retail news in context, analysis with attitude

Published on: May 22, 2017

by Kevin Coupe

This Eye-Opener has little, if anything, to do with business.

It does, however, have everything to do with a subject that MNB often has focused on during the past 15+ years.

Star Trek.

The first trailer is out for the new "Star Trek: Discovery" TV series, which will be unveiled in the fall. And it looks spectacular, with production values that seem more typical of a great sci-fi movie than a television series. It tells you how far technology has come and TV series budgets have grown since the original "Star Trek" series was filmed in the late sixties on Paramount's backlot. (Actually, the studio where those early "Star Trek" episodes were filmed was the Desilu lot founded by Lucille Ball and Desi Arnaz, which was sold to Paramount midway through the "Star Trek" run. Two other series were filmed on the same lot at the same time - "Mission: Impossible" and "Mannix." But I digress...)

Those of us who love Star Trek in all its iterations are excited about "Star Trek: Discovery," not least because one of the producers and writers is Nicholas Meyer, who co-wrote and directed two of the best movies in the series, Star Trek II: The Wrath of Khan and Star Trek VI: The Undiscovered Country, and also co-wrote Star Trek IV: The Voyage Home, which may have been the best movie in the series. (It is right up there with Star Trek: First Contact. But again, I digress...)

In addition to being a testament to how far technology has come over the past half-century - advances that also have affected pretty much every facet of business - "Star Trek: Discovery" also reflect two other changes worth noting.

For one thing, while the series pilot will debut on CBS, the rest of the episodes will only be available on CBS All Access, which is the network's pay channel. In other words, not on traditional free television ... which tells you something about how that business model is changing.

And finally, there's something else about the trailer that is remarkable - that, consistent with the values that "Star Trek" always has represented and promoted, there are very few white men to be seen. In fact, the two leading characters seen in the trailer are played by women, Sonequa Martin-Green and Michelle Yeoh. (The captain of the Discovery will be played by white male Jason Isaacs, but he isn't seen in the trailer and in the series he reportedly will be part of the ensemble, not the lead.)

In all, a trailer for a series that could be Eye-Opening and groundbreaking on a variety of levels. You can watch it above. (And yes, I know I'm a total geek about this stuff.)

Live long and prosper.

Great way to start the week.

Published on: May 22, 2017

The New York City Board of Health has informed supermarkets and large chain retailers there that they must begin posting calorie counts for prepared foods, as well as making additional nutritional information available upon request.

The rules apply to any retailer with a minimum of 15 locations nationwide. The Mayor Bill de Blasio administration said that the new regulations are designed to help New Yorkers know about their food, giving them the option of avoid foods that have little nutritional value and lead to a variety of chronic diseases.

According to the Wall Street Journal, "The expansion of the city’s health code is the latest measure in a decade-long push to improve New Yorkers’ health that began under former Mayor Michael Bloomberg and has continued under Mr. de Blasio.

"The city began requiring calorie counts at chain restaurants in 2008. In late 2015, it began requiring them to post a symbol of a salt shaker on the menu beside items that contain at least 2,300 milligrams of sodium.

"New York adopted the newest rules in 2015, but hasn’t implemented them until now because of a delay in the adoption of similar rules under consideration at the U.S. Food and Drug Administration. On Thursday, city officials said they would move forward anyway."

Leslie G. Sarasin, president/CEO of the Food Marketing Institute (FMI), said that FMI and its members were surprised and frustrated by the NYC decision: "The announcement violates both the compliance date and the preemption provisions of the federal ‘menu labeling’ statute and regulations, which have been formally postponed and are undergoing review by the U.S. Food and Drug Administration (FDA) until May 2018 due to substantive regulatory and enforcement concerns.  These  significant concerns get amplified by the City’s unexpected action, which did not include any prior or formal notification to food retailers and provides only a single business days’ notice prior to enforcement; a situation exacerbated by a lack of training materials, oversight procedures, and discussions to resolve problems.

“The supermarket industry for several years has sought common sense flexibility, such as liability protections for good-faith compliance efforts, allowing the use of a central menu board for a salad bar, and creating a regulatory environment that preserves the opportunity for selling locally-made and locally-sourced foods. These are sensible modifications that can easily be incorporated, and that will allow grocery stores to provide information to customers in a more efficient and accurate, less costly manner.  We ask for FDA, city officials, and other entities to begin to employ a thoughtful, constructive approach to resolve some of the tremendous challenges associated with application of chain restaurant style ‘menu labeling’ in a grocery store environment.”

Published on: May 22, 2017

Bloomberg reports that Amazon appears to be "laying the groundwork to bring its checkout-free grocery store Amazon Go to Europe, as the U.S. giant steps up its efforts to crack the $800 billion global market.

"The UK Intellectual Property Office on Friday approved the Seattle-based company’s application to trademark the slogans 'No Lines. No Checkout. (No, Seriously.)' and 'No Queue. No Checkout. (No, Seriously.)' A corresponding application is being reviewed by the European Union’s equivalent agency."

You can read MNB's original coverage of the Amazon Go concept, and see a video about it here.

Published on: May 22, 2017

Marketing Daily has a story about Target's new "TargetRun & Done" advertising campaign, which is designed to emphasize value and convenience in an attempt to persuade customers that "with one quick Target run, they’ll find everyday low prices on all their everyday essentials."

While Target's profits during the most recent quarter were up 10.4 percent, same-store sales for the period were down 1.3 percent because of "less traffic and smaller basket size." CEO Brian Cornell says that the goal is "to invest in our regular prices and reinforce our everyday positioning."

Published on: May 22, 2017

Quartz quotes from an interview with Angela Ahrendts, Apple’s head of retail, in which she talks about the fact that even as thousands of bricks-and-mortar stores close in the US, Apple's stores experienced a double-digit grown in visitors and sales during the fourth quarter of 2016 - and is continuing the strategy of opening new stores.

According to the story, Ahrendts says that "the secret to success in retail is for stores to become places that people come to experience products, not just buy them.

"To this end, Apple is in the midst of revamping its approach to its retail stores, which number almost 500 around the world. Ahrendts said that Apple’s retail team approached the design of the “next gen” stores as if they were a product—the hardware of the store is the physical architecture and the software of the store is the programming offered in the stores. Both are going to get an upgrade.

"The newly redesigned stores have new physical features such as a boardroom for community entrepreneurs to hold meetings. Some of the bigger ones could act as a town square for people. Ahrendts said that Apple is planning to open 100 stores of their new design concept by the end of 2017 and will replace about 30-35 of their existing stores each year."

Published on: May 22, 2017

The Daily Meal takes note of a new poll saying that "the all-time best burger in America is actually Five Guys ... In-N-Out lost its title in the annual Harris Poll EquiTrend study to the classic greasy burger chain with more fries than frills."

According to the story, "In-N-Out had been the two-year reigning champion of this user poll, which asks users to rank consumer brands of all stripes in categories like familiarity, quality, and how likely they are to consider buying from the brand. Five Guys Burgers and Fries was closely followed by In-N-Out, then Shake Shack and Wendy’s."

The Daily Meal points out that it would rank them differently - its believes that Shake Shack sells the nation's best burger, followed by In-N-Out, and then Five Guys.

Published on: May 22, 2017

The Cincinnati Enquirer has a long piece asking if Procter & Gamble "could be the next Kodak?"

The comparison is not a positive one.

"More than five years into a turnaround, P&G executives have bet the company’s future on a plan to sell off a bunch of small brands to refocus the business on its 65 top-selling labels, including Pampers diapers and Tide detergent," the Enquirer writes. "For the last two years, executives urged investors to be patient while the company cut away more than 100 brands they didn’t want.
But now that the company is smaller, it needs to get back to growing again – or risk the wrath of Wall Street ... Waiting in the wings if things don’t go according to plan? A New York hedge fund with a track record of pressuring corporations to cut costs, sell assets and split apart has early this year taken a $3.2 billion stake in P&G."

You can read the entire story here.

Published on: May 22, 2017

• The Los Angeles Times reports that Amazon has identified a site in LA's Century City mall where it plans to open a new Amazon Books store, its first in the city. The story says that "Amazon Books will be moving into a 5,227-square-foot space in Westfield Century City. The upscale mall, at Santa Monica Boulevard and Century Park West, is in the midst of a $1-billion modernization begun in 2015 that is expanding it to more than 1.3 million square feet and adding more shops and restaurants."


• Bloomberg reports that Amazon's drone delivery initiatives are for the birds. Literally.

The story says that Amazon "has started development of an air-traffic control system to manage its fleet as the drones fly from warehouses to customers’ doors. Amazon created a new research and development team near Paris, where about a dozen software engineers and developers will build a system aimed at ensuring flying delivery vehicles don’t collide with buildings, trees, other drones and -- most unpredictable of all -- birds."

Bloomberg writes that "a program for drones is more complicated because the vehicles fly at lower heights and must account for more obstacles. The management system will integrate detailed maps -- including temporary objects such as construction cranes -- as well as information about bad weather conditions. Drones will be programmed with instructions on how to react if they come near -- or strike -- a bird."

Published on: May 22, 2017

• Supervalu and Unified Grocers said late last week that the US Federal Trade Commission (FTC) "has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to SUPERVALU's proposed acquisition of Unified Grocers."

The conclusion of the waiting period satisfies one requirement for the acquisition to be finalized. It also must be approved by Unified's shareholders.


• The Specialty Food Association (SFA) and Food Marketing Institute (FMI) last week announced "the launch of a strategic partnership focused on the $127 billion specialty food category. This relationship will bring together SFA and FMI members to strengthen business development, engage in food safety training, and increase understanding of the growing specialty food industry. The segment offers high-quality, unique products that cater to an increasingly adventurous shopper."

The SFA’s Summer Fancy Food Show "will serve as the stage for the launch of this SFA-FMI relationship," the organizations say, with FMI members "invited to attend the new SFA LevelUP attraction at the Show and participate in a customized buyers program with SFA manufacturers ... The program brings pre-matched buyers and sellers together for one-on-one meetings just prior to the Fancy Food Show, creating sales opportunities that are tailored to each." And, the two organizations will work together to build awareness "for FMI’s Safe Quality Foods (SQF) Institute Certification programs for manufacturers and the FMI SafeMark for retailers."


• CNBC reports on how Starbucks is testing the use of frozen coffee ice cubes in iced espresso or brewed coffee beverages sold in its St. Louis and Baltimore stores. The innovation is designed to keep beverages from being watered down, and some say it actually makes the drinks smoother as well as stronger; if the feedback is good, the coffee ice cubes could be rolled out chain-wide.

Published on: May 22, 2017

One MNB reader had a thought about Target's new chief marketing officer:

Here is target hiring another CPG exec in addition to the CEO.

Maybe they should be hiring someone with local shopping experience value added results, not just brand management. CPGs think market share, mass marketing etc, not local store differentiation.

As example, would these guys be able to compete with a chain like Metropolitan Market stores or Wegmans in the food area?

From another reader:

Having worked around several Target stores over the last year or so it seems pretty evident the problems there are far more operational than marketing.  It truly amazes me that popular items can often stay OOS for literally weeks before someone takes the initiative to adjust the obviously incorrect inventory.  Their marketing is fine; what they desperately need is more attention to detail in the store.




We had a long email last week from a reader who expressed considerable concern about what could happen if Amazon gets into the prescription drug business, which prompted another MNB reader to write:

The note from the pharmacist’s spouse was truly frightening. Our insurance requires that we order through the online service after 2 fills at the retail pharmacy. I can’t think of a time that I’ve ever used my pharmacist for the potential service they could provide. I’ve never had a need to ask anything about our medicine. I cover all that with our doctors. If this is the case for most people, and I think it is, pharmacy services are already commoditized.
 
What’s frightening, for me, is the thought of my niece, a recent pharmacist graduate, who moved back in with my sister while she looks for work. She has $370,000 in student loan debt, which from the sound of your reader’s note, she may never land the job to enable her pay off.



On another subject, an email from MNB reader Tom Murphy:

As I have said before, Walmart needs to worry less about competing with Amazon for more $$$ and more on finding ways to improve the customer experience…to some degree, they appear to be doing this.  But the real value to this approach is it allows them to stop worrying about Amazon.  It is unlikely they will ever catch up to Amazon, but second place is pretty good!!  As is probably 3rd, 4th and 5th place!  Where you continually harp, and I agree, is that the experiences and operating models that are being created by Amazon and Walmart…and the other 3 – 5 companies, is changing how, when and where ALL retailers can compete.  If you are a firm who is not thinking about this, or is just beginning to think about this, you are probably below the retail event-horizon…where no amount of capital and energy can pull you out.  For big chains, think A&P and Sears as examples, you can spin in that death cycle for a long time…but a slow death can be very painful and ugly!