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    Published on: May 19, 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, coming to you this week from California's Silicon Valley.

    Pretty much as you read this - or watch the video version - Tom Furphy and I will be doing a live version of "The Innovation Conversation" at the Produce Marketing Association (PMA) Tech Knowledge conference. We're always excited about doing the "Conversation" live, mostly because there is simply so much to talk about, but also because it gives us the opportunity to engage in conversation with an audience consisting of both retailers and suppliers that have their own concerns and dreams about how to best innovate within their own businesses. Kudos to PMA for realizing that the technology advances being seen at pretty much every level of the food industry require a dedicated conference that focuses on them.

    The PMA Tech Knowledge conference is taking place in Santa Clara, but I decided to take advantage of the location to drive over to Sunnyvale - because I wanted to see a specific building. That building is behind me, and it is a structure that the local media has reported to be the location of a future grocery pickup facility to be operated by Amazon. It strikes me as a pretty good location for such a facility - there are lots of businesses and residences nearby, and the location is shared with an Orchard Supply Hardware store, and also is close to number of major thoroughfares. And it would be yet another test case for Amazon to play with some version of physical retail - in this case, a click-and-collect model similar to the kind being used by a number of traditional retailers as they look to get into the online space.

    It was interesting to me that as I drove from Santa Clara to Sunnyvale, one of the things I noticed - as one would while driving through Silicon Valley - was the large and modern buildings that I saw along the way, featuring names and logos for companies like Electronic Arts, Cisco, Oracle, Intel, and, of course, Apple. You can just feel the brain power as you drive past these buildings, because these are structures where people are working to change the world and our relationship with it. (Tom Furphy and I went out for a burger last night, and when I looked around the restaurant where we found ourselves, I figured that I may have been the oldest person there, and probably the one with the lowest IQ.)

    As I made the drive, I also saw names and logos I did not recognize - smaller companies, I assume, that also want to change the world, though it would be fair to suggest, I think that some will be successful and some will not. It won't be for lack of brainpower or ambition, but not everybody can be winners.

    And then, just a few blocks from here, I saw a building with the Nokia logo ... and all I could think about that this is a company that once was dominant in the mobile phone business, but then lost its way, largely because it was disrupted so effectively by companies like Google and Apple. And I thought to myself that this is instructive, that onetime dominance does not lead to permanent dominance, and that every business model is subject to the kind of disruption that can make it irrelevant.

    That is important, I think. Companies have to continue to innovate, continue to disrupt from within, resisting complacency at all costs. Companies have to constantly try to look around the corner and make both educated and instinctive bets about what will be the next big thing; some bets will pay off, some won't, but hopefully there will be learnings even from the ones that don't work out.

    Here's the thing. Companies have a choice. They can try to rock the world. Or they can wait for the world to rock them ... which I don't think ever is a good idea.

    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 19, 2016

    CNN reports that Sports Authority plans to "conduct going-out-of-business sales at all of its locations that weren't already slated to close," and will shut down what used to be the nation's largest sporting goods chain, yet another victim of e-commerce competitors.

    The Wall Street Journal goes on to say that "a consortium of liquidators that includes Tiger Capital Group, Hilco Global and Gordon Brothers prevailed in an auction for Sports Authority Holdings Inc.’s assets ... The winning group agreed to pay 101% of the cost of the retailer’s inventory, plus a $1.8 million augment guarantee."

    According to the story, "The winning bidders topped a rival offer from a second group of liquidators that included Yellen Partners, SB Capital Group and 360 Merchant Solutions."

    Retailers such as Dick's Sporting Goods, Modell's, and Bob’s Discount Furniture are said to be bidding for various packages of stores, though the story notes that at this point those bids seem to be smaller than originally anticipated. But the reality seems to be it is just a matter of time before Sports Authority will be just a memory.

    One unanticipated controversy resulting from Sports Authority's sales has been the naming rights for the home of the Denver Broncos - known as Sports Authority Field at Mile High. The bankrupt retailer reportedly is trying to sell those naming rights to another entity, but the Broncos say that it cannot - and that Sports Authority still in on the hook for a $1 million payment due two weeks ago.
    KC's View:
    A few things here...

    First, I'm wondering what the over-under is before some analyst suggests that Amazon ought to buy all the stores and turn them into Amazon warehouse stores. It won't happen, but somebody is going to suggest it ... ignoring the fact that a disruptive and innovative company like Amazon probably wouldn't be interested in the tainted assets of a failing bricks-and-mortar retailer.

    Second, my daughter and I went into a Sports Authority the other day, and were a little surprised by how little merchandise actually was on sale considering that the company is in such trouble. Maybe that'll change soon, but it was jarring.

    I'm guessing that the Broncos likely will have to kiss that million bucks goodbye. Can't get blood from a stone.

    Finally, Sports Authority has to be seen by other retailers as an object lesson in how not to compete in the new economy - that it squandered whatever advantages it had and was unable to maintain the kind of relevance that would have allowed it to survive.

    Published on: May 19, 2016

    The Los Angeles Times reports that for the past three days, "users of Walmart-brand prepaid debit cards say they've been unable to withdraw cash from ATMs, check their account balances or make purchases, leaving them cut off from their money ... Though it's not clear how widespread the problems are, the complaints are reminiscent of an outage at prepaid firm RushCard that last year left thousands of customers in the lurch."

    Green Dot Corp., the company that issues the cards, attributed the issue to a "technical problem" that should only be affecting people's ability to check their balances, not use the cards to make purchases; it said it expected to have the problem resolved by last night.

    However, customers said the problem was more serious than be admitted to by the company.

    Walmart has no yet commented on the problem, which has resulted in the creation of a Facebook group called Walmart MoneyCard Exodus, which currently has more than 500 members - and at least one user describing himself as a lawyer willing to work on a contingency basis to sue Walmart and Green Dot on behalf of consumers.
    KC's View:
    The problem may have been created by Green Dot, but Walmart's name is on the cards, which means it is going to be held responsible. I also have to say that it doesn't make a company look good when it says that the problems are limited to one thing, and hundreds of people are on social media saying it is a lot worse.

    Best I can tell, while there are a lot of comments and complaints on Facebook, there aren;t any responses from either Walmart or Green Dot. I have to wonder if some of the problems might be mitigated if these companies got on Facebook and tried to engage with the consumers, offering help and expressing sympathy rather than appearing to be in denial.

    Published on: May 19, 2016

    The Wall Street Journal reports that in view of Amazon's efforts to make itself a destination for online fashion shoppers, Gap CEO Art Peck told investors this week that he would consider selling his company's clothing "on Amazon or other third parties in the U.S."

    The reason? "To not be considering Amazon and others would be in my view delusional," he said. "We are always considering all of our opportunities beyond our traditional mix of channels and stores.”

    Peck conceded that Amazon is projected to become the largest US apparel retailer by next year. “To not acknowledge that and what it means to our strategy would be to have our head in the sand, and we do not have our head in the sand,” he said.

    The Journal writes that "Amazon has courted apparel brands for years and has started to lure some department store staples to its site, including Calvin Klein, Lacoste and Levi Strauss. But Gap is among the chains that have shunned the online retailer and it has largely focused on selling jeans, khakis and button-downs through a fleet of more than 3,500 stores and its own websites."
    KC's View:
    There's no question that doing business on Amazon can be problematic for companies like Gap, which will inevitably find that Amazon will have access to its shopper data and will be able to more effectively to compete with them. But unlike what happened to companies like Toys R Us and Borders, which got into bed with Amazon long before there was any real understanding of how powerful a platform Amazon had developed, Gap will be doing it with eyes wide open.

    If companies like Gap want to be relevant to its target audience, it may have little choice but to do business on Amazon. To do otherwise may well be to keep its head in the sand.

    Published on: May 19, 2016

    • The Columbus Dispatch reports that "Wal-Mart will bring its online grocery pickup service to four Columbus-area stores on May 25, enabling customers to order groceries online and pick them up at one of those four stores without leaving their cars ... Wal-Mart is making 30,000 items available through this service."

    The story notes that Walmart is joining "other supermarkets in offering online ordering and at-store pickup. Giant Eagle's Curbside Express made its debut in some Columbus stores last year. Kroger's service, called ClickList, is due to launch this year in Columbus and is already offered at more than a dozen Kroger stores spread across the Cincinnati, Indianapolis, Lexington, Ky., and Nashville, Tenn., markets."

    • In a follow up to the Tampa Bay Times story last weekend about how Walmart stores in that area essentially use local police forces to provide store security, an approach that costs taxpayers money and eliminates the amount of time that police can spend on crime prevention and other law enforcement activities, the paper is now reporting that Tampa Bay officials "are calling on Walmart to meet with community leaders and to reduce the burden that the nation's largest retailer places on local law enforcement."

    A number of officials have called for the government to address the problem, noting that Walmart competitors, such as Target, are far less dependent on local police to handle problems that fall into the "general disorder" category but rarely result in arrests.
    KC's View:

    Published on: May 19, 2016

    • Amazon this week announced that it has expanded its restaurant delivery service to customers in Manhattan and Dallas, saying that customers in both markets will be able to use the Prime Now mobile app or dedicated website to order from local restaurants and have items delivered free in one hour.

    "Once an order is placed," the press release says, "Amazon delivery partners deliver the food in an hour or less. Amazon Restaurants offers customers transparent pricing--there are no menu markups or hidden service fees and delivery on all orders is free for Prime members."
    KC's View:

    Published on: May 19, 2016

    • The Associated Press reports that Target Corp. posted Q1 earnings $632 million, down from $635 million a year ago, on revenue that was down 5.4 percent to $16.2 billion from $17.1 billion. Same-store sales were up 1.2 percent, lower than expected, because of what CEO Brian Cornell said was a cold, wet spring and some customer reluctance to spend.

    • Unilever-owned Ben & Jerry's ice cream has announced a new flavor, called Empower Mint,designed to draw attention to the battle against what activists say are oppressive voter ID laws. The Boston Globe reports that a portion of the profits from sales of the flavor - peppermint ice cream with chunks of fudge brownies and fudge swirls - will be used to support the North Carolina chapter of the NAACP; North Carolina is described by the company as "the epicenter of the fight for voting rights in the United States."

    A number of states, including North Carolina, have enacted stricter voter ID laws to combat what supporters say is voter fraud that corrupts local and national elections. However, opponents to such laws say they are primarily designed to make it harder for poor people, minorities and students to vote, since those demographics tend to cast their ballots for Democrats; for example, in some cases the laws will accept gun registrations as ID, but not college IDs. Opponents also say the laws are unnecessary since there is virtually no voter fraud in the US.

    The Globe notes that "it seems Ben & Jerry’s cannot stop mixing the sticky games of ice cream and politics," an approach that has persisted even though the company, founded by a couple of hippies in 1978, now is owned by a global conglomerate.

    Advertising Age reports that "Taco Bell is overhauling four California locations with sleek seating, distressed wood, funky pendant lighting and other elements in a test that may help the chain appear more like a chic loft than a fast-food taco joint." The goal of the design tests is to help the 7,000-store chain to get some distance from its fast food image and make it resemble, to some degree, Chipotle.

    Taco Bell says it plans to renovate some 600 stores a year, though it has not committed to a national rollout of the new designs.
    KC's View:

    Published on: May 19, 2016

    • The 37-store Strack & Van Til retail chain announced that Jeff Strack, grandson of the company's founder, has been named president/CEO. Strack has been serving as the company's chief marketing officer; he succeeds Kenneth Diehl.
    KC's View:

    Published on: May 19, 2016

    ...will return.
    KC's View: