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    Published on: February 24, 2017

    by Kevin Coupe

    Time reports this morning on a new study from the American Psychological Association (APA) saying that four out of five American adults "say they constantly check their email, texts and social media," which while it makes them connected, also creates enormous stress.

    According to the story, "42% of constant checkers report that social media conversations about politics and culture cause them stress, compared to 33% of people who check less often. Constant checkers also worry about how social media is affecting their wellbeing; 42% say they worry about how social media can impact their mental and physical health, yet only 27% of people who check less often say the same."

    And, the story says, "This digital obsession also appears to take a toll on families. Almost half of parents say they feel less connected to their family when technology is present, even when they are spending time together. Close to 60% say they worry about the impact of social media on their children's mental and physical health." The good news is that more than nine out of 10 parents say that "they do something to limit their children's use, like not allowing cell phones at the dinner table or limiting phone use before bed."

    Time notes that Americans say they "want to unplug more often. Nearly two-thirds of people surveyed say they agree that taking an occasional digital detox is good for their mental health. However, less than 30% say they actually do so."


    I have to admit that I am part of the group that is way too connected, and probably way too anxious as a result. I try to shut off, but find it difficult.

    So this study is an Eye-Opener.
    KC's View:

    Published on: February 24, 2017

    Internet Retailer has a story about a new study from CPC Strategy saying that more than half of online shoppers - 53.5 percent - will check prices on sites other than Amazon before making purchases. Just 18.2 percent say they only check Amazon's prices, with the remaining respondents (28.3 percent) saying they don't shop on Amazon.

    The story goes on: "CPC’s data shows 23.1% of shoppers cited price as the driving factor behind buying something on Amazon, while shipping came in a close second at 19.8%."

    The price-shipping equation always has been at the fulcrum of consumers' online decision making. "For years, free shipping has been a primary factor that influences consumer purchases," Internet Retailer writes. "In 2013, Forrester Research Inc. found that 59% of U.S. consumers consider shipping costs when making online purchase decisions and 53% of survey participants say low-cost shipping is an important reason why they would switch to a different online retailer. An October 2016 report by McKinsey & Co. states that 70% of consumers prefer the least expensive form of home delivery."

    Internet Retailer quotes the CPC study: "There are two basic kinds of Amazon shoppers: There’s the convenience shopper who values things like shipping speed and customer service. Then, there’s the value shopper, who gravitates toward Amazon for great deals. If they don’t see a deal they want, they’re going to see if it’s cheaper elsewhere."
    KC's View:
    If price is going to become even more important for online shoppers making purchasing decisions, then this could prove to be a place where Walmart is going to be able to make some headway against Amazon. I still think that Amazon has an advantage by being unencumbered by legacy issues, but Walmart clearly is spending the money to make itself more competitive. To me, the question will be about innovation ... who can innovate faster and most effectively.

    Published on: February 24, 2017

    Forbes reports that Starbucks has decided to shutter the four Evolution Fresh retail stores that it has opened during the past five years, after Starbucks bought the company for $50 million with dreams of using "a process called cold-pressing" to make a major impact on the juice business.

    The story notes that "Kevin Johnson isn't even CEO of Starbucks yet (officially) but the outfit he's inheriting from Howard Schultz is shedding brands and stores that aren't part of its coffee-centric mission ... When Starbucks removed its name from its logo in 2011, it was, Schultz said, so that future ventures wouldn't necessarily be tied to coffee. Ironically, Evolution Fresh carried no Starbucks branding or logos whatsoever. This was probably playing it safe. Now that the concept has tanked, it's easier to shut down without the Starbucks baggage."

    The story notes that bottled Evolution Fresh juices will remain for sale in Starbucks stores.
    KC's View:
    So I guess this means we can stuff Evolution Fresh into the same closet of ideas that didn't work with Hear Music.

    The story suggests that Kevin Johnson is going to remake the company to some degree. Well, I don't care what Howard Schultz says about letting go of the reins ... if Kevin Johnson's Starbucks begins to look unlike Howard Schultz's Starbucks, Schultz is going to grab those reins back faster than you can say "venti cappuccino."

    Published on: February 24, 2017

    As Sears announced that it is laying off 130 headquarters employees, citing the continuing decline of its retail business, The Street writes that it also unveiled a new format store.

    "With little fanfare," the story says, "Sears opened a full-service auto care facility called DieHard Auto Center Driven by Sears in San Antonio last week ... Similar to a Pep Boys, Sears' auto service stop provides oil changes, tire replacement and vehicle repairs and assessments. Unlike Sears Auto Centers, the Diehard Auto Center isn't attached to a Sears store or in a parking lot of one."

    However, The Street suggests that this may be less about retail innovation than it is about highlighting an established brand that the company would like to sell. Sears burned through $1.6 billion in cash last year, analysts say, and while it stated its intention to sell its Craftsman, DieHard and Kenmore brands, it has only been able to sell Craftsman (to Black & Decker, for a total of $900 million).
    KC's View:
    I don't know that The Street is right about this last assertion ... it strikes me as a pretty expensive way to sell something. Simple denial seems like a far more likely rationale to me.

    Published on: February 24, 2017

    CNBC featured an interview yesterday with Ron Johnson - the former head of Apple Retail and CEO of JC Penney - in which he suggested that "the only retailer that's truly taking Amazon seriously is Walmart," and argued that since "Walmart generates five times the net income that Amazon does," it "has the resources to take them on."

    However, the story says, "Johnson pointed out that Walmart will still need to figure out how to compete better to counteract Amazon's skyrocketing growth."

    Johnson said: "What do you do in store to beat Amazon? What do we do with our merchandise to make sure it's differentiated and preferred? How do we price goods? I would put Amazon on the wall. I would paint it on the billboards and I would say, we are going to find a way to beat Amazon because that is what's going to change the game here."

    And, Johnson argued against the border tax that is being proposed in Washington, DC: "We're in a very difficult time. Many retailers are on the brink as they begin to close stores, as the malls they're in start to close and change, so it's a very difficult environment. And you add something like a major need to put a price increase on products and it could have a very serious impact on many. Almost every retailer is forecasting comp sales flat or down next year. If you have a border tax and they're forced to raise prices, that's going to further decrease their sales and keep people out of stores."
    KC's View:

    Published on: February 24, 2017

    There is a fascinating piece in the Financial Times about the proposed and then quickly abandoned $143 billion acquisition of Unilever by Kraft Heinz, which would have been debt-fueled by feasible ... except that Unilever leadership felt that it vastly undervalued their company.

    One of the most interesting things about the story is how it casts the two companies as being polar opposites in many ways. Unilever CEO Paul Polman, FT points out, "likes to talk about managing growth for the longer term. By investing in its brands and promoting initiatives such as environmental sustainability, Mr Polman has sacrificed short-term profits for longevity."

    On the other hand, 3G - the company that, along with Warren Buffett, owns Kraft Heinz - "has rapidly transformed the consumer industry by slashing costs, cutting jobs and raising profit margins. In a sector buffeted by slower growth and changing consumer habits, investors have cheered its austere management discipline, including a strategy known as zero-based budgeting. Rivals have recoiled at what they view as a model that ultimately destroys businesses by starving them of investment."

    In other words, the disconnect was over both value and values.

    Interesting story, and you can read it here.
    KC's View:

    Published on: February 24, 2017

    • The Wall Street Journal reports this morning that Coca-Cola COO James Quincey, who will become CEO later this year, told an analysts meeting yesterday that "the 130-year-old company must speed up the development of products beyond soda to become 'a total beverage company'," saying that Coke "needs to be bigger than the core brand."

    The story goes on: "As consumers drink less soda, Mr. Quincey said, the company could still grow soda revenue by focusing on smaller, higher-priced packaging that would help it improve its margins. At the same time, he said, Coke must work more quickly to increase its market share in categories such as sports drinks, energy drinks, bottled water, dairy and ready-to-drink tea and coffee. The average person consumes eight 8-ounce beverages a day, he said, noting that globally, Coke currently provides about 4 of those ounces."

    Quincey told the analysts that "his plans include cutting corporate staff as well as the company’s 'sugar footprint,' and introducing a new compensation system intended to encourage more research, development and innovation."

    • JC Penney announced this morning that coming off a quarter in which same-store sales were down 0.7 percent, it will close between 130 and 140 of its stores in coming months. The closing units represent "13 percent to 14 percent of its store portfolio but generate less than 5 percent of annual sales," the story says.

    Reuters reports that "CVS Health Corp said its pharmacy chain had removed artificial trans fats, which have been linked to rising rates of heart diseases, from its store-branded food products well ahead of a June 2018 federal deadline. The second-largest U.S. pharmacy chain said it started offering more than 600 snack and grocery options without partially hydrogenated oils (PHOs), the primary source of artificial trans fats in processed foods, since January."

    • The iconic Pike Place Market in Seattle - which happens to be just a bit south of Etta's, home to the world's best bartender, Morgan - reportedly is nearing the completion of a $74 million expansion project that will add 47 stalls for farmers and artists, as well as provide a new commercial hall that will feature a number of food and beverage retailers, including the Old Stove Brewing Company.
    KC's View:

    Published on: February 24, 2017

    • In California, Raley's announced the promotion of COO Keith Knopf to the expanded role of president/COO.

    CEO/owner Michael Teel will remain in that job, responsible for the development and execution of Raley's overall strategic plan.

    • The Minneapolis/St. Paul Business Journal reports that Eric Hymas president of Supervalu's Cub Foods division for just a year, is leaving the company. he will be succeeded on an interim basis by Chad Ferguson, Supervalu Vice President of Marketing and Consumer Insights, until a permanent replacement can be found.

    The story notes that Hymas's departure comes just a month after Supervalu's hiring of Anne Dament, formerly grocery chief at Target, to be its new senior vice president of retail merchandising and marketing at Supervalu.

    The Business Journal goes on to say that "though Supervalu has sold off Save-a-Lot, its other retail chains like Cub Foods and Shop n' Save have been stuck in a middle ground between discount rivals like Aldi and more upscale chains like Whole Foods. Increased competition from new entrants to the market like Hy-Vee and Fresh Thyme have also added pressure."
    KC's View:

    Published on: February 24, 2017

    • The Washington Post reports that as political discourse becomes more polarized and toxic, companies are beginning to pay closer attention to where their digital ads show up, as "hundreds of major corporations, start-ups, universities and nonprofits are grappling with ... questions of how to mix advertising with politically charged content."

    One website that seems to be taking the brunt of the reaction is Breitbart, often criticized for taking positions seen supportive of white nationalism, misogyny and homophobia. "More than 1,250 companies, including Audi, Harris Teeter, Greenpeace and Lyft, have recently pulled advertising from the controversial site, according to Sleeping Giants, an activist group that is tracking online data," the Post writes.

    The story notes that "GroupM, which bills itself as the world’s largest advertising media company, recently began offering clients the option of avoiding advertising on sites with extreme political content. Before December, clients could choose to distance their company’s ads from hate speech and profanity, but rhetoric has become so charged following Britain’s Brexit vote and the election of President Trump that the New York-based company has begun to take more deliberate action."
    KC's View:

    Published on: February 24, 2017

    Yesterday, we posted an email from an MNB reader about the continuing debate about whether a florist must provide flowers for a same-sex wedding that she disagrees with on religious grounds. While religious freedom is a foundational value in our country, a Washington court ruled that sexual orientation is a protected class, and that discrimination cannot be justified using religious belief as a defense.

    The notion of tolerance always takes center stage in this discussion, and that's what this reader wanted to address, and he wrote, in part:

    Religious freedom is misdirected to serve as an excuse to persecute and discriminate. It makes me want to join the Pastafarians in the Church of the Flying Spaghetti Monster … is it really any more ridiculous...?

    One MNB reader found this to be offensive:

    I am astounded that you would allow this person to vent such bigoted statements towards Evangelical Christians.  To allow one of your readers to clearly equate quote “their prejudice against gays, blacks, Asians, Latinos, Muslims, Jews, Catholics, etc.”  “persecute and discriminate”  “Pastafarians of the Church of Flying Spaghetti Monster”.  This guy is an overt bigot and allowing him to vent is appalling.  Equating an evangelical Christians views on celebrating same sex marriage to this is clearly an ad hominem attack on someone’s deeply held religious beliefs.

    I don't think this person is a bigot. I think that he was simply trying to make a point about how religion can be used to justify a wide variety of behaviors, some of them not so admirable.

    Not everybody shared this view of the email, as MNB reader Mary Schroeder wrote:

    I, too, wish to become a Pastafarian.  I can noodle on the liturgy while I eat it too.  It’s a win-win.

    I applauded the decision by Walgreen to make some of their pharmacies specialists in dealing with cancer patients, but noted that it is ironic since Walgreen is the only one of the two major national drugstore chains that sells tobacco products.

    One MNB reader responded:

    Good for Walgreen's training selected staff to provide more information to cancer patients, but perhaps it's not irony that they still sell tobacco products but just a long-term customer acquisition model. In the latter vein, they can add bottled water from the streams where coal mines are now allowed to dump their mining waste … this could be cross-promoted with cigarettes.

    But really, how does Walgreen's with a tag line "at the corner of happy & healthy" rationalize tobacco products in that mission?

    I sense a little sarcasm here.

    From another reader:

    Kevin, regarding the article on Walgreens (below), I thought exactly the same thing that you did, in fact, I find it a bit strange when we walk out of the local Walgreens by our house, and the clerk at the front counter tells us to “Be Well”, while they’re standing in front of the cigarette and cigar display……  It’s likely time for Walgreens to start “walking the talk” in that area, IMHO….


    Regarding our story about the resurgent milk man industry, one MNB reader wrote:

    I have used home milk delivery going on 20 years here in the Seattle area.  We get both milk and eggs delivered once a week, the product is simply better than what you can get at a retail store.  When I got that knock on the door asking if I would be interested in starting the service, I asked how do they track their deliveries.  I was told it was a manual paper and pencil process but they were looking for a mobile app.  I told them I had a mobile app that was used by direct store delivery drivers who service grocery stores and I am sure it could be modified to work for home milk delivery.  Sure enough we made the needed modifications and the real benefit of the new app was the time savings in the billing process.  The milkman, who was an independent owner operator, would typically hand enter in all of the deliveries at the end of the month and now those same deliveries could be electronically posted.  This new electronic process took the entire billing process from a full weekend to an hour, where most of that hour was the printer printing statements.  While we still have users of the application, we no longer actively sell it as the effort it takes to install, train and support for 1 route companies is not a good use of our time and resources.

    And finally, one MNB reader reacted to our brief piece yesterday about how scientists have identified seven Earth-size planets orbiting a dwarf star named Trappist-1, about 40 light-years, or 235 trillion miles, from our planet ... One or more of the exoplanets in this new system could be at the right temperature to be awash in oceans of water, astronomers said, based on the distance of the planets from the dwarf star."

    April 5, 2063 has just come another step closer to reality!

    Thanks for reminding us of Gene Roddenberry’s positive hope for the future.

    My pleasure. Of course, if Star Trek got it right, we'll also have to go through World War III and the "post-Atomic horror" before we get there. So we may be in for a rough 46 years.
    KC's View:

    Published on: February 24, 2017

    I finally saw Hidden Figures, and I liked it enormously, and found it even more touching than I expected.

    For those of you unaware of the film, Hidden Figures is the true story of how, in the early sixties, a number of African-American women worked at NASA as "computers" - they were incredibly smart at math and science, and were able to do the complicated computations necessary to launch people into space and get them home again. This was at a time when black people had to use separate bathrooms, drink out of separate water fountains, use separate libraries and ride at the back of the bus in a number of southern states. It was, in fact, a time when social justice and equal rights were denied in certain places, with the bigots who wanted to deny them equality claiming it was a matter of "state's rights."

    Hidden Figures manages the considerable trick of showing us how these women managed to transcend their circumstances personally and professionally without ever being trite; part of this is because their story is so damned compelling, and part of it is because of skillful performances from Taraji P. Henson, Octavia Spencer, and Janelle Monáe as the three leads, and Kevin Costner as the NASA official (fictionalized for dramatic purposes) who helps enable their rise.

    Directed by Theodore Melfi, who also co-wrote the film with Allison Schroeder, Hidden Figures is all the more remarkable for the fact that it tells a story that largely has been unknown until now - after all, admitting that African-American women were behind the guys who The Right Stuff portrayed as iconically heroic simply would not have fit the narrative that a predominantly white, male establishment would prefer to be accepted. But this movie makes clear that a culture that marginalizes anyone, not giving each and every person the ability to grow and achieve their maximum potential, is a society that will never reach its potential.

    Hidden Figures ought to be shown in schools all over America. It tells an important story with implications beyond the launchpad ... because in this movie, the most powerful force is not the engine that propels astronauts into space, but the hearts and minds and souls of people who will not be put down.

    I'm so glad this story has finally been told. And it offers enormous business lessons about how employees need to be empowered, and how it is the boss's responsibility to be in touch with the realities - good and bad - of the workplace, and for making the environment as conducive to getting good work done as possible.

    Time to make my Oscar predictions, since the Academy Awards are scheduled for Sunday. (When my choice is at odds with who I think will win, I'll note it.)

    • Best Picture: La La Land (I'd prefer Moonlight or Hell or High Water)
    Best Actor: Denzel Washington, Fences
    Best Actress: Natalie Portman, Jackie
    Best Supporting Actor: Mahershala Ali, Moonlight
    Best Supporting Actress: Viola Davis, Fences
    Best Director: Damien Chazelle, La La Land (I'd vote for Barry Jenkins, Moonlight)
    Best Original Screenplay: Manchester By The Sea
    Best Adapted Screenplay: Fences (I'd prefer Moonlight.)

    I have a wine to recommend to you this week: the 2013 Francis Coppola Reserve Pinot Noir from Sonoma ... it is utterly delicious and even has a label designed by Dean Tavoularis, production designer on The Godfather. Enjoy.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: