business news in context, analysis with attitude

Published on: March 13, 2017

by Kevin Coupe

There were a couple of stories in the Wall Street Journal over the weekend that put me in mind of the book that Michael Sansolo and I wrote, "The Big Picture: Essential Business Lessons from the Movies." I couldn't help but share.

For one thing, there was a piece about how, against all odds, My Cousin Vinny has "swaggered into the pantheon of legal cinema, taking a seat alongside the genre’s dramatic greats, 12 Angry Men and To Kill a Mockingbird.

My Cousin Vinny is about Vincent La Guardia Gambini, a Brooklyn mechanic turned lawyer, played by Joe Pesci, who find himself with just six weeks experience defending his cousin from a murder charge in a small town Alabama courtroom.

No less a jurist than the late Justice Antonin Scalia even referred to the film in oral arguments at the Supreme Court once, and experts say the movies gets points for being legally accurate, and for demonstrating the importance of both perseverance and "experiential experts," who enable Vinny to perform far better than his capabilities.

That's a pretty good lesson for everyone, not just lawyers. It is important, not matter how experienced you may be, to be willing to ask questions and listen to the answers ... because that only can make you smarter.

You can read the story here.

At the same time, the Journal featured a column entitled, "How ‘Star Trek’ Has Helped Me Solve Workplace Dilemmas," which is definitely worth reading - especially by the ample number of MNB readers who I know are "Star Trek" fans.

Using examples from all the various series, the writer illustrates something that Michael and I have long espoused - that "Star Trek" can serve pretty much as a guidebook to life.

You can read the entire piece here.

Enjoy.

Published on: March 13, 2017

The New York Times had a story over the weekend about "wave of gas stations and convenience stores capitalizing on a growing demand for fresh, healthful and convenient road food," and they're doing so by creating restaurant operations that differentiate them from the competition. "Encouraged by the changing tastes of consumers and the potential for profit, a metamorphosis has taken place in at least 1,500 locations nationwide: at independent gas stations as well as those owned by oil giants like Shell and Exxon and convenience store chains like 7-Eleven."

As a result, the story continues, "roller-grilled hot dogs and little packaged cakes of indefinite shelf life are, in many places, giving way to fresh produce, elaborate sandwiches and even grilled tilapia and Korean bibimbap. Popular food trucks and food carts are adding to the variety, many setting up shop just feet from gas pumps to take advantage of a steady stream of customers."

Indeed, the National Association of Convenience Stores (NACS) says that "an estimated 10 percent of the 154,000 convenience stores across the country — a $31 billion industry — could be described as food-forward."

You can read the entire piece - at the risk, quite frankly, of getting hungry - here.

Published on: March 13, 2017

The Seattle Times reports on a new RBC Capital Markets analysis suggesting that "Amazon.com’s Alexa artificial-intelligence software could generate $10 billion worth of business a year for the company, stemming from device sales and voice orders from Amazon’s site ... their projections show that by 2020 the sale of products that incorporate Alexa — the Echo line of devices, for example — could reach $5 billion a year."

Indeed, the RBP analysis projects that "Alexa could become 5 percent of Amazon’s business within three to five years."

At the same time, the Wall Street Journal has a story saying that "people in the technology industry are increasingly thinking about how such voice-activated devices can be made useful in the workplace. The products aren’t quite ready for office prime time yet. The workplace offers challenges that experts say intelligent assistants built for home use so far haven't effectively met, mostly in the area of voice recognition."

But there is a lot of research and development taking place, as AI-oriented companies believe that there is enormous upside to this segment.

You can read the WSJ piece here.

Published on: March 13, 2017

Fortune reports that Starbucks is disputing assertions that it is suffering from diminution of its brand image because of an announced program designed to hire 10,000 refugees globally over the next five years.

The coffee retailer, the story says, "issued a letter sent by market research firm Kantar Millward Brown that claims that in the wake of the coffee company's refugee pledge, 'we did not observe any substantive impact on customer consideration, future visitation intent or brand Perceptions or any other key performance metrics for the Starbucks brand'."

Starbucks announced the refugee hiring program in the wake of the decision by President Donald Trump to bar the entry of refugees from seven predominantly Muslim countries as way of addressing concerns about terrorist attacks on the US. The program was seen as a deliberate slap at the current administration, and calls for a boycott were seen and heard on social media; at least some of these calls suggested that Starbucks was prioritizing global refugees over US military veterans.

Published on: March 13, 2017

The Chicago Tribune reports that Chipotle has decided to shut down all of the 15 ShopHouse Asian format restaurants that it has been operating in places like California, Illinois and Washington, DC, effective March 17. The reason, the company says, is that the format did not meet sales expectations.

According to the story, Chipotle "has a deal in place to sell the ShopHouse leases to another company," but is not yet announcing specifics.

The Tribune notes that "Chipotle operates two other restaurant concepts — Pizzeria Locale and retro-style burger stand Tasty Made — which executives have said are less of a 'distraction' and have more potential."

Published on: March 13, 2017

Bloomberg reports on how Tesco Chairman John Allan got himself in trouble last week when he spoke at a London conference about how non-executive directors serve on corporate boards. Allan reportedly said that white men were an “endangered species” on corporate boards and had to “work twice as hard.” He added that women with an ethnic background were “in an extremely propitious period.”

Afterwards, Allan said that he was kidding, and posted a statement on Tesco's website: “The point I was seeking to make was that successful boards must be active in bringing together a diverse and representative set of people ... There is still much more to be done but now is a good time for women to put themselves forward for non-executive director roles.”

The Bloomberg story notes that "investors and government officials are demanding greater diversity in company management, as women still tend to hold fewer senior positions and earn less money than their male counterparts ... 29 percent of directors appointed in the U.K. last year were female, the lowest level since 2012. Tesco’s board of directors has 11 members, nine of whom are white men."

Published on: March 13, 2017

• The Wall Street Journal reports that even though its Brazilian unit has been "facing lackluster sales," Walmart "is making a contrarian bet" there, "investing heavily to revamp its U.S.-style big-box stores even as shoppers increasingly flock to smaller, cheaper options." The plan is to spend the equivalent of $320 million (US) over three years.

This means "mostly sticking with a strategy it has followed here for two decades. Wal-Mart’s net sales in the country have been sluggish in recent years compared with its other international markets, falling 4.1% for the three months ended Jan. 31, versus increases for the same period of 8.9% across Mexico and Central America, and 5.4% in China."

The story suggests that while Walmart's big box stores were popular in Brazil three decades ago, it is facing issues today that make them seem - at least to some - to be so last century. For one thing, "hellish traffic in mushrooming cities makes hypermarkets hard to reach. Small neighborhood convenience stores are attracting Brazilians who increasingly live alone, not in large family homes."

And at the big box end of the market, "Warehouse-style stores known as 'cash and carries' - many owned by France-based Carrefour and Groupe Casino ’s GPA and originally targeted at small businesses - sell household items and a small selection of groceries in bulk to families at steep discounts ... Shoppers tend to go once a month or so to stock up on items like cleaning products and beer and rely on neighborhood supermarkets for most food and grocery items."

Published on: March 13, 2017

• The American Customer Satisfaction Index (ACSI) evaluation the Retail Trade "is up 4.7 percent to a score of 78.3 on a 100-point scale, an all-time high for the sector," the organization said.

The report goes on to say that "department and discount stores gain 5.4 percent to 78. Dillard's takes first place, up 4 percent to an ACSI score of 83. In second place, JCPenney is the biggest gainer, up 11 percent to 82." Remarkably, "Nordstrom is the only department store to deteriorate in customer satisfaction, slipping 2 percent into a three-way tie with Dollar Tree and Belk at 80. Kohl's, Macy's and Target all advance to 79, and Dollar General rises to 78. Meijer matches Sears at 77, followed by Ross at 76."

The ACSI report says that "specialty retailers lift shopper satisfaction 3.9 percent to 80. Costco (+2%) leads with an ACSI score of 83, followed by a trio at 81: Sam's Club (+7%), L Brands (unchanged), and Barnes & Noble (+3%) ... Supermarkets improve customer satisfaction by 6.8 percent to 78, aided by falling food prices, higher quality and better service. Trader Joe's rises to the top (+4% to 86). Publix is up 2 percent to 84, followed by ALDI, H-E-B and Wegmans at 83.

"Whole Foods climbs 11 percent to 81, ahead of Hy-Vee, Kroger and ShopRite (all 79). Meijer (+5%) matches Target (+10%) at 78, followed by BI-LO (+4% to 77). The newly merged Ahold Delhaize posts an ACSI score of 76 to tie with SUPERVALU. Albertsons follows at 75, well below its score in the drug store category. Walmart and Giant Eagle are each up 10 percent, but remain in a tie for last place at 74."

Published on: March 13, 2017

On Friday, MNB took note of a Travel & Leisure report on how the Scottish beer company BrewDog plans to open the “world’s first crowdfunded craft beer hotel" in Columbus, Ohio, which will be attached to the brewery it is building there. The story says that among the amenities that will be offered in the BrewDog hotel are "a tap in every room featuring Punk IPA, the brand’s flagship brew" ... "a beer-stocked mini-bar in every shower, so you never have to go a second without a beer in hand" ... "access to limited-edition brews from the brewery next door" ... "a spa that uses beer in its products and treatments, such as hop oils and a malted barley massage" ... and "craft-beer pairings during breakfast, lunch, and dinner."

Which prompted MNB reader Stacy McCoy to write:

OhmygodohmygodohmygodOHMYGOD!!! I can honestly say I have never been THIS excited to go visit COLUMBUS… OHIO!

But really, do you see the business lesson here? Aside from appealing to all of the craft beer geeks in the Midwest, or further… this company is trying something new and outside of the box in an industry that some will say is nearing a bubble burst due to all of the growth that the Microbrewery/ Craft Beer industry has seen in the past few years.

I travel a lot… A LOT. And if there was a chain of hotels that had a beer on tap and SHOWER BEERS in every room… well I can tell you where I would be booking all of my overnight stays.

See you in Columbus!

I sense an MNB get-together there in my future...

From another reader, Chris Esposito:

Kevin, funny that you mention this as I had already made a small investment in the brewery itself.  The DogTap opened two weeks ago and has been packed since and they expect to start brewing in April.  I think you’d find these two young men pretty entertaining but also pretty much doing what you always talk about – being disruptive.  Just read some of the stories of things they’ve done, quite hysterical.  Also, they had a three year run on the Esquire Network – Brew Dog’s, where they drove around the US brewing with guys from Stone, DogFish Head, Sam Adams, etc. but each time with some crazy twist to the brewing process.  I can’t wait to get to the bar in Columbus and claim some of my investment “swag”!




And finally, writing about the broader competitive issues that occupy us much of the time here on MNB, one reader sent the following email:

As we're watching the MNB Nature Hour unfold, the camera zones in on a particularly moronic Bunny eating clover. She doesn't notice the Coyote sneaking up behind her until it's too late. As viewers, we mourn bunny, that is until the camera shows Mama Coyote bringing her starving Puppy that dumb Bunny for a meal.

Is the Coyote evil? Is the Puppy evil? (trick question-impossible for a puppy to be evil) I would argue that in the grand scheme of things the Coyote is doing all the Bunnies out there a massive favor by frightening them into becoming faster and smarter.

Everyone who is blaming Amazon needs to stop being the Bunny and redirect that energy into stepping up their game. If they don't they might get eaten, and that's not the Coyote’s fault.

I’m tired of people acting like competition is evil instead of praising it for pushing us to be our best. Competition is what made America great in the first place. I don't want people to lose their jobs, I just want them to be pushed to become their best.

It is emails like this one that remind me why I love the MNB community so much.