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    Published on: August 12, 2016

    by Kevin Coupe

    Advertising Age has a story saying that "retail giants from Sony, Apple, Samsung and Fuji are betting the future of brick-and-mortar has little, if anything, to do with actually selling product on site. In fact, higher-ups at Sony Corp. in Japan had one demand for its retail outlet located at the base of its new Manhattan headquarters called Sony Square NYC: make it flexible."

    That means building an environment that can "accommodate anything from in-store concerts, movie premieres, new product launches, private events to branded takeovers and will be remodeled every four to six weeks.  In essence, it’s set up to do everything but sell product."

    Steven Fuld, senior VP-corporate marketing at Sony Corp. of America, describes the mandate this way: "It’s a necessary way to tell the brand’s story about what we are. It gives people more of a reason to come in than just driving down to get the lowest-priced product that sits in a cardboard box in the back."

    Now, not everybody agrees with this approach to retailing ... and nobody, I think, would argue with the idea that an "unstore" may be more appropriate for some categories than others.

    But I think the larger point is worth considering - that even within retail segments where this concept seems less workable, there may be opportunities to create high degrees of flexibility, move some parts of the experience online, and develop levels of theatricality that can differentiate stores and make them relevant and attractive to consumers.

    If you want consumers to go to actual stores, you have to think about how to give them reasons to do so.

    This isn't a one-size-fits-all solution ... but at the very least, it is an Eye-Opening approach that retailers need to think about.
    KC's View:

    Published on: August 12, 2016

    Columnist David Ignatius has a provocative piece in the Washington Post in which he writes about how, despite the fact that job insecurity - allegedly caused by trade deals and immigration - is the subject of much rhetoric during the current political season, the country may actually be having the wrong economic debate. What we should be talking about, he suggests, is the much bigger job losses that are likely to be driven by advancing technology."

    "The deeper problem facing the United States is how to provide meaningful work and good wages for the tens of millions of truck drivers, accountants, factory workers and office clerks whose jobs will disappear in coming years because of robots, driverless vehicles and 'machine learning' systems," Ignatius writes, adding that "the 'automation bomb' could destroy 45 percent of the work activities currently performed in the United States, representing about $2 trillion in annual wages, according to a study last year by the consulting firm McKinsey & Co. We’ve seen only the beginning of this change, they warned. Currently, only 5 percent of occupations can be entirely automated, but 60 percent of occupations could soon see machines doing 30 percent or more of the work."

    This is, Ignatius argues, the subject that politicians - and, I would add, the general population - need to address in a nuanced, sophisticated and realistic fashion.

    And I would recommend that you read his column here.
    KC's View:
    There are more than a few people out there - and some of them are MNB readers - who characterize advancing technology as inherently evil. To give you an example, I got the following email from a reader yesterday in response to a story about Amazon's strategic plans...

    Take a step outside your Amazon love affair, re-read your piece and you will see the evil job killer Amazon is. And congratulations to Amazon; 100 Macy’s stores scheduled to close and the corresponding damage that will do to malls and employment left in the wake. Is Amazon solely to blame, of course not. Does Macy’s have to shoulder some of the blame for becoming less relevant? Of course. But failure to admit the obvious will only lead to more unemployment, greater need for federal assistance and a further widening of the salary gap between rich, poor and the middle class Amazon is helping to destroy.

    I get why some people feel like this. Fear of the future is a powerful emotion, but the problem is that such fears can paralyze people who actually need to be figuring out how to be relevant in a changing world. (I'm not sure if everybody can do this individually, but we certainly need to have a national debate about the degree to which public policy can and should help.)

    I'm pretty sure that the people who made buggy whips thought that the automobile also was evil, and that Henry Ford was the devil. The folks who made feather pens probably weren't real happy with Johann Gutenberg. But I'm also pretty sure that this is not the most enlightened and realistic way to view the march of progress.

    Another MNB user, responding to the Amazon story, had a very different take...

    As William Gibson said "The future is already here — it's just not very evenly distributed."

    The thing is, we can't wait for the future to be distributed to us. We have to reach out and grab our piece of it ... but that requires reaching forward, not backward.

    Published on: August 12, 2016

    The New York Times reports that Macy's, the nation's largest department store chain, plans to close 100 of its stores, representing about 15 percent of its fleet, "saying they were more valuable as real estate properties."

    Not all the locations have been identified. There will be job cuts, but the numbers were not announced.

    The Los Angeles Times writes that "Macy’s currently operates 675 full-line stores nationwide; including locations such as Macy’s Home stores, it has 728. The ones that will be shut down are full-line stores, and they generate roughly $1 billion in annual sales, or 4% of Macy’s total sales ... Macy's said shutting the stores would enable it to bolster its online presence and 'elevate our total customer experience across all methods of shopping.'."

    The closures are in addition to 40 stores that Macy's said earlier this year it would shut down.

    The announcement came as Macy's said that its Q2 sales were down four percent from last year, and same-store sales were down two percent. Q2 profit was $11 million - down from $217 million during the same period a year ago.

    After the announcement, Macy's stock price went up more than 17 percent.
    KC's View:
    Reality can be tough ... but somehow the notion that America is over-stored, and that some chains are going to have to shut down parts of their fleet, ought not be surprising. To anyone.

    The question is, do traditional retailers continue just building stores? Or look for some new paradigm with which they can build their businesses?

    Published on: August 12, 2016

    The Washington Post this morning reports that the Italian legislature will consider a bill that "would punish parents with imprisonment for raising their children on 'dangerous' vegan diets, which the legislation compares to domestic abuse ... The legislation contends that many parents don’t know how to add nutritional supplements to their child’s vegan diet because they never consult medical professionals."

    Parents convicted of breaking the law - if it indeed becomes law - could be sentenced to at least a year in jail ... and the sentences would be far more severe if it is found that a child got sick because of a vegan diet.

    "I have nothing against vegans or veganism as long as it is a free choice by adults," conservative legislator Elvira Savino, who introduced the bill, tells Reuters.  “I just find it absurd that some parents are allowed to impose their will on children in an almost fanatical, religious way, often without proper scientific knowledge or medical consultation.”
    KC's View:
    Okay, I thought the political debate in the US was nuts. But this takes the cake ... though, to be clear, it'll have to be a cake made without any animal products.

    How do you say Oy! in Italian?

    Published on: August 12, 2016

    The New York Times has an interesting story about how and why the plethora of studies about a wide variety of topics seem to create noise rather than create clarity. Here's how the Times frames the story:

    "Dozens of studies are publicized every week. But those studies hardly slake people’s thirst for answers to questions about how to eat or how much to exercise. Does exercise help you maintain your memory? What kind? Walking? Intense exercise? Does eating carbohydrates make you fat? Can you prevent breast cancer by exercising when you are young? Do vegetables protect you from heart disease?

    "The problem is one of signal to noise. You can’t discern the signal — a lower risk of dementia, or a longer life, or less obesity, or less cancer — because the noise, the enormous uncertainty in the measurement of such things as how much you exercise or what exactly you eat, is overwhelming. The signal is often weak, meaning if there is an effect of lifestyle it is minuscule, nothing like the link between smoking and lung cancer, for example.

    "And there is no gold standard of measurement, nothing that everyone agrees on and uses to measure aspects of lifestyle."

    Of course, this isn't just a consumer problem. Even beyond all the perfectly legitimate research, there is "a cacophony of poorly designed research, the tendency for different researchers studying the same effect to use different measurements and report outcomes differently, and researchers’ tendency to selectively report positive or 'interesting' results."

    And so, the Times writes, the result often is nothing but confusion ... or worse, conclusions reached for wrong and insufficient reasons that result in actions that may or may not be positive.

    You can read the entire story here.
    KC's View:

    Published on: August 12, 2016

    • The Associated Press this morning has a story about a new 12,000-square-foot culinary and innovation center that Walmart has opened at its Arkansas headquarters, describing it as a place "where the nation's largest food retailer can work with major suppliers to come up with new food ideas, and develop ideas on its own to bolster its store-brand selection."

    According to the story, the center has "10 test kitchens including a studio-style chef's kitchen and replicas of the bakery and deli kitchens found in most of its stores. It has stoves, ovens and microwaves so the staff can cook the same ways customers do at home. There's also a sensory lab where Wal-Mart can collect feedback from customers and employees, who answer questions about the texture, saltiness or sweetness of a food or beverage."

    In the past, the story says, Walmart "had tested products at kitchens throughout its headquarters, but that effort was limited and the feedback it provided was fairly general. Now, Wal-Mart gets specific feedback from customers that it can share with suppliers to help decide if an item is ready or needs changes. That collaboration saves money and cuts several months off a product launch, which can last a year from idea to an item landing on store shelves."

    This all is important, the AP writes, because Walmart "derives 56 percent of its total sales from food and other grocery items."
    KC's View:

    Published on: August 12, 2016

    • The Wall Street Journal reports that Procter & Gamble is moving away "from ads on Facebook that target specific consumers, concluding that the practice has limited effectiveness."

    While Facebook "has spent years developing its ability to zero in on consumers based on demographics, shopping habits and life milestones," the Journal writes that P&G - which initially "jumped at the opportunity" to mine that information, now believes that it has gone too far.

    Marc Pritchard, P&G’s chief marketing officer, tells the Journal, "We targeted too much, and we went too narrow, and now we’re looking at: What is the best way to get the most reach but also the right precision?”
    KC's View:

    Published on: August 12, 2016

    • United Natural Foods (UNFI) announced yesterday that it has acquired Gourmet Guru, described as "a distributor and merchandiser of fresh and organic food focusing on new and emerging brands," in an all-cash transaction. Terms of the deal weren't disclosed.


    • The Charlotte Observer reports that "Food Lion says it has finished work on about half of its Charlotte-area grocery stores, as part of a major renovation effort at the chain." Seventy of its 142 stores there are done, with the rest of them scheduled to be finished by October.


    Investor's Business Daily reports that CVS Health "is launching CVS Pay, joining Apple, Starbucks, Wal-Mart and others in mobile payments," with plans to start offering it "in certain markets including New York, New Jersey, Pennsylvania and Delaware. A nationwide rollout is planned later this year."


    Twin Cities Business reports that Supervalu has "issued early drafts to the U.S. Securities and Exchange Commission regarding its separation of Save-A-Lot. The filing, which is the most formal and thorough documentation of the spin-off plan to date, details a 60/40 stock split of Save-A-Lot once it goes public. If nothing changes, 60 percent of the stock will be proportionally distributed to Supervalu stockholders ...  The other 40 percent of the stock will be retained by Supervalu, although the company said it 'plans to dispose' of at least half of those shares within two years."

    The filing comes even as there has been speculation that Supervalu could sell Save-A-Lot to a private equity group.
    KC's View:

    Published on: August 12, 2016

    ...will return next week.
    KC's View:

    Published on: August 12, 2016

    by Kevin Coupe

    I post MNB this morning from home in Connecticut, where I've finally arrived after a week of driving cross country from Portland, Oregon. Summer session at Portland State University is over (save for the grading of finals ... that's what is on the agenda for this weekend), I've packed up the apartment I rent there each summer, and come home.

    As always, the drive cross country was amazing. The weather was great, and so most of the time I had the top down on the Mustang. I spent a lot of time listening to podcasts and satellite radio, and I have to say that the counterpoint was jarring. The discussion and discourse about government and politics seemed too angry, and yet the landscape - my route took me through Oregon, Idaho, Wyoming, Nebraska, Iowa, Illinois, Indiana, Ohio (where I met up with Michael Sansolo for a speaking engagement in Cincinnati), Kentucky, Pennsylvania, West Virginia, Maryland, Delaware, New Jersey, New York and Connecticut - seemed so full of promise and optimism.

    Two points about this. One, I recognize that the gorgeous landscape of America may not accurately represent some of the discontent that may lie beneath the surface.

    And two, I didn't realize until I just wrote all the states down that I actually traveled through roughly one-third of the US states on this one trip cross-country. And that doesn't count the fact that during the summer I also drove through Wisconsin, Minnesota, North Dakota, Montana, Washington and California - which means that this summer alone I've been in almost half the states.

    This is actually the sixth time I've driven cross-country, using various routes and I recognize that it is a privilege to have the time to do so. To be honest, I already am looking forward to doing it again next summer, and I recommend the experience to everyone. This is a great country, no matter what anyone says ... and one cannot help but feel the sense of possibility when one sees it from the ground.

    I'm glad to be home. I got to take a walk with the girl of my dreams last night, my daughter cooked me an amazing meal, my son gave me a hug before he went off to work, and the dogs are so glad to see me that they are wrapping themselves around my feet.

    But I do miss Portland, especially the opportunity to get up in the morning in relatively humidity-free weather and go for a long bike ride or somewhat less long run along the Willamette River. And there are two meals that I want to tell you about that absolutely characterize the region.

    One was at Grassa, which has two restaurants in the city, and I've described this as just the perfect summer meal. I started with a chilled cucumber and tomato salad, which had a sprinkling of feta cheese and a harissa and greek yogurt dressing. Then, I luxuriated (and this is not too strong a characterization) in a chilled pasta dish - black squid ink pasta served with grilled squid and octopus, cherry tomatoes, fried shallots, sweet chili sauce and a touch of mint. Washed it down with a half bottle of very cold rose made from a Willamette Valley Pinot noir. It was perfection.

    The other meal was enjoyed at the Altabira City Tavern, which sits atop the Hotel Eastlund, in the Lloyd District with an outdoor patio and a beautiful view of downtown Portland. (It actually contradicts Calvin Trillin's first law of restaurants - that food quality usually is in direct inverse proportion to the view.) Altabira is highly beer-centric, and so I washed down a pizza - made with fennel sausage, caramelized onions and parmesan - with a spectacular Oakshire Brewing Amber Ale. It was wonderful.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    Slàinte!


    KC's View: