business news in context, analysis with attitude

Published on: August 17, 2016

by Kate McMahon

A riveting Under Armour commercial revealing an intense, bearded Michael Phelps training for the Rio Olympics made waves when it debuted in March.

By the time Phelps won his history-making 23rd Olympic gold medal on Saturday, the one-minute-thirty-two-second clip had become a social media tsunami. The number of views just on YouTube jumped from 9 million to more than 10.5 million while I was clicking through over the weekend. It is further proof that social media sharing platforms have disrupted traditional TV advertising in ways marketers could not have even prophesied a decade ago.

The ad, part of Under Armour’s #Rule Yourself campaign, shows Phelps’ grueling training regimen, including the “cupping therapy” that left circular bruises on his back and shoulders.

There is no dialogue, just a soundtrack consisting of the haunting and fittingly named “The Last Goodbye” by the indie rock band The Kills. The 31-year-old Phelps took to Facebook Saturday night and re-affirmed his plans to retire from competitive swimming as the most decorated Olympian of all time.

The Under Armour ad, like so many of the recent Super Bowl commercials that now premiere before the big game, points to the revolutionary change in the way we view content online and how we measure effectiveness.

As Adweek reported last week, the Phelps ad is one of the most shared Olympic spots ever, with 56% of the shares coming from Facebook followed by 28% on Twitter. Data from the mobile video ad tech company Unruly drills down even further, showing the spot resonated with its target audience – millennial males age 18 to 34 – and elicited a sense of inspiration among 68% of that group.

The Under Armour ad won praise for its authenticity – yes, that word again. Phelps signed with UA, based in his hometown of Baltimore, in 2010 and said he grew up wearing Under Armour. By not mentioning the Rio games, the ad slyly gets around the Olympic rule which prevents non-sponsors from referencing the Olympics in their advertising or on an official website.

Interestingly, UA also has been siphoning Rio limelight from sportswear behemoth Nike, capitalizing on its sponsorship of some 250 Olympic athletes, including the golden USA women’s gymnastics team. While Phelps was required to wear bright yellow Nike sneakers when he collected his five golds and one silver medal since Nike is the official supplier of Team USA medal stand uniforms, he was quick to promote two Olympic sneakers UA designed just for him this year.

UA also stuck by Phelps in what he called his “downward spiral” after the 2012 London Olympics – including a second drunk driving arrest and a stint in rehab that made his 2016 comeback even more remarkable.

Michael Phelps re-wrote the Olympic record books this year, and social media is re-writing the way companies connect with consumers on a daily basis. The ones that do not embrace this change will be left in their competitors' wakes.


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

Published on: August 17, 2016

by Kevin Coupe

The San Jose Mercury News reports that crickets are the hottest new snack in trendy Silicon Valley, supplanting items such as kale and quinoa that used to be the trendy choices.

According to the story, "Proponents say the tiny, chirping bugs are high in protein and iron and can serve as a sustainable alternative to beef or chicken. It's a movement that has people buzzing, with companies such as San Francisco-based Bitty Foods baking the bugs into cookies and chips, Tiny Farms in San Leandro breeding crickets for mass consumption, and New York-based Exo using them in protein bars. The products are showing up in Silicon Valley break rooms, and investors and entrepreneurs are paying close attention."

Indeed, the Mercury News writes, "Companies like Exo and Bitty are part of a larger trend of food startups that are replacing meat, gluten and dairy in everyday products." Investors have put hundreds of millions of dollars into such businesses, which means that there will be a lot of effort put into mainstreaming such items so that the investors make back their money.

While insects have been regularly consumed by people in places like Mexico and Thailand, the story notes that a report from the Food and Agriculture Organization of the United Nations recently "touted the nutritional benefits of insects and introduced them as a potential solution to a rapidly approaching problem -- the world will house 9 billion people by 2050, forcing humans to nearly double their food production using a limited supply of land and water. Crickets need 12 times less feed than cattle and half as much as chickens to produce the same amount of protein. They require less water and space to farm, produce minimal amounts of greenhouse gases and can be fed organic waste, according to the report."

My first reaction when reading this story was that this doesn't exactly sound like my kind of food. But then I thought to myself ... they can't be any worse than Brussels sprouts.

So maybe I'll try them. Maybe the experience will be an Eye-Opener.

Published on: August 17, 2016

The New York Times reports that young people seem to be showing an aversion for credit cards and credit card debt, a trend that "could have lasting repercussions for millennials, as well as for the financial system and the economy. Early use of credit cards has, in the past, helped young Americans develop a comfort level with credit that can last a lifetime and lead to a succession of big purchases financed by debt. Without a substantial credit history, it is much harder to take out a home mortgage, for example."

The story says that "data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989, when the Fed began collecting data in a standardized way." While older Americans also have been reducing credit card usage and debt since the 2008 financial crisis, the Times writes that "for no other age group has the decline in the proportion holding credit card debt been more rapid than it has been for young Americans — who are often referred to as millennials — the data from the Survey of Consumer Finances shows."

The Times goes on to say that "it is clear to economists who study payment patterns that millennials are gravitating toward payment methods that skirt both cash and credit. Why carry cash when you can whip out a debit card for the smallest transaction — a sandwich or a bottle of soda — or use an app like Venmo or an online payment service like PayPal? All of those typically draw funds directly from a bank account."

Published on: August 17, 2016

Mobile Commerce Daily has a story about the growing influence and impact of mobile, with a new study from Alliance Data saying that "34 percent of consumers leverage devices in-store for product information," 63 percent of millennials claiming "to shop on their phones everyday," and "84 percent of millennials claiming to use their phones for shopping assistance while in a store."

The study suggests that mobile no longer should be considered a disruptive technology, but rather an increasingly mainstream influence on various facets of the shopping experience. It concludes that "shoppers are leveraging a multitude of devices throughout their customer journey to help influence their decisions, and mobile is a key step in the process. Retailers that do not embrace the new customer journey are likely to miss out."

Published on: August 17, 2016

The Dayton Daily News had an interview the other day with Rob Connelly, the president of Henny Penny, in which he discussed the company's conversion to employee ownership.

"We think what makes a difference at Henny Penny is that we try to have people first," Connelly says. "I don’t want to imply that we are perfect or that we’re the only good company around — but we feel pride and feel special about the way we treat people and the benefits we enjoy by being privately held. We don’t feel that stockholder pressure many companies do. We care about the numbers, but we’re not doing what a lot of public companies have to do in the short term to show good numbers for a quarter. So your bias is different when you have a long view — you can really build value and relationships with suppliers, customers, the community. It’s better for business. Publicly held is a different game — not bad, just different. Rugby vs. soccer. But we feel fortunate to have this long-view, privately held culture."

While the ESOP model won't work for everyone, I've always been a big fan because it institutionalizes something that I do think every company ought to do - build a culture in which, by investing in employees, these same employees will feel invested in the business. Too many companies have cultures in which top execs reap all the benefits, and are rewarded based on how low they can drive labor costs. Efficiency is prized over effectiveness. Values are less important than value. And while that may have short-term benefits, and I think the long-term repercussions are likely to be negative.

And I love this other quote from Connelly:

"Our culture ... is that we don’t hire jerks. There are plenty of cultures where they don’t care if you’re a jerk, as long as you deliver. We don’t believe that. We think it’s important that you play well with others. We value that, and we think we’re better for it, and we’ll keep it going. This is a very low-ego place. We know how to get things done, and how to do things for people."

This is a very good piece, about a terrific company, and worth reading here.

Published on: August 17, 2016

New York magazine reports that New York State has developed its own proprietary sourcing label that will allow fruits and vegetables from the state to be labeled as "New York State Grown & Certified."

According to the story, "Farmers interested in participating will have their facilities inspected by health and agriculture officials, and anyone who meets the standards for food safety and enviro-sustainability will get to label fruits and vegetables with a special stamp."

Published on: August 17, 2016

The New York Times reports that "Wal-Mart’s $3.3 billion acquisition of Jet.com can be expected to sail through antitrust review, eliciting barely a peep of objection from the federal government," and suggests that the deal "will probably end up being another example of an upstart internet company being swallowed up to preserve the stranglehold of a giant."

The Times analysis says that "this happens because antitrust regulators are stuck in an outdated view of the world, while the internet giants are more attuned to their nascent competitive threats. The deal for Jet.com is just the latest defensive internet acquisition of an emerging startup that will preserve the hegemony of a select few."

The Times goes on to suggest that "Wal-Mart will now have a more dynamic management and brand to buttress its own internet sales operation, which trails Amazon by quite a distance. This will allow it to better compete against Amazon. The likely result is that competition in online retailing will eventually be a slugfest between Amazon and Wal-Mart, with everyone else thrown by the wayside."

But, the Times writes, this is not necessarily a good thing: "This misses the point that domination is all about users and views. Those companies with users and page views can dominate, and accumulating those users is everything, something only an infinitesimally small number of companies can find the key to doing.

"The antitrust system results in the increasing oligopoly that we have, where a few companies dominate major industries, accruing wealth and power as potential disrupters are swallowed at birth, the way Cronus, the titan in Greek mythology, ate his young to prevent their uprising. If antitrust authorities do not adapt and emerging competitors continue to be bought up, we should not be surprised by the continued dominance of a very few companies like Facebook, Google, Amazon and Wal-Mart."

Published on: August 17, 2016

• Kroger announced that its Ralphs division in California has begun to offer its ClickList click-and-collect e-commerce service; the company's Carlsbad store is the first of a dozen stores expected to offer ClickList before the end of the year.

Those store are located in n Burbank, Granada Hills, Indio, Long Beach, Los Angeles/Ladera Heights, Pasadena, Rancho Cucamonga, Redondo Beach, Seal Beach, Van Nuys and Westchester.

According to the announcement, "Currently, ClickList is featured in more than 120 stores in seven Kroger divisions across the country. The introduction of ClickList to Ralphs in the Southern California market illustrates the evolution of customers embracing technology to enhance their shopping experiences."


• Reuters reports that William Morrison Supermarkets in the UK has sold its 10 percent stake in US online food retailer FreshDirect for $58 million; it bought the stake for about $40 million in 2011, and now reportedly has sold it back to Fresh Direct.

Morrison originally said it planned to sell the Fresh Direct stake two years ago.

Published on: August 17, 2016

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Dayton Daily News reports that Dorothy Lane Market has been recognized with the Supervalu Master Marketer award, which "recognizes best-in-class marketing efforts by independent grocery retailers."

Dorothy Lane Market would get my "best of" award for pretty much everything, all the time.


• The St. Cloud Times reports that Coborn's supermarkets there today will unveil a new format in Isanti that has a heightened focus on perimeter fresh food departments, as well as a click-and-collect e-commerce service.


• The Dallas Morning News reports that "San Antonio-based H-E-B/Central Market just made another big leap into the Dallas-Fort Worth market with the purchase of six Sun Fresh Market stores.

"The state's largest independent grocery chain has purchased four Dallas stores in Uptown, Lake Highlands, Lakewood and Northwest Dallas. Two more stores are in McKinney and Grapevine.  Sun Fresh is in the process of closing these stores."

The story says that "H-E-B  isn't sure yet how it plans to use the stores," and that the company is in the process of deciding whether to convert them to the Central Market format or use them as H-E-B stores.

Published on: August 17, 2016

• The New York Times reports that Barnes & Noble CEO Ronald D. Boire is departing the company after less than a year in the job, making him the third CEO to leave in less than three years.

According to the Times, "Boire, who previously worked in top posts at Sears Canada, Brookstone and Toys R Us, tried to transform Barnes & Noble by expanding its selection of games, toys, art supplies and music and by offering coding and 3D printing workshops. On corporate earnings calls, Mr. Boire often talked about how strong sales of coloring books and vinyl records were bolstering revenue."

However, in the announcement about Boire's departure, the company said that he was "not a good fit for the organization and that it was in the best interest of all parties for him to leave the company."

Published on: August 17, 2016

...will return.