retail news in context, analysis with attitude

Published on: March 3, 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.

A friend of mine emailed me the other day with a link to a column posted on LinkedIn by branding expert Martin Lindstrom that focused on Walmart's recent problems.

He writes that Walmart blames its poor recent performances on increased wages and tougher competition, especially from Amazon ... but Lindstrom also says that "the real answer to Walmart’s big problem is so small that they have never noticed it."

Here, Lindstrom points to Walmart's increasing reliance on "Big Data" as the problem ... and suggests what the company really needs to do is focus on "Small Data." (Which makes sense, since he has just published a book entitled "Small Data.")

Small Data, as he defines it, can only be obtained by "spending time in real consumers’ homes, embedding themselves into local communities and converting their locations into vibrant community stores." Retailers that see the world through the eyes of the customer - and he includes Lowes Foods, Wegmans, and Eataly among them - have the best potential of being breakout winners in the new world order, especially when they can figure out where and when Big Data and Small Data overlap.

I mostly agree with Lindstrom on this. (Not that he cares whether I do or not.) For me, it is all about two things - having actionable data, and then actually acting on it. And what I would argue is that there is a vast chasm between data and story ... and it is in traversing that gap that businesses really can be successful.

One piece of relevant, customer-centric data that is acted upon by a retailer or supplier is far more valuable than thousands of pieces of data that fill up disk space but never are utilized. Business leaders have to make that commitment, challenging everyone in the organization not just to come up with information about how customers shop and consume, but how they are going to use that information to affect their behavior. Information can be a data point ... it also can be something sharply observed. Technology is great ... but one's eyes and ears also can be amazing tools.

Done right, information can be compiled into a story ... or rather, multiple stories that tell us something important about shoppers, and that can be addressed when retailers create their own narrative ... by which I mean stores that tell a compelling and relevant story to consumers.

Big data is fine. Small data is cool. But data converted into story ... that's really where the rubber meets the road.

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

Published on: March 3, 2016

by Kevin Coupe

CNet has a story that builds on the declaration by GOP presidential candidate Donald J. Trump that he plans to amend the nation's libel laws so that newspapers like the Washington Post and the New York Times can be more easily sued for articles that people may find to be offensive.

Trump, the story notes, seems particularly peeved at Jeff Bezos, the Amazon founder and CEO, who also owns the Washington Post.

"Trump's feud with the Post, Bezos and Amazon," the story says, "seemed to have come out of nowhere in December when the Republican candidate began tweeting fire at both, claiming that Bezos' purchase of The Washington Post was meant to use the struggling paper as a way of lowering Amazon's tax bill."

But CNet also does a bit of fact-checking, noting that "The Washington Post isn't owned by Amazon, it's owned by a personal investment firm that Bezos controls, so its losses don't help Amazon's tax bill. But it's possible that the situation helps Bezos' personal income tax rate."

This is all sort of amusing on a number of levels ... though I have to say that I find any suggestion that we need to lessen the constitutional guarantee of a free press to be seriously alarming.

It is sort of fun to watch one billionaire snipe at another. Best I can tell, Bezos has a personal worth that is at least three times that of Trump ... which may be a source of irritation to the candidate.

It also is intriguing to see Trump lambaste Bezos for hoping the Post will give him - and, by extension, Amazon - some political clout ... since Trump has donated considerable funds over the years to candidates on both sides of the aisle, presumably in the hope that this would give him political clout.

Isn't this why every industry has a lobbyist?

It is all business as usual. Eye-Opening, but business as usual.

Published on: March 3, 2016

Fortune has a story about how Target is addressing a persistent out-of-stocks problem by "shrinking the variety of sizes, flavors and even brands on store shelves to reduce the complexity of its operations."

The story says that Target management "is deploying workers to pore through the many categories of products it sells to see how many different formats and pack sizes of products like bottled water or soap it really needs to stock in its stores."

And the Washington Post has a story about how the company is looking "to transform Target’s logistics operations to speed delivery of online purchases while keeping store shelves better stocked. The plan involves looking at issues including big changes in how it will use its warehouses to fulfill online orders and seemingly small details such as ordering the optimal-sized packs of each product so they are easy for workers to unload on shelves ... This year, Target will be working to improve its assortment of fresh grocery items, in particular. But Cornell told reporters Wednesday that executives are doing an item-by-item evaluation 'from the grove to the shelf' on how to make sure customers see fresher food at Target."

CEO Brian Cornell says that the rationale is that Target needs to focus on variety and selection in the categories where it differentiates itself, and scale back in less-important segments. But he also says the company will not take a "blunt instrument" approach to the culling, but rather will conduct single-store tests and roll the cuts out as long as consumer reaction isn't negative.

It is an approach similar to one being adopted by Walmart, and expected by a number of CPG manufacturers that believe consumers actually are frustrated by too much choice.

Published on: March 3, 2016

The Wall Street Journal has a story about the newly adopted minimum wage law in the state of Oregon, which "will push the minimum wage in Portland to $14.75 an hour by 2022," and establishes different scales depending on the location.

The Oregon law reflects a growing trend around the country, albeit one that worries business leaders, who are concerned both about the costs and the patchwork of state laws that creates enormous complications for companies with multiple locations in various states.

To figure out where your state stands in the minimum wage continuum, click here.

Published on: March 3, 2016

The Austin Statesman reports that Whole Foods is expecting its new "365" concept to help the company "shake off" its reputation for expensive food, draw in both Millennials and older consumers, and "serve to help accelerate transformation within the mother brand," according to co-CEO John Mackey.

According to the story, "So far, Whole Foods says, it has signed 13 leases for sites for its 365 stores, with at least 10 of those expected to open by October of 2017. Most of the first stores are going into suburbs of larger cities such as Los Angeles. Six will be in California, the company said."

The Statesman writes that "Whole Foods is coming off a challenging 2015, where the organic foods giant saw its stock fall more than 40 percent during a series of disappointing earnings reports. This year, Mackey has said, will be different, thanks to a new game plan that includes 365, among other efforts." Those other initiatives include a new loyalty marketing program, digital coupons, and a new culinary/hospitality division that it hopes will drive innovation within the company.

Published on: March 3, 2016

Daymon Worldwide is out with a "What’s Next in Wellness” retail trends study, concluding that the growing global wellness movement offers retailers the opportunity "to play a key role in helping people to eat and live better while simultaneously securing their loyalty."

"Wellness choices are individual decisions, but wellness-oriented consumers actively seek community connections to validate those choices, and to learn about what’s next and what’s new," the report says. "These thriving communities are built around shared beliefs and understanding about the social and environmental impacts of food production. They demand transparency in how food is farmed, what is or isn’t in the ingredient deck, plus where it comes from, how it’s transported and how it’s prepared. They also care about the health and welfare of those who grow this food.

"In short, wellness choices are individual actions applied to change the world, and to feed a growing population while sustaining the planet. The movement permeates all age groups, especially younger consumers, and is seen in fitness communities, local food networks and organizations dedicated to ethical and environmentally sustainable food production. Takeaway: Retailers need to actively seek engagement and partnership with these communities."

Some other excerpts from the report:

• "Organic is now mainstream, and is the fastest-growing segment of the global food industry. Almost all categories of conventional food are becoming available in organic versions as three out of four Americans are purchasers of organic products. Retailers that are just now starting to think about their private brand organic offerings have already missed the first wave of organic growth. Those that were ahead of the trend are now expanding and extending their organic lines. The next phase of organic growth is in convenient and portable formats in fresh, foodservice, ‘grab and go’, and snack categories."

• "Today, consumers crave the positive. The new emphasis is on naturally nutritious superfoods, seafood, sprouted grains and probiotic foods. Packaging highlights the positives, loudly and clearly. Retail messaging places greater emphasis on the end-benefits, like stress-busting, deep rest and even happiness itself. A more expansive approach even includes the social and global benefits from cleaner ingredient lists, such as reduced impact on the environment; ethically-sourced foods; or humanely-treated animals."

• "A cleaner label often results in blander food, but recent experience shows this tradeoff is not inevitable. Ingenious culinary techniques are coming to the rescue to mitigate taste losses from the elimination or reduction of sugar, salt and trans-fats ... Culinary innovations are raising consumer expectations for the tastiness and pleasure of natural and organic foods. Takeaway: Retailers can bring these experiences to life for their customers, to delight and differentiate."

Published on: March 3, 2016

• Fortune reports that Walmart said yesterday that "prescription history and other basic information on a few thousand online U.S. pharmacy customers may have been visible to other users during a four-day stretch last month due to a coding mistake." However, the company emphasized that it had not been hacked, and that social security numbers, insurance information and credit/debit card numbers were not accessible to other users.


• In New York City, the Daily News reports that city officials "are wading into a lawsuit against Walmart for selling the bullets that were used to kill three people," arguing in a friend-of-the-court brief that "victims’ families should be able to sue the chain in state court for negligence for selling handgun ammunition to a customer they charge was too young to legally buy it and visibly drunk."

The actual case is playing out in Pennsylvania, but New York City officials say that holding retailers accountable will give them another tool in fighting the "iron pipeline" that funnels guns bought out-of-state into the city. Walmart is hoping to get the case moved into federal court, "where they’re likely to prevail under federal laws shielding gun manufacturers and sellers from liability."

Published on: March 3, 2016

• The Chicago Tribune reports this morning that Meijer plans to spend $400 million to build nine new stores and renovate 32 existing units. The story says that "stores will be added in Michigan, Indiana, Illinois, Kentucky and Wisconsin, and the remodels will focus on 'key markets' such as Detroit, Indianapolis and Fort Wayne, Ind."


• Delhaize America has announced that "it will work with suppliers to reach a 100 percent cage-free shell egg assortment by 2025. Delhaize America, and its Food Lion and Hannaford banners, will work toward a 100 percent cage-free shell egg assortment first in its private brand selection, which accounts for the majority of shell egg sales."

Published on: March 3, 2016

Yesterday, in a story about the Sports Authority bankruptcy, we quoted a Reuters story as saying that Sports Authority listed assets of up to $50,000 and liabilities of between $1 million and $10 million.

Sources tell MNB that these numbers were wrong ... that in its filing, the company listed assets in the range of $500 million to $1 billion and debts greater than $1 billion.

Apologies for the error.

Published on: March 3, 2016

Michael Sansolo this week provided coverage of a speech given by former Gen. Stanley McCrystal at the National Grocers Association (NGA) convention in Las Vegas, prompting one MNB user to write:

Kevin, I shared your recap of the McChrystal speech with an Army Platoon Leader, who worked two tours of duty.

His bottom-up perspective (vs. McChrystal's top-down, speech-interesting view) is something I thought you might find interesting - and probably gives us some additional lessons, particularly around speed. And, I think the notion of "disciplined initiative" has some legs, too.

Is interesting, the early frustrations in Iraq shaped a lot of our doctrine as an army today. Our problem is that as a whole, the solutions are implemented 5-10 years after the problem.

In the Army, we call the decentralized or flattened authority/decision making concept "mission command." The two key components are a clear vision with a desired"end state" and "disciplined initiative" at all levels. The hard part is making that initial commander or leader comfortable to visualize and describe key tasks with an imperfect, early picture.

I saw the difference between doing that and not doing that during my two deployments. In 2009, we had so much to do with the forces available our commanders had to loosen the reins; distance made direct supervision and micromanaging near impossible. I spent almost a month during the Afghan election season with my 18 man unit, and no higher headquarters within 35-40km. I contrast that with my last deployment, every thing I did as a platoon leader required a company commander. Many decisions I was able to make on my first tour were now made two levels of command higher.

I guess it's just one of those things; it's hard to get more authority, even harder (but so important) to share the authority you do have with subordinate leaders. I'm sure my perception was shaped my much smaller perspective, I was responsible for 20-40 guys out of 60-70,000 at the time. I wouldn't be surprised if McChrystal who was in command of all US forces in Afghanistan at the time felt like he didn't have enough control.




Also got a number of emails responding to Kate McMahon's column yesterday about the Lands' End contretemps. (The retailer featured an interview with feminist icon Gloria Steinem on its website, then pulled it when certain groups objected because of Steinem's pro-choice positions, even though reproductive rights never came up in the interview.)

One MNB user responded:

The article noted that "the Steinem interview was supposed to be the first in a new 'Legend Series; conducted by Lands’ End CEO Federica Marchionni, who wants to cultivate younger, more stylish customers."

Really Land's End?  Going for younger and more stylish yet interviewing someone who is in her 80's???!!  Are you next going to start up an ecological delivery system with the Pony Express?

Fair point. But one can only imagine what would've happened if they'd featured Lena Dunham...

From another reader:

I strongly believe us equal rights and pro-choice people need to change the narrative. Personally, I’ve very pro-life. Who isn’t! I also happen to believe a woman should have a right to choose. We need to stop calling so called “pro-life” people that term, since as I mentioned almost all people are pro-life. Rather we need to call them anti-choice, because at the end of the day that is the term that best describes them.

And another:

Your comments today about Lands’ End making a choice and sticking to its guns were spot on.  This story is becoming just one of a list of similar poor decisions that Lands’ End has made in driving its business into the ground.

We made our first purchase of clothing from Lands’ End as students in 1981 and were loyal shoppers for a very long time…..not just using their mail order service, but shopped at their retail stores as well as stocking up at their annual headquarters tent sale for clothing and home furnishings. The purchase of Lands' End by Sears was the beginning of the end for this company.

A couple of years ago, Lands’ End made a conscious decision to change the models who appeared in their catalogs.  Prior to that point in time, it was fair to say that the previous models used in their publications were closer to an accurate depiction of the people who purchased their clothes.  After the change, my wife contacted LE and notified them that she would no longer be shopping with them due to the marketing changes, along with a corresponding drop in their product quality.   Needless to say, we never heard from anyone at their firm regarding this or anything else.

Despite the fact that Lands’ End is no longer a part of Sears, no amount of soap is going to remove the stink of having been associated with one of retailing’s saddest stories.

And still another:

We can agree on one thing - the Lands End  issue was a debacle in the way that it was handled. But, I think that both you and Kate got it wrong!  I am confident that most of Lands End customers believe in equal rights for women. Your comment on tolerance is misplaced. The real issue is that Lands End marketers do not understand their traditional customer base who buy school uniforms. (Who would think to feature Steinem who is considered by most to be a nontraditional/polarizing figure - who you gonna follow up with next, Jane Fonda?). And everyone knows that Steinem represents (maybe not overtly) abortion rights. The same as having Billy Graham as the next legend discussing discussing family values (and not bringing up his Christian faith). I think that the Lands End folks were trying to reach out to a new demographic, but underestimated their current base, pissing both off!

Business lesson - why is the grass always greener with new customers? Think of mobile phone plan and cable/satellite subscription incentives to NEW CUSTOMERS. Existing customers need not apply!!! Before taking for granted our existing customer base, we should think long and hard in our boardrooms of how we might disenfranchise our existing customers.

We also got this message posted on our FaceBook page:

Great piece on Lands' End today... I wholeheartedly agree that Lands' End should have defended their approach instead of backing down so easily. The Facebook emoji count is particularly interesting - given the overwhelming Angry emojis in reaction to removing the interview it makes me wonder if the customers offended by that interview are either not on Facebook (which almost makes them irrelevant in today's digitally connected world) or if there simply aren't that many customers offended to that interview relative to customers that supported the interview. Things that make me go hmmmmmm....




On another subject, an email from MNB reader Ryan Murphy:

I saw your piece today on Howard Schultz and his focus on Starbucks delivering “performance through the lens of humanity” and “elevating citizenship and humanity.”   These statements reminds me of something a college professor taught me – beware of the company that starts defining its strategy in vague and lofty terms.  His favorite example was Disney during Michael Eisner’s latter years, when Disney defined itself as a company that excelled at “managing creativity within financial constraints.”  I’m not sure what Eisner meant and neither did shareholders.  Despite his early successes Eisner was subsequently shown the door.  There’s nothing wrong with Shultz using Starbucks as a platform for his aspirations, but “performance through the lens of humanity” shouldn’t be mistaken for a coherent business strategy or core competency.

I think there is a pretty decent argument that Schultz is building on a well-established strategy and competency ... but your point is well-taken. He has to be careful not to take his eye off the ball.




The other day, I took note of a comment by Jack Brown, the chairman of Stater Bros., in which he commented that Aldi was only a "minimal threat" to his company.

MNB reader Shannon McFarland asked:

Do you think Stater Bros. should take the relaxed attitude about the Aldi entrance to the SoCal market, or are they under-estimating this retailer?

If Jack Brown was being quoted accurately and in context, I'd say that this is 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.

But I also think that Jack Brown - with whom I share a great love of John Wayne movies, and with whom I bonded over a personal note that Wayne once wrote to me about a review of The Shootist I'd written - may have been engaging in a bit of competitive posturing. A leader often will say that the competition isn't much of a threat, and then will mobilize forces within the company to fight any and all disruptions.

Published on: March 3, 2016