business news in context, analysis with attitude

Published on: January 26, 2017

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here and this is Face Time with the Content Guy.

Two things I want to talk about this week...

First, I want to revisit a subject we talk a lot about here on MNB - e-commerce. Mostly, it is because I think that recent events suggest that for a lot of retailers that continue to believe that online shopping will largely bypass the grocery channel, the window may be closing faster than they think.

Let me put it to you this way.

You have Amazon over here, which is clearly the big kahuna of e-commerce in general, and equally clearly focused on making food a bigger part of its mix. The reason is simple - if you want to create an ecosystem in which you are the first, best choice for consumers, you have to be in the food business ... because that's the thing that people shop for most often. And let's remember, Amazon doesn't want to sell stuff...it just wants to make it easier to buy stuff.

Then, you have Walmart over there ... and the company seems to be doing everything it can, from acquiring Jet to reorganizing its executive ranks, to make sure that this is a game it can play. I think that Walmart isn't particularly interested in creating an ecosystem ... just in selling more stuff.

Two different approaches. They may be equally valid in the end, and relevant to different customers.

At the same time, you have Kroger building up its e-commerce and digital marketing capacities, and other food retailers that are embracing e-grocery not necessarily because they want to, but because they believe they have to.

The thing is, these folks are all operating in different universes. There's plenty of space between them right now for other businesses to operate, to find their own unique take on e-grocery. They can adapt Walmart's feeling that having bricks-and-mortar stores give it an ultimate advantage, and they can find ways to adopt or compete with Amazon's approach to replenishment, which takes many forms and is extremely effective, generating a lot of its growth.

But while there is room now, I'm not sure how long it'll be there. I think as all those universes expand, there will be less and less room for slow-movers to operate and distinguish themselves. I'm not saying it'll be impossible, but it will be harder and harder.

That's important to remember. And I'm making it one of my goals to find as many ways as possible to remind people of this here on MNB.

The other thing I wanted to comment on was last weekend's Women's Marches, which took place in hundreds of locations in the US and around the world, and generated participation by as many as 4 million people.

Let's forget the politics for a moment. For the purposes of this discussion, I don't care if you marched or not, or if you agree with the marchers or not.

Here's the single most important thing you need to keep in mind - that the whole thing started when one woman - Theresa Shook, who lives in Hawaii - decided the day after Election Day to organize a march on Washington for the day after Inauguration Day. She invited some friends. And look what happened.

That's the power of the digital age and social media. These kinds of passions can be ignited by politics, or by religion or cultural events or business. Agree with the sentiments behind the march or not, one cannot deny or ignore that these people made their voices heard on January 21. Now, it remains to be seen if their voices will be as loud or as passionate on February 21 or March 21 or January 21, 2018.

But I wouldn't bet against it, just as I wouldn't bet against the possibility that your business also could be the subject - or target - of social media passions. Just ask Teresa Shook.

That's what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: January 26, 2017

by Kevin Coupe

CNN reports that a new study from Certify, a company that creates expense account software for companies, shows that six percent of all business travel expenses last year were with Uber, making it the single most popular common expense.

The story says that Uber "grabbed the honor from Starbucks, which remains the most popular meal expense."

The study - which looked at some 40 million expenses recorded by more than one million business travelers - makes clear that the ranking is based on number of transactions, not dollars spent. (The most money is spent on airfare, followed by hotels.)

It is important to remember, though, that all these Uber transactions represent money that is not being spent on traditional taxicabs and rental car companies ... and it is hard to imagine circumstances under which they'll go back to those traditional businesses. Unless, of course, those businesses do something to change the game and disrupt the competition.

You know. Sort of the way that Uber did.

It is the kind of Eye-Opening approach to businesses that can affect every company, if they're not careful.

Published on: January 26, 2017

Amazon yesterday announced that it has added 50-plus new brands to its Dash Button program, bringing the total to more than 250.

Among the new companies now selling product via the Dash Buttons are Colgate, Iams, Seventh Generation, Clorox, Kingsford, Nexium, Rogaine and KY.

The Dash Buttons are part of Amazon's broader replenishment strategy. Customers can buy buttons for $4.99 apiece, and then place them in convenient locations. (A Colgate toothpaste button would go in the medicine chest, for example. The Kingsford charcoal button would be attached to the grill. And the KY button would ... well, use your imagination.) Then, when the customer needs to instantly re-order a product, he or she can just push the button, and the order is placed ... and the cost of the button is refunded with the first order.

Published on: January 26, 2017

Re/code, reports that Target "plans to introduce mobile payment features to one or more of its own apps," though Michael McNamara has not specific about whether "Target will add the payment feature to its main Target app, its popular Cartwheel coupon app or both."

Target is following in the footsteps of companies such as Walmart and Kohl's, each of which has added mobile payments to their applications.

According to the story, "McNamara said the Target payment service will only be available to shoppers who have a Target REDcard - 'at least initially.' REDcards are debit or credit cards that come with perks like 5 percent off Target purchases and free shipping on online orders."

Published on: January 26, 2017

The National Retail Federation (NRF) is out with a new study saying that "American consumers will spend an average of $75 for a total of $14.1 billion as an estimated 188.5 million watch the Atlanta Falcons face the New England Patriots in Super Bowl LI on February 5."

While viewership is expected to be roughly the same as last year's Super Bowl, NRF says that "the spending is down from an average of $82 and a total of $15.5 billion."

Published on: January 26, 2017

Fox News reports that "to celebrate the release of two new versions of its iconic burger, McDonald’s is giving away 10,000 bottles of its signature Big Mac Special Sauce ... McDonald’s has never sold the sauce in the U.S. and the giveaway will be on a first-come-first serve basis at participating locations ... To snag a free bottle, customers must say the code phrase 'There’s a Big Mac for that'."

Published on: January 26, 2017

• The Wall Street Journal reports that Amazon "has begun handling shipment of goods by ocean to its U.S. warehouses from Chinese merchants selling on its site—taking on a role it previously left to global freight-transportation companies. The move marks Amazon’s latest step in a multiyear effort to build out its delivery business. The company doesn’t own or operate ships, but is openly acting as a global freight forwarder and third-party logistics provider, categories of companies that book space on ocean vessels and truck goods between ports and warehouses."

The story says that "Amazon has helped ship at least 150 containers of goods from China since October, according to shipping documents collected at ports of entry that were compiled by Ocean Audit, a company specializing in ocean-freight refund recovery for shippers ... Its new steps to press ahead with ocean-shipping operations move Amazon into direct competition for business that previously was handled by companies including United Parcel Service Inc. and FedEx Corp."

Amazon, the Journal notes, also "plans to lease 40 cargo jets and bought branded semi trailers. The company has said that it needs to build out its delivery business to ensure the ability to deliver the growing amount of merchandise its customers order."


• TechCrunch reports that Amazon has announced "a new subscription program aimed at parents called STEM Club, which delivers educational toys to your home for $19.99 per month. The retailer says it will hand-pick which toys are shipped, and will ensure the items are age-appropriate. And by 'STEM,' of course, Amazon means the toys will be focused on the areas of science, technology, engineering and math."

The toys shipped by Amazon as part of the program will all be either new items or those exclusive to the online retailer.

The idea of STEM toys is a good one, and the subscription well is something that Amazon likes to go back to again and again. But I'm not sure I'd want or need a new toy every month ... but then again, I may not be typical.

Published on: January 26, 2017

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

• The Wall Street Journal has a story about how McCormick & Co.'s CEO, Lawrence Kurzius, has some objections to suggestions that the nation needs to adopt higher tariffs or a proposed “border tax” on imported goods.

The story notes that "McCormick sells herbs and spices such as garlic salt and black pepper and must import a large number of raw materials because they grow in the tropics near the equator. This limits changes the company could enact in response to a proposed border tax, Mr. Kurzius said."

“Regardless of what our [U.S.] tax policy is, we’re not going to be able to move the equator into the United States,” Kurzius said, adding, "Historically, agricultural commodities that can’t be grown in the United States have enjoyed a tax preferential treatment, and so we would hope that that would continue forward."


• The Food Marketing Institute (FMI) issued a statement yesterday in support of the Death Tax Repeal Act of 2017, introduced by Sen. John Thune (R-SD) and Rep. Kristi Noem (R-SD) that would repeal the death tax once and for all.

”The death tax represents the most pernicious form of double taxation in the U.S. tax code – one that hits survivors again in their time of grief. It threatens the very existence of many family-owned grocers.” said Jennifer Hatcher, chief public policy officer & senior vice president of government relations. “The death tax forces business owners to spend any profits they make on hiring lawyers to design a plan to keep the business running in the event of their untimely death, rather than expanding their businesses and creating new jobs. FMI fully supports the legislation introduced and looks forward to working with Congress to see that it is passed.”

Published on: January 26, 2017

Mary Tyler Moore, a television icon who helped redefine the notion of womanhood for several generations and over a number of decades, has passed away at age 80. The cause was cardiopulmonary arrest, which she suffered after contracting pneumonia.

Moore first gained notoriety as Sam, the secretary in the old "Richard Diamond, Private Detective" TV series, which starred a very young David Janssen; for the most part, viewers only saw her legs and heard her voice. Then, she leapt to stardom as Laura Petrie in "The Dick Van Dyke Show," and then cemented her iconic status as Mary Richards on "The Mary Tyler Moore Show." In those roles, both covertly and overtly, Moore used comedy to show us women who were every bit as talented, funny and yes, even spunky, as the men in her personal and work lives.

Later in her career, Moore was nominated for an Oscar for her serious portrayal of a mother in serious emotional pain in Ordinary People, and won a Tony for her performance as a quadriplegic who wants to commit suicide in “Whose Life Is It, Anyway?”

And perhaps as important as anything, she cofounded, with her then-husband, Grant Tinker, MTM Enterprises, which generated television series that included “The Bob Newhart Show,” "Taxi," “Newhart,” “WKRP in Cincinnati,” “Hill Street Blues,” “St. Elsewhere,” and "Rhoda."

Published on: January 26, 2017

One MNB reader wrote about yesterday's "Innovation Conversation:"

Your conversation with Mr. Furphy reminded me of a book I read about 10 years proposing a business shift to mass customization.  It is the concept that businesses, including retailing, are being forced to update their business models so they offer individual, custom solutions to a multitude of customers.  That is the case with on-line grocery retailing.  It is not a case of either bricks and mortar OR on-line shopping, but rather providing each shopper with the mix of both that they want.  For example, my wife may want to buy fruits and vegetables in the store, so she can visibly selection from the assortment being presented, while she welcomes automatic, electronic replenish for our household staples- coffee, paper towels, etc.  Another shopper knows she wants apples and she has developed a trust that the grocery provider will send her only “good” selections.  Each shopper is different.  Therefore, it is necessary to measure the incremental changes in shopper purchase behavior in order to determine the success of on-line grocery retailing.  Retailers will also need to make iterative changes in their business models in order to add, remove, or update based on specific shopper needs.

Exactly.

And MNB fave Glen Terbeek wrote:

Why online grocery isn't working?  A very good question!  Here is the answer.  The real breakthrough will occur only when the industry re-aligns the industry’s “economics" with the marketplace realities of the shopper driven real and virtual shopping experience. This should start by examining the current  redundancies, inefficiencies, and barriers built into 80% of the retail price above the manufactured cost that just frustrate the shoppers in a virtual world.

A good place to start is the “buy for resale, price competition” economic model of today’s practices that just don’t make sense virtually for either the manufacturer, the retailer, and for sure the shoppers.   Really, is one retailer’s Tide better than another’s, virtually?  We need economics that enable the retailers to compete as shopper’s agents through true value added real and virtual shopping experiences.  In my mind the transition is easy, once the current mind sets changes.  By the way, the local, real stores will exist and be much better as a result.  

“Outsiders” such as Amazon have figured this opportunity out!

Look what is happening to nonfood retailers and shopping malls.  It will happen to the food industry as well, if it doesn’t change.




I also got the following email from an MNB reader:

I thought I’d share my experience of Amazon Prime and their Automotive section.

I first signed up for Amazon Prime to get a new battery for one of my cars. The local O’Rielly had what I wanted but Amazon had it $50 cheaper and delivered free to my door in 2 days, a 50 pound battery! Half the cost of Amazon Prime covered in my first order! OEM quality parts often same day or next day at prices lower than the knock off brands that the local O’Rielly carried. O’Rielly was always out of stock on the oil I used for oil changes. Now I order it from Amazon, delivered within 1-2 days. I can probably get it same day now since I’m in the SF Bay Area.

That was 4 years ago. Since then, I’ve ordered all my car parts from Amazon from complete A/C systems to brakes, shocks, LED lights, a complete soft top for my Jeep, plus all of the specialty tools needed to complete those jobs. Amazon’s database has been extremely accurate in verifying if a certain part will fit the car I am working on at the time.

I still pick up the occasional items at O’Rielly. The clerks are often less than helpful. O’Rielly mails me a physical $5 coupon every month or so as part of their loyalty program and I always forget to use it.

Amazon has quietly entered so many markets, perfected the experience and then rolled out in that market as a leader. I’ve been saying they are a competitor of ours (grocery) for years. Most people have been in a state of denial, but slowly people are starting to see the truth. It is truly amazing how fast they are able to spool up into completely new market segments.




Got the following emails regarding our piece about how Air India is offering female-only aisles so that women fliers can avoid being groped by male fliers.

MNB reader Anne Evanoff wrote:

My son is traveling many non-touristy towns in India right now with two American women friends. He shared his shock and dismay at how his companions are treated, and groped, when they are not accompanied by a man.

It seems generally accepted that Indian males have the right to do what they want to unaccompanied women. (I appreciate that it shocks and dismays my son – a sign he was raised to respect women.)

I completely understand why Air India is offering the women’s section option – it would definitely reassure women that they can fly in peace and safety, and seems like a necessary measure.

MNB reader Bob Thomas wrote:

In 2016, ActionAid conducted a survey on street harassment in a number of countries. They found that 79% of women living in cities in India, 86% in Thailand, and 89% in Brazil have been subjected to harassment or violence in public, as had 75% of women in London, UK.
 
Some other airlines might want to watch Air India.

And MNB reader Tom Berghammer wrote:

I read the Friendlier Skies article today. It reminded me of my wife and I in Tokyo last summer visiting my oldest son. He was in Japan on a college studies program for the past year. The train and subway system in Tokyo is truly amazing. Hundreds of thousands of people use public transportation daily to commute. Trains run every couple of minutes to virtually everywhere in the city and surrounding suburbs. The first two cars of most trains are female only. Same rationale for use. Rush hour trains are completely packed. Human sardines in a can. Personal space is gone and unintentionally bumping into someone you don’t know is nearly impossible to avoid.




Michael Sansolo got this email from an MNB reader, about his column this week that talked about a customer service experience he had at Wegmans that went above and beyond:

Mr. Sansolo. I just read your soul crunching article "Breaking Through the Din",  a horrible outlook on the desire to have any human connection and trying to find meaning in a joyless life of going to eat routinely countless times and suddenly, to break through the monotony of existence without any direction or purpose, to all of a sudden feeling special, as if you weren't constantly being reminded that this torrential downpour of emotions and suffering isn't constantly raining down on you and the unhappiness that so many feel in many places daily, has been forgotten due to a privileged treatment and let's not forget why the exchange happened in the first place and that's the capitalist economic system we've created and the business of customer service to incentivize the vomit people spew out of their dirty rat holes to say mindless, inauthentic phrases like "thanks" and "have a nice day" and using that to distract ourselves from what's really going on deep inside of all of us, and that's this feeling that every one of us is at the center of the universe  and we constantly want to be reminded of that by people in the horrible profession of food industry, the people that serve us for money like a medieval, feudalistic era to treat royalty (money bearers) as some sort of divinity that was touched by god's sweet, sweet lavender smelling nipples that for some reason taste peach flavored and expecting it as a right every time we sit down to eat, we want to feel special and elite. The truth is none of us are deserving of that title and if you expect it and not have any empathy for what's being given up when a person provides 'good customer service' which is a part of your soul, then that person is sacrificing something, dignity. " Hey! That Vicky, boy. I really like that one. She was able to relinquish her dignity and lie to herself to provide good customer service for a business that she has no ownership of ." How much money did you tip her?

I'd suggest that this reader switch to decaf. And maybe try some therapy.

Just sayin'...