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    Published on: December 13, 2016

    by Michael Sansolo

    This December is a special one for my family as my father just turned 90. And while that is cause for celebration of longevity, love and, thankfully, relatively good health, it’s also a reminder of something remarkable he achieved.

    That accomplishment is this: despite living through the Great Depression, World War 2 and everything that followed, my parents managed to see their children build successful lives. They scrimped and saved to launch us to college education and interesting careers.

    What’s more, my mother-in-law turns 95 shortly and could claim very similar successes.

    So it was with much sadness that I read about the recent study how the American dream is fading for people younger than my wife, our siblings and me. And given that anything impacting the American population directly impacts your business, it’s a study that needs to be read and considered.

    As the New York Times reported this weekend, the notion of an American dream was defined in a 1931 book as “the dream of a land in which life should be better and richer and fuller for everyone.” As time went along, that dream was widely defined as seeing one’s children grow up to have a better life - earning more money and enjoying higher living standards - than our parents.

    And for many years that’s exactly what happened. As the American economy boomed, especially in the post-war years, the dream became reality. More than 90% of people born in 1940 earned more money (adjusted for inflation) than their parents did at the very same age. The same level of success was achieved by 79% of those born in the 1950, 62% from 1960 and 61% from 1970.

    In contrast a child born in 1980 has only a 50% chance of hitting the same mark.

    As the Times article pointed out, these findings are “a portrait of an economy that disappoints a huge number of people who have heard that they live in a country where life gets better, only to experience something quite different.” And that disappointment plays out in many aspects of life, including the recent election results.

    But the point of this article is not to trigger a political discussion, which seems possible these days on virtually any topic. Rather I think there are important business implications to this.

    First off, this disappointment among a large share of the population leads, as the Times article suggested, to growing distrust of many societal pillars including the government, corporations, the news media and even organized religion. That same distrust can manifest itself around your products and stores as, after all, this is the industry most people interact with most frequently. That provides one more compelling reason all companies need to understand how to best communicate with consumers today, whether through social media or in store connections.

    Trust needs to be built and reinforced constantly.

    But second, these findings also offer a sobering look at where the future might take us if the generations now starting to dominate the marketplace have lower expectations and resources than those before. Such an outlook might vastly change what shoppers do and don’t value and what kinds or products or services they see as enhancements or simply unattainable.

    The challenge for the future may be determining where dreams end and realities begin and how to best serve both.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: December 13, 2016

    by Kevin Coupe

    There was a line in Michael's column this morning - "growing distrust of many societal pillars including the government, corporations, the news media and even organized religion" - that made me think about an Eye-Opening story I read in the Los Angeles Times the other day.

    The story said that "a recent survey by STR, a hospitality analytics company, found that the percentage of hotels that offer religious materials in rooms has dropped significantly over the last decade, from 95% of hotels in 2006 to 48% this year.

    "Among the reasons for the change, according to industry experts, is a need to appeal to younger American travelers who are less devout than their parents or grandparents and to avoid offending international travelers such as Muslims or Buddhists."

    This shouldn't be a surprise. The Pew Research Center has reported that "the Christian share of the U.S. population is declining, while the number of U.S. adults who do not identify with any organized religion is growing, according to an extensive new survey by the Pew Research Center. Moreover, these changes are taking place across the religious landscape, affecting all regions of the country and many demographic groups."

    This demographic shift can be seen even in how Marriott International - a company founded by a devout Mormon - is operating. The company recently decided to keep Bibles and a Book of Mormon out of two new hotel brands, Moxy and Edition, that are geared to younger, less traditional travelers.

    Personally, I don't have a big problem either way. I may be a former altar boy, but I'm not what anyone would describe as being religious or spiritual. It never has bothered me when I find a religious book in hotel rooms, and I never even notice when they're not there. (Though I may be looking in the future, just out of curiosity.)

    I actually have a bigger problem with organizations like the Freedom From Religion Foundation, described in the Times story as "a nonprofit group that promotes separation of church and state," which not only has lobbied hotels not to put religious books in rooms, but also has encouraged supporters to put stickers on such books that say, "Warning: Literal belief in this book may endanger your health and life." This strikes me as offensive and just looking for a fight; there is a big difference between having one's own beliefs and not respecting the beliefs of others. (That goes for parties on both sides of this discussion, by the way.) Me, I'm pretty much in favor of whatever gets you through the night ... as long as it doesn't infringe on anyone else's freedoms.

    But I digress.

    The shifting attitudes toward something that became common practice back in the late 1800s offer us just another signpost on a demographic road that is curving in unexpected directions. And, as I say, an Eye-Opener.
    KC's View:

    Published on: December 13, 2016

    The Motley Fool reports this morning that Walmart's "vast supply chain, logistics network, and infrastructure" has made a "significant difference" in how Jet - which it acquired earlier this year for $3.3 billion - has competed in the e-commerce marketplace.

    According to the story, "In its second holiday season, Jet saw sales over the Thanksgiving weekend jump 300%, and the average order value was up 19%. Jet focused on key gift categories such as electronics, toys, home goods, and apparel and benefited from Wal-Mart's supply-chain expertise, as the company was able to replenish its inventory faster and maintain higher in-stock rates."

    Dan Wilkinson, chief commercial officer for 1WorldSync, a supply-chain partner for Wal-Mart, tells Motley Fool that "Jet has gained access to assets such as Wal-Mart's products, customer base, and supplier information to tap its vast vendor network, benefit from Wal-Mart's rock-bottom purchase prices, and market to millions of Wal-Mart's customers using its data. Importantly for the former start-up, Jet now has access to Wal-Mart's capital resources and no longer has to worry about its cash-burn rate or how much money start-ups can go through before they run out or turn profitable."

    The story goes on: "Just 6% of consumers have made a purchase on over the past year, compared with 98% who have made one on Amazon, 61% who have done so on eBay, and 26% on Etsy. In other words, there's a long potential runway of growth for as it reaches out to more consumers."

    In other Walmart-related news, CNBC reports that Walmart is saying that it "is offering free in-store pickup of online orders placed by 6 p.m. local time on Dec. 23, and has launched a dedicated online website for customers to view last-minute gift inventory available at their local store."
    KC's View:
    I may be a little surprised by how quickly the Walmart and Jet combination seems to have gelled, though it is worth noting that Jet's growth comes on top of some fairly small numbers last year. But listen ... I think that not only is Walmart/Jet a potent combo to which Amazon needs to pay serious attention, but one that, along with Amazon, may be creating a new retail reality that will affect retailers in every segment and of every stripe.

    Published on: December 13, 2016

    The Wall Street Journal reports that Panasonic has developed a new automated system for convenience stores that scans and bags items, conceivably eliminating the need for checkout personnel.

    According to the story, in the Panasonic system "a special shopping basket is designed to detect the merchandise in the basket and calculate the bill. After a customer places the basket in a slot, the bottom of the basket slides out and the merchandise drops into a plastic bag underneath, ready to be carried away. Customers can pay with cash or a card."

    The system requires that every SKU carry a special tag.

    The unveiling of the system comes just a week after Amazon revealed that it will open a new Amazon Go store in Seattle early next year, using technology that combines 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." No checkouts, no checkout lines ... and no checkout personnel.

    The folks at Panasonic - which is testing the system in a single Japan convenience store - say that this system is not designed to replace store personnel, but rather make the store "a point of communication for neighbors, where customers can enjoy chatting with clerks."
    KC's View:
    I'm not sold on the idea that such systems are going to create neighborhood back fences across which customers and clerks will share common cause, discoursing on the events of the day. Maybe in Japan, but that's not generally been my experience here in the US.

    For better or worse, most retailers are going to use such systems as a way or reducing their labor costs.

    I do think there is a difference in how these kinds of systems will affect different kinds of retailers. Supermarkets, which has lots of aisles and categories and more opportunity for meaningful interaction, can use them to redeploy people to where they might make a difference. C-stores, probably less so.

    In the end, though, I suspect that we're going to see a lot more of these kinds of technologies in the next couple of years. Probably be all the rage at NRF in 2017, and at the NACS Show, and at NGA.

    Published on: December 13, 2016

    The National Association of Convenience Stores (NACS) is out with its regular survey of US consumer attitudes, concluding that "a record 60% of U.S. fuel consumers report feeling optimistic about the economy, a 1-point increase over the prior month. Younger consumers ages 18-34 (64%) and consumers in the South (also 64%) report the highest levels of optimism, which is largely consistent across all demographics."

    NACS, which represents retailers that sell 80 percent of the gasoline in the US, says that "low gas prices are a major factor driving consumer optimism. Three in four drivers (78%) say that gas prices impact their feelings about the economy, including 84% of consumers age 18-34. Nationally, gas prices peaked for the year in June at $2.38 per gallon."

    And, low gas prices - at least for the moment - mean that people have money in their pockets to spend on other things: " One in three (33%) say that they will be spending more money this month on non-fuels purchases, significantly higher than December 2015 (27%) December 2014 (24%). More than two in five younger consumers ages 18-34 (42%) say that they will spend more this month."
    KC's View:
    g these positive consumer feelings may not last. USA Today happens to have a story this morning saying that "after hitting lows earlier this year, gasoline prices are on the march upward again and are poised to approach $3 per gallon in parts of the country in early next year following multiple deals to cut oil production, analysts said.

    "Oil prices have jumped well above $50 per barrel after the Organization of the Petroleum Exporting Countries and several non-member states agreed to slash oil output, pointing to higher costs for U.S. motorists."

    Hope may spring eternal, but optimism, probably not so much.

    Published on: December 13, 2016

    The Washington Post has a column this morning that I think is worth reading ... and that comes at an issue perhaps more artfully than I did last week. It starts out this way:

    "Everything is political these days. Every single decision.

    "Consider: Republicans boycotting 'Hamilton.' Democrats boycotting Yuengling. Five weeks after the end of a bitter presidential election, it hasn’t ended at all: It’s merely reached a new phase in which the things we buy are seen as surrogates for the people we voted for."

    And it goes on: "Setting aside whether these boycotts are effective in terms of sales (a product that becomes the scourge of the right is bound to become the darling of the left), one wonders whether they are effective in terms of our national future. In this fractured, limping mess of a country, whose inhabitants are struggling to not punch one another’s lights out, much less to have a civil conversation — if we can’t even eat the same cereal, then where does that leave us?"

    There are, the Post writes, "precious few things that all of us can agree on — the joy of a good sneaker, a good breakfast, a good movie — and instead of tending these cultural bridges, in the event that we one day decide to cross them and visit one another’s bubbles, we are burning them down."

    As I said, I think this is worth reading ... and you can check it out here.
    KC's View:

    Published on: December 13, 2016

    MarketWatch reports this morning that Tesco's UK market share went up for the third consecutive quarter, rising to 28.3%, from 28% for the period ending December 4 on sales that were up 1.6 percent to the equivalent of $9.4 billion (US).

    During the same period, discounters Aldi and Lidl also saw increases - Aldi's was up to 6.2 percent from 5.6 percent, and Lidl's was up to 4.6 percent from 4.4 percent.

    On the other hand, Sainsbury's share fell to 15.3 percent from 16.2 percent, Walmart-owned Asda's fell to 15.3 percent from 16.2 percent, William Morrison Supermarkets' market share dropped to 10.8 percent from 11 percent, and Waitrose's remained stagnant at 5.1 percent.

    • The New York Times reports this morning that Japanese brewer Asahi Group will spend $7.8 billion to acquire a number of Central and Eastern European beer brands from Anheuser-Busch InBev, including Pilsner Urquell. It is, the Times writes, just "the latest brand shuffle for the rapidly consolidating brewing business."

    • The Boston Herald reports that a Dunkin' Donuts in Natick, Massachusetts, is testing a new curbside pickup program: "Customers can place and pay for their orders in advance using Dunkin’s mobile app and select the curbside pickup option. They can then pull their cars into a designated parking spot at the restaurant, and Dunkin’ workers will deliver the orders right to their vehicles ... If the test is successful, Dunkin’ would expand it next year before deciding on a national rollout to restaurants where that kind of service makes sense.
    KC's View:

    Published on: December 13, 2016

    Following the passing of its longtime chairman Jack Brown last month, Stater Bros. has named a new chairman - Philip J. Smith, its former CFO and most recently the company's vice chairman.

    Smith tells the Press-Enterprise that he coming back to the company on a full-time basis after being "more or less semi-retired ... So I’m basically back in the office full-time now for awhile.”

    The story notes that Smith joined the company in 1987 as controller, and then "advanced to become executive vice president of finance, chief financial officer and chief accounting officer, titles he held until Brown appointed him as vice chairman of the board in 2012. David Harris succeeded him as CFO."
    KC's View:

    Published on: December 13, 2016

    • Chipotle Mexican Grill, having navigated a series of food safety crises over the past year, announced yesterday that it is losing one of its co-CEO - Montgomery F. Moran, who has long overseen the company's operations, will step down early next year.

    "“We all agreed that one C.E.O. will serve the company better,” Steve Ells, Chipotle’s founder and other co-chief executive, said in a telephone interview with the New York Times. “The board decided that one C.E.O. would be me, and I’m looking forward to a continued friendship with Monty.”

    Moran did not comment on the change.
    KC's View:
    Nor, for that matter, on the state of the friendship.

    Published on: December 13, 2016

    ...will return.
    KC's View:

    Published on: December 13, 2016

    In Monday Night Football, the New England Patriots defeated the Baltimore Ravens 30-23.
    KC's View: