retail news in context, analysis with attitude

Published on: July 20, 2016

by Kate McMahon

The unparalleled power of the Amazon ecosystem is enough to give the similarly named massive rainforest in Brazil an inferiority complex.

As reported here on MNB, Amazon said its second annual Prime Day on July 12 was its biggest sales day ever, with customer orders up 50% in the US and 60% globally. That a totally manufactured mid-summer shopping day can make Black Friday sales pale by comparison proves that the Amazon e-commerce ecosystem is indeed a force of nature.

Prime Day also prompted Amazon’s competitors to up their game. Walmart offered free shipping during the week starting July 11th, and updated its prices hourly on Prime Day to compare with Amazon. It also offered a free 30-day trial for ShippingPass, its $49 a year competitor to Amazon Prime.

Macy’s did its part by introducing a “Black Friday in July” sales event, and eBay and Best Buy touted deals and free shipping with “no membership required.”

Amazon debuted Prime Day last year to encourage consumers to sign up for its $99-a-year Prime membership, which offers "free" two-day shipping as well as "free" video and music streaming. (They're not actually free, of course, because they cost $99 a year, but the program is structured to encourage and reward frequent shopping.) Prime, in addition to ecosystem features such as Subscribe and Save, have contributed much to Amazon's growth ... though, to be fair, there are naysayers who question whether the model is sustainable.

The evidence would suggest that Amazon has identified yet another way to generate growth and expand its ecosystem.

Prime Day also set records for Amazon in terms of the sale of its devices, including Fire TV, Fire tablets, Kindle e-readers and Alexa-enabled devices across the world. It also saw Amazon's mobile app usage jump from 8 million average daily users to 12 million on Prime Day. And, in more good news for Amazon, various analyses suggest that while the promotion had its share of glitches, there were fewer than a year ago, with higher levels of customer satisfaction.

There also was a fascinating list of "most popular purchases" from different countries, which illustrates the breadth and depth of Amazon's appeal - cereal in Japan, a frying pan in Germany and Austria, an electric toothbrush with Bluetooth connectivity in the UK, and the "Game of Thrones" DVD set in France and Belgium.

This is all called going in the right direction - higher sales, and greater customer satisfaction, all leading to an expanding ecosystem designed to make Amazon - as we often point out here on MNB - the first, best choice for shoppers.

Small wonder there's a smile on the Amazon box.

Comments? As always, send them to me at kate@morningnewsbeat.com .

Published on: July 20, 2016

by Kevin Coupe

The Associated Press reports that "Macy's is testing a mobile tool using artificial intelligence that lets shoppers get answers customized to the store they're in — like where a particular brand is located or what's in stock — that they would normally ask a sales associate face-to-face."

The A.I. system - developed by IBM Watson - can be accessed through a mobile application, "uses natural language and offers feedback in seconds."

The test is being conducted in 10 markets, and the company hopes that it will be part of its effort to improve customer service and build sales.

It is an interesting move ... though at some level, I cannot help but think that Macy's is confusing strategy with tactics. I think that A.I. can be an effective tool, but it would be a mistake to believe that such technology can turn around a retailer's fortunes all by itself. It can supplement people, not replace them ... it can add to the experience, but can't be the experience ... and while it can help direct the shopper to merchandise, the retailer still has to have relevant merchandise.

It has the potential to be an Eye-Opener ... but it has to be part of something bigger.

Published on: July 20, 2016

Internet Retailer reports that Walmart has added 250 new merchants to its Walmart Marketplace, "quickly expanding its product assortment thanks to a growing number of outside merchants that sell on its website and app." Walmart is said to now have relationships with about 600 merchants.

The goal of the Marketplace is to compete effectively with Amazon's Marketplace - which has roughly two million merchants selling on it.

The story notes that Walmart "began in 2009 allowing merchants to sell products alongside the retail chain’s own inventory on Walmart.com. Wal-Mart has developed its online marketplace slowly, starting with six merchants and in 2014 expanding its roster. In April,  the retail giant made its first real push to invite many more merchants to its site after a long trial period that allowed Wal-Mart to rebuild its technology to support more sellers and more SKUs online."

Published on: July 20, 2016

Unilever-owned Ben & Jerry's has decided to get involved in the 2016 election cycle - not by taking sides, but by pushing people to vote. Among its tools is a new flavor: Empower Mint.

Advertising Age writes that "the ice cream maker has long promoted its progressive social mission, speaking out on issues including growth hormones in milk, marriage equality and climate change. This year, its effort is a 'Democracy Is in Your Hands' campaign that uses online videos showing fingers, spoons and ice cream to explain such complex political topics as the power of big money and voting rights, and to push people to vote."

The story notes that when Unilever bought the company from founders Ben Cohen and Jerry Greenfield for $326 million in 2000, one of the terms of the deal "included establishing an independent Ben & Jerry's board of directors to focus on areas such as the company's social mission and brand integrity ... Ben & Jerry's is among the more outspoken brands on social issues, even though it is housed within a major public company. It is the only big brand in the Democracy Awakening coalition, which is largely comprised of environmental, political, religious and social organizations."

"We take on the issues that we think are most important to our values and where we can have an impact," Jay Curley, the company's senior global marketing manager, tells Ad Age. "I don't think this is a big departure from where we've been, but I do think it's another step forward in really trying to bring more justice into this world."

Published on: July 20, 2016

Marketing Daily reports that Target has decided to let members of Generation Z run its annual back-to-school campaign, working with "a 13 year old, a 15 year old and a 17 year old to direct, with seven different children (from 8 to 11) writing scenarios that range from a friendship beginning over a Star Wars lunch box to a pencil sketch of an imaginary world."

“Kids and families are incredibly important to Target, and just as parents recognize the potential in their kids, Target does too,” Target's CMO, Jeff Jones, says. “We were inspired to work even more closely with kids after seeing the difference they made in the development of our new Cat & Jack and Pillowfort lines. Now, we're taking things a step further, allowing kids to put their mark on Target’s community giving and marketing campaign for the back-to-school season."

The story notes that Target is counting on these two lines into billion dollar businesses that will drive greater relevance and profitability.

Published on: July 20, 2016

Fortune reports that there is a petition circulating on the Internet - with close to 11,000 signatures on it to this point - asking Starbucks to terminate all store leases on properties owned by Donald Trump, the Republican presidential candidate.

The signers are people who say they disagree with comments made by Trump "about various groups of people, including Mexicans, Muslims, and women."

The Fortune story goes on to say that "supporters of the cause pledged to buy a gift card from Starbucks if they terminate their lease at Trump Tower. So far nearly 2,000 people have pledged close to $70,000.

"Neither Starbucks nor Donald Trump’s campaign could immediately be reached for comment."

Published on: July 20, 2016

CNBC reports that "Amazon has been awarded a patent for 'docking stations' for its delivery drones that will be built on tall structures such as lampposts or churches and allow the unmanned machines to recharge and pick up packages." According to the story, the patent "describes docking stations which could be installed on cell towers, church steeples, office building, electric poles, and generally tall structures. It would allow a drone to land, avoid bad weather, recharge or refuel and drop off and pick up packages."

Not only would these installations serve as docking stations, but they also could "act as cell towers, so that they could provide local free or fee-based internet services in public areas."

Published on: July 20, 2016

• The New York Times reports that Sainsbury, the UK's second largest supermarket company, is testing a one-hour delivery concept - called "Chop Chop" - designed to compete with Amazon's Prime Now offering.

Amazon launched Prime Now in the UK about a year ago.

According to the story, "Sainsbury's Chief Executive Mike Coupe (not related to the Content Guy, as far as we know) told analysts at Bernstein, in a call with the brokerage on Thursday, that the company can see potential demand for the provision of a basket of food on a very short time scale. He noted that Sainsbury's has the nationwide store network, with large fresh food ranges in all of them, and the online retail knowledge, to provide such a service if the market develops."

The UK's online food business is expected to double between now and 2020.

Published on: July 20, 2016

• Bloomberg reports that "five female Wal-Mart Stores Inc. employees who filed the sex discrimination class action that led to a landmark U.S. Supreme Court ruling formally dismissed their individual bias claims after reaching private settlements with the retail giant," but "six other former Wal-Mart employees ... filed a new class complaint alleging the company discriminated against women in pay and promotions in three corporate regions based in California. Those women, also members of the original class in Dukes v. Wal-Mart Stores Inc., are asking the U.S. District Court for the Northern District of California to certify a class of female employees who worked in those regions anytime from Dec. 26, 1998, until at least June 2004."

Published on: July 20, 2016

• The Wall Street Journal reports that Unilever is acquiring Dollar Shave Club for $1 billion.

According to the story, "Dollar Shave Club, which isn’t profitable, said it has signed up 3.2 million members for its mail-order service that ships out disposable razors and other grooming products for a flat monthly fee." With annual sales of $152 million, Dollar Shave Club has "chipped away at market leader Gillette."

Published on: July 20, 2016

• The Houston Business Journal reports that Bill Breetz, Kroger's Houston division president, has decided to retire after 44 years with the company.

He will be succeeded in Houston by Marlene Stewart, currently president of the company’s Dillons division.

Stewart, in turn, will be succeeded by Colleen Juergensen, the current vp-merchandising at Kroger's Smith's division.

And, in other Kroger news, the company promoted Pam Matthews to president of the QFC division, succeeding Dennis Gibson, who has just been named president of the King Soopers/City Market division.

Published on: July 20, 2016

Garry Marshall, a writer and director best known for iconic situation comedies such as "Happy Days," "Laverne and Shirley," "Mork and Mindy" and "The Odd Couple," has passed away at age 81, from complications related to pneumonia. Marshall also was responsible for such movies as Pretty Woman, Nothing In Common, The Princess Diaries and The Flamingo Kid.

Published on: July 20, 2016

Got the following email from an MNB reader:

Wanted to weigh in on the investment of Princi by Starbucks and their new Reserve Stores. I think that this is still great timing on their part as people are more willing to invest in “experiences” like sharing a meal with family or friends over the newest Prada handbag. I think that gathering spots will only continue to expand as people reach out in more ways to connect with other like-minded people for comfort in this unstable time. Sharing a glass of wine or beer has strengthened bonds for me that were previously just acquaintances. What  better that a delightful Merlot or a delicious sandwich to bring people together. Retail is in danger but experiences are not.

Agreed.




Regarding the all-female alternative to Uber and Lyft that is being developed, one MNB user wrote:

I can’t help but be concerned that with the start of See Jane Go, for “women who don’t feel comfortable getting into a car with a male stranger”, what he next steps might be?  Services for those uncomfortable with getting into cars with blacks, gays, etc?  It’s a slippery slope…