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    Published on: December 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, Kevin Coupe here and this is FaceTime with the Content Guy.

    It is metaphor time here on MNB … and as longtime MNB readers know, I love a metaphor. (It was the great Robert B. Parker who once said, “Life is mostly metaphor.” I agree.)

    The metaphor that I am using this week is the just-opened Governor Mario M. Cuomo Bridge, which traverses the Hudson River north of New York City, connecting Westchester County to Rockland County. The Cuomo Bridge has replaced the Tappan Zee Bridge, has taken more than four years to construct, and cost in the neighborhood of $4 billion.

    To be honest, it is a beautiful bridge … and a huge improvement over the Tappan Zee, which was built in the fifties and for years has been handling more than 130,000 cars a day - far more than the number for which it originally was designed.

    I know a little something about this - because I used to do a round-trip on this bridge virtually every day. In 1978, I was living in Westchester County, and I got a job with the Rockland Journal News as a newspaper reporter - my first real job out of school. (Trivia: At the same time I was working for the Journal-News, Michael Sansolo was working for the Reporter Dispatch in Westchester County …. he in fact lived in the same town I did, and had gone to high school with Mrs. Content Guy, but we didn’t meet until years later.)

    Every workday for two years, I drove across the Tappan Zee, often in an aging Triumph Spitfire that actually was in worse shape than the bridge. But there’s something I remember vividly from that time - the fact that we were writing stories for the Journal-News about how the bridge was in terrible shape and that government was dithering about a replacement or improvements.

    The fact is, New York State didn’t really do anything until other bridges around the country started collapsing, and the state of the nation’s infrastructure became a political issue. But if they’d done something about the Tappan Zee then, instead of waiting more than 30 years, it is a pretty good bet that it would’ve cost less.

    That’s a great metaphor for business. How many times do businesses know they’ve got a potential or actual problem, but don’t do anything about it until forced to by circumstances? Often, I would submit.

    In our first Innovation Conversation podcast, Boxed CMO Jackson Jeyanayagam talked about his experience as head of digital marketing at Chipotle, and said that they knew they had a potential food safety problem even before disaster struck … but that they were in a cycle of growth and profit and that it was hard to stop that particular merry-go-round to do repairs because it was moving so fast.

    But if they had, maybe Chipotle wouldn’t be a turnaround company today.

    When you have a problem, it is better to deal with it now rather than waiting.

    (Go figure … we have a chapter about this in our book “The Big Picture: Essential Business Lessons from the Movies.” The movie is The Wedding Singer … and the book is available on Amazon. End of shameless self-promotion.)

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

    KC's View:

    Published on: December 14, 2017

    by Kevin Coupe

    The Federal Reserve this week voted to raise interest rates - by a quarter of a percentage point, to a range of 1.25 percent to 1.50 percent - for the third time this year.

    Now, that’s not something that MNB normally reports about … but this week it roused my interest because of another story, in the Wall Street Journal, about how Amazon actually has made the Fed’s job more difficult.

    Here’s the logic: “Web-driven comparison shopping complicates Fed decisions on how much and how fast to raise interest rates,” the Journal writes. “Consumer knowledge is keeping a lid on prices that retailers can charge on a wealth of goods, a small but growing factor holding down inflation in the U.S., Japan and other advanced economies.”

    The story goes on:

    “Fed officials, along with central bankers in Europe and Japan, want inflation to rise to an annual rate of around 2%, considered a healthy level for spending, business investment and higher wages. With the U.S. economy expanding and showing very low unemployment, an interest-rate increase would help forestall asset bubbles or other financial dangers.

    “Most Fed policy makers agree they should keep gradually raising short-term rates in the months ahead to prevent the buoyant U.S. economy from overheating. But some are hesitant because inflation remains puzzlingly weak, running below 2% for most of this year. Moving too quickly could stall growth.”

    I just found this interesting. And unexpected. And worth sharing in case, like me, you never thought about it. It’s an Eye-Opener.
    KC's View:

    Published on: December 14, 2017

    Target took a big step yesterday in its efforts to compete with and keep pace with Amazon and Walmart, announcing that it will spend $550 million to acquire Shipt, an Instacart-like grocery delivery service.

    The Wall Street Journal writes this morning that “Target said the acquisition would allow it to offer same-day delivery services in about half of its Target stores by early 2018. It plans to have the service in all major markets before next year’s holiday season. Currently, the retailer has used a partnership with Instacart to deliver groceries in three markets … Target said Shipt will operate as a subsidiary and seek to maintain its partnerships with other chains, but it won’t utilize the customer data of other retailers on the platform.”

    Shipt, like Instacart, uses independent contractors to buy products at retail stores and then deliver them to customers, typically at a slight premium; it also charges customers a $99 membership fee, and a delivery fee for orders below $35. It has a presence in some 70 markets, uses more than 20,000 shoppers, and has worked with retailers that include Publix, Costco, and HEB.

    Engadget writes: “The deal should close by the end of December. Provided it does, Target will join Walmart in scrambling to offer same-day delivery services as quickly as possible. They're clearly concerned that Amazon's widening same-day delivery plans and integration with Whole Foods will cut directly into their core businesses, and they're betting that you'll stick with them if you can get comparably hasty service.”
    KC's View:
    Interestingly, Bloomberg did a story just before the Target-Shipt deal was announced, talking about how companies like Shipt and Instacart have thrived since Amazon acquired Whole Foods, because retailers feel the pressure to do something, anything, in order to keep up.

    In many ways, this deal creates more questions than answers.

    Will retailers like Publix and Costco want to continue using a Target-owned Shipt? It is one thing to outsource your delivery business to a third party, but another to outsource it to your competition.

    Does this immediately put Instacart in play for a possible acquisition? And if it were to be acquired by another retailer - say, Walmart or Kroger - what would that mean to all the retailers doing business with it?

    Will Target screw up Shipt? To what extent will Shipt allow Target to really compete with Amazon and Walmart? And, perhaps more importantly, differentiate it from those two competitors?

    Give Target credit. This was a bold move. It is trying to create its own ecosystem. But the most important thing for it to remember is that this is just one small step in what has to be a continuing journey.

    Published on: December 14, 2017

    The New York Times reports this morning that Walmart is instituting a program “to ease some of its workers’ financial strain, allowing them to receive wages before their next payday.”

    According to the story, “Instead of waiting two weeks between paychecks, Walmart workers can now use an app to access a portion of wages for hours they have already worked … Walmart said the new initiative is intended to help workers avoid costly payday loans and other debt traps, and reduce the stress that comes with financial hardship.”

    The Times notes that the program “also highlights, albeit unwittingly, the financial struggles of the low-wage workers in the retail and service industries. Even as the economy strengthens, many workers in stores and restaurants are not earning enough to make ends meet.”
    KC's View:
    There’s a part of me that sort of feels sorry for Walmart. They do something that should help its employees, and it gets called out for the broader reality that the move exposes.

    But it is a broader reality. Can’t get away from it.

    I wonder if long term, technology might make it possible for people to get paid more frequently. I mean, why shouldn’t people get paid every day if computers can calculate and disburse the funds? Could such a system turn a company into a preferred employer?

    Just wondering.

    Published on: December 14, 2017

    TechCrunch reports that Amazon is expanding “its same-day delivery and one-day shipping service to thousands more markets across the U.S., just in time for last-minute holiday shopping … The market expansion is not just focused on serving major metros, but brings the services to both larger cities and smaller towns in states including Arizona, California, Florida, Illinois, Indiana, Maryland, Minnesota, Nevada, New York, Oklahoma, Texas, Virginia, Washington, Wisconsin and others.”

    The services until now were available in 5,000 cities and towns, and now will be accessible in more than 8,000.
    KC's View:
    The ecosystem expands, as does Amazon’s head start in the delivery business. Boom.

    Published on: December 14, 2017

    Earlier this week, it was reported that France-based mall owner Unibail-Rodamco will acquire Australia-based mall owner Westfield - which owns more than 30 malls in the US, but has been facing tough times because of e-commerce competition and changing consumer habits - in a deal valued at $24.7 billion (US).

    Now, the Wall Street Journal reports that the Lowy family - which founded and controlled the Westfield company - “is making a new bet on the future of retail: that the line between online and bricks-and-mortar shopping will disappear … The company, San Francisco-based OneMarket, will use data to help connect consumers, retailers, shopping malls and brands.”

    According to the story, “The OneMarket platform will collect data from retailers and shoppers and be able to notify a customer via their smartphone as they enter a mall parking lot if a shirt at their favorite store is available. OneMarket could use existing technologies to know where consumers are and determine if they are near partner retailers or malls.”

    The Journal goes on to note that “online shopping has taken shoppers away from many malls, spurring a wave of consolidation as operators sought to add scale and cut costs. But some e-commerce giants are looking to bridge the divide and use bricks-and-mortar to their advantage.”
    KC's View:

    Published on: December 14, 2017

    Tom Sietsema has a terrific piece in the Washington Post in which he visited the nation’s top 10 casual, full-service restaurant chains - often maligned for their “uniformity and ubiquity” that seem at odds with “a culture increasingly bent on personal customization.

    In evaluating the chains, Sietsema found some surprises. An excerpt:

    “I surprised myself at one restaurant when I took home leftovers — something I seldom do even in independent establishments. Other lessons: Mashed potatoes are almost always better than french fries, ‘lite’ applied to a dish might as well be a stop sign, and when a picky friend calls something ‘entirely edible,’ it’s the equivalent of a rave.”

    Fun and informative piece, and you can read it here.

    Spoiler alert: The worst of the chains he visited was Buffalo Wild Wings. The best was Cracker Barrel. Go figure.
    KC's View:

    Published on: December 14, 2017

    • Ahold Delhaize-owned Peapod announced that it is launching its “first ever text-to-order grocery application. With the Chat-to-Cart platform from StorePower, shoppers can use their phones' text feature to type, speak and even use popular emoji icons to build and update their Peapod carts … the list can also be shared across multiple family members for an all-inclusive weekly shop and even synched up with voice activated assistants for voice-to-text convenience. The Chat-to-Cart launch follows a string of recent innovations launched by Peapod that are geared towards the connected shopper including Peapod's award-winning mobile app and Peapod's voice activated Alexa skill.”
    KC's View:
    The thing is, we all are going to be interacting with our computers - and through them, with a wide variety of entities, including retailers - in new and exciting ways. Tapping on a keyboard is going to be seen as quaint, as something from the distant past.

    Which reminds me of a scene from Star Trek IV: The Voyage Home

    Published on: December 14, 2017

    • In Canada, the Globe and Mail reports that Sobeys “will finally launch its FreshCo discount chain in Western Canada next year,” as it converts “almost 65 of its 255 Safeway and Sobeys stores in Western Canada to FreshCo, with the bulk of the changes coming in the following four years.”

    The story notes that “Sobeys already runs 91 FreshCo stores in Ontario and has been considering for years moving beyond that province with the low-cost format.”

    The Globe and Mail points out that “as Sobeys prepares to introduce more discount stores, it grapples with a customer perception of overly high prices, added costs of rising minimum wages and a massive transformation, dubbed Project Sunrise, which threatens to cause operational disruptions in the coming months.

    “While company executives said they were satisfied with the transformation efforts so far, they warned that Sobeys was heading into its riskiest period as it lays off 800 office staff and slims down its operations, potentially pinching profit margins or sales in the next two quarters.”

    Bloomberg reports that Kellogg Co. is opening a new cereal cafe in New York City’s Union Square, its second in the city following the one it opened in Times Square last year.

    According to the piece, “The cafe will be about fives times larger and feature an Instagram station with props and professional lighting, designed to help customers perfect their social-media posts. There’s a full cereal bar, giant murals of Kellogg characters like Tony the Tiger, a station to heat up Pop-Tarts and a special iron to cook fresh Eggo waffles.” The cafes are seen as “an attempt to generate some foodie buzz” and break out of what has been a four-year sales slump.

    • Mickey Mouse, Luke Skywalker, and the Avengers now can welcome The Simpsons and The X-Men to their neighborhood … Variety reports this morning that “The Walt Disney Co. has set a $52.4 billion, all-stock deal to acquire 20th Century Fox and other entertainment and sports assets from Rupert Murdoch’s empire. The deal between Disney and 21st Century Fox marks a historic union of Hollywood heavyweights and a bid by Disney to bolster its core TV and film businesses against an onslaught of new competitors in the content arena.”

    The deal does not include the Fox broadcast network, Fox News, Fox Business, and its various sports networks and TV stations.

    I mention this latter story because it is a vivid demonstration of how different companies are girding for ongoing competitive challenges and inevitable disruptions. In many ways, Disney is creating its own ecosystem.
    KC's View:

    Published on: December 14, 2017

    …will return.
    KC's View: