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    Published on: January 10, 2017

    by Michael Sansolo

    There was a time when shopper hackles were raised by simple loyalty cards, which were positioned by some privacy advocates as a way for companies to spy on consumers.

    That was then.

    Today we watch at shoppers willingly trade information non-stop. It’s not just Waze or Facebook postings or countless other apps that allow us to proudly announce where we are and where we are going. We increasingly ask questions of Siri and Alexa and only now - as Kevin has reported here recently - are we seeing some of the consequences of our constant monitors.

    Any thoughts you have about the trend ending might collide with a stunning new reality on Carnival cruise ships where tracking technology is about to shift into an entirely near gear. And this is a story you need to follow because the key to Carnival’s effort is about providing customer value that makes the exchange of information seem like an endless benefit.

    One executive summed up everything you need to know like this: “the cost is in the hundreds of millions of dollars and over time, more than that. People want the world to be organized around them. On vacation, even more so.”

    Carnival’s story, written about last week in the New York Times and delivered at the Consumer Electronics Show, involves giving passengers the opportunity to carry a small medallion that makes the cruise ship their own. It starts with the basics, such as opening stateroom doors or making it painlessly simple for passengers to pay for drinks or anything else. In other words: no lines and no worries.

    That’s just the start. Guests can load up their preferences before they get on board. Then armed with the app, for example, guests can order food wherever and whenever they want. The wait staff will know who gets what because as an order nears the customer that passenger’s picture will appear on a tablet device.

    Or say you are in your stateroom watching a televised version of a live show that’s taking place elsewhere on the ship. The performers will know who’s watching and can give you a shout out. Go figure, Big Brother does comedy.

    While the Carnival folks admit there is a feeling of creepiness to this they expect most passengers to eagerly sign up for a simple reason. As one Carnival executive told the Times, “As long as you benefit the guest, they don’t mind sharing.”

    And that’s the thing: provide value and your relationship with customers might change drastically. Sure the critics of early frequent shopper programs overstated the invasion of privacy, but they did have one strong point. Usually there were few compelling benefits to those same programs beyond coupons.

    Remember this: those same Carnival passengers are, in a different context, your customers. So that desire to have the world organized around them won’t end at sea. Isles or aisles, their expectations will be the same.

    Time to set sail.

    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: January 10, 2017

    by Kevin Coupe

    The Chicago Sun Times has a piece about something I've never heard about before - the "sanctuary restaurant movement."

    So I checked it out, and quickly found out that there actually is a website dedicated to the movement -

    According to the site, "Sanctuary restaurants have a zero tolerance policy for sexism, racism, and xenophobia. We believe that there is a place at the table for all. Sanctuary Restaurants is a joint project of the Restaurant Opportunities Centers (ROC) United and with participation by dozens of restaurants nationwide. Sanctuary Restaurants offer support and resources to workers impacted by hostile policies and actions, including women, immigrants, Muslims, LGBTQI people and others."

    It is interesting, especially within the context of a politics in which the word "sanctuary" seems to be used more and more often. A number of cities, college campuses, churches and now businesses are declaring themselves to be "sanctuaries" where there will be potentially considerable resistance to expected changes in federal priorities. (There's even a state - California - where, without using the word "sanctuary," there is a sense that many people intend to rebel against some national trends.)

    Here's the deal. I know when I bring stuff like this up, there will be members of the MNB community who will wonder why such political issues are being discussed in a business context. But I think that regardless of whether you agree with proponents of the sanctuary movement, it is important to know that this stuff is taking place - that customers on either side of the aisle may end up making purchase decisions based on positions staked out by businesses.

    Not everybody, and certainly not in every case.

    But this stuff is out there. The potential exists, I think, for the kind of cultural upheaval that hasn't been seen in the US since the late sixties and early seventies.

    No choice. We all have to keep our Eyes Open.
    KC's View:

    Published on: January 10, 2017

    AdWeek has a story about a new study done by ad agency Wunderman suggesting that brands can create customer engagement by developing what it calls "wantedness," which it defines as "the degree to which a brand proves their commitment to earning a customer's business across every touch point and throughout the entire path to purchase ... the data shows that brands now need to demonstrate their commitment to serving the consumer and exceeding their expectations every day."

    According to the story, "The study found that in the U.S., 79 percent of respondents said they only consider buying products from brands that show they care and understand their consumers, while in the U.K., the number is slightly less but still sizeable, hitting 72 percent.

    "Another key finding from the study shows just how essential mobile has become in the entire purchase process. Ninety percent of respondents in the U.S. feel mobile helps them make better purchase decisions, which means brands need to pay attention to how the mobile experience is working (or not working) for shoppers."
    KC's View:
    Fair or not, I think is is critical for businesses to understand that they have to do more than develop and sell create products. They have to demonstrate their relevance not just to how consumers need their products, but to the priorities that consumers establish in their everyday lives.

    Brand equity is a far more extensive, and even more intangible, than ever. Brands have to be vigilant about this every hour of every day.

    Published on: January 10, 2017

    The New York Times this morning has a story about how "a new generation of crops known as gene-edited rather than genetically modified is coming to the market. Created through new tools that snip and tweak DNA at precise locations, they, at least for now, largely fall outside of current regulations.

    "Unlike older methods of engineering genes, these techniques, like Crispr, so far have generally not been used to add genes from other organisms into the plants."

    There's one other wrinkle to this new food technology: "You may have no idea that something is different, because there may be no mention on the labeling even after a law passed by Congress last year to disclose genetically modified ingredients takes effect," because it the ingredients have not been technically modified.

    Some examples of what companies are doing with the new technology:

    "Calyxt, a subsidiary of Cellectis doing the gene-edited food, is also developing new versions of wheat including one with greater resistance to fungal diseases, another lower in carbohydrates and higher in dietary fibers ... Other companies also developing gene-edited crops including DuPont Pioneer, which has used the technology for a new variety of waxy corn, used most commonly not for food but for starch in adhesives. Scientists at Pennsylvania State University have used Crispr to create mushrooms that do not turn brown as quickly."

    The Times reports that "federal agencies have not yet said how they intend to regulate gene-edited foods, and the incoming Trump administration, while criticizing overregulation in general, has not weighed in.

    "Other parts of the world are also considering whether to regulate gene-edited foods and how to do so. In Europe, where many countries have banned the cultivation of G.M.O.s, the European Commission has created a scientific panel to study the issue, with debate resuming this year."
    KC's View:
    But, of course, it isn't all that simple. There remain a number of people who believe that we do not know nearly enough about these technologies to allow them to be used in a creation of food products that are not labeled as such. It seems to me that there are some obvious advantages to such products, though it also seems clear to me that if there are disadvantages, they will not be seen as early and obviously.

    I'm not smart enough to understand all the science here. I'm smart enough to believe that one should never be knee-jerk negative in one's response to scientific advancement. And I think that transparency ought to be a fundamental value here.

    Published on: January 10, 2017

    Good piece in FastCompany about how PepsiCo CEO Indra Nooyi is committed to the kind of cultural change within the company that will make products healthier, encourage environmental responsibility, and empower employees.

    It is a commitment that has its share of tensions.

    "PepsiCo’s business is three pieces," Nooyi says. "It has fun-for-you beverages and snacks: Pepsi, Mountain Dew, Lay’s, Doritos, Fritos, Cheetos . . . I could go on. All the ’tos. [Laughs] The second is what I would call better-for-you: Diet Pepsi, Baked Lay’s, Baked Doritos. And then there’s the good-for-you piece: Quaker Oats, Tropicana, Naked Juice. We are trying to take the fun-for-you portfolio and reduce the salt, sugar, and fat.

    "I didn’t create Pepsi Cola. I didn’t create Doritos or Fritos or Cheetos. I’m trying to take the products and make them healthier. And guess what they tell me? 'Don’t be Mother Teresa. Your job is to sell soda and chips.' So this is not being disingenuous. We are trying to take a historical eating and drinking habit that has been exported to the rest of the world and make [it] more permissible."

    Nooyi also addresses the challenge of getting more women into the CEO pipeline:

    "More than 50% of people who are graduating from colleges, from professional schools, are women," she says. " And some of the top grades are being [earned] by women. So we don’t have an entry-level problem. We bring them into the company, they do very well in the early stages. And then what happens? If they choose to get married and have kids, that’s the time they have to build a career, and most companies don’t have support systems that allow women to have a life and a livelihood. We almost force people to choose.

    "And then women leave, or take a step back. For example, how do you take the kid to the pediatrician if the doctor is not open Saturday or Sunday? If we don’t provide the support system when the employees are in their thirties and their forties to allow them to have a family and work, there is no way we’re going to build a pipeline to the C-suite. It is a long-term problem. We have to address it."

    It is an interesting piece about tensions that exist in a lot of companies trying to operate at a time of shifting consumer and corporate priorities, and you can read it in its entirety here.
    KC's View:
    In so many ways, I think that the challenge of sexism is the harder one for companies to address, since women are simply held to a different standard than men and forced to make choices that men simply don't have to make. Businesses suffer when they fall back on old cultural constructs and don't find new ways to make things work for people who might do more than just change their companies - they might also change the world.

    Published on: January 10, 2017

    Business Insider has a piece about the degree to which Sears Holdings is in trouble, in many ways because of self-inflicted wounds created by CEO and major shareholder, Edward Lampert.

    "Lampert, a former Wall Street prodigy, took control of Sears more than a decade ago and became its CEO in 2013," the story says. "But he's rarely seen in the office, typically visiting about once a year for the shareholder meeting and projecting into videoconference rooms at Sears' Hoffman Estates, Illinois, headquarters the rest of the time, according to interviews with employees. He prefers to stay on Indian Creek Island, off the coast of Miami, behind a desk dressed up with the Sears logo. The island has been dubbed the 'billionaire bunker,' partly because of a private police force that protects the island's 86 residents."

    The story goes on: "Lampert's physical absence might be better received if Sears, which also owns Kmart, was in better shape. But the retailer, famous for selling everything from shoes to vacuum cleaners to whole houses, is facing its biggest crisis ever. It's closing hundreds of stores. Others are in shambles, with leaking ceilings and broken escalators. In some, employees hang bedsheets to shield shoppers from sections that stand empty."

    Morale is said to be in as lousy shape as the company's stores, and executives - who are unable to speak on the record because of fear of retribution - say that Lampert is focused not on creating compelling stores, but on turning Sears "into a tech company that collects and sells customer data through the Shop Your Way program."

    While Lampert has invested upwards of $1 billion in Sears to keep it afloat, the story says that the vast majority of analysts say that the company is headed toward complete and total collapse.
    KC's View:
    This is an amazing story that gives very little hope that Sears somehow might be able to survive ... in large part because Lampert is painted as someone who doesn't really know what he is doing.

    Turning Sears into a tech company sounds like the kind of thing a hedge fund guy with no retail experience would come up with. It may look good on paper, but it seems to have very little foundation in the company's actual reality.

    Published on: January 10, 2017

    USA Today reports on a new study from Slice Intelligence about how Amazon was the go-to for an enormous number of last-minute Christmas shoppers. "On the Monday before Christmas," the story says, "49.2% of all online sales in the United States were made on Amazon ... The Seattle company's largest share of online retail hit on Dec. 18, 19 and 20, at 47.8%, 49.2% and 48.2% respectively, according to Slice estimates."

    The reason seems to be simple: "Consumers were doing their shopping later, secure in the knowledge that Amazon’s two-day delivery would still get them what they’d ordered before it was too late."
    KC's View:

    Published on: January 10, 2017

    • In the UK, Tesco announced that it plans to close two distribution centers and overhaul its distribution network in a way that will reduce overall staffing by about 500 jobs, according to a story in the Guardian.

    At the same time, Reuters reports that the Kantar Worldpanel figures say that Tesco had a pretty good holiday sales period - "Tesco sales grew 1.3 percent during the 12 weeks to Jan. 1, outperforming no.2 chain Sainsbury's, whose sales fell 0.1 percent, Asda , down 2.4 percent, and Morrisons, up 1.2 percent.

    "Kantar's data also showed that inflation returned to the market with underlying grocery prices rising 0.2 percentage points during the period, the first increase in prices since 2014."

    • The Wall Street Journal reports that "the National Fisheries Institute, six seafood companies and two other seafood industry associations have filed a lawsuit to prevent the Obama administration from implementing a final rule to crack down on seafood fraud." The coalition of groups " accused the administration of failing to disclose the data it used to draft the rule, which it said is a violation of the Administrative Procedure Act."

    The Journal writes that "the lawsuit was filed because the rule fails to adequately take into account the cost and impact of complying with the rule for seafood companies that are 'doing the right thing,' NFI, the leading U.S. seafood industry trade association, said in a statement issued Monday." The coalition says that the government's “shift from targeted investigation of the suspected guilty to arbitrary and massive data collection from the innocent creates an enormous economic burden on American companies that import and process the seafoods that families enjoy nightly."

    • Candy company Mars Inc. said yesterday that it is acquiring pet health care company VCA for about $7.7 billion, including $1.4 million in debt.

    The New York Times reports that this is an expanded focus on pets for Mars, which currently has 39 pet-oriented brands in its portfolio and soon will have a majority of its business focused on pets; VCA "owns about 800 animal hospitals, a lab business and dog day care franchises that operate under the name Camp Bow Wow." VCA will operate as a separate and distinct business, the companies said.
    KC's View:

    Published on: January 10, 2017

    Yesterday's Wake-Up Call went out a lot later than usual because of a snafu with the email system. Apologies for that ... with hopes that it won't happen again.
    KC's View:

    Published on: January 10, 2017

    The annual National Retail Federation (NRF) "Big Show" is scheduled to take place next week, from January 15-17, in New York City's Jacob Javits Convention Center ... and I'm planning to spend some time there next Monday, January 16.

    If there are any MNB readers who'd like to get together, I'll be camping out from 1:30-3 pm at the MyWebGrocer booth, #612 ... I'll have some copies of my books to give away, and I'm always happy to catch up with members of the MNB community.

    Hope to see you there...
    KC's View:

    Published on: January 10, 2017

    We had a story the other day about the potential impact of border tariffs on a number of US companies, which led MNB reader Philip Bradley to write:

    All this Republican posturing about a tax bill with sharply higher tariffs for imported goods solving all our trade problems is just blowing smoke.  Just go back to the 1930's and the infamous Hawley-Smoot bill, which raised import duties in just this way.  It made the Depression last longer and become more severe--every foreign government affected by this short-sighted law simply retaliated and raised tariffs on American goods.  As a result, costs were driven up worldwide, which sharply reduced the level of global trade, and the Depression went on for years.  I can't believe that the Republicans really believe that this strategy will be successful.

    On another subject - the closing of retail stores and companies - one MNB reader wrote:

    I wonder if anyone is keeping score on how many retailers, acquired and managed by investors and capital firms, go bankrupt, get sold into oblivion or obviously struggle in the market compared to retailers run by retailers (founders, families, privately held independents, ESOPs,  and traditional self-managed public companies)
    In essence, I wonder how many bankers and capital investment firms are really good at retailing and have track records to prove it?

    Got the following email from MNB reader Vincent R. Alvarado about changes at the top of Sam's Club:

    After 5 years at the helm, there was zero impact on the Sam's organization.  Wal-Mart has little ability to go head to head with Costco, after years of new leadership and low ideals. Costco strategic placement of units by income demographics and Sam's units placement to the Wal-Mart customer make them not even in the same ball game.  Merchandise quality at Costco compared to the Wal-Mart quality at Sam's, can't be changed due to a few grocery selections trying to get upper income to shop.

    Costco has been constant at what they do since the merger of Price Club, while Sam's is still trying to influence customers with the color of paint on the outside of the building. The old Sam's Club lead by Sam Walton, David Glass and Tom Coughlin understood what they had trying to develop Sam's Club.  Under the current situation I don't think anyone at Wal-Mart understands or knows what they want Sam's to grow up to be.  Sam's is a big company,  run by little ideals,  nothing will change.  Jim Sinegal once told me as we walk a Costco in Dallas Texas, Costco is the innovators and Wal-Mart was the imitators. I had taken offense to that but in the end.... he was pretty smart.

    On another subject, from MNB reader Shelley des Islets:

    Regarding the story of the USDA plan to "give families participating in the Supplemental Nutritional Assistance Program (SNAP) the ability to order groceries online and have them delivered to their doorstep," I give a wholehearted thumbs up.

    A major obstacle for low income families is transportation--they are often faced with managing a buying trip on foot, organizing trips with someone who has a car, or making use of mass transit or even Uber/taxis, taking another bite out of their funds.  Even if the mass transit trip is subsidized, it's still a pain; and with children in tow, that gets additionally complex.

    What would make it even more helpful would be to make sure each of these homes has a way to actually place an online order--a SNAP Tablet or smartphone, perhaps.  Or, better yet, a Social Services notebook on loan that would allow families aligned with social services to place online grocery orders AND apply for jobs, receive online training, access Social Services departments, online help & forms, get connected to their children's school and teacher, and basically be plugged in during the time they're receiving services.  That way, they can take advantage of opportunities that may pull them out of the safety net and on their feet. This would effectively reduce or even remove the additional marginalization that lack of transportation causes for people more obstacles than opportunities trying to make their way.

    I'd vote to pay more taxes for that.  I'd even volunteer to help families learn to use the systems and services.

    And, more emails on the subject of sexual abuse. MNB reader Mark Boyer wrote:

    My son and I had a conversation when he was about 25 years old where he said, “Thanks for never abusing me. Or letting anyone else abuse me.”
    Once I was able to catch my breath and process his comment I asked him what triggered him to say such a thing. He replied, “I cannot tell you how many of my friends have been abused somewhere in their childhood.” He went on to say it was both male and female friends.
    I still shake my head when I think about that conversation.

    From MNB reader Joe Gilman:

    I am sorry for coming to late to this discussion, but the comment by the woman who was molested as a young woman bothered me to no end, I just hope she is doing as well as possible now.

    What bothered me when reading this was your introduction, when you mentioned that the pervert who was bothering the young girl complained of "ageism".

    What a sick society we live in, to keep it brief,  I believe it is a total failure of our institutions and a narrative that seems to feel there is no objective truths any longer, just whatever anybody thinks to be true.

    Well, we reap what we sow, A baseball bat works for me.

    And from MNB reader Rich Barle:

    I’ll hold ’em and you hit ’em.  When you get tired of swinging that bat, we can switch roles.  I have 3 daughters and they will ALWAYS know I am there for them.

    I do want to be clear about one thing. When I said that I'd respond to some 37 year old creep hitting on my 16-year-old daughter with the help of a baseball bat designed for such things, I was not encouraging violence. I am encouraging being a caring adult. And I am anti-creep.

    And, another email:
    Meg Meeker has written two books – “Strong Fathers, Strong Daughters”, and “Strong Mothers, Strong Sons”, that ought to be required reading for every parent.  I frequently recommend them to friends and family members, and suspect that many in the MNB family could benefit.

    I should also mention that I have been in touch with the MNB reader who wrote in about her experiences as a victim of sexual abuse - "the girl who was not defended." And she assures me that she is fine:

    "I've a successful career," she writes, "a loving partnership, and I think I am reasonably well adjusted. We are all nuanced by our experiences, hopefully to become stronger, wiser and more compassionate. We cannot change our circumstances, but we can choose how we react to them."

    Again, I am honored and touched that she would share her experiences on MNB.
    KC's View:

    Published on: January 10, 2017

    The Clemson University Tigers last night delivered a stunning 35-31 defeat - with a two-yard touchdown pass with one second left in the game - to the University of Alabama Crimson Tide in the College Football Playoff game, dethroning the incumbent champs and ending the Tide's hopes for a fifth championship in eight years.
    KC's View:

    Published on: January 10, 2017

    Kroger-owned Harris Teeter announced that it has chosen MyWebGrocer, described as "the leading provider of eCommerce and digital marketing solutions to the grocery and Consumer Packaged Goods (CPG) industries," for MWG's "Digital Experience Platform (DEP) to power its omni-channel shopping experience."

    According to the announcement, "Using MWG’s grocery-specific software and services, Harris Teeter will optimize shopper engagement by providing an integrated omni-channel experience. This includes support for the retailer’s online grocery ordering program, seamless shopping list management across devices, advanced merchandising capabilities, circulars and personalization modules, as well as on-platform advertising and outbound email marketing."

    For more information about how MWG is helping grocery retailers and brands enhance their digital presence, as the only end-to-end digital ecosystem for grocers and CPG brands in a modern retail world, click here.
    KC's View: