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    Published on: April 10, 2018

    by Michael Sansolo

    Hope for the best, expect the worst
    Some drink champagne, some die of thirst
    No way of knowingwhich way it's going
    Hope for the best, expect the worst!

    - Mel Brooks, The Twelve Chairs (1970)

    Hope for the best, expect the worst. It is such a cliché. Though somehow, not when turned into a lyric for a Mel Brooks movie.

    I find myself humming that song as I think about some of the comments we get here at MNB about Amazon, arguing that our views of Amazon are overly optimistic.

    I don’t think so, but let’s look at it a different way.

    Essentially there are two likely outcomes as Amazon moves forward.

    Amazon could be as good as the hype, which means Amazon will continue to drastically reshape retail, shopping and maybe more. (Health care? Banking?)

    Or, it is all hype and essentially we are looking at a better funded version of Webvan, headed for a spectacular and inevitable collapse.

    But here’s where “hope for the best, expect the worst” comes in.

    You have to prepare for the first possibility, no matter what.

    Even if Amazon doesn’t become everything that it seems to want to be, it’s obvious the company is changing the world of retail. It’s fear of Amazon that is driving so many moves by other retailers, pushing them quickly toward omni-channel operations and, in the process, changing shopper expectations.

    And at the very least, preparing for a new level of competition will only make you and your company stronger for whatever comes next.

    If I had to bet, I’d wager that Amazon’s impact is going to be fairly large for countless reasons, but it begins with how the company thinks. Because more than anything, that might be why Amazon’s future impact is likely to be so powerful.

    There was a short exchange in part 2 of last week’s Innovation Conversation that should be required reading and re-reading. Tom Furphy, the originator of Amazon Fresh and now the CEO of Consumer Equity Partners, and his colleague Justin Leigh discussed part of the process that led to the checkout-free Amazon Go store.

    As Furphy explained, the Amazon team on the project wrote a press release detailing its success before the project even began.

    Leigh recalled an exchange at the Shoptalk conference about the project from two Amazon executives. As one said, “We had to build many, many algorithms that are far beyond what exist today. We had to take machine learning way past where it was.” At the time when the team wrote the press release and gained approval to start the project, the science didn’t exist to accomplish their goal. Which is to say, it literally could not be done when they began.
    Think about that for a second. Certainly, Amazon isn’t the only company to use the management philosophy of writing a press release in advance of a project to propel a team to action. But that’s not what Amazon did in this case. The Go team actually wrote a press release about a future that was seemingly impossible at the time.

    The group didn’t think about incremental improvements or by counting on rapid evolution. Rather, the group imagined a new future - when the front end would be unnecessary - and built toward that goal. They didn’t ask why something could or couldn’t be done. Instead, they verbalized the biggest challenge and then figured out how to do it.

    A company that imagines a new future and then makes it happen can’t ever be taken lightly. And that in turn means we all need to find new ways of thinking and acting to imagine the impossible and then make it happen.

    And if you don’t … well, you might begin to suffer from a kind of retail vertigo, making it appear as if the world is spinning and making you dizzy. Mel Brooks would call it “High Anxiety”…

    High anxiety ... it's always the same;
    High anxiety ... it's you that I blame.
    It's very clear to me I've got to give in.
    High anxiety: you win.


    In the retail game, though, you can’t let any sort of anxiety win. You, too, have to imagine a new future, and work on making it happen.


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: April 10, 2018

    by Kevin Coupe

    The Washington Post reports that “edible glitter” is “shaping up to be one of 2018’s biggest and most controversial trends: decorating everything from cookies to pizza with a sprinkling of shiny sparkles.”

    According to the story, “Edible glitter has been popping up on more and more food items lately — a natural extension of the childlike rainbow and unicorn trends that have overtaken social media. At first, it was mostly a cake-decorating thing — wedding cakes, frosted cookies and special occasion treats. But last year, it made the jump to coffee, adding an emphatic shimmer to latte art. It showed up in prosecco, which is already sort of sparkly to begin with.”

    Recently, the Post writes, “glitter has made a somewhat disturbing leap into savory foods. Glitter bagels are a thing. One London pub made glitter gravy — its sparkles an odd contrast to the brown, meaty sauce — to cheer up a basic roast. A rainbow glitter pizza from Santa Monica, Calif., got some buzz on Instagram … It’s only a matter of time before people take it one step further. Imagine glitter ramen, glitter burgers, glitter coq au vin — this is our dystopian future.”

    Dystopian is right.

    I don’t have a problem with glitter on cookies and cakes. I wouldn’t choose it, but it does seem sort of appropriate.

    But on hamburgers, in coffee? I don’t think so, but I’m not sure I would go as far as describing this as being dystopian in nature.

    What I do object to - on moral, ethical, gastronomic and aesthetic grounds, and any other grounds you can come up with - is the trend described in this sentence from the Post story:

    “ Several brewers have put it in beer.”

    I’m sorry. That’s a bridge too far. That’s not a dystopian future. That’s Armageddon.

    Except that … according to the Post, the Sasquatch Brewery in my home-away-from-home - Portland, Oregon - made a glitter beer called Gold Dust Woman, and it sold out in less than a week.

    That’s an Eye-Opener. I guess. Though it really makes me want to roll mine.
    KC's View:

    Published on: April 10, 2018

    The Wall Street Journal has a story about how “the Trump administration is pushing to rein in spending for the food-stamp program by nearly $130 billion over a decade, representing a 20% reduction of its current annual budget of $63 billion … This and other proposals from Republicans intend to overhaul the nation’s food-stamp program as lawmakers begin renegotiating the Farm Bill, a sprawling $900 billion piece of legislation that allots about 80% of its funding to nutrition assistance and is set to expire at the end of September.”

    Lawmakers pushing for the changes say that they reflect what they believe will be an improving economy, offering more opportunity to low-income Americans and allowing them to move off food stamps. There is a debate about how many people would be affected by the cutbacks, with Democrats saying it could be as many as a million and the GOP saying it will be fewer.

    However, food retailers are concerned about any such changes, worried that they will lose sales at a time when they can ill afford to do so because of increased competition and resultant tighter margins. Walmart, the story says, generates about $13 billion in annual sales through the program, and in fact is where 18 percent of food stamps are used annually.
    KC's View:
    I have to wonder how many retailers would argue against such a government program if it did not affect them directly.

    I also would suggest that if the GOP is right and hundreds of thousands of people are able to get off food stamps, they actually should have more money to spend in supermarkets, not less. so maybe this wouldn’t be all bad.

    If the GOP is wrong, however, it will leave a number of retailers with lower sales and a number of people without the support on which they count.

    So, there’s an economic question here, as well as an issue of compassion for the less fortunate folks in our society.

    Published on: April 10, 2018

    Roll down the window, put down the top … you can now add Los Angeles to the list of markets where Amazon and its Whole Foods division are teaming up to offer free two-hour delivery through the Prime Now program, and delivery within one hour to Prime members for $7.99 on orders of $35 or more.

    LA now joins Atlanta, San Francisco, Austin, Cincinnati, Dallas and Virginia Beach in having the Whole Foods/Prime Now program, which is being expanded across the US.
    KC's View:
    It seems clear that we are going to see a growing merger of various service at Amazon/Whole Foods, as Whole Foods’ delivery offering, Amazon Fresh, Amazon Prime Now and maybe even Prime Pantry and folded into each other to the extent that they become moire compelling and relevant to the shopper. It’s also about exerting more control over the various experiences, so they are as distinctly Amazon-Whole Foods as possible.

    Published on: April 10, 2018

    In Florida, the Sun-Sentinel reports on how Lucky’s Market, which has 28 stores nationally and plans to open at least 20 more this year, plans to open a dozen of them in Florida, as well as in Montana, Ohio and Colorado.

    Lucky’s has a strategic alliance with Kroger, which in 2016 said it was investing in the niche chain so that it could “significantly accelerate … growth in new and existing markets.”

    The paper seems to be excited about the prospect:

    “The chain has a fun, festive vibe, and encourages customers to sip and stroll around the store jamming to live or classic rock music. Think of it as a cross between a brewery, farmer's market, and the best of several grocery chains packed into one interesting about 45,000-square-foot store.

    “It has four craft brews on tap — Oakland Park's Funky Buddha Floridian among them — for $2 a pint, along with a selection of wines for $3 a glass. Stop by the cafe to grab a glass, clip the special cup holder onto your cart, and you're ready to roll.

    “Lucky's stocks its own brands of products and wines, about 50 percent of them organic, and has a large selection of prepared foods. It cures and smokes its own meats, selling bacon, deli meats and sausages free of antibiotics, growth hormones and nitrates. It also has bulk nuts, candy, coffee and other foods in self-serve bins.”
    KC's View:
    Drinking beer while shopping? That’s my idea of a differential advantage.

    Published on: April 10, 2018

    Temkin is out with its eighth annual “experience ratings” report, concluding that “Wegmans, H-E-B, and Publix deliver the best customer experience in the supermarket industry.”

    The report goes on: “This year, supermarkets earned some of the highest scores in the entire Ratings. With a score of 86%, Wegmans not only received the highest score in the supermarket industry, it received the highest score in the entire Ratings – ranking 1st out of 318 companies across 20 industries. Likewise, H-E-B and Publix earned the second highest scores for both the supermarket industry and the Ratings overall, each with a score of 83%. Aldi and Wawa Food Markets – each of which scored 82% and tied for 7th overall – also ranked in the top 10.

    “Overall, the supermarket industry averaged a 79% rating in the 2018 Temkin Experience Ratings and came in first place out of 20 industries. The average rating of the industry improved by 0.4 percentage-points between 2017 and 2018, going from 78.1% to 78.5.”

    The top supermarkets rated in the Temkin survey, in order, are Wegmans, H-E-B, Publix, Aldi, Wawa Food Markets, Trader Joe’s, ShopRite, Save-a-lot, Food Lion, Meijer, Kroger, Hy-Vee, Winn-Dixie, Albertsons, Safeway, Piggly Wiggly, Stop & Shop, Vons, Giant Eagle, BI-LO, Hannaford, Whole Foods, and AmazonFresh.

    To reach these conclusions, Temkin asked 10,000 U.S. consumers to evaluate their recent experiences with a company across three dimensions: success (can you do what you want to do?), effort (how easy is it to work with the company?), and emotion (how do you feel about the interactions?). It then averaged these three scores to produce each company's rating.
    KC's View:
    Few would dispute the idea that Wegmans, H-E-B, and Publix deliver some of the best customer experiences in the supermarket industry. But Aldi is number four? Save-A-Lot is number eight? And Whole Foods is second to last?

    Unless these folks are grading on some sort of weird curve, it is hard to imagine that this is so. And for me, it makes me a little skeptical about the whole exercise.

    Published on: April 10, 2018

    The New York Times has a story about Nordstrom “will open its first full-line store in Manhattan, a sleek, three-floor home to men’s clothing, shoes and grooming supplies at 57th Street and Broadway.” It is, the story says, “an inauspicious time for retailers,” as Nordstrom’s department store “competitors are selling off or converting some of their grandest stores, not building new ones,” and “the city’s toniest shopping strips, in SoHo and on Madison Avenue, have been littered with empty store fronts.”

    It better work - Nordstrom plans to open an even larger women’s store nearby late next year.

    The new men’s store, the story says, is going to be heavy on service: “If a customer needs a tie at 2 in the morning, he can order it online and a Nordstrom employee will meet him at a store entrance — no matter the hour. Returns can be made by simply scanning an item at a digital kiosk and depositing it in a bin — no human interaction needed.”

    And there will be much more. You can read about it here.
    KC's View:

    Published on: April 10, 2018

    Re/code reports that “since the start of 2017, Amazon has gone on a private-label rampage, releasing at least 60 of its own brands — predominantly in the clothing, shoes and jewelry categories, according to a new study from the research firm L2. Amazon now sells more than 70 of its own brands by Recode’s count, after checking L2’s list with Amazon.

    “With the rapid expansion, the company has silently delivered a message to retailers and brands that have shrugged off its earlier private-label launches as simply tactics that many retailers employ: We’re going big.”

    And, the story adds, “even if many of Amazon’s brands flame out, its private-label approach has the potential to be disruptive because of how much data it can easily analyze about competitor brands that sell on its site - which products and price points are selling, and why - after mining customer reviews.”


    Re/code also reports that “Postmates and DoorDash have discussed a merger that would unite two of the largest restaurant-delivery startups in the U.S. in a bid to take on better-funded competitors like GrubHub, Uber and Amazon … The discussions have been on-again off-again over this timeframe, but there is currently no concrete deal on the table and there are several roadblocks to getting one done. One of the biggest obstacles is the decision of who would run a joint company … It’s also not clear if both sides are convinced they’d gain enough benefits from a merger to justify the risk and difficultly of combining two large private companies.”

    The stakes, the story says, are significant: “By 2022, 11 percent of U.S. restaurant sales are expected to come from delivery orders, up from an estimated 6 percent last year, according to Morgan Stanley Research. That would equate to a $32 billion market opportunity within four years.”
    KC's View:

    Published on: April 10, 2018

    Newsday reports that cooperative retailer “ShopRite plans by early next year to have filled three more grocery store spaces on Long Island that were left vacant by A&P’s bankruptcy … Aside from the three new Long Island stores planned, ShopRite owners have taken over four other former Pathmark or Waldbaum’s locations on Long Island since 2016.”

    MNB fave Burt Flickinger, of the Strategic Resource Group, tells Newsday that “ShopRite is positioned to benefit from an expansion because it is a low-price leader and Long Island is ‘under stored,’ especially on the North and South forks of eastern Suffolk.”


    Nasdaq reports that Albertsons has officially withdrawn its plans for an initial public offering (IPO).

    Albertsons put its IPO plans on hold last year as it worked to improve same-store sales and dealt with growing competitive threats that did not create fertile ground in which to go public. Now, it appears to be waiting until its acquisition of Rite Aid is finalized before embarking on its IPO.
    KC's View:

    Published on: April 10, 2018

    We had a story yesterday about how credit card purchases no longer are going to require customer signatures, which prompted MNB reader Alan Finta to write:

    In regards to the need for signatures going away, you noted, “… many young people don’t learn how to write in cursive, so they have no idea how to sign their names.”  I agree with you, it is a shame.  I have two high schoolers…my daughter’s signature is beautiful, but she’s the “artistic type.”  My son’s signature is forever stuck at the 7th grade level.  Both of them have to take a little extra time to read grandma’s birthday card notes…kind of like they’re working through some new Spanish homework.  LOL

    I was behind a woman at the grocery store the other day and had to wait for her to fill out a check.  I couldn’t remember the last time that happened.  It’s literally been years.  I’ve also noticed my own signature is getting worse as I get older.  “Use it or lose it” seems to apply here.  I’m guessing you could mark an “X” on the electronic signature pads at retail and it would go through…


    Michael Sansolo and I will both say that one of the reasons we have relatively legible signatures is that we’ve signed so many books over the years … it has been one of the great pleasures of writing the books, and it has that side benefit.

    From another reader:

    I noticed that the end of your commentary on signatures being eliminated may affect server tips. “It’s a shame.”

    Actually, a number of restaurants in the NW are switching over to tip included, so ‘no sig required’ won’t affect tipping at all…not sure if that movement is spreading cross-country or not…just a thought.





    Regarding the idea that OFC is Seattle may shorten its name to just “Q,” since that’s what many people call it anyway, one MNB reader wrote:

    I have lived in the Seattle area all 50+ years of my life.  I have worked in the food distribution / retail grocery industry for close to 30 years.  I have been in QFC's corporate office on many occasions.  I have been in the back end receiving area of QFC stores more times than I can count.  The prior president of QFC lived next door to a good friend of mine.  I have never once heard anyone call QFC the Q.




    On another subject, from MNB reader Jeff Folloder:

    With so many companies in the throes of bankruptcy, and so many of them being repeat offenders, I cannot help but recall Jeff Goldblum's memorable quip as Dr. Ian Malcolm in Jurassic Park … that they were “so preoccupied with whether or not they could that they didn't stop to think if they should."  There are so many companies out there that have clearly demonstrated that they are simply not viable in terms of the evolution of commerce.  Our legal system should not be required to continually jump start economic models that should be labeled with “DNR".
    KC's View: