Published on: February 2, 2017
I took the Amtrak from Seattle to Portland yesterday, which gave me plenty of time to go through all the emails I've gotten while traveling the past week or so.
I wrote yesterday that I was surprised by the fact that executives to whom I'd been speaking had not requested lists of products that they sell that originate from Mexico or have ingredients from Mexico, which struck me as potentially important if the Trump administration establishes some sort of border tax on Mexican imports.
This prompted one MNB reader to write:I’d guess that the reason the executives you spoke with haven’s asked their people to compile a list of their products that are produced in Mexico is because they already have that list. I think it’s safe to assume that any executive knows exactly where any of their products are produced.
I think you'd be surprised. In fact, I've talked to people who have told me that most retailers, if asked for an exhaustive, complete list of all the vendors with which they do business, actually cannot come up with that list. (CEOs tend to think the list exists, until disabused of that notion by the CFO.) This is a real problem when it comes to food safety, when such a list is critical to making sure that traceability is easy and insurance coverage is sufficient. But it also suggests to me that the list you think is so readily available probably isn't.
On the subject of the new Mr. Clean ad that Kate McMahon wrote about yesterday, one MNB reader wrote:I found the Mr. Clean ad very funny; I loved it. Is it sexist and demeaning? Yes. But I choose to look at it from a broader perspective. As a girl, I grew up in the sixties where I was taught that men and women were supposed to be equal. But I ended up in a relationship (now former relationship) where I was expected to do all the ‘woman’s work’ despite working full time and carrying a second part-time job. I see the ad as promoting a bigger message: that a relationship is a partnership. And when both partners help each other out, it makes for a more successful relationship. I can overlook the tight pants and sexy moves if it teaches even just one person it’s OK to roll up your sleeves and pitch in – at home or at work.
We took note the other day of a new Food Marketing Institute (FMI)/Nielsen report about the "Digitally Engaged Food Shopper" analysis, designed to "offer a comprehensive look into the behaviors, motivations and expectations of the digitally engaged food shopper. Initial findings from this study show that within the next decade, online food shopping will reach maturation in the U.S., far faster than other industries that have come online before."
One of the findings ... "Center Store Migration: Center store categories are already migrating online and this migration is expected to continue."
MNB reader Paul J. Sullivan had a thought:Interesting findings it total but I think that point should concern the management teams of those heavily leveraged supermarket operators who have become dependent on other revenue streams (slotting, incentives, etc..,) from center store product groups. As those business migrates to other channels, those dollars will follow with no likely replacement. Could be the start of the thinning of the herd.
Got the following email about the potential border tax:Mexico’s Peso has depreciated 21 % in the last year. The USA is the world’s largest Food exporter and Mexico is a top destination for Made in the USA food products. USA Food manufacturers have been forced to raise prices significantly, depressing sales to Mexico. Walmart is Mexico’s largest private employer and number 1 retailer.
Annual Walmex sales at year ago exchange rates were $25 billion, at current exchange rates now $20 billion, surely a contributor to layoffs in Bentonville.
Home Depot, HEB, and Costco also manage billion dollar businesses in Mexico.
In general, Mexicans appreciate the USA and embrace our retailers and products.
However, there are already rumblings of boycotts. May I politely ask: Who benefits from a trade war?
There are a lot of folks asking the same question, but not necessarily as politely.
MNB reader Jim Veregge had some thoughts on the same subject:Kevin, thought I’d weigh in on the subject of Tariffs, Import Taxes and other Regulations coming from and going into Mexico. Thought I’d share a fact that many Americans (outside of the grocery industry) are unaware of.
Currently, for consumer grocery products going down into Mexico from the United States, Mexican regulations require that each individual item has to be taken out of the case and individually stickered with different versions of information depending upon how far into Mexico that the product is eventually being shipped. The cost that suppliers and import-export companies are having to spend to comply with these Mexican regulations for many products can run up to 20% or more of the cost of each item stickered, causing many products to be uncompetitive in price versus other products.
In light of this, having the U.S. consider enacting tariffs on products coming up from Mexico when our products going down there are basically being “taxed” with additional regulations does not seem to be quite as egregious as some are stating…..
MNB reader Tom Murphy had an idea for what stores should do if border taxes are instituted:In store signage: “This price increase brought to you by the Trump administration”!
Regarding Walmart's testing of an organic restaurant in one of its Florida stores, one MNB reader wrote:Not sure of the prices that this restaurant charges but it could lead to Walmart carrying even more “healthy” better for you products and start to draw a crowd they are currently low in – High Household incomes - even if only on a once and a while basis.
We had a piece recently mentioning that one can actually sign up for Amazon Prime on a month-to-month basis, prompting MNB reader Tom DeLuca to write:Wow – monthly installments to Prime would definitely be impactful to driving memberships…which impacts traffic and sales. The ability to buy two months of membership in Nov and Dec would drive a big shift away from brick and mortar retailers.
I recently did a piece about why I think parking meters are going to become obsolete ... they represent a desire on the part of many communities to charge people to shop[ on Main Street, which seems silly and counter-productive in an environment where Main Street is under attack by online retailers.
MNB reader Mark Woodgerd had a thought:Parking meters aren’t about the revenue they produce as much as they are designed to keep the parking spaces turning. If parking is free on Main Street then all the spaces quickly become filled up with office and store workers who will be there 8-10 hours a day making it so there will never be a parking spot for someone that only wants to run a quick errand or grab lunch. Most meters are web connected now (at least in my town) so that paying is just a couple taps on your smart phone and you can add an extra 15 minutes if you are running late.
You still have to pay but the convenience may make it worthwhile.
I have no problem with putting time limits on spaces. Say that spaces are for two-hour parking only, and you get a ticket if you stay too long. But, if you can show a receipt from a local store that totals more than $100, say, that was given to you during that period, you get top rip up the ticket.
MNB reader Terry Mullery wrote:Where I reside, Minneapolis, both Macy’s and Barnes & Noble just announced closing of their downtown stores. All that remains is a Target, and that is for the Target corporate employees to shop. I agree that retail will dry up downtown, and partly because of the inconveniences of downtown shopping. However, the city governments rely on the income and will not do away with them for as patrons of banking, city/county services, restaurants, and bars need a place to park. If the restaurants and bar owners had a choice, they would probably like to see the meters go away.
And, from another reader:Here in Sacramento we have new downtown arena for the Sacramento Kings. To help pay for the arena the city leveraged the parking revenue from city owned parking lots/structures. They also have gone to a dynamic pricing model for the street parking meters (which can be done using an app and paying with a credit card) whenever the Kings are playing, concerts, special events etc.
I can tell you that we rarely even think to drive to downtown Sacramento due to the idea that you have to pay to spend money downtown? How archaic is that? Like you said in your column cities, malls, etc. should be doing everything to make it easier to get people into their venues and spend money.
What is sad in downtown Sacramento now is that the local dry cleaners, hardware store, mom-and-pop store will be slowly going out of business because it is much easier to go somewhere where the parking is free and available.
Parking meters represent old world thinking, not appropriate to a new world of competition. As in so many cases, the meter is running on how much time is left for institutions to respond in appropriate ways, or be rendered irrelevant by the future.
We recently had a piece about Whole Foods closing some internal food production facilities and outsourcing the work, and one MNB reader wanted to weigh in:Your take on the news of WFM closing their internal production facilities seems to me like the wrong way to think about the decision. In a food industry where food safety expertise is at a premium and no corners can be cut, outsourcing to a partner who is focused exclusively on being the best, safest producer of prepared foods may not be a sign of WFM compromising its values, but instead o them realizing that someone else is even more adept at fulfilling their priorities. Let them focus on being fantastic retailers, while other focus on being first-rate, food-safe manufacturers!
On another subject, got the following email from MNB reader Ryan Murphy:I enjoyed reading your take on the NYT article “How Netflix is Deepening Our Cultural Echo Chambers.” There’s absolutely a lesson here for retailers.
The article hits on a foundational principle of modern business – greater segmentation leads to greater profits. Boosted by technology and big data, mass customization allows businesses to serve an ever increasing number of niches that are narrower and narrower. A great marketer once told me that the Holy Grail of marketing is the ability to narrow a market segment to an individual. Think about how Amazon does exactly this.
For retailers, the days of the single grocer serving a community are long gone. It took me less than a minute to identify 15 different food retailers within five miles of my home. While there is overlap in the customers each one serves, the successful retailers are pretty clear on the segment(s) they target. I believe the strongest differentiator is based on economics (Aldi vs. WFM), although selection, service, convenience, etc. certainly hold weight as well. The retailers who are not successful are the ones stuck in the murky middle and it shows.
Retailers pride themselves on serving their community. Yet by designing their business to exploit certain segments, the definition of the “community” they serve changes. The primary focus is no longer the general population surrounding their store but a slice of that population. This may help explain the existence of food deserts in populated areas – lots of people but missing the segments that attract retailers.
So if one buys the argument that Netflix deepens cultural echo chambers, the same may also be true of retailers. I’m not sure what, if anything, a retailer should do other than be aware that they are a part of this same cultural phenomenon that seems to be gaining steam.
Responding to my enthusiastic review of the Amazon series, "The Man In The High Castle," one reader wrote:I too have watched all of the episodes of this compelling series and like you, don’t fully understand it all. It is troubling to watch but I can’t turn away. Seeing how much our society is changed under both Japanese and German rule is disturbing. The blatant propaganda that is pervasive in the American Reich and the countless ways Americans were forced to adapt in the West is troubling. Even the mournful opening "Edelweiss" song can bring a tear to the eye and completely adds a new dimension to the version Christopher Plummer sang in "Sound of Music."
I give high marks (no pun intended) to the creative team for the visuals that convey how complete the American surrender is as part of this series (swastikas everywhere). I’ve never read the book but I’m sure looking forward to the next season.
Season three should be very interesting, since it will be the first season produced in the current political climate.