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    Published on: February 6, 2017

    by Kevin Coupe

    Grub Street reports that when Whole Foods opened its new Bryant Park location in New York City, it featured something new to the company - "the first-ever 'produce butcher,' a person who’d like nothing more than to delicately clean and de-stem your lacinato."

    According to the story, "Shoppers too lazy to cut their own onions can plop them on the cutting board of this poor employee, who must 'cut, slice, dice, julienne, chop, and grate any produce item at a shopper’s request'."

    The service isn't free - it costs a buck a pound.

    It also isn't actually the first of its kind: "Eataly actually invented this gig seven years ago. Food-performance artist Jennifer Rubell half-jokingly suggested it to Mario Batali, who promptly installed her at a station peeling carrots and trimming artichokes. The service is now Rubell-less, but is available free of charge in multiple Eatalys, and is still taken very seriously over there — one former veggie butcher is such an expert that she’s published a book on the topic."

    Still, the produce butcher is an interesting innovation. The question is whether the concept is ripe for expansion into other stores ... and whether it does anything to address the competitive problems from which Whole Foods recently has been suffering.

    The answer may be an Eye-Opener. (And we'll have more on this later in the week...)
    KC's View:

    Published on: February 6, 2017

    The National Law Review reported on Friday that "three months before new FDA regulations take effect that require restaurants and similar retail food establishments (in chains of 20 or more locations doing business under the same name and selling substantially similar menu items) to provide calorie and other nutrition information for standard menu items, Congress has again introduced legislation to modify the requirements."

    The proposed legislation "does not reduce the amount of nutritional information that must be provided by restaurants and retailers," the story says, but does provide "flexibility in determining how to disclose nutrition information ... The bill would also reduce penalties and liability under certain circumstances, and allow the opportunity for establishments to correct mistakes after receiving a notice of the violation from FDA. Sponsors of the bill estimate that new menu labeling requirements will cost nearly $1 billion for just grocers, in addition to requiring 14.5 million hours of paperwork."

    The Food Marketing Institute (FMI) and the National Grocers Association (NGA) were among the food industry trade associations applauding the new legislation.

    "Independent supermarket operators are committed to providing their customers with transparent information about the products they sell, however grocers continue to face challenges and uncertainty with implementing a regulation that was originally designed for chain restaurants," said Peter Larkin, president/CEO of NGA. "The Common Sense Nutrition Disclosure Act provides the needed flexibility in how nutritional information is disclosed to customers based on the different ways that foods are prepared and sold across various supermarket venues and formats. Additionally, the bill protects store associates who make inadvertent mistakes and provides stores with 90 days to take corrective steps prior to any enforcement action."

    And FMI president/CEO Leslie Sarasin added: “We applaud Representatives Cathy McMorris Rodgers (R-WA) and Tony Cárdenas (D-CA), Senators Roy Blunt (R-MO) and Angus King (I-ME), and their bipartisan co-sponsors for their continued commitment to addressing the problems supermarkets have been facing with a 'square-peg-in-a-round-hole' approach to FDA’s application of menu labeling in grocery stores. The Common Sense Nutrition Disclosure Act is exactly what its title indicates: a sensible approach to providing nutrition transparency to customers while providing flexibility for supermarkets to successfully implement the requirements of the regulation."
    KC's View:
    I'm hardly an expert on the ins and outs of Washington, but this strikes me as a slam-dunk ... the changes have bipartisan support, and some sort of flexibility depending on format and category would seem to make a certain amount of sense. As long as the goal is nutritional transparency, I'm certainly is okay with it.

    Published on: February 6, 2017

    Dollar General has announced that its 2017 expansion plans include 1,000 new stores, two new distribution centers, and the creation, as a result, of approximately 10,000 jobs.

    According to the announcement, "The creation of these approximate 10,000 new jobs will be a roughly nine percent overall increase to its workforce and mark the largest one-year employee increase through organic store and distribution center growth in the company’s 78-year history."

    Dollar General currently operates some 12,500 stores in 43 states.
    KC's View:
    This is only going to make this area of competition even more intense, especially as Aldi expands and Lidl invades and Save-A-Lot works to right the ship. (They're not exactly the same as a dollar store, but they do focus on roughly the same demographics in a lot of cases.) And it will make things harder for more traditional chains that want to promote a low-price image.

    Published on: February 6, 2017

    A couple of weeks ago, MNB took note of an Austin Business Journal report that H-E-B CEO Charles Butt "is making a $100 million investment in the future of Texas education. His donation will help create The Holdsworth Center in Austin as a training academy for public school administrators, to support current principals and superintendents as well as groom the next generation of education leaders."

    Now, the Dallas Morning News has a follow-up to that story in which he explains the rationale behind his remarkable donation, saying that he he sees stumbling blocks to a better educated America, such as weak curriculum and under-supported teachers.

    “I don’t like that," he says. “I’m an optimist at heart— for my business, for my friends and for people. But do I see an educated America for the future? It’s hard to say. Believe me, I obsess about this.”

    And here's something that many may not know: "The Holdsworth Center (is) named after his mother, Mary Elizabeth Holdsworth Butt, a one-time school teacher who spent much of her life advocating for children and those with mental illnesses," the Business Journal writes.

    “It’s not for my mom, but for the kids," Butt tells the paper. “She was focused on other people about as much as anyone I’ve ever known. That inspired me.”

    For now, the story says, "the center is not affiliated with a specific college or university. Butt said that’s because he wanted to ensure a rigorous program. He didn’t have complete confidence a Texas college or university could provide that.
    He was concerned that more and more colleges and universities are treating education programs as 'cash cows,' admitting as many students as they can without ensuring they leave fully prepared to teach children.

    “'We’re not satisfied with what’s coming out of the higher ed institutions now,' Butt said. 'And we’re not satisfied with the fact that they do not have a robust relationship with the schools. So we don’t have any continuation or continuum of activity that starts with the school of education and goes right down to the district'."
    KC's View:
    While this is not strictly a business story, I did want to return to it and take not of Butt's motivations for two reasons. First, I think it is terrific that someone from the business community is bring time, attention and money to the public schools. (My wife is a third-grade teacher and has been in elementary education for 16 years, but she came to it after having been a successful banker and stock broker. I've always thought that one of her great assets as a teacher is understanding how the real world works, and understanding things like goals and accountability.

    The other reason I thought this is important is because the focus here is on education, it reflects the mindset and commitment that H-E-B stores always reflect ... and the reason it is one of the country's best chains.

    Published on: February 6, 2017

    • The Wall Street Journal reports that Walmart is taking a somewhat more relaxed approach to its African expansion that it has in past efforts where it was opening in developing markets.

    The story notes that "when the U.S. retail behemoth bought a $2.4 billion majority stake in South African retailer  Massmart Holdings Ltd. in 2011, it trumpeted the potential of the continent’s burgeoning consumer class. At the time, Massmart had 26 stores outside its home market; in the five years since, it has added only 13 of its signature large destination-type outlets. In that same span, by contrast, rival Shoprite Holdings Ltd. has opened 182 of its mostly smaller, grocery-centric stores outside South Africa, for a total of 375."

    There are some economic reasons for the slower pace, as the Journal writes that "recent sharp fluctuations in African currencies—a result of the commodities crisis—have jolted businesses including retailers, especially because loans in many African countries are dollar-denominated. And inflation, a malady in various economies on the continent, has cut into the buying power of middle-class consumers."

    While Walmart has not commented on its African strategy, analysts suggest that it also be affected by the five-year investigation into alleged bribery of local officials in some markets as a way of greasing the wheels of expansion; Walmart knows that it is being watched for its processes, and may be attempting a more measured and transparent approach as a way of staving off criticisms.

    • The China Money Network reports that Walmart "has increased its stake in Chinese e-commerce firm Inc. to 12.1% as of the end of 2016, up from 10.8% last October, deepening its partnership with China's second largest online shopping platform behind Alibaba ... Walmart is betting on as a major e-commerce channel for its future in China, where consumers are projected to spend up to US$6.4 trillion a year by 2025.
    KC's View:

    Published on: February 6, 2017

    • In the UK, The Memo is reporting this morning that Amazon is "looking at about two dozen sites in and around central London to open" Amazon Go stores, the checkout-free format that it currently is testing in a single location in Seattle.

    The story notes that "Amazon Go uses thousands of cameras and sensors to track what items everyone is picking up and only charges you once you leave the store… an experience that sounds eerily similar to shoplifting. Without the need for cashiers or tills, a report over the weekend suggested that a supermarket-sized Amazon Go store could be run by just three human staff – a huge cost-saving compared to traditional supermarkets."

    The story also suggests that "Amazon’s plan to open high street grocery stores is also an admission that Amazon Fresh, the retailer’s online food shopping and delivery service, hasn’t been as successful as hoped. The launch of Amazon Fresh in the UK was dogged by criticism over the quality of its food, with complaints about rancid meat and fish, bruised fruit and veg, and missing items appearing online."
    KC's View:
    I think that maybe the folks in the UK are getting a little ahead of themselves here. Not that there won't be Amazon Go stores there, but I suspect not as many as they are thinking in the short term.

    Published on: February 6, 2017

    • New York City real estate journal The Real Deal is reporting that Kroger has purchased "three Greenwich Village retail condominium units at 250-254 Bleecker Street for $20.6 million, according to property records filed with the city Friday. The retail at the base of the five-story, roughly 22,000-square-foot building is home to Murray’s Cheese and Amy’s Bread and was owned by Murray’s Cheese proprietor Rob Kaufelt."

    The story notes that since 2008, Kroger has had a deal to open Murray's Cheese shops in its stores; there currently are some 350 of them. Now, the story says, "Kaufelt has decided to sell off the New York-based cheesemonger’s brick-and-mortar shop to the publicly traded grocery chain."

    • In the UK, This Is Money reports that "Aldi is poised to overtake the Co-op this week to become Britain's fifth largest grocer. It is a big step for the German discount retailer, putting it next in size to the so-called 'Big Four' supermarkets."

    • The Wall Street Journal reports that "Canada’s Hudson’s Bay Co. has approached Macy’s Inc. about a takeover, people familiar with the matter said, as the biggest U.S. department-store chain grapples with disappointing results and restive shareholders. Talks between the companies are at a preliminary stage and also encompass other ways they could cooperate, one of the people said, adding that a deal for only Macy’s real estate is also a possibility. Other details of the talks are unclear and it is far from guaranteed there will be any deal."
    KC's View:

    Published on: February 6, 2017

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

    • The New York Times this morning reports that nearly 100 companies - including technology heavyweights such as Apple, Google, Facebook, Microsoft, Uber, Twitter, Airbnb, Intel and Snap, as well as a few non-tech companies including Levi Strauss and Chobani - "have joined the court fight against President Trump’s immigration restrictions," warning that "the limits could hurt the country’s economy." In a filing with a federal appeals court considering the executive order, the companies "argued that Mr. Trump’s temporary ban on all visitors from seven predominantly Muslim countries would hurt their businesses and violate both immigration law and the United States Constitution. A lower court on Friday temporarily halted crucial parts of the ban, but the Trump administration said it would fight to have them reinstated.

    “'The tremendous impact of immigrants on America — and on American business — is not happenstance,' the companies said in a friend-of-the-court filing. 'People who choose to leave everything that is familiar and journey to an unknown land to make a new life necessarily are endowed with drive, creativity, determination — and just plain guts'."

    The Times notes that "an estimated 37 percent of the workforce in Silicon Valley is foreign-born, according to the think tank Joint Venture."

    Reuters reports that Walmart CEO Doug McMillon said last week that it was important for him to be part of an executive group that met with President Donald Trump at the White House. McMillon said that while the focus was supposed to be the economy and job creation, several execs took advantage of the access to express "concern about a travel ban on people from seven Muslim-majority countries traveling to the United States."

    McMillon described the conversation as ""constructive" and "candid," and added, "It's always better to be engaged in trying to shape solutions than sitting on the sidelines."

    Fox News reports that while Starbucks has been criticized in some circles for its announced intention to hire 10,000 refugees globally over the next decade - which clearly was in opposition to what chairman Howard Schultz sees as an unacceptable Trump administration policy toward immigrants and refugees - it is being defended by a veterans' group.

    According to the story, "Many supporters of the president became outraged, arguing that Schultz should be hiring American veterans instead of refugees and vowing to boycott the coffee chain in response. But Starbucks has been actively hiring veterans since 2013–- 8,800 to be exact."

    And a group of veterans that has been working with Starbucks to facilitate hiring released a letter saying, in part, that it has “seen first-hand the hard work and dedication of our fellow employees to transform Starbucks into one of the preeminent veteran-friendly companies in America ... We respect honest debate and the freedom of expression. Many of us served to protect that very right. Some of our brothers and sisters died protecting it. But to those who would suggest Starbucks is not committed to hiring veterans, we are here to say: check your facts, Starbucks is already there."

    • Call it "Harry Potter & The Sorcerer's Politics."

    The Washington Post reports that JK Rowling, the author of the hugely successful Harry Potter books, has gone to war with some of the people who bought the books, went to the movies and turned her into one of the UK's richest women. According to the story, " Some fans of Harry Potter are burning their copies of the books to protest author J.K. Rowling’s views of the U.S. president. And she’s fighting back on Twitter, insulting those very fans."

    The story notes that Rowling is no stranger to taking political positions, and she is a "dedicated progressive. She’s a strong believer in welfare, which she relied on during a particularly rough period in her life." And even the Potter novels have a political subtext: they are about "the triumph of marginalized peoples, be it the mixed-heritage Hermione, a “mudbl–d,” the poverty-stricken Weasleys, the stigmatized Hagrid (essentially an ex-offender reintroduced to society who can no longer practice magic as a result) or the “lower class” house elf named Dobby (the most obvious analogue to American slavery)." And even Harry "was an orphan and survivor of attempted infanticide."

    While Rowling is not backing away from the controversy, the story also notes that she is embracing the debate: "While attacking her own fans might seem like a poor marketing choice, it’s important to note one of the values that Rowling holds most dear: freedom of speech."

    Usually not a good idea to attack your customers, but it probably seems like less of a poor choice if you have hundreds of millions of dollars in the bank.
    KC's View:

    Published on: February 6, 2017

    We had a story on Friday about how Target, unable to get itself out of the rut that has affected its sales and traffic, now wants to get back to fundamentals and core values that it hopes can re-energize the company.

    My comment:

    The problem is that while Target is retrenching, everybody else is going to be innovating. Nobody is going to wait for Target to catch up. I think it is important to do both. To do otherwise is to concede a kind of defeat.

    Just in general, I hate it when companies start to talk about getting back to fundamentals. For the most part, fundamentals are table stakes. If you're not doing all the basic, core stuff right, it is a little late to get back to them.

    MNB reader John Phillips responded:

    Totally agree with your POV on Target. At the current time they are really not a threat to anyone but themselves. By not continuing to innovate they are falling farther and farther behind the organizations like Amazon that continue to push the envelope. Unfortunately Target has lost their way on the fundamentals which they are no where near best in class at ( In Stock, Customer Service, Merchandising, Point of Purchase Presentation of their Product, Diversity of Portfolio etc…) .One man’s opinion but it seems to me that they more headed the way of a Kmart/Sears versus being the disrupting force they used to be in the Marketplace.

    And MNB reader Tom Murphy wrote:

    The real problem: Target is a slave to Wall Street which means selling things.  Digital companies, including Amazon, tend to focus more on meeting the demands for customer experience…which may not always make Wall Street happy.  First order of business for a retailer is to pick your master!

    And, following up on my piece last week about the Moxy hotel format created by Marriott, MNB reader Marty Salerno wrote:

    I agree with what you are saying about this new concept hotel.  While I haven’t stayed in the one in Scottsdale, I’ve stayed at the first one at the Milan Airport in Italy.  The large community space in the lobby I also found worked very well.  With bean bag chairs, a library style area with desks that were comfortable.  Additionally, they offered food and beverages that were good but not great and not too expensive.  The room itself while not large was comfortable and was wired with USB ports for both charging and as an input for the TV.  Overall it was a great place for a one night stay before catching a flight back to the U.S. the next morning.  I would highly recommend it.

    Me, too.
    KC's View:

    Published on: February 6, 2017

    In Super Bowl LI yesterday, which featured the first overtime in the game's history, the New England Patriots engineered a remarkable second half comeback with 31 unanswered points to defeat the Atlanta Falcons 34-28.

    But in really important sports news, we have just about one week until pitchers and catchers report, and life can begin again.
    KC's View: