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    Published on: March 12, 2018

    by Kevin Coupe

    Just because the end of the world may be at hand doesn’t mean that retailers shouldn’t see it as a marketing opportunity.

    Take Costco - the company that several years ago got into the mail order casket business because it saw that the avarice of many in the funeral home industry was creating an opportunity.

    These days, Money reports, Costco seems to be tapping into increased fears of nuclear war breaking out between the US and North Korea.

    And so, Costco “is selling $6,000 doomsday preparation kits filled with enough food to feed a family of four for an entire year. Costco’s emergency food packs include freeze-dried fruits and vegetables with 25-year shelf lives, plus other pasta and grains that can last up to 30 years.

    “The retailer also offers smaller, less expensive doomsday kits. The least expensive pack costs $1,000 and contains a year’s supply of food for a single adult — but assumes a diet of just 1,200 calories per day. (The $6,000 kit offers a more generous 2,000 calories per day.)”

    Of course, Costco apparently has been selling the kits for more than a decade. But these days, sales are hot.

    And, go figure, Costco isn’t alone: “Sam’s Club sells a $6,097 four-person gourmet kit with prepared meals like lasagna, teriyaki chicken and beef stroganoff; Walmart sells a cheaper one-year, four-person emergency food kit for $3,634.59.”

    This is a little dystopian for my taste. I was talking to a friend of mine last night about what we’d do if we learned that missiles were heading for wherever it was we happened to be. I have to admit to being rather fatalistic. If I’m home, I gather my family around me and open up the best wine we have. If I’m traveling, I call my family members, and then find a bar and order a really good bottle of wine.

    When I read about these marketing efforts, I could not help but think of the third-season episode of “The Twilight Zone,” written by Rod Serling, called “The Shelter.” It had to do with a group of suburban folks who, anticipating a nuclear attack, turn on each other.

    Serling ended the show by saying, "No moral, no message, no prophetic tract, just a simple statement of fact: for civilization to survive, the human race has to remain civilized. Tonight's very small exercise in logic from the Twilight Zone.”

    Now that’s an Eye-Opener.
    KC's View:

    Published on: March 12, 2018

    Pymnts has a story about how “retailers, both traditional and digital-first, must increasingly cater to customers on digital channels or risk losing business to bigger, more digitally accessible brands like Amazon.”

    But, the story suggests, it is not a level playing field, but one in which digital-first companies have the advantage; they, the story suggests, “were born for this, while their predecessors played by a different set of rules and are now hustling to keep up in a game they barely recognize.”

    Which is why one strategy that may be critical for traditional bricks-and-mortar businesses to embrace is “to absorb newer, more tech-savvy companies to up their digital ante.”

    One example cited is Nordstrom. Even as the Nordstrom family maneuvers itself toward the so-far elusive goal of going private, the company “closed acquisition deals with startup retail tech companies BevyUp and MessageYes.”

    BevyUp is described as “a digital selling tool that puts ‘a sales associate in your customers’ pockets,’ while MessageYes leverages mobile messaging to deliver personalized product recommendations that get smarter the more customers interact with it.”

    The story goes on: “Nordstrom has always taken pride in forging customer connections and initiating style conversations. As customer expectations shift, those connections and conversations must be built in new ways in a new landscape: The conversation can now happen anytime, anywhere. That’s why Nordstrom’s Technology SVP Brian Gill told GeekWire that the acquisitions would reinforce the retailer’s existing strategy.”

    Full disclosure: BevyUp was a business that came out of Consumer Equity Partners, the venture accelerator run by Tom Furphy, who in his spare time - and he doesn’t have a ton - does The Innovation Conversation here on MNB with me. I asked Tom about it, and he said that “BevyUp was the first technology we worked with that truly bridges the precision of digital commerce with the experiential nature of physical shopping. As the lines between retail channels blur and eventually disappear, retailers that leverage technology for shopper engagement within and beyond their walls stand to do very well. Nordstrom has been a great customer of BevyUp and we're excited to see where they take the technology.”

    The approach isn’t unique to Nordstrom. This is exactly what Walmart has been doing of late, with its purchases of such largely digital businesses as Jet, Bonobos and Moosejaw, hoping that it can graft some of those companies’ strands of tech DNA onto its own legacy business model and get some new innovation juice.

