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    Published on: October 14, 2016

    by Kevin Coupe

    Yesterday, MNB took note of a Financial Times story reporting that Tesco has responded to price increases by Unilever in the UK by "removing Unilever products from its website and warning that some of the items could disappear from shelves if the dispute dragged on." Now, in this case Tesco said the price increases were related to weakening currency in the UK as a result of the Brexit vote, and it said that Unilever was taking inappropriate price increases. (We'll have more on the resolution of this controversy below.)

    I commented on this story, writing:

    I always sort of admire it when retailers position themselves as being agents for the consumer rather than sales agents for the manufacturer. I just think it is a better place to be ... and if that means occasionally delisting products to make a point to both constituencies, I'm okay with that.

    Which prompted MNB reader Kevin Mahon to respond:

    If you drew the distinction between a justified price increase and an arbitrary increase, I could respect your position. As stated, it is not respectful to many of your “manufacturer readers.” I am not ok with that.

    First of all, no disrespect meant.

    Second, I think we probably can agree that a price increase that seems justified to a manufacturer may seem less so to a retailer.

    Ideally, when a retailer comes to this conclusion, it is because it is representing what it perceives as the best interests of its customers. (It almost goes without saying that if a retailer stands up for its customers, it will be able to defend and even improve market share. So defending customer interests is not altruistic. Far from it.

    This is the larger point that I think needs to be made again and again. And I think it is an Eye-Opener.

    Almost two decades ago, Glen Terbeek wrote an excellent book called "The Agentry Agenda: Selling Food in a Frictionless Marketplace," which remains revolutionary in its premise - that retailers can be far more effective and efficient if they serve as agents for the consumer rather than sales representatives for manufacturers.

    I have agreed with that premise since the first time I read the book.

    (FYI ... "The Agentry Agenda" is out of print, but still, thankfully, available from third-party sellers on Amazon.)

    Here's the rub. When the retailer stands up for the customer, the supplier community wins as well. Because it all should begin and end with the shopper, and when retailers and suppliers get away from that core value, that's when they get in trouble.

    This is why I have always argued against the entire premise of slotting allowances, saying (and I am not alone in this) that they have a corrupting nature that does not serve the customer. (I've never met a supplier who thinks that statement disrespects them.)

    The Tesco-Unilever dispute was very specific. But the broader tensions between retailer and manufacturer ought to be resolved in only one way - on where the true bottom line ought to be, in the consumer's best interests.
    KC's View:

    Published on: October 14, 2016

    AFP reports that Amazon is saying that it plans to hire as many as 120,000 seasonal employees for the upcoming holiday season - 20 percent more than the company hired for such purposes just a year ago.

    Amazon says that it "turned 14,000 of those temporary positions from last year into regular full-time jobs, and hoped to increase that number this time around."

    AFP goes on to note that while Amazon's numbers are on the high end, it is not the only retailer engaging in holiday hiring. Macy's has said it plans to hire 83,000 seasonal employees for warehouses and stores, Target is hiring 77,500, and UPS "plans to take on 95,000 seasonal workers to meet holiday demands for deliveries."
    KC's View:
    There seems to be a lot of optimism out there about the economy and the holiday shopping season. I'm not entirely sure why ... I have this sort of pervasive sense of dread ... and I'm not entirely sure that it will be sustained as events unfold over the next month or two. I want to be optimistic, but I can't quite find it in my soul.

    Published on: October 14, 2016

    Accenture is out with its 10th annual Holiday Shopping Survey, making the following predictions:

    • "Forty-four percent of shoppers plan to spend more on their holiday shopping in 2016."

    • "Seventy-two percent of shoppers would be enticed by promotions or coupons to shop at a store they have not used in the last year."

    • "Shoppers are open to sharing personal information and shopping preferences with retailers in order to receive personalized offers."

    • "Webrooming and showrooming will be especially prevalent among U.S. shoppers with 81 percent planning to participate in each, an increase on 2015."

    • "Purchasing online with in-store delivery/pick up is most popular benefit among shoppers. Seventy-one percent said they are likely to purchase additional items during their in-store visit."

    • "Sixty-two percent of consumers cited shipping costs as the main frustration keeping them from purchasing more goods online, while long queues is the main frustration keeping consumers from purchasing more goods in-store."

    • "Seventy-two percent plan to do Thanksgiving Day/Night shopping online, also the dominant channel for Black Friday (cited by 64 percent of respondents)."

    • "The vast majority (84 percent) of shoppers this year said they check before looking or buying elsewhere."
    KC's View:
    The advantage of having adult children is that one can focus on finding one or two great presents, and the challenges of actually going to stores are a little less daunting. But if I had little kids, I think I wouldn't just be part of the vast majority that checks Amazon first, but also the percentage that doesn't necessarily check anywhere else.

    Published on: October 14, 2016

    Internet Retailer has a story about how "internet, e-commerce, mobile communications and urbanization are driving a revolution in retail, and, as a result, changing the nature of the warehouse as we know it."

    The argument is that distribution centers cannot any longer be cookie-cutter facilities places in remote locations. They have to be "highly varied in size, shape, purpose and intent, and deploy technology to meet rising customer service expectations. This means e-commerce managers have to think differently about the location of their distribution centers. Successful retail stores can thrive only to the extent that they are accessible to large numbers of customers. Just so, logistics spaces that serve e-commerce interests are also often best placed near population centers. That way they can better facilitate speedy 'last-mile' delivery."

    Which explains why Amazon has been building distribution centers pretty much everywhere for the last few years.

    You can read the entire story here.
    KC's View:

    Published on: October 14, 2016

    Reuters reports that Tesco "appeared to emerge victorious from a pricing row with Unilever on Friday, with its shares rising 4 percent and analysts saying Britain's biggest retailer had scored a public relations coup by casting itself as the consumer's champion."

    As reported yesterday on MNB, Tesco responded to price increases by Unilever in the UK by removing that company's products from its website and threatening that it would remove them from store shelves. Tesco argued that the price increases, which were blamed on a weakening currency that resulted from the Brexit vote (in which the UK decided to leave the EU), were not justifiable; Unilever said they were necessary to offset the higher cost of imported commodities, which are priced in euros and dollars, not the British pound.

    Reuters notes that the exact terms of the resolution have not been made public, but that "Unilever had probably at least partially backed down."
    KC's View:
    Three points here.

    First, the Reuters lede reinforces something I said in this morning's 'Eye Opener" - that Tesco "scored a public relations coup by casting itself as the consumer's champion."

    Second, it sounds like the coming months could be interesting in terms of UK supermarket competition. Reuters makes the point that "most analysts and economists believe sterling's recent slump - it is down about 19 percent against the dollar and about 16 percent against the euro since the June vote - will lead to higher prices, despite fierce competition between supermarkets." Which is interesting, since traditional retailers in the UK have seen their market shares fall consistently in recent years because of the impact of discounters such as Aldi and Lidl. The question then is, what will happen if prices start to go up across the broad.

    Finally, I have to wonder - and I do not have the answer to this - if the same thing would happen in the US if we were to take a Brexit-like approach to the global economy. Will all our prices go up? Just asking...

    Published on: October 14, 2016

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

    • CBL & Associates Properties, which owns, holds interests in or manages 144 properties, including 89 regional malls/open-air centers, in 31 states, announced that its shopping centers will be closed on Thanksgiving Day, opening at 6 am on Black Friday, November 25.

    While I've always understood that a lot of bricks-and-mortar stores were opening on Thanksgiving because they needed to compete with online retailers that never are closed, I have to say that I'm happy to see that there seems to be a minor trend in the opposite direction this year ... that a lot of retail employees are going to be able to spend their Thanksgiving at home, with their families. this strikes me as a good thing.
    KC's View:

    Published on: October 14, 2016

    • Sears Holdings announced this morning that Jason Hollar, the company's senior vice president of finance, has been promoted to the role of CFO. He replaces Robert Schriesheim, who left the company last May.
    KC's View:
    There are so few sales being generated by Sears Holdings properties these days that I suspect that Hollar only will need an abacus to do his calculations. That, and a prescription to Xanax.

    Published on: October 14, 2016

    ...will return.
    KC's View:

    Published on: October 14, 2016

    In game five of the final National League Divisional Series, the Los Angeles Dodgers defeated the Washington Nationals 4-3, taking the best-of-five game series 3-2 and moving onto the NL Championship Series, where they will face the Chicago Cubs.

    Over in the American League Championship Series, it will be the Toronto Blue Jays vs. the Cleveland Indians.

    And, in Thursday Night Football action, the San Diego Chargers defeated the Denver Broncos 21-13.
    KC's View:

    Published on: October 14, 2016

    It has been a really busy, crazy week, so I've hardly had the chance to do anything other than work. But I do have a couple of quick notes.

    First, I had dinner at Frontera Grill in Chicago last weekend ... and it was extraordinary. I'd never eaten there before, and I had an amazing red snapper served with a yellow mole sauce and rustic potato mash. I'm getting hungry just thinking about it.

    And the margaritas knocked my socks off.

    I can't wait to go back.

    Also, as I've noted here before, I like to take advantage of the fact that iTunes offers free viewing of pilot episodes of new television series. I usually don't ever watch additional episodes, but I find it instructive to see what people are producing.

    In this case, though, there were two series that I may want to follow. One is called "No Tomorrow," which is a sweet romantic comedy about a highly organized young woman who works for an Amazon-like company in Seattle, who meets a man who believes that the world will be hit by an enormous asteroid in about eight months. She doesn't necessarily believe him, but she is inspired to follow his lead and live her life as if there is "no tomorrow." It is an intriguing premise, and the performances are uniformly strong.

    The other is called "Speechless," and it is a rambunctious family comedy about an aggressive mother seeking to do everything she can for her son, a special need student unable to speak for himself. Minnie Driver is terrific in the lead role, and this show shows a unique ability to portray the entire family as unique individuals with their own needs ... and it has a piercing, irreverent approach to the whole concept of people with physical challenges. Great stuff.

    On the other hand, the new Kevin James comedy, "Kevin Can Wait," seems like it was produced 20 years ago, and was unearthed from a dusty video vault. Don't waste your time.

    That's it for this week. have a great weekend, and I'll see you Monday.

    KC's View: