retail news in context, analysis with attitude

Published on: July 26, 2016

by Michael Sansolo

There is almost no way your company - whatever kind of company it is - can avoid a discussion about how to deal with e-commerce.

You might choose to embrace it fully as so many companies are, offering specifically timed deliveries and a wide range of products. You might be partnering with a company like Instacart to get in the game without building your own organization's skills. You might be offering some pared down services, whether a click-and-collect model that avoids last-mile hassles or a limited assortment of products on line.

Or you might even decide to avoid e-commerce fully.

But even if you've come to that decision, you have to have the discussion.

Consider the experience of the Metropolitan Opera, the New York-based company that is the largest in its field, for a case study in both how hard the path forward is going to be and just how many unintended consequences there may be.

Ten years ago, the Met had what seemed to be a winning strategy to introduce its product to a new audience and hopefully build a future fan base for opera. The company started airing specific operas in chosen movie theaters. Today that effort has expanded to 2,000 theaters worldwide, reaching 2.7 million people and bringing in $18 million annually.

But like so many operas, this story isn’t happy or simple.

Attendance at live operas continues to decline at the Met and beyond and many in the opera community blame the broadcasts for allowing customers to trade down. That is, instead of buying tickets for live performances they can spend less, and go to a nearby movie theater to see the nation’s premier company.

As a result, smaller companies say their performances cannot compete with the quality of the Met, so they are losing business. And the Met itself is struggling, with ticket sales down to about 66 percent of capacity.

One retailer with whom I discussed this story summed it simply: “Be careful what you wish for.”

Finances aren’t the only issue. Opera purists - a group that certainly does not include me - say the slick movie productions remove many of the elements of a live performance that make opera so special. So even if people enjoy the video broadcasts, they might feel differently about the experience in a live theater.

Here’s the thing: there’s still some debate about whether the very idea of these broadcasts is good. Some argue that opera’s bigger problem is a failure to connect with and win over a new audience. Looked at that way, the outreach through movie theaters makes tons of sense.

It’s just that the path is really challenging, and the story provides object lessons for retailers grappling with uncertain futures.

E-commerce is quickly (everyday more so) becoming a reality, no matter what your feelings about Amazon, Prime Days and every other promotion. Consumer habits are shifting and like opera companies, sitting pat is a recipe for trouble. As those smaller opera companies have found, the outreach by the Met changes the realities in far distant markets. The exact same thing can happen to retail.

Action is necessary, but results may not come easily or expectedly. Somehow your business needs to solve the same problem the Met is having - finding a way to translate an experience into this new world and to do it in a profitable way.

As the cliché tells us, some operas end when “the fat lady sings.” When it comes to finding a foolproof strategy to win the emerging market place understand this: She’s warming up.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: July 26, 2016

This, according to the Hollywood Reporter, is what Amazon CEO Jeff Bezos, an avowed "Star Trek" fanatic who has spent massive amounts of money on space exploration projects, looks like in the new film, Star Trek Beyond, in which he has a cameo appearance.

Enough said. This is my idea of an Eye-Opener.

Live long and prosper.

Published on: July 26, 2016

Fascinating piece in the Washington Post about how and why human beings tend to be very resistant to changes, even those that end up profoundly improving their lives.

"From coffee to mechanical refrigeration to genetically altered food, history is littered with innovations that sparked resistance before becoming fixtures in everyday life," the Post writes. "The same theme is playing out today as some lawmakers and consumers question the safety of driverless cars, the economic impact of automation or the security of mobile banking."

The Post frames the discussion around an interview with Calestous Juma, a professor at Harvard University's Kennedy School of Government, who says that "people don’t fear innovation simply because the technology is new, but because innovation often means losing a piece of their identity or lifestyle. Innovation can also separate people from nature or their sense of purpose — two things that Juma argues are fundamental to the human experience."

And, in a new book - "Innovation and Its Enemies: Why People Resist New Technologies" - Juma identifies "three key sources of opposition to innovation: those with commercial interests in existing products, those who identify with existing products and those who might lose power as a result of change." In other words, people who resist change often are giving into fear, and not embracing the change as a chance to propel themselves to new heights and fresh opportunities."

it is a great and provocative piece, and you can read the entire thing here.

Published on: July 26, 2016

Internet Retailer reports that Jet is celebrating its first birthday

Here's how Internet Retailer frames the story:

"Online marketplace Jet.com took off a year ago Thursday, backed by $225 million in funding and a hurricane-force tailwind of hype as the next big thing in e-commerce—a potential adversary for Amazon.com Inc.

"A lot has changed in a year. The $49.95 annual subscription fee Jet planned to impose when it launched is gone, jettisoned less than three months into its existence in favor of opening its marketplace to all shoppers. The number of products available on the marketplace has increased by about 20% to 12 million from 10 million."

While Jet executive say they are ahead of plan, the story suggests that the company has a lot of road ahead of it before it becomes a legitimate threat to Amazon, or even to Walmart or Target for that matter.

Part of the problem, the story says, is that even as Jet grows its customer base, it has to depend on the capital it has raised to support the low prices it offers. (And analysts say there is no evidence to this point that Jet is beating anyone on price with any sort of consistency.) Amazon, Walmart and Target all have businesses and scale that support lower prices, an advantage that Jet does not have.

That said, Jet says that it is growing the number of outside retailers selling on its platform, with those retailers actually generating better sales growth on Jet than on Amazon, which has vastly more such vendors selling on its site.

Published on: July 26, 2016

Bloomberg reports that "Smart cars will become delivery boxes for Deutsche Post AG’s DHL package operation in Germany this year in the largest test so far of the mail and auto industry working together to leverage connected cars."

According to the story, "Owners of Daimler AG’s Smart models can arrange for DHL to deliver parcels to the trunks of their parked cars starting in September in the parent company’s hometown of Stuttgart, with the service eventually rolled out to a total of seven cities in the following months, including Cologne and Berlin. The project, dubbed Smart Ready to Drop, will be the country’s biggest trial yet of in-car delivery for ordinary vehicle owners, with several hundred customers targeted in each city."

The Bloomberg story goes on to say that "Smart Ready to Drop will be available on models equipped with so-called connectivity box detectors that will become standard equipment as of September. The customer will use a mobile application to agree on delivery details for a car parked close to the recipient’s address. A code will enable the DHL courier to open the vehicle once during a specified timeframe to place the goods in the back, and to pick up any items being returned."

Published on: July 26, 2016

Business Insider reports that "Kmart employees believe the company is nearing bankruptcy and is in the process of shutting down all its stores.

"The chain has closed one-third of its stores in the last decade, and sales have been cut in half in the same time period." And store employees say that "many of the remaining 941 Kmart stores now appear to be in the midst of liquidation," with layoffs, labor hour reductions, and stock room purges that leave stores without merchandise to sell.

Kmart, which is owned by Sears Holdings, denies the report, saying that it is "highly focused on restoring profitability to the company."

Published on: July 26, 2016

The New York Times reports that the British government is allowing Amazon to "significantly expand drone testing," which is described as "a move that could allow the devices to deliver packages to British homes far earlier than in the United States."

Under the partnership, the Times writes, "Britain’s aviation regulator will let Amazon test several aspects of drone technology — such as piloting the machines beyond the line of sight of its operators — that the Federal Aviation Administration in the United States has not permitted. The tests, which are an important sign of confidence in Britain after its historic vote last month to leave the European Union, are to begin immediately ... Amazon said it hoped success with the drone trials in Britain would encourage more hesitant regulators in the United States and elsewhere to loosen restrictions."

Published on: July 26, 2016

• The Post and Courier reports that an analysis by e-commerce firm Blue Acorn reveals that not only did Amazon's recent Prime Day promotion drive "millions of sales for the e-commerce giant earlier this month, handing the company its biggest day ever," but it also "appears to have dented results for its smaller competitors."

The story suggests that "smaller merchants got fewer visitors, converted fewer sales and pulled in less revenue on the second-annual Prime Day," though "things seemed to go back to normal the next day."

The lesson? Be prepared to ride out such a promotion by a major e-tailer, but also be ready in case the big player stumbles and leaves an opportunity for the smaller player to differentiate itself.

Published on: July 26, 2016

CNBC reports that "Starbucks baristas are now free to show off their personal style at work, under the coffee chain's new dress code released Monday. Although the iconic green apron is still a part of the uniform, Starbucks employees have more leeway to choose what goes under it."

The story goes on: "Employees can wear a variety of shirt colors that include gray, navy, dark denim and brown. Employees can also wear patterned tops in these colors. Starbucks' previous dress code only allowed for solid black and white shirts.

"Starbucks has extended employees' options for bottoms, too. Shorts, skirts and dresses with tights have also joined Starbucks' dress code. Baristas have the choice to wear dark-wash jeans and hues, although light tones are not permitted.

"Baristas can also make a statement with their hair color or wear hats such as beanies and fedoras to work. The key rule to follow for hair color is that the employee's dye must be permanent or semi-permanent to align with food safety standards."

Starbucks' last major dress code shift was two years ago, when it allowed baristas to have visible tattoos (as long as they did not contain vulgarities).

Published on: July 26, 2016

• The San Diego Business Journal reports that Bristol Farms-owned Lazy Acres Market "has leased an 18,700-square-foot Mission Hills space formerly occupied by grocer Haggen ... Lazy Acres has current locations in the Santa Barbara and Long Beach areas, and is planning several more Southern California openings in the next 24 months. One of those stores is planned for Encinitas, though an exact address has not been announced."

Published on: July 26, 2016

• The Wall Street Journal reports that Starbucks is going through a senior leadership reorganization, with CEO Howard Schultz saying he plans to focus more on long-term strategy and innovation efforts. In 2014, Schultz said he was adjusting his portfolio to focus on digital technology.

According to the story, "Schultz said in a letter to employees on Monday that the board of directors and senior leaders recently approved a long-term growth plan that 'will require a higher level of thoughtfulness, creativity and discipline than at any other time in our history' ... Under the new structure, Mr. Schultz will work closely with U.S. and Americas Group President Cliff Burrows, who will head up a new retail group dubbed 'Siren Retail' in which his role will include overseeing the global expansion of the Roastery stores and the development of the Starbucks Reserve and Princi stores."

At the same time, Kevin Johnson, president and chief operating officer, "will lead the Starbucks senior leadership team, while China and Asia Pacific Group President John Culver will expand his responsibilities to assume the role of group president in charge of Starbucks retail sales around the world."

Published on: July 26, 2016

Marni Nixon died on Sunday, at age 86, after a battle with breast cancer.

Nixon may, in fact, be the best-known singer that nobody ever has heard of. While she had a highly successful career on stage and as a concert singer, she's far less known for her better-known work - dubbing the singing voice for Deborah Kerr in the film version of The King and I, Natalie Wood in West Side Story, and Audrey Hepburn in My Fair Lady. Not to mention Jeanne Crain in Cheaper by the Dozen, Janet Leigh in Pepe and Ida Lupino in Jennifer. And Deborah Kerr (again, albeit briefly) in An Affair To Remember. She also voiced the angel who speaks to Ingrid Bergman in Joan of Arc. She did the singing for Grandmother Fa in the animated film, Mulan. And, Nixon even provided a note that Marilyn Monroe couldn't hit for "Diamonds Are A Girl's Best Friend" in Gentlemen Prefer Blondes.

Published on: July 26, 2016

We had a story the other day about the decision by a Japanese company that was the last one in the world manufacturing VCRs to stop production, citing lack of interest and the inability to get parts. Which led me to ask when DVD players will vanish because of the growth in streaming technology. But led MNB reader Robert Hemphill to say, not so fast:

Yes, clearly sales of DVD and Blu-ray movie disks are declining.  Netflix, Amazon, DirecTV, Hulu and cable are all hastening the disk’s demise.  For convenience, I’ve converted over 800 movies of HD quality from blu-ray disks and other sources to my own Plex movie server, which lets me watch great quality shows on my iPhone, iPad, or big screen HDTV, with NO rental fees.  The Plex server is free, open source, cloud-based software; all you need is a computer and fast Internet.  To access it, you need a free app, a new Apple TV, a Roku or etc..   What’s more, my family can access my Plex movies from anywhere, anytime, also at no cost.

BUT...

4K quality movies are helping give Blu-Ray a boost.  There are over 5 million 4K HDTV sets in the US, and a growing selection of 4K blu-ray disks.  A big con of streaming 4K is that it requires 25 Mbps speeds to play smoothly and when the ‘net is out, there’s no movie.  Whether you’re a ‘net neutrality nabob or not, it’s a bummer when House of Cards flops out due to streaming slowdowns.

Blu-ray 4K disks work every time, with no stuttering.  High quality 4K movies require tons of data, and the streaming services do extra compression just to get them to stream, so when it actually works, it’s less quality than full, uncompressed 4K disks.  Netflix charges more for 4K.  And when more people stream 4K, who’s gonna pay for all the bandwidth?

What's more, a majority of 4K movie discs include the awesome new Dolby Atmos surround sound, which makes movies an immersive experience most theaters don’t match.  It’s even possible the resurgence of vinyl albums may spill over to blu-ray, who knows?

So don’t write discs off just yet!

I consider myself schooled.




On another subject, an MNB user wrote:

Regarding the article Dealing With Food Waste Issue Requires Building Awareness ... The study recommends getting rid of "sell by" and "use by" dates from food packaging, saying that "only in rare circumstances is that date about food safety."

This “recommendation” will only cause trouble for  merchants and consumers. It honestly seems like they are a throwing out the baby with the bathwater.

First, from a consumer perspective, I want to know if that gallon of milk will last at least a week. Without a date, I wouldn’t know. How about that pre-made sandwich at the gas station, was it made today or 3 days ago? How about those steaks, will they last until the weekend? Do they serious expect customers to “guess”  how much shelf life left in something before purchase?

From a merchant perspective, it sounds like a way for dishonest people to take advantage of the return policies, or worse, lawsuits. Not only could the amount of frivolous lawsuits increase, but real lawsuits because the merchant was selling food unfit for consumption. This could lead to each merchant developing their own method to “date” food, leading to multiple solutions, information fragmentation and customer confusion/frustration.

There are too many unanswered questions and it seems like 3 steps backwards. At least the dates give consumers and merchants something to go on.

From another reader:

Kevin, I agree that I too would be uncomfortable with the removal of "use by/sell by dating". While I can't prove it, I've always had a suspicion that some manufacturers used this as planned obsolescence/ guaranteed turn play, rather than just a product quality issue.

I have to believe there's a happy medium to be had, perhaps by converting to a "Best Quality if used by:xxxxx - Discard after:xxxx" type of open dating.

I don't know who wouldn't see discarding perfectly good foodstuffs as waste, merely if the Best by: date expired last week. Maybe my Baby Boomer mentality is showing - if it smell good, looks good, tastes good - eat it.




On the subject of drone tests by 7-Eleven, one MNB user wrote:

Drones have been used to delivery emergency medical supplies (incl. blood and transplant parts), for a while now, in congested or difficult-to-reach places in South Africa. Glad to read the USA is finally catching up on drones. (Not surprising since it took a long time for the US banking system to catch up with newer African banking / credit card processes.)




Got a number of emails about yesterday's coupon story, and my suggestion that the industry ought to hasten the move to digital coupons, which are a lot more targeted.

One MNB user wrote:

You forget who uses coupons and the ages. Also when they have  a coupon in hand they remember to use it. All people are not like you. First thing in marketing is to not market to yourself...

Fair point.

MNB reader Kate Foxbower wrote:

I thought I’d start Monday off with a  reply to your question about why people would still use paper coupons vs digital.  For me, it’s about seeing the extra discount at shelf and I find some retailer apps challenging when I’m in the store with my 2 year old and 4 year old.  My grocery trips usually entail pulling one child away from the bakery counter cookies (sugar + preschooler - it’s the equivalent of feeding Gizmo after mid-night) while attempting to keep the other strapped safely in the cart and not screaming.  I could probably make a list and cross reference the list with the digital coupons available as well as the paper coupons in my hand, but I’ll once again refer to the 2 year old and 4 year old – life gets crazy busy for us and the most convenient coupons are the targeted ones mailed directly to my house for the stuff I actually buy.  For perspective, I’m a millennial mom.  My husband goes to the grocery store even more than I do and it’s safe to say he never looks at the digital coupons.  I would call out Target does a great job with in store signage letting me know there’s a digital coupon available.  That gives me the feeling that they want to help me save money, whereas, if the only coupon is a digital one and there’s no sign letting me know, that feels like you don’t want to help me save money, but quite the opposite.

MNB reader Mark Heckman wrote:

Several reasons for the continued use of paper coupons.

Shoppers like the visceral nature of them, even though they complain about having to clip and carry them.

Brands like the ‘advertising effect’ of the FSI. (Free Standing Inserts) that they do not receive with digital.

Big printing companies such as News America and Valassis have created huge profit machines with the FSI and are not motivated to transition as digital coupons do not have the profit potential of paper.

Digital coupons are still not as shopper centric as they need to be to gain traction faster.

And, from MNB reader Larry Larry Ishii:

I found this news item to be very interesting and also very surprising.

I suppose there could be a psychological factor here as a paper coupon might (subconsciously) to be thought of like actual currency.

Also, having the paper coupon helps the shopper remember for which items they have these savings.

Some habits die hard…




And finally, one MNB user responded to yesterday's admission by me that I got two (!) movie references wrong on Friday by sending me the following Associated Press story...

WASHINGTON — Memory loss may not always be the first warning sign that dementia is brewing — changes in behavior or personality might be an early clue.

Researchers on Sunday outlined a syndrome called "mild behavioral impairment" that may be a harbinger of Alzheimer's or other dementias, and proposed a checklist of symptoms to alert doctors and families.

Losing interest in favorite activities? Forgetting who was in what movie? Getting unusually anxious, aggressive or suspicious? Suddenly making crude comments in public?

"Historically those symptoms have been written off as a psychiatric issue, or as just part of aging," said Dr. Zahinoor Ismail of the University of Calgary, who presented the checklist at the Alzheimer's Association International Conference in Toronto.

Now, "when it comes to early detection, memory symptoms don't have the corner on the market anymore," he said.

Alzheimer's, the most common form of dementia, affects more than 5 million people in the U.S., a number growing as the population ages. It gradually strips people of their memory and the ability to think and reason.

But it creeps up, quietly ravaging the brain a decade or two before the first symptoms become noticeable. Early memory problems called "mild cognitive impairment," or MCI, can raise the risk of later developing dementia, and worsening memory often is the trigger for potential patients or their loved ones to seek medical help.

BTW ... I went back and checked the original AP story, and the Forgetting who was in what movie? line wasn't in there. Very funny.

But point taken. To be honest, you'll all probably know if I get dementia before I do. (Early clue - I'll start saying nice things about McDonald's, Sears, and Kmart.)