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    Published on: March 23, 2017


    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy.

    I'm standing in my kitchen, where I have an Amazon Echo, which allows me to interact with the Alexa voice-activated AI system. I just love it ... and I'm fascinated by some of the technology offerings that are emerging and that I've read about recently.

    For example...

    CNet had a story the other day about how pretty soon I'll be able to use the system to pre-heat a Jenn-Air WiFi-enabled wall oven. Now, I don't have a Jenn-Air WiFi-enabled wall oven, but in our next home ... which will be in Portland, Oregon, if everything breaks my way ... maybe I'll get lucky.

    That'll be great. The way things are going, I'll be able to be driving in my car, or just working in my office, and just say to the Echo or Dot, warm up the oven ... and it'll happen.

    The only thing better would be able to look at a Star Trek replicator, which would allow me to just say to the computer, "Earl Grey, hot," and have it appear.

    An oven, of course, is just the latest idea for a connected appliance ... there have been a lot of stories recently about refrigerators, washers and dryers, and dishwashers that will be internet-enabled, capable of being operated remotely.

    There's just so much interesting stuff out there.

    I was reading a piece in the Washington Post the other day about how Google and Levi Strauss have come up with a $350 jean jacket that "has technology woven into its fibers and allows users to take phone calls, get directions and check the time by tapping and swiping their sleeves. That delivers information to them through their headphones so they can keep their eyes on the road without having to fiddle with a screen."

    How cool is that.

    The jean jacket has to be just the beginning, and I would imagine that it won't be long before such technology will be available in pretty much any article of clothing. And when I say "won't be long," I mean within months ... because the tech-enabled jean jacket is scheduled to hit the market this fall.

    And this is just the beginning.

    Engadget had a story the other day about how Amazon has developed a new service available to Prime members that will allow them to upload photos of the user wearing two different outfits, and instantly be informed which one works better. The perk, called "Outfit Compare," used "real stylists with experience in retail and the fashion industry to judge your clothes based on their fit, how the colors complement you and what's on trend," and then automated their opinions and preferences.

    Now, in my case, such a service would be pretty much useless - the choices would be between blue Levis and gray Levis, and navy blue t-shirts and black t-shirts. But for most other people, this could be useful, and I'll be curious to see if it gets any traction.

    I know there will be folks who will say that people ought to get off their fannies and go turn on the oven ... ought to be willing to stop and look at a map when looking for directions and wait until arriving at a destination before taking phone calls ... and ought to be have the good sense to look in the mirror to see if this shirt looks better than that shirt.

    Maybe so. But I cannot help but be excited about this stuff, and I think I'm in the majority. The momentum in this direction just cannot be stopped.

    But it isn't just about being cool. All of these technological breakthroughs hold the potential - in fact the certainty - of redefining how retailers and suppliers define relevance to the shopper.

    And to steal a phrase from Bob Dylan, there is no 'shelter from the storm."

    That's what is on my mind this morning, and as always, I want to know what is on your mind.

    KC's View:

    Published on: March 23, 2017

    by Kevin Coupe

    Retailing is tough, and retailers will accept growth pretty much anywhere they can find it.

    Consumer research firm NPD said the other day that the art supplies business has been doing pretty well, the New York Times reports. In January, there was a week during which poster board sales were up 33 percent compared to a year earlier, and foam board sales were up 42 percent."

    In addition, "More than 6.5 million poster boards were sold in January, with nearly one-third sold during the week of the march. Sales of easel pads and flip charts grew by 28 percent ... Specialty markers were up by 24 percent; permanent markers, 12 percent; glue, 27 percent; and scissors, 6 percent."

    Anecdotally, it appears that many art supplies stores experienced shortages, sending consumers scurrying from place to place looking for materials.

    In fact, these increased sales appear to be directly attributable to people buying materials so they could protest at anti-Trump rallies all over the country during January, especially in the weeks surrounding the inauguration.

    Call it a Trump Bump. For retailers in the art supply business, it is an Eye-Opener.
    KC's View:

    Published on: March 23, 2017

    The Washington Post reports this morning that Starbucks' longtime CEO, Howard Schultz, "quite literally handed the keys to the company to his successor" yesterday when he handed the "door key to Seattle's Pike Place Market store, the company's original location, and handed it to president and chief operating officer Kevin Johnson, who will officially succeed Schultz in early April."

    The story notes that Johnson is not taking over Starbucks at a financial high point. "This year marks the first time since the financial crisis that the stock has been down in the year preceding the annual meeting," the Post writes. "As U.S. sales failed to meet analyst expectations five quarters in a row, investors have driven down shares in Starbucks 4 percent over the past year, compared with a 15 percent rise in the S&P 500 stock index. In January, it trimmed its full-year revenue forecast.

    "Both Johnson and Schultz said they are confident about the company's growth in China, where it now operates more than 2,600 stores and is opening more than one store a day, as well as new digital efforts to enhance ordering and gift-card sharing and new food and coffee options. Schultz, who will step down from the CEO role but continue on as executive chairman, plans to lead the company's new high-end Roastery and Reserve brands, as well as focus on the company's social impact efforts."

    At the meeting, the Post writes, "a representative from the National Center for Public Policy Research, a conservative think tank, asked about what the hiring of refugees would cost Starbucks and whether it was politically driven;" the question was prompted by Starbucks' recent announcement that, after the Trump administration attempted to impose a temporary travel ban on immigrants from a number of majority-Muslim countries, the company would hire 10,000 refugees over the next five years in 75 countries ... a move that "was lauded by many customers but also drew boycott threats on social media from the right."

    Schultz argued that the announcement had no impact on the company's brand equity, and that the refugee announcement was prompted by "humanity and compassion ... principles and our core beliefs," not politics.

    Perhaps as a response to those who charged that Starbucks were putting refugees ahead of US veterans - despite the company's hiring of 10,000 US military vets or their spouses over the past four years - Schultz said that "Starbucks will hire 15,000 veterans and their spouses by 2025," according to the Wall Street Journal. "In addition to hiring more veterans, Starbucks pledged Wednesday to hire more American young people who are unemployed or not in school. The chain plans to hire an additional 60,000 such young people by 2020."

    In other Starbucks news, the Chicago Tribune reports that it will unveil its new lunch menu in Chicago on April 11, with an initial presence in about 100 of the city's stores. The goal is to expand the menu - called "Mercato," and featuring healthier sandwiches and salads - into other US markets in the near future.

    According to the Tribune, "The new menu is part of a bigger plan by the coffee giant to capitalize on strong lunch sales. Starbucks announced a plan late last year to double food sales to about $5 billion by 2021. Starbucks said its food business has grown by 150 percent in the last four years."
    KC's View:
    A few things here, if I may...

    First, I would argue that Schultz is being at least mildly disingenuous when he talks about things like the refugee hiring initiative and say it is a matter of values, not politics. The thing is, politics are values. Or at least should be. Or maybe it is better to say that one's politics should reflect one's personal values.

    I don't agree with Schultz on everything, but I cannot for the life of me understand the objection to hiring refugees in Starbucks stores around the world. As I've said here before, the conflation of refugees with illegal immigrants is one of the more unfortunate things about our current discourse; refugees have been forced out of their homelands and are victims, and to me, Starbucks' position is about compassion and humanity. For me, those are positive values.

    I hope everything works out for Kevin Johnson. The last time Schultz handed off the CEO job and then took it back, it was because - according to him - the company had expanded too much at a time of recession. Well, opening one store a day sounds like a pretty aggressive to me ... plus opening new, more expensive Reserve stores ... and it all sounds like it could be a recipe for problems if the economy doesn't continue to improve.

    That said, Starbucks has shown an enormous facility for reinvention and an unusual level of nimbleness for a company its size. Plus, I like the product - and start virtually every morning by writing MNB while fueled by most of a pot of its Verona blend.

    Published on: March 23, 2017

    USA Today has a story about how Sears Holdings CEO Edward Lampert has "shielded some of his investment" in the company - he owns 48 percent of Sears stock - from "annihilation" if the company goes out of business.

    "The conventional wisdom is that Lampert will suffer massive losses if Sears perishes, since he has pumped hundreds of millions from his personal fortune into the company," the story says, but it adds that "through a series of transactions over the last several years, Lampert has extracted significant value from Sears and may secure additional assets if the company goes belly up."

    Former Sears Canada CEO and Columbia Business School Professor Mark Cohen tells the paper that Lampert has cordoned "off an enormous amount of assets through the loans he’s made, which have essentially protected him from what is eventually (going to) occur."

    And, the story says, Lampert "has spun off divisions, provided secured financing in exchange for real estate collateral and transferring valuable properties to an investment trust, all while retaining ownership stakes in those assets."
    KC's View:
    All this while continuing to say that Sears had a path to profitability and viability, which I suppose Lampert had to say. Still, while he may not have known very much about retailing, Lampert certainly knew something about how to protect himself.

    I cannot help but wonder, though, how protected all the employees working at Sears are. I doubt that they have secured financing or ownership stakes in anything.

    Published on: March 23, 2017

    The Democrat & Chronicle reports that "Wegmans Food Markets has set opening dates for two northern New Jersey locations as the Gates-based grocery store chain continues to march closer to the country's largest city, home to about 8.5 million people ... The chain said Tuesday that a 113,000-square-foot store in Hanover, New Jersey, will open July 23, roughly 30 miles west of the Big Apple. A 108,000-square-foot store in Montvale, New Jersey, is scheduled to open Sept. 24, about 30 miles north of New York City."

    At the same time, Wegmans has been working on a store in Brooklyn, as well as in Harrison, in the Westchester suburbs just north of the city. "Wegmans currently operates 92 total stores in its six-state footprint of New York, Pennsylvania, New Jersey, Virginia, Maryland and Massachusetts," the story notes.
    KC's View:
    Wegmans' biggest advantage, even in a climate where so many bricks-and-mortar stores are facing troubles - is that it continues to offer a differentiated shopping experience that makes people want to go there. The company continues to evolve even as it grows ... and that's not easy.

    There is an irony that Wegmans is opening a store in Montvale, New Jersey - a community that was home to A&P headquarters, a place that was cavernous, dark, and as lacking in innovative spirit as any office that I've ever visited. Wegmans is the antithesis of that ... which is why it continues to succeed.

    Published on: March 23, 2017

    The Associated Press reports that Target, seeking yet another solution to the problem of declining traffic and sales, "is embarking on an ambitious redesign aimed at helping people who need to dash in for milk to get out quickly while encouraging those who want to wander the aisles to linger."

    According to the story, the new layout "will feature a separate entrance and 10-minute parking for shoppers looking to pick up an online order or some essentials. New center aisles will be curved rather than squared off, to inspire people to explore, says Mark Schindele, senior vice president of Target Properties. LED track lighting will replace fluorescent fixtures, and brand boutiques meant to replicate a specialty-store feel will showcase rotating looks.

    "The first of the redesigned stores will open in suburban Houston this fall. About 40 more stores will get the remodel treatment by October, using the Houston prototype as a template. More than 600 of Target's 1,800 total locations are scheduled for updates over the next three years. It expects the remodeled stores to see a 2 percent to 4 percent sales bump."
    KC's View:
    Okay. Why not? Maybe this will work. It seems like Target has tried pretty much everything else, so why not a redesign.

    The thing is, it also is up to leadership to figure out what products and services it will offer that will differentiate it from the competition. Curved aisles and a separate entrance only will work if customers walk through those doors and along those aisles and find things that are relevant to their existence .... and, if Target does it right, unique to the Target value proposition.

    Published on: March 23, 2017

    Walmart-owned Vudu, a subscription-free, premium video streaming service, announced today that it will offer a new mobile service that will "convert DVDs and Blu-rays into digital libraries, right from a customer’s phone ... Mobile Disc-to-Digital turns DVDs and Blu-rays into digital movies with a simple scan through the Vudu app. These movies can then be viewed on hundreds of Vudu-enabled devices including televisions, Blu-ray disc players, gaming consoles, streaming players and through the Vudu app on phones and tablets."

    The service "works on iPhones and Android devices," the company says, "and is available for nearly 8,000 movies from Lionsgate, Paramount Home Media Distribution, Sony Pictures Home Entertainment, Twentieth Century Fox Home Entertainment, Universal Pictures Home Entertainment and Warner Bros. Home Entertainment."

    Mobile Disc-to-Digital enables consumers to use their smart phones to scan a barcode on the case of a purchased DVD or Blu-ray, which then gives the user a digital version of that movie at the cost of $2 apiece.
    KC's View:
    I like the idea of this service a lot, and it is the kind of thing that could attract people to the Walmart-owned video site. It is rare that I buy a Blu-ray, but it always makes sense to buy one that provides access to a digital version as well. This basically covers movies without such an option, and I can't wait to try it.

    Published on: March 23, 2017

    • Walmart said this week that it will invest $800 million (US) in its Chilean business over the coming 36 months, with plans to open as many as 60 new stores and remodel 50 existing units.

    While the Chilean economy has struggled in recent years, Walmart Chile general manager Horacio Barbeito says, "We are confident in the future potential of the country, and we are convinced that spaces exist to continue expanding our low-cost model."
    KC's View:

    Published on: March 23, 2017

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

    Bloomberg reports that "Bebe Stores Inc., a women’s apparel chain with locations across the U.S., is planning to shut its stores and seek a turnaround as an online brand, according to people familiar with the situation.

    "The company is trying to close the locations without filing for bankruptcy ... However, Chapter 11 may be required if enough landlords aren’t willing to negotiate."

    Reality strikes for yet another bricks-and-mortar retail brand. Some will see this as the triumph of evil, but I think it is a simple recognition - albeit after hundreds of millions of dollars in losses - that consumer changes require retailer to change, not resist. Because resistance is futile.
    KC's View:

    Published on: March 23, 2017

    • The Boston Globe reports that Dunkin' Donuts is removing a longtime staple from its drink menu, discontinuing the Coffee Coolatta and replacing it with the Frozen Dunkin’ Coffee, described as "a new drink that’s made with blenders, combines coffee extract, ice, and dairy, and can be customized."

    The story suggests that the move "seems to signal that the company is shifting its focus onto a more coffee-focused frozen beverage and away from the dessert-like Coolatta - a large Caramel Coffee Coolatta with cream contains 990 calories, 138 grams of sugar, and 47 grams of fat."


    • The Chicago Tribune reports that in the new Whole Foods store opening today in the Lakeview section of the city - about a half-mile southwest of the new Amazon Books store, and a mile southwest of Wrigley Field - "half the space here seems devoted to dining experiences, ranging from a full-service wine bar to hot and cold food bars, with a new rotisserie chicken flavor of the month program, and much more."

    Among the offerings are "beet dip and vegetables ($8), a bouquet of thinly sliced striped beets and rainbow carrot sticks arranged in a magenta puree of Greek yogurt and roasted beet, spiced with za'atar; smoked Buffalo wings ($7), crispy skinned and served with crunchy jicama sticks and housemade ranch dressing; and the Un-Beetable Burger ($8), a vegan burger with a patty made from beets, garbanzo beans and whole grains -- which looks and feels alarmingly like barely griddled steak tartare -- served on a whole wheat bun with lettuce, tomato and pickled onions." There also is an Allegro coffee bar ... Real Good Juice Co. juice bar ... and The Red Star Bar, which "serves food and drinks including Begyle Brewing's Lakeview pale ale on draft and cocktails, notably the Honey Badger."


    • The Associated Press reports that "Pepsi is pulling 2-liter bottles and 12-packs of its products from Philadelphia grocery store shelves over the city's new tax on sweetened drinks ... The 1.5-cent-per-ounce tax on sweetened and diet beverages is imposed at the distributor level. If fully passed on to the consumer it amounts to $1.44 on a six-pack of 16-ounce bottles."

    Pepsi says that "it wants to offer products and package sizes working families can better afford," the AP writes, noting that "earlier this month, Purchase, New York-based PepsiCo Inc. cited the tax when announcing layoffs of 80 to 100 workers at distribution plants serving Philadelphia."
    KC's View:

    Published on: March 23, 2017

    ...will return.
    KC's View:

    Published on: March 23, 2017

    The United States yesterday won its first World Baseball Classic title yesterday with an 8-0 defeat of Puerto Rico at Dodger Stadium in Los Angeles.

    The New York Times writes that "the United States, which had advanced to the semifinals once in the three previous tournaments, had a shaky start to this tournament. The Americans needed extra innings to beat Colombia, squandered a 5-0 lead against the Dominican Republic in Miami and lost to Puerto Rico in the second round in San Diego." But, "since that defeat, they have won three consecutive elimination games, beating the Dominican Republic, Japan and Puerto Rico."

    Before the final game, US manager Jim Leyland explained it this way: “We’re trying to make America great again."
    KC's View: