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    Published on: December 2, 2016

    by Kevin Coupe

    It is yet another example of how traditional consumption habits are breaking down, and how businesses are adjusting to changed realities.

    Variety reports that "Universal and Warner Bros. are having discussions with theater chains about possibly limiting the amount of time between a film’s theatrical release and its debut on home entertainment platforms ... The studios are looking for ways to bolster home entertainment revenue, which is suffering from an 18% decline in DVD sales. The talks are the clearest sign yet that windowing, the industry term for the amount of time a film is in theaters, is going to be hotly debated in the coming months and that a major change in release patterns could take place as early as next year."

    The story goes on: "The studios have yet to determine whether or not the films will be just higher-priced rentals or will be available for purchase. Bloomberg reported that the time frame being weighed is two weeks to a month and that the price being considered is between $25 and $50. Insiders say that the price is likely to be on the higher end of that range and that a month delay between a film’s theatrical opening and its home entertainment bow is the most likely scenario. Theater owners would get a cut of the revenue in exchange for agreeing to the new windows."

    As someone who goes to more movies than most people - probably 30-40 a year, if I had to guess - I have to admit that I would find such a shift to be refreshing. There are some movies that one wants to see in theaters (Rogue One comes to mind) ASAP, but there are some that can wait a few weeks and that won't be hurt by being seen at home. Offering them for at-home viewing sooner will actually take advantage of all the marketing dollars spent upon initial release ... and if they can figure out a way for theatre owners to dip their beaks, this should be workable for all parties, especially consumers.

    But again, most importantly, it reflects something bigger - how traditional consumption habits are breaking down, and how businesses have to adjust to changed realities.

    It is an Eye-Opener.
    KC's View:

    Published on: December 2, 2016

    Starbucks CEO Howard Schultz announced yesterday that he will step down from the job next year and be succeeded by the company's COO/president, Kevin Johnson.

    The handover is scheduled for April 3.

    Schultz will remain as executive chairman. The Seattle Times reports that he now will "concentrate his efforts on long-term global strategy and innovation ... Schultz will be in charge of design and development of the company’s high-end Reserve Roasteries around the world, expansion of the Starbucks Reserve retail store format and the company’s social impact initiatives."

    The New York Times reports that "the move is likely to ignite renewed speculation about whether Mr. Schultz is paving the way to leave the company entirely to enter politics. His outspoken positions on social issues have led many people, including his closest friends, to say he may seek run for president. He has spent an increasing amount of time traveling around the country speaking publicly about the need to fix the 'dysfunction in Washington'."

    This is not the first time that Schultz has stepped down as CEO. In 2000, he handed the reins of the company over to Jim Donald, the former CEO of Pathmark. When the company rand into the headwinds of recession in 2008, though, Schultz fired Donald and returned.

    Since then, it must be noted, Starbucks has ridden the waves of economic recovery to a market value of $84 billion, up from $15 billion.
    KC's View:
    I'm a bit of a cynic about these things, as well as being an enormous fan (and, in recent years, a friend) of Jim Donald. So I have to ask: What's the over/under on when Schultz returns to the CEO job yet again?

    His office remains right door to Johnson's, and you can bet that as chairman Schultz will be in the loop on every decision. If the company runs into recessionary issues down the road, I think it is a pretty good bet that Schultz will be tanned, rested and ready.

    I'm a big fan of the Roastery concept, but I'm not nearly so sure of the Starbucks Reserve retail store format on which Schultz wants to lavish his time and attention. I keep wondering how it affects the perception of traditional Starbucks stores ...

    Published on: December 2, 2016

    Kroger said yesterday that its third quarter net sales were up 5.9 percent to $26.56 billion, with net income falling to $391 million from $428 million during the same period a year earlier.

    Same store sales, excluding fuel, were up 0.1 percent.

    Forbes reports that "company executives attributed the quarter's results to the widespread deflation in food commodity costs, which has seen the price of beef, pork and chicken drop as much as 18% compared to year-ago levels. The USDA's economic research arm recently said that by the end of the year, beef and veal prices will have declined by 6.75% to 5.75% percent for 2016 and will decrease another 1% to 2% percent in 2017. Given this environment, the USDA has warned that 2016 could be the first year since 1967 that retail food prices reflect annual deflation -- which is good news for consumer wallets, but something that is squeezing sales at companies like Kroger."

    Kroger CEO Rodney McMullen put it this way: "We’re in the middle of the cycle right now and it’s not fun."
    KC's View:
    "Middle of the cycle" means that the deflationary run, which usually lasts for five quarters or so, probably has another six months or so to go. Companies just have to do their best, understanding that there is a light at the end of the tunnel, and that they have to see the bright side and take advantage of the opportunity that deflation offers.

    McMullen's take: "A silver lining is that it reveals to us how we can run our business better. It is really tough when you're in it, but we'll be in a position to benefit from the changes we're making today once we're out of this cycle."

    Published on: December 2, 2016 has a story about how Amazon is saying that "four of its proprietary Echo and Fire devices outsold all other products purchased on its site over Black Friday weekend. The Amazon items were the Echo Dot, the Fire TV Stick with Alexa Voice Remote, its Fire tablet, and the Amazon Echo."

    According to the story, "Dave Limp, senior VP of Amazon devices and services, noted that three of the devices - the Dot, the 7-inch Fire tablet and the TV Stick - are all priced under $50, which is helping to make the company’s Alexa cyber assistant ever more pervasive."
    KC's View:
    I can't say this enough, because I think it is absolutely essential that retailers and vendors keep it top-of-mind ... all of these products are designed to make it easier for the people who use them to buy more and other stuff using those products.

    We now have four of these things at home, and not only are they in constant use, but I also can imagine a bunch of other places where I'd like to have them. I'm in the ecosystem ... maybe trapped in it ... and it doesn't seem like such an unpleasant place to be.

    Published on: December 2, 2016

    The Denver Post reports on the opening of a new Walmart store in Thornton, Colorado - a 4,000 square foot unit described as "one part convenience store, one part gas station and one part physical bet on the booming market for online grocery shopping

    "In addition to gas pumps and your typical convenience store fare — hot coffee, cold soda and snacks galore — at Walmart prices, Walmart Pickup with Fuel is home to a dedicated drive-through for picking up grocery orders placed through Walmart’s online grocery service."

    The story notes that the Thornton store is just the second of the format to be opened; the first has been operating in Huntsville, Alabama, since spring.
    KC's View:
    I'm intrigued. This is the kind of store that companies have to test and play with, just to see what consumers want. Some will succeed. All will teach retailers something.

    Published on: December 2, 2016

    Following the decision by Kellogg's to pull its ads from the controversial alt-right Breitbart website, saying that its approach does not synch with the company's values, Breitbart is firing back.

    Not satisfied with just calling Kellogg's decision un-American, Breitbart is now calling for a boycott of the company's products.

    Here's the statement issued by Breitbart on its site:

    "Kellogg’s offered no examples of how Breitbart’s 45 million monthly readers fail to align with the breakfast maker’s values. Indeed, the move appears to be one more example of out-of-touch corporation embracing false left-wing narratives used to cynically smear the hard working Americans that populate this nation’s heartland.”

    And Breitbart News Editor-in-Chief Alexander Marlow issued the following statement:

    "“Breitbart News is the largest platform for pro-family content anywhere on the internet ... We are fearless advocates for traditional American values, perhaps most important among them is freedom of speech, or our motto ‘more voices, not less.’ For Kellogg’s, an American brand, to blacklist Breitbart News in order to placate left-wing totalitarians is a disgraceful act of cowardice. They insult our incredibly diverse staff and spit in the face of our 45,000,000 highly engaged, highly perceptive, highly loyal readers, many of whom are Kellogg’s customers. Boycotting Breitbart News for presenting mainstream American ideas is an act of discrimination and intense prejudice. If you serve Kellogg’s products to your family, you are serving up bigotry at your breakfast table.”
    KC's View:
    To begin with, I have no idea what Marlow is drinking with his morning cereal. But it would probably be a good idea to switch to decaf.

    This is a bully who is looking for a fight. His arguments are absurd. Kellogg's isn't blacklisting Breitbart ... it is simply choosing to advertise in other places where they think their message fits better.

    If a company decides not to advertise someplace other than MNB, I don't take offense. I just assume that they found a better fit, and I wish them the best of luck. I know that MNB's editorial approach isn't for everyone, and I respect the decisions that every company has to make. My job is to do the best I can in terms of content, and hope that readers will read it and sponsors will follow them. Not get all whiny when someone decides not to advertise on MNB.

    I'm also amused by the claim that Breitbart is the "largest platform for pro-family content anywhere on the internet."

    Again, some Breitbart headlines: “Birth Control Makes Women Unattractive and Crazy." “Hoist It High And Proud: The Confederate Flag Proclaims A Glorious Heritage." "There’s No Hiring Bias Against Women In Tech, They Just Suck At Interviews.”

    Actually, I'm not amused. And I just have to say this:

    Not my family.

    One other thing.

    I'm buying some Frosted Flakes and some Special K today. (I may also, just on principle, order a Diet Pepsi, wear my New Balance sneakers, and figure out a way to order something from GrubHub.)

    Published on: December 2, 2016

    • The Dallas Morning News reports that H-E-B has decided to open two new Central Markets in the Dallas area, at Midway Road and West Northwest Highway in Dallas and at McKinney and Lemmon Avenue. 

    According to the story, "Both stores were among the six Sun Fresh Market stores that H-E-B purchased in August from RLS Supermarkets of Carrollton. The transaction was completed in September, and since then H-E-B has decided to sell the remaining four locations."

    • The Chicago Tribune reports that Albertsons-owned Jewel-Osco plans to open what is called its "swankiest, most contemporary" store to date on the corner of Clark and Division streets in Chicago, describing it as "the type of store where one might ruminate on the grocery list with a glass of wine and a fancy cheese platter." The location is near the city's Gold Coast, "a growing area with healthy incomes and limited grocery options."

    Scheduled to open next summer, "the 45,000-square-foot Jewel will have a 15,000-square-foot mezzanine level with a full-service bar and fresh food offerings to eat in-store. It replaces an older, smaller Jewel built in 1974, closed in June of last year and subsequently razed." The Tribune writes that "for Jewel-Osco, the store represents a commitment to changing with the times and expanding its footprint in the fiercely competitive Chicago grocery industry." And the company's president, Mike Withers, says it reflects a focus on "opening new stores and growing in the market."

    • Daymon Worldwide is out with a "Four Forces Shaping Success in Retail" report, saying that there are four trends that will dominate in 2017.

    They include "shopper participation," in which consumers want a greater role in how brands are created and marketed; "destination retailing," in which consumers look for experiences, not just to make transactions; "precision wellness," which includes things like DNA profiling that allow for customized and specific ways to address health issues; and a "redefinition of convenience" for a world that is increasingly urbanized and digital.
    KC's View:

    Published on: December 2, 2016

    The Associated Press reports that Michael James “Jim” Delligatti, the McDonald’s franchisee "who created the Big Mac nearly 50 years ago and saw it become perhaps the best-known fast-food sandwich in the world," died this week at age 98. The story says that Delligatti "ate at least one 540-calorie Big Mac a week for decades."
    KC's View:

    Published on: December 2, 2016

    ...will return.
    KC's View:

    Published on: December 2, 2016

    In Thursday Night Football, the Dallas Cowboys defeated the Minnesota Vikings 17-15.
    KC's View:
    FYI, I got an email yesterday from an MNB questioning why I hadn't covered something of particular interest to him - and, in truth, to me.

    Certainly not telling you what to do, but I was a bit surprised after seeing the breaking news last night and then hearing some of the discussion on MLB Radio about the 5 year Labor Deal that there was no mention of it anywhere today.

    In fairness, it may be a topic that needs a little more time to extract some of the lessons that can be applied to business in general (Including the all-important #1, “When you have a good thing going – Don’t get in the way and mess it up!”)

    In any case, 5 more years of baseball without a labor dispute during a time of growth and all sides focusing on making the game better is a great place to be in...

    First of all, feel free to tell me what to do. I'm always open to suggestions.

    You're right. A new five-year labor agreement between baseball owners and players - or, to put it another way, really rich people and slightly less rich people - is a very smart move on both sides.

    To be honest, though, I am more heartened by reports yesterday that the deal also includes a provision that from now on, the World Series home field advantage will go to the pennant winner with the best record. This abandons the absurd practice - a 14 year "experiment" - of awarding home field advantage to the league that wins the All Star Game.

    Now, if they could just get rid of the designated hitter rule in the American League, we could have a system in which both leagues play real baseball...

    Published on: December 2, 2016

    Assuming that everything is going on schedule, as you read this I'm under anesthesia, getting a combination colonoscopy/endoscopy. (If I were awake, I'd probably feel like a goat on a spit...)

    I just hope MNB makes sense this morning, since I've been working on it while simultaneously going through colonoscopy prep. It is hard to get any writing momentum going when there is all sorts of other momentum taking place. If you get my meaning.

    A couple of movies to mention this week...

    Allied is an interesting, romantic thriller of a World War II movie, directed by Robert Zemeckis, about a pair of spies who first find themselves fighting Nazis in Casablanca, fall in love, and then move back to England, where the wife is suspected of actually being a Nazi spy.

    The movie has classic ambitions; why else would it start out in "Casablanca"? And Brad Pitt and Marion Cotillard bring some old fashioned movie star glamour to their roles. And I have to say that I liked much of the movie, if only because it appealed to my yearning for adult movies without superheroes or comic book characters.

    It isn't great, though. I kept thinking that if Alfred Hitchcock had directed Allied, it would've starred Cary Grant and Ingrid Bergman, and probably would've been about 20 minutes shorter and a helluva lot sharper. I can't recommend it, but there are worse ways to spend a couple of hours.

    I also saw Moana, the new Disney animated movie the other day, and while I enjoyed it in the moment, I also found it to be unmemorable. It's no The Lion King. I have absolutely no memory of any other songs from Moana, and I can still warble "Hakuna Matata" from time to time in the shower. (Which is sort of amazing, since some of the songs are by Lin-Manuel Miranda of "Hamilton" fame.)

    There are two very good things about Moana, though. First, it features a female lead character who is Polynesian ... which is a positive cultural step forward. And second, it demonstrates that Dwayne Johnson, who voices (including the singing) the character of the demigod Maui, can pretty much do anything.

    If you have not watched "Westworld" on HBO the past nine Sundays, I urge you to catch up in time for this Sunday's season finale. "Westworld" is a sophisticated meditation on the old Michael Crichton movie about a theme park where robot hosts entertain human customers, by way of the old Patrick McGoohan "The Prisoner" TV series. It asks relevant questions about the nature of humanity, and is consistently and provocatively entertaining. And, it features some wonderful performances - Thandie Newton is a revelation, Evan Rachel Wood and Jeffrey Wright are terrific, and Anthony Hopkins is ... well, he's got yet another indelible character to add to his resume.

    I can't wait for Sunday night. And I'm already looking forward to Season Two.

    That's it for this week. Have a great weekend, and I'll see you Monday. (Assuming I survive the colonoscopy...)

    KC's View: