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    Published on: July 7, 2017

    by Kevin Coupe

    There has been some question in recent days about whether or not Amazon is a good fit with Whole Foods, the bricks-and-mortar retailer that it wants to acquire for $13.7 billion. Some of it is about culture, but there also is speculation that Amazon will find it difficult to integrate its products and services with Whole Foods', and vice-versa.

    My friend Rudy Dory, of Bend, Oregon's wonderful Newport Avenue Market, may have found the answer. In Spain.

    Rudy was in Madrid this week, and being a grocer to his core, he visited one of the fresh markets there, the Mercado de la Paz, which dates back to the 19th century. He found an Amazon PrimeNow booth, which is facilitating free two-hour delivery from the many fresh food stalls there.

    (Check out the pictures at left. Thanks, Rudy.)

    The fact is that the Mercado, which represents a time-honored way of buying fresh foods, is adapting successfully to 21st century technology and the advantages it offers to consumers. Which is very smart.

    It also isn't new. I did a little research, and found that the Mercado launched this partnership in 2016.

    While there seemed to be some activity in the e-commerce segment when Amazon announced its bid for Whole Food, with experts saying that this would finally force many traditional grocers to move faster and more decisively to offer e-grocery services, I'd suggest that this may be something of an illusion. People are talking about competing with the Amazon-Whole Foods tie-up, but I'm not yet persuaded that retailers big and small are making the moves they need to make as quickly as they need to make them.

    And yet, here is this 19th century Spanish market that already has, and may reflect exactly how Amazon will be able to utilize Whole Foods' real estate pretty quickly after the deal is finalized.

    It is an Eye-Opener.

    KC's View:

    Published on: July 7, 2017

    Mashable reports that Walmart is expanding its concept of a "giant self-serve kiosk tower" where consumers can pick up their online orders to more than a dozen locations.

    According to the story, "The big-box store is rolling out a giant self-serve kiosk tower for online orders to more than a dozen locations. Customers simply arrange their shipment ahead of time, visit the store, and access their order via a barcode scanner on the side of the machine. Each package is preloaded by workers ... The massive orange towers stand 16 feet tall by 8 feet wide and deliver items through a conveyor belt inside the contraption. Walmart began testing the system last fall in an Arkansas store near its headquarters."

    The move is part of Walmart's overall effort to adapt more fluidly to the e-commerce world. "Other experiments," the story says, "that cater to these strengths include a program in which store workers deliver packages on the way home from work and a partnership with Uber for short-distance delivery orders."
    KC's View:
    I continue to believe that if Walmart really wants to serve notice that it is ready and able to compete with Amazon, it should announce that within a matter of months it will have click-and-collect depots installed in thousands of stores. It would be what Tom Furphy and I recently referred to as "a big swing," the kind of thing that has both symbolic appeal and practical applications.

    Testing a system over months and expanding the test slowly won't cut it.

    Published on: July 7, 2017

    Money has a story about the pricing battles taking place among big chains and e-tailers, and how "the frugality site Cheapism.com recently compared prices for 75 ... name-brand products at Amazon, Walmart, and the Walmart-owned site Jet.

    The conclusion: "Overall, Amazon had the lowest prices, Cheapism found: The total for all 75 items came to $813.39 at Amazon, versus $859.26 at Walmart.com and $859.47 at Jet ... While Amazon had the lowest prices on 14 of the items, Walmart was the cheapest option for 12. So your choice varies based on what's on your shopping list: If you regularly buy some or all of the goods where Walmart is the low-price leader, and not so many of the items where Amazon is cheapest, you could save by shopping at Walmart."

    Very little is definitive: "These retailers and others are constantly comparing prices with each other, and the study shows it: Of the 75 featured items, there were 38 ties, with the exact same prices from two or all three retailers.

    "So where is the cheapest place to shop? The true answer is, frustratingly enough, it depends."
    KC's View:
    No surprise here. There will be a lot of price matching, a lot of collateral damage ... and plenty of instances where smart, aggressive retailers decide not to play this game because they can't win it, and instead create stores that are innovative, nimble and differentiated.

    Published on: July 7, 2017

    Reuters reports on a poll by Coworker.org, an online petition site, suggesting that a Starbucks initiative "designed to improve speed and customer service has not fixed staffing shortages ... Eighty-nine percent of respondents said staffing levels were still a problem in their stores in the past three months, and 62 percent said their ability to deliver the best customer service possible decreased during that time." The story notes that the new poll comes " a year after U.S. Starbucks workers used the site to protest staffing cutbacks that they warned were slowing service and hurting morale at the popular coffee chain."

    The Reuters story notes that Starbucks has said it is trying to respond to criticisms that the combination of staff cutbacks and busy stores, as well as bottlenecks created by the company's successful mobile ordering app, was creating service issues. And a spokesperson tells Reuters that the company has added staff to about 15 percent of its stores, and that "all of our metrics show we are moving in the opposite direction of what the survey claims."
    KC's View:
    The first thing I'd suggest to Starbucks is that it would be a real mistake to simply dismiss the survey results. Sometimes employees will tell their bosses what they think they want to hear, and will use outside mechanisms to send a message that needs to be heard.

    I'd also suggest that while metrics are important, they aren't everything. They can even be misleading. Metrics can measure efficiency, but they don't always measure effectiveness. And customer service is the lynchpin of Starbucks' business model.

    When I read this story, I started to think about recent visits to Starbucks ... and it seems to me (and this is completely anecdotal) that there have been an awful lot of times when things were slow because there were only one or two people working the counter at a time when an extra pair of hands or two would've been really useful. Maybe the survey is onto something.

    One other thought. I noticed that in all the stories about this survey, the reporters quite rightly pointed out that Starbucks has a new CEO - Kevin Johnson, who succeeded Howard Schultz in April. Now, these problems predate Johnson';s ascension to the top job, and Schultz remains chairman. But - and I don't want to get ahead of myself here - I cannot help but think that we may be seeing the very first planting of the seeds that will return Schultz - someone who I've always thought has something of a Messiah complex, even if one could argue that it is well-earned - to the CEO's office.

    I certainly wouldn't bet against it.

    Published on: July 7, 2017

    The Washington Post has a story about a fascinating study that looks at the “gig economy" - in which American workers can use new, disruptive businesses such as Lyft or Airbnb "to make money on their own terms."

    New data from loan provider Earnest, however, indicates that "the majority of workers — 85 percent of them — make less than $500 a month, on average, using those services."

    Furthermore, the Post writes about a Pew Research Center survey indicating that "nearly one in four Americans now earns money from the digital “platform economy" ... And increasingly, their experiences — and their earnings — are split between those who are supplementing their incomes with side gigs, and those who rely on those piecemeal earnings to eke out a living.

    “We’re starting to see that these gigs are filling in the gaps for a lot of people — a little bit of extra money here for a student loan payment, or a few hours of work there to create additional income,” Catherine New, a senior editor at Earnest, tells the Post. “But bigger picture, you also see that people are having to work two or three jobs to make ends meet.”

    The Post points out that "experts say a slow job market recovery, growing income inequality and stagnant wages — combined with ballooning student loan debt — have exacerbated financial burdens for many Americans, leading to the growing popularity of side gigs ... At the same time that it’s become harder to find a stable source of income to sustain a family, it’s become easier than ever to download an app that allows you to drive around passengers, rent out your bed, or stand in line for concert tickets in exchange for money."
    KC's View:

    Published on: July 7, 2017

    Craft breweries owned by Anheuser-Busch InBev - including Four Peaks, 10 Barrel, Elysian, and Wicked Weed - have gone on the record as being opposed to a new seal of approval introduced by the Brewers Association to differentiate independent craft beers.

    The strong reaction, the St. Louis Post-Dispatch suggests, "may have something to do with that fact that all of the craft breweries that A-B InBev has recently acquired are excluded from using the seal."

    The argument is that what ought to matter is the beer, not the ownership of the company that makes it. And, there is a suggestion that the Brewers Association may have violated its charter to represent the entire industry when it came up with the concept of a seal.

    Andy Ingram of Four Peaks says in a video produced to oppose the seal that "when a major trade organization is saying it doesn’t matter what's in your glass as long as it’s independent, and they’re telling consumers that, then that’s a big issue, you’re saying go ahead and drink crap just as long as you don’t support the big guys. And it’s not healthy and not a good way going forward."
    KC's View:
    Give me a break.

    This just strikes me as so disingenuous. I have no problem with independent craft brewers taking a big check from a multinational corporation so they can expand ... as well as so founders can get some return on their investments of blood, sweat, tears and money. It is absolutely fine.

    I also have no problem with multinational corporations wanting to own these small breweries because they understand that this is where a lot of innovation comes from, and where consumers seem to be focusing their approbation these days. This also is absolutely fine.

    But objecting to a trade association finding a transparent and honest way for small, independent craft breweries to differentiate themselves from those owned by big multinational companies? Really? I'd argue that you don't get to cash the check and still claim independence.

    You cash the check, you have to shut the hell up. You still get to make beer that people want to buy and drink, but you don't get to claim independence anymore.

    You don't get to claim you're a virgin if you're not.

    Published on: July 7, 2017

    Advertising Age has a story noting that as bricks-and-mortar retailers feel the pain of a contracting marketplace in which e-commerce is growing at the expense of physical stores, among the victims are "the iconic flagship stores" that were built in high-profile locations, that paid high rents, but served "as status symbols for retailers, more important for their brand-wide promotional value than the profits they may or may not have generated on the premises."

    "Contraction in retail is leading big chains to reconsider their biggest brand temples," Ad Age writes. " The latest casualty is JC Penney's New York City flagship and sole Manhattan outpost, put up for rent last month less than a decade into a 20-year lease. JC Penney's decision to close the 150,000-square-foot store, centrally located in one of the top tourist destinations in the world, signifies a dire situation at the Plano, Texas-based retailer ... Earlier this spring, Ralph Lauren closed its lavish Fifth Avenue Polo store, for which it brokered a $400 million, 16-year lease in 2013. Toys R Us and Aéropostale shuttered their Times Square stores last year, and FAO Schwarz in 2015 turned in the keys to its Fifth Avenue flagship, whose giant piano won't be enticing Tom Hanks wannabes anymore. And while its miraculous location on 34th Street remains open, even Macy's is rethinking its real estate.

    "Struggling retailers can no longer justify the expense, even as a marketing cost, as e-commerce and social media grow in importance with shoppers. In the digital age, ads made from bricks and mortar no longer work as well, or even send the right message."

    Ad Age writes that "instead of flagship as marketing, brands may do well to market their flagships as brand experiences." If stores continue to exist, they likely are going to have to be more experiential, and they're almost certainly going to be smaller.
    KC's View:
    Unless these flagship locations are truly remarkable, they're mostly going to be a waste of time, money and effort ... with very little relevance to brands' actual users. It may be a change, but it hardly strikes me as a loss for western civilization.

    Published on: July 7, 2017

    • The Los Angeles Times reports that "in a bid to promote its deals to consumers, Amazon.com Inc. started displaying current discounts compared to their historic price tags — a strategy that it calls the 'was' price,'" which was introduced "as the e-commerce giant faced legal challenges and mounting criticism for allegedly exaggerating discounts through its previous pricing strategy, which was based on 'list' prices derived from manufacturers, vendors and competitors.

    "But a fresh study by Consumer Watchdog alleges that 'was' prices, along with 'before-sale' prices and 'list' prices, continue to deceive consumers into thinking that they’re getting a bigger bargain than they actually are ... On Thursday, Consumer Watchdog filed another petition calling on the Federal Trade Commission and the Justice Department to look into Amazon’s current pricing scheme."
    KC's View:

    Published on: July 7, 2017

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

    • The Wall Street Journal reports that Campbell Soup plans to acquire "organic-soup maker Pacific Foods for $700 million, the food stalwart’s latest effort to meet demand for fresher, more natural foods ... Adding Pacific’s butternut-squash soup to Campbell’s familiar line of chicken-noodle and vegetable soups continues a turn toward healthier foods that Campbell has been making since 2011," according to Campbell CEO Denise Morrison.


    • The Wall Street Journal reports that "longtime rivals QVC and the Home Shopping Network have agreed to merge as two retailers built around cable television adapt to a world where impulse buying and video watching is moving to smartphones. The companies, famous for pitching products such as the Miracle Mop and George Foreman grill, said Thursday they have agreed to combine in an all-stock transaction valued at about $2.1 billion. QVC parent Liberty Interactive Corp., controlled by cable magnate John Malone, already owns a 38% stake in HSN."


    • Yesterday, MNB took note of Volvo's decision to begin phasing out the internal combustion engine ... and now France has announced that its goal is to end the sale of gasoline and diesel cars there by 2040.

    "The target is less ambitious than ones set by countries like Norway and India," the New York Times writes. "Still, coming from a major car-producing country, France’s declaration gave additional momentum to efforts to fight climate change and urban smog by promoting the use of electric cars." In addition, the Times points out, setting a goal is different from coming up with strategies and tactics to achieve it.

    "The timing of the announcement was also significant, a day after the automaker Volvo said it would phase out the internal combustion engine, and during a visit to Europe by President Trump. The announcement by Nicolas Hulot, the French environment minister, was an expression of European leaders’ determination to pursue an environmental agenda despite Mr. Trump’s repudiation of the Paris agreement on climate change."

    Vive la difference!
    KC's View:

    Published on: July 7, 2017

    ...will return. I promise.
    KC's View:

    Published on: July 7, 2017

    Baby Driver is a terrific little crime thriller ...which doesn't mean it is a great movie, which it isn't, but it is an awful lot of fun, filled with strong performances, and offering car chase sequences that - be still my heart! - are staged on real roads with real cars rather than simulated via special effects and green screens.

    Ansel Elgort plays Baby, an extraordinarily talented getaway driver who is working off a debt to a crime boss played to sleazy perfection by Kevin Spacey. Baby lives in his own world - he suffers from severe tinnitus, and he uses a series of iPods to play music to drown it out, which also has the effect of cutting him off from the world emotionally. His only real connection seems to be to his foster father, and aging and deaf African-American man whom he is supporting with his ill-gotten gains.

    Baby tries to remain his detachment from his crimes by only driving - the bank robberies and violent crimes are committed by various gangs (played with verve by actors that include Jamie Foxx and Jon Hamm), and he tries to deny his own culpability. That changes as events threaten his well-being, and as he becomes involved - to his own surprise - with a waitress played by Lily James; with emotional connection comes vulnerability, and like Al Pacino in Godfather III, every time he thinks he is close to getting out, they drag him back in.

    Elgort is a revelation in the title role - it is like watching some magical combination of Gene Kelly and Paul Newman. He is well served by Edgar Wright (Shaun of the Dead, Hot Fuzz), who wrote and directed Baby Driver and who seems utterly committed to keeping the film grounded even as Elgort and his cars take flight. (The movie reminds me of the films of Walter Hill, who made 48 Hours and a little movie called The Driver that seems to be a touchstone for this one.)

    And, let's give credit to the imaginative and energetic soundtrack, which keeps the film moving forward relentlessly.

    Go see Baby Driver. It is a wonderful example of what a summer movie can be when it doesn't feature superheroes and depend on special effects.



    I have a lovely wine to recommend to you this week - the 2015 Envidia Cochina Albarino from Spain, which manages to be bright and intense and have lots of body while being a perfect summer wine. (I got it from Zupan's in Portland, which is always a great place to find interesting wines that I've never heard of before. This one is a real winner.)
    KC's View:

    Published on: July 7, 2017

    As is my custom at this time of year, I'm going to take a couple of weeks off…

    MNB will be on hiatus until Monday, July 24, which means that I'll actually be missing ten editions. (If something major happens, and I have access to my laptop, I'll return.)

    I'm in the Pacific Northwest, and I'll be spending the time with Mrs. Content Guy - biking, hiking, wine tasting, beer drinking, and enjoying some great food.

    I'll also be teaching at Portland State during the MNB hiatus, as well as going to the (sold out!) Organic Produce Summit, where I'll be moderating a couple of panels. (If you're there, come say hi.)

    Between now and my return the MNB archives will, of course, be open. And, I may post the occasional note or picture on Facebook if the spirit moves me …

    Thanks…I hope you'll also get some time this summer to recharge your batteries.

    And, as always…

    Fins Up!
    KC's View: