retail news in context, analysis with attitude

Published on: September 6, 2016

 

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here and this is a special Monday FaceTime with the Content Guy ... coming to you from Smorgasburg, which is this wonderful food festival that takes place every Saturday In the Williamsburg section of Brooklyn, right on the banks of the East River, where one can see the magnificent Manhattan skyline less than a mile away.

Smorgasburg actually has three Brooklyn homes - East River State Park on Saturdays, Prospect Park on Sundays, and then a central indoor location where the two come together from November until April 1. But the geography is less important than the amazing taste sensations and aromas that emanate from Smorgasburg, which taps into something very important when it comes to food innovation.

The goal of Smorgasburg is to bring together dozens of food vendors - mostly start-ups, though some do have locations elsewhere - and allow them to cook and serve some amazing foods that one might not be able to find elsewhere. I drove out on a hot Saturday morning while I was on vacation, and enjoyed some extraordinary dishes. Like, a Ramen burger in which the burger roll actually is made from fried ramen noodles. And mozzarella sticks that were the size of small logs, and amazingly tangy. And the best spring rolls I've ever tasted. And a Venetian sandwich made with steamed tuna, delicious pearl onions, and steamed bread the likes of which I've never had before. And an Indian taco made with paratha flatbread and this unbelievable pork belly.

Plus, there's a beer garden ... need I say more?

This only is a small sampling of what they had to offer - the only problem is that by the time I tasted this stuff, I was totally full ... I'm simply going to have to go back to Brooklyn for another round of tastings.

I've provided some pictures of Smorgasburg, and along with the video, it'll give you a sense of how busy it is. And if you still have any questions let me give you a number - 10,000, which is the number of people who can visit it on any given Saturday or Sunday.

In thinking about all these taste sensations that I'd never experienced before, I found myself thinking about how competition often plays out in the more mainstream food retailing sector - companies often will fight on price even if they have no legitimate hope of winning that battle, or they'll kid themselves that location or some notion of being the hometown grocer will be the winning formula, even if that idea seems less workable with every passing day.

We talk about competition a lot here on MNB, and while eating wonderful new foods at Smorgasburg, I found myself considering the possibility of a new way to compete. Since it always has been my bias that food companies ought to compete with their food (a radical notion, I know), wouldn't it be interesting for a retailer to say that once a month, or better yet, once a week, it would come up with some food item that nobody in the market has ever tasted or heard of before, and then they'd market the hell out of it. Instead of trying to make a difference with products that everybody else is selling, they'd focus on the totally unusual - it could be an enormous and enduring differential advantage if done right, done consistently, and done with a real commitment to great food.

Sounds like a pretty good - and potentially Eye-Opening - idea to me.

That's what is on my mind this Tuesday morning. As always, I want to hear what is on your mind.

Published on: September 6, 2016

by Michael Sansolo
Whoever coined the adage that no news is good news likely wasn’t providing customer service. Or at a minimum, that person wasn’t giving good customer service.

A few nights back, my wife and I headed out to a local restaurant for a late dinner and were greeted by the host with a strange opening line. He told us he had both good news and bad news.

The good news was we could get a table immediately. The bad news was more complex. Due to some staffing issues and a sudden rush of customer orders, we weren’t likely to get our food very quickly. In fact, it would probably take 15-20 minutes longer than usual.

Luckily, we weren’t in a rush or very hungry, so we sat down, ordered, waited, waited and waited.

However, we weren’t disappointed. Thanks to the host and later to our waitress (who offered us everything she could), we were well aware of why everything was taking so long. No amount of griping, nagging or whining could change the situation. It was what it was.

So simply put, we waited longer that we planned, but we didn’t mind because we knew in advance. It seemed like an interesting lesson in customer service - especially when things aren’t going according to plan, which happens a lot.

To correct the old adage - communicated news is good news, or at least acceptable news. As my wife and I discussed, knowing the situation made us completely comfortable. Besides, had we been in more of a rush we had advance information - from the host - to go elsewhere that evening. Knowledge empowered and relaxed us.

Now I’m fully aware of the goal to under-promise and over-deliver. That’s why lines at Disney World always suggest a longer wait time that you’ll ever experience or why most restaurants say the wait is 30 minutes, when it’s really shorter. We get a pleasant surprise and feel good about things.

But what happened at this restaurant got me thinking of the importance of clear communication especially when the news isn’t good. Maybe it’s that as a society we’ve become too demanding of getting everything our way. Perhaps it’s because of politicians constantly telling us all the good things they’ll do without ever reminding us of the sacrifices we’ll need to make.

The reality is the world is filled with good news and bad news and not always in equal or easy amounts. Yet there’s one other reality: today, more than ever, we live in a transparent world thanks to instantaneous communication. More than ever, an annoyed customer forced to wait longer than deemed acceptable can get on line and spout off to whatever audience will listen.

And maybe that’s the best argument of all for full transparency and clear communication. There’s the risk it might cost you some business, but disappointing customers will likely do the same.

Let’s remember a very different adage: bad news isn’t like fine wine. It doesn’t improve with age so holding it back will never make it better.

Maybe, just maybe, we can treat shoppers like adults. Who knows, they might actually appreciate it.

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: September 6, 2016

The Post & Parcel reports that Ahold Delhaize-owned Food Lion is expanding its use of delivery service Instacart to deliver groceries in the Charlotte, North Carolina, market.

According to the story, "Food Lion has been piloting the service in the Charlotte area since May. The expansion – which adds six zip codes – has more than doubled the coverage area ... Food Lion also piloted Instacart in Raleigh, N.C., in June and continues to test the home delivery service in select zip codes in this area."

Keith Nicks, vice president of customer engagement at Food Lion, is quoted as saying, "“Food Lion is extremely pleased with the speedy delivery service Instacart has consistently offered our customers since its launch in May. As we work to expand our home delivery footprint, we’re excited more of our customers will be able to enjoy the convenience of fresh and affordable groceries at their doorstep."

Published on: September 6, 2016

USA Today has a story about how Jay Zagorsky, economist and research scientist at Ohio State University, who maintains that "we are sort of on the edge of seeing more and more businesses that don't take cash."

The story points to some select businesses - at this point, still a tiny minority - that don't accept cash. But, the story says, "Retailers and others have plenty of reasons to eliminate cash, Zagorsky said. Clerks or attendants might steal. Or there could be robberies. No one has to count change or make sure a cash drawer balances. Store employees would not have to haul cash to the bank at the end of the day."

However, while "the use of credit cards seems harmless, but it comes with a cost — one that retailers tend to pass on to customers. They typically end up raising the prices charged to everyone — including those who pay with cash — to cover the fees that credit card companies charge, Zagorsky said."

USA Today does note that "a 2013 Survey of Consumer Payment Choice indicated a trend away from paper checks. Debit cards were the most popular form of payment, with 31.1% of payments covered by debit cards. Yet 26.3% of payments were covered by cash; while 22.5% are covered by credit cards; and the rest are made by check, money order, prepaid cards, electronic payments and online bill paying."

Published on: September 6, 2016

Internet Retailer reports that Amazon is trying to combat the sale of counterfeit goods on its site by requiring certain sellers to pay a fee that may be as high as $1500, plus requiring them "to provide proof of purchase from select manufacturers and distributors before allowing sellers to list those products on Amazon.com. The brands subject to the new fee and authorization process include counterfeit-prone brands, such as Nike and Lego."

The story says that " this is a one-time, nonrefundable fee, and only applies to new sellers to the platform or existing sellers that are new to selling those brands’ products ... Amazon declined to elaborate further about why it’s instating these requirements—prerequisites that the marketplace has never had in place before—but some marketplace experts say this is one way to counteract sellers who list unauthorized or counterfeit products on Amazon."

The CNBC story notes that "with the holiday season just around the corner, sellers that count on Amazon for the bulk of their revenue are on edge. Amazon has been hit with a swarm of counterfeiting, largely from Chinese manufacturers, in the past couple years, and is now responding with a heavy hand to get the problem under control. By forcing brand resellers to show that their products are coming from legitimate sources, the thinking goes, Amazon can get rid of the bad actors and clean up the site."

Published on: September 6, 2016

The Food Marketing Institute (FMI) last week used the occasion of kids going back to school to publicize its consumer survey saying that "only 57% of parents eat dinner with their children every night," and that "71% of parents in the survey say in their 'ideal' world they would want to eat with their children every night."

The lesson: potentially the most important "school supply" one can give children is the family meal.

Sue Borra, RD, executive director of the FMI Foundation, explains it this way: "Just as notebooks and art supplies prepare our children for school, so does the family meal.  Academic research shows that kids and teens who eat meals with their family four or more times a week earn better test scores and perform better in school."

And, the FMI Foundation pointed to its ongoing efforts to help retailers use the family dinner as a marketing tool that can build sales while having a positive cultural impact.

Published on: September 6, 2016

United Press international reports that Amazon and Wells Fargo have decided to end a partnership that had them offering low interest rate college loans to Amazon Prime customers.

The story says that both companies confirmed the end of the arrangement without explanation; the offer was only initiated two months ago after a reported year in the planning.

Published on: September 6, 2016

The New York Times had an intriguing story while I was on vacation about General Electric, where CEO Jeffrey Immelt is spearheading a kind of mindset reset that is designed to make the company more relevant and responsive to the marketplace.

The "eureka moment" came, the story says, when Immelt was speaking to GE scientists about new jet engines the company was building that were "laden with sensors to generate a trove of data from every flight." The fact was that the data could actually be more valuable to GE than the engines ... but the problem was that GE had no infrastructure capability to use it.

Immelt realized that the company needed to develop that sort of software expertise to go along with its heavy industry capabilities ... and "needed to think of its competitors as Amazon and IBM," and not just the other companies building jet engines and medical imaging equipment.

The result was the opening of a software center in San Ramon, California, where one of the most important projects "is to build a computer operating system, but on an industrial scale — a Microsoft Windows or Google Android for factories and industrial equipment. The project is central to G.E.’s drive to become what Mr. Immelt says will be a 'top 10 software company' by 2020."

The story goes on: "Many industries see digital threats, of course. Yet the scope of the challenge is magnified at G.E., a 124-year-old company and the nation’s largest manufacturer, with more than 300,000 employees worldwide. Employees companywide have been making pilgrimages to San Ramon for technology briefings, but also to soak in the culture. Their marching orders are to try to adapt the digital wizardry and hurry-up habits of Silicon Valley to G.E.’s world of industrial manufacturing."

You can read the entire story here.

Published on: September 6, 2016

• The Wall Street Journal reports that Walmart "plans to cut thousands of back-office positions around the country, a sign that the retailer’s effort to make its cavernous stores more efficient is also changing the face of its workforce." The goal is to eliminate "about 7,000 store accounting and invoicing positions over the next several months. The jobs are mostly held by long-term employees, often some of the highest paid hourly workers in stores. The retailer wants those employees working with shoppers, not in backrooms, say company executives."

The story goes on to say that "the back-office cuts to Wal-Mart’s 4,600 U.S. stores is a sign that retail workers - one of the largest employee cohorts in America - face big changes as their employers spend heavily to compete with Amazon.com Inc. and grab foot traffic from other chains."

Published on: September 6, 2016

• The Detroit News reports that "starting Sept. 15, smartphone app Shipt and Grand Rapids-based Meijer will partner to offer delivery grocery services of 55,000 items seven days a week. Deliveries from 24-hour Meijer locations will be made available to shoppers around the clock and orders can be delivered in as little as one hour." The story says that "25 Meijer stores in Metro Detroit will offer the service, which constitute the majority of stores in the region."


• The Houston Business Journal reports that Amazon is bringing its one-hour restaurant delivery service to Houston ... where it will compete with, among other companies, UberEats and a local delivery service called NeighborFavor.


• The Wall Street Journal reports that "Lands’ End Inc. said it would begin selling some of its merchandise on Amazon.com Inc., becoming the latest apparel brand trying to tap into the Internet giant’s rapid growth. The struggling apparel maker, known for its outdoorsy clothes, will list items from its Lands’ End sports, footwear and Canvas collections on Amazon by the end of the month."

The story goes on: "Once shunned by the fashion community for its downscale feel and reputation for cut-rate prices, Amazon is becoming an important partner for an expanding list of apparel, footwear and accessories companies. To win over the brands, Amazon has promised to hold the line on discounting, people familiar with the discussions have said, a departure from how it has gained market share in books, electronics and other categories."


• Reuters reported that Amazon is bringing its Dash buttons to the UK, launching with 48 brands that will allow consumers to easily replenish products through the push of a button that can be kept in a convenient/appropriate location - a diaper button on the baby's changing table and a razor blade button in the medicine cabinet, for example.

The story notes that when Amazon started the Dash button program last year, it began with just 20 brands. That number has grown to 150 in the US, with a threefold increase in orders, according to Amazon.

Published on: September 6, 2016

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

• The Cincinnati Business Courier speculated that Kroger "could be a prime bidder for some Rite Aid or Walgreens drug stores that will need to be sold when those two companies finally complete their merger later this year," suggesting that Kroger "is a potential buyer of some of the 500 stores that will likely be put up for sale."

The story goes on to say that "Kroger is primarily a grocery store chain, but it’s also the nation’s fifth-largest pharmacy operator. It has 2,200 in-store pharmacies. An acquisition of some of the Walgreens/Rite Aid stores would boost its pharmacy business. It could also use the sites – typically in prime locations – and surrounding real estate to build supermarkets. It could even use some Walgreens/Rite Aid sites to open urban supermarkets, a trend Kroger has been capitalizing on recently."

This might make sense, but it also needs to be pointed out that pretty much every time these kinds of opportunities pop up Kroger is probably going to be suggested as being potentially in the mix. Doesn't make it so. Just makes it fun to wonder.


• The Houston Chronicle reports that "a revamped and re-branded Fiesta Market in Houston's traditionally Hispanic East End is the first step in a company-wide effort to expand the appeal of the 44-year-old grocery chain," according to CEO Michael Byars, who said, "What you see in this format is a store that still is relevant not only to the core Hispanic shopper but also provides outreach to any of the demographics we serve."

Byars also said that the overhaul "marks the beginning of a series of store remodels and upgrades in coming months."


• The New York Times reports that PepsiCo-owned Gatorade is introducing a new organic version, called G Organic, which "will come in lemon, strawberry and mixed berry flavors." The organic version is seen as a way "to cash in on a growing demand for foods considered to be more natural and free of additives, pesticides and artificial ingredients seen as harmful."


• The Chicago Business Journal reports that Kroger-owned Mariano's Fresh Market has opened, in the city's north side Lakeview neighborhood, a new concept that management is referring to as a "grocerant," which is to say "both a traditional grocery outlet and a place where customers can find a larger-than-usual array of prepared restaurant-style items to either eat in store or take home ... This particular approach sounds tailor-made for the masses of busy millennials who inhabit the Lakeview neighborhood around where the new two-story Mariano's is located at 3030 N. Broadway."

Published on: September 6, 2016

• Albertsons announced that Dan Valenzuela, who has been running its Seattle division, has been named president of its Safeway Eastern Division, effective immediately. He succeeds Steve Burnham.


• The Wall Street Journal reports that Amazon has hired away from eBay Hassan Sawaf, described as an artificial intelligence expert whose goal it will be to improve “the user experience for users of Amazon’s search capability across all products and businesses.”

The story notes that with its Alexa family of voice recognition devices, Amazon "is part of the scramble to develop artificial intelligence assistants, including Apple Inc.’s Siri, Alphabet Inc. ’s Google Now and Microsoft Corp. ’s Cortana. These companies and others are pouring money into artificial intelligence, which is expected to run everything from automobiles to houses in the future."


• Target announced that Jeff Jones, its chief marketing officer, has resigned "to pursue another opportunity." The company said that it is looking both inside and outside the company for a successor.


• Weis Markets announced it has promoted its corporate controller, Jeanette Rogers to vice president/corporate controller; she will continue in her roles as chief accounting officer and assistant treasurer.

Published on: September 6, 2016

Hugh O'Brian, perhaps best known for playing the title role in the TV series "The Life & Legend of Wyatt Earp" from 1955-1961, passed away yesterday at age 91. In addition to acting in many movies and in another TV series, "Search," O'Brian also had the distinction of playing the last character killed by John Wayne in a movie - in The Shootist.

Published on: September 6, 2016

We took note a couple of weeks ago of a USA Today story about how some publications had decided to get rid of their open bulletin boards online that allowed readers to say pretty much anything they wanted about stories - which sometimes resulted in comments that the publications believed veered into hate speech.

I commented, in part:

While toxicity of sentiment, tone and actual content is not isolated to websites' comments sections, it is on these sites that they tend to achieve their highest volume and lowest standards. I found this USA Today story interesting because I made the decision almost 16 years ago on MNB not to create an online bulletin board where anybody could say anything, even though it would save me all the time that I spend reading emails and deciding which ones to post. I just figured that part of my editorial responsibility was to curate the comments and keep the conversation on course. (One always has to be aware of the lunatic fringe...)

I think that the general tenor of the discourse in America these days ... means that anyone with a website that encourages consumers to comment/respond needs to be vigilant about the things that people say there.

MNB user Tom Herman responded:

I am against any form of limiting the free exercise of speech in nearly any form. My motto is "People have a right to be wrong". It is an Orwellian slippery slope when a group of people get to decide what speech is good and what speech is bad. It always ends up being my speech is good and yours is bad. People have free will to decide if they want to participate in message boards or comment sections. If they don't agree or don't like what people say so be it don't participate. We have all been called a few choice names here and there. Part of maturity is seeing it for what it is. Protecting people from speech they don't like or feel threatened by on the Internet only leads to censorship.

Another reader wrote:

The beauty of a comments section (especially when it turns into a cesspool) is that if you don't like what is being said and are tired of refuting it you can turn off your computer, put down your tablet, walk away. You don't have to read the comments.

From another reader:

If you look at the Times’ editorial page today, they have run a series of letters on both sides of the debate over online commenting.   I have personally found the anonymous online commentary of most publications to be filled with comments that are thoughtless, gutless, or both----and even though I read several daily papers in their online version, I have always made a point to avoid their respective comment sections.

MNB user Randy Adams wrote:

I've thought for a long time that the answer to vile and obscene comments is a requirement that the actual commenters name be posted. I know a lot of people would never say the types of things they say if they were going to be tied to the comment. It is easy to say anything when you know you'll never be discovered.

MNB reader Joe Gilman wrote:

I don't agree with the silly and nasty comments one sees in these online comments sections, but I also don't agree with doing away with them also.

If there was a way to make people have to use their name in the comment section, as opposed to some online identity, I think that would help with the nastiness. If you say something with your name attached, you sort of own it.




On the subject of food safety, a subject we talk about a lot here on MNB, one reader wrote:

The trend in recent years is for more and more retailers to increase in-store food prep. Having worked in many retail locations over the years, I'm amazed that food safety regulations have not focused in this area. In retail you have many different locations, with many different employees, with various levels of training, involved in producing fresh cut SKUs in less than ideal food prep areas, at ambient room temperatures above the required range, in less than ideal prep areas of various configurations. And how those designated ares in the back rooms, behind closed doors, are shared spaces for other activities and traffic. I could go on and on. I'm amazed at what I see at retail, versus what I see for companies that specialize in food prep have for facilities that resemble operating rooms.

The same holds true with "local" produce. To tour the fields, and see the processes that larger, national growers have, and what they do to ensure safe produce, and then to do the same tour of local growers is vastly different. Wherever food is being produced, or cut, for the retail display, shouldn't all have to share in the same requirements?

They pretty much do. I think some retailers do a better job than others.

From another reader:

On the issue of the finalizing of the rules for food safety under FMSA, I realized as I read your comments that I was reading with “two heads”.
 
My business brain, after many proud and happy decades in the food and CPG industry, is pleased. I am praying this will go well and I am keenly aware that the bad press , recalls, and outright public danger of a few bad actors has done very little good and a lot of harm to our industry. My business brain wants to see national rules rather than a patchwork of state and local rules, I want to see compliance, and I think the lack of strong enforceable policy in such things has been a tragedy for years. We will all benefit from this in the long run. It all seems fair and logical.
 
My personal brain, my shopper brain, my citizen brain, is a whole lot more skeptical. I have been disturbed for years by the resistance of the industry to proper and appropriate policing, that responsibility has been avoided, that obscene amounts of money have been spent lobbying to enable labeling obfuscation, as well as on watering down prior efforts at regulation (and this one as well, I am quite certain). I see that resistance to be self-defeating but pervasive, short term thinking at its worst. I know that most of us (even myself) have never felt well served by some of the  “big food” lowest cost ingredient thinking, by formulations that were questionable, by lax practices, by corner cutting, by misleading claims (defending nonsense like berry-free blueberries or being less than effective at dealing with the implications of mad cow disease a few years ago for example), and that almost every company that has done real harm to confidence in safety has gotten less punishment and suffered fewer consequences than I, as a consumer, would wish. I won’t buy hamburger in most stores (by preference we grind it ourselves at home) we wash our veggies, we read the labels, we stay alert, and we don’t forgive easily.
 
My business side likes this. My personal side remains, arms folded, scanning labels, avoiding some companies, watching retailers for signs of laxity, wanting to trust but not feeling at all trusting.
 
As they say in Missouri – show me.




On another subject, MNB reader Todd Ruberg wrote:

I really appreciate your review of the new SF Apple store.   Design Matters…..and is STILL a big opportunity for traditional food retailers. Stores are still linear rows, “warehousing” un-curated product…..in many cases laid out by the retailers buying organization assignments….. walk down the “Paper”-aisle:    Wouldn’t Paper towels be better situated by Cleaning supplies?   Feminine care products near Beauty care?   etc.     What Apple is doing is “Shopper based” retail design,  and it makes a difference.    ON line too—the click through progression should  be “shopper" based.

MNB reader Tom Murphy chimed in:

I was thinking of this comment in your story on the new Apple store in San Francisco: Apple - like any retailer - has to have both compelling new products and engaging new stores.

It occurred to me that many of the retail segments, e.g., grocery, department stores, drug stores, etc. don’t have the luxury Apple has of controlling product innovation.  Other than private label product, which is frequently less about innovation and more about “me too”, retailers are stuck with manufacturer’s line extensions, “new improved” products, repackaging, and general lack of innovation.  That needs to change…until retailers refuse to stock those lackluster alternatives to innovation, it will continue to be their albatross or their center-store hell.  As my father used to say, “you deserve whatever you will put up with."

And from another reader:

You wrote: “I think most people would agree that Apple is on a bit of a design plateau at the moment. It has been a while since the company has come out with a knock-your-socks-off product.”

Notice how this “design plateau” corresponds with the absence of Steve Jobs? Tim Cook appears to be a fine executive, both strategically and tactically, but Jobs was a visionary and that’s a completely different thing. Jobs was the creative force behind Apple; without him, they’re coasting on their flagship products from his era. Those products are so strong that they’ll be able to get away with this for a while, but not too long. The end of Apple hegemony is on the horizon.

Listen, it almost unheard of for any organization to be able to replace one visionary with another - it is rare for a team to be able to replace Joe DiMaggio in center field with Mickey Mantle ... usually it ends up being someone like Bobby Murcer - a very good player, but not a DiMaggio or a Mantle.




We also got a number of emails about our story regarding Aloft's efforts to develop a smart hotel room with voice recognition capabilities.

One reader wrote:

This is exciting but I would love it if I could program the room to start to cool down before I arrive.   And then able to control the temperature remote so I could again cool it before coming back from being away, thus not wasting electricity while away.  Just some enhancement type of ideas for what they already have started!

Another MNB user wrote:

I often wish people also came with voice recognition capabilities.

True.

And from another reader, commenting on my waxing rhapsodic about my Echo voice-recognition device from Amazon, and occasions when i've wanted to talk to my car even though it doesn't have the software:

Do you still talk to your wife?

Constantly. I actually think she's relieved when I talk to the computer. It gives her a break.




And finally, from an MNB reader who wanted to comment on my statement that last week marked the end of summer:

FYI ... Our summers in Phoenix don't end until late October.

Fair point.