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    Published on: June 22, 2016

    by Kevin Coupe

    CHICAGO - As I write this in the early morning hours, the city of Chicago and surrounding communities are facing a day in which there are supposed to be torrential rainstorms, high winds, and even the potential of tornados.

    Inside the McCormick Place convention center, where retailers and suppliers are meeting at the Food Marketing Institute (FMI) Connect and United Fresh shows to consider their futures, the atmosphere may be less damp, but the winds and threat of dangerous storms are no less ominous.

    I do love a metaphor.

    The question is whether attendees are prepared to deal with the competitive storms and the inevitable repercussions. It seems to me that the industry has reached a critical juncture at which retailers, suppliers - and yes, even trade associations - have to not just acknowledge the fundamental economic, technological and cultural changes that are changing the landscape in which they operate, but must embrace the opportunities that these changes create.

    Without hesitating. Without hedging their bets. Without hoping, in the backs of their minds, that doing business in traditional ways will be enough to survive.

    Steve Case, the co-founder of America Online, which helped build the "on ramp" to the internet that made it accessible to millions of Americans, and who now runs an investment firm that helps innovative startups gain traction in the marketplace, certainly seemed to think so. Case pointed to a "third wave" in the Internet revolution that is making technology more integrated in our lives, saying that this requires "a different mindset and different playbook" for companies that want to succeed.

    Case also argued that the ability to create networks of people and companies - virtual (in every sense of that word) partnerships - may be a defining characteristic for competitive companies. He quoted an African proverb: "If you want to go fast, go alone. If you want to go far, go together." And he suggested to the FMI audience that "no matter how many smart people work for your company, there are more smart people who don't work for your company." Finding ways to access them - and make companies accessible to them - is a critical ability in the current environment.

    The importance of a people-focused culture was echoed in a presentation made by H-E-B president/COO Craig Boyan to the United Fresh conference, in which he suggested that most experts would say that the three best supermarket companies in the country are Wegmans, Publix and Costco - and that all of those companies place a premium on investing in employees, not driving down labor costs as a means to an end. (Boyan was modest enough not to put H-E-B in the same class, but pretty much everybody else in the audience would've done so.)

    Networks, I would suggest, can exist both within and outside organizations ... and that the key to successful leadership is being able to nurture them, take advantage of them, invest in them, and learn from them. Indeed, Case responded to a question about legacy cultures by pointing out that companies like Amazon and Google have been designed not to be complacent, and not to create legacies that may hold back innovation and disruption.

    Which brings me back to the weather. As storm clouds gather, there will people who will ignore the predictions and radar reports, and there will be those who will understand that ignorance of such things put their companies and employees at severe risk.

    The question, for the leaders here in Chicago, is what kind of people they want to be.

    Eyes open, or eyes closed.

    Other notes from Chicago...

    • Food Marketing Institute (FMI) President and CEO Leslie G. Sarasin presented the organization's 2016 U.S. Grocery Shopper Trends analysis, suggesting that there have been some significant shifts in how people shop. "Today, 85 percent of the U.S. population reports it shares in at least half the grocery shopping for the household, and there is great diversity in the way these individuals divide food shopping responsibilities," she said. "It’s time to expand our shopper vocabulary," and start marketing to a more fragmented consumer class that is sharing more of the shopping responsibilities.

    • FMI recognized Maureen Murphy of Price Chopper Supermarkets/ Market 32 with the 2016 Esther Peterson Award for Consumer Service, celebrating her for "a lifetime of vision, integrity and caring sensitivity to the needs of retail food customers."

    • And, FMI presented the Glen P. Woodard, Jr., Award for Public Affairs to Jack Brown, executive chairman of Stater Bros. Markets, describing him as "as one of the most ardent supporters of the organization’s Political Action Committee and for encouraging his company to be involved in the political process."
    KC's View:

    Published on: June 22, 2016

    by Kate McMahon

    Cory James Connell. Mercedez Marisol Flores. Luis Omar Ocasio-Capo.

    They were just three young people who worked hard all week in their retail jobs and went to a dance club on a Saturday night to have fun.

    Tragically, they chose the Pulse nightclub in Orlando the same night gunman Omar Mateen opened fire with a military assault rifle and a Glock pistol, killing 49 people in the deadliest mass shooting in U.S. history. It was declared a hate crime and an act of terrorism.

    When their names were listed among the victims, the June 12th tragedy became personal for their co-workers and customers at a local Publix and two Target stores. A third Target employee also was among the 53 people wounded.

    Cory Connell, 21, had worked stocking shelves at the Publix in College Park for two years while attending Valencia College with hopes of becoming a firefighter. He had gone to Pulse with his Colombian-born girlfriend because it was Latin Night and she wanted to teach him how to salsa.

    Immediately after the shooting, a memorial was created in the store for the young man known for his cheerful demeanor, local news outlets reported. Last week, hundreds gathered in front of the Publix for an evening vigil. Cory was named an honorary Orange County firefighter at his funeral.
    Mercedez Flores, 26, began working at Target after she graduated from high school in 2008. She studied literature at Valencia College, loved music and wanted to become a party planner.

    Known to his friends as Omar, the 20-year-old Ocasio-Capo had been a barista at the Starbucks in the Target in Kissimmee for two years. The aspiring actor/dancer had an audition scheduled for the Tuesday after the massacre.

    On that Tuesday, Target employees in Orlando gathered in a heart-shaped circle to honor their co-workers with a moment of silence. The retailer said Target teams across the country and at headquarters in Minneapolis also observed a moment of silence.

    While there is no playbook on how to respond to such a tragedy, I think both Publix and Target addressed the crisis appropriately and with enormous compassion.

    Target Corporation announced a donation of $250,000 to the OneOrlando Fund in honor of Flores and Ocasio-Capo, saying the “horrific event was made even more personal by the tragic loss of two of our own team members.”

    Publix Super Markets Charities also donated $250,000 to the OneOrlando Fund in hopes it would “help the families and community in the healing process.”

    Both retailers worked to donate water, food and ice to emergency responders in the 48 hours after the shooting

    Other companies with ties to Florida which have made significant donations include Comcast, which owns Universal Studios, $1 million; Disney, $1 million; Darden Restaurants, $500,000; the DeVos Family (Orlando Magic), $400,000; Wells Fargo, $300,000; and CVS, $100,000.

    The massacre was also personal for Universal. Another victim was Luis Vielma, 22, who worked on the Wizarding World of Harry Potter rides at Universal Studios theme park. Universal employees and friends gathered outside the Hogwarts castle for a memorial and to raise their wands to him last week. “Harry Potter” author J.K. Rowling expressed her sadness about his death on Twitter, and sent a wreath to his funeral with a note “you will never be forgotten.”

    While it was Latin Night at Pulse, a primarily gay nightclub, the Latino and LBGT communities in Orlando were particularly hard hit by the tragedy. But the stories of these victims illustrate how they were just like all of the young people who work hard all week in retail or customer service, looking forward to having fun on Saturday night, only to have their lives cut short by assault weapons and a madman who pledged his allegiance to terrorists.

    They should never be forgotten.


    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: June 22, 2016

    by Kevin Coupe

    This morning's Chicago Tribune has an interview with Shake Shack CEO Randy Garutti, in which he talks about his chain's accelerating expansion plans: "It now has nearly 100 locations around the world, and ultimately aims to have as many as 450 in the U.S. alone." And, big successes in Chicago have led it to ramp up its Midwestern plans, with a new store opened in Minneapolis and one planned for Detroit in the near future.

    "We're so blown away by what's been happening in Chicago," Garutti says. "We're going to keep growing in the Chicago area. We're looking at other sites in downtown, we're looking at sites in the suburbs and I think we've got a great opportunity to keep growing. But over time, and carefully as we usually do; not too many at once."

    But what impresses me is how Garutti seems to be approaching the "better burger" trend that is so hot right now.

    "We don't want to fight in that arms race," he says. "We want to own and operate our restaurants and we want to put them in great places with a pace that makes sense for our brand and the city. Our brand is the strongest thing we have and we're going to constantly protect it ... We're not a gourmet burger place, we don't do all this crazy, weird stuff. We're doing the basic things, that you've eaten your whole life, just better. No hormones, no antibiotics, cooked to order. I think that's what really resonates. I just want a classic cheeseburger, or a classic chicken sandwich, like when I grew up at all these great fast-food restaurants, but I'm willing to pay a couple bucks more to know how good it is. And to take my kids there and feel OK about it. To take a shot with my phone, and tell the whole world about it. I think that's the moment that Shake Shack is in."

    And, there's the thing that Garutti says about company culture, that seems to be counterintuitive compared to what most CEOs would say.

    "You've got to keep that culture moving forward," he says. "When people say to me 'this place doesn't feel like it used to,' that's the best compliment anyone can get."

    Wow. That's an Eye-Opener.

    (Full disclosure: A friend of mine, David Genovese, has worked very hard to bring Shake Shack to my Connecticut town ... and just got the approvals last week. I am an enormous fan of the chain, am thrilled with David's efforts ... and think it is a great example of higher-common-denominator food.)
    KC's View:

    Published on: June 22, 2016

    The Associated Press reports that the Federal Aviation Administration (FAA) "announced the creation of a new category of aviation rules designed specifically for drones weighing less than 55 pounds. The long-anticipated rules mean commercial operators can fly drones without special permission ... Under the new rules, operators would register their drones online, pass an aviation knowledge exam for drone pilots at an FAA-approved testing center and then they’re good to go. That’s a big change since operators currently have to have a manned aircraft pilot’s license."

    The new rules, the AP writes, "also would effectively lift the lid on flights by other potential operators who have held off using the technology — ranchers who want to count cattle, research scientists, and companies that inspect infrastructure like bridges, oil platforms and smokestacks, to name a few."

    However, while "the rules permit commercial transport of goods by drones for the first time," they also preclude "delivery drones flying across cities and suburbs clasping small packages as envisioned by Amazon. Amazon and Google are working on drone delivery systems for goods purchased online. Google officials have said they expect deliveries to begin sometime in 2017. FAA Administrator Michael Huerta said the agency is researching how drone deliveries might safely be accomplished, but he declined to set a timetable for such rules."
    KC's View:
    Drone deliveries are going to open ... not everywhere, but judiciously, in places where it makes sense.

    It is extraordinary to me how fast this has moved ... just a few years ago, the whole drone movement was seen as being on the fringes, and the FAA was resistant. Now, it is mainstream.

    Published on: June 22, 2016

    CVS Pharmacy said this week that it plans to expand "its assortment of healthier foods and beverages to more than 2,900 stores nationwide." According to the announcement, "Throughout the year, 100 stores each week are being enhanced with a carefully curated selection of national and niche better-for-you brands that make healthier eating on-the-go, convenient and affordable. Expanding this initiative beyond the initial 500 store pilot launched in 2015 is a critical step as the company continues to evolve into a premier health destination by making better health easy for millions of customers."

    The announcement says that "this spring, more than 250 fresh, refrigerated and non-perishable healthy foods and beverages have hit shelves at CVS Pharmacy stores around the country from brands including: Amy's Kitchen, Annie's Homegrown, Chobani, Vita CoCo, Bai, Krave Jerky, Rhythm Superfoods, That's it bars as well as new products from the CVS Pharmacy exclusive line, Gold Emblem abound which is free from artificial preservatives, flavors and colors."

    And, "in addition to the 2,900 stores which will stock a wide assortment of healthy foods by year end, another 360 stores will receive significant additional enhancements to the layout of food, beauty and over the counter health products. The new store layouts have a broader assortment of better-for-you foods in an expanded refrigerated section and more prominent displays of healthy foods and grab-and-go snacks, making healthy snacking more convenient."
    KC's View:
    This is an example of new food industry competition coming from another angle ... though I cannot say I'm totally buying into CVS's expertise in this area. But they're really pushing their chips into the middle of the table when it comes to health ... starting with banning tobacco products, and now moving in this inevitable direction.

    Published on: June 22, 2016

    The New York Times reports that a federal judge in California is allowing a lawsuit to continue against Starbucks that accuses the company "of deliberately under-filling lattes" by as much as 25 percent. "In their complaint, the plaintiffs said Starbucks used cups that held the advertised amounts only when filled to the brim, but that the drinks were not filled that high. They said that in 2009, Starbucks made a 'conscious decision' to save money on milk by using pitchers with etched-in 'fill to' lines that were too low, and the recipe required baristas to fill a quarter-inch below the brim of the cups, the lawsuit says."

    Starbucks has said that the accusations are without merit.
    KC's View:
    Hard to imagine that this suit can succeed, unless the plaintiffs can prove such intent by Starbucks ... I've occasionally seen my latte under-filled, but I just ask the barista to remake it, and they do.

    On the other hand, if intent is proven, it will be a black eye for a company that prides itself on a customer-focused reputation.

    Published on: June 22, 2016

    Advertising Age reports that Walmart is making a big play in the sport of professional bull riding - with some of the sport's luminaries having shown up "at Walmart stores in Sioux Falls, S.D., Little Rock, Ark., and Las Vegas earlier this year," and "made enough impact that the league will take its show on the road to 40 more Walmart stores later this year, with plans to hit another 200 next year."

    The story notes that "They don't actually ride bulls in the parking lots. But the pro bull riders do sign autographs in stores and the bulls make an appearance in tractor-trailers outside. It was enough to draw lines of fans and a 21-photo online spread in the Argus (S.D.) Leader in March.

    "This is what Walmart executives call retail-tainment, an idea that has lived in their stores for decades in the form of Oreo-stacking contests and such, but faded in recent years. Now it's back with a vengeance. And it's hard for Walmart not to like, in part because it's free to the giant retailer."
    KC's View:

    Published on: June 22, 2016

    Barron's reports that "Amazon is eating all of consumer electronics retail sales," and, in fact, in 2015 "overtook Wal-Mart Stores as the second-biggest electronics retailer, while Best Buy lost share and Apple’s Apple Store retail locations logged no growth for the first time since 2009."

    Amazon, the story says, "last year had 17% share of consumer electronics sales, up from just 6.3% back in 2010. Best Buy has gone from 25.6% share to 22.7%."
    KC's View:

    Published on: June 22, 2016

    • The Los AngelesTimes reports that, as expected, "Grocery workers across Southern California voted to authorize a strike against Ralphs and Albertsons, which includes Vons, Pavilions and Safeway stores ... The vote by 47,000 United Food and Commercial Workers members gives union officials the power to call for a strike if the supermarkets don’t back down on their demands. The grocery companies and union have 10 meetings scheduled through the end of July."


    • The Dallas Morning News reports that employee-owned WinCo Foods "is building an 830,000-square-foot distribution center in Denton. That’s big enough to supply between 25 and 35 stores, depending on each store’s volumes, said spokesman Dave Butler."

    WinCo currently has seven stores in Texas, and two more in the works.


    USA Today reports that Trader Joe's "has agreed to a $500,000 settlement arising from leaky refrigeration systems that contribute to global warming under an agreement with the federal government. The chain is expected to spend an additional $2 million over the next three years as part of a settlement announced Tuesday by the Justice Department and Environmental Protection Agency to improve the equipment at 453 stores nationwide. The stores have been leaking a coolant called R-22, which government attorneys say depletes the ozone layer and is a greenhouse gas. They had alleged the leak violates the Clean Air Act and federal stratospheric ozone regulations."


    • The Wall Street Journal reports that "UK sporting goods retailer Sports Direct International PLC is in talks with Modell’s Sporting Goods about a potential deal to acquire as many as 200 Sports Authority stores out of the retailer’s bankruptcy, according to people familiar with the situation ... Bids for Sports Authority store leases are due Thursday, and stores with leases that go unsold are in danger of going dark. With going-out-of-business sales in full swing at some 450 Sports Authority stores, the possible deal could be the last hope of saving anything of the ailing business. Sports Authority filed for chapter 11 bankruptcy in March and is expected to wrap up its liquidation by the end of July."
    KC's View:

    Published on: June 22, 2016

    • Kroger has announced the retirement of Ralphs division President Donna Giordano after 44 years with the company, and the promotion of Valerie Jabbar, currently vice president of merchandising for Ralphs, to succeed her.

    Giordano joined the company's King Soopers banner as a courtesy clerk in 1972, while still in college. And Jabbar began her career with the company in 1987 as a clerk in the Fry's division.


    • United Fresh Produce Association named Jennifer McEntire, Ph.D., as its new Vice President, Food Safety & Technology. McEntire, most recently Vice President for Science Operations at the Grocery Manufacturers Association, succeeds Dr. David Gombas, who retired from the association June 1 after 11 years leading its food safety program.
    KC's View:

    Published on: June 22, 2016

    ...will return.
    KC's View: