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    Published on: March 7, 2017

    by Kevin Coupe

    Think of it as diversity served with a side of carbonation.

    Coca-Cola is out with a new commercial that is part of its "Taste the Feeling" campaign, offering a look at unique family dynamics circa 2017. Entitled "Pool Boy," the ad portrays a brother and sister, each of whom is fixated on the rippling abs of the fellow working on their pool. Each wants to bring the guy a cold Coke ... but neither is quick enough.

    It isn't just the willingness to use diversity as not just a fact of life, but also the narrative backbone of the commercial, that I find impressive. It also is the fact that this commercial could be shown pretty much anywhere - there is no dialogue, and the story is entirely visual.

    I'm sure there will be someone out there who will propose boycotting Coca-Cola because the company is seen as normalizing something that someone sees as anything but. I think Coke deserves a lot of credit for seeing the world the way it is, and working with it.

    The commercial, I think, is an Eye-Opener. Enjoy.

    KC's View:

    Published on: March 7, 2017

    The Wall Street Journal this morning reports that "landlords of mid- and low-quality mall properties" are turning to supermarkets as prospective tenants that may be able to keep their facilities relevant and open for business, especially as some former anchor tenants shutter stores or go out of business.

    According to the story, "Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans Food Markets Inc., which is planning to open a store in 2018." Meanwhile, "College Mall in Bloomington, Ind., plans to bring in 365 by Whole Foods Market in the fall." And, at the same time, Kroger "has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place."

    According to the story, "The goal for landlords of covered malls is to provide one-stop destinations where consumers can pick up a broad array of items and, ideally, visit multiple times a week. These massive rectangular structures surrounded by vast parking lots are usually built to serve shoppers up to 25 miles away ... While some malls have brought in grocery stores as tenants in the past, the pace has accelerated sharply in the past few years as higher-end grocery stores look to expand, analysts said."
    KC's View:
    First of all, I'm guessing that the landlords trolling for supermarkets are not describing themselves as owning "mid- and low-quality mall properties." Not the best way to go into a sales meeting.

    I'm not sure that this is the panacea that real estate folks might suggest. After all, this is what Whole Foods did with its "365" format in Bellevue, Washington ... and I'm not persuaded that this is a good place for a format that already seems flawed. (My original comments, plus pictures, can be found here.) I can imagine that the right store in the right mall location might work, but this is not for everyone.

    And let's not forget that this could end up being a short-term solution to a long-term problem, since Nielsen is projecting that within a decade 20 percent of total food store sales will go online, and 40% of center store sales.

    Malls aren't suffering because of the woes of specific stores. These stores are suffering because of changed consumer behavior, and the impact is being felt by malls. Supermarkets might help solve the problem, but not forever.

    Published on: March 7, 2017

    The Cincinnati Business Courier reports that some 1300 Kroger employees have decided to accept early buyout packages; the company announced last December that it was offering early retirement to about 2,000 non-store employees.

    According to the story, "This was the first time Kroger has offered a voluntary workforce reduction package. It did cut employment in 2001, but those job cuts weren’t voluntary."

    This move is part of a broader cost-cutting initiative at the retailer, which is trying to lower administrative costs. "That’s vital," the story says, "as Kroger and virtually all other supermarkets are battling the effects of food price deflation, which cuts into their sales and profits. Kroger had its industry-leading streak of 52 consecutive quarters posting same-store sales growth snapped last quarter. Food price deflation was largely to blame."
    KC's View:
    Part of being a leader is knowing when to take your medicine, even if it doesn't taste great. Part of being a retail leader is knowing that you have to make stores a priority - staff cuts are best started at headquarters.

    Published on: March 7, 2017

    Forbes has a story suggesting that Target CEO Brian Cornell is likely to find it difficult "to turn the company around quickly and recreate a momentum of growth," especially because the company seems not to have gotten any real competitive traction since Cornell joined the company in 2014.

    Among the problems Cornell faces: a high percentage of stores that are over a decade old, a seeming inability to establish the kind of EDLP approach that would reinforce it as a discount destination; and an internet business that, while growing, is not yet competitive online with Amazon and Walmart.

    And, things are not likely to get easier: "The environment in 2017 will be hostile. Low margin food retailers like Aldi, Lidl and dollar stores are going to enter the Target market areas and be competitive. The customer will test the new entries and Target (and Walmart) must be prepared to reduce food prices and compete aggressively."
    KC's View:
    I don't think anything is imminent, but I have to wonder at what point the folks at Target are going to grow impatient with Cornell's leadership. I think he did a great job of cutting off the diseased limbs (like Target's Canada business), but now it is important to regain some sales and profit traction ... and it doesn't sound like that is going to happen anytime soon.

    Published on: March 7, 2017

    • The Milwaukee Journal Sentinel reports that Walmart "is bringing its online grocery shopping/pickup service to metro Milwaukee, a move that will almost certainly add to the region's already hyper-competitive supermarket scene ... In Wisconsin, Wal-Mart is planning to launch the service at its Muskego store at W159-S6530 Moorland Road, according to documents on file with the City of Muskego. Wal-Mart needs Plan Commission approval to add signs directing customers to the online pickup area at the store. Muskego is a Milwaukee suburb in Waukesha County."

    If the opening foray works, there is potential for considerable expansion: "Wal-Mart has 83 supercenters, 12 Sam's Club warehouse stores, 4 discount stores and 2 neighborhood markets in Wisconsin," the story points out.
    KC's View:

    Published on: March 7, 2017

    • New York-based pure play online grocery retailer FreshDirect has announced that it plans to expand into the Washington, DC, market, probably during the second quarter of this year.

    AZ Business Magazine reports that Arizona-based Bashas is teaming up with Instacart to allow "grocery shoppers who live in Phoenix, Scottsdale, Paradise Valley, Tempe, Chandler, Gilbert, Mesa and Ahwatukee" to get their groceries delivered.

    According to the story, "Groceries can be delivered within one hour, two hours or up to seven days in advance. The delivery charge is $5.99 for grocery orders $35 and up."
    KC's View:

    Published on: March 7, 2017

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

    • The New York Times reports this morning that "a farm in southern Tennessee that produces chickens for Tyson Foods was ordered to cull its flock after federal officials on Sunday identified an outbreak of lethal avian influenza there, the first time the disease has struck this year."

    Some 73,000 chickens had to be killed, and the US Department of Agriculture (USDA) also "established a quarantine on chicken farms around the area" as it tested chickens "to determine whether the disease had spread." The specific strain of avian influenza has not yet been publicly identified.

    The Times quotes Tyson as saying that this is “a bird health issue and not a food safety or human health concern,” and that “there’s no evidence to suggest that any form of avian influenza can be transmitted to humans from properly cooked poultry.”

    • The Chicago Tribune reports that Strack and Van Til has announced it's closing five of its grocery stores, including the Strack & Van Til at 72nd Avenue and Taft Street in Merrillville and four in Illinois." The stores are expected to close late next month. "After the closings, Strack and Van Till will have 32 stores in Indiana and Illinois," the story says.

    • The Oregonian reports that Portland-based New Seasons plans to open its first store in San Francisco. No opening date has been announced.

    The story notes that New Seasons already has a store in San Jose, and has plans for four store sin Northern California.

    I'm a big fan of New Seasons ... see this recent piece about the company's newest store, on Mercer Island near Seattle.

    • The Ann Arbor News reports that "Meijer plans to invest more than $375 million in new and remodeled stores this year across six states ... The investment will include seven new stores and remodeling of 22 stores. The new stores will be built in Michigan, Indiana and Wisconsin. The new locations are expected to create about 2,100 new jobs."

    The story notes that "this year, Meijer will finally open stores in Michigan's Upper Peninsula. The two stores -- the only new locations in Michigan in 2017 -- will be in Escanaba and Sault Ste. Marie. Two stores are planned for Indiana in the communities of McCordsville and Franklin. Three stores opening this year in Wisconsin, Meijer's newest market, in Greenfield, West Bend and the Green Bay suburb of Howard."

    By the end of the year, Meijer expects to have 237 stores.
    KC's View:

    Published on: March 7, 2017

    • SpartanNash announced that its president/COO, David Staples, will succeed CEO Dennis Eidson when he retires in late May.

    At the same time, SpartanNash said that Pat Weslow, Vice President, National Accounts, has been promoted to the role of Senior Vice President, Distribution Sales.
    KC's View:

    Published on: March 7, 2017

    USA Today reports that the Trump administration's "hard-line stance on undocumented workers is threatening large dairy farms that rely on immigrant labor. That, in turn, could raise the price of milk, yogurt, ice cream and cheese for consumers..."

    According to the story, "By some estimates, up to 80% of the hired help on large Wisconsin dairy operations is immigrant labor and a large percentage of those workers are undocumented ... Without the foreign-born help, many farmers said they would be forced to quit milking cows because not enough other people are willing to accept such physically demanding jobs for $13 an hour."

    The story notes that "dairy constitutes about half, 49%, of all Wisconsin agriculture revenue," and that "Wisconsin is No. 1 in cheese production across the USA with more than a quarter of the market." While the impact of administration policies could hit Wisconsin hard, farmers in places like California have similar concerns.
    KC's View:
    To be clear, the dairy farmers quoted in the story are not in favor of doing nothing. Rather, they are seeking "comprehensive immigration reform nationally because it's needed to provide a stable, secure dairy workforce."

    The story goes on to make the point that "immigrants, including undocumented workers, play an important role in the U.S. economy because they fill the jobs that most Americans won’t do. Dairy farmers say they get almost 'zero response' from native-born job applicants even when pay is comparable with nearby factories."

    The question that has to be asked is whether consumers are willing to put up with either higher prices or lower availability as a price for a hard-line approach to immigration reform.

    Published on: March 7, 2017

    Robert Osborne, who started out as an actor, shifted to writing, and finally ended up as the primary host and onscreen presence on the Turner Classic Movies cable channel, passed away yesterday at age 84.

    Osborne was the cable network's human version of a genius bar - a seemingly inexhaustible source of contextual information about the movies of the past, the actors and actresses many of us grew up with, and the studio system that allowed them to blossom. And, he was a significant voice for film preservation, understanding that cinema is an enduring popular art form that has helped define America (and the world) through the decades, and that one never should be casual or complacent about the importance of art.
    KC's View:

    Published on: March 7, 2017

    Following up on our continuing dialogue about whether the moves are worth going to, and whether it suggests a certain detachment from cultural realities to brag about knowing nothing about them, the MNB reader who made the original I could give a rat's a** about movies and Hollywood that launched the conversation, weighed back in about something other readers said:

    Love the comments about “ignorance of popular culture”. The truth is that I don’t buy into the hype and pedestals that these actors have been placed on. Add to that their political comments that disagree with 50% of the country, they are no different than anyone else holding a job.

    I choose to lift up those that actually contribute to society and influence my life directly. Teachers, ministers, social workers and my hourly team members mean more to me and have enlightened my life more than any actor ever could. Rather than live in a make-believe world I choose to live in reality.

    When I want to be entertained, I check out a few of the best movies ever made, Tommy Boy, Step Brothers and Ferris Bueller's Day Off

    Ah. The classics.

    (Actually, Ferris Bueller is a legit classic of the genre. No argument there. But we part company on the others.)

    I would just respond by saying two things.

    First, people who love the movies aren't living in a make-believe world. That's as judgmental as saying that you are boring because you don't like the movies (which one MNB reader said, though I disagreed). They're just enjoying one element of our culture, which can, when done right, can illuminate important issues and facets of the human condition. Going to the movies can be part of the same human instinct for illumination and emotional enlightenment that prompts people to listen to music or go to an art museum. It isn't escapism. Far from it.

    So maybe try to be a little less judgmental.

    Second, you may not have noticed, but we live in a world where pretty much everybody disagrees with 50 percent of the country. I figure that there are folks on both sides of the divide from whom I can learn something, if I'm willing to be open to the experience.

    We had a story yesterday about how AI assistants may be creating a lack of basic civility in kids, which prompted MNB reader Gary Harris to write:

    I guess Amazon’s next upgrade to Alexa will go beyond providing information to perhaps providing feedback, especially using voice recognition to identify household members. “I’m sorry, Johnny, I didn’t hear a ‘please’ in your question. Would you like to try again?” “I’m sorry, Sally, that tone of voice is inappropriate. Please try again in 5 minutes.”

    Brave new world out there…

    I actually think that is a really good idea.
    Jeff Bezos ... we're talking to you.

    KC's View: