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    Published on: June 2, 2017

    by Kevin Coupe

    The Los Angeles Times reports that two airlines actually are asking their customers to give them the finger.

    Or maybe an eye.

    According to the Times, "The airline industry has begun testing the idea of using biometrics — facial recognition, retinal scans and fingerprints — to identify fliers as a way to boost security and make life easier for travelers.

    "JetBlue Airways announced that it will begin to use facial recognition technology this month to verify the identity of passengers boarding flights between Boston’s Logan International Airport and Queen Beatrix International Airport in Aruba.

    "Last week, Delta Air Lines began letting members of its loyalty reward program use their fingerprints as ID to enter the Delta Sky Club at the Ronald Reagan Washington National Airport. If the test program goes well, the Atlanta-based airline says it plans to use fingerprints to let passengers check a bag or board a flight."

    The story notes that "travel experts say such tests will help move the industry toward a time when fingerprints, facial recognition technology and other biometrics will replace boarding passes, passports and driver’s licenses as identification at airports."

    I've noticed lately that when I use Clear stations is participating airports, they're not even asking to see my Clear card ... they just check my fingerprints, look at my boarding pass, and then escort me past the long security lines. (I love Clear. It is even better than TSA Pre-Check, in my experience ... and while having both may seem like wearing both a belt and suspenders, it is nice to have options that make the flying experience any more pleasant.)

    It probably is fair to say that if the use of this technology becomes common at airports, it will find its way into many of the transactions we make every day.

    It is, quite literally in this case, an Eye-Opener.
    KC's View:

    Published on: June 2, 2017

    Walmart said yesterday that Walmart is testing a program in which it asks store employees to deliver online orders to customers' homes or offices on their way home from work, an effort to establish a "last mile" advantage over primary online rival Amazon. The notion of a "last mile" advantage is notable considering that nine out of 10 Americans live within 10 miles of a Walmart.

    The tests are taking place in New Jersey and Arkansas, with workers able to make extra money by using their own cars. Bloomberg writes that employees are "assigned packages based on where they live so the route aligns with their commute home."

    Walmart "is using those locations as shipping hubs to compete with Amazon on the last mile of delivery -- the most expensive part of getting goods to customers," Bloombergwrites. " By using existing workers in their own cars, Wal-Mart could create a vast network with little upfront cost, similar to how Uber Technologies Inc. created a ride-hailing service without owning any cars."

    And, Bloomberg writes, "The lines between internet and brick-and-mortar commerce are blurring as retailers -- including Amazon -- try to accommodate a variety of shopping preferences. Bentonville, Arkansas-based Wal-Mart offers free two-day delivery on millions of items to compete with Amazon’s standard delivery time. It also lets customers buy groceries online and pick them up at stores and offers discounts to online shoppers who pick up items at stores rather than having them delivered."
    KC's View:

    Now, I do think that Walmart has to be a little careful about which employees it uses in this initiative - you want to have people who are upbeat and friendly and positive ambassadors for the brand. (I know a little something about this. When I worked my way through high school in a clothing store, I used to drop stuff off to customers all the time. It wasn't a formal service, just something we did because we believed in doing everything we could to make the shopper's life easy. And I always knew that I was a representative of the company when I knocked on the front door ... I had to be every bit as personable there as when on the sales floor.)

    Ultimately, this demonstrates something that every retailer has to do - figure out what your built-in advantages are, and then find new ways to leverage them. This is something that Walmart has that Amazon doesn't ... and so it changes the game a bit.

    The next move is Amazon's.

    Published on: June 2, 2017

    Blue Apron, one of the most prominent food kit companies in the country, yesterday announced its plans to go public, saying it would trade under the symbol "APRN."

    According to the New York Times, the decision comes as Blue Apron "faces intensifying competition from a host of rivals, including HelloFresh, Sun Basket and the vegetarian-focused Purple Carrot. And its filing shed light on some of the high costs of that race: Even as the company’s revenue grew, its losses and marketing costs soared."

    The Times frames the company's financial situation this way, saying that Blue Apron's "net loss grew 16 percent last year from 2015, to $54.8 million, according to the filing. Using the company’s preferred measure of adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, which excludes expenses like stock-based pay and taxes, it lost $43.6 million in 2016, up 32.5 percent from the year before, the filing shows.

    "Some of the increased loss stemmed from the rising cost of ingredients and from spending on marketing, which jumped 10-fold from 2014 to 2016, to $144.1 million.

    "Blue Apron has shown signs of stalled growth in other ways. Its average order value for the first three months of 2017 shrank slightly from the same period a year ago, to $57.23. Both the number of orders per customer and the average revenue per customer also fell slightly in the first quarter of this year compared with the first quarter of 2016."

    The Times also makes the point that founders Matthew B. Salzberg and Ilia M. Papas will not give up control of the company with the IPO: "The start-up will have three classes of stock: Class A shares that will be sold to the public and will carry one vote per share; Class B shares, which the founders and early investors own, which carry 10 votes per share; and Class C shares, which come with no voting rights and will be used for purposes like acquisitions."
    KC's View:
    An interesting move, though I always worry that this will end up meaning a company that is more responsive to Wall Street than Main Street. Which isn't always good for business from the customer's point of view.

    Published on: June 2, 2017

    Two days after the Wall Street Journal ran story about how restaurants have seen a big decline in lunchtime transactions as people choose to eat at their desks as a way of saving time and money, it comes back with a story about how "restaurants are no longer treating lunchtime delivery as an afterthought. With online-ordering apps proliferating and many customers cutting down on eating out for lunch, the industry - from fast-food chains to upscale restaurateurs - is looking for ways to bring food to patrons without compromising their eating experience."

    In other words, delivery.

    The trend is being taken up by fast food chains, fast-casual chains, and even upscale restaurants that are identifying different ways of getting food to a variety of workplaces.

    According to the Journal, "Delivery only accounts for 3% of restaurant purchases nationwide, but it is growing fast. Non-pizza delivery purchases have risen by 30% in the past four years, according to market-research firm NPD Group Inc.

    "GrubHub Inc., one of many apps that have helped improve the online-ordering and payment process, said it has more than 10,000 delivery drivers, from just a few hundred less than two years ago. Its number of active diners, which it defines as those who have placed at least one order in the past 12 months, grew 26% to 8.75 million in the first quarter from a year earlier."
    KC's View:
    There are lots of different ways to slice this particular loaf of bread - some companies are using outside delivery services, and some restaurants are building to-go only facilities that are designed to take advantage of this trend. I have to wonder if we'll also see more restaurants developing food trucks that can specifically cater to these consumer needs.

    I also think that many supermarkets should engage with this trend - at least of they want to grow their share of stomach.

    I thought it was interesting that one expert looks at this trend and sees nothing but momentum, especially as driverless cars and drone technology become more common; the prediction is that at some point, we'll all be able to order a sandwich and a drink from Amazon via our Echo/Alexa systems, and it'll be delivered shortly via drone ... probably in a box with a shipping label that doubles as a parachute.

    Published on: June 2, 2017

    The Chicago Tribune reports that Sears Holdings said yesterday that some of its Kmart stores "were targeted by hackers, leading to unauthorized activity on some of its customers’ credit cards" after "Kmart’s store payment systems were ... infected with virus-like computer code undetectable by current anti-virus systems."

    According to the story, " A Sears Holdings spokesman said the investigation into the hack is still ongoing, so details on the dates of the breach, how many customers were affected and which stores were targeted, were not available. Not all Kmart stores were affected, he said. Kmart had 624 stores at the end of April.

    "No personal information, such as names, addresses, social security numbers and email addresses, was pilfered, the company said."
    KC's View:
    The good news is that it seems probable that very few actual shoppers were affected, since Kmart doesn't have very many customers.

    You'd think that Sears/Kmart would've known immediately that something was wrong, since it would've seen activity in its store payment systems.

    Published on: June 2, 2017

    Mashable has a story about how Amazon "has turned its flagship app into something of a testing ground for the small-screen shopping experience of the future. It now boasts a slew of experimental features beyond Amazon's standard store listings - some of which are impressive and potentially game-changing, others puzzling and superfluous."

    "As the indisputable heavyweight of the online shopping market," suggests, "Amazon's app is the front lines of where mobile shopping as a whole might be headed."

    The piece is definitely worth looking at here.
    KC's View:

    Published on: June 2, 2017

    • The New York Times this morning reports that "a report released Thursday by a workers’ advocacy group says Walmart, the nation’s largest private employer, routinely refuses to accept doctors’ notes, penalizes workers who need to take care of a sick family member and otherwise punishes employees for lawful absences.

    "The report, based on a survey of more than 1,000 employees, accuses Walmart of violating the Americans with Disabilities Act and the Family and Medical Leave Act, among other worker-protection laws. The group argued in a lawsuit filed last month, and in an earlier complaint with the Equal Employment Opportunity Commission, that Walmart discriminated against pregnant workers."

    Walmart, the story says, "said that it had not reviewed the report but disputed the group’s conclusions, and said that the company’s attendance policies helped make sure that there were enough employees to help customers while protecting workers from regularly covering others’ duties."
    KC's View:

    Published on: June 2, 2017

    Yahoo! Finance reports that Alibaba, the China-based e-commerce behemoth, is buying an 18 percent stake in Lianhua, a Chinese bricks-and-mortar supermarket chain. Cost of the investment: $81 million (US). It makes Alibaba the second largest investor in Lianhua.

    According to the story, "Alibaba has been steering its business into the brick-and-mortar space in China, just like Amazon in the U.S. Last year, the company invested $4.6 billion in electronics retailer, Suning Commerce Group Co Ltd. The company has also partnered with Intime Retail Group Co Ltd founder, Shen Guojun, in a $2.6 billion bid to privatize Intime and has purchased a stake in grocery chain Sanjiang Shopping Club Co Ltd ... Alibaba, which gives tough competition to Amazon, eBay EBAY and JD in China, has a broader goal of tapping China’s massive $4.8 trillion retail space that includes both online and offline forms. Notably, offline retail currently constitutes 84% of total retail sales in China despite the enormous growth of e-commerce over the last few years."
    KC's View:

    Published on: June 2, 2017

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • In the UK, Marketing Week reports that 62 percent of the nation's population shopped in a Lidl or an Aldi during the most recent quarter - an increase that coincided with rising food inflation (currently at 2.9 percent).

    The story says that "according to Kantar Worldpanel, the German discounters grew at their fastest rate since January 2015, with combined sales rising 19.2% and the pair reaching a record market share of 12%. To put this into perspective, the big four’s collective sales grew by just 1.6% over the same period."

    • Technomic is out with a study saying that "nearly half (49%) of college & university students avoid some type of meat or animal products" ... "more students are price-sensitive off-campus (58%) than on-campus (46%)" ... and "slightly more than half (54%) of students say it’s important to eat healthy and pay attention to nutrition."

    In other words, once they graduate, burgers and beer pong are going to be less central to their lives. Probably.
    KC's View:

    Published on: June 2, 2017

    Got the following email from an MNB reader:

    I have been thinking a lot about your item ‘Throwing Shade’ and Michael Sansolo’s subsequent piece on consumer self-perception. Several years ago, I attended a session by a marketing group about consumer self-identification.  They worked with retailers to define their core customers by working through exploration of how these customers define themselves and the kinds of imagery, store layouts and styles they respond to, right down to the kinds of animals, landscapes, and colors to use in their marketing materials.

    Ultimately, the point was that demographics such as age and geography are poor indicators of how consumers see themselves; instead, you should try to understand the psychographics of your core clientele and seek to align yourself to those, so your core clientele will understand and identify with you. That was the business lesson I took from your interaction with the usher (your chagrin is the same that I feel every time someone offers me a seat on the bus for what seems to me to be no good reason). The usher was being polite to you, but any business that can’t see why you felt the way you did is probably in a little trouble.
    The issue of consumer self-identification is even more urgent in this era of extreme personalization. E-commerce delivers more to consumers than just an easy way to get stuff.

    On a different subject, from MNB reader Phil Blackburn:

    Was reading your take on Radio Shack going out of business this morning. They are a great example of a business that did not evolve, and therefore became irrelevant.

    I stopped buying from them a long time ago for a different reason:  rather than simply checking me out, they asked for my phone number, address, etc.  I refused, and told the clerk that it was pretty ridiculous to invade my privacy when I was just trying to buy some batteries.

    Sad for everyone involved.

    I think you just quoted Kramer from "Seinfeld."

    Regarding the clothing store in Boston where they have a machine that can make a jacket to-order on the spot, one MNB reader wrote:

    This sounds so intriguing that if I were headed to Boston, I would try to make time to see this machine and while I’m in the store, I’d probably at least look to see what else they carry and may even buy something  - off the machine or otherwise.  It’s a differentiator that all by itself probably wouldn’t work but combined with the ‘typical’ way of shopping,  it brings consumers to the store that might not have even considered walking in the door previously.

    And from another:

    This is one of they most revolutionary things I have read about retail this year.  I can hardly wrap my mind around the implications...Wow.

    And, from MNB reader Tim Grimes:

    Have been watching "Bosch" - per your suggestion, every night for 2 weeks-and I’m entering Season 3 tonight.  Can’t think of a better show on TV and Titus Welliver -what an actor.  Rounded characters, great acting, great plot lines…how about the circular killer.  Inspired!

    Thanks for a great head’s up as the first two seasons were an incredible find!

    That's what I'm here for.
    KC's View:

    Published on: June 2, 2017

    HBO and Netflix are out with two reality-based films that look at recent events, but unfortunately only one really works.

    "The Wizard of Lies" is a terrific retelling of the Bernie Madoff story, focusing on how the enormously successful securities broker actually was running an enormous Ponzi scheme, bilking people, companies and even charitable organizations out of billions of dollars. (As a fan of the New York Mets, I take this very personally, since owner Fred Wilpon was one of his victims and it had a big impact on the club's finances. But I digress...)

    There was an multi-part ABC drama earlier this year that featured an excellent Richard Dreyfuss as Madoff, and that took great pains to explain the mechanisms that Madoff used to create his elaborate fraud. The HBO version stars Robert De Niro, who is as good as he's been in years, given the opportunity to play a nuanced, fleshed-out character as opposed to some of the caricatures that he's been doing in the movies.

    "The Wizard of Lies" focused more on the people than the Ponzi scheme, giving us real insight into not just Madoff but his wife (Michelle Pfeiffer, almost unrecognizable), sons and other family members. (Hank Azaria is great as Madoff's main co-conspirator.) In fact, my only complaint might be that there is so much focus on the Madoff side of the narrative ledger that there isn't enough on the victims.

    The story is seen through Madoff's eyes, framed by an interview he gives in prison, and this gives De Niro (guided by director Barry Levinson) the opportunity to put shadings into behavior and line readings. In the end, "The Wizard of Lies" asks whether Madoff was a common criminal, or some sort of sociopath ... and I think the film makes clear its answer.

    "War Machine," on Netflix, is an ambitious attempt at a fictionalized retelling of the story of Gen. Stanley McChrystal, who was sent by the Obama administration to Afghanistan ostensibly to win the war at the same time as the administration was planning to pull its troops out of the war-torn country where winning seemed like a pipe dream.

    Brad Pitt plays Gen. Glen McMahon as a broad caricature in a way that actually undermines the story; there is a legitimate point to be made about how the war in Afghanistan was prosecuted, and "War Machine" takes solid aim at some of the decisions made by the Obama administration. But it struck me that Pitt's artistic choices take the story to a place where it seems more like broad comedy than satire, and that's too bad; there are times when he seems to be doing a bad imitation of George Clooney, enough so that I wondered if Clooney would've been better in the role.

    There are some good performances here - especially a sly turn by Ben Kingsley as Hamid Karzai, and some lovely, understated work by Meg Tilly as McMahon's long-suffering wife - but the whole thing just doesn't work. It could've been something closer to the great Charlie Wilson's War, but instead it is a broad misfire.

    I have a beer to recommend to you this week - Summer of Lager, from Cisco Brewers in Nantucket, which is a bright and refreshing beer perfect for a summer barbecue.

    That's it for this week.

    Have a great weekend.

    KC's View: