business news in context, analysis with attitude

Published on: September 14, 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, I’m Kevin Coupe and this is FaceTime with the Content Guy.

Michael Sansolo’s column this week focused on how movie industry executives. coming off a terrible summer in terms of box office receipts, are blaming the website Rotten Tomatoes for their woes. Rotten Tomatoes brings together all the reviews of major and minor critics ands makes them easily accessible to consumers, and executives apparently have decided that it is the access to crappy reviews that is turning people off movies, as opposed to the crappy movies that are in theaters.

Michael and I agree that this is symptomatic of a problem that afflicts a lot of businesses - fixing blame instead of fixing problems. It is, to be clear, exactly the wrong thing to do.

It’s a lot more fun to talk about people and companies that do the right thing. I loved Kate’s column this week about how boutique owners, recognizing that boutique owners in areas hit by hurricanes often go out of business because of the difficulty getting new merchandise, are helping their brethren get back on their feet. That’s an example of companies doing the right thing.

There also was a story in the Washington Post about how Tesla pushed a software update last week that increased the battery capacity of some of its battery powered cars; the update unlocks previously inaccessible battery power, allowing vehicles go farther on a single charge, which is important when you’re trying to evacuate. Again, the right thing to do.

There have been a lot of examples of companies doing the right thing over the past few weeks - especially in the retail community, where companies have donated money and man hours have done their best to keep communities afloat - pun intended - and make sure that people in trouble have access to the products and services they need.

The Puget Sound Business Journal has a story about how Starbucks not only closed hundreds of stores in areas affected by Hurricanes Harvey and Irma, but also offered what it calls “catastrophic pay to its employees who can't work shifts due to store closures or an inability to make it to work. It also is expediting its CUP Fund grants, which are the company's Caring Unites Partners Fund grants.” The CUP Fund is described as “a way for employees to help other employees. They contribute to the fund, which is a financial assistance program started by workers in 1998 to help each other in times of need. The fund acts as a safety net for employees by providing monetary help following natural disasters or family emergencies.”

Again, all the right things to do … while simultaneously building community within the company.

Of course, there also have been examples of companies that have done the wrong thing, like the 7-Eleven franchisees in Florida accused of gouging customers for bottled water.

Or, there was the Pizza Hut manager in Florida who warned his employees that if they evacuated the state too early for his tastes, or returned too late, they’d be documented and could face disciplinary action. His instructions went directly against the recommendations of local authorities, and even the guidelines established by Pizza Hut corporate.

Or, how about the ship chartered by Marriott to help guests at its hotels on St. Thomas to get off the island after the airport closed? There was plenty of room to take hundreds of people off the island, but Marriott only would transport its own customers … or was only allowed to transport its own customers … depending on what version of the story you believe. It doesn’t really matter, though … somebody did the wrong thing, somebody could’ve done the right thing, and people were left stranded while a ship left port with hundreds of empty seats.

I always wonder to myself, what are these people thinking? Clearly, they’re not thinking about their customers or their employees, and they’re not even thinking about their brand equity or public image. They’re just thinking about themselves and the almighty buck.

By the way, having nothing to do with the storm, I keep running into businesses have have introduced a paid-time-off policy, in which vacation time and sick time are essentially combined, and, for example, if you get a bad case of the flu you end up being unable to take any sort of real vacation, or if you get the flu after you’ve been on vacation, well, you’d better come to work or you’re going to not be paid. This is how they treat full-time employees, and it makes absolutely no sense … your people either end up burned out from little time off, or coming to work sick and getting other people sick. It is called “PTO” in the trade, but I call it “BS” … the wrong thing to do, because it clearly establishes that you don’t give a damn about your people, only yourself.

There’s a lot of that going around. The good news is that there often is good news, and are good people, to compensate. Which reminds me of the lines from “A Man For All Seasons,” in which Thomas More, arguing that he must do the right thing even if it means going against a self-indulgent king who believes the law does not apply to him, says:

“If we lived in a State where virtue was profitable, common sense would make us good, and greed would make us saintly. And we'd live like animals or angels in the happy land that needs no heroes. But since in fact we see that avarice, anger, envy, pride, sloth, lust and stupidity commonly profit far beyond humility, chastity, fortitude, justice and thought, and have to choose, to be human at all ... why then perhaps we must stand fast a little --even at the risk of being heroes.”

That’s what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: September 14, 2017

by Kevin Coupe

CNBC has a story about digital disruption, noting that “in 2015, less than one percent of executives believed digital disruption could have a transformative impact on their industry. Now, Airbnb is more valuable than Hilton, Tesla is more valuable than Ford, General Motors and BMW, and Amazon's takeover of Whole Foods just put tremendous pressure on competing grocery chains' stocks.”

Now, just two years later, “according to new research from the Global Center for Digital Business Transformation … more than three-quarters of executives now believe the impact of disruption on their industries will be ‘major’ or ‘transformative’.”

But here’s the scary punchline: “40 percent of survey respondents still feel their leaders do not understand the threat, or are responding inappropriately. There is still a large gap between acknowledging the need to transform and actually achieving transformation.”

The story makes clear that business leaders have various choices when facing disruption, but that essentially it comes down to a defensive strategy of retreating/retrenching, or an offensive strategy of disrupting from within.

But I’m not sure that’s really a choice. I think that in the end, disruptive companies love it when the industries they are targeting go into a defensive posture … because that leaves so many more openings for them to exploit. Defensive companies see themselves as having everything to lose, and, as we know, freedom is just another word for nothing left to lose. And the freedom to disrupt can be a powerful thing.

It’s an Eye-Opener.

Published on: September 14, 2017

The New York Times has a story about how food courts are being taken to the next level, as developers now are focusing on opening food halls, which “typically mix local artisan restaurants, butcher shops and other food-oriented boutiques under one roof. Many celebrate quirkiness versus uniformity, and their ability to draw crowds is particularly appealing to landlords battling the growth of e-commerce and changing shopping habits.”

The Times goes on: “Food halls have been around for years, especially in Europe. But the concept is becoming increasingly popular in the United States as consumers demand healthier and better-tasting ‘quick casual’ food options in entertaining environments, observers say. The number of food halls operating in the United States is expected to exceed 200 in 2019, about double the number that were open in late 2016, said Pamela Flora, director of research for Cushman & Wakefield. That would also be a roughly 700 percent increase since 2010, according to research compiled by the brokerage firm.”

Published on: September 14, 2017

On National Public Radio, Marketplace has a story about the bodega, an urban retail store format that usually are owned by immigrant families and that “serve us our first coffee and our post-hangover Gatorades … They know how we like our sandwiches … Their neon lights illuminate our streets 24/7, showing us the way home to our tiny shoebox apartments.”

Except … that’s not the bodega that is the real focus of the story.

Here’s now Marketplace frames the issue:

“In cities like New York or Los Angeles, bodegas are a cornerstone of communities. So imagine the shock when a West Coast-based startup announced on Wednesday it was rolling out a five-foot-wide high tech vending machine with a limited range of nonperishable items and calling it … Bodega.

“As of this morning, about 50 have been placed in apartment buildings, offices, dorms and gyms across the Bay Area so that those in need of certain items don’t have to trek to the corner store. Paul McDonald, one of the co-founders of the company, hopes that by the end of 2018, there will be more than a thousand ‘Bodega’ boxes across the U.S.

“To buy anything from the box, you will need to use an app and the box’s smart technology, which will recognize the items you selected and automatically charge your credit card for them. There is no friendly cashier or bodega owner to ask you about your day, just you, your phone and a box of nonperishables.”

The fact of these high-tech vending machines was not as offending to some as the name chosen by the founders, and social media exploded with reactions to what some saw as the misappropriation of the name “bodega.”

The founders initially said that they believe the name is a canny choice and not culturally insensitive.

But Paul McDonald, one of the co-founders, has subsequently posted the following: “When we first came up with the idea to call the company Bodega we recognized that there was a risk of it being interpreted as misappropriation. We did some homework — speaking to New Yorkers, branding people, and even running some survey work asking about the name and any potential offense it might cause. But it’s clear that we may not have been asking the right questions of the right people.” McDonald has promised to “review” the feedback it has received, but has not promised a name change.

Published on: September 14, 2017

Community-owned PCC Natural Markets, based in Seattle, announced yesterday that it is changing its name to PCC Community Markets, which it said would coincide with the creation of a new logo and new brand campaign.

Cate Hardy, the company’s CEO, noted that PCC started as a local food buying group in 1953, and that “as a community-owned co-op, we think about things differently, from our dedication to staff and our deep relationships with local producers, farmers and ranchers; to what makes it onto store shelves; to why we believe cooking food from scratch in each store every day is one of the most important things we do. The ‘why’ behind every decision we make starts with our community, and we want our name to reflect that commitment.”

PCC said that several new introductions reflect that local orientation, including a local, organic, non-GMO, grass-fed, animal welfare-certified yogurt from the nation’s only certified 100 percent grass-fed dairy, a spirits shop highlighting products from the Pacific Northwest, and a private-label line of fresh, ready-to-cook meal kit components that includes marinated and seasoned organic, non-GMO or grass-fed meats and fresh, organic vegetables.

Published on: September 14, 2017

Financial Review reports that Panasonic has introduced a “moveable fridge” that “responds to voice commands and brings food when it is summoned … The prototype uses similar sensor technology to robotic vacuum cleaners that scan the room to avoid crashing once they have left the docking station.

“The company also reportedly plans to add a warming plate to the top of the fridge, to keep food hot as it's transported around the home.”

The new refrigerator was unveiled at the Internationale Funkausstellung electronics trade show in Berlin, Germany.

The story notes that at the same show, Panasonic “floated the concept of a ‘Sustainable Maintainer’ – a washing machine that launders clothing items individually, scanning the label for washing instructions and examining how dirty it is. After it washes and dries the load a robotic arm picks up each item, folds it and places it onto a shelf within the unit.
The products unveiled are still prototypes, with no announcements made about if or when they would be introduced to the market.”

Published on: September 14, 2017

Kroger and Lidl has gone to court and filed a joint stipulation for dismissal of a trademark infringement case that Kroger brought against the Germany-based discounter earlier this year.

The case concerned Lidl’s Preferred Selection private label brand, which it is featuring in its US rollout; Kroger charged that it was too close to its own Private Selection own-label brand.

A judge denied Kroger’s request for a preliminary injunction against Lidl last July, and the case was scheduled to go to trial in January 2018.

While details behind the agreement were not divulged, Will Harwood, Lidl’s US spokesman, said that “Lidl’s launch in the United States has been a great success so far. We look forward to more store openings, and are pleased to continue to offer our customers Lidl’s Preferred Selection.”

Published on: September 14, 2017

• Marketing Daily reports that a new study from Deloitte says that “last year, 51% of grocery purchases were influenced by digital media or information somewhere along the path to purchase,” a shift that “brought it on par with categories such as health (51%) and apparel (56%).”

The story goes on: “Fully 80% of shoppers surveyed have used a digital device to browse or research grocery products, tapping sources such as manufacturer and grocery retailer websites. More than three-quarters (77%) report using digital touchpoints such as recipe websites and blogs to drive awareness and find inspiration.”


• Reuters reports that Amazon “is preparing to open a 1 million square-foot warehouse near Mexico City … part of an effort to boost its presence in Mexico’s nascent e-commerce industry.”

According to the story, “Amazon is a relative newcomer to Mexico; it opened its Kindle e-books site to Mexican customers in 2013 and expanded into sales of physical goods just two years ago. But it is growing much faster than rivals such as Wal-Mart Stores Inc, and is already the nation’s third-largest online retailer. Amazon posted $253 million in sales in Mexico last year, more than double the year before, according to market research firm Euromonitor International.”

Published on: September 14, 2017

• Minnesota-based CobornsDelivers announced this week that it is introducing a new fall meal kit menu, including a selection of school lunches. According to the announcement, “Packaged in sturdy brown bags, the dietician-designed lunches come with the perfect mix of whole grains, lean protein, dairy, and fruit/veggies to give kids a midday energy boost—and a treat they will look forward to all morning long.

CobornsDelivers is the online grocery ordering and home-delivery service owned by St. Cloud, Minn.-based Coborn’s, Inc.


• In Minnesota, the Star Tribune reports that “HGTV stars Chip and Joanna Gaines are teaming with Target to roll out a new home and lifestyle brand … The new brand, Hearth & Hand with Magnolia, will be exclusive to Target. It will launch Nov. 5 and will be a multiple-year partnership unlike Target’s limited-time collaborations with celebrities and designers such as Victoria Beckham.”

According to the story, “The brand is one of a dozen-plus exclusive brands Target will roll out over the next two years as part of its strategy to revive sluggish sales. It already has introduced two new clothing lines - A New Day, which will replace longtime brands Merona and Mossimo, and the men’s clothing line Goodfellow & Co. It’s also adding an affordable wine brand, a modern decor home line and a new athleisure brand.”


• The Wall Street Journal reports that Target “said it would increase by 40% the number of temporary workers it hires for the key holiday selling season, kicking off the annual scramble among retailers and delivery firms to staff stores and distribution centers.”

Target said it would hire approximately 100,000 seasonal workers, compared with 70,000 last year.

Published on: September 14, 2017

…will return.