retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 3, 2017


    by Kevin Coupe

    IKEA, the Swedish furniture retailer, has decided to get smart. As in, Smart Home technology.

    CNet reports that "Ikea is set to start rolling out a line of connected lighting products designed to be simple, affordable, and accessible. These include light bulbs and also LED light panels that can come built into Ikea cabinetry, or sold on their own as standalone, wall-or-ceiling-mounted light fixtures.

    "All of the products will communicate with each other using built-in ZigBee radios - the same standard used by Philips Hue, among others in the connected lighting category. After syncing the lights up with an Ikea ZigBee hub that you plug into your router, you'll be able to control the lights from your phone, or program them to turn on and off automatically at preset times."

    This is just one facet of Smart Home development, which if expectations are correct, will have virtually every home appliance connected to each other and to the homeowner, with the user able to control everything via smartphone.

    This isn't to say that the shift will come easily, or quickly. Opening the door so appliances can be connected also will open a window to hackers, not to mention other problems. (If the network goes down, does that mean you won't be able to turn on your lights?)

    This is where the world is going. Probably in fits and starts, and almost certainly with glitches. And when a company like IKEA move sin this direction, it points to a kind of democratization of the technology that will result in higher adoption levels.

    Inevitably. It is an Eye-Opener.

    KC's View:

    Published on: April 3, 2017

    The Atlanta Business Chronicle reports that Publix plans to relaunch its GreenWise concept with a new store near Florida State University in Tallahassee. The retailer says that it is "aggressively" looking for "additional GreenWise locations throughout its operating areas."

    The story notes that "Publix hasn't opened a GreenWise store since 2008. There are only three GreenWise stores, all in Florida."

    According to Kevin Murphy, Publix's senior vice president of retail operations, "We are committed to being the retailer of choice for consumers who are looking for specialty, natural and organic products. Over the past several years, we have gained valuable insights from our existing GreenWise locations. By combining these learnings with customer feedback and market trends, we are better positioned to deliver on our vision of being the best at serving the evolving lifestyles of today’s consumer.”
    KC's View:
    The story suggests that it may not be a coincidence that "the move comes as Whole Foods is rolling out its 365 store concept in Atlanta, and Sprouts is also expanding in metro Atlanta."

    This is a smart move, I think, for Publix ... clearly this is a space that is gaining momentum, and maybe the time is right to develop an expanded role for the GreenWise format.

    Published on: April 3, 2017

    The Wall Street Journal has an interview with Kevin Johnson, who takes over from Howard Schultz as CEO of Starbucks today, after two years as COO. Some excerpts:

    Re: Autonomy: "Howard has been clear that I’ll be the CEO, so that means the buck stops with me, but I am also smart enough to know that you collaborate with people to get their input on things. So will I talk to Howard about things that I am noodling on? Of course."

    Re: An expanded lunch menu: "We already have a significant number of customers coming to Starbucks at lunch for a beverage. Our thought is, if we have fresh food that pairs well with the beverages customers are buying at lunch, we’ll sell more food items at lunch."

    Re: US growth potential: " A lot of growth opportunities might be in less urban places, more suburban areas, the Midwest. Over the next five years we’ve projected building 12,000 additional stores globally, taking us to 37,000 stores. More than half of those stores will be in the U.S. and China."

    Re: Starbucks' public positions on social issues: "One of the reasons people come to work at Starbucks is because we stand for something. It’s about human connection and having a sense of humanity. We think that’s part of what makes Starbucks a special place that both partners and customers want to be associated with. And frankly, I think there should be more publicly traded companies that also think about not only creating shareholder value but how to contribute in a positive way to society."
    KC's View:
    I continue to believe that one of the most important things Johnson has to do is figure out how to grow same-store sales and make that more important than store expansion. And, I think that they have to be concerned that the expansion into more upscale formats could be hurt if the economy goes south.

    Published on: April 3, 2017

    The Chicago Business Journal reports that Walgreen Boots Alliance has established a three-month deadline "for the Federal Trade Commission to either block or allow its $9.7 billion merger with Rite Aid," which was first announced in 2015.

    The Journal suggests that "Walgreens is likely betting that President Donald Trump will install a deal-friendly commissioner to review the merger. Trump may select Utah’s Republican attorney general Sean Reyes to head the FTC, replacing Democrat Edith Ramirez, who blocked mergers between Staples and Office Depot and between Sysco and US Foods amid antitrust concerns." The two companies already have agreed to sell off hundreds of stores as a condition for making the deal.

    MarketWatch reported over the weekend that investors awaiting completion of the deal "are growing increasingly uneasy that the deal, heavily scrutinized by regulators, could fall apart ... Federal regulators are concerned the deal, which would marry the second- and third-largest pharmacy chains by sales, could stymie competition."
    KC's View:
    My feeling during the Staples-Office Depot debate was that to define their influence only within the bricks-and-mortar realm was to ignore the competition coming from online retailers such as Amazon; while I realize that the situation is more complicated than that, I also think that the way government bureaucrats look at competition has to evolve so that it is appropriate to 21st century realities.

    It gets even more complicated for Walgreens and Rite Aid, because of pharmacy-benefit management issues. But I continue to believe that as the competitive landscape changes, regulators have to deal with reality, not nostalgia.

    Published on: April 3, 2017

    The New York Times had an interesting story over the weekend about how millennials, popularly perceived as favoring "a new national consensus" toward gender equality, may in fact have different and divergent views of the subject.

    One of the reasons is that millennials are a large group, made up of people from aged 17 to 34, "a group varied by race, ethnicity, religion, income, education and life experience." They don't all think alike.

    And, "as a set of reports released Friday by the Council on Contemporary Families reveals, fewer of the youngest millennials, those aged 18 to 25, support egalitarian family arrangements than did the same age group 20 years earlier."

    According to the story, "In 1994, only 42 percent of high school seniors agreed that the best family was one where the man was the main income earner and the woman took care of the home. But in 2014, 58 percent of seniors said they preferred that arrangement. In 1994, fewer than 30 percent of high school seniors thought 'the husband should make all the important decisions in the family.' By 2014, nearly 40 percent subscribed to that premise."

    The story goes on: "It’s not just the youngest millennials who seem resistant to continuing the gender revolution. Overall, Americans aged 18 to 34 are less comfortable than their elders with the idea of women holding roles historically held by men. And millennial men are significantly more likely than Gen X or baby boomer men to say that society has already made all the changes needed to create equality in the workplace."

    You can read the entire piece here.
    KC's View:
    The headline on the Times piece read, provocatively, "Do Millennial Men Want Stay-at-Home Wives?"

    I must admit that when I saw the headline, even before I read the piece, I thought to myself, who the hell cares what millennial men want their wives to do? I'm a lot more interested in what women want.

    Here's what I think. (It also is what my daughter thinks, and I believe, if I've done my job right, it is what my millennial sons think.) Equality means that no matter what your gender (or anything else for that matter), you ought to be able to decide how you want to live your life. You want to work full-time, do it. You want to have kids and stay home with them, fine. If you want to get married and find some sort of mutually agreeable hybrid, no problem. Everybody has the right to seek fulfillment however they want to, and everybody has the right to make sacrifices - or decide not to - as related to their personal and professional lives.

    I do think that it is instructive that millennial women seem a lot less inclined to move toward what might be thought of traditional gender roles. And I find it laughable that anyone would think that "society has already made all the changes needed to create equality in the workplace."

    I read pieces like this, and I get worried that somehow we're moving backward. This strikes me as unacceptable.

    Published on: April 3, 2017

    • Danone announced on Friday that as it moves toward completing its $10 billion acquisition of soy-milk maker WhiteWave Foods, it has acceded to US Department of Justice antitrust concerns by selling its Stonyfield organic yogurt business. The White Wave acquisition will be allowed to close, and then Danone will have to find a buyer for Stonyfield.


    • The Boston Globe reports on a Worcester, Massachusetts, man who sued 20 Dunkin’ Donuts franchises in Eastern and Central Massachusetts, accusing them "of a grand deception: using a butter substitute on his bagels, even though he had ordered the bagels with butter."

    Dunkin' Donuts reportedly has agreed to settle the case for an undisclosed amount.

    Thomas Shapiro, the lawyer for the plaintiff, said, "Candidly, it seems like a really minor thing, and we thought twice or three times about whether to bring a lawsuit or not ... The main point of the lawsuit is to stop the practice of representing one thing and selling a different thing. It’s a minor thing, but at the same time, if somebody goes in and makes a point to order butter for the bagel . . . they don’t want margarine or some other kind of chemical substitute.”
    KC's View:

    Published on: April 3, 2017

    Got the following email from an MNB reader:

    I am often struck by how often both your column and my own work focus on flags and signals shouting “danger – disruption in progress” while much of the retail environment, suppliers included, seem mostly intent on driving along the same old roads in the same old way.

    At the top of the column you mentioned Amazon holding meetings with suppliers aimed at enlisting them in the new economy…highly reminiscent of the tough meetings a few of us remember when Walmart did the same more than thirty-plus years ago, and met the same ambivalence, while retailers were either oblivious, or threatening. The same happened when clubs emerged.

    The old order changeth, yielding place to new…

    Then in the same column, you mentioned the startling news  that yes, indeed, men shop and cook and by inference, actually eat. And that young men are increasingly digital and purchasing online, which led nicely into the latest set of statistics on the amount of grocery ordering that Prime members do through Amazon.

    I have  spent years (way too many I am sure) pointing out how slow companies are to respond and it struck me how many brand managers are still being measured by POS data – which has been woefully incomplete since somewhere around 1990, since it doesn’t include whole swathes of retail change, from clubs to dollar stores, and now to online. It is obvious that we have a slower growth grocery environment, but if looked at completely, not all that slow – it simply isn’t taking place in traditional stores. We use panel data that is inherently incomplete, spending vast sums of money to buy data we KNOW is insufficient, possibly wrong and certainly misleading. And then complain about the budget required to get different data.

    The measurements are wrong. And you get what you measure. There, in plain sight, is the primary excuse for the sort of sloppy management thinking that retards change – measuring the wrong result. And using the same old flawed data to repeat the same mistakes every fiscal year until it is too late.

    You might as well wonder why traffic is declining on the Silk Road (the original one, thank you), why the trolley car business is in trouble, why gas lamps are no longer in use, why most houses no longer cook over a fireplace or keep their groceries in a root cellar. If you narrow-focus, you miss the whole picture. It is no longer enough to put stuff on shelves, to drop a coupon, to ship cases in dozens that in turn are piled up on pallets that simply create inventory for someone else.

    Most companies have enormous installed reliance on traditional routes to market and traditional measurement of that long-gone era.  Many angry people write in to your column to complain that these changes are disruptive, and somehow, if we turn away, it will all stop and go back to the way it was.

    No. It won’t. And the oldest best advice I can think of is this: Lead, Follow, Or Get Out Of The Way.

    Start by measuring right. Toss the old POS mind-set out of the way and before you reconstruct your business model , reconstruct your management model and your rules for success.  Most companies are already depending for growth on businesses they neither like, nor understand,  nor are well-fitted to serve. But they delay their own adaptation because they still seek success by the old rule, the tyranny of an old spreadsheet mind-set. And do it NOW.





    Got a number of emails about the meetings that Amazon has called with suppliers. One MNB reader wrote:

    White Cloud  bathroom tissue comes to mind, it used to be a great seller in our stores, Wal-Mart convinced them to sell only to them, taken from traditional supermarkets…now they want to sell to us again…good luck with that..valuable shelf space absorbed by other brands, that promote.

    Regarding the brands that might decide to work with Amazon, another MNB reader wrote:

    Those items would be OUT of my stores!!!

    And, from MNB reader Kevin Mahon:

    Let’s not overlook the fact that if Amazon controls the fulfillment, they gain access to all of the purchase behavior of shoppers.

    And let's not forget that Amazon has to find ways to justify the money it is spending on trucks, airplanes and boats, as it looks to control more of the distribution business and expand its ecosystem.
    KC's View:

    Published on: April 3, 2017

    • In the NCAA Women's College Basketball final, following Friday's upset of UConn by Mississippi State (ending UConn's consecutive win streak at 111), the University of South Carolina then defeated Mississippi State 67-55. It was, the New York Times noted, the "first time in five years, a program not named Connecticut won a national title."

    And tonight will be the Men's Championship final, with Gonzaga Bulldogs facing off against North Carolina.



    • Yesterday was Opening Day in Major League Baseball, with three games played...

    NY Yankees 3
    Tampa Bay 7

    San Francisco 5
    Arizona 6

    Chicago Cubs 3
    St. Louis 4
    KC's View:
    The Mets play the Braves at 1:10 pm today. Thank goodness, because baseball could not begin soon enough for my taste and sanity.