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    Published on: October 12, 2017

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    Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

    I recorded this week’s FaceTime at the Samsung 837 Experience store, located in New York City’s downtown meatpacking district, just across the street from the HighLine - it was one of the places we visited during the recent GMDC Retail Tomorrow conference, and I think I can safely say it was a highlight.

    One of my criticisms of Microsoft when it started opening brand-centric bricks-and-mortar locations was that they seemed like pale imitations of the Apple Store - a comparison that didn’t make Microsoft look any better when they’d open stores in the same shopping centers, often nearby Apple Stores, and it was obvious just from looking inside that the Apple Stores were almost always busy, and the Microsoft Stores, not so much.

    This Samsung store, on the other hand, is something completely different - while it is a flagship facility that couldn’t and wouldn’t be replicated in a traditional mall, there are differentiated elements about the experience that easily could be. From the virtual reality games that they let you play to the enormous video wall, from the smart appliances on display to the coffee shop and desks where they encourage people to come in and spend time - the Samsung 837 Experience is all about being immersive.

    That’s a great lesson. It seems to me that being immersed in the product experience is a valuable and differentiating approach to marketing - whether you are selling a virtual reality system or smartphones, or tomatoes, bread and cheese, or cookware and HBC products. The goal is to create connections between the customer and the product, and to turn physical retail into a kind of stage where the connections can be enabled and nurtured.

    The more tactile the retailing experience, the more people will seek it out because that’s largely something that online retail can’t offer.

    And by the way, I don’t care if you are Albertsons or Wegmans or a 15,000 square foot independent … creating an immersive, tactile experience is more about imagination and creativity than big budgets.

    If you’re in New York, I encourage you to visit the Samsung 837 Experience store - it is a terrific example of what imaginative, immersive retailing can be. I’m pretty sure that they’re less interested in actually selling stuff than in creating a brand connection that is both relevant and resonant.

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

    KC's View:

    Published on: October 12, 2017

    by Kevin Coupe

    Interesting piece in the Wall Street Journal about how car market Hyundai has decided to “shake up the way its dealers sell cars,” reasoning that in a world where consumer buying habits are rapidly changing, it cannot afford to do business the way it always has.

    The program is called “Shopper Assurance,” and it starts by allowing car shoppers - many of whom don’t like going to car dealerships, and who have specific ideas about what they want to buy because of online research - to designate where and when they want to do their test drives; it can be near their homes, or near a local coffee shop, or at work. And, Hyundai also will offer a three-day money-back guarantee on all car purchases.

    According to the story, “Hyundai also plans to be more transparent on the pricing published on dealer websites, and will work to speed transactions by allowing customers to complete most of the paperwork before stepping into the showroom.

    “Dean Evans, chief marketing officer of Hyundai Motor America, said dealers aren’t forced to participate in Shopper Assurance, but he expects most will. The money-back guarantee has been tried in the industry before, but it isn’t a standard practice—most sales, in fact, are final.”

    Evans says that the company has come to the realization that it needs to address issues other than quality, for which Hyundai has a good reputation. But that doesn’t seem to be enough - recent years have had stagnant sales, and US sales this year are down 13 percent. (Sales in general are off in the US car business, but at the moment they’re worse for Hyundai than for most other car companies.)

    It is a good and Eye-Opening lesson for every kind of retailer. Now is not the time to do pretty much anything the way it used to be done. If your customers are encountering essentially the same shopping experience as they did one, two or five years ago, then you probably are missing an opportunity to drive new traffic and sales.
    KC's View:

    Published on: October 12, 2017

    Kroger said yesterday that it is exploring strategic alternatives for its 780-unit convenience store business, and has hired Goldman Sachs to help it with a possible sale. Kroger’s c-stores do approximately $4 billion in sales annually.

    "Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake a review," says Kroger CFO Mike Schlotman.

    The announcement came at an annual investor meeting in New York, where Kroger unveiled what it is calling its “Restock” program - spending $9 billion over the next three years on capital projects and improved employee compensation, while cutting costs in certain business segments, all as a way of building up a strong defense against all the new and insurgent competition it is facing from both bricks-and-mortar and e-commerce companies.

    We have the scale, the data, the physical assets and human connection to win," said CEO Rodney McMullen. "Restock Kroger builds on our strengths and strategically repositions Kroger to accelerate our customer-centered efforts in order to create shareholder value.”
    KC's View:
    It seems pretty clear that Kroger is moving a bunch of pieces around the board, with the understanding that it cannot stand pat in any way, shape or form if it wants to continue to be competitive. I agree with McMullen’s observation that the company has “the scale, the data, the physical assets and human connection” to be competitive, though I suspect that one of the continuing challenges that it faces - along with other companies of its size - is how to move faster and faster in making those advantages work for it. Speed, it seems to me, has to be added to the list of competitive advantages.

    Published on: October 12, 2017

    TechCrunch reports that Amazon has launched a new teen-centric service that allows young people between the age of 13 and 17 to shop its site independently and place orders, while allowing parents to review purchases before they go through, as well as pre-set spending limits.

    The story notes that while this is good for both parents and their children, it also “gives Amazon a way to addict a whole new crop of shoppers to its larger Prime platform, which is made available to teens through the service, if parents are Prime members. That means teens can order from over 50 million items that ship for free in two days, and they can take advantage of other Prime benefits like Prime Video and the gaming perks with Twitch Prime.”
    KC's View:
    It is simple. It makes perfect strategic sense for Amazon (or any other retailer, for that matter) to work to get ‘em while they’re young, and create an environment in which, as they get older, these folks will always think of Amazon as the first, best choice for everything … or at least as a place that needs to be checked before the trigger is pulled on any purchase.

    I think this is a good idea, though maybe a little redundant, since I think most teens probably already are hooked on Amazon. But it still makes sense not to be complacent about it.

    Published on: October 12, 2017

    Data and analytics company Teradata is out with a new survey saying that “a whopping 80 percent of enterprises are investing today in AI, but one in three business leaders believe their company will need to invest more over the next 36 months to keep pace with competitors.”

    It won’t necessarily be easy. “Enterprises are anticipating significant barriers to adoption and are looking to strategize against those issues by creating a new C-suite position, the Chief AI Officer (CAIO) to streamline and coordinate AI adoption,” the survey says, adding, “Enterprises expect AI to be a technology with longevity, planning to double their investment in five years and triple it within 10 years. But to maximize this ROI, companies realize they must re-imagine how AI will disrupt all aspects of their businesses and create a suitably agile strategy to gain ROI.”

    Some other results from the survey:

    • “The industries where respondents expect to see the most impact from AI are IT, technology and telecoms (59 percent); business and professional services (43 percent); and customer services and financial services were tied for third (32 percent).”

    • “The top three challenges where businesses expect AI to drive revenue are product innovation/research and development (50 percent); customer service (46 percent); and supply chain and operations (42 percent). This mirrored some of the top areas of AI investment, which include customer experience (62 percent), product innovation (59 percent) and operational excellence (55 percent).”

    • “Eighty percent of respondents report that some form of AI is already in production in their organization, although 42 percent say that there is lots of room for further implementation across the business. Thirty percent still believe that their organization isn’t investing enough and will need to invest more in AI technologies over the next 36 months to keep up with competitors in their industry.”

    • “Business leaders are not as concerned about the impact AI and automation will have on employee morale — only 20 percent see this as a barrier — and even less, 19 percent, are worried about making a business case for AI.”

    You can see more survey results here.
    KC's View:

    Published on: October 12, 2017

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

    Bloomberg reports that Amazon “is willing to team up with competitors Apple Inc. and Alphabet Inc.’s Google if it would help improve customers’ experience with its Alexa voice-activated virtual assistant, an executive working on the platform said.

    “The online retailer, which is already working with Microsoft Corp. on productivity features for Alexa such as calendar interactions, will put the user first in pursuit of any other partnerships, said Toni Reid, Amazon’s vice president of Alexa and Echo devices, who has been on the team since 2014.”

    GeekWire reports that Amazon has announced a $10 million donation over the next five years to, described as “a non-profit that advocates for K-12 STEM education” and “dedicated to expanding access to computer science in schools and increasing participation by women and underrepresented minorities.”

    Good for them. This is smart for all sorts of reasons, including the fact that it helps seed the labor pool.

    • Provocative quote from PepsiCo chairman/CEO Indra Nooyi in Fortune in which she talks about the growing importance of e-commerce - especially Amazon - to her categories; PepsiCo says that it is “on track to hit about $1 billion in e-commerce sales by the end of the year,” according to the story.

    “Our strategy is not about shelf space,” Nooyi says. “It’s about how to get the right clicks so we move up in the search process.”
    KC's View:

    Published on: October 12, 2017

    • Southeastern Grocers (SEG), parent company of BI-LO, Fresco y Más, Harveys Supermarket and Winn-Dixie stores, announced the continued expansion of its Fresco y Más and Harveys Supermarket banners, with eight new stores throughout Florida. SEG will open five new Fresco y Más stores in South Florida, and three new Harveys Supermarkets in West Florida, making the banners the fastest growing in the company.

    • The Chicago Sun Times reports that in Illinois, “the Cook County Board of Commissioners on Wednesday repealed the penny-an-ounce levy on sweetened beverages it passed last November. Wednesday’s final action comes after a similar vote Tuesday in the board’s Finance Committee.”

    The story notes that “the tax has been controversial since it was narrowly passed by the board … Dueling ad campaigns have argued that the tax is either an onerous burden on consumers that is hurting small businesses, or a way to provide desperately needed funds and promote healthy choices and combat child obesity.”
    KC's View:

    Published on: October 12, 2017

    The Associated Press reports that the Boy Scouts of America has announced an “historic change” in policy - starting next year, it will accept girls into Cub Scouts and will “establish a new program for older girls using the same curriculum as the Boy Scouts.”

    The story says that “under the plan, Cub Scout dens — the smallest unit — will be single-gender, either all-boys or all-girls. The larger Cub Scout packs will have the option to remain single gender or welcome both genders. The program for older girls is expected to start in 2019 and will enable girls to earn the coveted rank of Eagle Scout.”

    The plan was approved unanimously by the organization’s board of directors.

    The AP writes that “the Girl Scouts of the USA criticized the initiative, saying it strained the century-old bond between the two organizations. Girl Scout officials have suggested the BSA’s move was driven partly by financial problems and a need to boost revenue.”
    KC's View:
    I’m sure this announcement will be met with derision from some quarters, and to be completely clear, I have very little connection to the Boy Scouts and so have no skin in this game. (I was a Cub Scout for about three weeks, and quit because there was no baseball involved. One of my sons lasted a little longer, but I think quit as least in part for the same reason.)

    That said, I have no problem with Scouting being more inclusive and progressive. Maybe if these values are taught at a young age, they will persist in both genders as they get older and are in a position to continue to promulgate such values.

    Published on: October 12, 2017

    There are those who occasionally accuse MNB about being a bit too rhapsodic about Amazon. So, in the interest of fairness, we offer the following email from MNB reader Craig Espelien:

    I wanted to share my recent experiences with Amazon as I know most folks seem to think they are either the greatest ever or that they are the scourge of all things retail. I do not see them either way - they are simply another retailer who has a pretty large array of items and they are pretty convenient to shop at. I am not a prime member as I see that as a slippery slope to buying everything (regardless of price) from Amazon and I still use a lot of bricks and mortar for my needs (Costco is where I tend to go for most of my bricks and mortar stuff). Essentially, I see Amazon as “Target” as compared to Walmart (too bad for Target - many purchases I used to make there I now make at Amazon).

    That being said, Amazon has some challenges with their business model - both from a consumer and a supplier perspective.

    My last two orders from Amazon (the first was books and a power supply and the second was for pillow case covers) had errors - the first sent me an extra copy of a book (useless to me, cost Amazon some fraction of the sell price). The second sent the wrong size pillow case covers (ordered four king and two standard, received four standard and two king). Amazon will lose $ based on me having to ship the extra standards back - but now I have to re-order the king size (the option to re-order on a shipping mistake is no longer there) and probably will have to wait to buy them as I received free shipping on the pillow case covers and replacements will not achieve the minimum on its own. Disappointed and inconvenienced - but have pretty low expectations of Amazon’s service anyway. I have more issues with shipping from Amazon than ANYONE else I buy from online - but end up there due to convenience (by the way, if you are shopping for specialty items Amazon is no where near the cheapest - simply the most convenient). Sort of interesting and leads to my next point.

    As a supplier who has used (and is trying to use again) Amazon for fulfillment, some suppliers are getting frustrated with Amazon’s return policy. It used to be that the first line of defense was to provide the supplier with a way and a means to satisfy the customer so they would keep the product (in a past life it was mainly setup assistance as you would be surprised how many people can’t follow simple instructions - but perhaps you would not be surprised) and not clog the system with returned items. That has recently changed - Amazon has made it monumentally easier to have the buyer simply give up and return the item rather than even attempt to resolve the situation (as a side note, my return experience above reflects that - I would much rather have done a simple exchange of standard size for king size but I could not find that option). This is bad for suppliers as this creates all sorts of headaches and increases in cost - that Amazon does not have to bear. They actually can benefit from it as they can sell of the merchandise at greatly reduced prices and simply charge the supplier for their profit. We did not select Amazon as a channel we could pursue based on this.

    Anyway, I know you are a big fan of Amazon and their eco-system but I will be on the fence for a long time before I let an incredibly average (albeit convenient) retailer that close to my life.

    Thanks for the insight. I have to say that your experiences as described above are completely different from the experiences that I’ve had … I have high expectations, and rarely have been either disappointed or inconvenienced. As a consumer, I find that they routinely over-deliver on their promises, and as a book author, I’ve been thrilled with Amazon’s ability to sell my books.

    But clearly there are two sides to every story.
    KC's View:

    Published on: October 12, 2017

    In game five of the American League Divisional Series, the New York Yankees defeated the Cleveland Indians 5-2, winning the best-of-five series and moving on to play the Houston Astros in the AL Championship series, which begins on Friday.

    And in game four of their National League Divisional Series, the Washington Nationals defeated the Chicago Cubs 5-0, evening the best-of-five series at two apiece and sending it to a fifth and deciding game, which will be played tonight.
    KC's View: