retail news in context, analysis with attitude

Published on: December 5, 2016

by Kevin Coupe

As part of a broader series on leadership and productivity, Fast Company has an interview with Shonda Rhimes, the CEO of ShondaLand, the producer of television programs such as "Gray's Anatomy," "Scandal," and "How To Get Away With Murder." Producing that much television in a single season takes a lot of time, talent and energy, and it is not an auteur's environment - it requires enormous collaboration and coordination.

Like a lot of businesses.

And I was intrigued by one specific thing she said:

"I think my biggest problem with time is that I need most of it for creative space, [but] there is a giant part of my job that is running my business. So people try to come into my office with fires that need to be put out, many of which they could solve themselves if they did not have me in front of them ... And at work I have a rule that you're not allowed to come into my office unless you're coming into my office with a solution to a problem, and not with a problem."

She goes on:

"I want you to come into my office with some plans for what you think can happen. Don't come in with a fire that's already lit - I want to know how you think the fire is gonna be put out, and then we can talk."

I think that's a pretty good approach, whether one is a CEO or a store manager.

It is an Eye-Opener.

Published on: December 5, 2016

Reuters reports that Walmart has agreed to pay $7.5 million to settle a lawsuit that accused it of discriminating against gay employees by not providing health benefits to their spouses.

The settlement must still be approved by a federal judge.

As part of the agreement, which is designed to resolve a 2015 lawsuit that was filed in Boston, Walmart issued a statement about how inclusion and diversity are key corporate values: "We will continue to not distinguish between same and opposite sex spouses when it comes to the benefits we offer under our health insurance plan," said Sally Welborn, a senior vice president with the company.

The lawsuit originally was filed by Jacqueline Cote, who, as Reuters reports, "worked at Wal-Mart stores in Maine and Massachusetts since 1999." The suit said that "her wife, Diana Smithson, developed cancer in 2012 and Wal-Mart's denial of insurance coverage led to more than $150,000 in medical debt. Smithson died in March."

The story goes on to note that "federal employment discrimination laws do not explicitly provide protections for gay workers. But LGBT groups and the Obama administration have aggressively pushed the argument that bias against gay people is a form of sex discrimination, and three federal appeals courts are currently considering that claim."

Meanwhile, Bloomberg has a story about how Walmart's decision to add insurance coverage for transgender workers earlier this year put it in the company of "more than 500 companies taking a bigger role in advancing the rights of LGBT employees in a competitive market for labor. Companies from Apple Inc. to Xerox Corp. are pushing to protect employee rights and improve gender equality."

However, this may run to legislative trends. Bloomberg writes that "in 28 states, it’s still legal to fire a person for being gay, and President-elect Donald Trump has said he will rescind President Barack Obama’s executive orders, some of which aim at workplace diversity." However, "some companies, including Salesforce.com Inc., PayPal Holdings Inc. and Dow Chemical Co., have also started working with LGBT rights advocates on plans to take on expected anti-LGBT legislation at the state level."

The Bloomberg story goes on to note that "Wal-Mart, the largest private employer in the U.S. and the world’s biggest retailer, has been trying to improve its image to appeal to more customers, particularly on the east and west coasts, where its reputation for low wages and poor benefits has hurt its ability to open new stores." One of the ways it has been doing so has been to improve its reputation for diversity.

And, the New York Times writes, "The agreement also signals how legal doctrine on discrimination against gays and lesbians is rapidly changing, making it increasingly likely to be considered a form of sex discrimination. Such a doctrine would generally make it easier for gay and lesbian plaintiffs to prevail in court, as federal civil rights laws prohibit sex discrimination."

Published on: December 5, 2016

The Wall Street Journal reports that pork producer Smithfield Foods "plans to cut a quarter of its carbon emissions over eight years, a voluntary move the company hopes will trim costs and burnish its brand." Thew company says that it "will scale back applications of fertilizer used to grow grain for pig feed and install systems to extract natural gas from manure, among other measures. The Environmental Defense Fund, which worked with Smithfield on the plan, said it is the most ambitious commitment yet by a U.S. meatpacker to curtail greenhouse-gas emissions."

Smithfield CEO Ken Sullivan, the story says, sees a business case for making the shift and "expects more energy-efficient operations to save money and boost Smithfield’s standing in restaurants and grocery stores. Two-thirds of U.S. consumers will pay more for a product marketed as sustainable, says research firm Nielsen."

The story also puts the Smithfield move in a political context: "President-elect Donald Trump has pledged to roll back environmental regulations he says put U.S. businesses at a disadvantage. But Mr. Sullivan said Smithfield’s emissions plan is “apolitical” and not a response to any regulatory pressure. Rather, it is based on business and the belief it is the 'right thing,' he said."

And, some historical context: "Smithfield estimates it emits about 17 million metric tons of carbon dioxide annually, nearly as much as five coal-fired power plants. The company was long vilified as a top polluter. In 2001, former CEO and Chairman Joseph W. Luter III derided Smithfield’s critics as whiny. But just a year later, Smithfield hired Dennis Treacy, a former director of Virginia’s Department of Environmental Quality, to help make the company more environmentally friendly."

Published on: December 5, 2016

There was a piece in the Wall Street Journal the other day about how "proposed laws requiring employers to give workers more predictable and remunerative schedules are sprouting across the nation, drawing the ire of some employers as local governments wade into the debate over economic inequality.

"Largely aimed at part-time employees in the retail and food-service sectors that employ some of the lowest-wage workers in the country, the plans vary in scope but have common goals: give employees more notice of their schedules, more access to extra hours and extra pay for employers’ last-minute scheduling changes."

However, the story says, "employers call scheduling regulations a solution in search of a problem and say workers initiate most scheduling changes. They warn such laws would remove employer autonomy and penalize businesses because of a small group of bad actors." Employers seem to be most concerned about how such laws restrict needed flexibility and raise costs; they're also concerned about the degree to which they are required to provide documentation to regulators.

Among the communities that have passed or are considering legislation are New York City, Seattle, San Francisco, and San Jose, California.

Some political context: "President-elect Donald Trump has generally vowed to roll back regulations, but hasn’t been specific about laws addressing issues such as overtime pay and scheduling. Most of the scheduling legislation has come at the local level, however."

Published on: December 5, 2016

There have been a lot of stories and analysis about the announcement last week by Starbucks CEO Howard Schultz that he will step down from the job next year and be succeeded by the company's COO/president, Kevin Johnson.

(Me, I made the point that he's done this before and came back when the company ran into recession headwinds. Schultz has a bit of a messiah complex, I think. Though, to be fair, he has some justification...)

The first story comes from Fast Company, which notes that Johnson has big shoes to fill - Schultz has not just been a successful CEO, but an iconic one. Starbucks is nothing if not a reflection of his own ambitions and taste. And so, the magazine suggests, there are a number of things that the company needs to do in order to make the transition work.

You can read about them here.

At the same time, The New Yorker has a somewhat more jaundiced view of the company. Noting that it is a successful, progressive company, the magazine also argues that Schultz is disingenuous when he spins the narrative about how, when he returned at CEO in 2008, he had to close hundreds of stores "because too many stores were just not good enough."

But the truth is that Schultz has fueled Starbucks' financial growth with physical expansion: "Schultz has spent most of his second stint at Starbucks aggressively expanding. In 2008, there were 16,680 Starbucks stores around the world. In 2009, the year of the high-profile closures, there were 16,635. And by 2010 the number had risen, again, to 16,858. Currently, the number of stores stands at more than twenty-four thousand. It’s true that Starbucks closed hundreds of low-performing stores during the recession, but it opened far more during that period, in places that didn’t already have too many Starbucks outlets and where costs could be kept down, and doubled down on that approach when the recession ended."

And The New Yorker also takes another shot at the company: "There are plenty of things that are distinctive about Starbucks. But the coffee isn’t one of them."

You can read this piece here.

Published on: December 5, 2016

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

• Barron's had a story over the weekend about how Chipotle, which was severely wounded by a series of food safety problems in a number of locations around the country, may be experiencing a resurgence.

The story says that a company called LikeFolio is reporting that "about 68% of Chipotle’s social media mentions were positive, its best showing since November 2015, before most of the food illnesses were reported. Positive mentions fell as low as 63% (which actually seems surprisingly high!) earlier this year as the company dealt with the outbreak."

LikeFolio evaluates the situation this way: "Customers are reacting to Chipotle’s delicious burritos again, rather than complaining about throwing up. That’s a good thing."

Nothing like setting the bar high...


• Business Insider reports that "McDonald's is expanding a test of its most dramatic menu change in decades: the addition of fresh, never-frozen beef ... Switching to fresh beef represents a massive challenge for McDonald's, but one that could potentially pay off through an improved public image and better-tasting burgers.

"The company has long relied on an extensive network of suppliers who make, freeze, and ship beef patties to its more than 14,000 restaurants in the US.
Expanding the test would require a massive shake-up to that supply chain."

The story notes that McDonald's "is adding fresh beef patties to 75 restaurants in Northeast Oklahoma, following a test that started earlier this year in the Dallas-Forth Worth area. The fresh patties will be used in McDonald's Quarter Pounder burgers, which include the Quarter Pounder with cheese, the Double Quarter Pounder with cheese, the Quarter Pounder Deluxe, and the Bacon Clubhouse Burger."

I've always argued that the most important thing that McDonald's needs to do is work on taste. They got the fries right, but if they can make the burgers tastier, it has to help. There may be expanded food safety issues to be dealt with in the use of fresh meat, but it should be work it.

Published on: December 5, 2016

• Meijer announced that Rick Keyes, the company's president, now also will serve as CEO, becoming the first non-family member to hold that title at Meijer. He succeeds Hank Meijer, who moves into the role of executive chairman.

Historically, the Grand Rapids Press writes, "Meijer has given the title of president to a non-family member, with the title of CEO being held by Hank Meijer and his late father, Fred Meijer."

The story notes that Keyes "started his career with Meijer as a store pharmacist in Columbus, Ohio. Prior to his 2015 promotion to president, he had been executive vice president of supply chain and manufacturing since 2006."


• The Save Mart Companies announced on Friday that Nicole Piccinini Pesco, most recently the company's Co-President and Chief Strategy and Branding Officer, has been named CEO. She also is the daughter of Save Mart’s longtime CEO, Chairman, and Owner Bob Piccinini, who passed away last year.

Published on: December 5, 2016

I mentioned in Friday's MNB that I was getting a colonoscopy/endoscopy, which prompted a lovely outpouring of emails. Some were just good wishes. Some were pretty funny jokes. Some were painful puns. And some shared stories of people's own experiences with the procedures and, in a couple of cases, details about how they may have saved their lives.

I was touched by all your notes. One of the reasons I mentioned the procedures - and have in the past - was because many people put off their own colonoscopies because of concerns about how unpleasant it will be.

I've said it before. The colonoscopy itself was no big deal. The prep was less than pleasant. But the best thing about it is when they say, "Everything looks good" afterwards.

While it never has happened to me (yet), the next best thing would have to be if they find something, but can deal with it.

If you're due, get one. The alternative may be considerably less pleasant in the long run.

Published on: December 5, 2016

Regarding Amazon's ongoing growth, one MNB user wrote:

I appreciate the PRIME benefits, but in my opinion the real Amazon game changer is the ECHO device(s).

Retail is about LOCATION and who is closest to the consumer. (Yes, price matters too, but with no real difference, then its about LOCATION and SERVICE.) Echo is the second closest you can get to the consumer.  The mobile smart phone is the closest.




Responding to Michael Sansolo's column last week about weak links in the supply chain - specifically how product moves around the country - one MNB user wrote:

My company ships frozen seafood from Norway. We deliver full containers to the port of Portland, Maine and Elizabeth, NJ.

We can ship containers from Rotterdam,  Netherlands to NJ in 6 days. It takes 5 to 6 days to get that freight from NJ to Boston.

Due to the lack of drivers. This is a complex problem.




We had an email the other day from an MNB reader who got an Amazon package delivered by a non-traditional delivery person. Prompting another MNB reader to write:

I read the comment about the person experiencing the non UPS driver delivering their package and we had a similar experience earlier this year.  I was a bit put off by it as well since we live on a private drive and had this person drive back in a regular car.  In this instance it was an Uber driver they were using and did not have any readily available ID hanging from their shirt, so I was a bit taken back.  The gentleman in question was friendly enough but I’m with this reader, Amazon needs to notify the end user if they are in fact not using the conventional delivery means we’ve become accustomed to.

And from another reader:

I had my own personal experience with Amazon delivery the other day.  Was walking the dog and had a small hatchback speeding somewhat erratically down my 25 mph street.  The 20 something was looking at his phone instead of the street and then took a sharp right driving through a neighbors lawn.  He then went into a driveway, backed out and drove up to me as if he was lost.  When he stopped I noticed a significant number of Amazon boxes in the back of what was clearly his personal vehicle.  I asked if he was having an issue or needed help and and he said no and drove off down the street where he dropped off a package.  It was both odd and concerning if this is the future of package delivery.




And, regarding shopping habits over the Thanksgiving weekend, MNB reader Dan Jones wrote:

Cyber Monday was relevant when high speed internet access was only available at the office.  Now that high speed access is ubiquitous the import of Cyber Monday has declined.  Now every day is Cyber Day.

From another reader:

Did you notice no major websites went down on Cyber Monday/black Friday??? Looks like the tech guys caught up to and figured out how to deal with demand on busy days.

Published on: December 5, 2016

It was Week Thirteen in the National Football League...

Lions 28
Saints 13

Rams 10
Patriots 26

Broncos 20
Jaguars 10

49ers 6
Bears 26

Texans 13
Packers 21

Chiefs 29
Falcons 28

Dolphins 6
Ravens 38

Eagles 14
Bengals 32

Bills 24
Raiders 38

Buccaneers 28
Chargers 21

Giants 14
Steelers 24

Washington 23
Cardinals 31

Panthers 7
Seahawks 40

Published on: December 5, 2016

Amazon announced this morning via press release and YouTube video (which you can see at left) that it will open a new 1,800 square foot convenience store format in Seattle early next year that will allow consumers to enter the store using a mobile application, choose the items they want, and then leave - without having to go through a checkout lane.

The store is called Amazon Go.

The system is said to use the same sort of technologies that power self-driving cars. It currently is being tested with Amazon employees, and is located on the corner of Seventh Avenue and Blanchard Street. It uses "Just Walk Out" technology, or what Amazon calls a combination of computer vision, deep learning algorithms, and sensor fusion "to allow people to walk through the store, with everything they pick up added to their virtual cart. The products are charged to the person's Amazon account on departure from the store.

The company says that the store has been in the planning process for four years.

The Seattle Times writes that the store "is the latest beach in brick-and-mortar retail stormed by the e-commerce giant, which already has bookstores and is working on secretive drive-through grocery locations."

And, the Times writes, "Amazon says there will be well-known brands as well as “special finds we’re excited to introduce to customers.” That includes an 'Amazon Meal Kit,' which contains ingredients needed to make a meal for two in 30 minutes."