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    Published on: March 30, 2017

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    Hi, Kevin Coupe here and this is FaceTime with the Content Guy, coming to you this week from San Francisco.

    See that building behind me? It is the Sentinel Building, was built in 1907, is a San Francisco landmark ... and it is owned by Francis Ford Coppola. In fact, much of the building is occupied by Coppola's production company, and it is where a number of his films - including The Godfather - have been edited. For a movie geek like me, that building is like going to the Vatican. Except with better food.

    The better food is because the bottom of the building is occupied by Cafe Zoetrope, a small bistro owned by Coppola.

    Now, I like to try new restaurants when I travel, but there are certain cities - Seattle, Portland, Chicago, Boston, and San Francisco - where I have favorites places I like to visit. They're sort of like comfort food ... when I'm traveling, I like to go to what I think of as my neighborhood places, even though my actual neighborhood sometimes is thousands of miles away.

    It so happens that when I first when to Cafe Zoetrope, many years ago, it was the first time that I ever had chilaquiles, which almost instantly became one of my favorite comfort foods. (My fondness for the dish only increased when the bartender told me that the only reason it is on the menu is because it is one of Coppola's favorite dishes ... which means we have one thing in common. I'll take it.) Which is why I'll be going over there shortly to have chilaquiles and a glass of two white wine...probably one of Coppola's own sauvignon blancs.

    I've been thinking about the concept of comfort food because I am in Northern California for the inaugural Retail Tomorrow conference being sponsored by GMDC, which I'll be writing about here on MNB over the next few days. We're going to looking at cutting edge retail, visiting Google, and taking a hands-on approach to formulating answers to the question of what retail stores are going to look like in just a few years. Fascinating stuff ... and definitely an instance in which GMDC is getting outside its traditional lane of business, beyond its comfort zone and certainly prompting the retailers, suppliers and even this reporter to do the same.

    There is much to be admired about that. I think that's exactly what the National Grocers Association (NGA) and the National Association of Convenience Stores (NACS) were doing this week when they announced a new alliance - recognizing that as consumers change, retailers have to change with them or risk irrelevance. Consumers think about format far less than stores do, and so it makes sense for retailers to get outside their comfort zones and look at consumer needs through a fresh prism.

    When you think about it, that is exactly what Walmart is doing at it invests billions of dollars and enormous people resources to the e-commerce channel, even upending its own organizational chart to make it work. And that is what Amazon is doing, as it looks to create a new approach to bricks-and-mortar, understanding that it needs to get beyond its e-comfort zone and address last-mile issues that could inhibit its growth down the road.

    Call it the discomfort zone. And so while I might be about to enjoy some comfort food of chilaquiles and wine, the rest of the week, I'm going to go where I've never been before.

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

    KC's View:

    Published on: March 30, 2017

    by Kevin Coupe

    SAN MATEO, Ca. -- After writing about retailing and business for more than 30 years, there aren't many days that I can honestly say are completely different.

    Wednesday was one.

    GMDC's initiated its Retail Tomorrow conference with a two-day Northern California "immersion" event designed to force retailer and supplier attendees to not just accept the notion that the competitive landscape is changing, but to embrace and enable that change within their organizations. That is easier said than done, and there clearly is the aroma of aspiration in the air .... along with the perspiration that comes from all the smart people in Silicon Valley trying to change the world, or at least little pieces of it a little bit at a time.

    The challenge was framed by Nielsen's Scott McKinley, who noted that the Uber driver who brought him to the conference had identified himself as a former equities trader at Webvan, the long defunct e-grocery business that collapsed under the weight of its own unmet promises and enormous debt. The irony was not lost on the group.

    McKinley made the point that retailers and suppliers are in a position where they can not just identify the drivers of shopping behavior, but also track how that converts to purchase behavior. This isn't a choice, he suggested, but a mandate to create a more personalized shopping experience that will resonant with consumers and permit them to compete with larger entities. (Think Amazon.)

    At one point, McKinley put up a chart on the screen which he said essentially listed every possible data point that now is possible to know about customer behavior; it was one of those cases where the difficulty in reading the chart actually made the point about the extent of what is knowable and actionable.

    Which got me thinking about the retailers that may not have the resources to access that level of data, and the significant disadvantages they may be facing. In so many ways, this underlines the degree to which retailers unable to access such data need to be extraordinarily sharp in terms of how they identify their own differential advantages and communicate them to customers. The room for error is narrow, if it exists at all.

    The group then spent several hours visiting some fascinating retail experiences in nearby Palo Alto, where the sense of retail history becomes palpable when you drive past the original Apple Store.

    The first stop was B8ta (pronounced "Beta"), a fascinating retail store that caters to both consumers and business customers. Essentially, the store leases out small spaces on Apple Store-like tables to technology businesses that want to test out their products' viability. The products range from electric-powered skateboards to juicers, virtual reality viewers to high-tech security systems. B8ta has a highly trained staff that helps guide customers through the store, and rotates products regularly to make sure there is variety; it also has technology that is able to track how customers interact with products, so that suppliers have the maximum amount of actionable data. B8ta has a full supply of products for customers in the backroom, and it only profits from the table lease payments; it takes no cut of the sales.

    FYI ... there are three B8ta stores at this point, in Seattle, Santa Monica, and Palo Alto. And, it also is testing the concept inside Lowe's stores, which is handing over the space as a way of creating a little in-store excitement and extend its ability to appeal to shoppers in new but relevant categories. You can see pictures of the B8ta store at right, and see its website here.

    From there we went to Beam store, which features mobile robotics including "emote telepresence" that would seem to have an enormous number of applications, from providing customer service in a retail store to a multitude of purposes in a warehouse. Fascinating stuff, though one attendee pointed out that rather than serving as a way to eliminate labor, it also could help retailers to provide customer service in new places, but from remote locations (in much the same way as JetBlue's reservations staff can be in remote locations when taking calls).

    The company that makes Beam is Suitable Technologies, and you can access their website here. Pictures are available at right.

    Finally, it was on to one of the more unusual stores I've been to, called Relonch.

    Relonch addresses the precipitous decline of the traditional camera business - 10 years ago, 127 million cameras were sold, a number that was down to 20 million last year. Relonch takes the position that it is in the photograph business, not the camera business - so it essentially gives its customers a high quality camera which automatically sends photos taken back to the company, which then sends the customer "a selection of pictured photos in preview resolution that you shot the day before. Then you decide which ones are truly remarkable and pay only $1 per full-resolution photo. " They only charge you for the photos you hand pick as the best of the best.

    Customers do have to make a $500 commitment - but that only means that they have to buy 500 photos, with no time limit. You can check out Relonch here.

    While I must admit that I cannot imagine making this deal with Relonch, it did get me thinking about how such a business model would work in the food business. What would happen if a food retailer went to a customer and said, "We want to give you a new refrigerator/freezer, and all you have to do is commit to buying $200 worth of refrigerated or frozen foods a month from us for X number of months." They'd be creating their own ecosystem, of a sort, though I have no idea how the economics of this would work out ... but that essentially is what Relonch is doing.

    (One of the conference attendees said not only was it not the dumbest idea he'd ever heard, but nobody would be surprised if Amazon announced such a program next week.)

    The day was not over. The next stop was Plug And Play, a Sunnyvale, California, accelerator that provides infrastructure for startup companies and plays matchmaker between them and major companies that serve as their partners. We got a tour of the place, which fairly hummed with youth and enthusiasm, and then had the opportunity to sit through a half-dozen pitches by startup companies looking to get their sea legs in the supermarket business. And we followed that with a panel discussion, which I had the privilege of moderating.

    If I could sum up the panel in just a few words, it would be to point out that pretty much everyone agreed that there is a gap - perhaps a chasm - between the traditional retail world and the forward-thinking, innovation-oriented people we'd met at Plug and Play. Some of it was demographic, some of it was attitudinal ... but there was a sense that the two sides have to engage with each other, invest and ideate speedily, and find a way to amplify the advantages of legacy business models with the opportunities provided not just by new technologies, but new thinking as well.

    My sense is that GMDC would be happy that its new Retail Tomorrow conference is getting people to think this way ... which is to say, not the way we necessarily would've been thinking yesterday.

    I'll have more tomorrow from GMDC's Retail Tomorrow ...

    KC's View:

    Published on: March 30, 2017

    by Kevin Coupe

    CNet reports on a new wristband created by a Japanese company that "an tell what food you're eating simply by how you move your hand while you do it."

    The wristband is powered by what is called "Dietary Content Recognition Technology," and it is described as having "acceleration sensors, gyroscopes and more, which can currently distinguish between eating rice bowls, sushi, bread, pasta and curry."

    It is not, however, quite ready for primetime ... the manufacturer says there are still a few kinks to work out.

    But when it is ready, it'll be an Eye-Opener ... though I hope they don't add functionality to the wristband that shocks the user when he or she takes one too many bites.
    KC's View:

    Published on: March 30, 2017

    The Harvard Business Review has a piece provocatively entitled, "Walmart Won’t Stay on Top If Its Strategy Is 'Copy Amazon'."

    Citing Amazon's Prime program as an enormous differential advantage, HBR writes, "Walmart can’t compete with this value proposition, at least not yet. Walmart also can’t challenge Amazon’s existing brand equity in access and selection. With approximately 160 million items for sale, Amazon has become the go-to outlet for anything. In comparison, sells 'only' 15 million items — and just 2 million of them are available for the free two-day shipping. It’s no wonder 52% of online shoppers start their search on Amazon, according IHL Group."

    The story goes on: "Trying to beat Amazon at its own game is not only likely to fail, it’s also not in Walmart’s best interests. Walmart has perhaps the best physical distribution and retail network in the world. It needs to be competitive on digital channels, sure. But, more important, it should excel at brick-and-mortar. Improving the in-store experience, promoting omnichannel shopping and fulfillment options, and developing in-person service innovations are avenues that leverage its brand equity and core competencies — and they’re approaches that would put Amazon at a disadvantage ... Walmart should invest to advance its strongest competitive advantage: its physical stores."

    The piece is instructive, and you can read it here.
    KC's View:

    Published on: March 30, 2017

    Bloomberg has a story about a nutritionally bifurcated American public, more focused o healthy eating than ever, but still buying enough Twinkies to have rejuvenated that recently troubled brand.

    "Nine months of forced disappearance from store shelves sharpened appetites for the golden sponge cake filled with fluffy cream, and after two bankruptcies, the 2013 acquisition of the Hostess Brands Inc. snack-cake business by a pair of private equity firms put the company back on the road to solvency," the story says, adding, "In opinion surveys, Americans rank stealthy eating right up there with healthy. While 75 percent told NPR last year they were eating wholesome food, another report, from the Boston Consulting Group and IRI, found that indulgence was a top food trend, alongside nutrition."

    There is an economic side note to the Twinkies resurgence. "Twinkies’ new popularity came at a cost," the story says. "The Hostess bankruptcy enabled the private equity buyers to start over with a fraction of a workforce that once numbered about 8,000 at several bakeries across the country. Their reconstituted company now has 1,350 employees and three baking facilities. Now, one automated production line staffed by 10 employees in Emporia, Kansas, can produce 95 percent of the iconic cakes ... The changes have helped produce some of the best profit margins in the food industry."
    KC's View:
    No real surprise here, but it is always worth being reminder that customers are not monolithic in their needs and desires. It's why companies - retailers and suppliers alike - have to be so sensitive to how they behave, and the influences that factor into their decision-making.

    Published on: March 30, 2017

    People is out with its first-ever list of "top 50 Companies that Care in America," defining them as "those with 1,000 or more employees that show extraordinary compassion for their employees, their communities and the environment as well as being military friendly and embracing diversity."

    A number of retailers made the list, including Wegmans, which at number six was the highest-ranked retailer. Among the qualities that Wegmans was cited for are how "14.5 million pounds of food were 'reclaimed' from stores and distributed to the community to feed the hungry, and the company raised $3 million at checkout registers for hunger relief."

    Publix was ranked number nine, and the story says that the company "has a 'Publix Serves Day' and in 2015, 4,000 employees volunteered with more than 125 non-profits related to youth, education and the plight of the hungry/homeless."

    Other retailers cited in the top 50 included The Container Store, REI, and Nugget Markets.
    KC's View:

    Published on: March 30, 2017

    • The Wall Street Journal reports that Amazon is shutting down its Quidsi division, which runs, because it is unprofitable. Amazon bought Quidsi in 2010 for more than $500 million.

    Ironically, Amazon bought Quidsi from Marc Lore, who subsequently left the company, waited out a period covered by a noncompete clause, and then started Jet, which he recently sold to Walmart for $3.3 billion ... for which he is now running all of its e-commerce business, positioning it for a battle against Amazon.

    The Journal writes that "Quidsi’s, which launched in 2005, helped prove that consumers would buy household products online if a broad selection was paired with free, fast shipping. By the time of the acquisition in late 2010, however, Amazon had undercut its competitor on diaper prices and launched a service that offered free two-day shipping for new parents for three months or more.

    "The Quidsi developers will be working on a current focus for Amazon: food and groceries, as it seeks a bigger share of consumer spending."
    KC's View:
    Y'think anyone at Walmart looks at that whole "Quidsi is unprofitable" thing and gulps a little bit? And maybe crosses his or her fingers?

    Published on: March 30, 2017

    • The Seattle Times reports that Whole Foods' long-planned store for West Seattle won't be built after all, and the retailer is working with the developer to find a replacement tenant for the space.

    The story notes that "the announcement comes as Whole Foods has been struggling, posting six consecutive quarterly declines in sales at stores open at least a year, and facing increased competition from a number of other grocers selling organic and natural foods ... Whole Foods is cutting costs, saying last month that it would be closing nine stores by April and shuttering its last three commissaries that made prepared foods for its stores. It also has terminated several leases in development."

    Whole Foods has three other stores in the Seattle market.

    • The Atlanta Journal Constitution reports that "a flock of chickens in a Chattooga County commercial farm has tested positive for a low-pathogenic strain of the avian flu, the state Department of Agriculture said Monday.  It is the first confirmation of bird flu in commercial poultry in Georgia. 

    "The entire flock was killed as a precaution, although Agriculture Commissioner Gary Black’s office said no infected animals entered the food chain and this strain of the avian flu does not threaten the food supply."
    KC's View:

    Published on: March 30, 2017

    • Wegmans announced yesterday that Colleen Wegman, the company's president, now is taking on the additional responsibilities of CEO of the company. Her father, Danny Wegman, will now assume the title of chairman.

    "The time has come to create a structure for the future that will allow us to remain strong, vibrant and family-owned," Danny Wegman said in a statement. "I have no doubt that our company will be in good hands.”
    KC's View:

    Published on: March 30, 2017

    Yesterday, we had a piece about how Kroger has launched a new website designed to share "stories, ideas & inspiration from The Kroger Family of Companies."

    MNB reader Jerome Schindler had a different story:

    Unfortunately the  story for the Kroger near me would have to be classified as a fairy tale - perhaps "The Ugly Duckling".

    I have been a reader of MorningNewsBeat for many years and noted your continuing praise for the Kroger Company.  I must live near the worst Kroger store in the entire country located on E. Broad St. in Whitehall, Ohio, a close by suburb of my Columbus home.  (Many of my neighbors call it "Krummy Krogers", so it is not just me.)

    As part of our division of marital duties I do almost all of the grocery shopping because as a 74 year old veteran of the grocery business on the supplier side  I (usually) enjoy it.   Not being much of a TV fan I often do grocery shopping in the late evening. Went to that Kroger tonight and had a lot of stuff - was ready to checkout about 10 p.m. There were no cashiers on duty - all of us were forced to either just leave the groceries they had spent the better part of an hour loading into their cart or use the Kroger self check out - and not all of those self check outs were even in service. The one lady overseeing the process was run ragged with people like me who have no experience with the quirky Kroger self checkout. She had to come back to me several times when the machine just stopped working for me when I did something wrong, and actually got a little impatient with me.

    I am old fashioned and believe that self check out should be an option, not mandatory at any time the store is open. I am calling the manager tomorrow.  I'd call the Kroger consumer response department but my experience over the years is that they are mostly brain dead - complaints don't seem to ever get passed on to management.  Perhaps someone higher up at Kroger will see this.  I am in the phone book, he/she can call me if they wish, but I do not expect any such call.

    Well, I think it is fair to say that they've probably read it now.

    Everybody has bad days. Every company has bad stores. I hope they get back to you, and that you'll keep MNB readers in the loop.
    KC's View: