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    Published on: June 8, 2017

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy...coming to you this morning from the Edgewater Hotel in Seattle.

    We've had several pieces here on MNB recently about the importance of not making assumptions about customers, and I was just reading yet another one in the New York Times. It was about how hotel executives are so busy trying to cater to millennials - or to what they think millennials want - that they're doing way in some formats with things on which they believe millennials do not place a premium.

    Like desks they can work on, or any sort of functional work space. Or rolling chairs. Or minibars. Or room service. Or closets. Or dressers with drawers.

    It is apparently getting so bad that I'm half-expecting, next time I check into some sort if edgy hotel format, that they'll have replaced the shower with a tube of dry shampoo ... and I don't even want to think about how they might replace the toilet.

    The thing is, I like trying not new hotel formats, like the Moxie or the Aloft chains - it is interesting to see what major hotel companies like Marriott are doing in order to break the mold a little bit. I give them a lot of credit for trying. Plus, they end up giving me stuff to write about.

    But it seems like even millennials like having a desk to work on in their rooms - not everybody wants to go downstairs to work in a common area.

    I think it is important to figure out how younger generations differ in terms of priorities and desires, and to then figure out how to address them. But it also is critical not to change just for change's sake.

    Me, I'm a fairly undemanding hotel guest. As long as the bed is comfortable, the shower is hot and the Wifi is fast, I'm pretty good. It always is nice when there are lots of electric plugs near the desk, and I like it best when the desk actually faces the TV ... two things that this hotel, much as I like it, falls short on. But I've spent a lot more time in Holiday Inns than I have in four-star hotels in my life, so I've learned how to adapt. (Room service and minibars mean nothing to me - I almost never use them. I like real restaurants and actual bars ... plus, I like to get out of the room when I can.)

    But adapting cuts both ways ... and every business has to continually innovate without disenfranchising traditional customers. That isn't easy ... but then again, appealing to consumers is not for the faint of heart.

    That's what is on my mind this morning and, as always, I want to hear what is on your mind.

    KC's View:

    Published on: June 8, 2017

    by Kevin Coupe

    Reuters is reporting that Amazon is expanding the loans that it has been providing to third-party sellers on its site, doling out more than $1 billion over the past 12 months, as opposed to the $1.5 billion it loaned out between 2011 and 2015.

    Peeyush Nahar, vice president for Amazon Marketplace, tells Reuters that the money is used buy the sellers to either expand their inventory or offer sharper discounts on their products.

    More than 20,000 sellers have gotten the loans to this point, which have ranged between $1,000 and $750,000, at reported interest rates of between six and 14 percent (which is more than a mortgage rate and less than a credit card interest rate).

    According to the story, the Eye-Opening piece of this is that a) "boosting sales for third-party merchants is lucrative for Amazon, which takes a cut of transactions on its site," and b) it keeps these sellers "close to Amazon's orbit," even a rivals Walmart and eBay look to expand their marketplace/third party vendor offerings.

    In other words, the Amazon ecosystem is designed not just to keep customers close, but vendors potentially even closer.
    KC's View:

    Published on: June 8, 2017

    One Click Retail is out with a new study saying that "Amazon's sales of consumables in the Health & Personal Care, Baby and Grocery groups saw double-digit growth in Q1 2017, while the total HPC and grocery markets experienced declines of 1% and 10%, respectively. As consumers shift away from brick and mortar towards eCommerce for consumables, the popularity of Amazon's services such as Prime, Pantry and Fresh is gaining ground."

    The study goes on to say that there was "30% growth in Amazon Grocery averaged across the US, UK and Germany, driven by the growing adoption of Amazon Prime in Q1 2017. Traditionally, grocery has been less susceptible to the shift towards eCommerce (in 2016, only 5% of U.S. grocery sales occurred online). According to Amazon sales data calculations for Q1 2017, Amazon's grocery sales outpaced that of the total market fifteen-fold."

    In Health & personal Care (HPC), "US total HPC sales increased only about 1% in Q1 2017," but is expected to be vastly outpaced by Amazon this year; "Amazon already earned $1.3 billion, or 27.5% of the total annual sales, in 2016."

    In Q1 2017, the story says, "total US baby products revenues dropped 10%. Most of this decrease took place in offline sales, allowing eCommerce market share to rise from 20% to 22%. The Baby Products category enjoyed the highest eCommerce CPG penetration, with Amazon having 43% of the total. Q1 Amazon US sales of diapers increased 30%, baby food 15%, and baby formula 80%. In both the US and the UK, Amazon saw triple-digit growth of top brands like Pampers (700% increase)."
    KC's View:
    The thing that traditional retailers have to keep in mind is that Amazon is building its consumables business significantly each month and doing so largely with its varying automatic replenishment models - which means that those sales are highly unlikely to ever go back to the stores that they've abandoned for those consumables.

    I think it is fair to point out that "the popularity of Amazon's services such as Prime, Pantry and Fresh is gaining ground," but I'd actually be just as worried about the popularity and stickiness of its Subscribe & Save and Dash Buttons programs.

    Published on: June 8, 2017

    The Tampa Bay Times reports that Publix plans to launch "same-day grocery delivery across all Publix locations. Prompted by customer demand, the newly-expanded service will be fully rolled out by 2020."

    The story notes that Publix already delivers in some Florida markets, as well as from "some stores in Georgia, South Carolina, North Carolina and Tennessee. The expansion will add more delivery to these states, as well as Alabama and Virginia."

    Publix is teaming up with Instacart to provide the delivery services.
    KC's View:
    I continue to believe that while I think it is a good thing that Publix seems to finally have made some sort of commitment to e-commerce, using Instacart is actually a way of hedging its bets ... and doing so in a way that puts the brand potentially at risk, because it is allowing a third party that has similar relationships with other retailers to handle that last mile responsibility. And yet, if a driver screws up or delivers a less than optimal experience, the customers is going to blame Publix, not Instacart.

    Published on: June 8, 2017

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy...coming to you this morning from the Edgewater Hotel in Seattle.

    We've had several pieces here on MNB recently about the importance of not making assumptions about customers, and I was just reading yet another one in the New York Times. It was about how hotel executives are so busy trying to cater to millennials - or to what they think millennials want - that they're doing way in some formats with things on which they believe millennials do not place a premium.

    Like desks they can work on, or any sort of functional work space. Or rolling chairs. Or minibars. Or room service. Or closets. Or dressers with drawers.

    It is apparently getting so bad that I'm half-expecting, next time I check into some sort if edgy hotel format, that they'll have replaced the shower with a tube of dry shampoo ... and I don't even want to think about how they might replace the toilet.

    The thing is, I like trying hot new hotel formats, like the Moxie or the Aloft chains - it is interesting to see what major hotel companies like Marriott are doing in order to break the mold a little bit. I give them a lot of credit for trying. Plus, they end up giving me stuff to write about.

    But it seems like even millennials like having a desk to work on in their rooms - not everybody wants to go downstairs to work in a common area.

    I think it is important to figure out how younger generations differ in terms of priorities and desires, and to then figure out how to address them. But it also is critical not to change just for change's sake.

    Me, I'm a fairly undemanding hotel guest. As long as the bed is comfortable, the shower is hot and the Wifi is fast, I'm pretty good. It always is nice when there are lots of electric plugs near the desk, and I like it best when the desk actually faces the TV ... two things that this hotel, much as I like it, falls short on. But I've spent a lot more time in Holiday Inns than I have in four-star hotels in my life, so I've learned how to adapt. (Room service and minibars mean nothing to me - I almost never use them. I like real restaurants and actual bars ... plus, I like to get out of the room when I can.)

    But adapting cuts both ways ... and every business has to continually innovate without disenfranchising traditional customers. That isn't easy ... but then again, appealing to consumers is not for the faint of heart.

    That's what is on my mind this morning and, as always, I want to hear what is on your mind.

    KC's View:

    Published on: June 8, 2017

    by Kevin Coupe

    Reuters is reporting that Amazon is expanding the loans that it has been providing to third-party sellers on its site, doling out more than $1 billion over the past 12 months, as opposed to the $1.5 billion it loaned out between 2011 and 2015.

    Peeyush Nahar, vice president for Amazon Marketplace, tells Reuters that the money is used buy the sellers to either expand their inventory or offer sharper discounts on their products.

    More than 20,000 sellers have gotten the loans to this point, which have ranged between $1,000 and $750,000, at reported interest rates of between six and 14 percent (which is more than a mortgage rate and less than a credit card interest rate).

    According to the story, the Eye-Opening piece of this is that a) "boosting sales for third-party merchants is lucrative for Amazon, which takes a cut of transactions on its site," and b) it keeps these sellers "close to Amazon's orbit," even a rivals Walmart and eBay look to expand their marketplace/third party vendor offerings.

    In other words, the Amazon ecosystem is designed not just to keep customers close, but vendors potentially even closer.
    KC's View:

    Published on: June 8, 2017

    One Click Retail is out with a new study saying that "Amazon's sales of consumables in the Health & Personal Care, Baby and Grocery groups saw double-digit growth in Q1 2017, while the total HPC and grocery markets experienced declines of 1% and 10%, respectively. As consumers shift away from brick and mortar towards eCommerce for consumables, the popularity of Amazon's services such as Prime, Pantry and Fresh is gaining ground."

    The study goes on to say that there was "30% growth in Amazon Grocery averaged across the US, UK and Germany, driven by the growing adoption of Amazon Prime in Q1 2017. Traditionally, grocery has been less susceptible to the shift towards eCommerce (in 2016, only 5% of U.S. grocery sales occurred online). According to Amazon sales data calculations for Q1 2017, Amazon's grocery sales outpaced that of the total market fifteen-fold."

    In Health & personal Care (HPC), "US total HPC sales increased only about 1% in Q1 2017," but is expected to be vastly outpaced by Amazon this year; "Amazon already earned $1.3 billion, or 27.5% of the total annual sales, in 2016."

    In Q1 2017, the story says, "total US baby products revenues dropped 10%. Most of this decrease took place in offline sales, allowing eCommerce market share to rise from 20% to 22%. The Baby Products category enjoyed the highest eCommerce CPG penetration, with Amazon having 43% of the total. Q1 Amazon US sales of diapers increased 30%, baby food 15%, and baby formula 80%. In both the US and the UK, Amazon saw triple-digit growth of top brands like Pampers (700% increase)."
    KC's View:
    The thing that traditional retailers have to keep in mind is that Amazon is building its consumables business significantly each month and doing so largely with its varying automatic replenishment models - which means that those sales are highly unlikely to ever go back to the stores that they've abandoned for those consumables.

    I think it is fair to point out that "the popularity of Amazon's services such as Prime, Pantry and Fresh is gaining ground," but I'd actually be just as worried about the popularity and stickiness of its Subscribe & Save and Dash Buttons programs.

    Published on: June 8, 2017

    The Chicago Tribune reports that a lawsuit was filed this week that attempts to force a retailer - in this case Chipotle, though the suit could have implications for virtually every business that pays hourly wages - to expand the number of people to whom it pays overtime wages.

    The case has to do with a Labor Department rule instituted during the Obama administration saying that businesses should pay overtime to any employee working more than 40 hours a week and making less than $47,476 a year, up from the previous level of $23,660. The Tribune writes that "the lawsuit claims that while the injunction blocked the Labor Department from enforcing the rule, it did not technically prevent the rule from going into effect. The lawyers argue that the Labor Department does not have to take any further steps to implement the rule because it was already finalized and officially published by the time the injunction was filed ... The order was meant to give the court more time to reach a final decision on the regulation, which was challenged by 21 states and a coalition of business groups, including the Chamber of Commerce. The result was a limbo where the rule was put on hold but not permanently eliminated, according to legal experts not associated with the case."
    KC's View:
    It seems unlikely that the Trump administration won't do what it needs to do to vacate the new regulations now that a potential hole in the process has been identified by some lawyers. The Tribune notes that "during his confirmation hearing in March, Labor Secretary Alexander Acosta said it was 'unfortunate' that the rule had not been updated in more than a decade, but he also said the threshold proposed by the previous administration may 'create a stress on the system'."

    Published on: June 8, 2017

    My friend Karen Caplan, president/CEO of Frieda's Specialty Produce, has a bog that I enjoy reading each week, entitled, "What's on Karen's Plate?" She even is a source of inspiration - not that long ago, she did a blog posting about the importance of giving blood, and I followed up by doing the same (and gave her credit).

    This week, Karen posted a piece entitled, "Why I Quit My Gym." Karen writes about how her workout routine had grown stale, and how she was presented with a wide variety of alternatives when she started looking for options. And, it ended up being a business lesson: "Welcome to the new economy," she writes, "and yet another disruptor to an existing business model ... That’s the great thing about the new economy; there are so many options available to us. For everything we do."

    Including working out. And, of course, shopping.

    Once again, Karen inspired me on a variety of levels ... and you can read her entire blog posting here.
    KC's View:

    Published on: June 8, 2017

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

    • The Puget Sound Business Journal reports that Amazon "has patented technology to allow robots that transport inventory around its warehouse floors to take on more tasks, such as taking inventory, mopping, sweeping and waxing floors ... the patent describes various tools that can be easily attached and removed from the existing robot fleet."

    The story notes that "patents and patent applications don’t guarantee an idea will become reality. But the growing number of drone and robot patents shows Amazon is investing heavily in a technology that could upend the shipping industry."

    The story also notes that "although almost 25 million jobs will be lost to automation over the next 10 years, research firm Forrester suggests that the development and maintenance of smart warehouse bots will create 15 million jobs.
    KC's View:

    Published on: June 8, 2017

    • The Charlotte Observer reports on how Kroger-owned Harris Teeter plans to open a new 53,000 square foot store in the city's south end, in the same neighborhood where the company opened a store in 1952 ... a store that subsequently was closed in 1988.

    Now the company is returning to the neighborhood, and doing so with a design treatment that harkens back to the company's roots, with a retro logo and overall look. However, not everything will be a nod to the past - the store also will have "a Starbucks coffee stand, a bar with wine and 16 beers on tap, filling stations for beer growlers, an events area that will feature weekly meal specials, a pharmacy and a sit-down eating area."

    The store is slated to open on June 20.
    KC's View:

    Published on: June 8, 2017

    We reported yesterday about Amazon's decision to offer a lower price on Prime membership to people who are on federal assistance - a way of appealing to a segment of the population that traditionally has shopped at Walmart.

    MNB reader Carla A. Girten wrote:

    I read about this last night on a social media link and then scanned the comments.  There were several people who were clearly upset that Amazon would discount the membership for lower income shoppers.  The feeling was why should we regular full-price users “subsidize” this, and why aren’t we getting the discounts for being loyal, high volume shoppers.  These are people who, in this highly politicized climate, are resentful of their tax dollars going towards SNAP and other welfare programs and see this as another give-away.  One actually said they would be cancelling their Prime membership.  Another commented that if someone could not afford to buy food and other necessities, why were they shopping on Amazon anyway, and how did they have the connected devices to even accomplish it. Although this was not my thought when I read it, I understand the logic because I hear it from friends and co-workers. Maybe I am naïve to think of the benefit for people who couldn’t get to the store, or who lived in food deserts, etc. and how they would be able to buy necessities they otherwise couldn’t get. Just wanted to put another side out there.

    I do think that one of the real benefits of this new Amazon discount is that it does address the issue of food deserts ... I don't think that this is naïve at all. Now, it also is good for Amazon, but that's okay. Building stores in food deserts isn't all about altruism, either.

    While I agree that the resentment might be felt by some folks, and understand the line of thought, I profoundly disagree with it. I don't feel like I'm subsidizing benefits for people less fortunate than I, though I'd be okay with that if I were; it isn't like Amazon is raising my fees to pay to give Prime benefits to people on assistance.

    If some folks want to give up their Amazon Prime memberships because of this, let them. I can't imagine it will be a very big group. I think most people will have a greater generosity of spirit.




    We also reported the other day about the Seattle City Council decision to impose a tax on sugared beverages, prompting one MNB reader to write:

    It is interesting that the Seattle City Council says one of the reasons for the soda tax is to "cut down on the consumption of sugary drinks" because of course it makes them more expensive.  The same city council insists that raising the minimum wage more than 50% will have no adverse impact on jobs.

    MNB reader Peter Talbott wrote:

    A Starbucks grande caramel Frappucino is 420 calories, with 9 grams of saturated fat and 66 grams of sugar.  I wonder how Seattle missed that?

    I don't.



    I wrote yesterday about Apple's introduction of the new Home Pod, designed to compete with Amazon's Echo ... while I see the attraction (largely, I think, because I am such an Apple guy), I'm not sure it, as described, could supplant my devotion to the Echo/Alexa system.

    MNB reader Jeff Gartner wrote:

    Kevin, I think Apple is positioning the Home Pod more against Sonos (and similar speaker systems) than it is against the Echo or Google Home, emphasizing both its sound quality for music listening and with more intelligence.

    Sonos produces okay sound quality, but its real appeal is how easy it is to use. The Home Pod seems to be positioned as also very easy to use but more automatically than relying on your iPhone's Sonos app (such as with determining the best audio in a particular room or with other speakers in the same room). 
    From what I read in online tech reviews, the Home Pod seems to be a much superior speaker to the Echo, but perhaps its real Amazon competition is the much cheaper Echo Dot connected to a better speaker. 

    Personally, I'm just glad Apple finally updated its iMacs so I can rely on my still good but 5-year old Mac Air (often connected to a bigger monitor) just for travel.


    I hadn't thought about it that way, but I have to say that I have a Sonos system in my office, and just love it. Hard to imagine I'd want to replace it.

    I loved this email from MNB reader Gary Loehr about the Home Pod-Echo conflict:

    Oh no, Apple competing with Amazon…Your girlfriend just met your wife.  Apple, sexy, sleek, stylish, exciting with maybe a touch of danger.  But Amazon knows you, understands you, really gets you in a way that Apple may never match.  Two parallel universes, each calling out to you, each with it’s own allure.  A bit like matter and anti-matter colliding.

    Oh. no. I thought I was thinking about a consumer choice ... not in the middle of a existential mid-life crisis point.




    Finally, I got this email from MNB reader Tom Redwine referencing a "worth reading" piece that came from a New York Times column by Tom Friedman:

    The quote regarding self-driving cars in the Friedman article reminded me of something I read in Barron's last week, in regards to unintended consequences:

    "Waiting lists for organ donations will grow longer, as car accidents, especially fatal ones, become rarer."

    Wow. Did not see that coming.


    Me neither. Yikes.
    KC's View: