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    Published on: December 18, 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 a Monday FaceTime with the Content Guy.

    When Mrs. Content Guy and I went out the other day to do some actual bricks-and-mortar holiday shopping - something that I’m sure will shock people who believe that I only shop online, and hate the physical shopping experience - one of the places we went to was the Apple Store in the local mall.

    I think it is fair to say that it isn’t really fair to compare all bricks-and-mortar to the Apple Store, which offers one of the best shopping experiences available.

    Except that this time, it wasn’t. At a time when Apple is emphasizing its positioning as a luxury brand as opposed to being a technology brand, I’d suggest that at least based on this experience, they’re not getting it done.

    We walked inside to look at a few things, and stood around for about 10 minutes waiting for someone to help us. Nobody did. There were lots of folks in red Apple t-shirts standing around - more, in fact, than there were customers - but they seemed more interested in talking to each other than to customers. I finally went up to one of them, and was told that if I wanted help, I needed to check in with a person near the front door who was holding an iPad.

    Really? Not only did that seem silly considering how many employees there were standing around, but there was no signage to tell me that. Plus, it seems like a policy designed to make it easy for the employees, not easy for customers.

    Another thing. When I started asking questions, I was told that the people in red shirts were assigned to different areas, and were not allowed to talk to customers in other sections. While that may make sense in terms of expertise, a store like Apple, where they traditionally have depended on big transactions enabled by superior customer service, this seems counterproductive.

    Look. The Apple Store is still one of the best retail stores out there, but even the Apple Store has to bring its A-game every hour of every day. I’m not sure if this experience is an anomaly, or if there s something else going on here. Like, maybe, hubris based on past performance.

    If that’s the case, it does not say good things about Apple or its retail stores. That worries me … because if you stop paying attention to these kinds of things, one day you’re the Apple Store, and the next day you’re something less special, less differentiated.

    Like the Microsoft Store.

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

    KC's View:

    Published on: December 18, 2017

    by Kevin Coupe

    There is a terrific piece in the New York Times about a new group of consumers to which retailers can cater: people who have not retired at traditional ages.

    “The crash of 2008, debt burdens, decreasing income replacement rates and the demise of employer pensions are a few of the trends” have “pushed the number of non-retirees to record levels,” the story suggests.

    There are, the Times writes, “more than 1.5 million Americans over the age of 75, who are still in the paid work force, according to the Bureau of Labor Statistics. While the study does not list their specific jobs, many work at occupations in which skill and brainpower count more than brawn and endurance. Some are self-employed and aren’t subject to mandatory retirement rules. Others are stars in their fields — no one has ever suggested that Warren Buffett, 87, quit investing. And there are others, a growing cohort, who remain at their posts because of financial necessity.”

    But while this isn’t the point of the story, the implication is clear - there’s a growing number of Americans who are not following traditional paths, and who may be worth catering to. It’s a small group, but it is likely to grow, and attention should be paid.

    You can read the entire story here.

    I really liked this piece and its subjects - a 96-year-old Federal District Court judge, an 82-year-old New York City high school teacher, an 88-year-old Nobel Prize-winning neuroscientist, and a 71-year-old Manhattan pediatrician - all of whom have decided, for a variety of reasons to stay active and engaged, eschewing the notion that there should come a day when they should stop working and being productive.

    They remind me of Charles Dickens, Morris West and Robert B. Parker, writers who each died at their desks, writing.

    That’s how I want to go.

    As the pediatrician, Dr. Laura Popper, tells the Times, “There’s no part of me that wants to retire. If you have something you love, there’s nothing else.”

    That’s an Eye-Opener.
    KC's View:

    Published on: December 18, 2017

    Politico reports that two more major CPG companies,Tyson and Unilever, are ending their membership in the Grocery Manufacturers Association (GMA), the major industry trade and lobbying group.

    They join Campbell Soup, Nestlé, Dean Foods and Mars, all of which also recently opted out of GMA.

    In a statement to Politico, Unilever said, “We review and assess our trade association memberships each year and decided not to renew our membership in 2018 as we increase our focus on advocacy aligned with delivering our Unilever Sustainable Living Plan.”

    Tyson said: “Tyson Foods is not renewing our membership with the Grocery Manufacturers Association at this time. While we respect the work of the organization, our company is moving toward a more global discussion about the future of food.”

    Politico writes, “At least six major food companies have now broken with the association as it struggles to navigate deep disagreements within the industry over how to respond to rapidly changing consumer tastes.”

    Roger Lowe, GMA’s executive vice president of strategic communication, tells Politico that “GMA and its board is continuing our work to build the new GMA for the future to meet the needs of long-time and new member companies and of consumers. The food industry is facing significant disruption and is evolving — and so is GMA. We all will continue to evolve and change at an even faster pace. We are always sorry when a member company decides to leave, and hope to work with them on issues of mutual interest in the future.”
    KC's View:
    The food industry certainly is facing disruption and constant evolution - and maybe a little bit of revolution - but the evidence suggests that GMA isn’t keeping up … and certainly isn’t “evolving and changing at an even faster pace” than the industry it is supposed to represent.

    The companies that are leaving GMA generally try to sugarcoat it, not wanting to openly attack their trade association. But it is hard to sugarcoat the reality of the situation.

    Experience suggests that these departures are not isolated incidents; I suspect that there will be more such moves made by companies realizing that many trade associations see their role as protecting the status quo, and defending them from the predations of activist consumers, when in fact these days they ought to be pushing their members to embrace an uncertain future, and realize that their first loyalty ought to be to those consumers.

    The GMA defections ought to serve as an object lesson to every trade association, because while they seem like inside baseball, they actually say something broad and profound about the industry’s relationship to new realities.

    Published on: December 18, 2017

    The Cincinnati Business Courier has a story about Kroger’s first standalone restaurant, Kitchen 1883, opened last month in Union, Kentucky. While attached to a Kroger Marketplace store, the restaurant - named after the year Barney Kroger launched his company - “has its own entrance, its own identity and could easily be an independent restaurant that decided to locate next to Kroger;” it has intentionally been designed to have “its own culture and atmosphere.”

    According to the story, the restaurant “is meant to appeal to a broad customer base … The menu includes wraps, a burger, craft-beer-battered cod using locally made Braxton Brewing beer, crab remoulade salad and an appetizer called roasted cauli-sprouts among others … It also features a full bar, including six beers on tap, a wine list,” and a high-end bourbon selection to reflect its Kentucky location.

    The Courier notes that “Kroger opened the restaurant on the southern fringe of Greater Cincinnati rather than in a central location partly so it can try things out before making a big splash. It can treat the Union location as a test kitchen … Kroger is working on what’s next for its restaurant concept, Howard said. It’ll consider where it might work best for future locations and whether another concept might work better in another area of the country. Kroger has 2,793 stores in 35 states and the District of Columbia, so it has plenty of room to roam.”
    KC's View:
    To me, it is always about share of stomach … and I think Kroger is very smart to look for new ways to get in touch with consumer tastes and priorities. The next step is to not wait too long for the next iteration … speed is a key here. And yes, that even means a willingness to fail.

    Published on: December 18, 2017

    The Wall Street Journal has a story about how bricks-and-mortar retailers “can thrive in the age of Amazon,” using as an example the thriving Bellevue Square mall in Bellevue, Washington, just east of Seattle, where ownership says “retailers are lining up to pay $100 a square foot for store space, about three times the industry average.”

    Owner Kemper Freeman tells the Journal that while retail in the US has been overbuilt, he remains optimistic. Some excerpts from the story:

    • “Mr. Freeman insists that reports of retail’s demise have been greatly exaggerated, and he’s prepared to make the case with numbers. He tells me that a 2016 government report totaled retail sales (excluding restaurants, gasoline and automobiles) at $3.4 trillion nationwide. He asks me to guess how much of that was online. I say 15%. ‘No,’ he says, ‘it’s 11%, or $400 billion. And the online sales is less than 10% when including restaurants. Now, it used to be 3%, so it’s growing, and it’s not capped. But it’s still only a fraction of the business. It may someday go to 20% or 30%, but it’s not going to take over the world’.”

    • “How can a retailer flourish in such a daunting environment? By providing ‘emotional fulfillment,’ which is one of Mr. Freeman’s favorite phrases. He means the joy customers take in seeing, touching, sniffing and testing the product before they pull out the credit card. A computer can’t match that experience, Mr. Freeman insists: ‘We are social animals. We aren’t robots who are going to make all our purchases from robots’ … He sketches out a strategy for retail in the digital age. It starts with making the mall an appealing place to visit. Parking is free, he says, and the stores are full of helpful employees. ‘We tell our retailers that one of the primary value added of retail shopping is the expertise that the salesclerks can offer customers,’ he says, ‘They better be knowledgeable about what they are selling, or people will go online or to a discount store.’ He urges his tenants to pay well more than the minimum wage to attract better employees, and he says most of them do.”

    • “Somewhat counterintuitively, he argues that e-commerce is ‘not our enemy’ but is becoming complementary to retail. Here’s his challenge to anyone who thinks digital sales are set to crush the old analog kind: ‘Explain Blue Nile. They were one of the first to sell online jewelry. Blue Nile comes in and blows the door off as one of our most successful stores. Who else? Apple! You can buy your phone online, and they can ship it to your house. But the Apple Store almost everywhere does giant business. Microsoft - same thing. Peloton is another one. They make exercise equipment and have just opened a store next to Nordstrom, highest sales in the country. They’re killin’ it.’.”
    KC's View:
    A couple of notes here, if I may.,

    First, I’m not sure that Bellevue Square is the best example of the mainstream mall business. It is pretty upscale, and my sense of the mall business is that entities like these tend to be in better shape than more mainstream - are I say mediocre - malls. Bellevue Square is in the right location, with the right selection of stores and the right consumer base in a growing and affluent area.

    Second, let’s not forget that Bellevue Square was where the third “365 by Whole Foods” was opened, and then closed in fairly short order because it didn’t live up to expectations and more recently was re-opened because a judge agreed with the mall owner’s assertion that the closure violated the terms of the lease, even though Whole Foods apparently was willing to write a check. People may be lining up to take space at Bellevue Square, but not for every space.

    That said, I agree with the basic premise of the Journal story - that online is not going to capture every sale and put every bricks-and-mortar store out of business. Only a fool would suggest such a thing. Online could capture 10 percent of retail, or 15 percent, or 20 or 20 percent. Which doesn’t sound all that bad, but it forces me to ask the following question:

    Which 10 or 15 or 20 or 30 percent of your business are you willing or able to lose? Just curious.

    Published on: December 18, 2017

    The Chicago Tribune reports that “the Trump administration ruled on Friday that livestock deemed ‘USDA Organic’ need not be treated any more humanely than the animals in conventional farming. The decision reverses years of policy at the USDA, which, through the ‘USDA Organic’ label, dictates what may be sold as ‘organic’ food in the U.S.”

    The story says that USDA under the Trump administration is arguing that “the 1990 law creating the ‘USDA Organic’ label does not allow ‘broadly prescriptive, stand-alone animal welfare regulations’ … USDA officials said they were concerned that the proposed rule ‘may hamper market-driven innovation and evolution and impose unnecessary regulatory burdens’.”

    One immediate victim of the change in approach, the Tribune writes, “was a proposed rule, more than seven years in gestation, that would have required ‘organic’ egg farms to give hens at least a square foot of space inside as well as access to the outdoors. The rule would have prohibited the large scale ‘organic’ egg farms … in which the birds were kept in barns containing 180,000, at a density of three per square foot of floor space, and never allowed to set foot outside.”
    KC's View:
    I’m sure the folks at the USDA figured this was a useless regulation that stifled innovation. I guess I wonder if in some circles it will be seen as anti-consumer … because it certainly strikes me as a move that puts the needs of companies ahead of those of shoppers. Which wouldn’t be how I’d play it.

    That said, let the organic companies that want to differentiate themselves ignore the government, and create higher standards on their own, driving business with an equally high level of transparency.

    Published on: December 18, 2017

    Business Insider has a story suggesting Atlanta could win the contest to be home to Amazon’s second headquarters, in which hundreds of communities are participating. The reason: “Amazon is sending a lobbyist to Georgia ahead of the start of its legislative session next month,” which has created “speculation that Amazon is taking a closer look at the state as the potential site of its next home.”

    Amazon has said it is looking for a population of at least one million people, a strong infrastructure and an educated workforce.

    • In the UK, the Guardian reports that “Amazon could face an investigation by the Advertising Standards Authority (ASA) over complaints that its premium service is failing to deliver on time in the run-up to Christmas.

    “Amazon Prime claims to offer ‘unlimited one-day delivery’ but customers have contacted the advertising regulator to say it is falling short of what is promised.”

    The ASA confirms that it is considering whether to launch a probe into Amazon.
    KC's View:

    Published on: December 18, 2017

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

    • The Associated Press reports that sources tell it that Campbell Soup is in negotiations to acquire pretzel maker Snyder’s-Lance. neither company has commented on the rumor.

    • The Boston Globe reports that Roche Bros. has made a deal to open a Brothers Marketplace store - a small format store with a stronger emphasis on fresh and prepared foods - in a building owned by the Massachusetts Institute of Technology (MIT) in Cambridge’s Kendall Square. The goal, the story says, is to bring a modern supermarket to an area where “you can find some of the brightest minds in the world and some of the biggest companies in technology and life sciences.”

    • The Wall Street Journal reports that “food costs are ticking up after a multiyear glut of many staples. But consumers aren’t paying much more yet because grocers, discounters and online retailers are all holding down prices to win business.

    “Higher prices for vegetables, beef and eggs helped push the food portion of the producer-price index up 3.5% annually in November, according to the Labor Department. Meanwhile consumers paid just 0.6% more for groceries that month than a year earlier, the department said on Wednesday. The spread between producer and retail prices is the widest in more than three years, according to Barclays.”

    Seems pretty clear that while costs are up, competition means that prices have to be kept at a certain level. BTW … if prices have to be kept in check, that also means that even if lowered corporate taxes are implemented, in the food business at least, it is unlikely that there suddenly will be higher salaries and more jobs. CEOs still will be rewarded based on high investor rewards and low labor costs, and now they’ll have the added incentive of pricing pressures.
    KC's View:

    Published on: December 18, 2017

    …will return.
    KC's View:

    Published on: December 18, 2017

    In Week Fifteen of National Football League action…

    Chicago 10
    Detroit 20

    LA Chargers 13
    Kansas City 30

    Philadelphia 34
    NY Giants 29

    Cincinnati 7
    Minnesota 34

    Baltimore 27
    Cleveland 10

    Arizona 15
    Washington 20

    Green Bay 24
    Carolina 31

    NY Jets 19
    New Orleans 31

    Miami 16
    Buffalo 24

    Houston 7
    Jacksonville 45

    LA Rams 42
    Seattle 7

    Tennessee 23
    San Francisco 25

    New England 27
    Pittsburgh 24

    Dallas 20
    Oakland 17
    KC's View: