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    Published on: September 29, 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 FaceTime with the Content Guy.

    This week's FaceTime video was recorded on Sunday afternoon at Tropicana Field in Tampa, Florida - one of two baseball stadiums that I visited last weekend. The other was Miami's Marlins Park, where, as it happened, I went to a game on Saturday night, just hours before the tragic death of Marlins pitcher Jose Fernandez.

    I was very happy to attend the Braves-Marlins game and the Red Sox-Rays games, and not just because there are few things better than September baseball (other than October baseball, of course), and not just because it was wonderful to see David Ortiz - Big Papi - play in one of his last regular seasons games. (He got three hits, including a double, on his way to the best final season of any player in baseball.)

    The biggest reason I was so happy was that with those two games, I completed a goal of mine. I have now been to every Major league Baseball stadium in the country.

    Man's gotta have goals.

    Now, it has taken me a long time to achieve this goal. Something like 25 years. I'm not entirely sure. All I know is that when I started, my goal was to bring back a baseball cap from every ballpark, but was told at some point that I was cluttering up the house and needed to find something else to collect.

    I also know that I haven't just been to 30 ballparks. In fact, I've been to 18 other ballparks that, since I started this quest, have been closed and replaced by newer stadiums. And I've been to one in a city - Montreal - that doesn't even have major league baseball anymore. So I've actually been to 49 ballparks ... and that doesn't even count all the minor league parks I've been to. (Like where the Utica Blue Sox used to play when they were a Red Sox affiliate.) I wish I still had that cap.)

    But this leads right into the business lesson that I've garnered from all these ballparks.

    When I started on this quest, one of the things I noticed was that minor league fields tended to be a lot more fun than the major league variety. The big league parks tended to be a little more formal, a little more staid. But minor league fields, in addition to being a lot less expensive, also did a lot more to engage with patrons. There would be ice cream giveaways, dime hot dog nights, handing out of free t-shirts, on-field races for kids - all that sort of stuff. The reason was that minor league teams knew that the good players weren't sticking around, and so they had to market the experience.

    These days, the number of options on which to spend one's entertainment budget are far more numerous, and so major league teams have adopted the minor league approach - lots of promotions that help to entice and entertain the customers. (Sometimes there are too many, to be frank. On Saturday night, the Miami Marlins had a Star Wars promotion that was way, way over the top. It made me want to take a light saber to whatever genius in marketing thought it up.)

    That's what retailers need to do, now more than ever. They can't just be places that stock other companies' merchandise and promote other companies' brands. They have to create enticing, engaging and unique experiences that speak to the customer's interests and desires. Sometimes, that means having the kind of nimble attitude that characterizes smaller companies. And sometimes it just means being innovative to focus on fun.

    That's been the lesson of the my baseball stadium odyssey.

    One other thing. Tomorrow, in "OffBeat," I'll do my ranking of the 30 existing major league baseball stadiums. I'm sure I'll annoy some folks and please some others ... but all I can tell you is that it is my list, and reflects just by biases and preferences.

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

    KC's View:

    Published on: September 29, 2016

    by Kevin Coupe

    Bloomberg reports that research firm CB Insights estimates that "funding to grocery delivery startups has passed $1 billion for the second year in a row."

    That doesn't include what Amazon is doing ... and, the story notes, it is important to understand that at the moment, "Amazon controls less than 1 percent of a fragmented U.S. grocery business."

    Here's the reality, as reported by Bloomberg:

    "American consumers are buying groceries online, but haven't changed their food-buying habits as quickly as they have for, say, buying shoes or electronics. But if the U.K. market is any indication -- government statistics show 5 percent of grocery shopping is done online there -- then the shift is coming.

    "Amazon has made it clear it intends to go after grocery the same way it took on books and electronics. Its Amazon Fresh grocery service, which promises grocery delivery within 24 hours, has recently expanded to new new locations, including Boston and London. But the slow roll out of Amazon Fresh has already taken nearly a decade, in contrast to other Amazon programs such as Amazon Prime Now, the same-day delivery service that went practically nationwide after a year or so."

    This is all interesting, but I would follow up on this story by suggesting three things.

    First, there will be plenty of failures among those startup companies with so much funding. Failures of specific companies won't mean a failure of the concept ... just that this is a complicated business that takes time to get right.

    Which leads me to my second point. I don't think anyone familiar with the grocery business is surprised that it has taken Amazon more time to figure out the food business. And anyone familiar with Amazon thinks that they'll keep working it from different angles until it gets it right.

    Finally, I've always believed that if online can generate five percent of the US grocery business, that's a pretty good number. There a lot of smart folks who think that it get can get to three times that. But here's the deal - I think Amazon would be thrilled if it could 2.5 percent of the US grocery business. That's a pretty big number.

    We're still in early days when it comes to online grocery sales. What happens next will be an Eye-Opener.
    KC's View:

    Published on: September 29, 2016

    Following yesterday's announcement by the Food Marketing Institute (FMI) that it is cancelling its signature 2017 FMI Connect show, United Fresh reiterated its plans to keep its show - which was to be co-located with FMI Connect - open and operating next June 13-15 in Chicago.

    FMI said yesterday that it had concluded in the months since the 2016 event that it is "not the right formula" with which to go forward, citing declining attendee numbers owing to consolidation and economic realities.

    Tom Stenzel, president/CEO of United Fresh, released a prepared statement noting that "in recent years, it’s become abundantly clear that fresh produce and fresh foods are driving so much of the consumer experience in retail, restaurants and multiple new delivery channels.  We’ve seen that growth in the United Fresh Marketplace and FreshTech expos, as both our exhibitor community and buyer attendees have continued to grow each year."

    "The combination of our shows," Stenzel said, pointing to the United Fresh, International Floriculture Expo and the Global Cold Chain Expo events, "offers wholesale, retail, foodservice and other food marketing channels an unparalleled experience to see, taste and touch the new products that are driving consumer success with fresh foods, produce and floral products."

    In a comment to MNB, Stenzel said that he remains upbeat: "We actually attracted more attendees than FMI last year, so are pretty confident where our future is.  We will be continuing to grow significantly this year, in the fresh foods, produce, floral and technology space."
    KC's View:
    One of the things I wrote yesterday in our breaking news alert about the FMI cancellation was that "to those of us who attended the 2016 show, this does not come as an enormous surprise, since the diminishing returns were obvious in the low traffic that seemed to be walking the show floor."

    It must be pointed out, along the same lines, that the exact opposite was true of the United Fresh show. It was just across the hall in McCormick Place, and yet the contrast was stark - the aisles were busy and energized, and when I'd go to booths like, say, Frieda's, there was a sense of innovation and business being done. And that was pretty much throughout the sales floor, where the samples were ample and everybody seemed to be having a good time.

    I can remember thinking to myself that when the FMI folks looked across the hall, they had to wonder what, exactly, they were doing wrong ... or maybe, wonder how and why the business had shifted or how they missed the signs.

    I'm not sure the FMI Connect cancellation will have no impact on United Fresh, since there's something to be said for the advantages of co-location. But then again, if I'm right about what I wrote yesterday about the advantages of being more targeted, with a greater ability to define return-on-investment, United Fresh is well positioned. (I continue to believe that FMI ought to think about bringing back its Meal Solutions and MarkeTechnics shows in some form. They might be able to capitalize on the same trends in those categories that has been driving United Fresh ... and, by the way, some other more targeted shows.)

    Published on: September 29, 2016

    Fortune reports that the US Food and Drug Administration (FDA) "has begun the process of redefining what 'healthy' stands for on food labels ... saying that an "updated definition will 'encourage companies to make a greater variety of healthy products available to consumers through both innovation and reformulation'."

    According to the story, "Healthy diets are now more focused on the type of fat rather than the total amount of fat. But old standards have meant that foods like fat-free chocolate pudding can be labeled as healthy, while avocados and salmon cannot. Nutritionists are also more concern about added sugars than in the past—something the current definition of healthy does not reflect."

    The story notes that "the FDA’s examination of 'healthy' is just the latest move from the agency as it works to keep up with consumers’ shifting eating habits and desire for transparency. The FDA is also considering giving 'natural' a legal definition; it received received more than 7,600 comments on the term and is currently in the process of analyzing them."
    KC's View:
    The story also notes that this is likely to be a lengthy process; similar reconsiderations have taken up to six years to complete.

    I also have to wonder the degree to which politics could play a role - specifically who wins the White House in November. One of the contestants says he maintains superb physical condition by eating fast food, like McDonald's, suggesting that he likes the big chains because you always know what's in the food because they all use the same formulas. (The people who got sick at Chipotle might disagree with this notion.)

    Published on: September 29, 2016

    The Wall Street Journal reports this morning that "lackluster sales growth, slowing foot traffic and a late-to-the-game push into e-commerce have hurt results" at Costco, and that these days, competition against Amazon has to be top of mind.

    "The online behemoth’s annual revenue is expected to surpass Costco’s for the first time this year," the writes. "By comparison, Amazon had less than half of Costco’s annual revenue six years ago.

    "Over the past five years, Costco’s shares have trailed Amazon’s, while outperforming Wal-Mart. The contrast has only grown starker over the past 18 months as Costco’s stock has treaded water while Amazon’s has more than doubled."

    The Journal continues: "Costco’s competitive edge lies in limited product selection, loyal customers and fee income. Its roughly 81 million card holders spent around $2.5 billion in membership fees in fiscal 2015, comprising the bulk of Costco’s $3.6 billion in operating income. But Costco is arguably paying more now than ever for that growth. Capital expenditures rose to $2.4 billion in fiscal 2015, more than double their level six years earlier. Meanwhile, same-store sales growth has slowed for four years in a row."
    KC's View:
    I wrote this the other day in a slightly different context - that when I thought about it, I realized the degree to which I have shifted Costco spending to Amazon. It is just easier. No lines. No significant price differences.

    Published on: September 29, 2016

    Business Insider has a story about an interview that Starbucks CEO Howard Schultz did on "Here's The Thing," the National Public Radio (NPR) podcast hosted by Alec Baldwin, in which he talked about the continuing challenges of growth, even at a well-established chain such as Starbucks.

    "Not a lot of food companies have scaled very well," he says. "Ubiquity is a challenge. It's hard to get big and stay small."

    "The idea of getting big and staying small is a major one at Starbucks right now," Business Insider writes. "As the chain becomes ubiquitous, it is trying hard to maintain its upscale reputation — and avoid being seen as a 'basic,' over-hyped brand. To maintain this reputation, Starbucks is investing millions of dollars into building Roasteries, introducing new menu items, and even creating original content."

    Schultz says that rather than looking to food industry companies for inspiration, he "looks to brands such as Nike, Apple, and Disney to learn how to maintain integrity while becoming global phenomenons."

    There are two chains that he mentions to Baldwin in the podcast as being strong players - Shake Shack and In-N-Out Burger, which are both known for maintaining and improving quality as well as taking care of their people.
    KC's View:
    The notion of getting big and staying small is something that MNB fave Glen Terbeek wrote about years ago in his book "The Agentry Agenda," in which he argued that big chains would be better off - and better able to serve customers - if they organized themselves into smaller pods. For example, he suggested that a 100-store chain should break itself into 10 10-store units with a great deal of autonomy and a nimbleness that would be a long-term advantage.

    That's a little different from what Schultz is suggesting, but the general theory is the same.

    By the way, the Baldwin podcast is excellent - there's a new one every two weeks or so, and the conversations revealing. (The one with Billy Joel is a favorite of mine.) "Here's The Thing" is one of my favorite podcasts, along with "Off Message" from Politico and the new Tony Kornheiser podcast.)

    Published on: September 29, 2016

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

    • Amazon-owned Zappos said yesterday that it is launching its first-ever loyalty program, described as a four-tier system that "will allow customers to earn Rewards Points towards future purchases, get free expedited shipping on all orders, and receive early access to exclusive products and sales."

    The company says that customers can earn 10 points for every dollar spent, 50 points just for logging into Zappos from any device, and 100 points for writing product reviews; in addition to getting expedited shipping, the company says it will give members a "dedicated customer service phone number."

    I have to be honest here. It is hard to imagine Zappos providing better service or faster shipping ... I routinely find that Zappos defies the laws of physics when shipping items, getting them to me amazingly fast.

    I do like the idea that as a way of celebrating the new program, Zappos says that it "will surprise 1,000 customers at random today by shipping customers one item from his or her 'Favorites Wishlist'." I have a pretty good wishlist, so now I'm holding my breath...



    • The Chicago Business Journal reports that Starbucks and Whole Foods have both opened stores in "Englewood, one of the most economically-challenged, violence-riddled neighborhoods on the city's south side."

    "Hopes are high among executives with both companies," the story says. "But this is an experiment whose outcome is anything but certain. The biggest question looming over the two store openings is whether Englewood residents will frequent the two stores. Or more to the point, whether many of them can even afford to buy at them."

    There is a political component to the openings: They are described as being "part of Chicago Mayor Rahm Emanuel's plan to show that he cares just as much about his African American constituency as he does the rest of the city. Over the past year many African-American residents have turned against the mayor with a vengeance amid allegations that the mayor may have had a hand in keeping the video of the Laquan McDonald shooting by police under wraps until after he was re-elected for a second term."


    • Fast casual restaurant chain Cosi has filed for bankruptcy protection and is attempting to sell itself after having closed 29 stores. The company, which now has 76 stores still operating, says it has assets of between $10 million and $50 million and the same amounts in debt.
    KC's View:

    Published on: September 29, 2016

    On Tuesday morning, a number of MNB readers wrote in to complain that the formatting on the home page was kind of screwy - nothing was where it was supposed to be, the fonts were messed up, and it was hard to navigate.

    They wondered if this some sort of new design, and questioned whether the problem was on our end, or if they were having computer issues.

    The answer is that the problem was all on our end, and it took about an hour to figure out where the goblin was and get him out of the machinery. The irony was that I had the same question - I was in a hotel with lousy internet, and figured that the problem was connected to that.

    Thanks to the folks at Webstop (which powers MNB each day) for all their hard work in correcting the issue.

    Mea culpa, mea culpa, mea maxima culpa.

    KC's View:

    Published on: September 29, 2016

    ...will return.
    KC's View:

    Published on: September 29, 2016

    Despite losing to the New York Yankees 5-3 last night, the Boston Red Sox clinched the American League East championship yesterday when the Baltimore Orioles defeated the second-place Toronto Blue Jays 3-2.

    Not only did the Red Sox win the AL East, but the team accomplished a last-to-first rebound for the second time in five seasons. The Red Sox won the 2013 World Series, then finished last in the division in 2014 and 2015.
    KC's View:
    I am, of course, rooting for the Mets to go to the World Series. (They have to get into the playoffs first, of course.) But if the Mets don't make it, I hope that it ends up being a Boston Red Sox-Chicago Cubs series ... it would be classic.