retail news in context, analysis with attitude

Published on: May 2, 2017

by Michael Sansolo

In case you didn’t know, I am a sports fan. I’m content to flip on the TV and follow a game involving teams and even sports that I don’t particularly care about.

And even with that background I cannot understand the spectacle of the National Football League (NFL) draft of college players that took place in the past week. But it is clear that this is a marketing marvel, simply because the NFL essentially turned nothing into something.

That marketing lesson shouldn’t be lost on anyone, especially given what was done this year.

First, let’s dispense with the sports part of this: the draft allows each of the league’s 32 teams to select eligible collegiate players in a series of rounds. The teams choose players in reverse order of their success the previous year, so the worst teams go first and so on, round after round.

Through the years, the spectacle grew thanks to the advent of non-stop television coverage. What once took a day and drew the interest of only the most die-hard fans, now takes three days and is all done in prime time. The weeks leading up to the draft are dotted with “experts” analyzing and predicting the outcomes.

The event itself has gone dramatic, with clocks counting down the time until the next selection and likely draftees waiting anxiously for their names to be chosen. Heck, they even made a Kevin Costner movie (Draft Day) about the process.

Even the final player chosen gets special recognition as Mr. Irrelevant. (A dubious honor, but one that at least comes with the potential of a career in professional sports.)

Lastly, after 50 years of taking place in theaters and hotels in New York, the draft went on the road and into new territory. This year the NFL placed it outside, on the Ben Franklin Parkway, Eakins Oval and the steps of the Philadelphia Museum of Art. The crowd size mushroomed to 250,000. Already I’ve read sports articles questioning how the NFL will possibly top this next year.

That's great marketing and that’s something business should be examining. How do we take the ordinary and turn it into something extraordinary or, a minimum, exciting? Remember, this doesn’t mean celebrating holidays or obvious events, but rather creating events and excitement.

For instance, where are the events celebrating the arrival of summer produce, something I look forward to far more than the NFL draft? Or how about the start of barbecue season; the end of the school year; or any of the countless created little holidays we seem to have almost weekly. It’s about building displays, pushing sampling and doing it all with energy and style.

It doesn’t have to matter if peanut butter and jelly sandwich day is real; it only matters that we find a way to make it exciting and special in the same way that the NFL made player selections must-see television for even casual fans. Making something out of nothing is the key to great marketing, merchandising and excitement, especially at a time when shoppers are gaining more ways to avoid coming to your store.

More than ever we need make the ordinary extraordinary.

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: May 2, 2017

by Kevin Coupe

The Seattle Times reports that Amazon has decided to show a little gratitude to the Massachusetts fishing community of Manchester-by-the-Sea, which gave its name and served as a location to the Oscar-winning movie produced by Amazon.

The retailer, in connection with the release of the film on Prime Video "will ship to every Manchester household a gift box with a code to enroll in Prime for free and three packs of popcorn from Amazon’s own private label brand, Wickedly Prime.

"The membership means that the 5,000 or so residents of the city will get access to Prime Video in time for their namesake movie’s launch on May 5."

Prime membership normally would cost $99 a year.

This is very clever ... and reflects the broader strategic approach that Amazon takes to business development. It isn't just about selling stuff ... it is about creating an ecosystem in which products are available, food is purveyed, content is created, and people's lives are made easier through technology.

It is an Eye-Opener.

Published on: May 2, 2017

The US Food and Drug Administration (FDA) said yesterday that implementation of a "federal rule that would mandate all chain restaurants, supermarkets, convenience stores and other food sellers to post calorie counts on their menus has been delayed until 2018," according to the Chicago Tribune. The rule, originally part of the Affordable Care Act in 2010, was set to go into effect at the end of this week.

The new deadline for the posting of calorie counts by all food business with 20 or more locations is May 7, 2018.

The Tribune writes that "the labeling requirement has been heralded by public health advocates who say consumers who see calorie counts before buying food tend to order less calorie-laden options. But it had staunch critics who argued the rule didn't allow for enough flexibility for food sellers that aren't restaurants. It was fought by trade groups representing pizza restaurants, supermarkets, convenience stores and bakeries, which argued that the regulations needed to be adjusted to accommodate the many different ways in which Americans buy their food."

The story notes that "menu labeling opponents had petitioned the Trump administration to delay the rule and pushed for passage of a bill called the Common Sense Nutrition Disclosure Act, which would dilute and remove some of the regulations." Now, "the FDA is opening the regulations to another public comment period starting Thursday. It asked in particular for 'approaches to reduce regulatory burden or increase flexibility' for calorie postings on buffets and grab-and-go food stations, as well as recommendations on how to best provide calorie information outside of a menu board."

Published on: May 2, 2017

In Minnesota, the Star Tribune reports that Target has decided to shut down its Food + Future lab, first opened in 2016 in partnership with MIT Media Labs and design firm Ideo, after it could not find a buyer at what it deemed to be an appropriate price.

The lab will close its doors for good in June.

According to the story, "The food lab ... is one of a number of innovation-related projects that CEO Brian Cornell has been shutting down in recent months as Target's sales have continued to slide. He's been refocusing innovation efforts to be more closely tied to Target's core business and to those that will pay off more quickly."

The Star Tribune also notes that "last week, Target announced internally that Casey Carl, its chief innovation and strategy officer, will be leaving the company next month. Carl spearheaded an entrepreneur-in-residence program that helped spawn many of these projects that have been cut, including the food lab and a secretive start-up called Goldfish. Earlier this year, Target also halted a store-of-the-future prototype that was about to be built in Silicon Valley."

Published on: May 2, 2017

The Indianapolis Star reports that Marsh Supermarkets, which recently announced the closure of 10 stores, or 15 percent of its fleet, now " is closing its pharmacies after reaching a deal to sell its prescription records and drug inventory to CVS Health Corp. Marsh's pharmacy operations will cease in May."

Terms of the deal were not disclosed. Marsh did not comment on the arrangement, though CVS released a statement saying that "CVS and Marsh will work together to ensure that pharmacy patients experience a seamless transition with no interruption of service."

Published on: May 2, 2017

The Tampa Bay Business Journal reports that Publix's Q1 results reflect the "ongoing challenges in the grocery industry," with same-store sales that were down 2.1 percent, which came after "28 consecutive quarters of same-store sales growth. The last time the grocer reported a decline in same-store sales was December 2009."

Publix total Q1 sales were down 0.4 percent from last year’s $8.72 billion, to $8.69 billion, with profit down 4.6 percent, to $555.3 million, compared to $581.9 million in 2016.

The story notes that Publix blamed a late Easter for the decline, but points out that "Publix is far from the only grocer to see financial declines in recent quarters. Cincinnati-based Kroger Co. ended a streak of same-stores sales growth that spanned 52 consecutive quarters when it reported its fourth quarter 2016 earnings." In addition, Publix has been investing in remodels and new store development that impacted its profits.

Published on: May 2, 2017

• The New York Daily News has the story of an Arizona Walmart shopper who bought a purse from the big box retailer and says that she discovered inside it a note that has been translated as being from a prisoner there who works 14 hours a day, given little to eat, and is forced to make products sold in US stores. (Similar notes are said to have been found in products sold in Saks Fifth Avenue and K-Mart.)

A Walmart spokesman said that the company could not "comment specifically on this note, because we have no way to verify the origin of the letter, but one of our requirements for the suppliers who supply products for sale at Walmart is all work should be voluntary as indicated in our Standards for Suppliers.”

Published on: May 2, 2017

• Digital Trends reports that Sur La Table is partnering with delivery service Instacart so that "customers can get not only ingredients, but also kitchen tools on-demand ... Upon launch, kitchen enthusiasts will be able to shop Sur La Table via the Instacart platform in the California Bay Area, Portland, and Chicago."

Published on: May 2, 2017

• Whole Foods has decided to push back the opening of a 365 by Whole Foods store in Houston from 2017 to 2018, according to a story in the Houston Business Journal.

The story says that Whole Foods originally bought the property in 2015, and it originally was expected that it would be the location of one of the first five 365 stores to be opened in the US.

Four 365 stores now are operating - in the Los Angeles market; Lake Oswego, Oregon; Bellevue, Washington; and the latest, in Austin, Texas.


• Reuters reports that Pret A Manger, the British coffee and sandwich chain, is seeing some strong growth in the US, apparently because of its investment in a breakfast menu. Sales at its US stores exceeded $200 million for the first time, up 14 percent last year, which has encouraged the company to begin planning for further US expansion.


• The Chicago Tribune reports that "McDonald's has launched a line of premium mix-and-match sandwiches it calls Signature Crafted, a pricier option it hopes customers will bite onto despite their focus on value. The Signature Crafted line features three topping choices: Maple Bacon Dijon (grilled onions, thick-cut bacon and Dijon sauce); Sweet BBQ Bacon (barbecue sauce, bacon and crispy onions) and Pico Guacamole (avocado, pico de gallo and buttermilk ranch sauce.) All come with white cheddar cheese. The topping options are available on a burger patty or grilled or crispy chicken. The new line, which rolls out nationwide this week, costs around $5."

Published on: May 2, 2017

• SpartanNash announced that it has hired Tom Lee - formerly VP, merchandising operations, U.S. e-commerce for Walmart - to be its new senior VP, supply chain.

Published on: May 2, 2017

On the subject of the continued debate about menu labeling rules, MNB reader Gregg Raffensperger wrote:

I agree with you that transparency is a good thing, however I feel in this case, there is a flaw in this argument.

I doubt that the majority of people eating in fast food restaurants, or restaurants in general, are making their purchase decisions based on calorie content.  “Should I eat the chicken tenders or the cheese burger today….hmmm which has less calories?”  They will not move to a salad.  I guess either one is fine, as long as they have a Diet Coke. 
 
FDA, please focus on something more meaningful.

From another reader:

Thank you Trump administration. Federal rules mandating that restaurants post calorie counts truly are a waste. First off, the research I've come across seems to show that posting this information does not affect health outcomes.

Second, it costs businesses money and therefore it costs consumers money (maybe providing less to spend on healthy food options or a gym membership).

Third, if consumers want the information it is not hard to imagine health oriented food service outlets posting it (on menus, electronically, # of ways this could take place) and having that trickle down to other outlets (if consumers truly want and feel they can benefit from it).

Fourth, it's easy enough to at least have an idea of what you're consuming with easy access to the internet, calorie counting apps, etc.

Fifth, calorie counts are just one part of the picture...if we require calorie counts on service menus should we also require whether the options are GMO free, full nutrition facts, how the animals were slaughtered, co2 emissions related to the supply chain, etc (it's all information that could help the consumer but there just may not be room for the name of the product).

Lastly, if regulation is the only way to go let's at least have it done on a state or more local level so different methods can be tested and we can see what method if any provides better health outcomes.

And, from MNB reader Bruce Wesbury:

Kevin, Trump is doing what should have been done long ago, get the government out of the way. If you want to label all your products then label them. Do you think your wife Bezos waits around for the government to tell him to do something.

For the record, while I have no problem with federal rules that mandate menu labels because I think such rules would serve the best interests of citizens/consumers, this is not an issue that would be likely to affect my vote one way or the other. While I feel one way, I understand the opposite argument, that companies ought to be able to use such labels as a differential advantage if they choose to ... and think that this is one of those things about which people can agree to disagree, and that there are far more meaningful issues about which the debate should be more intense and where I'd be a lot more willing to be draw the line.

That said ... I have to say that I don't really understand the "your wife Bezos" comment, except that it seems to be your way of trying to demean me and my opinion. That's too bad ... because I have more respect for your opinion than you seem to have for mine.

This kind of crap, which seems to take a lowest common denominator approach to conversation, abandoning any attempt at civil discourse, is one of the reasons that we have such divisions in this country. Why should I take you seriously if this is your definition of reasoned discussion?



On another subject, from MNB reader Jim Veregge:

Hey Kevin, anyone supporting the entire repeal of Dodd-Frank needs to rent or buy the movie The Big Short to remind them of how the financial service industry acted in an era of little regulation or oversight. Some “fine tuning” of some of the regulations is certainly needed, but letting the fox guard the henhouse, as they did prior to the housing crisis and financial services meltdown is certainly NOT the answer….  Also, I’d think most consumers would appreciate keeping or reducing the “swipe fees” financial institutions charge retailers if they really understood the amount of profits financial institutions are raking in at their expense.

There's that great line about how “those who don't know history are doomed to repeat it.”

Which seems about where we are right now on this one.

MNB reader Gil Harmon wrote:

Regarding swipe cap fee - you nailed it with your statement they want to “…make it as opaque a process as possible.”  In a capitalistic society, the system will work as long as everyone has all the information.  So let’s make it as transparent as possible by making it so that retailers can add the credit card/debit fee to the receipt.  Show the consumer what they are paying in credit card fees in order to “earn” double miles.  Take the retailers out of the middle, mandate transparency of the fees directly to consumers, and make banks compete on the balance of miles/rewards versus fees charged.  Maybe then we will see the emergence of a no frills bank that does not give bonus miles, but also does not charge you as much either.

There is a counter argument that it will cause more cash in the system, meaning more handling - more labor, so maybe the retailers can pay part of the fee?  As long as it is transparent, the consumer knows what the true cost is, there should be no argument for taking off the cap.  Maybe then the banks would not be so quick to lobby Congress for what they want.  If only politics were about what is best and not about how to get re-elected.   

But, another MNB reader chimed in:

By no means am I an expert on this, but I don’t think you are correct to say that the banks’ strategy is to “screw over consumers and retailers and charge as much as they want, and make it as opaque a process as possible.”  There’s no way that is the end game here.  If fee limits are removed and banks increase swipe fees, it will open the door to competition intent on reducing this cost.  Apple pay, PayPal, and bitcoin come to mind immediately.  Or, if there is true value in the services provided by Visa and MasterCard (and no doubt there is), then consumers will pay for those services, up to a point.  It might not be the best example, but there is no limit on the fees that brokerage firms can charge clients for managing accounts, or accounting firms can charge for tax return prep – there is a wide range of options and it is up to consumers to choose the level of service they want, and pay for that level of service with commensurate fees.  I’m surprised that you are so firmly against eliminating this cap, as it can only lead to more competition – benefiting consumers – in the long run.



Got the following note from MNB reader Tom DeMott:

Kevin, you made the comment below regarding fish from China.

“Which means that consumers - and retailers - need to stand up and do something about it, like doing their level best to never, ever buy or eat seafood from China.”
 
For your information, millions of pounds of Alaskan Seafood (Cod & Salmon specifically) are caught by US fisherman and shipped for further processing and packaging in China and shipped back to the US. If this option (processing in China) wasn’t available it would negatively impact the economic value of the wild catch in Alaska.
 
There is a distinction between fish caught by Chinese fisherman and fish caught by Alaskan fisherman. Be careful not to throw the baby out with the bath water.

A fair point ... but since I'm pretty sure that most labels will not make the distinction, and I feel morally obligated to do something, I'm going to have to draw the line. No seafood from China, to the best of my ability.



Finally ... thanks to the many MNB readers who sent me emails congratulating me (and Mrs. Content Guy) on our 34th wedding anniversary.

One of the things I wrote yesterday was that she is an amazingly patient person:

As I write this, I am 3,000 miles away from her and home, and she doesn't mind. She doesn't even mind that we ended up essentially agreeing to give each other appliances for this anniversary, since the washing machine, dryer and dishwasher all crapped out on us in about a 45-day period.

Which prompted the funniest email I got, from MNB reader Mark Boyer:

Maybe she’s hoping that next year her car craps out....