retail news in context, analysis with attitude

Published on: April 18, 2017

by Michael Sansolo

United Airlines reminded us all last week that there are no private mistakes anymore. Everyone is always armed with a camera and the ability to broadcast widely. A colossal blunder - like dragging a passenger off an airplane - doesn’t stay quiet for even five seconds.

But the truth is, those kinds of mistakes are rare, which is why they get so much attention. The normal course of business mostly goes on without any notice beyond grouchy comments on Yelp. Yet those more normal situations present endless opportunities for small acts that can reward good customer behavior and cement relationships.

And that’s something we need to rethink.

Permit me a personal example. Early last week, before United became THE story, Delta airlines was having a lousy week. Weather problems in Atlanta give Delta the equivalent of back pain for the rest of us. Suddenly nothing works right.

As luck would have it, I was flying Delta and my flight was delayed by nearly three hours because the plane was delayed from Atlanta. The ground crew could only do so much, but they tried; putting out snacks by the boarding gate was one way to at least show some sign of apology.

Then they screwed up. When we finally starting board, the ground crew told us that 35 people would need to check their carry-on bags “voluntarily” in order for everything to fit on the plane. It’s a request I’ve heard before and because I wasn’t in a great rush I decided to volunteer.

That’s something that won’t happen again.

First, once the plane was ready to go, it was apparent than the overhead baggage compartments weren’t completely full. So the credibility of the request for volunteers was a little overstated and I felt fooled.

Second, Delta had countless small ways to thank all of us who volunteered, which in the process would have incentivized future cooperation. They could have given us a coupon for a drink or a discount on a meal, neither costing the airline very much. At the minimum, they could have marked our bags as “priority” so they would have appeared at baggage claim in the first wave. That gesture would have cost nothing.

Instead I cursed myself as my bag came off in the very last group at my destination. My lesson was learned; my good deed was punished. Next time I won’t volunteer and who knows, I may post a video of my bag being dragged off a flight!

Many years ago a Middle Eastern diplomat decried the lack of progress toward peace by saying his counterparts “never missed an opportunity to miss an opportunity.” That’s a mistake in business as well.

Often we are presented small opportunities to make a difference and in the process turn ambivalent customers into fans or supportive customers into advocates. Such moments often don't cost more than a little bit of focus.


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.

Published on: April 18, 2017

by Kevin Coupe

Variety reports that while Netflix didn't have as strong a first quarter as analysts predicted - it only added 1.42 million U.S. subscribers and 3.53 million overseas, on Q1 revenue of $2.64 billion, up from $1.96 billion in revenue during the same period a year ago - it is expected to hit a major milestone this weekend.

Netflix - which helped to disrupt Blockbuster right out of business and continues to serve not just as a major competitor to traditional media companies, but also as an estimable original content producer and provider - is expected to cross the 100-million-subscriber benchmark this weekend.

Yikes.

Never underestimate the power of disruption.

Right now, I can hardly remember life before Netflix started sending me those red envelopes, and I cannot imagine life without its streaming services. Though, to be fair, I only feel that way because something better and more convenient and relevant hasn't come along.

Yet.

And when it does, it'll be an Eye-Opener.

Published on: April 18, 2017

Vogue has a story about how, at last week's Condé Nast International Luxury Conference, "Farfetch founder José Neves spoke about his vision for a future retail experience, where advancements in technology (including virtual reality) would start to free up time and can help make the consumer experience more human."

Farfetch defines itself as "a luxury fashion online platform," selling products from hundreds of boutiques and global brands.

Neves said, according to the story, that "employing new technology - including virtual reality, emotion-scanning software, and innovative payment options" - can be positive for the fashion business as well as transformative for the bricks-and-mortar retail experience.

"Physical retail accounts for 93 per cent of sales today, and even with online growing at fast speed, it will account for 80 per cent by 2025," Neves says. "Retailers need a way to collect information about their customers while they are browsing in-store, just as they collect data from online searches. The Store of the Future aims at providing the in-store experience of the future by giving visibility to retailers on what is happening in the store. It’s the offline cookie that closes the loop, between a great online presence and a complete omni-channel offering and, finally, in-store technology which augments the experience of customers in store and overall."

Neves says that his company plans to start testing his store-of-the-future theories in retail brands that Farfetch has acquired, starting with London-base Browns.

Published on: April 18, 2017

The Chicago Tribune reports that Starbucks "is negotiating a potential deal" that would have it opening a giant Roastery and tasting room concept on the city's Miracle Mile, in the 35,000 square foot location currently occupied by a Crate & Barrel flagship store.

If the deal goes through, it would be the largest Roastery operated by Starbucks; there is only one currently operating, though a 30,000 square foot version is being built in China.

The Tribune writes that the Roastery format is "a hybrid of coffee shop, tourist attraction and educational experience, where customers watch and learn about the roasting and brewing of higher-end, small-batch coffees. Cups of pour-over coffee and bags of beans are sold in the stores."

Published on: April 18, 2017

The Washington Post has a story about a new study from consultancy ghSmart, called the CEO Genome Project, which says that the stereotype of an successful CEO being an "extroverted, charismatic, confident executive who climbed a mistake-free ladder to the top with a degree from an elite school" may be overstated.

The analysis "examined a sample of 930 of those CEOs to come up with the traits and patterns that most predicted which ones became a CEO. They also gathered information on the performance of 212 of them to compare how top-performers' behaviors lined up with the traits that tend to get CEOs hired.
What they found surprised them. A little more than half of the CEOs who did better than expected in the minds of investors and directors were actually introverts, not the usual gregarious CEO known for glad-handing customers."

The story also notes that "only 7 percent of the best-performing CEOs -- who ran companies from Fortune 10 behemoths to those with just $10 million in annual sales -- had an Ivy League degree, despite the conventional wisdom that pedigree matters."

And, "nearly all of the executives in their sample who were candidates for a CEO job had some kind of major mistake, the project found, such as overpaying for an acquisition or making a wrong hire, in their assessment. Nearly half of them also had what the researchers called a career "blowup" that pushed them out of a job or cost the business a large amount of money -- and three-quarters of that group went on to actually become a CEO."

So what makes for a successful CEO? The Post writes that in most cases, it is someone who has more than one of four traits - "reaching out to stakeholders; being highly adaptable to change; being reliable and predictable rather than showing exceptional, and perhaps not repeatable, performance; and making fast decisions with conviction, if not necessarily perfect ones."

Published on: April 18, 2017

• Business Insider reports that "when Taco Bell develops new menu items, how the snacks will look on Instagram is top of mind."

At the company's California headquarters, the story says, "a team of chefs and food scientists spend their days developing a seemingly endless list of new items, each one more bizarre yet strangely appealing than the last. How the food will look in pictures is always on their minds."

In fact, social media has become so important to the product development process that when it prepared to launch a new Naked Chicken Chalupa, it decided to bypass traditional ad media and instead "put the power in the hands of Instagrammers. In a handful of cities around the US, the chain held launch parties for people to show up, take photos of the chalupas, and — hopefully — share them on Instagram."

"We want to be a part of culture," says Liz Matthews, Taco Bell's chief innovation officer.

Published on: April 18, 2017

• AdWeek has a story about how Home Depot works to be among the country's best-perceived retail brands.

Home Depot, the story says, "is focusing on a blended strategy, appealing to both construction professionals and the average consumer, while upping its e-commerce and in-store customer service game ... For Home Depot, professional contractors make up just 3 percent of its customers, but generate 40 percent of its revenue. The key to the retailer’s success is helping professionals do their jobs efficiently and cost effectively while educating amateur home remodelers and tinkerers to help them build confidence ... the retailer heavily focuses on the in-store experience and service, prepping its associates for the massive amounts of questions customers might have."

I would be a little careful about holding Home Depot up as a paradigm of customer service ... I've spent way too much time wandering those aisles looking for someone to whom I can ask a question. But, they're better than they used to be ... I just think on the customer service question, for someone like me, they tend to over-promise and under-deliver.

Published on: April 18, 2017

• CVS Health confirmed yesterday that Alex Perez-Tenessa, its VP merchandising manager of beauty and personal care, is leaving the company, reportedly to join Amazon, where he will work in the company's Kindle e-books division.

Published on: April 18, 2017

We had a story yesterday about a reorganization at Hy-Vee headquarters that reflects changing priorities at the company. Which prompted this email from an MNB reader:

This article did not take me completely by surprise, but it was shocking nonetheless.   I have been watching the company add staff positions over the past five years and wondered about the need for them but assumed it was because the firm was building sales volume.   I’m not sure who was calling the shots on this, but I think the size of the administrative staff got away from them and they started to increase the pressure on the stores to generate profits to pay for it.

When I talk to my friends and co-workers who are department heads and store directors, I hear three overarching themes:

• The job is not fun anymore. More and more people are retiring or leaving voluntarily because of the substantially increased pressure to perform and produce sales and profits.   There are no “attaboys” for a good job; the only time they hear from a staff person is when something is wrong.

• People are disposable. Even more so than in the past, it is made clear by staff that “if you can’t do this job, we will find someone else who will”.  While I don’t disagree with that theory, it is still incumbent upon the employer to put an employee in a position to at least have the possibility of success.  Too often recently I have seen the company only putting people in positions to fail with no way out and they have to walk away as store directors because they are starving to death.

• There is no ability to constructively provide a difference of opinion with the CEO at any level. In the past, the vice-presidents could act more as a “team of rivals” with differing theories or methods of running a store.  Now, the ability to manage a store as an entrepreneur is discouraged and individuality is not permitted.   Long-time store directors have been dismissed or have walked away because the CEO has told them that they are not being supportive of him and his directions.   In the past, if a store was sufficiently profitable, such flexibility would be tolerated and sometimes even encouraged.  
 
It is disheartening to me to see this occurring and the number of key people who have approached me to accelerate their retirement plans has increased.    I hope the company can modify its thinking to maintain its status as a progressive retailer that can attract and keep good people.

Perhaps the changing priorities are even greater than I thought...




On another subject, this email from an MNB reader:

We had to make a driving speed trip to Ohio from Florida and back last week for family reasons. I have been fascinated for some time by the on-going expansion of Bass Pro, Cabela's, Field & Stream and Gander Mountain stores in the face of an ever increasing availability of online shopping. I realize that Bass Pro is working on the purchase of Cabela's and it is really those two that most fascinate me by virtue of the size of the facilities, the huge aquariums and wildlife exhibits in each unit and the land required for the stores and for parking when one can essentially by everything they offer online except for maybe Boats and ATVs.

They seem to be doing well and I understand one stop shopping, on staff expertise and wide variety but it also seems that their overhead and inventory costs must be massive.

While I appreciate the sense of theater they present and I also understand each has online businesses as well I just wonder why they have yet to be seriously disrupted.
 
I suspect their products are not in your wheelhouse I never see them mentioned in discussions of retail and the future of retail. I thought they might make for some interesting discussion and observation at some time if you were able to study and research them.

Never underestimate the power of disruption. Gander Mountain, in fact, is in bankruptcy protection as it seeks a buyer for the company, and has closed a bunch of under-performing stores.

I think your point is a good one - that many of these kinds of stores have managed to avoid disruption by using a sense of theater; I'm always sort of reminded of Wegmans when I go in one (though I must concede that this is not often ... I'm neither a hunter nor a fisherman, and my definition of enjoying the outdoors is sitting on a veranda scanning the wine list of enjoying a craft beer).

Published on: April 18, 2017

In yesterday's 121st running of the Boston Marathon, Kenyan Geoffrey Kirui won on the men's side with a time of 2 hours, 9 minutes, 37 seconds, while Kenyan Edna Kiplagat won on the women's side with a time of 2:21:52.

In a notable sidebar, 70-year-old Kathrine Switzer recorded a time of 4:44:31. It was 50 years ago that Switzer ran the Boston Marathon for the first time, though she had to register as K.V. Switzer because at the time the Boston Marathon was for men-only. That first time, Switzer's boyfriend had to body-block a race official who tried to escort her from the course; she finished the 1967 Marathon in 4 hours and 20 minutes.