retail news in context, analysis with attitude

Published on: June 16, 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, Kevin Coupe here, and this is FaceTime with the Content Guy.

I want to circle back around to the conversation we've been having on MNB recently about the work ethic - or lack thereof - that is seen in the Millennial generation.

The reason? I was visiting a Florida ad agency last week, just to help them with some observations about the supermarket industry designed to help them with a potential client, and I heard a story about a 24-year-old woman who worked there.

She's an administrative assistant, and only had been working there for a few weeks, but had been put in charge of pulling together all the pieces of a proposal that was going to a prospective client, making sure that the materials got to the client by 10 am one morning, the deadline designated in the RFP.

The evening before it was due, she had all the pieces and was about to send them out via FedEx for signature-required, first-thing-in-the-morning delivery ... but she learned that if the FedEx truck got to the client's office at, say, 7:45 am, but the office did not open until 8:15, the truck would go back on the road and might not make it back to the office until after 10 am .... and the proposal would be late, with the agency instantly put out of the running.

And so, she took the entire proposal home, and the next morning got up at 5 am and hot the road early enough to drive the more than two hours to the client's office sop she could be there when it opened and make sure the proposal got there on time. Not only that, but because she wasn't 100 percent confident in her aging car, she contacted a friend to make sure that if the car didn't start or broke down, she'd have a Plan B.

Now, this is exactly what you'd want out of any employee. It definitely what you'd want out of a new employee ... it showed the kind of dedication and moxie she had.

The next step, it seems to me, is up to the employer. Because now that she has shown them what she's made of, it is up to the employer to nurture and reward this kind of dedication and effort. You can't just say, "This is what we're paying them for" and take it for granted. People want to know that the companies for which they work value them, are willing to invest in them. When they know that, they'll invest themselves in the company. Which is good for everybody.

That's what the employer has to do, it seems to me. Everybody - not just millennials - wants to be valued.

Let's be clear. I'm aware that not all millennials are like this. But there are plenty ... we just have to find them, nurture them, and reward them.

It also needs to be pointed out to millennials that this is the kind of effort that is necessary if you want to get ahead and succeed in any organization. If you're in the right place, and you behave this way, it'll be recognized and rewarded. If you're in the wrong place ... well, maybe that's the time to breathe in, breathe out, and then move on. Because there are plenty of places that will value you, and the companies that don't will be lesser for having missed the opportunity.

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

Published on: June 16, 2016

by Kevin Coupe

The Street has a story evaluating the private label strategy ... er, propriety content expenditures at Netflix, suggesting that the company "may actually deserve more credit for its content bets than it's getting."

Netflix has announced plans to spend more than $6 billion on content, and another $1 billion on content marketing. This includes not just the acquisition of content that already has been in theaters and on television, but also the production of original content such as "Orange Is The New Black," "Daredevil," "Fuller House," "Unbreakable Kimmy Schmidt," "Bloodline," and "Grace & Frankie."

Pacific Crest Securities analyst Andy Hargreaves writes in a note, The Street says, that companies worried about Netflix's long-term prospects simply do not understand its business model.

"Over the past three years, Netflix's U.S. streaming business has generated incremental contribution margins of approximately 50%, has driven [Return On Invested Capital] to 15% from less than 5% and has driven operating profit to what we estimate will be over $1.0 billion in 2016 from $178 million in 2013," Hargreaves writes.

The story also suggests that Netflix should be able to replicate its model internationally, which will cost it more but also contribute more to its bottom line.

I bring this up because I've always thought that the original content strategy pursued by Netflix - as well as by companies like HBO, Showtime and Amazon - is a good metaphor for what retailers have to do to differentiate themselves. At the end of the day, companies are going to be defined by the things they have and the services they offer that other companies do not have. It is that simple ... and that challenging.

Use the Netflix story as a conversation-starter. And an Eye-Opener.

Published on: June 16, 2016

New research from The Boston Consulting Group (BCG) says that "even though more than three-quarters of Americans, ranging in age from 15 to 85, have bought something from Amazon.com in the last year, the overall move to online shopping is expected to slow considerably over the next three years, according to a BCG survey of more than 3,300 Americans completed this month."

"In 41 categories, from athletic apparel and pet supplies to insurance products and consumer electronics, the vast majority of Americans surveyed -- 78% to 92%, depending on the category -- said they don't plan to increase their online spending over the next three years. And in many categories -- including baby products and food, beverages, fine jewelry, news and magazines, cars and packages goods -- more than a quarter of those already shopping online said they will spend less online in the future ... The few categories in which the most respondents said they'll spend more online over the next three years include airline tickets (20% of Americans), hotel reservations (20%), entertainment tickets and reservations (22%), reflecting potential sales growth in experiential consumption as opposed to products."

"In other words, more than twice as many people say they'll spend less online over the next three years than those who say they'll spend more online. Strikingly, the intention to keep online shopping at current levels and slow down in many categories is virtually identical among Millennials, Gen-Xers and Baby Boomers."

Published on: June 16, 2016

Brookshire Grocery Co. said yesterday that it is buying 25 former Wal-Mart Express stores in Texas and Louisiana, and will convert them to a new convenience format that it said would "offer hometown convenience in an easy to shop format with a surprising assortment of products at highly competitive prices. "

The 12,000 square foot stores, opened mostly over the past three years, were closed in January.

According to the announcement, Brookshire plans to reopen the locations as Spring Market stores," a name that "represents and honors the company’s great history which began in 1928 with the opening of its first store on Spring Avenue in Tyler, Texas."

Published on: June 16, 2016

The Washington Post reports on how meal kit service Blue Apron is using obscure produce items such as fairy tale eggplant, Shokichi Shiro squash, Atlas carrots and at least 40 other specialty crops as a way of differentiating itself. Indeed, the story says that "Blue Apron has built a team of regionally dispersed experts" across the country and is incentivizing them "to grow crops Blue Apron wants to use."

"Blue Apron's vegetable binge is helping the young company build a fast, almost-cult following among people who want to prepare original home-cooked meals without the fuss of dealing with a shopping list," the Post writes. "And it is hardly alone. Investors have poured hundreds of millions of dollars into a wave of ambitious start-ups with names like Plated and Sun Basket that are aiming to take a piece of a grocery industry that has proven difficult to disrupt."

The story goes on: "Earlier upstarts tried to win over shoppers by delivering food to their doorsteps and saving them a trip to the grocery store. The dinner-in-a-box companies, though, are betting that they can bypass the supermarket altogether by adding the convenience of curating recipes and portions so that all families have to do is chop and stir and fire up the stove.

"It's still too soon to know whether they will ultimately become a threat to traditional grocers. But Blue Apron thinks the secret might be changing the logistics of how fresh food moves to the pantry, fundamentally rethinking the food supply chain by starting all the way back at the farm."

Published on: June 16, 2016

The New Republic has a fascinating story about how US food producers are pressuring the US Congress to shield them from the prying eyes of citizens and journalists who would use the Freedom of Information Act (FOIA) to find out "how industry wields undue, and even illegal, influence over government agencies." Specifically at issue is how some food boards - which get tax dollars in order to promote the consumption of their categories through campaigns - actually use that money to help fund lobbying efforts that sometimes veer into the promotion of protectionist policies.

"In April," the story says, "14 food boards - including the leading producers of beef, milk, pork, potatoes, and eggs - quietly convinced Congress to insert language into this year’s Agricultural Appropriations Bill that would exempt them from all FOIA requests. If the measure passes, America’s biggest food manufacturers will be allowed to spend millions in federal funds every year, while operating in total secrecy.

"The move involves far more than the public’s right to know how its tax dollars are being spent. With less transparency about how food is produced, it will be harder for consumers to make informed choices about what to put on their tables. And if the food industry is allowed to operate in the dark, experts warn, there will be no way to identify and prevent the kinds of practices that lead to outbreaks of food-borne illness."

Ironically, the New Republic points out, the food boards are making the argument that they should not be subject to FOIA requests because they are not government agencies. But "in a case before the Supreme Court in 2005, they argued that they should be allowed to use tax dollars to promote their products because those efforts constitute 'government speech'." The Supreme Court agreed.

Really good piece, and you can read it here.

Published on: June 16, 2016

The Chicago Tribune reports that Home Depot has filed a lawsuit in US District Court charging that "Visa and MasterCard are using security measures prone to fraud, putting retailers and customers at risk of hacking attacks by cyber thieves." The suit says that "new payment cards with so-called 'chip' technology, rolled out in the U.S. in recent years, remain less secure than cards used in Europe and elsewhere in the world."

The Tribune notes that Home Depot is just "the latest giant retailer to raise serious concerns about security with its lawsuit filed this week in U.S. District Court in Atlanta. Last month, Arkansas-based Wal-Mart Stores Inc. sued Visa Inc. over similar issues."

Published on: June 16, 2016

• The Seattle Times reports that Amazon "is slashing fees it charges merchants to sell USB cables, smartphone screen protectors and other small, flat items that can fit in envelopes, posing a potential threat to competing marketplaces owned by Alibaba, eBay and other online retailers that connect Chinese sellers with U.S. shoppers ... The new rates apply to merchants using the company’s Fulfillment By Amazon Small and Light program, introduced last year to offer shoppers free shipping on thousands of popular small items such as makeup, mobile-phone accessories and stickers."

Published on: June 16, 2016

• Walmart announced yesterday that it is expanding its Walmart Pay, its method of paying for purchases via smartphone, to Alabama, Georgia, Louisiana, and Mississippi, making it available in a total of 485 of its stores across the four states.

Walmart describes the technology this way: "Built with the goal of improving how customers check out and dramatically expanding mobile payment access, Walmart Pay is like no other mobile payments solution available today. With this launch, Walmart becomes the only retailer to offer its own payment solution that works with any iOS or Android device*, at any checkout lane, and with any major credit, debit, pre-paid or Walmart gift card – all through the Walmart mobile app."


• The Wall Street Journal reports this morning that Walmart is eliminating some 1500 store-level jobs as part of its effort "to become more efficient and focus spending on store employees who interact with customers."

It essentially works out to three jobs per store, at 500 West Coast stores, described as "positions that cover accounting and invoicing ... usually higher-paid hourly workers who count cash or manage invoices for companies that bring products directly to stores, not through Wal-Mart’s warehouses." Those jobs now will be handled at a central office in Arkansas.

Published on: June 16, 2016

• Newsweek reports that Tesco has designed a new mobile service that actually will give customers discounts off their Tesco Mobile phone bills if they watch commercials on their phones from McDonald's, Doritos, and British Airways.

"It is not the first time a company has offered its customers free or discounted products or services in return for viewing adverts," the story says. "Blyk, Samba Mobile and Ovivo Mobile all ran separate trials of ad-funded offers but each has since been shut down."

Published on: June 16, 2016

MNB yesterday took note of a CNBC story about how Martha Stewart "is teaming up with meal-kit delivery service Marley Spoon to develop recipes and send them along with the pre-measured ingredients, directly to your doorstep."

And I commented:

The cool thing is that every Martha Stewart meal kit comes with a bonus slice of cake with a file baked into it. Just in case.

MNB user William J McCollum thought I crossed the line:

I can’t believe that you would be so crass especially considering the number of Wall Street execs and company officials who have served no time in jail for far worse financial crimes.

And, from another reader:

I don't think a man in her situation would have recd any time in prison!!

First, it was a joke.

Second, I have totally changed my mind about Martha Stewart. When she went to jail, I figured it was deserved. But the number of people who did not go to jail even after far more egregious offenses - like bringing the nation's economy to the brink of collapse - persuades me that you are absolutely right. She shouldn't have gone to jail, and she deserves more than to be made the butt of a cheap joke.

But that doesn't mean I'm sorry I made the joke. I actually thought it was pretty funny.