    And, this almost certainly is what Kroger wanted when it bid $400 million to buy Boxed, an offer that was rejected by the online warehouse club retailer. “However, Pymnts writes, “that likely won’t stop Kroger and others from searching for a partner to fill that niche, as the grocery wars continue to foist innovation upon supermarkets whether they like it or not. Many grocers have already acquired meal kit startups (or built their own) for this exact reason. For instance, Albertsons grabbed Plated for $200 million last fall.”

    The story goes on: “Across retail, the mentality seems to be, ‘If you can’t build it, buy it’ — and with the rate things are changing, maybe the ‘grab and go’ acquisition method is the best way for traditional retailers to quickly add and deliver the features their customers want.”
    KC's View:
    An important corollary to the “if you can’t build it, buy it” rule is the following: “Once you’ve bought it, don’t muck it up.” It is critical that tradition-bound retailers understand that they need to give disruptors and innovators room to breathe and grow and, yes, even make mistakes; they cannot apply the “we’ve always done it this way” approach that got them into trouble to begin with to the companies that they are buying.

    Traditional retailers can offer support, money, and even some institutional wisdom and context. But if they forget that it is more important for them to learn from these acquired companies than it is to teach them the facts of retail life, then they’ll just be wasting their money.

    These companies, old and accomplished as some of them may be, have to be careful not to breathe their own exhaust. I saw a piece the other day suggesting that food retailers are leading the way when it comes to mobile technology applications, and I’m trying to figure out what companies - with a few exceptions - were being talked about.

    If I’m going to be honest about it, I think the list of food retailing companies vulnerable to being disrupted right out of business - many of them regional players that may have too much debt, that may be under capitalized, that may have trouble finding new funding if inflation kicks in and money gets more expensive, that may be be run by folks who have had distinguished, decades-long careers but may not be best equipped to embrace the kind of foundation-rocking innovation that revolution necessary to survive - probably is longer than the list of companies that understand how the world has changed and are actually taking all the necessary steps to do something about it.

    Published on: March 12, 2018

    The Seattle Post-Intelligencer reports that local co-op PCC Community Markets “will open a new location into downtown Seattle's Rainier Square tower. It's both a big development for PCC and for a downtown core that has historically been short on grocery stores, though that's becoming less true as Whole Foods and Target have cropped up recently.”

    The new 20,000 square foot store is likely to open in mid-2020 and will be located in a tower that “will become Seattle's second-tallest building and offer 722,000 square feet of office space, 188 luxury apartment and nearly 80,000 square feet of retail space. A seven-story underground parking garage will also come with it. A ‘luxury-lifestyle’ hotel will also be added to the space.”

    PCC is the largest co-operative food market in the US, claiming more than 58,000 members, with 10 stores operating in the Seattle area.
    KC's View:
    I like the PCC operation a lot, but I find myself wondering if this is a great fit for a cooperative. The rent has to be pretty sizable, and somehow the image of a luxury office building/apartments/hotel doesn’t jibe with my image of the company. Now, this could be my lack of imagination … but when I think co-op, I tend to think about greater good, and this seems a little out of synch with that philosophy.

    Maybe someone will persuade me otherwise. I’m certainly interested in seeing the rationale.

    Published on: March 12, 2018

    In Oregon, Willamette Week has a story about Jeffrey's Flower and Oil, described as “Portland's first true cannabis bodega, a one-stop for tinctures, drinks and munchies.” Owner Sam Watson described it this way: “like a mini Providore with cannabis.”

    (Providore, as it happens, is a specialty food store that MNB was very enthusiastic about when it opened. You can check it out here.)

    Watson says that he’s just trying to satisfy local resident’s desire for something good and something local. “I wanted something new and fresh," he says, ”something that would be different. As a consumer myself - I love cannabis - I almost always go somewhere to get a tasty beverage. Let's curate some stuff that's made here in Portland.”

    The story says that while Jeffrey’s offers a wide variety of competitively priced cannabis, “the most interesting blend … is the simplest - the idea that you can pick up weed and a snack as casually as you'd pick up a bottle of wine and some bread for dinner, or a sixer and some chips at the Plaid. Like a lot of very smart ideas, it feels head-thunkingly obvious the second you're inside.”
    KC's View:
    Head-thunkingly obvious, indeed.

    The bigger question is when traditional and specialty retailers will decide to come at it from the other angle.

    Published on: March 12, 2018

    Daily Meal reports that we can add Weight Watchers to the list of brands getting into the meal kit business, competing against not just the like of Blue Apron and HelloFresh, but also against retailers such as Walmart, Amazon and Albertsons.

    According to the story, “Weight Watchers - which just added DJ Khaled as an ambassador alongside longtime spokeswoman Oprah - is working with California-based meal kit company FreshRealm to roll out quick-prep food and individual grocery products as a part of the company’s new WW Healthy Kitchen initiative, which also includes a new line of kitchen tools (water bottles with built-in tea and fruit infusers, pineapple corers, and nonstick pans) … The weight-loss company has not released pricing information, but consumers can expect to see the meal kits roll out in the second half of 2018.”
    KC's View:
    It seems fair to suggest that any brand that has Oprah Winfrey plugging its products immediately has to be considered a potential force in the category … the question is, is the enemy, or can it be an ally?

    Published on: March 12, 2018

    The Wall Street Journal over the weekend about how some supermarkets are becoming a social hub and even a great place to find a date.

    An excerpt:

    “Supermarkets—those havens of the not-so-scintillating chore of scouring numbered aisles, pushing carts and perusing produce—are finding a new identity as a social hub in communities. Parents now bring their children here to play, retirees gather for Bingo, and singles find romance.

    “Grocery stores are fulfilling the new role as traditional gathering spots, from shopping malls to social clubs like Lions Clubs and Rotary International, continue to shrink from decades-earlier peaks. Malls, in particular, are in danger of extinction. Credit Suisse has projected that up to 25% of malls will close over the next five years, as the internet continues to reshape the way Americans shop.

    “As more shoppers consider alternatives including online shopping apps and meal kits, grocers are finding ways to avoid a similar fate. Many are reinventing themselves as destination spots.”

    Among the companies cited in the story as having deliberately worked to turn their stores into gathering places and hotbeds of romance are Mariano’s, Market of Choice, Lucky’s Markets, and Lowes Foods.
    KC's View:
    This is a sweet story, replete with romantic entanglements developed in the produce department.

    Though I have to admit that when I think about romance in the produce department, my mind immediately goes to Animal House, as Otter engages in cucumber-related repartee with Mrs. Wormer. Classic.

    The thing is, with apologies to my friends at the Journal, this isn’t new. The immediate circumstances driving the trend may be new, but these kinds of initiatives have been going on for years … certainly as long as I’ve been writing about retail, and probably longer.

    The question is whether the trend is sustainable. I think, in fact, that this is the kind of thing traditional retailers have to do in order to compete with online shopping. But it will require a sustained effort, continued investment, and perhaps a rethinking of what is mostly a transactional mindset, with a greater focus on lifetime customer value.

    Published on: March 12, 2018

    For Whole Foods and some of its most important vendors, next Monday is a big day.

    CNBC reports that they will come together on March 19 for a summit designed to “reassure the brands of relations after Whole Foods' sale to Amazon. It comes after a rocky few months for the grocer, which has been trying to shift from a local orientation to a national one, without sacrificing the selection and relations that set it apart from larger peers like Kroger and Albertsons.

    “Some of those efforts, like its move to centralize purchases, preceded its sale to Amazon. However, any change the grocer makes is drawing more scrutiny amid the uncertainty following Amazon's acquisition … A major point of debate for its larger vendors is the new servicing fee, proposed in the last few months, which will charge vendors for Whole Foods' efforts to centralize its merchandising, sources said. Still, some of the sources noted their reliance on Whole Foods as a customer gives them little power with which to bargain.”
    KC's View:

    Published on: March 12, 2018

    The Associated Press reports that “Tully’s Coffee, which once aspired to challenge Starbucks in the global coffee market, is temporarily closing stores citing a lack of coffee as it undergoes what a spokeswoman called a rebranding.

    However, the story makes clear that very little seems to be clear about either the lack of coffee availability or the exact nature of the rebranding.

    Some context from the AP:

    “Seattle-based Tully’s has had a string of legal and financial troubles, and it closed some stores late last year after being sued for back rent. The company quickly expanded in the late 1990s and 2000s before the stock market’s crash in 2007 scuttled plans for an initial public offering.” In 2013, the company was bought out of bankruptcy by Michael J. Avenatti.

    More context:

    “Actor Patrick Dempsey reached a deal to serve as the public face of Tully’s when Avenatti bought it out of bankruptcy, but he quickly backed out and sued his former partner in 2013. Dempsey alleged that Avenatti had not fully financed the coffee chain as promised and instead had borrowed $2 million against Tully’s assets, at an exorbitant 15 percent interest, without telling him.”
    KC's View:
    And now, some subtext … if the name Michael J. Avenatti seems vaguely familiar to you, it is because he’s been in the news a lot lately. He’s the new attorney of record for Stormy Daniels, the porn actress, who got paid $130,000 by somebody (Donald Trump? Donald Trump’s personal attorney?) to keep quiet about an affair she claims to have had with the future president in 2006.

    Small world, huh?

    Published on: March 12, 2018

    Oregon Public Broadcasting reports that food retailers in the state - including Albertsons, Kroger and Costco, with the support of the Northwest Grocery Association - are spending more than a million dollars to fight a ballot initiative that would impose a tax on sugary beverages and levy a gross receipts tax on the total gross revenues of companies. 

    “The idea of keeping your groceries tax-free is pretty universal,” says Joe Gilliam, president of the Northwest Grocery Association. “That’s why we’re going ahead with this.”

    • A quick update on Flippy, the burger-flipping robot.

    Last week, we took note of a Washington Post story about the “specialized industrial six-axis robotic arm bolted to the kitchen floor,” that works lunchtime shifts at a CaliBurger location in Pasadena. “It takes burger orders through a digital ticketing system, then flips the burger patties and removes them from the grill. It uses thermal and regular vision, as well as cameras, to detect when the raw meat is placed on the grill, then monitors each burger throughout its cooking process…”

    Now, the Post writes, Flippy has been taken off-line, a victim of its own notoriety. So many people went to the burger joint to see Flippy in action that the robot couldn’t keep up with demand. And so, it has been “temporarily decommissioned,” while management works top figure out a way to make the system even more efficient, including retraining “restaurant staff to work more efficiently alongside Flippy.”
    KC's View:

    Published on: March 12, 2018

    Last Thursday I took note of International Women’s Day, but also featured - in a completely different story - a FaceTime video that was shot at Eataly in Chicago. Which prompted the following email:

    On International Women’s Day you choose to highlight a story about a retailer that’s owned by Mario Batali? As someone who seems to support your wife and daughter, I’m surprised with your timing and where you show your support. It is not just the experience, it’s also who created it.

    This raises an important point - that we all have to think this stuff through, examining even unintended consequences and messages, in a climate that has become far more sensitized to missteps and egregious behavior.

    To be honest, I never made the connection. I obviously know about the Batali situation, and know that he is an owner of Eataly. But I didn’t connect the two. Frankly, the Eataly video was the one ready to go last Thursday … I shot it a couple of weeks ago, and wasn’t thinking about International Women’s Day.

    Two things, though. First of all, Mrs. Content Guy held the camera while we were there. We talked a bit about how all evidence of Batali has been erased from the store, but it never occurred to either of us that I should not do the piece.

    Second, it is worth pointing out that one of the other owners of Eataly is Lydia Bastianich … so, looked at from another angle, I actually was highlighting a woman-owned business.

    But your essential point remains a good one, and worth thinking about.

    On the subject of Toys R Us’s apparent impending demise, MNB reader Glenn Cantor wrote:

    I thought about Gordon Gekko when I read the article about Toys R Us.  Greed killed this company, and is about to take away the jobs from the people who work in their stores.  Also, it is taking away the joy children have from shopping in a toy store with their parents.  (Walmart is just not the same.) 

    The thing is, there is nothing anyone in operations or marketing could have done to improve the actual operations of Toys R Us to make it a viable company.  Most of their stores are vibrant, fun, and updated.  The investors loaded the company with debt in order to suck the cash value out of the business, without any consideration for other stakeholders or the overall public good.  While this is sadly legal, it is certainly immoral.

    Hard for me to imagine Toys R Us being “vibrant, fun, and updated.” Sorry.

    From another reader:

    My very young son received a Toys R Us gift card for Christmas so went to go spend it today before the doors shut.  Walking into the store saw a young girl walking out very happy and proud of her new toy, was pretty cool to see.  Somewhat depressing that children will no longer have a easily accessible store dedicated to just toys available.  Going to Target or Walmart just isn’t the same experience for a kid. 

    Maybe I was a bad father, but I kept my kids as far away from Toys R Us as I could.

    On another subject, from an MNB reader:

    Had to share this Kevin, full disclosure I am an Amazon fan.  My computer monitor died this afternoon(Saturday).  I thought I would get a cheap one as I don't use my desktop as much anymore.  I opted for a $59 Sceptre model, just fine with me.  Checked Walmart site first, I could pick up in store by Wednesday the 14th, or get it 2 day shipping, also by the same date!  Apparently weekends don't count in the 2 day shipping, as the order would not have been acted upon until Monday.  So I ordered it late in the afternoon Saturday from Amazon, and it will be delivered Monday.
    Where do you think I will buy my next item on short notice?  'Nuff said!

    Truer words…

    The other day we took note of a Boston Globe report on Daily Table, a two-store nonprofit “designed to bring healthy, affordable food to inner-city neighborhoods with limited grocery options.” The store’s mission: stock food that has passed its sell-by date, salvaging still perfectly good food from the landfill and getting it to people who need it.”

    MNB reader Philip Herr responded:

    This is a fascinating story. Since retiring I have been volunteering at our local food pantry. The bulk of the meat and bread we stock is day-old donations from our local stores (Thanks Stop & Shop and Panera!). This model may help our mission become redundant — which is not a bad thing.

    Regarding the decision by some companies, facing a tight labor market, to eliminate drug testing, one MNB reader wrote:

    Forgoing drug tests also reduces the cost of hire by $95 - $125 each. And with industry turnover above 50% you can see the financial implications. Dropping them also
    reduces “time to hire” and gets new hires in the job sooner.

    Got the following email from MNB reader Bob Vereen:

    At my local Walmart in Avon, IN, yesterday, I noticed a huge painted PICKUP on the building exterior where customers could pickup web purchases. Previously, signing was much more modest. This big sign might help stimulate even more pickup business by alerting people to its features and availability.

    Finally, thanks to all the MNB readers who, after reading the obit for Russ Solomon, the founder of Tower Records, suggested that I watch a documentary about the store entitled, All Things Must Pass – The Rise and Fall of Tower Records.

    I’ve not seen it, but it is now on my list.
    KC's View:

    Published on: March 12, 2018

    The Boston Globe had an extraordinary story over the weekend about how almost half the New England Patriots players who were on the team’s first three Super Bowl title teams between 2002 and 2005 now report that they are suffering from brain injuries.

    Let’s say that again, in the words of the Globe: “Some 42 of about 100 Patriots who were members of New England’s first three Super Bowl title teams have alleged in a landmark class-action concussion suit against the NFL and the helmet maker Riddell that they have experienced symptoms of brain injuries caused by the repetitive head impacts they absorbed in games and practices … While there is a story behind every NFL player who has filed a complaint alleging brain damage, the numbers alone bring into sharper relief the toll the crisis has taken on elite athletes who once called themselves Patriots.”

    In all, the story says, “more than 340 former Patriots or their estates have sued the NFL and its former helmet manufacturer. The Globe, using the team’s official all-time roster, has for the first time compiled and analyzed a list of the Patriots who allege they suffered brain injuries on the job since the franchise was founded in 1960.”

    Some - but, apparently, not all - of these players joined the suit against the National Football League that resulted in$1 billion being pout aside by the teams in the league to cover medical expenses and claims by players. Ridell, the helmet manufacturer, was not part of the settlement and continues to fight the suit.

    Here’s another passage from the Globe story: “By position, defensive backs led the categories of former Patriots in the concussion suit, perhaps not surprising considering their jobs often demand tackling opponents at full speed, with major collisions ensuing, sometimes with helmets crashing into helmets. Defensive backs were followed by running backs (51), defensive linemen (50), linebackers (46), offensive linemen (44), wide receivers (43), and tight ends (21).”

    Ten former quarterbacks also have joined the suit, the story says.
    KC's View:
    I know that this story is a little outside the lines of where I usually spend my time on MNB, but I had to bring this story to your attention for two reasons.

    First, the numbers are extraordinary. The impact of brain injuries on current and former NFL players has become well known up to this point, but somehow these numbers paint the situation in much starker terms. When I saw the headline, I simply had to read the story.

    Which leads me to my second point … which is wondering how long, given these kinds of issues, can the NFL remain a viable business model. At some point, does the sport begin to crack under pressure? NFL ratings are down, probably for a lot of reasons … but it seems to me that unless the owners do something dramatic to address this issue, they’re playing defense to a degree that will make the ultimate game untenable and unwinnable.