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    Published on: June 6, 2017

    by Michael Sansolo

    No doubt you’ve heard this one before: two hikers are in the woods when suddenly they realize a bear has their scent and is tracking them. As one hiker kneels to put on running shoes, the second scoffs saying that even with sneakers there’s no way to outrun the bear.

    The first hiker responds, “I don’t have to outrun the bear. I just have to outrun you.”

    Increasingly, that’s a scenario every company needs to consider. Think of the news you constantly read here and on countless other sites. The world of business is changing and changing really fast and like it or not, you need to change with it.

    So certainly, when you read about Walmart’s idea to have employees deliver parcels on their way home from work you can find many potential flaws in the plan. There are insurance issues and labor costs. And let’s try to imagine the staggering reality of Walmart’s 1.4 million workers (that’s just in the US) dropping in on homes across the country.

    But then again, it might give the company an incredible way to address last mile costs and connect their associates to customers and communities in a new, different and personal way that drones can’t ever match. In truth, we really don’t know. The idea could be brilliant or it could be folly.

    At least it’s an idea.

    In contrast, take a few minutes to read the Washington Post Sunday profile of the enormous missteps made by Sears as it traveled the road from retail dominance to apparent irrelevance. It’s a laundry list of botched business decisions that eroded the great company’s brand.

    But it also examines an endless series of missed opportunities that could have made Sears today’s Amazon. In a lot of ways, it was yesterday's Amazon.

    Let’s be clear that we are all so smart about Sears or Radio Shack or any of the other failed operators out there because we are blessed with hindsight. The problem with today’s - and tomorrow’s - competitive battle is we obviously don’t have any clue what formula will work.

    And that’s why all kinds of ideas need be considered and possibly tried. There’s incredible value in the effort, even from failed ideas. More than ever companies need to open themselves to a range of idea sharing efforts both internally and with trading partners to find creative steps to the future.

    Most may not work, but some might. In contrast, doing nothing is a guarantee of defeat.

    Remember, there’s a bear out there. In fact, more than one. Lots more.'

    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: June 6, 2017

    by Kevin Coupe

    I had the opportunity recently to visit the new Fresh Eats MKT small-store format that Kroger is testing in Central Ohio that the company's CFO, Mike Schlotman, has described a "different kind of convenience store."

    The one I visited was in Blacklick, Ohio, a bedroom community about 15 miles east of Columbus; it had just been open a few weeks, and I've posted some pictures below to give you a sense of the approximately 12,000 square-foot shopping experience.

    Fresh East MKT seems to take its "convenience" moniker seriously - it is just 1.5 miles north of a giant Meijer, and there are full-sized Kroger stores three, six, and seven miles away in varying directions. On the one hand, the suburban setting seems like an odd choice for a format that one might ordinarily think would be better suited for an urban environment; but Kroger clearly is trying to figure out how it can slice this particular loaf of format bread in different ways.

    It strikes me as a very interesting effort - essentially offering a highly edited grocery selection, hitting most of the categories that a standard grocery store would have, but in a highly focused way. The layout is pleasing, with fresh foods (produce, deli, bakery) on display right inside the front door, and series of low shelves and a wall of frozen/refrigerated doors easily seen from almost any angle. The store also has gas pumps and a pharmacy drive-up window, and I can see where it would be a go-to stop for local residents facing time constraints.

    I was, to be honest, a little surprised by the size of the Starbucks occupying one whole wall of the store; it struck me as a little oversized for the unit, but it also is possible that it is seen as a big draw for the neighborhood. And I also think that the store may be experiencing some out-of-stock issues, though I was there on the Sunday of Memorial Day weekend, so it may not be a fair assessment. (That said, convenience is only convenient if there is merchandise to buy, and there were an awful lot of holes in pretty much every aisle; every hole represents a potential lost sale, and that's dangerous for any store, but even more so for a new format.)

    I do have one suggestion for Kroger - that it ought to test using the Fresh Eats MKT location as a pickup location for local residents looking for a click-and-collect option. It would enable them to actually sell a lot more products than the store keeps in stock, ands the relatively close proximity of larger Kroger stores might make the logistics doable.

    Just a thought.

    I don't think Fresh Eats MKT is perfect, and I do think it has some issues that need to be addressed. But ... we talk a lot here about the importance of continuous reinvention and innovation, and Kroger is to be lauded for trying new things.

    It is an Eye-Opener.

    KC's View:

    Published on: June 6, 2017

    IRI is out with a new study saying that the click-and-collect e-commerce model is expected to be "a core driver of growth in e-commerce purchases of consumer packaged goods (CPG). Survey responses showed an overwhelmingly positive customer response and adoption as well as the successes of major retailers with click-and-collect programs."

    The study goes on: "While e-commerce currently represents only a small portion of total CPG purchasing, it is expected to make up approximately 11 percent of CPG sales by 2022, hitting nearly $88 billion in revenue — $6.6 billion of which IRI expects to be from click-and-collect programs. Click-and-collect combines the convenience of shopping online without the fees or delays of delivery and integrates a retailer’s e-commerce and brick-and-mortar platforms into one shopping experience. While only 8 percent of U.S. shoppers have purchased products using a click-and-collect program, 82 percent of shoppers who have used the service would 'definitely' or 'probably' use it again."

    And, "nearly seven in 10 shoppers (69 percent) use click-and-collect services to avoid charges for shipping, the most frequently cited reason for using the service. Furthermore, half of all users cite the time savings click-and-collect affords as a motivation to use the service."
    KC's View:
    And, the good news for retailers is that pretty much every one I've spoken with agrees that click-and-collect is a model that becomes profitable a lot faster than delivery.

    Published on: June 6, 2017

    Food Dive reports that Walmart is testing a 20 by 90 foot automated kiosk at a store in Oklahoma that is designed to hold some 30,000 SKUs - including refrigerated and frozen items - that offers 24-hour pickup for consumers who place orders online.

    Walmart has not said whether it plans to expand the concept, which takes click-and-collect to a level where the offering does not have to be staffed.
    KC's View:
    Yet another instance in which Walmart is showing new muscle and aggressiveness in the e-commerce segment. I continue to believe that we're going to see a lot of click-and-collect stations at Walmarts around the country, and this concept - if it works - could be a way of adding capacity in communities where the economics make sense.

    Published on: June 6, 2017

    New York Times columnist Thomas L. Friedman has a piece that is an absolute must-read, about what he believes is the impetus behind much of the economic agita that has taken hold in the US and Europe - it is, he writes, "income anxiety and the stress over what it now takes to secure and hold a good job.

    Friedman writes: "I believe the accelerations set loose by Silicon Valley in technology and digital globalization have created a world where every decent job demands more skill and, now, lifelong learning," because everybody needs to be prepared for the possibility - in fact, the likelihood - that the jobs for which they train simply will not exist for the entirety of their working lives.

    An example: Brian Krzanich, CEO at of Intel, tells Friedman that he believes his grandchildren will not know how to drive. "Since he has teenage daughters, that means self-driving vehicles should be fully deployed in 25 years, at which time you won’t 'steer' your car but will program it on a smartphone or watch or glasses. Sounds like fun — unless you’re one of the millions who drive a truck or cab for a living."

    You can read the entire column click here.
    KC's View:
    I thought it was important to point this column out, in part because yesterday I referred you to an "Amazon is the devil" column by a writer who has a very different view of the world, and in part because we tend to have a lot of discussion here about the public policy moves - in concert with private enterprise - required by such shifts. (I can't say I'm surprised by the discussion, since I tend to be the one who gets it rolling ... it is a conversation that intrigues me. But I also know that I get email from a percentage of the MNB community in the "Amazon is evil" vein.)

    It struck me as kind of symbolic that while I had not seen the Friedman column, it was MNB reader Daniel McQuade who pointed me to it ... and he'd read it while "sitting in Mumbai, teaching Indian students about Global Entrepreneurship (like you I get to travel globally and hang with the life blood of the future) and I always "preach" about life long learning....which by the way I have more of a desire to do as I get along in years..."

    Published on: June 6, 2017

    Re/code reports on how Amazon, which "laid the groundwork for a massive line of in-house brands" with the 2009 introduction of the Amazon Basics private label, is seeing the strategy pay off.

    "In batteries, for example, the AmazonBasics brand has become the most popular online, accounting for an estimated third of all digital sales in batteries as of last summer.

    "In the baby wipe category, the Amazon Elements brand, which is two-and-a-half years old, holds an estimated 15 percent-plus of online market share — behind only Huggies and Pampers."

    The Re/code story goes on: "As at other retailers, the private-label business at Amazon allows the company to offer low-priced alternatives to major brands as customers become increasingly comfortable with in-house brands. Retailers can keep prices on in-house brands low — in part because they don’t have to spend money on big traditional marketing campaigns to get them in front of shoppers."
    KC's View:
    The story makes the point that "Amazon currently sells hundreds of different products under the AmazonBasics name, from cutlery to medicine balls to poop bags for pets. Not everything has taken off. In 2015, Amazon stopped selling its own line of diapers less than two months after unveiling them. It hasn’t brought them back. Amazon also appears to offer only one flavor, and one pack size, of Mama Bear baby food, about a year after launch."

    But ... Amazon does not let the failures either define or dissuade it. That's an important thing to know about Amazon.

    Re/code is basing its story on a presentation recently made by investor Mary Meeker at its recent Code Conference, which is absolutely worth watching - here.

    Published on: June 6, 2017

    The Seattle Times reports that the Seattle City Council has passed by a 7-1 vote a new tax on sugary beverages, saying that it will be an effective way "to raise millions for healthy food and education programs" while helping to "cut down on the consumption of sugary drinks that have little nutritional value and are linked to obesity, diabetes and other health problems."

    The story notes that "businesses and labor groups spoke out against the tax, saying it would hurt small businesses and cost jobs. Other critics called it regressive, saying it would affect low-income consumers the most."

    The tax - of 1.75 cents per ounce - is designed to be paid by distributors of sugared soft drinks (but not diet sodas), energy drinks, and other beverages, and it puts Seattle in the company of other cities (Philadelphia, San Francisco, and Oakland, California) that have passed such taxes. It is not a universal approach, however; Santa Fe, New Mexico, voters recently rejected the imposition of a soda tax.
    KC's View:
    Yet another reason, I suppose, to only drink coffee, beer and wine when I'm in Seattle.

    Nothing wrong with that.

    Published on: June 6, 2017

    MarketWatch reports on a new study by Wells Fargo saying that "about 155 million people in the U.S. visited in the first quarter, which represents 63% of all internet users in the country for the period." No other online retailer even came close, with on Kohl's website attracting as much as 10 percent of total US web users.

    "For the quarter, Amazon accounted for 67% of addressable-market growth," the story says. "'Addressable market' is retail sales excluding gas stations and food/beverage stores, according to Wells Fargo. This is lower than the fourth quarter, but 'when accounting for seasonality of Amazon's sales (relative to the rest of retail), we see that Amazon's share of industry growth continues to climb higher,' the note said."
    KC's View:

    Published on: June 6, 2017

    • Alphabet, parent company to Google, saw its stock price close above $1,000 per share yesterday - at $1,003.88 to be precise.

    This was the second time in two trading days that a major tech company - the other was Amazon, last Friday - reached a closing price at that level.

    The Los Angeles Times reports that "others in the elite group include home builder NVR Inc., pork producer and ocean transportation company Seaboard Corp. and Warren Buffett’s Berkshire Hathaway Inc."
    KC's View:

    Published on: June 6, 2017

    • Millard "Mickey" Drexler, one of the most legendary fashion retailers of the past 50 years, announced yesterday that he is stepping down as CEO of J. Crew and will be succeeded by James Brett, president of the West Elm home furnishing business. Drexler, 72, will keep his ownership stake in J. Crew, as well as the chairmanship of the company, but, as the New York Times writes, the move "signals the end of a fashion era," precipitated because while Drexler helped reinvent J. Crew starting in 2003, he could not stop a recent decline as the company saw same-store sales declines in 11 of the pst 12 quarters.
    KC's View:
    This isn't the first time this has happened to Drexler. As the Times notes, "Drexler was credited with creating the 1990s office uniform of a button-down shirt and khaki pants during his 18-year career at Gap. He saw that brand’s sales grow to $14 billion from $400 million and created Gap’s discount cousin, Old Navy. But he was fired in 2002 after 24 consecutive months of declines in same-store sales."

    Perhaps it is the inevitable cyclical nature of the fashion business. Maybe Drexler just lost a step, as the company recently seemed to be selling lines that were too late, too expensive, and too unconnected to what people wanted. But whatever it is, this event - and in the clothing biz, this is nothing less than an event - demonstrates the importance of continuous reinvention and innovation, and when that doesn't happen, even the greats can fall.

    Published on: June 6, 2017

    ...will return.
    KC's View: