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    Published on: May 12, 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, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    Well, I'm back in my kitchen ... after a five week run of FaceTime videos that were shot in Washington State and California, looking at some fascinating retailers. They ranged from Kroger's Main & Vine format to the new Starbucks Roastery & Tasting room, from the Grand Central Market in Los Angeles to the sublime Northgate Gonzalez Market in Norwalk, California.

    In each case, these food retailers are doing their best to create environments designed to encourage people to leave home, to see these stores as attractive and compelling alternatives to e-commerce, not to mention bricks-and-mortar competitors. That's not all they were designed to do, of course, but to me, that was the subtext of each of these visits.

    This is really important. But I also think there is something else that retailers need to pay attention to - the fact that so many millennials, who soon will be the center of the consumer target for many retailers, simply are going to have less money to spend on food than one would hope.

    I was just reading a study from WalletHub saying that many college graduates have to spend 18 percent of their salaries on student loan payments; for the record, some experts say that to spend 10 percent of your salary on student loans is "excessive." Many of these people are going to carry these loan payments into their forties, which is going to have an impact on how much they can spend on houses, cars, having children, and yes, even food. (How the hell are they going to send their kids to college? These are dominos that will continue to fall, and the economic noise it is going to make will be deafening.)

    Here's another alarming statistic - more than 40 percent of these people are going to be unable to keep up with their debt payments.

    Let's put the political part of this aside ... though I'm more than willing to say that this requires some sort of government attention beyond "we're going to make the economy grow so that these folks have more money." And, "We're going to make public college free for everyone" doesn't sound to me like any sort of reasonable or attainable solution. I'm not a single issue voter, but this is right up in the top five or six for me.

    As retailers develop formats and strategies, I think it is critical to keep this nightmare scenario in mind. Yes, it is critical to offer differential and distinct advantages ... but also to keep in mind that customers simply may have less money to spend. That doesn't mean that they won't want to indulge themselves, that they won't be interested in cool and unique products. It just means that there will be competing impulses, and it is better to embrace the challenge than not.

    This also means that if you are a traditional retailer who believes that just having been in business for decades and having a 'loyal" customer base will leave you immune to the challenges of companies like Aldi and, soon, Lidl, you are delusional.

    For me personally, this study has a lot of resonance. I was fascinated to see that the Connecticut community where I live is ranked among the 2500 places in the nation looked at by the study as one where the ratio of student debt to median adult income is the lowest ... and it is still 18 percent. Ironically, the community identified by the study as having the worst ratio is just 130 miles southwest of me ... Voorhees, New Jersey, a suburb of Philadelphia, where debt accounts for 174 percent of the median income of adults aged 25-44.

    I cannot imagine even getting up in the morning facing that kind of student debt.

    Now, we've been extraordinarily lucky. My youngest child, my daughter, graduates from college in about nine days ... and she walks into the world without any student debt. (She also walks into the world without a job. She's a criminal justice major, a member of the National Criminal Justice Honor Society and a dean's list student .. so if you have any ideas or contacts, especially with the FBI, CIA or Homeland Security, let me know.)

    The financial pressures facing so many of our college graduates is both a national security issue and an economic problem that needs to be addressed. And the sad likelihood is that it may never be addressed at the public policy level that it deserves, simply because our politics are so toxic that coming to any agreement on anything is practically impossible.

    So businesses are going to have to figure out how to deal with it on their own. It means having differentiated stores, but also have a differentiated mindset ... because the challenges they face in the very near future will be significant and potentially even crushing.

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

    KC's View:

    Published on: May 12, 2016

    by Kevin Coupe

    This morning's "FaceTime" commentary was a bit of a downer, focusing on limitations. So I wanted the "Eye-Opener" to talk about possibilities.

    I found the right stuff in a Washington Post story about how NASA scientists have announced the discovery of 1,284 new exoplanets in our galaxy - that is, 1,284 planetary bodies that have been found and confirmed by the Kepler Space Telescope with "99 percent certainty."

    Furthermore, the Post writes that "of the newly confirmed planets, nine are thought to be rocky planets (like Earth, as opposed to gas giants or tiny worlds made of ice) in the habitable zone — meaning that they’re the right distance from their host stars to potentially host liquid water, a necessary ingredient for life as we know it ... As of today, NASA knows of 21 exoplanets that it considers likely to be rocky, potentially wet worlds. And based on Kepler data ... our galaxy probably has more than 10 billion rocky planets that live in the habitable zones of their stars."

    Which I just think is cool ... and the numbers suggest a galaxy that is just bursting with possibility.

    Is it time to make some sort of star trek? Maybe. Because the truth may well be out there.

    It'd be an Eye-Opener.
    KC's View:

    Published on: May 12, 2016

    The Wall Street Journal this morning reports that Walmart is looking to compete with Amazon Prime by testing a new two-day shipping subscription service and building a more robust regional delivery network.

    According to the story, "Last year Wal-Mart began experimenting with a three-day shipping service for members who pay $50 a year. The program called “ShippingPass” is similar to Prime, Amazon’s $99-a-year service with free two-day shipping. Starting Thursday, ShippingPass members will get free two-day shipping for $49 a year, says a Wal-Mart spokesman. He declined to say how many people have signed up for the service, which is only available by invitation. Standard delivery on can take around a week."

    To make the service work, the Journal writes, "Wal-Mart will rely on eight massive e-commerce warehouses around the country, the last of which will be built by year’s end." The retailer plans to move away from its use of national shipping services like FedEx and use more regional services as it ramps up the program.
    KC's View:
    One of the things that Walmart has to figure out is how to bring down shipping costs, which can make or break an e-commerce business; Amazon is said to ship something like six or seven times the number of items that Walmart does, which allows it to bring down its costs ... and even Amazon is engaged in an ongoing effort to better control the fulfillment process, own more of the elements that are pat of it, and bring down its costs.

    What Walmart is doing makes sense, and it illustrates the degree to which Amazon is setting the rules of the game, challenging its competitors to play the game as well as it does.

    Published on: May 12, 2016

    Re/code reports that startup e-grocery site "is taking a big swing at becoming a shopping site for the masses" by testing a new offering that will sell and deliver fresh foods - milk, fruit, meat, etc.. - to some customers in the northeastern US.

    The story says that Jet "will have the groceries delivered in one to two days, depending on when they are ordered, and delivery will be free for orders of more than $35 during what Jet is calling a 'pilot test,' according to an email sent to some customers ... A Jet rep said the company is testing the service in 875 Zip Codes in total spread throughout New York City, New Jersey, Connecticut, Pennsylvania and Washington, D.C."

    The test pits Jet not just against Amazon, but also against FreshDirect and Peapod, not to mention retailers that are outsourcing delivery to companies such as Instacart."
    KC's View:
    I think one of the things that Amazon has been smart about has been not leaping into the grocery business early - it built up a lot of credibility, and learned from fresh food purveyors in Seattle for years before it ever rolled out Amazon Fresh; it also continues to work with food retailers in various markets on its Prime Now offering, which I actually think might eventually supplant Amazon Fresh.

    I can understand Jet getting into this business, but I have to wonder if it has the street cred to do so, especially without any identification of what fresh food experts it might be working with. That's not to say it won't work, but it could be tougher ... and this move could be perceived as a "hail Mary" as it burns through capital and tries to gain sufficient traction.

    Published on: May 12, 2016

    The Seattle Times reports that Amazon has added a new capability to its family of Alexa-enabled voice-powered digital assistants - the ability to track packages ordered from Amazon.

    According to the story, "Shoppers now just need to 'ask Alexa when your package will arrive,' 'where’s my stuff,' or 'track my package,' and Alexa will respond."

    The Times writes that "Alexa has been a remarkably successful experiment for Amazon. It’s becoming a big hub for home automation, and the latest skill added by Amazon enhances its usefulness as a shopping concierge."

    There have been estimates that Amazon has sold more than three million Echo units, and it recently added new, similarly enabled gadgets - the Tap and the Dot - to the ecosystem.
    KC's View:
    Wow. This just seems so cool. Can't wait to test it, and see yet another fascinating addition to the Amazon ecosystem.

    Published on: May 12, 2016

    The New York Times has a story about Whole Foods' first "365" store in the Silver Lake section of Los Angeles, which is scheduled to open in just two weeks.

    An excerpt:

    "On Wednesday, Jeff Turnas, the president of 365, gave a tour of the store, which feels like a sort of foodie playroom. Shelves, racks and refrigerated cases are splashed with bright primary colors and surrounded by exposed insulation and polished concrete floors. All the fixtures are low profile — the highest shelving rises just 72 inches. Electronic terminals are lined up, ready to accept orders.

    "Instead of a human sommelier, there’s Banquet, a wine app developed especially for 365 stores by Delectable. Want a bottle of special Frankies olive oil for $9.99? That’s a so-called green-and-gold product, the name for goods procured and sold exclusively at 365 and only temporarily available."

    The story notes that 365 "does not have a tattoo parlor. Nor is it merely a stripped-down Whole Foods. Instead, it’s more like what Old Navy is to the Gap, or Madewell to J.Crew."

    You can read the entire story here.
    KC's View:

    Published on: May 12, 2016

    The Democrat & Chronicle reports that Wegmans is getting into the digital coupon business, telling its Shoppers Club members via email that it will begin making them available "later this year."

    According to the story, "Wegmans will pilot Wegmans Shoppers Club digital coupons in its Rochester-area and Lehigh Valley, Pennsylvania, stores beginning in June, with a date to be determined, said spokeswoman Jo Natale," who said that the introduction is a result of customer demand.

    The Democrat & Chronicle says that "Wegmans has designed the program so it’s easy to use, and shoppers won’t need a smart phone to take advantage of the coupons. Customers may use either a desktop computer or a mobile device to clip digital coupons directly to their Shoppers Club account, Natale said, adding that digital coupons will not replace Shoppers Club discounts."
    KC's View:
    Inevitable, I think ... since eventually we're going to see the death of paper coupons. Not anytime soon, but eventually ... and every retailer has to get with the digital program so that it is relevant to the next generation of consumers.

    Published on: May 12, 2016

    The Washington Post has a story about the restaurant industry, observing that the fast casual segment is growing at a rate (11.4 percent last year) that dwarfs the growth of the full-service segment (3.4 percent) and fast food business (4.4 percent).

    But even more interesting is the finding by location-based marketing company xAd, which found that for the post part, the customers who patronize these restaurant segments tend to stay in their lanes, not often veering off to visit a category outside their preferences.

    In other words, there is more customer overlap at BurgerKing, Chick-fil-A and Taco Bell, and at Panera, Chipotle and Shake Shack, than there is between, say, Chick-fil-A and Panera.

    The exceptions seems to be Taco Bell and Chipotle, which share more customers than most of the other companies in their segments, and McDonald's, which "still dwarfs the other brands in terms of overall foot traffic, and its customers have very little overlap with other chains."

    "Here’s why that is important," the story says. "Surely there are plenty of customers who have traded up from the fast-food standbys for pricier offerings from fast-casual restaurants that they perceive as healthier and fresher. But now that we’re deeper into the fast-casual boom and consumers have adjusted to this new restaurant landscape, it’s worth noting that they tend to stay exclusively in one dining lane."
    KC's View:

    Published on: May 12, 2016

    Mother Jones reports that Mark Bittman, the celebrated and influential former New York Times food columnist who left the paper last year to become chief innovation officer at a vegan meal kit startup, has left that company, Purple Carrot.

    "I'm ready for something new," Bittman said on Tuesday.

    Purple Carrot said that Bittman retains his ownership stake in the company, but no longer will have any management role; both sides suggested the departure was amicable.
    KC's View:
    I've done it on a fare smaller scale than Bittman, but I can tell you from experience that it is hard to go from just a writer/pundit to being an entrepreneur ... they involve entirely different skill sets.

    From my POV, I'm mostly going to miss Bittman's Fast Company columns about the entrepreneurial experience. They were fascinating.

    Published on: May 12, 2016

    • The New York Business Journal reports that even as the New York metro area deals with the bankruptcies of both A&P and Fairway - the first of which resulted in the end of the company, the second of which leaves the once-iconic Upper West Side independent food retailer with an uncertain future - there is a small player planning to take advantage of the moment.

    Mrs. Green’s Neighborhood Market, the story says, "plans to grow further here after opening a store in the West Village last August. Its Westchester County-based parent company, Natural Markets Food Group, plans to expand its Mrs. Green footprint into Manhattan and Brooklyn, with plans to open two or three more stores in the next 18 months."

    CEO Pat Brown tells the Journal that the company is actively looking for sites in neighborhoods that don't have small grocery stores focused on local and organic products.

    Pat Brown comes from HEB and New Seasons Markets, which means he is a very smart guy with a ton of experience in growing differentiated formats. Mrs. Green's will have more than its share of challenges if it wants to grow in New York, but I think Brown is a guy worth betting on.

    • The Food Marketing Institute (FMI) has released the names of the 10 finalists in its annual Store Manager Award contest.

    The nominees are scored based on their ability to generate sales growth, provide exceptional customer service and/or community relations, execute in-store innovation and demonstrate team leadership, FMI said. The finalists are:

    - Category A (1-49 Stores): Alberto Ayala, Northgate Gonzalez Market, Los Angeles, California; Larry Baxter, Roche Bros. Supermarkets, Boston, Massachusetts; Jon Wieser, Festival Foods, Green Bay, Wisconsin.

    - Category B (50-199 Stores): Patty Bianco, Tops Markets, LLC, Niagara Falls, New York; David Couture, Hannaford Supermarkets, Wells, Maine; Piotr Soja, Big Y Foods, Inc., Northampton, Massachusetts.

    - Category C (200+ Stores): Josh Birmingham, The Kroger Co. Columbus Division, Holland, Ohio; Jen Knesel, Hy-Vee, Inc., Winona, Minnesota; Angel Robles, Smart & Final Stores, LLC, Upland, California.

    - Category D (International): Ted Pigeon, Overwaitea Food Group, Victoria, BC, Canada.

    The winner will be announced at the 2016 FMI Show in Chicago next month.
    KC's View:

    Published on: May 12, 2016

    Yesterday, MNB took note of an announcement by Kroger that it will hold a nationwide hiring event on Saturday, May 14, with a plan to hire 14,000 employees.

    However, I screwed something up in my reporting. Kroger pointed out to me yesterday that while the official announcement talked about the hiring being for "permanent" positions, I conflated this to mean "full-time." Which they are not.

    The Kroger spokesperson told me that the jobs are both full-time and part-time, and pointed out that "it is important to note that 70% of our store managers today – who as you know run multimillion dollar businesses – began their Kroger career in entry level, part-time positions. That’s a good indicator of the opportunity culture we strive for in our company."

    I jumped to a conclusion and was wrong. My apologies to Kroger, which deserved better.

    Mea culpa, mea culpa, mea maxima culpa.
    KC's View:

    Published on: May 12, 2016

    On Tuesday, in this section, we carried an email from an MNB reader who wanted to comment on food labeling lawsuits. It said:

    It was said that John Edwards, the infamous running mate of John Kerry, was responsible for driving up the cost of every prescription in the US by $1.00. His ambulance chasing tactics and ultimate lawsuits were simply added to the cost of doing business. Americans have long been consuming wood chips, chemicals, fillers, rat feces, bugs, dirt, hair and many other tastefully sounding things in their food for years. I for one could care less what additives are in our food, if I like it I will eat it. There is no denying that we have the safest food supply in the world and the lawyers will not be happy until it’s the most expensive.

    I responded, in part:

    I want to be clear about something here. While the reader who sent this email signed his name, and I could've used it, I've decided not to ...because this person works in the bakery business. I didn't think it would do him - or his company - any good if he gets quoted as saying that he doesn't care what's in his food - including "wood chips, chemicals, fillers, rat feces, bugs, dirt, hair" - as long as it taste good. (I suspect that his company's official position may be somewhat different.)

    I got another email from him yesterday:

    I must have hit a nerve with you. Being threatened to use additional information about me shows me more about your character than your content. Nowhere in my email did I state anything other than my views, and I purposely used the word “I” in my description of the situation. I will be happy to continue to provide you content but from my personal account in the future.

    Well, you've hit a nerve now.

    Let me be clear.

    There was no threat involved.  Not at all.  For 15 years I have been assiduous about making sure that people - not companies - being identified, and then only when they wanted to be.  I only list companies when the person writing in makes a company-related point that is "official" in nature.  In fact, I will often not use names of people who write in … even when they've signed the email … if I think it might create problems for them at work or with customers/clients.  My goal is to protect my readers as best I can, not to victimize them for sharing their honest opinions.

    In fact, this is what happened in your case.  I didn't use your name - though I've used it before when you've written in - because I didn't want your customers (or competitors) to be able to link your company to your comments.  That didn't mean that I could not comment on the irony of what you said … but let's be clear - there was no threat involved.  Not stated, nor implied.  And to suggest otherwise is B.S.

    We got a lot of email responding to Kate McMahon's column about companies having to take stands on cultural issues, whether they want to or not.

    One MNB user wrote:

    Thanks for reminding me about the Target Boycott.  I have 8 daughters that twice in recent months have had to flee public restrooms where policies similar to Target’s are in place.  In both cases a male entered and used the women’s restroom (strange how my girls no longer enjoy deference or “rights” in this scenario).  After your reading your pro-Target-policy article, I straightway went to the AFA site to add my signature to the boycott.  I don’t expect to be understood, but I do intend to do my part to protect our society’s women and young girls.  Additionally, I find myself obliged to align to God Almighty’s obvious design specifications versus our increasingly godless social, political, and now commercial dictates.  Thanks again for the reminder.

    We aim to inspire. And frankly, anyone with eight kids deserves enormous admiration.

    However, I would point out that a man entering the ladies room is different from a transgender person using the rest room that coincides with their gender identity rather than birth gender. Just not the same thing.

    Another MNB user wrote:

    Target was pandering and nothing will get you in more trouble than that. Try honesty. It works.

    Let me gently suggest that your email is based on the premise that Target was pandering, and that the North Carolina politicians who passed the law were not, but rather just were voting in a sincere, non-political way. Which could be true. However, it also is possible that the opposite is true - that the politicians were the ones doing the pandering. It even is possible that everybody is pandering.

    I just think it is important to remember that it isn't only the people with whom we disagree that are pandering and insincere, and the people with whom we agree that are motivated by the purest of intentions.

    At one point in her piece, Kate wrote:

    Target's bet was that a message of anti-discrimination - that bias based on sex, race, age, religion, disability, sexual preference or gender identity is illegal and morally wrong - would be the one that is most resonant and most relevant to the majority of its customers, and that this majority only would grow.

    Leading one MNB user to write:

    Good piece but I would suggest using the term sexual orientation rather than sexual preference.

    You're absolutely right.
    KC's View: