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    Published on: August 10, 2017

    Article Text.

    Hi, I’m Kevin Coupe and this is FaceTime with the Content Guy. I’m coming to you this week from Burlington, Vermont … I made a quick trip here from Portland, and between classes at Portland State University, to help facilitate a Customer Days event for MyWebGrocer.

    Now, this is the point in the commentary where I quite properly point out that MyWebGrocer is a longtime and valued MNB sponsor. CEO Rich Tarrant and I were talking about it this week, and MWG is maybe a year or so older than MNB, and we’ve been with each other almost from the beginning … both of us persuaded, even when many other people weren’t, about the potential power and inevitability of e-grocery.

    In fact, we’ve been doing this so long that I don’t think that people were even using words like “disruption” to describe what we were both were doing. I was trying to be provocative and opinionated in a segment of my business that seemed to luxuriate in vanilla writing, passionless opinions and a decided preference for the status quo. And MWG was pioneering and evolving even as entities like Webvan and HomeGrocer were collapsing.

    The evolution continues. One of the things that impressed me about this week’s event was that while MWG is first and foremost a technology company, this was not a conference that focused solely on technology. Sure, there was a session about Amazon and Whole Foods … because it would be irresponsible to have any sort of food industry conference these days and not discuss this pending deal and its implications for the industry.

    And sure, there was a session by Scott Galloway, professor of marketing at New York University’s Stern School of Business, and founder of digital intelligence firm L2, in which he addressed the overwhelming and even unfair advantages enjoyed by Amazon, Apple, Google and Facebook. (And the greatest of these, he argued, is Amazon.) But even Galloway argued that these enormously powerful digital/technology companies can be competed with by bricks and mortar companies - and he suggested that Apple actually is the best proof of this. The Apple Store is “a temple to the brand,” he said, and demonstrates how great physical retail can not just work, but be transformative.

    There also was a presentation about “power of play,” and what marketers can learn from how and why people play games. Go figure, different people play games because they are seeking different psychic rewards - status, a treasure, the ability to feel smarter, for example. I was listening to Marguerite Dibble, founder/CEO of a company called Game Theory, go down the list, and it occurred to me that in a really good retail environment, that’s exactly what stores offer shoppers - psychic rewards that go beyond the tangible products they put in their shopping carts. (Sadly, some just offer the products … and this can be what separates the excellent from the merely mundane.)

    I had the chance to moderate panel discussion on the subject of using content to be better marketers - not just in the digital realm, but in store and in the mass media. We talked about how the best “content” is just storytelling, and how the best retail and CPG companies weave compelling stories in and around their brands. (Since my self-chosen title is “Content Guy,” and I co-wrote a book with Michael Sansolo about the importance of storytelling, they had me pretty much at “hello.”)

    We also did a session about the likely impact of Aldi and Lidl on the marketplace, framed as a conversation between Barry Clogan and myself. While Barry now is EVP-Retail at MWG, he used to be at Tesco, and saw firsthand the impact that the two German discounters had on the UK market. Alarm bells were sounded, and I think we all walked away with a greater understanding of how potent a force they could be.

    My point is this. We were talking about disruption in many forms, not just digital. That’s a critical insight, I believe, because companies have to start thinking about holistic disruption if they are to survive - you can’t just innovate on one side of your business without innovating everywhere, and you can’t disrupt from within only a single silo of your business. It’d be nice if you could, but you can’t.

    Holistic disruption. I kind of like the sound of that.

    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: August 10, 2017

    by Kevin Coupe

    Remember the kid from The Sixth Sense who says, “I see dead people?”

    Well, I feel like him sometimes, except my line is a little different:

    I see lessons and metaphors.

    It isn’t quite as good a line as the one from the movie, but it’s mine, and I’m sticking with it.

    One of the things I’ve done almost every morning in Portland is walk from the apartment I’m renting near Portland State University down to the Stumptown Coffee on Third. And there, I sit at the counter each morning, drink black coffee, and read the digital edition of the New York Times and go through email on my iPad. Sure, I could make coffee and do all this at home, but I’ve had a bad knee (calcified tendonitis, I’m told) that has prevented me from jogging, and so I’ve developed this habit to make sure I get out and walk. Sometimes I cut through the city, and sometimes I walk along Waterfront Park, on the banks of the Willamette River. But I force myself to get out.

    I tell you all this to explain that while sitting at the counter, I also tend to watch the baristas grind and measure the beans to make coffee. I’ve been fascinated by it all summer, because they’ll grind the beans into this small metal container, which they then weigh … and inevitably, they will remove just a couple of grains to get it right. And when I say “a couple of grains,” I mean just a whisper of coffee beans, hardly enough to, in my view, make a difference.

    Last week I was sitting there and I struck up a conversation with Alina, a very nice young woman who was performing this particular task. And when I inquired, she told me that the weight they are going for is between 19.5 and 20 grams of ground coffee … and that yes, being off by a little bit, one way or another, would make a difference. (You can see her at work in the pictures below.)

    Well, I’m certainly not going to argue with her. She demonstrated in our conversation that not only does she know a lot more about coffee than I do, but she’s passionate about the subject. Which is a good thing if you are working for Stumptown Coffee. I also love the coffee there, so I’m not going to question the methodology.

    But I also think there is a larger lesson and even a metaphor here for how businesses operate.

    We talk a lot here about the importance of taking “big swings,” of how it is important in a climate of enormous competition to do things that are ambitious and even audacious to demonstrate both relevance and resonance to customers. But I think we may not pay enough attention to getting the little things right, of paying attention to the small details that may only whisper in the ear of the customer, but that can add up to an experience that is more compelling or a product that is superior.

    As you read this, think of me. I may well be at the counter at Stumptown Coffee, sipping from a steaming cup of well-made, hand-crafted coffee … and looking for lessons, metaphors and Eye Openers everywhere,

    KC's View:

    Published on: August 10, 2017

    Gallup is out with a new survey suggesting that the e-commerce trend still “has not yet hit the retail grocery industry in a significant way.

    “Nine percent of U.S. adults report their household orders groceries online for pickup or delivery at least once a month, including 4% who do it at least weekly. By contrast, almost all Americans say someone in their family shops for groceries in person at least once a month, with 83% going at least once a week … At this point, online grocery shopping appears to be an adjunct to retail shopping rather than a replacement, as most shoppers whose families purchase groceries online once or twice a month or more say they still visit a store to buy groceries at least once a week.”

    The Gallup survey indicates that the younger and more urban you are, the more likely it is that you’ll shop for food online: “Fifteen percent of U.S. adults aged 18 to 29 say they purchase groceries online at least monthly, similar to the 12% among those 30 to 49 and 10% of those 50 to 64. These figures all contrast sharply with the negligible 2% of those aged 65 and older who shop for groceries online at least once a month” And, “Americans living in the eastern U.S. and those residing in cities are modestly more likely than their counterparts to use online grocery shopping technology.”
    KC's View:
    While the numbers may be lower than some might expect, Gallup suggests that rather than serving as reassuring to traditional grocers, these numbers actually highlight “the theoretically enormous potential for growth in the online grocery business,” potential that may be a lot clearer once Amazon’s plan to acquire Whole Foods is completed.

    But let’s be clear. Once the deal is completed, it is not like everything is going to change overnight. And it isn’t like all physical stores are going to go away. It’ll just be the mediocre stores will be vulnerable, because there will be little reason to go there.

    Published on: August 10, 2017

    The Associated Press reports that the Walt Disney Co., owner of the ABC television network, has disclosed a $177 million legal settlement, which while not specifically identified as such seems to be going to Beef Products Inc. (BPI), which sued the network’s news division over a story about low-cost processed “lean finely textured beef," which was sprayed with ammonia and used as filler in ground beef.

    ABC News ran several stories about the filler, which was referred to as “pink slime” - a term coined by a staff microbiologist with the US Department of Agriculture (USDA). BPI maintained that ABC's coverage misled consumers into believing the product is unsafe, is not beef and isn't nutritious.

    A settlement of the suit - which, had ABC lost it, could have cost the company more than a billion dollars - was reached in late June, though terms had not been disclosed. The AP story suggests that while Disney is writing a $177 million check, that is not the total amount of the settlement, and ABC’s insurance company likely is writing another check.
    KC's View:
    I’ll repeat what I’ve said here before - that I never was comfortable with the network's concession that its reporting engaged in "imaginative expression" and "rhetorical hyperbole." That's the mind of stuff I do...but I'm a pundit, and I label the commentary as such. But I also thought that BPI wasn’t as transparent as it probably should’ve been.

    Published on: August 10, 2017

    The New York Times has a story about how “Walmart has put more than 150,000 of its store supervisors and department managers” through what it calls Walmart Academy, “which, over several weeks, teaches skills like merchandising and how to motivate employees.”

    Here’s how the story frames what Walmart is trying to do, and why:

    “American companies spend about $170 billion a year on formal employee training, but most of that instruction focuses on workers with college degrees.
    Walmart has spent $2.7 billion on training and raising wages for 1.2 million of its store workers over the past two years — an investment that reflects the pressures the company faces in the retail industry.

    “Fighting Amazon for sales, Walmart is trying to make its stores more pleasant places to shop. That requires a well-trained work force with a sense of purpose and self-worth, qualities that can be difficult to nurture in lower-wage workers.”

    What’s interesting about the Times is that it looks at Walmart’s training efforts in the context of a changing American landscape, in which certain kinds of retailers are facing extinction and certain kinds of communities - those that depended on a robust manufacturing component to support its middle class - are fighting to survive. The question the story asks is whether, despite all the money Walmart is spending and all the people it is training, whether the efforts will add up to anything more than Walmart just running stores that are more competitive with Amazon.

    Walmart certainly wants to be seen as doing more than just that: “Walmart was once considered to be a pariah of rural America, vilified by some — especially people who shopped elsewhere — for wiping out local businesses by selling cheap goods made in China,” the story says. “Now, Walmart is rebranding itself as a company focused on the needs of its workers and the fate of small towns and hardscrabble cities.”

    It is an insightful piece of writing, and you can read it here.
    KC's View:

    Published on: August 10, 2017

    The Washington Post has a story about the restaurant food delivery business - booming right now, and a $43 billion business with some expectations that it could almost double in the next five years.

    But it is also a business with the persistent challenge of maintaining quality - or heat, or warmth, or cold - of certain products that simply “don’t naturally travel well.”

    “Anything that pairs wet and dry ingredients -- such as soft-shell tacos, loaded gyros or avocado toast -- risks getting soggy in transit,” the story says. “Restaurants and delivery services have also struggled with hot, crispy foods, such as grilled sandwiches, thin-crust pizza and french fries -- the white whale of delivery. The insulation that keeps these foods warm while they travel also locks in steam, risking sogginess and overcooking.”

    Since “most restaurants lack the infrastructure and logistical expertise” to develop the expertise to deal with such issues themselves, and most that have engaged in delivery services have outsourced the job to companies such as DoorDash, GrubHub, Caviar, UberEats, and Foodler. These companies are having to develop processes and logistics that allow them to be more effective in growing their own and their clients’ businesses.

    “GrubHub recommends,” for example, “that Neapolitan pizzas spend seven more minutes in the oven crisping when they’re being delivered, for instance. And Caviar has designed instructional stickers to help customers reassemble foods such as pho and ramen. The company also swears by stand-up to-go cups for fries -- clamshells are essentially a Styrofoam steamer … On top of the emphasis on packaging, delivery services have also invested heavily in their logistics technology: algorithms designed to improve the timing of delivery pickups and minimize how long it takes a driver to get from point A to B.”
    KC's View:
    As much as I like e-commerce, I have to admit that I really don’t like ordering a lot of restaurant food to go, mostly because of the quality issue. The exceptions are pizza and Chinese food … and mostly I prefer going to pick it up myself because it gives me greater control over quality and timing.

    Published on: August 10, 2017

    CNBC reports that investment analysts are predicting that Starbucks’ ubiquity - its cafes “are facing mounting competition from other Starbucks locations” - has “grown to such an extreme point that they are hurting each other's sales.”

    A report from BMO Capital Markets says that “the pace of U.S. development should be slowed,” largely because “the annual increase in store overlap across Starbucks' U.S. footprint has accelerated by more than three times over the last few years.”

    The analysis says that “seventy-five percent of Starbucks locations in California (Starbucks' largest U.S. market representing approximately 20 percent of its U.S. footprint) now have a store within a one-mile radius … There are now 3.6 Starbucks locations within a one-mile radius of the typical Starbucks in the U.S. relative to 3.3 and 3.2 stores in 2014 and 2012 respectively.”

    The report also says that beverage innovation also may have reached its limits: “Specialty beverage growth may be nearing saturation among existing customers as the percentage of Starbucks U.S. orders that include specialty beverages declined from year-ago levels. Beverage innovations may drive greater switching across products among existing customers, rather than incremental sales.”
    KC's View:
    If I remember accurately, back in 2008 when Starbucks was going through problems because the recession contributed to a growing unwillingness to spend $4 on lattes, the company’s growth strategy also was seen as a problem … and the decision was made to scale back. I’ve had folks suggest to me that this was just temporary, and that Starbucks was way denser than before.

    The question is, what happens if there is another recession?

    Published on: August 10, 2017

    Axios has a story about analysis done by investment research firm Morningstar in which it names three companies that it believes are “the most likely survivors of Amazonization” of the retail landscape.

    They are Lowe’s, because “home improvement retailers benefit from the high price of shipping the bulky goods they have on offer;” Costco, because it “benefits from its gasoline business, an item that Amazon's Whole Foods doesn't sell;” and Walmart, because its “sheer scale and close relationships with suppliers means it can compete on price.”
    KC's View:
    There will be a lot more survivors than this, and it isn’t really going out on a limb to suggest that these three will survive.

    The better question is, what will pass for survival?

    Published on: August 10, 2017

    • The Wall Street Journal has a story about the continuing evolution of the Internet, and how in some places around the world, “instead of typing searches and emails, a wave of newcomers - ‘the next billion,’ the tech industry calls them - is avoiding text, using voice activation and communicating with images. They are a swath of the world’s less-educated, online for the first time thanks to low-end smartphones, cheap data plans and intuitive apps that let them navigate despite poor literacy.” This has become such a priority that “some poor users say they are willing to pay for data even if it means forgoing consumption of things like cigarettes to afford prepaid cards. Sales of shampoo and some snacks foods have slipped for certain consumers as they put more rupees aside for their phones.”

    Indeed, while some of the apps being used by these users are familiar - Facebook and Google, for example - there also are many “that are unfamiliar in the developed world, including UC Browser, MX Player and SHAREit, that have been tailored for slow connections and skimpy data storage.”
    KC's View:

    Published on: August 10, 2017

    CNN reports that Walmart has condemned the display in one of its stores that appeared to promote firearms as a back-to-school special. However, while the picture of the display was visible on social media, where it caused an outcry among users, Walmart has not been able to identify which of its stores had the display so it could be removed.
    KC's View:

    Published on: August 10, 2017

    • The Associated Press reports that “Chipotle has temporarily closed a Dallas location where a diner posted video of rodents inside the restaurant,” and that it will remain closed “while the company thoroughly checks out the 100-year-old building in Dallas' West End neighborhood.”

    The rat video came out at the same time as Chipotle was dealing with new cases of norovirus occurring among patrons of one of its Virginia restaurants, which set back its efforts to get beyond the 2015 E. coli outbreak that did severe damage to the company’s reputation.

    USA Today reports that Oprah Winfrey is teaming up with Kraft Heinz on “a new line of refrigerated soups and side dishes” called ‘O, That's Good.’ The products start coming to store shelves this week.

    “Marketed as healthy riffs on comfort food, the inaugural offerings include mashed potatoes with cauliflower mixed in, creamy parmesan pasta with white bean puree replacing some of the cheese and broccoli cheddar soup infused with butternut squash.”

    This is just Winfrey’s latest foray into a food related business, following an endorsement of and investment in Weight Watchers.
    KC's View:

    Published on: August 10, 2017

    …will return.
    KC's View: