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 11, 2017

    by Michael Sansolo

    Back in the 1960's it was popular among Baby Boomers to believe that we should trust no one over the age of 30. Of course, we said it before we started actually turning 30.

    Today, our perspective has changed. Now 70 is the new 50 and that makes us feel good, even if our Millennial children might disagree.

    But to paraphrase an old Frank Sinatra song, fairy tales can true if you are young in the brain. For inspiration, just think of John Goodenough, a 94-year-old physicist of great renown who is still trying to reinvent the world.

    Dr. Goodenough (who clearly has never settled for being just good-enough) is an inspiration to all of us grappling with the challenges of a new day and wondering where to find the creativity to surmount them. As he explained in an interview with the New York Times last week, age and experience aren’t impediments; they can both be advantages. And he offers all of us a lesson in the importance of finding and retaining older workers, who can be a source of innovation and wisdom.

    “I’m old enough to know you can’t close your mind to new ideas. You have to test out every possibility if you want something new,” he said. In Goodenough’s case, that open mind is focused on developing new batteries that could provide the power source of the future. Which means he isn't just generating innovative thinking and new ideas. He is quite literally generating energy.

    When John Goodenough was in his 20's, he was told he was too old to study physics. When he was in his late 50's, he helped create the lithium ion batteries we use in countless devices today.

    The odds are that you aren’t trying to do anything quite as complicated as developing an entirely new energy source today. But you are still dealing with some mighty complex problems, be they figuring out how to best employ the newest technologies or how to serve swiftly changing consumer demands.

    The answers never come easily, but that again is why we need consider what Dr. Goodenough is doing. Like him, we all need to have an open mind to the challenges of the future by letting the lessons of the past guide, but not limit us.

    As he told the Times, “You have to draw on a fair amount of experience in order to be able to put ideas together.”

    That is, of course, if you can see past the successes of the present to find the answers for the future. Doing just that is a challenge that knows no age limit, which is why age diversity is just one more asset you need on your teams.

    But Goodenough offered one more reminder why older workers might be essential to finding some break-through solutions for the future. As he said, at age 94, "You no longer worry about keeping your job.”

    In fact, all you have to think about is doing it.


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: April 11, 2017

    by Kevin Coupe

    Yikes.

    Here's a sobering analysis from the Washington Post - that "more than 2,880 retail stores have been closed this year to date, a pace that is running ahead of the same point during 2008’s recession."

    That's right. In 2017, a time when the economy continues to be in what has seemed like a long, slow period of improvement, there are more retail stores closing than at the height of the recession.

    And, the Post writes, there is no sign that anything is getting better. The "bubble has burst," one expert says, and there is a glut of retail space that seems out of step with consumer moves online, driven largely, but not exclusively, by Amazon.

    But ... that doesn't mean that all is lost for bricks-and-mortar retail. The Post writes that so-called "Class A malls" still are performing well, and physical stores tend to continue to attract customers and make sales when they offer differentiated, compelling experiences.

    The message is simple. The internet superhighway doesn't have to run roughshod over Main Street ... but Main Street has to fight back by being faster, more nimble, with a greater knowledge of a store's target consumers and more in synch with shopper needs and desires.

    The Eye-Opening message is this - that it is survival of the fittest.
    KC's View:

    Published on: April 11, 2017

    Supervalu said yesterday that it will acquire Unified Grocers for $375 million - $114 million in cash, and the assumption of $261 million in debt. Once the deal has been completed, the Supervalu will have a significant western US presence, and will operate 24 distribution centers serving more than 3,000 stores in 46 states.

    The Star Tribune writes that the move doubles down on Supervalu's shifting focus away from retailing and into wholesaling; Unified has annual revenues of about $3.8 billion, which will now be added to Supervalu's existing wholesale business of about $8 billion. While Supervalu has a retail division that does $4.8 billion in annual sales, in recent years it has been selling off retail businesses, including Albertsons and Save-A-Lot.

    Supervalu said in its announcement that the "combined company will be uniquely positioned to efficiently serve a broad range of independent customers and offer a diverse array of value added services, helping customers compete in an increasingly demanding grocery environment. The acquisition also provides new growth opportunities across multiple geographies, including the expansion of Unified’s Market Centre division, a growing business providing specialty and ethnic products to independent customers."

    In its analysis if the deal, the Star Tribune writes that "the purchase of Unified represents a push into the West Coast for Supervalu's distribution business, which chiefly operates in the Midwest and parts of the East and Southeast. Its operates a single distribution center on the West Coast in Tacoma, Wash.

    "Unified is a combination of three West Coast wholesale grocery cooperatives, each founded more than 80 years ago. Two of the cooperatives, one based in Los Angeles and another in Portland, Ore., merged in 1999 to form Unified Western Grocers. Eight years later, the merged cooperative bought Seattle-based Associated Grocers and dropped the 'Western' from its name."

    The deal is expected to close this summer, pending regulatory approvals.
    KC's View:
    One of the questions I tend to get asked a lot is, "What do think will be the next merger/acquisition in the food business?" Well, to be honest, I never saw this one coming...

    It'll be interesting to see if there is any fallout from this deal. I'm sure there will be retailers that will be happy with the change, but I'd also guess that there will be some that will not be pleased by the new structure. Just by dint of being so much bigger, it will be a challenge for Supervalu to convince its customers that it is as in synch with their needs as Unified.

    Published on: April 11, 2017

    Jana Partners, described as an "activist hedge fund," said this week that it has acquired enough stock in Whole Foods to be the company's second-largest shareholder, with 8.8 percent of its shares. And with that financial position comes a philosophical position that is calling for dramatic changes in how Whole Foods does businesses.

    One of its goals, the Wall Street Journal writes, is to "find out how much a potential bidder might be willing to pay."

    The New York Times this morning reports that in its filing with the US Security and Exchange Commission (SEC), Jana Partners " took broad aim at the company for the way it has conducted business - criticizing everything from how it has handled its brand development to what it says are deficiencies in customer service - and argued that Whole Foods’s analytics and distribution strategy could be improved ... In recent years, Whole Foods has been criticized by Wall Street for its poor share price performance, and passed over by shoppers who have turned to competitors including Costco, Safeway and even Walmart, all of which are now offering similar products for lower prices."

    And, the Journal writes, "Jana’s campaign is the latest quandary for Whole Foods, which has struggled to make the transition from high-flying upstart with a loyal following into a large, national chain with the kind of back-office systems tracking customers and inventory that rivals use to keep costs down and sales up."

    The Times notes that Jana "also proposed four new board nominees. In a twist on the activist playbook, Jana has partnered with each of these nominees, who bought their own stakes in Whole Foods. Among the new board members Jana proposed are Mark Bittman, a former food writer and columnist for the New York Times, and Glenn Murphy, the former chief executive of Gap Inc., according to its S.E.C. filing."

    And, the story says, "Unlike activist investors who take their battles to the public, seeking to bully management teams into making certain changes through the public forum, Jana is known for taking its concerns about a company to the board. In recent years, the hedge fund has negotiated behind the scenes to change the boards at companies as diverse as Tiffany & Company, the jeweler, and the drugmaker Bristol-Myers Squibb. But in this case, Jana opted for the more confrontational approach."
    KC's View:
    This isn't the first time that an investor group has tried to influence the way Whole Foods does business (Ron Burkle comes to mind), but Whole Foods may be more vulnerable this time around than in the past. Not only are there almost certainly ways in which it could be more efficient, but there is more competition out there than ever before.

    This isn't to suggest that Mark Bittman is the best person to tell Whole Foods how to go to market. (And I'm a big Bittman fan.) But maybe the time has come for new leadership at the top ... maybe John Mackey has taken the company as far as he can take it.

    Though I wouldn't expect Whole Foods to go down without a fight.

    Published on: April 11, 2017

    The Wall Street Journal reports that "hackers are targeting the growing population of third-party sellers on Amazon.com Inc., using stolen credentials to post fake deals and steal cash."

    According to the story, "attackers have changed the bank-deposit information on Amazon accounts of active sellers to steal tens of thousands of dollars from each, according to several sellers and advisers. Attackers also have hacked into the Amazon accounts of sellers who haven’t used them recently to post nonexistent merchandise for sale at steep discounts in an attempt to pocket the cash, those people say."

    Hacking of this kind has occurred in the past on sites such as PayPal and eBay, the story says, but Amazon increasingly has become an attractive target. While Amazon says it is constantly innovating on behalf of its third-party sellers and will make whole any seller who loses money because of hacking, the Journal notes that the reports have shaken some sellers' confidence in Amazon's systems.
    KC's View:
    I've always felt that Amazon would be an enormous prize for any of these hackers to penetrate ... especially because it would be a way to really throw a crimp into the global e-commerce business. Amazon certainly knows this, and spends enormous sums to keep its seller and customer data safe ... but it has to be some sort of race, between its guardians and the hackers.

    Published on: April 11, 2017

    Fortune reports on a new analysis saying that "brick-and-mortar retailers should expect no relief from Amazon.com's relentless march to e-commerce dominance. The online retailer, which accounts for about 34% of U.S. online sales, should see that market share grow to about 50% by 2021, helped how the popularity of its Prime membership program and its marketplaces, Wall Street firm Needham said in a research note on Monday."

    The story goes on: "While traditional retailers are enjoying strong online growth- Kohl's, J.C. Penney and Target enjoyed record internet sales during the holidays, Amazon is still outpacing the overall industry's growth, extending its lead over rivals."
    KC's View:

    Published on: April 11, 2017

    Business Insider reports that even as Amazon has continued to dominate the e-commerce field, "it seems that Walmart is emerging as the big winner in the fight for the remaining share of America's brick-and-mortar retail market ... Over the last decade Walmart has invested millions in their grocery department, and it has paid off. Walmart is now the second largest grocery store in the country behind Kroger. Additionally, grocery accounts for roughly 56% of sales at Walmart and 59% at Sam's Club, making grocery the company's largest business."
    KC's View:

    Published on: April 11, 2017

    • The National Association of Convenience Stores (NACS) is out with its latest Consumer Fuels Survey, concluding that "economic optimism this month held steady, with 59% of gasoline consumers saying that they feel optimistic about the U.S. economy ... Those in the South are most optimistic (64%) while those in the Northeast are least optimistic (54%).  Year over year, optimism is up 15 points in comparison to April 2016, when only 44% of gasoline consumers reported feeling optimistic about the state of the economy. Current consumer optimism is only two points less than the record high (61%) reported last month."

    A significant factor for the consumer optimism is said to be continuing low gas prices.


    • The Financial Times reports that in the UK, "a senior judge has approved a deferred prosecution agreement between a division of Tesco and the Serious Fraud Office. The agreement ends a long running investigation by the agency into the supermarket group and its UK subsidiary, Tesco Stores Ltd, over a 2014 accounting fraud" in which Tesco systematically and systemically under-reported costs and over-reported revenues."


    Publishers Daily reports that "Time Inc.’s Southern Living brand is introducing a line of ready-to-eat meals called 'Southern Living Kitchen' in select stores across the South on April 24. The meals are inspired by traditional Southern comfort food and readers’ favorite Southern Living recipes. This is the first time Southern Living has tapped into the retail consumable food category."
    KC's View:

    Published on: April 11, 2017

    • Kroger announced this week that it has named Todd A. Foley, the company's vice president and treasurer, to be its new chief accounting officer. Foley succeeds the retiring Mary Elizabeth Van Oflen.

    Foley will be succeeded in his previous role by Carin Fike.


    • Bartell Drugs has announced that CEO Brian Unmacht, the first non-family-member CEO in the company's 126-year history, has resigned after two years in the job "to pursue...other opportunities." No successor has yet been named.
    KC's View:

    Published on: April 11, 2017

    Yesterday, MNB took note of a piece in the New York Times by 17-year-old Jonah Stillman, who recently joined the advisory board of Blackboard, an educational software company. Invited to attend his first meeting, Stillman was enthralled and engaged ... until he got an unexpected criticism from a vice president named Craig Chanoff during a break in the session. Chanoff told him that if he wanted to be successful, Stillman had to stop texting friends and checking his Twitter feed during the meeting.

    Stillman, however, wasn't doing any such thing. He was taking copious notes on his smart phone, and Stillman acknowledged that this reflected a generational chasm that needs to be addressed.

    ( You can read it in its entirety here.)

    One MNB reader responded:

    It is more of a company culture difference than an age difference as we have many “senior” folks taking notes on their phone/tablet during meetings and HR takes all their notes during an interview on a device. So if an educational software company is upset about a young adult using his phone, perhaps they need some new folks to lead the culture into the 21st century. (And as any parent knows, if you are looking for your kid’s phone, the most likely place to find it is in their hand.)

    From another reader:

    After reading this article, I immediately forwarded it to our twenty-something sons for their edification……..and then thought of you.   For as much as we are critical of millennials for their usage of their smart phones at inappropriate times, I find lots of baby-boomers and GenX folks are just as guilty of the same things and can be hypocritical in their approach discussing this subject with younger people.

    I work for a large firm with over 14,000 employees who basically do the same job as mine.   The firm spends thousands of dollars each year to educate us in meetings that are usually held at our headquarters or at sites around the US and we are usually provided with first class accommodations.

    Over the past few years, it has been stunning to me how many people in our meeting audiences can be spotted with their faces buried in their mobile devices while a speaker is talking from the stage - even if those speakers are the key management members of our own organization.   Further, while some of the participants might be taking notes, it is clearly explained to us in advance that virtually all the slides and notes used by our speakers will be made available to us via an intranet website (that is provided to us by our firm after each meeting).   As a daily rule, I use my smartphone to communicate with only my closest friends and family.   Unless I get a text message that reads, “911----your house is on fire!” (or something of a similar vein), I do not have a valid reason to use my phone or mobile device while a speaker is on stage.    Everything else can wait.  

    Knowing that a big part of your business is providing seminars to educated adults as well as serving as adjunct faculty in various class settings, I have to wonder if it is discouraging to you to be addressing a group while the audience is making more eye contact with their devices than they are with you.   While a few speakers would accept reduced eye contact as a challenge to improve their method of presentation or make their message more relevant, I suspect the vast majority of presenters would consider it to simply be an insult.   I don’t know about your other readers, but I’d sure be curious to hear your thoughts about this subject.


    There's no question that it takes some getting used to. But I've been doing this a long time, and since one of the things I talk about is being relevant, I've always sort of worked on the premise that I'd better be sensitive to the how people interact with their devices.

    To be honest, I also think that as a speaker, it is my responsibility to be interesting enough that people don't focus on their smartphones. That means trying to be entertaining as well as informative ... it means having slides that are easy to look at (as opposed to having unreadable charts) ... it means engaging with the audience rather than pontificating ... and it means having a message that resonates.

    Rather than being insulted if audience members were captivated by their devices, I'd wonder what I'd done wrong and why I'd failed to keep their attention.

    Now that I think about it, I guess this is the same argument I make to bricks-and-mortar retailers - that it is their responsibility to captivate and keep their customers.
    KC's View: