retail news in context, analysis with attitude

Published on: March 22, 2016

by Michael Sansolo

You don’t have to be extraordinary at everything to succeed in business, but there better be some way in which you are anything but ordinary.

Otherwise, you’ve got problems.

Yesterday’s MNB had an e-mail from a reader whose loyalty to Macy’s evaporated when the retailer eliminated a personal shopper program. What made the store extraordinary to that shopper suddenly disappeared and so did the shopper.

But here’s the thing: the extraordinary can come from anywhere, even inside a hot dog bun, provided the hot dog found inside is really special.

At Costco, that is exactly the case. Highlights like those hot dogs might give the warehouse club giant one more way to keep shoppers crowding the aisles even in the face of increased e-commerce competition. It’s an example any business can and should emulate.

Business Insider recently sent a team of reporters to Costco to sample the entire range of fare at what passes for a food court at the front of each warehouse club. What they found might shock a lot of people - although not my 89-year-old Dad, who is feeling very vindicated by this column and will likely celebrate with lunch at Costco.

In short, Costco’s food courts are terrific, possibly extraordinary for both quality and quantity.

The quantity part should surprise none of us about Costco, the home of really, really large sizes. Business Insider includes a photograph of the smorgasbord purchased by the reporters for about $25. It’s the quality that’s the shock.

The reporters admit that their expectations were low, and then almost apologetically rave about nearly every item they sampled. They loved the Italian sausage, the hot turkey and provolone and chicken bake roll. The pizza and churros were praised as tasty and great values.

Of the barbecue brisket sandwich, they wrote that it was “one of the best we’ve had.” And those hot dogs - they are great and may explain why Costco sells more of them than all major league ballparks combined, according to the Daily Meal.

In summary, Business Insider writes, “We went to Costco with low expectations of its food court, but we were completely blown away. The food at Costco is supersized, delicious and indulgent. It may not be the healthiest food, but it’s a guilty pleasure we plan to cater to more often.”

In other words, Costco has found one more way to be extraordinary and keep shoppers coming back.

Now let’s be straight about this: Costco is not the average retailer. It is known for a number of signature products, a highly unique shopping trip complete with countless sampling stations, bulk pricing and incredible loyalty among shoppers that us reinforced by membership fees.

Yet I also would argue that Costco might be especially vulnerable to the lure of e-commerce. Due to store size, Costco is rarely in a convenient location, checkout lines are legendarily long and the ambience is simply a warehouse. All of those factors could lead a shopper to opt for point and click.

That’s why extraordinary hot dogs and sandwiches might be so important, especially if they give shoppers one more reason to visit Costco, grab a bite and prowl the aisles.

So what makes you special?

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: March 22, 2016

by Kevin Coupe

Bloomberg reports on a new analysts' note from Cowen & Company, which predicts that "Amazon will be a top-10 player in the approximately $795 billion U.S. food and beverage grocery market by 2019 ... We are encouraged by Amazon’s growing footprint in this category, which we see as ripe for potential disruption given younger [demographics] increasingly purchasing food and beverage [F&B] grocery items via digital channels."

The argument is that millennials are primed (pun intended) based on experience and lifestyle preferences to buy more of their groceries online, while at the same time the technology is constantly improving, making it easier for them to indulge their needs and desires.

Let's repeat.

Amazon. Top-ten food retailer in the US. By 2019.

It is an Eye-Opener.

Published on: March 22, 2016

Food World has published a list of 83 stores that Ahold and Delhaize say they will sell in order to eliminate competition issues and gain the approbation of US regulatory authorities.

Thirty two of the stores are Ahold-owned units in markets that include the Baltimore Washington market as well as Virginia, Pennsylvania, West Virginia, upstate New York and Boston. Forty three of the units are said to be non-union Delhaize-owned Food Lion stores.

In other relevant news...

Bloomberg reports that Ahold's US stores "will be placing a bigger emphasis on ready-made meals and prepared meal kits as it seeks to offer customers the convenience they crave ... Ahold plans to apply lessons learned in its home market of the Netherlands by offering more ready-made dinners and kits containing all ingredients needed to prepare a meal."

CEO Dick Boer says that the improved US economy is allowing consumers to eat out more, which is putting pressure on supermarkets. "What we need to do is to create more alternatives in our stores," he says.

Published on: March 22, 2016

The Chicago Tribune reports that Chipotle, still seeking the secret sauce that will allow it to rebound from the food safety issues that have plagued some of its locations over the past few months, has decided to add free chips and guacamole to the burrito giveaway program that it has been promoting.

According to the story, Chipotle has "teamed up with Avocados from Mexico to launch an online game called 'Guac Hunter,' where users see a series of near-identical image pairs and have to spot the differences. Players who test their detail-spotting skills for three rounds will get a mobile offer for free chips and guacamole when they play, but only through March 31. The coupons can be redeemed through April 10."

Chipotle, which has begun scaling back some of its local-sourcing-and-onsite-preparation processes in favor of greater centralization, has conceded that the hit to its reputation could cost it seven precent of its customer base, which is likely never to return.

Published on: March 22, 2016

The Wall Street Journal reports that a California jury has ruled that Coca-Cola did not mislead consumers when it advertised a pomegranate-blueberry juice that contained less than one percent pomegranate juice.

The suit had been brought against Coke by Pom Wonderful, which was seeking more than $75 million in damages. The jury in the case decided that Pom had not proved that Coke's labeling was misleading and that, since it had not suffered any economic harm, it did not deserve any money.

Coke stopped making the product in 2014. The Journal writes that "Pom filed the lawsuit in 2008, and the U.S. Supreme Court ruled in 2014 that it could proceed under federal trademark law, regardless of government regulations on juice labeling."

Published on: March 22, 2016

City AM reports that Tesco has launched an 80-item line of what is described as entry level private label products designed to challenge discounters Aldi and Lidl on price.

The story says that Tesco "will sell around 80 fresh, meat and poultry products under seven new 'Farms' brands which, in many cases, will either match or be cheaper than its rivals."

In a prepared statement, Tesco said that "over the last 18 months we have been simplifying our ranges, launched Brand Guarantee and improved customer service. However, we know customers want the convenience of getting all their shopping in one place. These seven new brands, which are exclusive to Tesco, address our customers’ needs for quality fresh food, at very competitive prices in a single shop.”

Published on: March 22, 2016

• TechCrunch reports that "Alibaba has formally thrown its hat into the virtual reality ring after the Chinese e-commerce giant announced its own VR research lab, dubbed GnomeMagic Lab ... GnomeMagic Lab will work with its shopping businesses with a view to integrating VR into the shopping experience while exploring other applications, such as video with Youku Tudou and entertainment via Alibaba Pictures."

The story notes that "Alibaba wants to help merchants use VR to sell on its sites, it said it has already created VR visuals for hundreds of products.

Published on: March 22, 2016

• Walmart announced that Brian Besanceney, most recently senior vice president, Walt Disney World public affairs and worldwide government and industry relations, is joining it as senior vice president and chief communications officer.

Published on: March 22, 2016

Andrew S. Grove, the longtime chairman and CEO of Intel Corporation who often is credited with helping to create Silicon Valley with a management style that thrived on confrontation and even paranoia, has passed away at age 79. No cause of death has yet been announced, though Grove was a cancer survivor who also had been diagnosed with Parkinson's disease.

The New York Times has a long and detailed obituary for Grove in which it notes that his was a "rags-to-riches immigrant story. A survivor of the Nazi Holocaust and the 1956 Soviet invasion of his native Hungary, he arrived in the United States as a penniless youth who spoke little English and suffered from severe hearing loss. Within decades, Mr. Grove was worth hundreds of millions of dollars. And in 1997, he was chosen 'Man of the Year' by Time magazine as 'the person most responsible for the amazing growth in the power and the innovative potential of microchips'."

The Times writes that "besides presiding over the development of Intel’s memory chips and microprocessors in laboratory research, Mr. Grove gained a reputation as a ruthlessly effective manager who spurred associates and cowed rivals in a cutthroat, high-tech business world where companies rose and fell at startling speed. Mr. Grove’s famous slogan, 'Only the Paranoid Survive,' became the title of his 1996 best seller describing his management philosophy."

Published on: March 22, 2016

Yesterday, MNB reported that Starbucks has been hit with a class-action suit contending that the latte drinks it serves are 25 percent under-filled, and that baristas are instructed not to fill 12, 16 and 20 ounce cups to the brim - thus not giving customers what they are paying for while saving the company millions of dollars. While the suit suggests that the practice is systemic, Starbucks says that the charges are "without merit," and that "hand-prepared beverages increase the likelihood of variations ... If a customer is unhappy with their beverage preparation then we are happy to remake it to their satisfaction.”

I commented:

As a regular Starbucks consumer, I can't say that I have any complaints ... but I am sort of intrigued to see where this goes. If it ends up being a Subway foot-long situation (the foot-long sandwiches weren't that long), it'll end up being a black eye for Starbucks. I suspect that won't be the case, but I am curious...

MNB reader Joe Axford wrote:

As a regular latte consumer I see this as much ado about nothing.  As long as my Grande has 2 shots of espresso and my Venti has 3, I have no complaints,  as simple as that!

But MNB user Larry Lund disagreed:

I can tell you my wife who is a big Starbuck latte customer (sometimes 3 a day) is livid when she gets a cup that is not closely filled to the top! In fact, she as stopped going to some Starbuck stores because of this. She had no idea that this was their practice, she thought it was just a careless barista and decided not to go back to those stores who follow what we are now learning is “company practice”.

Well, let's not get ahead of the story ... Starbucks is accused, but nothing has been proven.

From MNB reader Scott Zeiher:

Yo KC!!!  Being a loyal Starbucks “contributor” I mostly order just coffee.  However, I stumbled across an item called a Flat White?  And I have noticed that in some locations, it can be a very light fill.  To the point where I have told them to put more coffee and less foam into the cup.  In addition when you order a double expresso, you get 1.5oz’s instead of 2???  There’s some fuzzy math going on here and I’d say there’s a basis for the suite!!

And MNB user Bruce Wesbury wrote:

Seems to me you had a big problem with Whole Food charging for underweight items about a month ago. What gives?

I think in the Whole Foods case the allegations were proven. In the Starbucks case, the allegations are just that - two Californians filed a class action lawsuit. But if this is demonstrated to be systemic and cultural, I'll have a major problem with Starbucks. And Starbucks will have a major problem with a lot of its customers.