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    Published on: October 12, 2016

    by Kevin Coupe

    The Wall Street Journal is reporting that Amazon plans to push "deeper into the grocery business" with a chain of convenience-style stores and pickup depots that would allow it to more effectively occupy the so-called last mile between retailer and consumer.

    The initiative reportedly is known internally as Project Como. Amazon is not commenting on the report for the record.

    According to the story, sources tell the Journal that Amazon "aims to build small brick-and-mortar stores that would sell produce, milk, meats and other perishable items that customers can take home, these people say. Primarily using their mobile phones or, possibly, touch screens around the store, customers could also order peanut butter, cereal and other goods with longer shelf lives for same-day delivery. For customers seeking a quicker checkout, Amazon will soon begin rolling out designated drive-in locations where online grocery orders will be brought to the car, the people said. The company is developing license-plate reading technology to speed wait times."

    At least in the short term, the stores would be exclusively for Amazon Prime Fresh subscribers.

    The Journal writes that the bricks-and-mortar effort is designed to allow Amazon to capture the business of food shoppers who are not necessarily ready - yet - to order food, especially fresh food, online. Plus, there is a clear economic incentive...

    The average supermarket shopper spends $5500 a year in the store, while average Amazon Prime shoppers - by definition, the retailer's best and most loyal customers - spend roughly half that. Amazon, to put it simply, wants a bigger piece of the action.
    KC's View:
    It does not sound like hundreds of these will suddenly populate the landscape virtually overnight. It actually sounds more like Amazon will begin testing the format in select markets sometime next year, and that a national rollout will depend on the degree to which it works.

    There have been reports that Amazon plans to open a test grocery store in Seattle as soon as the end of the year, which may provide some hint of where it is headed. And Tom Furphy and I will do a deep dive on this in our next "Innovation Conversation."

    I've long been ambivalent about the idea of Amazon opening so many bricks-and-mortar stores, simply because it could mean that it has decided to play the same game as so many traditional retailers, which I'm not sure is the smartest way to go. But a couple of things seem to have changed.

    First of all, you've got Walmart making a major investment in e-commerce, and Amazon may feel that it cannot allow the Bentonville Behemoth to have so much of the so-called "last mile" to itself.

    And, it may be that Amazon has looked at the success of its Amazon Books store in Seattle and come to the conclusion that the template can be adapted to other categories, and that is what is driving this decision. I know that one of the smartest retailers I know looked at Amazon Books and said it was the most impressive and potentially threatening formats he'd ever seen, mostly because it was so adaptable. (I came to much the same conclusion here.)

    I'm not sure that competing retailers need to be afraid, but they certainly need to be aware. Very aware. Because the competitive wars are likely to become even more intense, and retailers have to be totally engaged.

    Compete is a verb. You have to get busy. Now.

    Published on: October 12, 2016

    by Kate McMahon

    In a down-and-dirty presidential election season like no other, even two innocent candy makers are being dragged into distasteful debate.

    Or as one Twitter user wrote: “Tic Tac headquarters def(initely) getting a sympathy card from Skittles tomorrow.”

    To recap ... Skittles made news last month when Donald Trump Jr. tweeted a meme comparing Syrian refugees to poisonous Skittles in a bowl of the colorful candies. And then Tic Tac rocketed to the top of the trending charts over the weekend when the now infamous Donald Trump "Access Hollywood" video was released.

    Both stories sparked an intense backlash on social media, and plenty of material for late night hosts and comedians.

    "Saturday Night Live" immediately spoofed the 2005 Trump tape, a lewd conversation in which the GOP presidential nominee said he needed some Tic Tacs “just in case” he started kissing an unsuspecting soap opera actress.

    “Now if you’re a woman and hear Tic Tacs shaking in someone’s pocket, it’s like hearing the Jaws theme,” said SNL’s Colin Jost, and the jokes continued.

    Beyond the tweets and politics, for the purposes of MNB I think the more relevant and notable issue is how the two brands reacted to the unwanted publicity.

    Tic Tac USA, which is owned by the Italian confection giant Ferrero, responded the day after the story broke with this statement: “Tic Tac respects all women. We find the recent statements and behavior completely inappropriate and unacceptable.”

    The timing and wording was comparable to the terse statement issued by Skittles, which is part of Mars-owned Wrigley: “Skittles are candy. Refugees are people. We don’t feel it’s an appropriate analogy. We will respectfully refrain from further commentary as anything we say could be misinterpreted as marketing.”

    Both Skittles and Tic Tac released the statements on their corporate Twitter accounts, @MarsGlobal and @Tic Tac USA, and they do not appear on either candy maker’s Facebook pages.

    While corporate image consultants continue to debate how Skittles and Tic Tac should handle the controversy, I think the answer is clear. A timely, succinct statement disassociating the brand from such statements is mandatory. This isn’t about tax reform or Supreme Court vacancies, but rather a humanitarian refugee crisis and the misogynistic objectification of women. To say nothing is simply not acceptable.

    Skittles has had experience navigating turbulent waters. In 2012, the candy was inextricably linked to the shooting death of Florida teenager Trayvon Martin, and became an emblem of the racial protests that followed. The company offered condolences and then said it felt it “inappropriate to get involved or comment further as we would never wish for our actions to be perceived as an attempt of commercial gain following this tragedy."

    Again, I think that was the appropriate response in this case, and set a wise
    precedent for the refugee comment.

    Given the salacious nature of the Trump tape, it’s likely Tic Tac jokes will continue to play out on social media through November 8th and beyond. Particularly when its classic slogan was “Put a Tic Tac in your mouth and get a bang out of life.”

    Comments? As always, send them to me at .
    KC's View:

    Published on: October 12, 2016

    Blue Bell Creameries has expanded its voluntary recall of ice cream containing cookie dough because of worries about listeria contamination, USA Today writes. No illnesses have yet been reported.

    According to the story, "Last month, Blue Bell said they were recalling two types of ice cream over concerns that a cookie dough ingredient supplied by third-party supplier Aspen Hills Inc. could contain listeria. On Monday, the Brenham, Texas-based ice cream maker expanded the recall to all products that contain cookie dough." The recalled product was distributed in Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

    The USA Today story noted that all Blue Bell ice cream was recalled last year because of listeria contamination connected to 10 illnesses and three deaths; distribution resumed when "test production at its facility in Sylacauga, Ala., came back negative for contamination."
    KC's View:
    I know that loyalists seem to believe that in the end, all this stuff won't hurt Texas-based Blue Bell. Maybe that's just a sense that Texans have a stronger stomach for this stuff than other people.

    But I think the anecdotal evidence seems to suggest that this is a company that may have systemic problems with how it sources and makes its products. And I know that Blue Bell has had enough problems that I (admittedly, not a Texan) cannot imagine ever buying its ice cream. Ever. Again.

    Published on: October 12, 2016

    The World Health Organization (WHO) is urging a global public policy that would have nations imposing taxes on sugary drinks as a way of battling the obesity epidemic, the New York Times reports.

    According to the story, WHO is fortifying its policy recommendation with research that it says supports the approach. The Times writes that "a tax on sugary beverages raising their price 20 percent would result in a proportionate reduction in their consumption, the agency said. That would advance the fight against obesity, which has more than doubled since 1980. About half a billion adults were obese in 2014, roughly 11 percent of men and 15 percent of women."

    The Times goes on: "Obesity began rising in rich countries several decades ago, but is now taking hold in middle-income countries like China and Mexico. Public health experts, alarmed by the trend, are studying policies that countries can enact to fight it.

    "One way is to tax sugary drinks, like sodas, fruit drinks, energy drinks and iced teas. They have been linked to obesity, diabetes and tooth decay. Supporters of the taxes argue that discouraging consumption of such drinks could help reduce the toll of those ailments."

    One other approach recommended by WHO: "Subsidies for fresh fruits and vegetables that reduce prices 10 percent to 30 percent can increase consumption of them," the Times writes.
    KC's View:
    Some of this consumption is driven by economics, but much of it is being driven by cultures where a) sugary drink companies have spent a fortune on advertising their products, and b) the ability to buy and drink such products is seen as aspirational. So just imposing taxes may not have the anticipated impact.

    That's assuming all these countries even can get together on such a public policy strategy. There are a lot more important issues on which nations cannot agree on anything. I'm not sure soft drinks will bring them together.

    Published on: October 12, 2016

    Amazon this week announced that it is launching a new streaming music service that undercuts the competition on price, covers tens of millions of songs, and offers an alternative to the likes of Spotify, Pandora and Apple Music.

    And, it is specifically keyed to its Echo/Alexa voice activated computer system.

    Amazon Music Unlimited, the Seattle Times writes, will have three pricing tiers: "Prime members can get the service for $8 per month, or $79 a year. Those who don’t belong to Amazon’s growing flock of loyal Prime subscribers would have to pay $10 a month, about the same chief competitors charge. A third alternative is a $4 monthly subscription for use on a single Echo, the company’s popular voice-activated speaker."

    The Seattle Times goes on: "At first sight, the service seems to be another sweetener by Amazon to its already perk-loaded Prime program, which for $99 a year also includes guaranteed two-day shipping, streaming video and a limited-catalog streaming music service. But it’s more than that.

    "By applying to music streaming its savoir-faire in machine learning, recommendation tools and voice computing, Amazon is creating a formidable alternative to Spotify for the millions of households that have Echo devices.

    "Amazon CEO Jeff Bezos said in a statement that through Echo, the service would provide the curious with a 'sense of the future of voice-controlled music'."
    KC's View:
    The real advantage that Amazon seems to have in this arena is that it has so much infrastructure with which it can offer real products and services ... to people who already may have demonstrated an interest in them. It is the ultimate in targeted marketing, and a demonstration of Amazon's sweeping ambitions.

    Published on: October 12, 2016

    This story is about cutting out the middleman ... and in this case, the middleman actually is the shopper.

    Louisville Business First reports that GE Appliances is coming out with a new line of dishwashers that " will keep track of how much dish detergent you have on hand and order more when you're low."

    The story goes on: "The dishwashers use the Inc. Dash Replenishment service, which allows connected devices to order goods from Amazon ... Users set up Dash Replenishment through the GE Kitchen app, using their Amazon account. They select the dish detergent pods they want to reorder and enter how many they currently have on hand.

    "The dishwasher then keeps track of how many are used and reorders the selected pods when low. Users can adjust when to reorder. For instance, they might have the service order new pods when they have fewer than 10 on hand."

    The line is similar to laundry washing machines that GE brought out earlier this year that do much the same thing with detergent and fabric softener.
    KC's View:
    This is all about capturing and keeping the sale, and creating an environment in which the consumer will never, ever go to the retailer to buy these specific detergent products. It is a small step in a long marathon, in which Amazon is trying to create the path of least resistance between its distribution centers and the customers it covets.

    Let's be clear. If you are a retailer and you lose this sale to Amazon, you're incredibly unlikely to get it back. Ever.

    Published on: October 12, 2016

    • Ahold Delhaize-owned Food Lion said this week that it has completed a $215 million revamp of 142 stores in the Charlotte, North Carolina, market, which it says "includes remodeling the stores, lowering prices, hiring hundreds of additional associates and giving back to local communities."

    Meg Ham, president of Food Lion, said in a prepared statement that the changes mean that "customers can easily find fresh, quality products at affordable prices, delivered with caring, friendly service every time they shop."

    Bloomberg reports that after several years of private equity ownership during which the emphasis has been on cutting costs and closing unproductive stores, Toys R Us now is "starting to put money back into operations, with an eye toward growing sales and traffic. For the first time in years, Toys R Us is building inventory." The company also is investing in e-commerce and partnerships that it hopes will enable it to grow the company and build on two recent quarters of strong sales.

    According to the story, "There are still plenty of obvious challenges. Amazon and other online toy sellers keep grabbing market share. Ditto for big-box stores such as Walmart and Target. And Toys R Us is fighting an all-encompassing retail malaise. But if Toys R Us can succeed in the holiday season  -- when the company generates 40 percent of its annual revenue and all its operating income -- then it may lay the groundwork for a second run at an IPO."

    • The National Association of Convenience Stores (NACS) is out with its monthly assessment of consumer confidence, reporting that "consumer sentiment increased slightly to 46%, a one-point increase from September ... The last time at least half of the population was optimistic about the economy was March 2016, when gas prices averaged $1.80 per gallon and 50% expressed optimism."

    The report goes on to say that "men continue to be more optimistic than women (49% vs. 43%). Younger consumers ages 18 to 34 are the most optimistic by age (54%) and consumers in the West (51%) are the more optimistic by region (51%)."
    KC's View:

    Published on: October 12, 2016

    • Tops Friendly Markets announced that Mark Lumadue, the company's Director of Logistics, has been promoted to the role of Vice President, Distribution.
    KC's View:

    Published on: October 12, 2016

    ...will return.
    KC's View:

    Published on: October 12, 2016

    In the National League Divisional Series, the Los Angeles Dodgers defeated the Washington Nationals 6-5, to even the best-of-five series at two games apiece.

    And the Chicago Cubs turned a four-run ninth inning into a 6-5 victory over the San Francisco Giants, completing a 3-1 game victory in the best-of-five series. The Cubs now will go on to face the winner of the Dodgers-Nationals series in the National League Championship Series.
    KC's View: