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    Published on: August 26, 2016

    by Kevin Coupe

    Amazon continues to play around in the car business, yesterday launching a new Vehicles section of its website designed, as the Washington Post puts it, "to help people looking for a new ride get more information on the vehicles out there ... Amazon also has collected basic information on a number of vehicles, giving users easy access to attributes such as gas mileage and car dimensions. Users can compare different versions of the same model of car — the hatchback vs. the sedan, for example. Listings also contain safety information, including information on recalls."

    The Post writes, "Amazon already sells millions of car parts and accessories, but this is the first time it has taken a serious push to feature vehicles on the site. One selling point for Amazon Vehicles, according to the company, will be that customers can leave reviews for cars in much the same way as they can for any other item on the site."

    Essentially, Amazon is positioning its Vehicles section as an alternative to more traditional car review sites, such as Kelley Blue Book, in the same way that it developed a home services function that competes with the likes of Angie's List. While initially the offerings may not be as robust as on sites that have been in business for a long time, Amazon clearly continues to believe in its ecosystem approach - making it a legitimate and functional stop whenever customers want to do anything, and eventually turning it into the first, best stop for practically everything.

    "Our goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way," said Adam Goetsch, Director of Automotive at "Amazon Vehicles is a great resource for customers who are interested in car information or looking for a broad selection of parts and accessories - all enhanced by the ability to tap into the knowledge, opinions, and experiences of other car owners within the Amazon customer community."

    The move positions Amazon against many well-known car research sites, including trusted names such as Edmund’s or Kelley Blue Book — which also list professional and consumer reviews for cars. While Amazon doesn’t have the same reputation on vehicles as these older sites, it appears to be banking on the fact that customers already on the site will find it convenient to get auto information at Amazon’s one-stop shop.

    It was just earlier this week that Amazon said it would test another car-related program this weekend in Southern California, allowing Prime members to use Amazon to schedule test drives of the 2017 Hyundai Elantra - a program that conceivably could be rolled out to other geographic areas and include other automobile brands if it is successful.

    I suppose at some level there will be questions about just how much bandwidth Amazon has; is there a point at which it stretches beyond its ability to deliver relevant and differentiated products and services. But for the moment, there's nothing to suggest to me that this won;t work.

    One thing, though. I just asked my Amazon Echo what the price is for a 2016 Mustang convertible, 2016 Mazda Miata, and 2016 BMW X1 ... and the Echo couldn't tell me.

    I suspect that this is a conversation for another day. And when it happens, it'll be an Eye-Opener.
    KC's View:

    Published on: August 26, 2016

    Bloomberg reports that Walmart's recent efforts to battle the dollar store segment by "using its hefty $10 billion in free cash flow year to date to cut prices on key traffic-driving items such as laundry detergent and fresh fruit in the locations closest to dollar stores" seem to be working.

    Both Dollar General and Dollar Tree have reported disappointing quarterly sales numbers in recent days, blaming increased competition, inflation and in one case, "that sadly common retailer affliction, 'unseasonably mild spring weather'."

    At the same time, Reuters reports that Dollar General "said it was cutting prices on its most popular items such as bread, eggs and milk, intensifying a price war with retail giant Wal-Mart Stores Inc. to win back market share ... Dollar General cut prices by 10 percent on average on about 450 of its best-selling items across 2,200 stores during the quarter."

    The story notes that "dollar store operators have expanded aggressively in recent years, taking market share from Wal-Mart and other retailers, thanks to their smaller store sizes, improving product assortment and price points starting $1." Walmart originally seemed to think that the best way to compete was with small format stores, like the Walmart Express concept. But when that didn't work out as well as it hoped, Walmart closed or sold off those units and refocused its attention on the supercenter and Neighborhood Markets concepts.

    It isn't just Walmart and the dollar stores that are engaged in the price battle. The Cincinnati Business Courier reports that Kroger has implemented price reductions on 1,000 SKUs in its 120-store Mid-Atlantic region, described in the story as an effort "to cut off Wal-Mart at the pass when it comes to cutting prices."

    It doesn't seem likely to get any better. Bloomberg notes that "German no-frills supermarket Aldi has also been expanding in the U.S. at a faster clip. And with its other German competitor, Lidl, poised to enter the U.S., the race to the bottom is unlikely to abate.

    "Cutting prices to the bone -- worsening the deflation that has gripped America's mass merchants lately -- doesn't tend to be a winning long-term strategy. It especially hurts retailers that aren't opening new stores, which lets chains make up the difference on volume, at least in the short term."
    KC's View:
    One of the things that I think a lot of retailers have to be careful about is getting engaged in price wars that they cannot possibly win. Some will be tempted ... and while I think it is important to be as competitive as possible, it is much more important to figure out other competitive advantages.

    And while I know I say this a lot, it is always worth repeating that if you run a food store, your most natural advantage is (go figure) food. Invest in good food, distinctive food, higher-common-denominator food, and I think you'll find that some people are willing to vote with their taste buds. Do it for long enough, and the number of people who do so will grow.

    Published on: August 26, 2016

    The Washington Post this morning reports that Domino's has successfully tested the use of a delivery drone to deliver pizza.

    In New Zealand. Where commercial drone deliveries have been approved by the government.

    According to the story, Domino's "has successfully demonstrated a flying drone that can transport pizza, and the chain will partner with a drone delivery company called Flirtey to make the service available to customers later this year.

    “With the increased number of deliveries we make each year, we were faced with the challenge of ensuring our delivery times continue to decrease and that we strive to offer our customers new and progressive ways of ordering from us,” says Domino’s Group CEO Don Meij.

    Interestingly, Domino's also has been testing another form of pizza delivery in that part of the world.

    The Post writes that "earlier this year, a Domino’s Pizza Enterprises research lab in Australia unveiled an autonomous robot that looks like a warming drawer on wheels and can transport as many as 10 pizzas in a single trip. In March, the Domino’s Robot Unit carried out its first successful delivery."
    KC's View:
    I know there can be geographic challenges in some markets, but this strikes me as a major advance for drone technology.

    I'm not a Domino's fan ... but the idea of getting pizzas delivered by drone strikes me as the second-best use of drones. Ever. (The first best being the delivery of beer by drone to ice fishermen in Minnesota, which was tested not so long ago.)

    Published on: August 26, 2016

    MarketWatch reports that Ahold Delhaize said yesterday that "its mega-merger got off to a good start after the newly merged supermarket operators reported solid standalone results in the second quarter, driven in part by a robust performance in the US."

    The company said that Ahold's Q2 same-store sales were up 1.2 percent and underlying operating profit was up seven percent from the same period a year ago; sales at Delhaize stores were up two percent and underlying operating profit was up 10 percent.

    "We have started our new chapter as Ahold Delhaize with good momentum, with these two strong sets of pre-merger results," said Chief Executive Dick Boer, noting that third quarter results will be reported for the combined companies.

    The story notes that "Ahold Delhaize said it intends to sell another 10 stores in the U.S. after agreeing to divest 86 stores to get merger approval from the Federal Trade Commission. The additional disposals will be concentrated in the Richmond area, the company said, without giving further detail."
    KC's View:
    Considering the way the supermarket wars are shaping up in Richmond, I might be selling stores there, too ... if only to get rid of anything tat might end up being dead weight.

    As for the new. combined company - I want to see what it does to be better, not just more efficient. And I want to be dazzled. (Dazzling may be the bare minimum of what is necessary to be competitive these days...)

    Published on: August 26, 2016

    The Wall Street Journal reports that Jeni’s Splendid Ice Creams, a year after it had to halt production and recall all its products because of concerns related to possible listeria contamination, continues to have problems in this area.

    According to the story, "In a warning letter to the company’s chief executive, dated Aug. 9, the U.S. Food and Drug Administration said it found a dangerous form of listeria in the company’s Columbus, Ohio, manufacturing plant that supplies the base for Jeni’s ice creams and frozen yogurts. Regulators also found 'significant' violations of good manufacturing practices spelled out in federal regulations during inspections earlier this year."

    Here's how the Journal frames the broader story:

    "The ice-cream sector has struggled with food safety in recent years. Blue Bell Creameries LP recalled all of its frozen desserts from supermarket shelves last year after the U.S. Centers for Disease Control and Prevention linked its ice cream to three deaths and multiple other illnesses. The company since has resumed sales.

    "The U.S. Justice Department launched an investigation of Blue Bell’s listeria outbreak. The status of the probe is unclear, and Blue Bell previously has declined to comment. It didn’t immediately respond to a request for comment Wednesday.

    "According to the FDA’s August warning letter to Jeni’s, the listeria strain found earlier this year matches the one discovered in the plant and the company’s ice cream last year, indicating the potentially deadly pathogen has been present in the facility since 2015."
    KC's View:
    The Jeni's folks seem to be taking the position that some listeria is inevitable, that its food is 100 percent safe despite the FDA findings, and that customers have nothing to worry about.

    Am I wrong if I am unconvinced? There are plenty of ice cream manufacturers out there - I'm thinking companies like Graeter's and Salt & Straw, for example - that don't seem to have these problems.

    I'm beginning to wonder how Jeni's will do once the government starts applying the new standards established by the Food Safety Modernization Act (FSMA). Because if they don't measure up, senior executives could find themselves held personally responsible.

    Published on: August 26, 2016

    Crain's Chicago Business reports that Amazon plans to open its first Amazon Books store in the Windy City, just south of Wrigley Field.

    The store will open next year. Amazon already has one up and running in Seattle, with additional locations scheduled to be opened in San Diego and Portland, Oregon.

    According to the story, "Bookstore prices will be comparable to Amazon's online offerings, and the physical store will be stocked with titles that get the highest rankings from customers online and the Goodreads review site. Customers will also be able to test out Amazon devices like Kindle, Echo, Fire TV and Fire tablets."
    KC's View:
    MNB readers know that I am a fan of this concept ... you can check out my review from earlier this year, of the original version in Seattle, here.

    A friend of mine who knows a lot about retailing recently suggested that the most interesting thing about the Amazon Books concept is how easily the template could be adapted to other categories - like toys, office supplies, and food.

    Published on: August 26, 2016

    • The Chicago Business Journal reports that Sears Holdings - which had Q2 revenue of $5.7 billion, down $548 million from the same period a year earlier, and a loss of $217 million, marginally better than the $256 loss it had during the same period a year earlier - had to get a $300 million loan from its CEO, Edward Lampert, to keep going.

    The story says that the $300 million "debt-financing loan ... will be secured against Sears' inventory, receivables and other working capital. The loan comes on top of a $125 million loan that Lampert made to the company in April."
    KC's View:

    Published on: August 26, 2016

    ...will return.
    KC's View:

    Published on: August 26, 2016

    After a summer that largely has been disappointing in terms of movies, it was great last weekend to see Hell Or High Water, an absolutely terrific modern western that takes place in dusty, desolate west Texas, while portraying a classic battle between the law and outlaws.

    Chris Pine and Ben Foster play a pair of brothers who embark on an odyssey during which they rob small Texas banks, never stealing very much money, but moving relentlessly from branch to branch. They are very different people - Pine is more thoughtful, Foster more impulsive - and have different motivations, but they also are fiercely loyal to each other. They are tracked by an aging Texas Ranger just weeks from retirement, played with laconic gusto by Jeff Bridges, who doesn't see the act of turning in his badge as a reason to stop seeking justice.

    Hell Or High Water is wonderfully written and directed - by Taylor Sheridan and David Mackenzie, respectively - with insightful, beautifully detailed performances ... including those by people in smaller roles who populate the banks and cafes of the beaten up towns portrayed in the film. (One of them actually has been shown on film before - in The Last Picture Show, which Bridges made early in his career.) And one of the subtexts of the film is thought-provoking - that the banks from which the brothers are stealing may be actually bigger criminals (or at least more ethically challenged) for how they have treated their communities.

    Hell Or High Water is wonderful movie-making - it is about people and ideas, not just about explosions and special effects. I really, really recommend you see it.

    People who grew up loving movies are likely to have read 1966's "Hitchcock/Truffaut," which essentially was a long series of conversations with the iconic director Alfred Hitchcock conducted by French filmmaker Francois Truffaut - going through each of Hitchcock's movies, shot by shot, line by line, to talk about content, context, style and intent. Reading it is a kind of master class in moviemaking, and I can remember poring over it for hours.

    Now, there is a documentary out, Hitchcock/Truffaut, currently showing on HBO, that both portrays the backstory behind the interviews and visually demonstrates some of the things discussed in the book. It doesn't have quite the depth of the original, but it is a delight, mostly because it effectively shows us two master filmmakers who were utterly in love with their craft. I loved it, and if you like movies, I think you will, too.

    Ands if you're like me, you're suddenly going to have a craving for Vertigo and Rear Window.

    Summer is almost over, which meant that last night was a good time to drive out to Jones Beach on Long Island to see Jimmy Buffett in concert. Buffett is almost 70, but he shows no sign of slowing down - he did almost two hours straight last night, singing almost all his favorites, doing a nice tribute to Glen Frey, and just generally keeping the crowd singing, dancing and robustly entertained. It's been a long time since he wrote "Margaritaville," but he seems to have lost none of his enthusiasm for performing and for preaching the gospel of kicking back, having a beer, and just generally having a good time.

    Play on, Jimmy.

    It's time to go to summerzcool
    The courses are easy and there are no rules
    At summerzcool
    Remember what is and is not cool
    You need to stay in summerzcool
    This is the time and the place to act like a fool
    Oh, summerzcool
    Just know when to keep and to break all the rules...

    KC's View:

    Published on: August 26, 2016

    As is my custom at this time of year, I'm taking the week before Labor Day off. MNB will be on hiatus until Tuesday, September 6, when we'll return with all new stories and commentaries. Between now and then, the MNB archives will, of course, be open.

    Thanks, as always, for your patience … I hope you enjoy the last few days of summer.

    KC's View: