Published on: January 18, 2018
“Content Guy” Kevin Coupe sits down with Barry Clogan (pictured at left) - a veteran of the e-commerce wars with his share of battle scars - the 2018 National Retail Federation Big Show, to talk about how the fast evolving e-commerce segment is creating a growing chasm between retailers that “get it” and those who don’t. The focus is on customer acquisition, and the importance of focusing on total customer value as opposed to sales and transactions, and the conclusion is that retailers are running out of time to make the critical moves to keep them relevant and successful.
Content Guy’s Note: In the interest of full disclosure, I should note here that Barry currently is president of Retail Solutions at MyWebGrocer, but also spent five years at Tesco, where he led its online grocery rollout across eight countries. I thought his perspective would be valuable, and worth sharing with the MNB community. It was only later that MyWebGrocer stepped in and asked to sponsor it … which didn’t particularly matter in terms of content, because at no point in the interview did we talk about MyWebGrocer. This is not a commercial, or even an infomercial … but I wanted to be completely transparent about it. So, enjoy…
- KC's View:
Published on: January 18, 2018
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.
I have a business lesson yet again this week … but this time, it is a business lesson from the business of the movies, not a film plot or character.
Here’s the background. Director Ridley Scott made this film called All The Money In The World, about the kidnapping of 16-year-old John Paul Getty III. It starred Michelle Williams as Getty’s mother, Mark Wahlberg as a former CIA agent who gets involved in the case, and Kevin Spacey as J. Paul Getty, then the richest man in the world, who refuses to pay the ransom.
As most people know, it all became problematic when Spacey faced multiple allegations of sexual assault just months before the movie was scheduled to be released. Scott made the decision to recast the role, hired Christopher Plummer, and reshot all the scenes in which Spacey had appeared - at the cost of millions of dollars, all the while racing the clock so the film could hit its Christmas release date. Which it did, garnering generally favorable reviews, including very good reviews for Plummer.
But that’s actually where the part of the story in which I’m interested begins. Michelle Williams, who approved of the decision to reshoot, said she’d do it for virtually nothing because she wanted the film to find an audience. Scott didn’t make any extra money for the reshoots, either. But Wahlberg … well, his agents knew when they had leverage, and so they negotiated a $1.5 million fee for just a couple of weeks of work.
The problem was that this was all happening at a time when there was a lot of debate in the film industry about women being undervalued and underpaid compared to men … and suddenly it became a story about a woman being paid less than one-tenth of one percent of her male co-star. And while Wahlberg eventually announced that he would donate his entire reshoot payment of $1.5 million to the Time’s Up legal defense fund that has been set up to help women in every business sector victimized by sexual harassment or discrimination, it took a week of public shaming for him to do so.
Now, let’s face it. These are high class problems concerning people who make millions of dollars for what they do. Nobody should feel too sorry for anybody.
There are several lessons to be taken from this. One is that at the time of all these negotiations, Williams and Wahlberg had the same agents. If I’m Williams, I start to look for new representation. (The agency probably was worried about this, because it added $500,000 to Wahlberg’s donation to Times Up. But again, it took a week to make that decision.)
But here’s the big lesson that I actually think is applicable other businesses.
To me, this was a really obvious potential problem that all the producers should’ve seen coming. If you know you have an inequity that is going to make the business look bad, you fix it. You write a check, you do whatever you have to do to make sure the thing doesn’t come back to bite you in the rear end.
The one thing you don’t do is hold your breath, cross your fingers, and hope nobody is going to notice.
That kind of approach is inevitably not going to be good for business.
But that’s what a lot of businesses do, even when they can see a problem coming from a mile away. Addressing it may mean getting outside of their comfort zone, and so they hope it’ll go away.
Not gonna happen. Almost nobody gets that kind of Hollywood ending.
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: January 18, 2018by Kevin Coupe
One of the examples often cited here about how an industry can be totally disrupted by someone from the outside with a good idea is the hotel business - there’s no question that Airbnb has created an enormous competitive threat to companies in the traditional hospitality space, allowing people to do peer-to-peer rentals in less institutional spaces that often provide a far more intimate view of the locality.
In essentially creating this business, Airbnb has more rooms to rent globally than any hotel chain … and it doesn’t own a room or a building. It is just a facilitator, dipping its beak on every transaction, but providing a service that - go figure - people were yearning for but didn’t know it.
Now, a story in GQ talks about how “hotels are trying to swing things back by enticing long-stay customers with homier, more personal options. To try to steal some business back from Airbnb and its peers, the aggressively hip Standard hotels recently announced Stowaway, a program that gives guests staying for a least a week ‘a feeling of home comfort throughout the duration of their stay’.”
What does this mean exactly?
GQ writes: “ Stowaway guests will be able to ‘curate their own environment on property,’ meaning they can get things like a personal concierge, restaurant reservations, a personalized mini bar, and (pending availability) a Tesla to drive them around. (Also, brands love to use the word ‘curate’ as neo-hipster catnip; to be fair, it often works.) The package is far more appealing than that Airbnb ‘just 10 minutes from downtown’ that didn’t have toilet paper … For those who can afford it (and those who can expense it), Stowaway seems like a pretty good deal - you get all the clean folded high-thread count sheets of a hotel (and a bar downstairs!), with a few good bonuses.”
It may be that high-end hotels are better positioned to fight back against Airbnb and its brethren than more value-oriented hotels, but I do like the idea of fighting back. One can see this happening in a lot of chains, where they’ve replaced stodgy front desks with more casual and, they hope, more responsive setups. And I do think that as time goes on, we’re going to see more hotel companies looking for unexpected, consumer-focused, and yes, Eye-Opening differential advantages that they can use in this war against a disruptor.
The only thing that sort of caught be by surprise was the characterization of the word “curate” as “neo-hipster catnip.” I’ve been saying for more than 16 years that MNB curates the news … I had no idea that neo-hipster catnip was what I was offering up. I’ve also been saying that MNB offers “hand-crafted” commentaries … and I suspect that this might be as bad as “curate.”
- KC's View:
Published on: January 18, 2018Business Insider has a story about how Kroger is rolling out a new technology, dubbed Kroger Edge, to almost 200 stores, with it being “installed on store shelves where paper price tags currently hang. It digitally displays pricing and nutritional information, as well as video ads and coupons for various products … The technology gives Kroger the ability to instantly change prices and activate promotions across its stores, enabling it to undercut sales at other chains and freeing up employees who would otherwise change prices by hand.”
In the future, the story says, the technology will allow Kroger to communicate to in-store shoppers via their smartphones, informing them about sales and product availabilities, and will even “light up underneath the product that shoppers are seeking” based on shopping lists they keep on their phones.
According to Business Insider, “Kroger Edge is currently deployed in only a handful of stores. For now, customers must use one of Kroger's handheld devices to communicate with the system,” but a smartphone app eventually “will enable customers to take advantage of the system with their smartphones.
“Kroger Edge will be available in 200 stores by the end of 2018, but mostly in stores' end caps — the industry's term for displays at the ends of store aisles. It could also start showing up soon in other retailers' stores. Kroger is marketing and selling the technology, which was developed with Microsoft Azure, Microsoft's cloud computing service, to other retailers globally.”
- KC's View:
- Electronic shelf tags are hardly a new concept, but this certainly seems to be a significant step beyond that technology. The notion that such tags actually could be interactive screens, going beyond even dynamic pricing to offer services that create a more dynamic shopping experience … well, that’s kind of cool. And exactly the kin d of thing that retailers need to do to differentiate themselves.
Published on: January 18, 2018A new Retail Preference Index study done by dunnhumby, endeavoring to identify consumers’ favorite supermarkets, concludes that Trader Joe's, Costco and Amazon are shoppers’ preferred stores.
Rounding out the top 10, in order, are HEB, Walmart, Wegmans, Aldi, Sam’s Club, Sprouts, and Whole Foods.
According to dunnhumby, “The RPI study surveyed 11,000 U.S. households and analyzed consumer emotional sentiment for 59 grocery retailers and then combined the survey data with the retailers' financial performance which then created each retailer's preference index.”
in its analysis of the numbers, dunnhumby concluded that the top rated companies shared four characteristics -they were price-focused, quality focused, value-focused and supported by digital execution.
The study goes on: “The second best performing quartile of retailers include some of the higher performing, older grocery banners including Meijer, Publix, and Kroger. This quartile has the highest top of mind (ToM) recall and the second highest financial performance. This group does not perform as well as the top quartile because their price and quality scores are not as strong, but this second group differentiates itself by excelling at secondary preference drivers, such as promotions, rewards, and information.
“Many undifferentiated mainstream banners are delivering minimal value to their shoppers. Even though many have been shopped at for a longer period, they have the weakest emotional connection. They must focus on improving value perceptions and reconnect with their shoppers or profitability will be a challenge in an increasingly competitive market.”
- KC's View:
- I have a lot of respect for dunnhumby’s ability to collect and analyze data, but I cannot help but have a little trouble with the idea that, seen on a level playing field, Publix is less preferred than Aldi.
But that’s okay. They just have a different reference point than I probably would have.
To me, the really important thing is the top three - Trader Joe's, Costco and Amazon - each of which is a completely different take on the traditional food shopping experience. What this tells us, if we are to believe the numbers, is that consumers simply are less enthralled with traditional stores than many would have us believe.
Success is found in the differences, not the similarities.
Published on: January 18, 2018In the UK, the Guardian reports that Tesco has decided to delay changes to its Clubcard loyalty rewards program after “a backlash from customers who objected to it reducing the value of vouchers without warning.” The delay means that instead of making the changes on January 15, they will take effect on June 10.
Here’s how the Guardian frames the contretemps:
“Tesco wrote to its millions of Clubcard customers this week to say it had “simplified” the scheme, with the changes taking effect from 15 January, to make it more straightforward. It said the revamped loyalty card would offer three times the value of their vouchers with more than 100 commercial partners as the standard redemption.
“The retailer said it was ending those offering twice and four times the value, including some of the most popular and longstanding deals, such as meals at PizzaExpress, Prezzo and Zizzi.
“The announcement was immediately met with criticism that customers would gain less from their points and that they had been given no notice about the changes. Tesco said any customers who had redeemed vouchers at three times the value ‘will not lose out’ and should contact customer service.”
- KC's View:
- Tesco always has been a leader in terms of its approach to loyalty marketing … but in this case, leadership means having created enormous emotional investment on the part of its shoppers in a system that has existed for a long time.
You mess with that at your own risk.
Published on: January 18, 2018The National Retail Federation (NRF) was out with its quarterly Consumer View study this week, just as the annual NRF Big Show took place in New York City.
Some of the findings:
• “Whether shopping in-store or online, consumers are typically seeking to buy a certain item rather than just browsing, with 73 percent surveyed saying that’s the case with stores and 54 percent online, according to the report. And in either case, 58 percent rated being able to find what they want quickly and easily as their top factor in determining where to shop. Shopping ‘just to browse’ has shifted to being more popular online (done by 46 percent of those surveyed) than in stores (27 percent).”
• “Among those shopping online, 68 percent expect free shipping even on purchases of less than $50, with 47 percent saying they typically back out if shipping isn’t free. And 38 percent expect two-day shipping to be free while 24 percent expect free same-day shipping.”
• “The quality of customer service is also a top factor in deciding where to shop, cited by 44 percent, along with speed and simplicity of checkout (42 percent) and the ability to try out products (20 percent). Consumers said their overall experience with a brand or retailer is important in determining which to buy from and how often (79 percent each) and how loyal or connected they feel (77 percent).”
• “The survey found 59 percent of consumers are interested in special events retailers hold to draw customers into stores or onto websites, including the ability to try out products, exclusive access to sales, demonstrations and product tutorials. Millennials are particularly enthusiastic about special events – 44 percent said they were “very interested” compared with 25 percent of consumers overall. And Millennial men (60 percent) were more likely to be ‘very’ interested than Millennial women (28 percent).”
• “The report said fewer than a third of consumers were aware of technological innovations such as 3D printing or making purchases through social media (29 percent each), in-app store navigation (28 percent), in-store digital displays (25 percent) or retail messaging apps and online chat (24 percent). But among those that were, messaging apps and chat were the technology that had most often been tried (65 percent) while in-app store navigation was most-cited as improving the shopping experience (63 percent).”
- KC's View:
Published on: January 18, 2018• Walmart announced that it has struck deal with H&R Block, making the tax preparation firm “the sole provider of tax software available at Walmart stores.”
CNBC reports that H&R Blocks’ services will “provide Walmart customers with competitively priced products, free in-person audit representation, unlimited tax advice through live chat, up to five free federal returns and tax identity care, among other features.”
- KC's View:
Published on: January 18, 2018...with brief, occasional, italicized and sometimes gratuitous commentary…
• The Democrat & Chronicle reports that Wegmans plans to try something different when it opens its new Natick, Massachusetts, store in April - “a restaurant serving contemporary Mexican fare.” The restaurant, called Blue Dalia, is described as “a Mexican restaurant and tequila bar offering authentic Mexican cuisine and craft cocktails using ‘market-fresh ingredients’.” Blue Dalia is scheduled to open May 4.
Chef Roberto Santibañez - who has partnered with Wegmans for years on Mexican food offerings and promotions - is Blue Dalia’s culinary director, and says that “guests will see centuries-old tortilla-making on display alongside crushed-to-order salsas, contemporary craft cocktails and of course, an extensive tequila and mezcal selection.”
• The Seattle Times reports that Starbucks has chosen one location in Seattle, a store in the Russell Investments Center that only is open during weekday business hours, to test a no-cash format. Only credit/debit cards and the Starbucks mobile application are accepted for purchases.
The company says it is just a one-store test at this time, as it gauges consumer reactions as well as the impact on operations - it is anticipated that a no-cash policy will speed things up at checkout as well as eliminate shrink.
If they are going to test this innovation, they might as well do it in a building that caters to people with lots of money; Zillow, for example, is based there. Not much chance they’re going to run into folks without credit cards there.
• Quartz reports that this week Dunkin’ Donuts has opened a “next generation concept store” in Quincy, Massachusetts, less than a mile from the company’s original store. it is described as “a brighter, airier, hipper reboot of Dunkin. ‘Donuts’ has been dropped from the name, only the third store to do so. Servers pour drinks from beer-tap-like dispensers, and donuts sit in glass cases. There’s a designated mobile pick-up area in the store, and a dedicated mobile-order drive-through lane outside … The company’s mobile app and its mobile order and pay system are both key components of its operational success.”
Indeed, Quartz writes, it “looks a lot like Starbucks.”
- KC's View:
Published on: January 18, 2018Responding to some of the observations I made yesterday about the Instacart acquisition of Unata, one MNB reader wrote:
I think you raise excellent points about why retailers should be worried outsourcing their customer experience - their core value in the marketplace - to a company like Instacart. But I also understand Instacart made the acquisition and I understand why it could work.
The key question that every retailer needs to ask themselves today isn't just, "How can I differentiate myself from e-commerce (especially Amazon)." They need to be asking themselves, "How can I take the most compelling qualities of the e-commerce experience and deliver that value to my customers, through my existing physical stores.”
There are lots of reasons e-commerce has been successful: the convenience of shopping when and where you like. Access to additional information, like ratings and comparative prices, is built in. Saved payment instruments for speedy checkout. Remarketing ads (the ones that follow you around after you visit a site without making a purchase). Abandoned cart reminders. Personalized messaging. Subscribe and save. People who bought this also bought that. And so on.
I don't know which of these are the magical ones and which of these are just nice to have. I don't know even *how* one would provide some of these as a bricks and mortar retailer. But I suspect that the folks at Instacart and Unata have ideas and if they can execute then they'll continue to find a willing audience in the legions of rightfully-terrified supermarket execs.
Regarding our story about how CVS has pledged to stop ‘materially altering’ all of the imagery associated with its beauty products as a way of being more truthful with its shoppers about what is achievable and what isn’t, one MNB reader wrote:
I think this CVS move is totally on-strategy with its broader health initiatives. They quit tobacco even though it was profitable. They made the decision to remove the candy counter, even though those impulse buys had great margin. This is simply an extension of those physical health policies to mental health.
CVS looks like it’s playing the long game in health and wellness. I applaud their leadership for making these tough decisions and standing for something bigger.
- KC's View: