weeks) will climb to $105. 'Peak' tickets (most of December, spring break weeks, July weekends) will cost $119.

    "At Disney World in Orlando, Fla., which includes four major theme parks, the price changes are more complex, because they vary by park. At the most popular Disney World park, the Magic Kingdom, which handles nearly 20 million visitors annually, single-day prices will remain at the current level, $105, for value periods. Prices will rise to $110 for regular periods, and to $124 for peak."

    The Times notes that Disney tends to raise prices once a year, usually at a rate higher than inflation, and almost always inciting consumer outrage. However, Disney says that the price hikes are modest based on demand, and that the higher prices on busy days are actually aimed at encouraging people to attend at slower periods, which would reduce lines on busier days.

    Now, before I comment on this, let me stipulate that I'm not a Disney guy. I enjoyed taking my kids there when they were young, and I'll be happy to take my grandchildren there someday, assuming that I'm still ambulatory when I have grandchildren. It also assumes that I won't have to take out a second mortgage to take my grandchildren there ... because that seems to be the way things are headed. But I'm not one of those adults who would ever go to Disney without kids ... I have nothing against people who do, but I'm just not one of them. (Epcot, for example, holds little charm for me ... but then again, I'm lucky enough to have actually been to most of the places that it purports to represent.)

    I just have to wonder if the Disney folks are hurting the brand by making the Disney experience out of reach for a broad swath of folks who are yearning for a couple of days in Orlando and/or Anaheim. One of the reasons the park is busy at certain times is because that's when the kids are off from school ... it isn't like most people have a choice when they go to Disney or any other amusement park. And it seems to me that the demand pricing will have the effect of increasing attendance on "slow days" without having much impact on the busy day lines.

    Good for Disney in the short-term, certainly. But it raises an interesting branding question in my mind, since if a brand increasingly becomes beyond the reach of the core audience that consumes it, what is the long-term impact on the brand?

    Just curious. Not that it will have any impact on me ... at least, not until my kinds start giving us grandchildren. (The way things are going, I've got plenty of time to save...)
    KC's View:

    Published on: February 29, 2016

    Amazon announced this morning that it has made a deal with William Morrison Supermarkets in the UK that will make "hundreds" of Morrison's products available via both the one-hour Prime Now and Amazon Pantry services.

    At the same time, according to a story in the Wall Street Journal, "Morrison's said that it has agreed on the broad terms of a deal with online-only grocer Ocado Group PLC, whose technology and equipment Morrisons has licensed since 2013.

    "Morrisons will take space in Ocado’s new warehouse, currently under construction in southeast London. Ocado will give Morrisons the software needed to fulfill online orders from stores that aren’t serviced by an Ocado warehouse. The deal - which would allow Morrisons to sell to customers all over Britain - is being finalized and could still fall apart."

    The Journal story goes on to say that "Amazon’s moves to build its presence in the U.K. come as the country’s online-grocery market continues to boom, with penetration higher than in most other developed countries ... The Seattle-based online retailer has long been widely expected to launch a full grocery service in the U.K., which is already home to fierce competition online among mainstream grocers such as Tesco, Sainsbury’s and Wal-Mart Stores Inc. ’s U.K. business Asda - all of which offer home delivery and 'click and collect' services. The mainstream grocers have been losing market share to discount supermarket chains Aldi and Lidl, neither of which offer home delivery as yet."
    KC's View:
    It is interesting to me that Morrison's has a two-pronged approach to e-commerce, engaging with both Amazon and Ocado at the same time ... sometimes it makes sense to cover your bets and see what works best.

    The broader lesson here is that one cannot afford to leave any weapons on the table in the current competitive climate. The folks at Morrison's seem to understand that ... and I'd suggest that it won't be long before Aldi and Lidl both launch their own, differentiated versions of e-grocery. It's dog-eat-dog in the UK, and this is a lesson that US retailers have to take to heart.

    I saw a comment the other day from a regional supermarket CEO in which he said that he thought that Aldi would have only a "minimal impact" on his company. Forgive me, but I think this is incredibly shortsighted ... I think that pretty much every food retailer has to work on the assumption that competitors from every angle - Aldi, Lidl, Amazon, etc... - are positioned to have maximum impact on their companies, and then to arm themselves for the battles that will ensue.

    Published on: February 29, 2016

    Macy's has announced that it is changing its approach to discounts and coupons, saying that it will still use coupons for full-priced items, but will employ different tactics for clearance merchandise.

    According to a Washington Post story, "When an item is on clearance, you can’t apply coupons or other discounts to it. Macy’s said it will apply deeper cuts to the ticket price than it did previously, but the price you see on the tag is the price you will pay. The retailer has also moved all the clearance items to a centralized area in the store - one for men’s apparel, one for women’s - instead of having the racks scattered throughout the store ... The move is effectively a bet that shoppers prefer simplicity over the thrill of demonstrating their shopping savvy. And it could serve as a test case for the broader retail industry, which is grappling with how to win over shoppers who seem less and less moved by everpresent discounting tactics, especially when the Web has made it easier than ever to compare prices."

    Macy's says the results of the shift in tactics have been positive where it has been tested.
    KC's View:
    I tend to like discounting programs that eliminate clutter and confusion and make it easier for the shopper. That said, in some ways this is exactly the approach that Ron Johnson tried to take at JC Penney, and it sent the company into a tailspin and got him fired. But that may have had more to do with implementation than concept.

    Published on: February 29, 2016

    The New York Times reports that Starbucks CEO Howard Schultz announced last week that the company will open its first store in Italy early in 2017

    Schultz says that the Italian venture is undertaken with "great humility," especially since it is Italy's coffee culture that first inspired him to buy the then-four-store company and expand it to its current parameters.

    The story notes that the Italy opening is modest by almost any standard - Starbucks operates in 70 countries, and is opening 500 stores a year in China.

    The Times writes that Starbucks "will partner with Percassi, the Italian retail and real estate group, which will own and operate the stores as licensee. Mr. Schultz said the first store in Milan would open early next year, followed by others in the city before the company expands elsewhere in Italy. And as has happened in other countries, Starbucks will tailor itself to local coffee habits." Schultz says that the Starbucks in Italy will have espresso bars, where people stand and consume their drinks, will be priced and sized according to Italian customs, and also will have some flavors unique to and appropriate to Italian tastes.
    KC's View:
    I'm not sure that Starbucks will have a big impact in Italy, but operating there could provide it with new lessons that it could bring back home. Besides ... the company is big enough and successful enough that it ought to gamble a little bit.

    Published on: February 29, 2016

    The Washington Post has a story about a Denmark supermarket called WeFood, which opened in Copenhagen last week, and "stocks only food that is past its official expiration date or unworthy of other supermarket shelves because of aesthetic imperfections and damaged packaging." The store is operated by a Danish NGO, Folkekirkens Nødhjælp, which says it "is hoping to lure shoppers of all socioeconomic backgrounds by selling its food at steep discounts - somewhere between 30 to 50 percent cheaper than other standard supermarkets."

    The story says that "the new supermarket is a not-so-subtle swing at the modern food system, which often prioritizes food safety at the expense of waste. Roughly one-third of all food produced worldwide ends up in the garbage, complicating efforts to alleviate hunger around the globe. But the problem is especially pronounced in developed countries, thanks in large part to stigmas attached to unappealing fruit and vegetables and overly conservative expiration dates ... In Denmark, the unreasonable standards send 1.5 billion pounds of edible produce to landfill, undermining efforts to bring nutrition to households that struggle to put food on the table."
    KC's View:

    Published on: February 29, 2016

    The Austin Business Journal reports that Whole Foods "is testing the waters with a new food truck called Tartinette that will be serve lunch daily outside its downtown Austin headquarters starting March 10."

    According to the story, ",Whole Foods said the food truck will be used 'to experiment with new ideas for store eateries, as well as explore collaborations with chefs and supplier partners.' It will originally serve open-faced sandwiches and salads from 11 a.m. to 8 p.m. daily but Whole Foods said the truck's name and menu will change every two months 'to explore food trends, seasonal flavors and vendor partnerships'."

    The truck venture is being overseen by former New York restaurateur Tien Ho, who the retailer hired last December as global vice president of culinary and hospitality.
    KC's View:
    I've long thought that most food retailers should have a food truck, if only as a compelling way to extend brand consciousness. In the fight for share of stomach, it is an interesting way to reach out to customers in unusual ways.

    Published on: February 29, 2016

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

    Reuters reports this morning that Dutch retailer Koninklijke Ahold N.V. has announced that when its merger with Delhaize Group is completed, it has been granted permission by the King of the Netherlands to continue to use the predicate "Koninklijke" ("Royal"), and will be known as Koninklijke Ahold Delhaize N.V.

    • The Boston Globe reports that "the union representing 10,000 Stop & Shop workers in Massachusetts voted unanimously to authorize a strike if Local 1445 of the United Food and Commercial Workers can’t reach a contract agreement with the company. The contract expired Saturday at midnight, but store employees will continue working while the bargaining continues. Four other UFCW locals in New England, which are negotiating separate contracts with Stop & Shop, postponed strike authorization votes."

    • The Associated Press reports that "an executive and two Pennsylvania cheese businesses her family controls pleaded guilty Friday to trying to pass off grated Swiss and mozzarella as parmesan and romano and adding more wood pulp to the products than the law allows. Michelle Myrter, 44, will receive probation instead of up to one year in prison called for by the statute, according to her attorney.

    "Under a deal with prosecutors, Myrter's Slippery Rock companies — International Packing and Universal Cheese and Drying — will have to forfeit $500,000 each."

    Somehow, "Slippery Rock" seems like exactly the right name for a company that sells adulterated products, saying they are one thing when they are something else.

    ª In the UK, the Guardian reports that Tesco is considering laying off as many as 39,000 staffers over the next three years. The report is based on an internal document obtained by the newspaper.

    While Tesco confirmed the validity of the document, it said that there are no current layoff plans.

    That's something like one out of six employees. hard to imagine that morale is very good right now ... and hard to imagine that such cuts won't have an impact on customer-facing services.
    KC's View:

    Published on: February 29, 2016

    • Smart & Final announced last week that it has hired Leland P. Smith as its new SVP and general counsel, succeeding the retiring Donald Alvarado, who was with the company for almost three decades.

    Re/code reports that Mike Swartz, who "spent nearly a decade at Amazon teaching and instituting processes to help its warehouses operate more efficiently," has joined grocery delivery startup Instacart as senior vice president of operations. In that role, Swartz will "oversee the network of contractors and employees who do the personal shopping in partner grocery stores and deliver orders to customer doors."
    KC's View:

    Published on: February 29, 2016

    ...will return.
    KC's View:

    Published on: February 29, 2016

    The 88th Academy Awards were last night, and the winners of the major awards included...

    Best Film: Spotlight
    Best Actor: Leonardo DiCaprio, The Revenant
    Best Actress: Brie Larson, Room
    Best Supporting Actor: Mark Rylance, Bridge of Spies
    Best Supporting Actress: Alicia Vikander, The Danish Girl
    Best Animated Feature: Inside Out
    Best Original Screenplay: Spotlight
    Best Adapted Screenplay: The Big Short
    Best Director: Alejandro G. Iñárritu, The Revenant
    KC's View:
    Some years I have strong feelings about the Oscars, but this was not one of those years ... some of my favorite movies of the year (The Big Short, Spotlight) were pretty well represented, though I was a little disappointed that Sylvester Stallone did not win a best supporting actor Oscar for Creed.

    I was very happy to see Spotlight win Best Picture ... MNB readers may recall that I was a huge fan of the movie when I saw it, and wrote about it here.

    As most people know, the Oscars this year took place in a somewhat controversial climate because of the lack of diversity in the major nominations. For me, there were two bits that spoke volumes about the distance between the business and customers/audiences ... and even provided a business lesson.

    One was a taped segment in which Chris Rock went to a Compton, California, multiplex to ask black moviegoers about the movies they liked and saw ... and it ended up that they weren't even familiar with many of the Oscar nominees. That's a dangerous place for any customer-facing business to be.

    The other was the line from Rock's monolog in which he put it in perspective, noting that it hardly was the first time: "You gotta figure that it happened in the 50s, in the 60s — you know, in the 60s, one of those years Sidney (Poitier) didn’t put out a movie. I’m sure there were no black nominees some of those years. Say ‘62 or ‘63, and black people did not protest.

    "Why? Because we had real things to protest at the time, you know? We had real things to protest; you know, we’re too busy being raped and lynched to care about who won best cinematographer. You know, when your grandmother’s swinging from a tree, it’s really hard to care about best documentary foreign short..."

    In other words, there are a lot more important things in life than gold statues given to Hollywood millionaires. Maybe they could think about it next time they produce a three-and-a-half hour, self-congratulatory ceremony that feels like it was twice as long and self-aggrandizing as it should be.

    Published on: February 29, 2016

    For more than 25 years, FMI Connect has helped retailers sift through the clutter of industry trends and technology and our activities have helped make vital business connections. Bringing together an extensive industry network, FMI Connect provides food retail professionals with the education, events, people, and products to get you to what’s next and best in the food industry for your business. Don’t miss a beat while at FMI Connect, June 20-23, McCormick Place Chicago, Ill.

    Book housing and register today!

    KC's View: