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    Published on: April 20, 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, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    There was an interesting piece in the Wall Street Journal this week about a lawsuit that has been filed against PricewaterhouseCoopers, a company that proudly calls itself "the place to work for millennials" and each year recruits thousands of college graduates to join its ranks.

    The lawsuit was filed by two men - one 53 years old, the other 47 - who charge that PwC was guilty of age discrimination when it rejected their applications for entry-level positions. Normally, these sorts of suits are brought by older people who have been let go, but the Journalsuggests that this actually will be an interesting case to follow because the facts of the case put it in the realm of unsettled law.

    Now, I'm no lawyer, so I'm not qualified to weigh in on the technicalities of the federal Age Discrimination in Employment Act (ADEA). I'm pretty sure that PwC, like most companies, always has worked on the premise that entry-level jobs are for young people, and that older folks are not suitable for such positions. But the plaintiffs obviously disagree, arguing that favoritism toward millennials, even in this case, is illegal.

    Regardless of the legal technicalities, I do think that companies make a mistake if they automatically decide that someone in their late forties or early fifties isn't suitable for a startup position, or work under the belief that young people are by definition more "productive, creative, trainable and cheaper," as the Journal puts it.

    I'm simply not sure that's always true. If a person is in his or her forties or fifties and is willing to start over, it may well be because whatever it is they used to do is no longer a tenable way to make a living. I would think they'd be grateful for the opportunity, and that they might actually bring a great deal of energy, enthusiasm and dedication to any company willing to give them a shot. They also bring a lot of knowledge and experience - which in some cases might limit their vision, but in others might provide badly needed context and seasoning.

    PwC can't be worried about them leaving - after all, millennials are well known for moving on after a year or two, and those older folks might well be a lot more loyal down the road.

    I want to be careful about not painting with too broad a brush. Not every baby boomer is going to be a better employee than every millennial, but neither will every millennial be better than every baby boomer.

    I just think that companies have to cast with a wider net these days, and be willing to take chances on people that not that long ago they never would've considered. If we're going to agree that the economy and the job market are going through tectonic changes, companies have to be willing to approach the hiring process with a changed mindset.

    After all, look at Bartolo Colon .... who at 43 normally would be considered way too old to be winning baseball games, but who helped the NY Mets get to the playoffs last year and is pitching pretty well for the Atlanta Braves this year.

    Colon appears to have a lot left in the tank ... and he knows how to use it. I think the same may be true of a lot of other folks, too.

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

    KC's View:

    Published on: April 20, 2017

    by Kevin Coupe

    Just another case of a company that didn't think before it acted.

    After the Boston Marathon this week, running shoe company Adidas emailed participants with the following message:

    "Congrats, you survived the Boston Marathon!"

    Ignoring the fact that such a message seems at the least insensitive since it was just four years ago that two terrorists planted bombs at the Marathon that killed three people and injured more than 260 others.


    The Associated Press reports that at least two survivors of the 2013 bombing ran the race this year, but that it was unknown whether they received the message.

    One can only hope not.

    Adidas apologized. Quickly.

    But the misstep remains an Eye-Opener.

    KC's View:

    Published on: April 20, 2017

    As Target rethinks its strategic and tactical priorities, the company reportedly is considering its options for the Food + Future laboratory that it first opened in 2016 in partnership with MIT Media Labs and design firm Ideo.

    The Star Tribune writes that the initiative was one of several "potentially on the chopping block as the Minneapolis-based retailer pared back some innovation-related projects in recent months."

    The story says that Target has been seeking outside investors to take over the Food + Future program, and was on the verge of shutting it down before an offer from an undisclosed party emerged this week.

    According to the story, in the development of the Food + Future program, Target "has been exploring a number of ideas including building indoor farms inside of stores and was at one point planning to test one at Target's store near Fenway Park in Boston. Target employs about 10 full-time workers at the Massachusetts lab. A handful of other positions are funded by partners or contractors."

    But, as Target has seen its sales and profits decline, Target CEO Brian Cornell "has been reining in the retailer's big-thinking innovation agenda to refocus on the core business. In January, Target halted a store-of-the-future concept being built in Silicon Valley and killed a secretive start-up project called Goldfish, which was to be an online marketplace."
    KC's View:
    I cannot comment specifically on the Food + Future program, but it seems to me that Target's decision reflects a typically earthbound approach to business that may spell trouble for bricks-and-mortar retailers.

    Every retail company - each according to its resources - has to figure out ways to build a current business with an eye on future innovation. You can't do one without the other, and it often is further complicated by fires that leaders often have to put out on a daily basis.

    What Target is doing stands in marked contrast to how Amazon seems to continually be patenting new technologies and investing in ideas that may or may not come to fruition and change the ways in which Amazon comes to market.

    Airborne blimps that serve as warehouse/docking stations for drones that deliver products to consumers? Really? But I think these kinds of efforts are critical to being relevant on the future retailing landscape. And Target, which is struggling with current relevance, may be taking bets off the table that would've been important to its future.

    Published on: April 20, 2017

    The Wall Street Journal has a story that looks inside "a nondescript warehouse" in Union, New Jersey, where, every day, "tens of thousands of bulk household items move through the fulfillment center, destined for the online retailer’s customers along the Northeast corridor.

    "Incoming orders get assigned to large plastic bins that travel along an automated system of nearly 2 miles of conveyors. Workers stationed along the winding route drop each item—from paper towels to peanut butter—into the bins as they pass by. When the order is complete, packers arrange the items in a box, tape it shut and set it on another conveyor headed for a waiting delivery truck."

    This, Journal suggests, reflects a dawning urban reality - "shopping as infrastructure," with a "growing network of e-commerce sites, warehouses and delivery services" that redefine how shoppers acquire products.

    "Warehouses like these are becoming a way of life for many urbanites. Instead of spending the afternoon choosing items off store shelves and standing in a checkout line, city dwellers of the future will tap a few buttons on hand-held devices and a part-human, part-machine warehouse crew in a nearby industrial district will handle the transaction from start to finish. The weekly shopping is done in 10 minutes, and the shopper never has to leave the house."

    You can read the entire story here.
    KC's View:
    While the story refers specifically to urbanites, I tend to believe that over time we're going to see more and more people outside urban centers are going to look for these kinds of options. Physical stores that are going to compete simply are going to have to find new and evolving ways to be compelling, and may have to rethink their broader assumptions about how to do business.

    I also think that one of the things we are likely to see down the line is these kinds of formats potentially redefining the relationship between retailers and suppliers, as well as consumers and suppliers. Again, old assumptions may not apply.

    Published on: April 20, 2017

    USA Today reports that CVS Health, just three years after deciding to get out of the tobacco business because it was inconsistent with the health-oriented image it is trying to build, now "plans to accelerate a store renovation project, devoting more floor space to nutritious food and health products ... CVS executives said Wednesday that they would implement the new format at several hundred stores by the end of 2018, demonstrating the company’s commitment to remake itself as a beacon of healthy living rather than a place devoted primarily to treating illnesses and selling candy bars."

    The story goes on: "The overhaul includes abandoning the typical smorgasbord of candy at the front counter, moving those items farther back and devoting that coveted shelf space to healthier choices, including organic foods, sugar-free items and protein bars. CVS is also betting on items connected to helping people sleep, skincare and healthy 'eat-on-the-run' snacks, said Judy Sansone, senior vice president for the front store business and chief merchant."

    Another notable line from the USA Today story: "The company will sell fewer seasonal products and other general items that are suffering against online competition, namely Amazon."
    KC's View:
    I'm not the biggest fan of CVS (though I am a customer), but I do admire the idea that it seems focused on trying to be strategically and tactically consistent. And I think the last point is an important one - that sometimes retailers have to embrace the intelligent loss of business, and move on ... building on strengths rather than focusing on legacies.

    Published on: April 20, 2017

    GeekWire reports that Amazon has just won a patent for what is called "on-demand apparel manufacturing," which creates "a system in which computer software collects clothing orders from all over the world and comes up with an efficient plan for fulfilling them," and in which "machines only start snipping and stitching once an order has been placed."

    The patent also says that orders “can be organized by the computing environment into one or more groups of orders based on one or more productivity factors, such as size, shape, fabric type, or delivery location for the textile products,” the patent says."

    The process, according to GeekWire, may be applicable to more than just clothing - it may be able to be used for "accessories (e.g., scarves, gloves, hats, bags, belts, etc.), footwear, bedding, curtains, towels, etc., in a wide variety of materials including, but not limited to paper, plastic, leather, rubber, and other materials.”
    KC's View:
    Look at this as being yet another effort by Amazon to innovate around a basic truth that typifies its business - when millions of people are on its home page at the same time, they all are being exposed to different homes, because those pages are organized and oriented around past behavior and demonstrated interests.

    That's what on-demand manufacturing would seem to be focused on, as Amazon tries to rethink and rebuild a supply chain that is more personalized.

    By the way ... contrast this move by Amazon with our story above about Target backing off innovation initiatives that might help it in the future.

    Published on: April 20, 2017

    • The Canadian Press reports that Walmart Canada is embarking on a restructuring initiative that will lead to the layoff of what the story says is "an unspecified number of employees." Press reports have set the layoffs at 475, but the company says the number is lower than that.

    Spokesman Alex Roberton said that the layoffs are related to a change in store operations that allows employees to "work across the entire store rather than a specific department."

    Fast Company reports that Walmart is making plans to go beyond its existing commitment to reduce its own carbon output by 18% by 2025, and is "encouraging its top suppliers to make similar commitments. Its new initiative, called Project Gigaton, aims to cut greenhouse emissions by one billion tons across its supply chain by 2030. Which is a hell of a lot: The retailer estimates it’s the equivalent of getting 211 million passenger vehicles off of U.S. roads for an entire year."

    According to the story, "Walmart is releasing an open source toolkit that identifies “hotspot” areas where suppliers can make improvements. It covers energy efficiency, agriculture, waste, packaging, deforestation, and product use and design."

    “Some suppliers aren’t sure where to start and where the priorities are and we can focus them,” Laura Phillips, Walmart’s senior vice president of sustainability, tells Fast Company. “What’s unique about our approach is that we’re bringing all our suppliers along with us, sharing results and taking on this broader challenge together.”
    KC's View:

    Published on: April 20, 2017

    Consumer Reports is out with a new survey saying that "the vast majority - 86 percent - of consumers who often or always buy organic food say it’s highly important that animals used to produce these foods are raised on farms with high standards for animal welfare. The survey found that 83 percent of these consumers think it’s highly important that organic eggs come from hens that were able to go outdoors, and have enough space to move around freely."

    Consumer Reports notes that the "survey was released at the same time that agribusiness interests are pressuring the U.S. Department of Agriculture to abandon its rules requiring organic producers to abide by strong animal welfare standards. The rules were set to go into effect in March but have been delayed.  Consumer Reports urged the USDA to enact the new rules without further delay."
    KC's View:
    I'm not surprised by this, just as I won't be surprised if the USDA relaxes animal welfare standards. If agribusiness wants it, they're likely to get it ... though I think that this may have only a short-term impact on their businesses while demonstrating to a growing consumer group that agribusiness doesn't care about their priorities ... which could have long-term implications about which business will be less enthralled.

    Published on: April 20, 2017

    • The Seattle Times reports that " plans to launch an online emporium in Australia, the e-commerce giant’s first full-fledged retail foray in the Southern Hemisphere ... Currently Australians can buy online Kindle books and readers, Audible audiobooks and download apps. But Aussies looking for other physical items have had to go to Amazon’s global store, wait nine to 12 days for standard shipping, and pay hefty shipping rates." But now, Amazon is looking to build a platform for third-party sellers in Australia that will replicate those already operating in the US, Mexico, the UK, Germany, France, Italy, Spain, India, China and Japan.
    KC's View:

    Published on: April 20, 2017

    • The Chicago Tribune reports that Central Grocers, parent company to both Strack & Van Til and Ultra Foods grocery stores, has announced plans to close nine of the Ultra stores, and sell 22 Strack & Van Til stores.

    The announcement comes as, "in a lawsuit filed Tuesday in federal court in Chicago, Teamsters Local 703 allege Central Grocers signed a letter of intent to 'sell its operations and/or facilities'."

    The Street reports that the stock market is responding negatively to rumors that the Federal Trade Commission (FTC) "is leaning towards filing a lawsuit seeking to block Walgreens planned acquisition of Rite Aid."

    The story notes that "Walgreens has repeatedly upped the number of stores it is willing to divest to win FTC clearance," but other recent antitrust moves by the FTC have indicated to analysts that it will not ultimately rule in Walgreens' favor.

    Barron's reports that "Chipotle has been quietly raising prices in several cities in recent weeks -- its first large-scale increase in about two years. It’s a sign that the company is more confident about its ability to win back customers," and "is no longer in damage-control mode, doing everything possible to woo back customers who were turned off by its food-safety problems."

    The story notes that "the increases are necessary to deal with higher costs. Chipotle’s labor and food costs have risen in the past couple of years, even as the company has held the line on prices."
    KC's View:

    Published on: April 20, 2017

    • Albertsons announced that it has named Wayne Denningham, the company's EVP and COO, as its president/COO.

    • Los Angeles-based Gelson's Markets said that it has hired Paul Kneeland to be its new senior director of produce and floral. Kneeland most recently has been with Ahold's Fresh Formats division, and before that was at King's and Roche Bros.
    KC's View:

    Published on: April 20, 2017

    Got several emails responding to yesterday's story about PetSmart buying e-commerce site Chewy.

    MNB face Glen Terbeek wrote:

    Here is another example of a large, established company buying innovation and its future from a recent startup. Could it be that the company's organization, measurements, old industry practices, quarterly results focus, and risk adversity won’t let them deal with the the future changing marketplace internally? They are the perfect kind of company that is targeted by “disruptors”; startups without any “historical" barriers.

    The question, of course, is whether the big company ends up killing or nurturing and learning from the small company. It can work, or it can go sideways.

    And, speaking of potential going sideways, one MNB reader wrote:

    I have been in the Pet Industry for over 40 years. What I see here could bring another view more than just the drive for a strong e-commerce platform. Like most brick and mortar, Petsmart has been very strong to the vendor community to proceed with MAP policies. Chewy is like Amazon and lives in the free flow of a free marketplace. Trying to get Chewy to go with MAP pricing is nearly impossible. With this we have not shipped Chewy, nor Amazon and now we play that game of wack a mole as we make efforts to stop our distributors from selling these who don’t follow MAP. So will Chewy change and follow the parent in Phoenix or stay with the free market side that got them to have the following they do?

    MNB reader Jessica Duffy had some thoughts about Whole Foods' "whole-paycheck" issues:

    I feel that in regard to basic grocery products, Whole Foods prices are reasonable and competitive for real food that isn’t stuffed with a bunch of cheap fillers, as well as additives and preservatives. And then, Whole Foods has all those amazing fun things that are specialized or local and more more expensive to produce. The products are vetted extensively, come to Whole Foods shelves, and then are commandeered by other johnnie-come-latelies who did not have the costs of ensuring the level of quality necessary to put a product on Whole Foods shelves.

    May I also add, that other grocery retailers do not have anything close to the quality of Whole Foods produce, let alone mandatory humane standards, where even the 1st level is far above what animals face in conventional production. And did I mention the seafood sustainability standards? So many “competitors” are merely jumping on the work done first by Whole Foods and then Whole Foods gets bashed for having higher prices.

    We also reported the other day about how Taco Bell uses social media increasingly to make decisions about new product introductions, often using pictures to communicate with customers.

    One MNB reader wrote:

    There is no resemblance between the Taco Bell items seen in commercials and how they look when you buy one in store.  Not sure that pictures of store purchased food is in their best interest.

    I was thinking this the other day, but I sometimes am accused of being too snarky about many fast food chains. I decided to let this pitch go by ... but am glad that someone else took a swing at it.

    Finally, we took note the other of a CNBC report that new data from The NPD Group's Checkout Tracking Service "suggests that Americans as a whole tend to be value-driven consumers, with about 95 percent of US shoppers buying something at a Walmart during 2016, and 89 percent buying something at a McDonald's. In third place was Target, where 84 percent of Americans shopped last year."

    Prompting one MNB reader to write:

    Although I’m sure the numbers are high, I have trouble believing they are really 95% and 89%. I have not entered either of those establishments in at least a decade and I don’t know many people who have….

    I think one has to be careful about statements like these. There are a lot of retail establishments that I haven't patronized over the past decade because they are neither relevant nor compelling to my life ... but that doesn't mean that they aren't hugely popular with people elsewhere in the country with entirely different interests and priorities.

    One has to be careful about epistemic closure.
    KC's View: