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    Published on: October 6, 2017

    by Kevin Coupe

    The New York Times has a story this morning about how Silicon Valley start-up Chowbotics has devised a “device, which it calls Sally the Salad Robot, (that) is aimed at reducing the risk of food-borne illness by assembling salads out of precut vegetables stored in refrigerated canisters.

    “Diners use a touch screen to place their orders, choosing from a menu of recipes or designing their own salads. The machine calculates the number of calories per salad and drops the veggies into a bowl in less than a minute. There is less human contact with the food.”

    Which the robot’s creators hope will lead to less bacteria and fewer viruses, greater food safety, and reduced risk for food business and their consumers.

    It also, of course, lead to fewer jobs for humans.

    Deepak Sekar, the device’s inventor and the founder and chief executive of Chowbotics, “insists that his company’s current focus — which is on the salad bar market instead of restaurants more broadly — means Sally won’t be a job killer,” the Times writes. “He says workers at salad bars could restock the robot, which holds enough ingredients for 50 salads before it needs to be refilled. And he says, restaurants can continue with their usual food preparation methods — relying on kitchen workers to do the chopping or buying precut vegetables.”

    In fairness, he may be wrong. The Times writes, “There is evidence that automation can have a devastating effect on employment. Commercial robots have already begun to eliminate jobs, according to an M.I.T.-Boston University study published in March. Researchers analyzed the effects of industrial robots on local labor markets in the United States from 1990 to 2007, and estimated that adding one robot per 1,000 workers has led to unemployment for up to six workers and has caused a decrease in wages by up to 0.50 percent.”

    Of course, there are those who argue the opposite: See this MNB story from just a few weeks ago.

    An Eye-Opening conversation, methinks.
    KC's View:

    Published on: October 6, 2017

    Bloomberg reports that Amazon “is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses,” a move that will “push the online retailer deeper into functions handled by longtime partners United Parcel Service Inc. and FedEx Corp.”

    The name of the program: Seller Flex.

    The tests originally began in India, but now has found its way to the US, where Amazon has been testing it on the west coast in anticipation of a national rollout next year.

    The story goes on: ”Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on and their delivery to customers’ homes, the people said -- work that is now often handled by UPS and FedEx. Amazon could still use these couriers for delivery, but the company will decide how a package is sent instead of leaving it up to the seller. Handling more deliveries itself would give Amazon greater flexibility and control over the last mile to shoppers’ doorsteps, let it save money through volume discounts, and help avoid congestion in its own warehouses by keeping merchandise in the outside sellers’ own facilities.”
    KC's View:
    What Amazon realizes is that to the degree it can - and the company’s scale make this very difficult - it has to control as much of the customer experience as possible. A superior customer experience was a core value for the company when it began, and that hasn’t changed much … even if the canvas on which it paints is a lot larger and more colorful than in the past.

    Published on: October 6, 2017

    Fox Business reports that Costco is upgrading its home delivery options, offering “two-day delivery on shelf-stable food from its own website,” while also expanding its “fresh-food delivery partnership with Instacart, a startup that delivers groceries from retailers in one day. Both services let Costco members buy food online at lower prices than available under previous options,” the story says.

    CFO Richard Galanti says that while the company still prefers “you to just come in and buy and take it home,” the company would rather offer delivery and lose the in-store business to itself than to the competition.

    According to the story, “The new delivery service, dubbed CostcoGrocery, will offer free shipping on around 500 products for orders of at least $75. Its Instacart partnership will sell around 1,700 grocery products like eggs, meat and fruit, with free same-day delivery on orders of at least $35.
    Both and Instacart previously sold some Costco groceries, but only at higher prices. Prices under the new services will still be higher than available in stores.”
    KC's View:
    One of the things that retailers have to realize is that it doesn’t really matter what they want … there is a growing move on the part of shoppers to a preference to have certain kinds of products delivered, and retailers have to adapt or resign themselves to losing pieces of their business.

    Published on: October 6, 2017

    Dannon yesterday announced that it is ending its endorsement deal with Carolina Panthers quarterback Cam Newton, after Newton in a press conference disparaged a female sports reporter who asked a question about the physicality with which wide receiver Devin Funchess runs his routes.

    “It's funny to hear a female talk about routes,” Newton said.

    While Newton remains under contract to Dannon, the company released the following statement: "It is entirely inconsistent with our commitment to fostering equality and inclusion in every workplace. It's simply not OK to belittle anyone based on gender. We have shared our concerns with Cam and will no longer work with him.” Dannon said it will begin the process of pulling Newton’s ads from the air.

    Gatorade, which also has an endorsement deal with Newton, released a statement: “Gatorade also issued a statement Thursday, saying, "Cam's comments were objectionable and disrespectful to all women and they do not reflect the values of our brand. Gatorade fully supports women who compete in, report on, coach for, or play any role in sport -- on or off the field.”
    KC's View:
    I liked what Stephen Colbert said last night, that it was a shame that Dannon has stopped using Newton in its advertising, “since it was funny to hear a man talk about yogurt.”

    The thing is, Newton has a mother, a significant female other, and a daughter … like a lot of men who behave in a sexist manner. When will these people realize that it is attitudes like theirs that contribute to the holding back of people that they presumably love?

    The New York Times has a long piece today about the Hollywood movie producer Harvey Weinstein, reporting that he has engaged in almost three decades of sexual harassment of employees, reaching at least eight financial settlements during that time. Best I can tell, he’s been married twice and has at least four daughters … and yet engages in the kind of predatory behavior that one can only presume would enrage him if it happened to a member of his family. (It is almost pathetically predictable that Weinstein’s response has been to go into therapy and simultaneously threaten a lawsuit against the Times.)

    It isn’t just football players and Hollywood producers. It is executives in all lines of work (even presidents), people who think that because they have some power, it gives them the right to exploit people who work for them or want to work for them.

    This kind of B.S. has to stop. And it is up to people who don’t engage or sanction this kind of crap to call out the people who do.

    Published on: October 6, 2017

    MarketWatch reports that Sears Holdings owner/CEO Edward Lampert is loaning the company $100 million to help it get through the holiday season.

    This brings to $499.4 million the total amount loaned to Sears by Lampert’s ESL Investments hedge fund, the story says. The terms of the new loan says that Sears can borrow up to another $100 million “by pledging additional properties or assets as collateral.”
    KC's View:
    The very fact that Lampert has a half-billion dollars to loan Sears means that he’s smarter about money than I am … but at what point is he going to realize that this thing simply is not coming back? Just curious.

    Maybe the payoff will be total and uncontested control of Sears’ real estate when it finally gives up the ghost.

    Published on: October 6, 2017

    Call it the inevitable result of the impact of Hurricane Harvey on the state of Texas … “Home Depot and Lowe's Cos. have leased more than a half-million square feet of additional warehouse space since the storm flooded some 136,000 homes in the Bayou City.”

    The story notes that “the additional warehouse space will expand their capacity to store drywall, flooring and other construction materials needed in the city's massive rebuilding effort.”
    KC's View:

    Published on: October 6, 2017

    AdWeek reports that an upcoming holiday commercial for Walmart will feature a direct broadside at Amazon, emphasizing that it is offering free shipping on orders larger than $35, saying, “No membership fee because, you know, we just don’t think you should have to pay $99 a year for the privilege of free shipping.”

    Walmart CMO Tony Rogers made clear in a recent speech that “he wants Walmart to be known for ‘innovation’ and ‘evolution,’ highlighting Walmart’s new partnership with Google (which will enable customers to shop with their voice), online grocery ordering in 1,000 stores (Walmart plans to roll this out in more stores soon), new delivery methods (including Uber), and even automated pick-up kiosks that will feed customers their orders with the touch of a button.”
    KC's View:

    Published on: October 6, 2017

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

    • The Associated Press reports that Netflix is increasing its monthly streaming price by 10 percent - from $10 to $11 - “a move aimed at bringing in more money to outbid HBO, Amazon and other rivals for addictive shows such as ‘Stranger Things’.”

    According to the story, “The increase will be the first in two years for Netflix, although it won’t seem that way for millions of subscribers. That’s because Netflix temporarily froze its rates for long-time subscribers the last two times it raised its prices, delaying the most recent increases until the second half of last year for them.” This time, everybody will see an increase at the same time.

    Netflix, to me, is a total bargain. That it only costs $11 a month is amazing.

    • Costco said yesterday that its Q4 earnings were up 18 percent, to $919 million from $779 million during the same period a year earlier. Total revenue, which includes net sales and membership fees, rose to $42.3 billion in the quarter, up from $36.6 billion a year earlier.

    For the year, Costco reported profit of $2.68 billion, up from $2.35 billion the previous year. Revenue grew to $129.03 billion in 2017 from the previous year's $118.72 billion.
    KC's View:

    Published on: October 6, 2017

    Chiming in on my criticism of Starbucks for having closed down its online store, end customer subscriptions, and insist that if you want bagged coffee you have to go a bricks-and-mortar store, MNB reader Jim Mahern wrote:

    To say the least I was shocked by the "close" in your correspondence from Starbucks. A company should never close a pitch to its valued customers with "Thank You and Farewell". My wife was a development director for Starbucks and I ran two quick service restaurants for several years.The goal for any business is to serve the customer in a way that they want to return, and not say farewell to you. We are still Starbucks shareholders and want them to continue the policies that have made them successful. Hopefully this is just a short sighted hiccup.

    From another reader:

    They totally mis-handled this situation, IMHO.  It could have been an opportunity for Starbucks to build on your relationship, not end it.

    And another:

    There was a time a few years back when companies decided to “weed out” their least valuable customers. Those that added more to servicing than they generated in revenue or profits. Perhaps Starbuck’s new CEO came from that school of thought?

    That said, I absolutely agree with your position — stupid.

    On a broader subject, one MNB reader wrote:

    I read your blog daily and find the points on e-commerce vs brick and mortar interesting.  Both sides seem to have their pluses, with e-commerce for the consumer, winning.

    As a representative of a small CPG company, I find e-commerce refreshing and straight forward.

    I am weary of the power that retailers have held over our heads for so many years.  Slotting fees, reset fees, remodel fees, excessive margins, and exorbitant costs that have nothing to do with selling groceries. 
    So when I hear of supermarkets in trouble, I feel sad for the people that work there, but they brought it on themselves.  If retailers would focus more on selling cases instead of grabbing money, maybe they would not be in such a quandary as how to defend against e-commerce or other threats.

    Warren Buffett invested in the Flying J Truck Stop company the other day, and I wondered if this was an old-world-style investment that did not really take into account where the world is going.

    MNB reader Jeff Moore responded:

    Perhaps they are projecting more traffic and frequent stops ($rings) due to the new Electronic Log Device laws that will go in to effect 12/18/17. Probably more to it than that but could certainly be a factor??

    MNB reader Jeff Halliburton wrote:

    Maybe Warren Buffet’s investment is in anticipation of increased traffic at truck stops, due to the increased shipping brought on by more consumers shopping e-commerce solutions.  In the end, his investment in a “traditional direction” is likely to capture the downstream revenue opportunities created by disruptive companies such as Amazon and Google.

    MNB reader Tom Murphy wrote:

    Interesting, but what happens to demand once there is a movement to autonomous driving trucks?  Now, you and I have both driven across country, and have probably stopped at a number of truck stops (food sucks but the coffee is strong!).  Not sure that guys like us can carry the business.

    MNB reader Mike Hamelin wrote:

    There’s a lot of talk in Michigan about driverless trucks that will convoy on interstate routes, each one mimicking the maneuvers of the one in front of it. So if the lead truck turns into a Flying J…

    When Monty Hall died the other day, I mentioned the Jimmy Buffett song, “Door Number Three.” MNB reader Jeff Gartner observed:

    As a native Chicagoan, I must note that the late great Steve Goodman co-wrote "Door Number Three" with Jimmy Buffett (I didn't know Jimmy Buffet co-wrote it until your column today).

    Steve Goodman also wrote the classic "City of New Orleans" (made famous by Arlo Guthrie), but is perhaps better known these days for his songs about his Chicago Cubs … "A Dying Cubs Fan's Last Request" (he was dying of leukemia at the time) and of course "Go Cubs Go.”

    Finally, I wrote the other day about Lidl:

    I’ve never believed that Lidl will totally disrupt the US supermarket industry; I’ve been doing this way too long to think that. (When I started writing about this industry, there were fears that Cub Foods was going to destroy every other format.) But it can have an impact, both in terms of specific operations and consumers’ expectations.

    Prompting one wisenheimer MNB reader to respond:

    When you started writing about this industry, there were concerns that Ike Godsey would destroy every other format.

    Sad, but almost true.
    KC's View:

    Published on: October 6, 2017

    In the American League Divisional Series, the Houston Astros defeated the Boston Red Sox 8-2, and the Cleveland Indians shut out the News York Yankees 4-0. The Astros and Indians each take a 1-0 lead in their best-of-five series.

    And, in Thursday Night Football, the New England Patriots beat the Tampa Bay Buccaneers 19-14.
    KC's View:
    Got an email from MNB reader David Sari that said…

    Hmmmm, the MNB Sports Desk reported on the Wild Card play in game between Arizona and Colorado but didn’t mention the Minnesota Lynx winning their fourth WNBA championship in seven years?

    Fair point. Consider it mentioned, and hopefully, better late than never.

    Published on: October 6, 2017

    I’m not the biggest Tom Cruise fan. For me, he doesn’t use enough colors when he paints his characterizations, and when one of his movies needs a jolt of energy, the solution generally is to cut to him running someplace. I’ve never forgiven him for the first three Mission: Impossible movies because they seemed completely at odds with the teamwork-centric approach of the original TV series, though the last two have been refreshingly entertaining and a return to form.

    But I was intrigued by his latest project, American Made, the story of Barry Seal, a real-life commercial airline pilot who had a second career during the eighties running guns to South America for the CIA, and then a third career concurrently running drugs to the US for South American cartels. I wasn’t disappointed in the movie - Cruise’s character isn’t morally ambiguous (like in The Firm), but rather is morally agnostic, as in Risky Business … he’s so used to getting by on a smile and improvisational skills, and in so in love with risk, that he doesn’t seem to even think about the ethical implications of his decisions until it is too late.

    That’s a Cruise I’m willing to watch, if only because it means he is willing to commit to a character who is a complete antihero. American Made is an entertaining look at a particular episode in our nation’s history, when foreign policy got a little unhinged. Put it up there with the terrific Charlie Wilson’s War as a strong example of how a movie can be entertaining and still wear its message reasonably lightly. It is, I think, worth a look.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    KC's View: