retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 26, 2016

    The last time I did a story about Walter's Hot Dogs, I was standing in a flurry of snowflakes, marveling at the line that formed despite the lousy weather. This time around, the weather is better, the occasion is different ... but the lesson no less important to marketers.

    While I usually provide a text version of my video commentaries, every once in a while I don't ... just because I think it is better for actually seeing and hearing it. For some reason, Walter's seems to be a subject that lends itself best to this approach,

    I will tell you the general subject though. It is about brand resonance - how to create it, sustain it, and make it cross generational lines.


    To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    KC's View:

    Published on: May 26, 2016

    by Kevin Coupe

    AdWeek has a story about how Zappos is about to start shipping some of its shoes in a specially designed box "that features a collection of template designs printed on the inside—encouraging the recipients to fold, cut and otherwise reuse the box into item like a smartphone holder, a children's shoe sizer, a geometric planter and a 3-D llama."

    The story says that this is part of a broader campaign, "I'm Not A Box," that encourages people to think outside the box by emphasizing that Zappos does not. In a TV commercial using this theme, for example, a woman's voice is used to say that Zappos wants to help customers spend time on what is important ... that it is not just a box ... and it is not just an online retailer, "and you're not just a customer. You're our best customer."

    I've always thought that marketing approaches like these by online retailers are canny, in that they tend to subvert the image of e-commerce companies as soulless, antisocial entities. (One MNB reader keeps sending me emails describing Amazon as "evil." He's wrong, but he's not alone.) By focusing on how online shopping actually empowers people to reorder their priorities in a positive way, and spotlighting the high levels of customer service that such companies can provide, companies like Zappos establish a compelling narrative.

    It is an Eye-Opening approach to marketing.
    KC's View:

    Published on: May 26, 2016

    Re/code reports that "Amazon plans to expand its Fresh grocery delivery service this year to new markets including Boston and the United Kingdom," after 18 months in which Amazon Fresh had not been expanded into any new markets.

    The story notes that "Amazon began testing the service in 2007, but has been slow to expand it since then. Today, it is only available in parts of Washington state, California, New Jersey, New York City and Philadelphia."

    In a possible harbinger of heightened competition, Ahold-owned bfresh in Boston said it would launch its own online shopping service in Boston, using CartFresh, a Ukraine-based company, as its service provider.

    Re/code goes on: "The new launches appear to indicate that Amazon is going all in on the grocery delivery market, which is tiny in the U.S. today — making up less than 5 percent of grocery sales — but has the potential to be a giant market ... The AmazonFresh service lets Amazon customers order groceries, including perishable items like dairy, meat and fish, for delivery within 24 hours. It's only available to customers who buy a $299 Prime Fresh membership, which also includes other perks that come with the company's regular $99 Amazon Prime program."
    KC's View:
    If Amazon plans to double down on the grocery delivery market, it is going to put even greater pressure on the retailers with which it competes. Not that they'll necessarily have to offer e-commerce options - like bfresh has decided to - but they certainly will have to come up with compelling alternatives if they don't.

    I continue to believe that $299 a year is way, way too expensive for an Amazon Prime Fresh membership, and that it could end up being a barrier to people trying the service.

    But here's the ultimate thing. Boxers, when they get into the ring, know that they can do enormous damage to an opponent with what's called a liver punch ... that's what everybody needs to be looking for. Amazon certainly is looking for it, and that's what its competitors need to do as well.

    Published on: May 26, 2016

    As expected, the first "365 by Whole Foods" store opened yesterday in the Silver Lake, California, neighborhood of Los Angeles, the first of more than a dozen that it plans to open up around the country over the next two years. And, as expected, there has been ample media coverage of a smaller, more accessible format that Whole Foods says it hopes will have greater appeal to millennials because of lower prices and greater use of technology.

    The Los Angeles Times writes: "By 8:45 a.m., the parking lot at the new 365 store was packed. At least a dozen cars, including a taxi, circled the lot. A deejay played music at the entrance while customers streamed in.

    Besides lower prices, the 365 store is also tech-friendly. Wednesday morning, produce lined a display in the center of the store. Scattered around the fruits and vegetables were electronic readers slightly larger than iPads with attached scales where shoppers could weigh their produce, see the price and print labels with all the necessary information for checkout."

    And: "The biggest selling point at 365 is lower prices, which company executives hope will attract people who wouldn't normally shop at the more expensive Whole Foods.

    "Expect a greater amount of non-organic produce and meat sold in smaller packages. Shelves will feature less variety than a typical Whole Foods, and there won't be any butchers slicing cuts of meat to order."

    Reuters reports: "365's messaging is breezier than its serious elder sibling's. One sign offers 'free air guitars,' while a 'silver kale' mural next to the meat case is a fun, foodie nod to the chain's first neighborhood, known for a hipster feel.

    "About half of the brightly colored fruits and vegetables at 365 are non-organic, a greater proportion than at Whole Foods. Produce is priced per piece or per package, rather than by the pound as at cult discounter Trader Joe's.

    "365 stores will be about a third smaller than the average Whole Foods outlet and carry roughly a quarter the number of products, reducing real estate and merchandise-related costs.

    "Staffing is leaner and no longer specialized. An iPad app replaces wine experts, while meat and cheese are in 'grab-and-go' packages, eliminating the need for staff like butchers and cheesemongers.

    "While 365 takes aim at budget gourmets and cash-strapped 'millennial moms,' grocery experts said it also must appeal to people who buy from a range of other food sellers, including Kroger, Walmart and, as well as restaurant delivery companies and meal kit providers such as Blue Apron."

    And, an MNB user observed: "I was in the store last week while overseeing our set and of course to take advantage of seeing the format beforehand.

    "We came away pretty impressed. If they get some density with these stores over the next year or so 365 will take business from Trader Joe's.

    "It’s got a lot of things going for it. Starting of course with the Whole Foods level of quality. Big selling point.   The 365 team worked hard to keep the lower pricing the focus - people will be pleasantly surprised at the pricing/quality ratio.

    "The store seems well designed with their target shoppers in mind. The aisles are wide enough for strollers that young moms and dads will be using and for older shoppers who will appreciate the space to maneuver.  There’s a pared back aesthetic but industrial chic rather than warehouse approach. Nothing austere about the setting.

    "Aisles are low so you can look across the store. And the product edit seems right - you’re not scanning the shelves for 10 different chips etc. And there’s a real emphasis-seen by the cold room and Euro style displays-for produce. Shoppers will love it I’m sure - Inviting.    In my opinion this format - executed by a new team devoted just to 365 - has the capability to bring Whole Foods quality to many more people in an everyday fashion just as they’ve indicated.  WF still has magic."
    KC's View:
    I won't be at all surprised if the 365 stores are successful in the short term, but I think it is going to take some time to get a sense whether it is resonating in a differential way with consumers without hurting the mother ship.

    Published on: May 26, 2016

    Nasdaq reports that Amazon CEO Jeff Bezos has confirmed that the online retailer plans to open more brick-and-mortar bookstores, which would "strengthen its foothold in brick-and-mortar retailing, likely enabling it to learn more about its customers and also helping distribution."

    The company's first brick-and-mortar bookstore - which not only featured some 5,000 books identified as being most popular by Amazon's online traffic, but also a selection of its various technology products, such as the Kindle - opened in Seattle last year. (MNB took a look at the store here.) A second store is scheduled to open in San Diego later this year.

    Physical stores, Nasdaq writes, might "help Amazon with showrooming because they will have friendly sales people to help customers find the products they want, install and use Amazon apps and even return merchandise.

    "Amazon might go the brick and mortar way with other merchandise, targeting the considerably large customer base that still prefers to shop at physical stores. We note that every industry matures and falls. Amazon seems to be gearing up well in advance should online retail ever bottom out."
    KC's View:
    I'm not sure that Amazon is worried about internet shopping collapsing, but it is a pretty good bet that the company will be looking for selected opportunities to open bricks-and-mortar stores that can complement its offering. Books are just one of the possibilities ... I suspect that it also is possible that it could open stores that focus on any number of categories. In food, for example, it could partner with any number of supermarkets with which it already is doing business, allow them to help develop a fresh offering, and then provide a pickup station for CPG products ordered online.

    That's not to say that these models would dominate Amazon's approach at any time in the near future ... just that Amazon is culturally nimble enough to try different things, to see what works and what doesn't, and to learn from all experiments.

    Published on: May 26, 2016

    Weis Markets announced it has entered into an agreement with Mars Super Markets to purchase five Mars stores in Baltimore County, a move that essentially doubles Weis' footprint in the region. Terms of the deal, which is expected to close during the summer, were not disclosed.

    An internal memo to Mars' store employees acknowledged that the company" has been struggling with declining sales for several years," saying that "we have tried cutting costs everywhere we can while preserving jobs and benefits, but it ha snot been enough."

    The memo said that Mars management will close the eight stores not being sold at the end of July if they cannot be sold to other retailers.

    Mars has been in business since 1943.
    KC's View:

    Published on: May 26, 2016

    • The Guardian reports that the European Commission has unveiled new rules designed to maker sure that digital on-demand and digital services play by the same rules as traditional broadcasters, saying that companies such as Amazon and Netflix "will have to guarantee to that at least 20% of video content in their catalogue is from Europe."

    "Currently, European TV broadcasters invest around 20% of their revenues in original content and on-demand providers less than 1%,” the European Commission said in its statement. “The Commission wants TV broadcasters to continue to dedicate at least half of viewing time to European works and will oblige on-demand providers to ensure that at least 20% share of European content in their catalogues.”

    According to the story, "Netflix disagreed with the Commission’s ruling, arguing that a quota system, as well as forced investment in European productions, will not necessarily lead to quality shows being made." The company, which said it has already committed “hundreds of millions” of euros to European productions, said that the new rule could require it to make or acquire "filler" that won't serve the audience and only will serve to fulfill a quota.
    KC's View:
    This highlights to me why I tend to be anti-protectionism ... it creates artificial barriers in a global economic climate, as well as creating the illusion that a country is being competitive when what they're really in is denial.

    Published on: May 26, 2016

    Fortune, noting that Costco Wholesale on Wednesday reported no growth in quarterly comparable sales at U.S. stores for the first time in more than six years, said that the company's relatively poor performance could be attributed both to "a pullback in spending by high-income consumers, who make up Costco’s core customer base" and "unseasonably cold weather in April."

    • The New York Times reports that e-commerce giant Alibaba said that it is "under investigation by United States securities regulators over its accounting practices, a potential setback for a company long seen as a symbol of China’s growing technological might ... It also puts under scrutiny Alibaba’s handling of Singles Day, a one-day shopping event in China that the company says gave it the world record for most online sales volume in a day. Alibaba said it had provided the commission with information about how it reported data from that event.

    "Alibaba said that it was voluntarily cooperating with the commission, and that the investigation was not an indication it had violated any law."

    • In a letter to customers yesterday, Sports Authority CEO Michael Foss wrote that the company, which has been in business since 1919, will "close all of our stores by the end of August. We will be holding store closing sales at all of our locations that will allow you to take advantage of big discounts on great brands," and that gift cards will only be accepted through June 28.
    KC's View:

    Published on: May 26, 2016

    • The Bergen Record reports that Toys R Us has named Lance Wills, former global head of digital technology at American Eagle Outfitters and vp for direct and omnichannel technologies at Macy's, to be its new global chief technology officer.
    KC's View:

    Published on: May 26, 2016

    I asked the other day how many people remember a time, not that long ago, when Walmart wasn't in the food business, prompting MNB reader Mike Carr to write:

    Yes I do remember Walmart before they sold groceries, less than 30 years ago. In 1987 they tested two “Hypermarts” in Dallas, then closed them. But they opened the first Supercenter just outside St. Louis in 1988 and came to Texas just two years later.

    As a young staffer with HEB I happened to be in an executive strategic off-site in 1989. In the discussion of new strategies our exec team said - forget about the buildings across the street from our stores – Kroger, Albertsons, Winn-Dixie, and Safeway. Instead they said, we need to worry about the new guy in our business – Walmart. And, at the time they had ZERO Supercenters opened in Texas.

    It was then that HEB decided to adjust their strategy to go to EDLP for Center Store and make up the margin in the growing Fresh categories. Of course we now know the rest of the story. Walmart has 350+ Supercenters in Texas alone, and HEB has earned a reputation of being one of the most successful chains to compete with that monster grocer. As I look back……what great foresight that HEB Exec team had.

    Here's something else to remember. Walmart and Kmart both decided to get into the supercenter business at around the same time ... and in the beginning, Kmart's version was vastly superior to Walmart's. The difference was that Walmart stayed the course and continued to learn and evolve, and Kmart went off the rails, sunk by its own arrogance and missteps.

    Responding to Michael Sansolo's column this week, one MNB user wrote:

    There are so many good books out there on how and why our economy is rising, but not all boats are rising with it. I work with many good young people, some going to college, some just out ... Our future management pool is shrinking because these young Turks can’t pay house payment or rent, car payment or repair the beater they drive, student load payment, and then try to save for retirement or even go out for dinner while only making 13 or 14 dollars an hour. On the corporate level I see many IT and business analysis hired and I’m pretty sure they make more than 13 or 14 dollars an hour (this isn’t to say they are not worth it, just a comparison is all). To have these young people start at the store and move up thru the ranks takes time and is quite an investment. I (naturally because  I am up thru the ranks)  feel that when you travel up thru the store rank and file you make a better manager. This is a challenge for all companies, how to keep young talent in the stores? Especially when the corporate offers Monday thru Friday, off weekends and holidays. (mostly) While at the stores, it is days, evenings, weekends and holidays ... Many challenges has we head into the future.

    Commenting on a story the other day, I noted that a friend of mine had pointed me to a Politico story about how Donald J. Trump calls global warming "a total hoax" and "pseudoscience," but recently applied for permission from local authorities "to erect a coastal protection works to prevent erosion at his seaside golf resort, . . . That application "explicitly cites global warming and its consequences - increased erosion due to rising sea levels and extreme weather this century - as a chief justification for building the structure." The point of the story was that Trump the CEO behaves differently than Trump the politician.

    Prompting one MNB user to write:

    Perhaps Trump is sophisticated enough to be able to discriminate between the scientific fact the globe is warming and the arguable hypothesis that humans both are responsible and able to reverse it.  It would seem reasonably intelligent for a company to prepare itself for inevitable changes it has absolutely no control over . . . unless its CEO is a Republican candidate, of course.

    One person's management philosophy is another person's hypocritical, cynical political posturing.

    I continue to get emails about the subject of millennials. MNB reader Rich Heiland wrote:

    A good bit of my work with owners and staffs of small business focuses on generations. We have more generations and generational subsets in the workplace than we ever have had and management and team challenges are immense, though at the same time simple. My goal, to cut to the chase, is to get rid of generational silos within a team and see how everyone contributes, just in a different way.

    I have found the subsets to blow up the theory of "a generation." For instance, Boomers are said to be those born between 1946 and 1964. I was born in 1946 so I am the first Boomer. I was in the part of that generation that marched for civil rights, against war, had some damn fine music and tries very hard to remember some of it. Those who came later were more of the "party hearty" and precursor to the Yuppies, yet they get lumped in with Boomers.

    In the case of the Millennials I see trends much as the Times article notes. I have found young people tend to want to know the "why" of what they do and as a manager you have to understand that. They also have seen previous generations work like dogs and end up getting laid off before retirement so they are not wedded to the idea of a "career" or a "company."

    There also, I think, is a huge difference between urban Millennials and rural ones. While the stereotype of Millennials is they live in 800-square feet, filled with really cool stuff, live near what they love, such as museums, clubs and friends, don't drive (Zip Car in urban areas is the biggest automotive growth industry) and they Uber (another noun-to-verb swing). In a rural area, it's hard to do all that so while there may be some baseline views of the world, how it plays out is different.

    And, we are starting to see studies showing that as the first Millennials age, marry and have kids, the home in the suburbs is tempting them away from the  800-square foot apartment near the clubs and museums.

    These differences are one key reason why I tell the teams I work with that you can't categorize generations based on work ethic, technological savvy, etc. Do they show up, do they work? Do they care? In my opinion Millennials do. It's not that one generation has a better work ethic than another, it's that they are different.

    I know this is too long for publication but I enjoyed your sharing of the Times article, and I plan to share it with some my clients.

    Not at all. It was perfect and right on point.

    One of our millennial readers also had an observation about how his generation should be categorized:

    To add to this conversation you could also call us very generous ... since we will pay into social security our whole lives with no plan to get any significant return when we are eligible.

    Maybe we should act our age and start complaining?

    Please don't.
    KC's View: