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    Published on: May 31, 2017

    by Michael Sansolo

    A woman at my gym (who happens to be a doctor) made an interesting observation as we worked out together this past weekend.

    Most of the women working out, she said, look in the mirrors around the room and see every single flaw in the bodies. The men, in contrast, look at themselves in the same mirrors and see six-pack abs and chiseled physiques.

    As she explained, the reason is due to both complex sociological issues and the simple reality that every person perceives the world in their own special way, rightly or wrongly.

    Last week, Kevin wrote an interesting column about his experience at a baseball game and his realization that he was offered a benefit that was clearly aimed at the older patrons in the stands. And it got the attention of a lot of readers, almost all of whom took aim at what they perceived to be Kevin’s vanity.

    Heck, even Kevin admitted (during one of our regular several-times-daily) phone calls) that he may have made his point less artfully than he wished.

    But I’d argue he actually made an important point and one that increasingly is key to successful marketing.

    That is: what consumers perceive as reality is far more important than what actually is the case. And as marketers struggle to connect with increasingly complex shoppers, it becomes increasingly important to reconcile aspirations with realities.

    For instance, we know shoppers love “local,” but they aren’t totally sure what that means. Is it a product from the same county or state or even just somewhere in the US? The answer, frequently, is all of the above, just at different times.

    Or, we know shoppers tell us they want more emphasis on healthier foods or specific types of shopping trips, yet countless failed examples demonstrate that reality can be very different.

    And then we get demographics, whether it’s a Boomer, like Kevin or me, being offered - and being offended by - a service intended for people our age. Or my 87-year-old mother complaining that there were too many old people at some location she just visited.

    Who we are is who we perceive we are and that creates an incredible challenge for today’s marketers who have to serve and satisfy both reality and perception. But as with so many issues in today’s marketplace, that’s a fine line that must be walked correctly.

    More than ever we need understand how to serve the Boomer generation that feels eternally young even as they (or their friends) start lining up for hip and knee replacements and more. And that same complexity extends to every generation walking your aisles.

    Unraveling these mysteries won’t be easy and probably can’t be accomplished without increased communication between retailers and suppliers and both of them with consumers. Together, we might know a lot more than we think.

    Or at least, we better know a lot more. The perception of knowledge won’t be anywhere near enough.

    Michael Sansolo can be reached via email at . 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: May 31, 2017

    by Kevin Coupe

    The Washington Post reports on a clothing store called Ministry of Supply, which in Boston operates a store that sells, like many such stores, sweaters and shirts and pants. Except there is a difference - there is a "10-foot-long 3-D knitting machine positioned next to the checkout counter ... that weighs as much as a car, is outfitted with 4,000 needles and can manufacture a customized blazer in about 90 minutes."

    Those blazers, the story says, require "little in the way of human labor. After a customer selects the colors, cuffs and buttons of the garment, an employee programs the device to crank out a jacket to those specifications. It may sound like a novelty, but make no mistake: It is a symbol of a potentially industry-shaking wave of innovation taking hold in the apparel world."

    If this innovation and others in the same vein, "are successful, they could set off a scramble in the fashion business to radically transform the long-standing supply chains and design methods that are used to make clothes today," the Post writes.

    "If even a small portion of a retailer’s goods are made on-demand, it could slash some of their costs, since there would be no risk of getting stuck with inventory that customers didn’t like. It could also allow brands to react on the fly to trends, an increasingly powerful weapon at a time when social media is acting as rocket fuel for fashion fads. And it could help retailers meet the expectations of a customer who is increasingly seeking out one-of-a-kind, boutique-like goods."

    Now, of course, it isn't quite this simple. The equipment is expensive, and the story makes the point that in some ways, this is not the most efficient way to manufacture clothes - such customization means that the retailer always is dealing in "batches of one."

    But ... it does point to some level of consumer preference that may affect a lot of retailers in a lot of categories, and requires attention. It is, I think, an Eye-Opener.
    KC's View:

    Published on: May 31, 2017

    The Associated Press has a story about Walmart's strategy in competing with Amazon, saying that its "acquisition of and brands that appeal to younger shoppers have given it an e-commerce boost as it works to close the gap between itself and the online leader. The world's largest retailer is betting on essentials like cereal and diapers, and has adjusted its shipping strategy to better compete with Amazon's Prime program."

    Walmart says that its "expansion of stores with curbside pickup for groceries is also helping, since people often realize they forgot an item or two and run into the store. And as rivals like Target struggle to get their grocery departments right, Wal-Mart is placing a priority on essentials like peanut butter, paper towels and fresh produce that shoppers buy often."

    Some experts say that one thing that Walmart does not bring to the table is an answer to Amazon Prime, which has conditioned many of its customers to begin and end their online product searches on Amazon site, and is driving much of the company's e-commerce growth. Marc Lore, who came to Walmart when it bought Jet and now serves as the company's head of US online operations, says, "We don't think specifically about Prime at all. We think we (have) got a customer base — those customers who want to be able to save money and they want to be able to shop in different ways, whether it be direct-to-home, grocery pickup or going to the physical store."

    And while Amazon has an advantage in terms of SKU count - hundreds of millions of products, s. Walmart's 50 million - Lore says that the goal is "to get to several hundred million products on Wal-Mart's website over the next few years. 'We want to sell them everything,' Lore said. 'The assortment is growing fast ... But we know in certain categories, we need to make more progress'."
    KC's View:
    Amazon's response to Walmart's new aggressiveness in the e-commerce segment, it seems to me, is evident just in Lore's comment that "we want to sell them everything." Remember - Amazon says that it does not want to sell people stuff, but rather just make it easier for people to buy stuff.

    It is not a semantic difference. It actually reflects a customer obsession that is built into Amazon's DNA that is different from the operational efficiencies that are built into Walmart's.

    This isn't to suggest that Walmart won't be successful online. I think it will be, and that there is plenty of room for both Amazon and Walmart. But I also think that when it comes to e-commerce, Walmart is going to occupy an unaccustomed position.

    Second place.

    Published on: May 31, 2017

    USA Today reports on how retailers competing against Amazon are turning to "experts to make sure they are stocking the best merchandise."

    Walmart, for example, "just named Nathan Adrian, an American who won gold in the 2012 Olympic Games and bronze last year, to offer advice on everything from swim caps to goggles" and "says that it will be hiring hundreds of specialists over the next two months in categories ranging from fishing gear to shoes. They will not only help select items, but have a say in the way that they are priced and displayed online."

    Target, the story says, "found its own group of experts -- children between the ages of 7 and 14 -- to help shape its Art Class clothing collection, which debuted in January and was tailored to the 86 million teens and 'tweens who comprise Generation Z."

    And Toys R Us "will soon feature pages that not only sell car seats and strollers, but will educate new parents about which model or style best fits their needs."
    KC's View:
    Gee, this sounds familiar.

    Didn't someone around here once say that "retailers need to be more than just a source of product, but also need to be a resource for information?"

    By the way ... it does occur to me that Amazon essentially offers expertise in the form of user reviews.

    Published on: May 31, 2017

    The Wall Street Journal this morning has a story about how "Americans made 433 million fewer trips to restaurants at lunchtime last year, resulting in roughly $3.2 billion in lost business for restaurants, according to market-research firm NPD Group Inc.

    "It was the lowest level of lunch traffic in at least four decades. While that loss in traffic is a 2% decline from 2015, it is a significant one-year drop for an industry that has traditionally relied on lunch and has had little or no growth for a decade ... Among the hardest hit are casual sit-down restaurants ... because of the time it takes to order, get served and pay. Such establishments last year saw their steepest ever decline in lunch traffic, according to NPD."

    The story makes the point that there are a lot of reasons for this - restaurant lunches during the workday end up taking too much time and cost too much money, and people find that grabbing a bite and eating at one's desk is simply more efficient and effective.
    KC's View:
    It is rare that I ever have a so-called "business lunch" - there is way too much to do and way too few hours in the day. But this trend certainly would seem to point to a category to which supermarkets and c-stores would seem well suited.

    Published on: May 31, 2017

    The New Yorker sent one of its writers to the new Amazon Books store in Columbus Circle in Manhattan, and she was not impressed, concluding that the books that it sells feel like they have been "assembled according to algorithm ... They exist far less to serve the desires of the reader than to serve the needs of Amazon, a company whose twenty-year campaign to 'disrupt' bookstores has now killed off much of the competition, usurped nearly half of the U.S. book market, and brought it back, full circle, to books on shelves."

    You can read the entire critique here.
    KC's View:
    I love The New Yorker, but it may well be that the things it finds distressing are the very things that appeal to many Amazon customers. And, it may be that an Amazon Books store simply is not meant for an Upper West Side of Manhattan customer ... or at least, not an Upper West Side of Manhattan customer who also happens to be a New Yorker writer.

    I think that's fine.

    I also think, though, that Jeff Bezos is right when he says that it wasn't Amazon that disrupted the bookstore industry. It is the future that continues to disrupt it.

    Published on: May 31, 2017

    Fortune reports that Walmart has applied to the US Patent and Trademark Office for a "'delivery management system' that aims to improve upon last mile shipping - the final stretch extending to consumers' homes - by using robotics, sensors, and yes, blockchains, also often referred to as distributed ledgers." The application specifically refers to an "unmanned aerial delivery to secure location."

    In other words, drones.
    KC's View:

    Published on: May 31, 2017

    • The Kansas City Star reports that Hy-Vee is ready to begin building there a new "$29 million e-commerce fulfillment center and central kitchen for its Kansas City-area stores ... The fulfillment center will support the Hy-Vee Aisles Online order and delivery program. The kitchen facility will prepare food to be distributed to the grocer’s area stores."

    • Amazon entered rarefied territory yesterday - for a brief time, its stock price went above $1,000 per share.

    The New York Times reports that Amazon "is now the fourth most valuable company in the world by market capitalization. The top five, Apple, Alphabet, the parent company of Google, Microsoft, Amazon and Facebook, have emerged as the dominant forces in technology. Amazon’s shares are up almost 33 percent for the year and up 368 percent over five years. Tech companies make up the five most valuable companies in the world by market capitalization."

    The Times story also notes that Amazon has "given investors reason to believe it is not content to remain simply an e-commerce giant. Through its Amazon Web Services business, it is now the largest provider of cloud computing services in the world. It stands to benefit for many years as hundreds of billions of dollars in information technology spending shifts from traditional purchases of hardware and software to effectively renting them in the data centers. Because profit margins in cloud computing are wider than those in the retail business, Amazon, which had only a passing familiarity with profits over most of its life, is now consistently in the black."

    Stock price has not been something that apparently has preoccupied Amazon founder/CEO Jeff Bezos, who, the Times points out, "has been dismissive of the preoccupation with near-term stock price swings, often quoting the influential investor Benjamin Graham, who said the market is a voting machine in the short run and a weighing machine in the long run."

    Advertising Age reports that "Amazon's attempt to re-invent HSN and QVC for a younger generation has ended ... After 15 months on the air, Amazon canceled the live fashion and beauty series 'Style Code Live'."

    The half-hour series had streamed five days a week on Amazon's website, and allowed customers to easily purchase products featured on the program.
    KC's View:

    Published on: May 31, 2017

    New York magazine's Grub Street column has a story about how Chipotle has said that "most but not all" of its restaurants have been affected by hackers who broke into restaurant point-of-sale systems that could have accessed "card names, numbers, expiration dates, and verification codes." The hack reportedly could have affected people who patronized Chipotle restaurants between March 24 and April 18.

    Chipotle has released a statement saying that an internal investigation "identified the operation of malware designed to access payment card data from cards used on point-of-sale (POS) devices at certain Chipotle and Pizzeria Locale restaurants between March 24, 2017 and April 18, 2017. The malware searched for track data (which sometimes has cardholder name in addition to card number, expiration date, and internal verification code) read from the magnetic stripe of a payment card as it was being routed through the POS device. There is no indication that other customer information was affected."

    Reuters reports that J. M. Smucker Co. plans to acquire the Wesson cooking oil brand from Conagra for about $285 million. According to the story, "Conagra will continue to manufacture products sold under the Wesson brand for up to one year following the close, after which Wesson will be merged into J.M. Smucker's oils manufacturing facility in Cincinnati, Ohio."

    MarketWatch reports that in the UK, the Competition and Markets Authority plans to investigate Tesco's proposed acquisition of food wholesaler Booker Group for the equivalent of $4.75 billion (US). While a completed acquisition could save Tesco a lot of money and create efficiencies for Booker, there are concerns about "the consequences for competition in the sector."

    Bloomberg reports that "Staples Inc. has rejected a takeover offer from Cerberus Capital Management as too low, leaving Sycamore Partners in the running to acquire the office-supplies retailer, according to people familiar with the matter." The Cerberus offer valued Staples at more than its $5.8 billion current market value, the story says.
    KC's View:

    Published on: May 31, 2017

    There were a lot of notable deaths over the past four or five days, but MNB would like to take note of the passing of Frank Deford, the sports essayist who passed away last Sunday at age 78.

    Deford was at his core a wonderful storyteller, going beyond scores and personalities to explain in elegant terms the interconnection between sports and the broader culture. It was a skill he used at Sports Illustrated for more than three decades, on HBO's "Real Sports with Bryant Gumbel" for 22 years, and in the course of 1.656 commentaries done for National Public Radio's "Morning Edition" for almost four decades. Deford wrote more than a dozen books, the most consequential of which may have been 1983's “Alex: The Life of a Child," about his daughter, who died of cystic fibrosis when she was 8 years old.

    And, Deford was an entrepreneur of sorts - in 1990, he launched The National, a daily national sports newspaper for which he, as managing editor, was able to recruit some of the nation's best sportswriters, including Mike Lupica and John Feinstein.
    KC's View:

    Published on: May 31, 2017

    We had a discussion here about school lunch programs and whether it is better public policy to serve students healthier food to which they may be resistant, or less nutritious food that they're more likely to actually eat.

    MNB reader Brian Baker wrote:

    I work in the Food Distribution industry and have found that larger school districts have an OK, time with the regulations, that was put in place by the Obama administration.  The issues occur, with smaller school districts.  They are one or two person kitchens, where the cook spends hours a week, doing compliance paperwork, and counting salt intake for a week.  Also, they are not allowed to give seconds to kid (even paid for) because it gives the students too many calories.  These are growing kids, many in sports…

    Unfortunately, Trump’s  “deregulation” really isn’t, it allows for hardship exceptions, but the effort to gain the exception is not worth it.  Many of the schools are choosing to forgo the Fed money.

    One last point.  The kids do not love this food.  They tolerate it.  allowing a little more salt and spice to add flavor, is not a bad thing.

    I am not saying that we should go back to all fried, cheap food, but there has to be common sense.  (Which is not Common.)

    Another MNB reader wrote:

    My parents are school teachers with a large proportion of their students on free and reduced lunch. Many of these kids only get their meals at school because their families can’t afford to feed them properly. Of course, the GOP doesn’t care about the link between unhealthy foods and poverty, and they definitely don’t care if a poor minority’s only available food is school lunch when there is some white kid throwing away a salad in favor of buying candy for lunch.

    To be fair, there are members of the GOP who likely would disagree with that characterization. I'm sure we'll hear from them.

    Kate McMahon's column last week joked that the decision by both Wegmans and Wawa to open stores in Washington, DC, represented a "Trump bump." Not everybody got the joke.

    Prompting another MNB reader to chime in:

    When I saw Kate's tongue in cheek "Trump bump" remark, I wondered how many people, of both parties, would overreact...and it seems they did!  You're response was great.

    But I never thought you would get remarks on your comments about the usher at the baseball game, particularly seeing you as a grumpy old man.  Again, you may be too nuanced for some of your audience!

    Wanted to pass along, you are doing a terrific job handling the land mines buried in many of today's top stories - the political climate is more toxic than ever, and you are managing it straight on, but fairly.  Not easy, congrats.

    The "grumpy old man" column - to which Michael Sansolo refers in his piece today, and which garnered a ton of criticism last week - continues to generate some email.

    MNB reader Karen Techeira wrote:

    Kevin, your article and the comments made me chuckle.  I had a similar incident. 

    I came out of the grocery store and noticed I didn't get my "senior" discount.  What to do, what to do?  Do I take it as a compliment that I look younger than my age? Or do I go in and ask for my discount? 

    Needless to say, I just continued to walk to my car with a broad grin on my face.

    But some people still think I blew it. MNB reader Greg Lindenberg wrote:

    Yes, I get that your Throwing Shade column was meant to be lighthearted. I’m only in my mid-50s, but I consider anything that separates me from the millennials as a badge of honor. You earned that shade. I, too, will often embrace opportunities to play the grumpy old man when it suits me. This was not one of those occasions. You lost an opportunity to provide some customer service of your own. You failed your “brand”—being a kind and grateful person.

    Two things.

    First, to be clear (again), I wasn't unkind to the person who treated me like an old person. I said thank you ... it was only later that I realized what had happened, and it was only the MNB audience to whom I complained. I may get cranky, but in this case, at least, I was not unkind.

    Second...and this actually is a serious point...I completely disagree with the "I consider anything that separates me from the millennials as a badge of honor" statement. That's ridiculous ... I think it is far more important to look for things that connect us than things that separate us. I think that we all have to be aware of differences, and that we all have differing perspectives and points of reference.

    But seeing differences as a "badge of honor?" Nope. Won't go there.
    KC's View: