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    Published on: March 14, 2016

    by Kevin Coupe

    The Washington Post on yet another use for the Amazon Echo, the company's screenless, voice-controlled household computer, beyond the ability to play music, dim the lights, or buy stuff on Amazon.

    According to the story, "Capital One announced Friday that it is the first bank to partner with Amazon to let customers review their finances through Alexa-enabled devices, including the Amazon Echo, Amazon Tap, Echo Dot and Fire TV ... People who own one of those devices and have a Capital One credit card or bank account will be able to request information on their account balance and most recent transactions. Instead of having to log in through their laptop or phones, customers will be able to speak the commands while they’re doing the dishes or doing other tasks around the house."

    The story notes that for the moment, the service will only allow people to review their finances, but that the expectation is that new applications will be developed over time ... and that new security features will also have to be developed at the same time.

    The Amazon ecosystem continues to expand. It is an Eye-Opener.
    KC's View:

    Published on: March 14, 2016

    The Chicago Tribune reports that grocery delivery service Instacart "is working with General Mills, Nestlé, PepsiCo, Unilever, and other consumer goods makers to cover the cost of delivery or provide other discounts when customers buy their products. In addition to the coupons, the companies pay Instacart to advertise on its website ... Shoppers can find discounts when filling up their carts with brands such as Degree, Doritos, DiGiorno, Häagen-Dazs, Quaker Oats, and Stella Artois."

    Instacart CEO Apoorva Mehta says that fees being paid by these manufacturers now account for 15 percent of his company's total revenue.

    The Tribune writes that "in its quest to build a profitable business, Instacart is searching for new sources of revenue that won't turn off shoppers. The company, which was valued at $2 billion by investors last year, had previously made up some of its costs by selling products for more than what the grocery stores charged. Customers complained, and Instacart backtracked. The company said it costs much more to deliver an order than the $5.99 it charges shoppers, but customers are unwilling to pay more."

    Meanwhile, the Wall Street Journal reports that Instacart "is cutting the fees it pays couriers who shuttle groceries in several cities, the latest Silicon Valley on-demand startup trying to contain costs in a tightened funding environment. Instacart informed drivers in recent weeks in some cities, including the San Francisco and Los Angeles metro areas, about new rates that in some cases will require workers to nearly triple their deliveries to make the same pay."
    KC's View:
    So let me get this straight...

    Instacart began its business by simply shopping at supermarkets, even without permission or agreements in place, and then would mark up those products, which would often hurt the price/value images of the stores it was getting product from. Then, it started making deals with the stores, even becoming a major c-commerce factor for companies like Whole Foods. And now it is going to start charging suppliers fees for delivering products, on top of the fees they already are charging customers.

    I'm wondering what budget line these fees will come out of. Promotional budgets, perhaps? And wouldn't that, almost by necessity, reduce the promotional dollars they pay to retailers? (I've learned over the years that one of the more dangerous places to be is between a retailer and its promotional monies.)

    And the delivery people who now have to work three times as hard to make the same money ... d'ya think they are going to be a little less concerned with customers service than they will be with cutting corners (both literally and figuratively) so they can make a buck?

    All this does is suggest to me that maybe the house of cards on which Instacart has built its business is a little wobbly, and could come crashing down if subjected to a reasonably stiff breeze.

    BTW ... the Tribune also reports that "40 percent of the company's volume is profitable-meaning most orders still lose money. (Instacart) also said it will be profitable globally by summer. However, its calculation for profitability doesn't include the cost of office space, the cost of acquiring shopper workers, or the salaries of its executives, engineers, designers, or other employees based at its San Francisco headquarters."

    All of which tells me that Instacart is not a basket in which you want to put very many of your eggs. E-grocery remains important, and will become more so ... but I don't think Instacart is the answer to strategic and tactical problems that retailers have in this segment.

    Published on: March 14, 2016

    Jefferson Public Radio has a piece about how US Sen. Jeff Merkley (D-Oregon) "is trying to stop a federal ban on labeling products as containing genetically modified organisms" by pushing a bill that "would permit GMO labeling, but only using small type on the back of the product."

    However, it may be a little late, since the US House of Representatives already has passed a bill that would prevent any state from requiring the labeling of products containing GMOs. The US Senate - where Merkley is introducing his compromise bill - is expected to start considering a similar piece of legislation as soon as this week.

    “The food producers said we need a single standard across the country. This gives that to them," Merkley says. "They’ve said they don’t want anything on the front of the table that would appear pejorative. This gives that to them."

    Meanwhile, the Environmental Working Group (EWG) issued a report that is says debunks claims that a patchwork of state GMO labeling laws would create major problems for food manufacturers. "A new legal analysis by EWG’s legislative attorney finds that a simple 'produced with genetic engineering' disclosure on the back of food packaging would meet the requirements of all three state GMO-labeling laws that are already on the books," the report says.

    It goes on to say that "the EWG analysis also notes that current federal law clearly allows states to require food disclosures such as GMO labels. Under the National Labeling and Education Act of 1990, states have the authority to require disclosures – and they have used it."

    Of course, many in the industry disagree. A Chicago Tribune story notes that the Grocery Manufacturers Association (GMA) believes that "mandatory labeling is 'inherently misleading' because it appears to be a warning when the food is completely safe."
    KC's View:
    Interestingly, the Wall Street Journal has a story this morning about how both small and big food suppliers "are rushing to meet consumers’ increasing demand to know more about what’s in their food, where it came from, and how it was produced." This includes knowledge about GMOs ... and the companies and trade associations that resist the requirement that they be transparent are going to find themselves on the wrong side of history.

    Published on: March 14, 2016

    Haggen said on Friday that it has accepted a bid by Albertsons to acquire 29 of its "core" stores. The retailer said it will sell the three stores not included in the deal.

    According to the Seattle Times story, "A lengthy contract filed in bankruptcy court indicates Albertsons will pay a 'base amount' of $106 million, subject to various adjustments. The deal requires approval from the bankruptcy court in Delaware overseeing the dismantling of Haggen’s remains." Once those approvals come, Haggen will begin going-out-of-business sales at the three units.
    KC's View:
    What a hairball this whole thing has been. It is a sorry end to a saga in which Albertsons was forced to sell off stores after it acquired Safeway, 33-unit Haggen bought 146 of the stores and then went bankrupt after it found that it did not have the infrastructure, strategic acumen or management expertise to run a company that big. And, to make matters worse, the it was federal antitrust regulators that forced the whole thing to happen in the first place ... and now seem remarkably unrepentant about their role in this fiasco, only reinforcing the notion that we have to redefine the idea of "fair competition" for the 21st century.

    Published on: March 14, 2016

    In Minnesota, the Star Tribune reports that Target is "looking to hire 20 engineers and product managers in Silicon Valley to join a technology-based start-up called 'Goldfish,' but it’s still fairly mysterious as to what the new project is all about." The initiative "is the brainchild of West Stringfellow, who joined Target last year as one of three entrepreneurs in residence who were charged with bringing out-of-the-box ideas to help push Target’s innovation agenda. Target liked him so much that it ended up promoting Stringfellow in December to the more permanent position of vice president of internal innovation and operations."

    In describing the initiative - albeit in vague terms - one of the job postings says that the company is "ambitious and bent on disrupting the way people shop." But the company, while acknowledging the existence of "Goldfish," says details remain confidential.

    The story notes that "Goldfish" seems to be just part of Target's disruption strategy: "In Boston, another member of Target’s first entrepreneur-in-residence program has set up a lab to think up ideas about the future of food. In January, Target opened the Food + Future coLAB in partnership with MIT’s Media Lab and the design firm Ideo. University students have used that space to brainstorm ideas for new start-ups around how food is grown, bought and consumed. Target executives will then vet the ideas to see if there are some that make sense for the retailer to launch."
    KC's View:

    Published on: March 14, 2016

    Business Insider reports that "McDonald's is building a loyalty program into its smartphone app," with plans to reward customers based on the number of visits they make to its fast food stores each month, as well as track purchases so it can identify consumer preferences. "If customers haven't visited McDonald's in a while," the story suggests, "the app may prompt them to return with promotions on their favorite items."

    McDonald's USA President Mike Andres said last week that "we can entice them with their favorite products to come to the restaurant ... That’s the future of customer relationship management. We think it can be a significant sales layer for us."
    KC's View:
    My question is, what took them so long? Using data to communicate and entice customers isn't just the future of customer relationship management. For savvy companies, it also is the past ...

    Published on: March 14, 2016

    BidnessEtc reports that Amazon plans to launch a new platform that "will let schools, educators, and academic staff streamline the organization, analysis, and dissemination of educational materials, and student data."

    According to the story, "The platform will also be equipped with a rating system for ease of use. Amazon’s involvement in the education space dates back to 2013, when it acquired TenMarks, an online math-instruction firm, to build a strong base in the sector and better gauge consumer interests."

    In a posting designed to keep interested parties apprised of when the new platform launches, Amazon says in describing the effort that, "Someday soon, educators everywhere will have free and unlimited access to first-class course materials from a revolutionary platform. Get on the wait list to be notified when the platform is available for all schools and classrooms!”

    In putting the new platform in context, BidnessEtc writes, "While these ambitions are real, the company has a long way to go to create a depository of educational tools, and materials to gain a strong foothold against learning systems powered by juggernauts, Apple and Google. Amazon’s educational services will greatly benefit from the company’s cloud-based services that would allow for better allocation of data-computing processes.

    "According to a research estimate, the e-learning market will be worth up to $244 billion by 2022. This is quite sufficient to explain the interest of big companies investing steadily in the development of educational tools and processes. The benefits of eLearning over printed books are obvious and plentiful."

    That's not all that Amazon is up to. Motley Fool reports that Amazon also "is assembling a VR team to build a 'virtual reality experience within Amazon Video.' In the posting on Glassdoor, Amazon declares that the team will create a new 'platform and interface for immersive storytelling'." The story notes that "tech M&A advisory firm Digi-Capital estimates that the VR market will grow from nearly nothing today to $30 billion by 2020. It expects most of that growth to be fueled by sales of VR hardware, games, movies, and experiences."
    KC's View:

    Published on: March 14, 2016

    The Seattle Times reports that "Nordstrom has laid off more than a hundred staffers in its technology operations as the company steps off the investment pedal in the midst of a surprisingly tough retail environment ... The move comes in the wake of the recent cutback of 14 managers, the person said. In total the layoffs represented about 7 percent of the tech department’s staff."

    In addition to facing what is called an unexpected slowdown in its bricks-and-mortar sales, the story says, Nordstrom is facing "more competition from Amazon.com, which is betting big on the fashion business." The Times notes that "this week the South Lake Union-based giant launched a free daily show geared to fashion shoppers, and it is investing in private-label brands for apparel. Cowen, an equity-research firm, predicts that Amazon will surpass Macy’s as the top apparel retailer in the U.S. by next year."
    KC's View:
    Nordstrom is generally perceived as one of the stars of the retailing world, and the idea that it is being squeezed on both ends ought to make less accomplished retailers sit up and take notice.

    Published on: March 14, 2016

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

    • Lubbock, Texas-based, Albertsons-owned United Supermarkets announced that it has it agreed to acquire seven stores in West Texas and New Mexico owned by Lawrence Bros., four of which will be rebranded as United stores, two as Albertsons, and one as a Super Saver Foods.

    Terms of the deal, which is expected to be completed by early summer, were not disclosed.

    Lawrence Bros. says it will continue to own and operate stores in 17 markets.


    • The Chicago Tribune reports that "Chipotle won't give its executives cash bonuses for their performance in 2015 as a result of the dramatic stock price decline following the burrito chain's string of food safety scares ... Executive compensation packages for top brass fell significantly in 2015 because of the lack of stock option awards. Ells saw his total compensation drop to $13.8 million, from $28.9 million the year before. Moran's total compensation fell nearly as dramatically, to $13.6 million from $28.1 million the year before."

    I'm sure they'll be able to muddle along...
    KC's View:

    Published on: March 14, 2016

    • The Puget Sound Business Journal has a piece about former Starbucks COO Troy Alstead, who announced just the other day that he had resigned from the company - where he'd spent 23 years - after taking a one-year sabbatical.

    Despite rumors to the contrary, Alstead says he did not decide to leave Starbucks because a) he had serious health problems, or b) there were concerns about the company's financial performance on his watch. In fact, he says, all was just as it seemed - he took what the company calls a "coffee break" in order to spend time with his family, especially a son in his senior year of high school before going off the college.

    Now, he says, "he will be starting a small business and establishing a nonprofit organization, both of which will be deeply rooted in sustainability. He is passionate about the planet, he said, particularly the ocean."
    KC's View:

    Published on: March 14, 2016

    ...will return.'
    KC's View: