retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: November 14, 2016

    by Kevin Coupe

    There was an interesting story in the New York Times over the weekend about companies and corporate leaders that found themselves in trouble in the days after election because of positions - positive and negative - taken toward the winner.

    The Times writes that "Matt Maloney, the chief executive of the online food delivery company GrubHub, found himself in a clash of business and politics this week after he sent an email to employees on Wednesday that appeared to say that anyone who disagreed with the company’s policy of inclusion and diversity should resign."

    At the same time, "the footwear company New Balance also encountered a post-election backlash after its vice president for communications, Matt LeBretton, said after Mr. Trump’s victory that 'we feel things are going to move in the right direction'."

    In the case of GrubHub, the initial email said: "As we all try to understand what this vote means to us, I want to affirm to anyone on our team that is scared or feels personally exposed, that I and everyone else here at GrubHub will fight for your dignity and your right to make a better life for yourself and your family here in the United States ... If you do not agree with this statement, then please reply to this email with your resignation because you have no place here."

    That email was interpreted by some - and it got a lot of currency when being reported in the media - as suggesting that anyone who voted for Donald Trump was not welcome. When I read the email, for the record, that's not what I saw ... I felt it was a way of communicating a philosophy of inclusion at a time when some people feel that the national winds have shifted in a different direction.

    This is not to say that the United States has become a non-inclusive nation. But it is factually accurate to say that there is a sense of unease among many people in the Hispanic, Muslim, LGBTQ communities, as well as among many women, who are worried about the cultural and political implications of the election. It is also factually accurate to say that some people - not all, and not a majority - have seen the election results through a "make America white again" prism. Both sides have made their feelings known, and bringing the nation together will not just take words.

    Feelings are raw, though, and GrubHub's Maloney felt obliged to refine his message: “I want to clarify that I did not ask for anyone to resign if they voted for Trump,” he wrote. “I would never make such a demand. To the contrary, the message of the email is that we do not tolerate discriminatory activity or hateful commentary in the workplace, and that we will stand up for our employees.”

    Over at New Balance, after the seemingly pro-Trump message went public, there was an immediate backlash, and the Times reports that "online, images of New Balance footwear being burned or thrown in the garbage were posted, and there were calls for a boycott."

    Like at GrubHub, clarifications seemed to be called for, and the company emailed the following message to media outlets: "“As the only major company that still makes athletic shoes in the United States, New Balance has a unique perspective on trade and trade policy in that we want to make more shoes in the United States, not less ... New Balance publicly supported the trade positions of Hillary Clinton, Bernie Sanders and Donald Trump prior to Election Day that focused on American manufacturing job creation and we continue to support them today."

    I happen to be a big New Balance user, and for the record, none of this stuff really matters to me. I'm not burning my running shoes, and when I need new ones, I'll buy New Balance. I like the quality, they fit, and I approve of the company's commitment to US manufacturing.

    The thing is, I try hard not to take knee-jerk positions. I am a believer in nuance, and I think everybody has to choose an appropriate path. I think that Trump is entitled, as a matter of his election, to shape the government that he feels will best serve the country and match his own vision ... I think that President Barack Obama and Hillary Clinton have been correct in their approach to defeat and the orderly transfer of power ... and I think that the nonviolent protestors have every right to take to the streets to express their opinions. (I have no tolerance for violent demonstrations nor for the scum who scrawl swastikas on walls ... but I don't think this constitutes a knee-jerk position.)

    But, the GrubHub and New Balance experiences certainly are Eye-Openers, if only because they illustrate the raw emotions and exposed nerves of the American population. Companies and corporate leaders need to be careful. Words matter. Deeds matter. Take care.

    Last week, when we reported on the passing of iconic singer/songwriter Leonard Cohen, one MNB reader pointed to me to a song of his with which I was not familiar. It is called "Democracy," and the lyrics include the following passage:

    Sail on, sail on
    O mighty ship of State
    To the shores of need
    Past the reefs of greed
    Through the squalls of hate
    Sail on, sail on, sail on, sail on...

    Rough seas ahead, I think.
    KC's View:

    Published on: November 14, 2016

    The Orange County Register reports on the renovation of a nine-year-old Whole Foods store in Tustin, California, pointing to what to some appears to be an inconsistency in the company's approach.

    Here's how the Register frames the story:

    "When Whole Foods Market opened a megastore in Tustin in 2007, it boasted premium services from a seafood-grilling center to wine and tea bars.

    "But after surviving a Great Recession that forever changed consumer buying habits, the Orange County store is unveiling a major overhaul to meet consumer demand for chef-driven dining, value, convenience and personalization. The remodeled store, the biggest overhaul since it opened, features easier-to-navigate aisles, a wider selection of takeout foods, order-ahead coffee service, meat value packs, expanded selection of craft beers, a self-serve pizza station and more express checkout lanes.

    "Yet the centerpiece of the year-old makeover has little to do with shopping for GMO-free crackers or organic hemp nut ice cream. In fact, no shopping cart is required. The 60,000-square-foot market, a key anchor at the District shopping center, has added two dining venues: gourmet sandwich chain Mendocino Farms and the Hangar Bar."

    At another remodeled Whole Foods, in El Segundo, California, the company "unveiled a Kogi restaurant; it also recently added a bar. The Kogi eatery is popular Los Angeles chef Roy Choi’s second food venue inside a Whole Foods. Last year, the food truck pioneer opened Chego at a downtown Los Angeles store."

    The question raised by the story is whether these efforts will address the problems that Whole Foods seems to have - the image of high prices, the seeming lack of appeal to millennials.
    KC's View:
    I suppose it is possible that Whole Foods wants to be even more exclusive and upmarket with its flagship format, and will use its 365 format to address the other issues in select markets. (Which would mean, I suspect, that we could see a number of traditional Whole Foods stores could be converted to the 365 format.) I'm still not convinced that 365 works as a long-term plan...but I'm willing to give it a chance to play out.

    That said, MNB fave Burt Flickinger, managing director of retail consulting firm Strategic Resource Group, is quoted by the Register as saying that the var program in Tustin seems "really ill-advised" and "an expensive initiative when they have so much more to fix.” And he says that the Whole Foods dining experiment is a waste of “productive space."

    I keep getting the sense that Whole Foods may be throwing stuff against the wall to see what sticks.

    Published on: November 14, 2016

    Amazon announced this morning that it is expanding its home services business - which essentially competes with the likes of Angie's List - to 20 new metropolitan areas in the US. The expansion brings to 50 the number of markets served by Amazon Home Services, with the company saying it now has more than 1,200 unique services being offered by close to 60 professions.

    The 20 new metro areas are: Santa Rosa, CA; Ventura County, CA; Boulder, CO; Greater Bridgeport, CT; New Haven, CT; Brevard County, FL; Cape Coral, FL; Sarasota, FL; Indianapolis, IN; Ann Arbor, MI; Raleigh, NC; Trenton, NJ; Las Vegas, NV; Cleveland, OH; Allentown, PA; Lehigh Valley, PA; San Antonio, TX; Milwaukee, WI; Richmond, VA and Hampton Roads VA/NC.

    The company says that "Amazon Home Services features handpicked pros offering upfront pricing on hundreds of helpful services. Local service providers opt-in to where they operate and the services they provide. Customers purchasing items on Amazon that require assembly or installation can include the service as part of their checkout process, or they can read reviews and schedule services directly."
    KC's View:
    This is just another page from the Amazon playbook ... it expands the ecosystem in which it hopes that Amazon will be the first, best choice (or at least an option to be consulted) of consumers for pretty much everything ... and it positions Amazon has being not just a source of product, but an increasingly expansive resource.

    Published on: November 14, 2016

    There is a terrific piece in the New York Times about some introspection taking place at Facebook regarding the role it may have played in the 2016 elections ... and it is a subject that could have implications for every business and business leader.

    "Facebook has been in the eye of a post-election storm for the last few days, embroiled in accusations that it helped spread misinformation and fake news stories that influenced how the American electorate voted," the Times writes. "The online conversation among Facebook’s executives on Tuesday, which was one of several private message threads that began among the company’s top ranks, showed that the social network was internally questioning what its responsibilities might be."

    The story goes on: "Some employees are worried about the spread of racist and so-called alt-right memes across the network, according to interviews with 10 current and former Facebook employees. Others are asking whether they contributed to a 'filter bubble' among users who largely interact with people who share the same beliefs.

    "Even more are reassessing Facebook’s role as a media company and wondering how to stop the distribution of false information. Some employees have been galvanized to send suggestions to product managers on how to improve Facebook’s powerful news feed: the streams of status updates, articles, photos and videos that users typically spend the most time interacting with."

    To be clear, not all the criticisms were aimed at one side of the political equation. The Times notes that "in May, the company grappled with accusations that politically biased employees were censoring some conservative stories and websites in Facebook’s Trending Topics section, a part of the site that shows the most talked-about stories and issues on Facebook. Facebook later laid off the Trending Topics team."

    The story is worth reading here, and here's why.

    While not everybody at Facebook (like founder/CEO Mark Zuckerberg, for example) publicly accepts the premise that Facebook has that kind of outsized influence in either political direction, I think that it actually is hard to argue that social media in general has enormous influence in the way people think and act. Some will think this is a good thing, and some, not so much; I suspect that most people's positions will depend on whether they won the argument or not.

    But I think this is important for business leaders to read and absorb, because as much as these social media platforms can influence voter opinion, they also can have a profound impact on consumer behavior.

    To be clear, some of what appears on the internet is uplifting and designed to appeal to the better angels of our nature. But much is designed to appeal to the basest of instincts, beliefs and personal conduct.

    To pretend otherwise is to be foolish.
    KC's View:

    Published on: November 14, 2016

    The New York Times reports on how the leadership at Newman's Own, the CPG brand created by actor/philanthropist Paul Newman to fund a wide variety of charities, is having to make "more of a show of its record of magnanimity, rolling out a marketing initiative aimed at millennials who might not recognize the famous face of the brand and might have little to no knowledge of its altruistic story.

    "For a no-frills company that has tried to avoid the spotlight — its celebrity co-founder notwithstanding — the new promotional effort is an unusual step. But it follows a growing pattern among large corporations to highlight their philanthropic work to appeal to a younger audience. Millennials especially have demonstrated a propensity to favor companies with a generous mission."

    The Times writes that "the foundation, which is funded entirely through sales of Newman’s Own products and does not accept donations, gave away $260.8 million before Mr. Newman’s death and $224.4 million since then, or about $28 million annually since 2008. But only a third of Newman’s Own customers said they realized the company gave away its profits," and even fewer millennials.

    Among the things it is doing is "rewording and repositioning the 'All Profits to Charity' banner that typically frames Mr. Newman’s face. The new label, which is expected to start appearing in stores in December, will be more prominently located on the products. The wording has also changed to '100 Percent to Charity,' which Newman’s Own feels is a slight but significant clarification to consumers."

    And, Newman's Own is taking to social media to be more upfront about its mission, goals and achievements.
    KC's View:
    First of all, kudos to Newman's Own and its late founder for creating something so effectively and sustainably philanthropic.

    Second, let's face it ... I'm guessing that more millennials would think of Paul Newman, who died in 2008, as they guy from the spaghetti sauce jar, rather than the actor from so many great movies and citizen who was highly engaged in many public policy debates during his lifetime.

    One of the things that every company has to do is continue to communicate and refine messages so that they are relevant and resonant to the audience. You can't just assume that everybody gets it.

    Published on: November 14, 2016

    Internet Retailer reports that Amazon-owned Zappos for the first time is embracing a pricing model that will automatically adjust prices to match online competitors "on selected products." The story says that the program "started Oct. 31 and is currently scheduled to run through Nov. 20, although Zappos says it may extend the offer."

    “We are constantly trying to up our value propositions and listen to customer feedback and feel Zappos Price Promise will truly help our customers this holiday season,” says Joe Grusman, director of marketing acquisition and emerging platforms at Zappos.

    Bloomberg reports that "Alibaba Group Holding Ltd. broke its Singles’ Day sales record with room to spare, offering assurances about the strength of the Chinese consumer despite the nation’s economic slowdown ... Sales on its e-commerce platform reached 102 billion yuan ($15 billion) shortly before 8 pm in China, easily topping last year’s total of 91.2 billion yuan with about four hours left to run. Dwarfing both America’s Cyber Monday and Black Friday, the 24-hour online promotion is closely watched for clues on the health of the economy and its largest online retailer."

    The story explains that "billionaire Jack Ma’s Alibaba pioneered the annual shopping spree in 2009 and has since transformed it into a social phenomenon, replicated by rivals including Inc. and now involving thousands of marquee labels across the world."
    KC's View:

    Published on: November 14, 2016

    • Last week, MNB took note of a CNBC story about how Starbucks says that "since making a commitment that it would hire at least 10,000 veterans and military spouses by the end of 2018, it already has hired more than 8,000. And, "the Schultz Family Foundation has committed $30 million to help veterans with the challenges associated with transitioning successfully into the civilian workforce."

    To be fair, there are a lot of companies out there that are doing the same thing. One of them is Amazon, and the Seattle Times had a story over the weekend about Ardine Williams, a captain in the U.S. Army Signal Corps during the 1980s, currently leads efforts there "to staff up Amazon Web Services, an Amazon division that has more than 6,000 jobs open worldwide, in the midst of a veritable war for talent among technology titans. She wants to open the door to as many veterans as she can who are a 'great fit,' she says, for the company."

    The Times notes that one of the intriguing Amazon offerings is "a 10-week internship to armed-forces personnel on active duty about to transition out of the service."
    KC's View:

    Published on: November 14, 2016

    Robert Vaughn, who came to fame as one of The Magnificent Seven, then became a TV star for four seasons as "The Man from U.N.C.L.E.," and then went on to become a popular character actor in everything from Bullitt to "Law & Order," passed away last Friday. The cause was acute leukemia. He was 83.
    KC's View:

    Published on: November 14, 2016

    Responding to one of our stories from last week, MNB reader Jack Di Salvo wrote:

    IMHO, a Dollar General in a convenience format will be an incredible success, providing they bring the same pricing they have in their rural stores.  Saw the on line photos of the layout and they look very up class.

    On another subject, from MNB reader Jerome Schindler:

    Transparency.  What a concept.  Buyer beware.  The means taken to avoid such transparency reminds me of the song "50 ways to leave your lover".

    Opening up a package of two luscious looking prepackaged thick pork chops this evening I was again made aware that what you see is often not what you get.  The good side of the cut is face up, the bad side is face down.  And the label is often positioned to hide significantly less than desirable factors.  My nearby Kroger store is a master of this deceit, though it happens elsewhere as well, including at Sam's Club and Costco.  This all leads to a them versus us mentality eroding trust in the retailer.  Some years ago our local Big Bear
    chain (since bought out by Penn Traffic and closed as part of their bankruptcy) had a brief policy of "bad side up". Transparent meat trays instead of opaque white styrofoam would be a welcomed middle ground. I try to buy my meat from the butcher's case so I can examine it front and back but that is often not an option.

    Got the following email responding to Michael Sansolo's column last week about Sprint's new ad campaign about how there is only one percent difference separating most cell phone systems ... and how that one percent can be extraordinarily important depending on where you want to use your phone:

    I wholeheartedly agree with your assessment of Sprint.  A couple of years ago I signed up with Sprint because it was “cheaper.”  I soon found out why with all of the dropped calls (even in the LA area) and cancelled the service.  It cost me $350 to cancel because I had kept the phone and service beyond the trial period.  It was a great reminder that (I am totally paraphrasing) that I think a notable American said, “The bitterness of poor quality is remembered long after the sweetness of low price has faded from memory.”  When you sign up for cell phone service you expect it to work.  A lesson learned the hard way by me.

    One MNB user had a thought about the plastic bag ban voted in by California residents:

    I'm an avid MNB reader and a California resident that's been living the ban for the last 6 months or so. I manage a grocery store and am in a county that has been restricting plastic bags for a while.

    My takeaway: it works to reduce plastic. After the initial public grumbling, sales of reusable bags are off the charts and we no longer burn through a full pallet of plastic bags in a few days. We should definitely put this in the win column.

    One of the things that came up last week within the context of the California bag ban was how the Golden State in so many ways seemed to be going in the opposite direction from much of the rest of the country. Some are even calling it the "Rebel State."

    From MNB reader Ray England:

    Rebel State? Well, I guess one could call it that since the rest of the country came to its senses Tuesday and California did not! I moved to the Central Valley of California three years ago and if anyone was wondering what a third term of Obama would look like, just come on out and find out for yourself. Talk about Crony Capitalism, supermarkets and other retailers got together with environmentalists on this plastic bag ban creating an unholy alliance. Californians now have to pay retailers $.10 for each and every plastic bag they use…..and just where does this revenue go? Back to the retailer. That’s right, what once was a supply expense is now a revenue stream; pretty smooth move. I guess I can’t blame them with a $15.00 minimum wage staring down their throats. It’s amazing that a state this large and diverse is held hostage by what folks in two major population centers; San Francisco and L.A. want…They rule the roost.

    That's what major population centers do. It is called democracy.
    KC's View:

    Published on: November 14, 2016

    In Week Ten of the National Football League...

    Chiefs 20
    Panthers 17

    Broncos 25
    Saints 23

    Rams 9
    Jets 6

    Packers 25
    Titans 47

    Falcons 15
    Eagles 24

    Vikings 20
    Washington 26

    Texans 24
    Jaguars 21

    Bears 10
    Buccaneers 36

    Dolphgins 31
    Chargers 24

    49ers 20
    Cardinals 23

    Cowboys 35
    Steelers 30

    Seahawks 31
    Patriots 24
    KC's View: