business news in context, analysis with attitude

Published on: April 12, 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, Kevin Coupe here and this is FaceTime with the Content Guy, coming to you this week from Seattle, where I am visiting the new Starbucks Reserve store that was opened on the ground floor of the company’s headquarters, just south of Safeco Field.

In a lot of ways, the Reserve Store is a somewhat smaller version of the Roastery store that Starbucks opened elsewhere in Seattle, and that has been an enormous success for the company. (I wrote about it here.)

Unlike the Roastery, where they - natch - roast coffee beans, this store has no such facility. What it does have is an enormous Princi Bakery - Starbucks became a global licensee of and investor in the Princi bakery brand in 2016; Princi was launched in Italy in 1986 and specializes in sandwiches, pizzas and desserts. The bakery dominates the format, and they’re making enough product here that they’re sending it to the Roastery … and the Roastery, in turn, is sending roasted beans here to be turned into all sorts of specialty coffee drinks that you can’t get at a run of the mill Starbucks.

Now, Starbucks chairman Howard Schultz has said he’d like to have a thousand of these, which strikes me as a little over-ambitious. In fact, one of the employees inside sort of rolled his eyes when we talked about the expansion plans. One thousand is a pretty big number, and if the economy goes south, or just slides into recession, and people are resistant to spending four bucks on a latte, I’m not sure that they’ll spend the seven or eight bucks that a specialty drink costs here. So I’m not sure about the company’s ability to hit that number.

But having gone inside and enjoyed a nice lunch, and seen a healthy number of people doing the same, here’s what I do like about it - this is an audacious idea. It is kind of audacious to think you can open a thousand of these. It is a big swing, and I like it when retailers take big swings, challenging themselves to serve the customer differently with a store concept that pushes the envelope a bit.

I don’t know if this is a smart play, or if it’ll work long-term. But there is something to be said for trying something different. There’s a lesson to be learned from a company that is being anything but complacent.

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

Published on: April 12, 2018

by Kevin Coupe

This commercial has been out for a few weeks, but I just caught up with it yesterday … and it struck me as a) a good commercial, and b) a deliberate attempt to get in on the replenishment business that Amazon has successfully mined with Subscribe & Save and Dash Buttons, not to mention the way in which it is positioning its Alexa-powered smart speakers for that segment.

Not sure it does much to woo away Amazon customers who are using its various programs, but it may appeal to people who want control over what products are replenished and when, and find Amazon’s approach to be off-putting. But it works, and is worth a look … because any retailer that gets a piece of the replenishment biz has an immediate advantage over retailers that are ignoring this side of the business.

I’ve said it before and I’ll say it again. Any food retailer not in the replenishment space is at severe risk of losing a significant portion of its center store sales to a retailer that is.

And that’ll be an Eye-Opener.

Published on: April 12, 2018

The Washington Post has a story about a new bill being proposed in the Delaware legislature that “seeks to hold companies with more than 50 employees (including interns and volunteers) responsible for sexual-harassment violations when it ‘knows or should have known of the conduct and fails to take immediate and appropriate corrective action’.”

This legislation, the story says, “would require these employers to provide two hours of anti-sexual-harassment training every two years to ‘supervisory employees,’ starting within six weeks of assuming their positions. Sexual harassment in the bill is broadly defined as ‘unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature’ … Under the measure, owners of a company would be held responsible if they knew about the conduct and failed to take corrective action.”

Published on: April 12, 2018

The Washington Post reports on a resurgence in the frozen food business.

An excerpt:

“Consumers are eating more vegetables and protein, and their reservations about eating frozen foods — long dubbed an unsatisfying diet option or loaded with artificial ingredients — are starting to thaw. Meanwhile, frozen food companies are revamping their products to include more healthful, flavorful options. And while dishes like Mango Edamame Power Bowls or Sweet and Spicy Harissa Meatballs add an inventiveness to the freezer aisle, one of frozen foods’ chief attractions has stayed rock solid: convenience.”

A recent RBC Capital Markets report “showed that that the frozen food market has grown for the first time in five years, growing 1 percent in the 12 weeks leading up to March 10. As millennials seek out nutritious and well-rounded meals without sacrificing convenience, frozen vegetables, fruits and prepared foods present a relatively cheap and easy-access option. That’s true for younger people and families who are less interested in eating out — whether that’s because they’re working from home or having dinner with a side of Netflix.”

Published on: April 12, 2018

The New York Post reports that as Toys R Us liquidates its US stores, it is finding that “real estate shoppers view its unattractive, boxy stores the same way toy customers did in recent years.”

Toys R Us has about 700 stores, and of the “140 stores that hit the auction block last week, just 50 received winning bids, and 30 of them were from the landlords themselves, some of whom scooped up their own properties for $5,000 to $10,000.”

The retailer has raised just over $37 million from the auction of the locations - and two of them (a San Francisco store that went for $15.6 million and a Chicago location that went for $7.5 million) represented more than half the haul.

There was some good news for Toys R Us - “on Wednesday, it received multiple bids of more than $1 billion for an 85 percent stake in its Asian business.”

Published on: April 12, 2018

Business Insider reports that Walmart has decided to start selling Soylent - described as “Silicon Valley's favorite ‘open source’ meal replacement … encouraging people to tinker with its recipe” - in 450 of its locations around the country.

According to the story, “The deal follows Soylent's debut in more than 2,500 7-Eleven locations. Before the 2017 7-Eleven deal, Soylent was solely available online, on Amazon.com, and on the brand's website.” It is a move that reflects “a push towards the mainstream for a brand that originally positioned itself as a tech startup.”

Published on: April 12, 2018

Barron’s has an interesting story about the competition between Amazon Prime Video and Netflix, each of which is spending hundreds of millions of dollars on original content in order to differentiate themselves.

Loop Capital, the story says, did a survey recently and discovered that Amazon Prime Video is of far less import to viewers and isn’t really a competitive threat to Netflix, which is seen as having an “unstoppable lead.”

What’s even more interesting is that it may not matter.

The survey suggests that Amazon’s video offerings are seen as a nice addition to Prime membership, but not a driving force when people decide to join up. Since six out of 10 US households are estimated to be Prime members, this means that it is part of a pervasive ecosystem - not the most important component, but a component nonetheless.

But … the survey also said that if Amazon is able to improve its content lineup, it could be a big deal.

“The opportunity for Amazon is to develop one or two ‘water cooler talk’ series that drive consumers to sign up for Amazon Prime in order to watch them—which will translate into additional product and service sales,” Loop’s analysts wrote.

Published on: April 12, 2018

The Wall Street Journal has a story about how movie theater owners - dealing with the fact that “theater attendance last year fell to its lowest level since 1995, a crisis propelled by the rise of streaming,” which by definition does not require people to go to a movie theater - are trying to improve the experience.

“Today, exhibitors are tearing out seats and replacing them with luxury recliners—fitting fewer overall seats, but creating steadier revenue at higher prices,” the Journal writes. “They’re adding high-end drinks and dining options, and sophisticated sound and screens that no home theater could replicate. Special attractions such as virtual-reality sections and child-friendly play areas are extras to entice people to leave their living rooms.”

In other words, they;’re doing exactly what MNB urges retailers to do when competing with Amazon - offer something that Amazon cannot or will not.

Good piece, with lots of lessons … and you can read it here.

Published on: April 12, 2018

• Bloomberg reports that Walmart “has relaxed deadlines for some supplier deliveries just months after tightening them, easing pressure on manufacturers who are already grappling with a driver shortage.”

Now, shipments can come in a day early without being subject to fines, which were instituted last year because of Walmart’s concerns about overstocks.

According to the story, “Walmart’s more generous stance comes as suppliers like General Mills Inc. and Hershey Co. grapple with a transportation shortage and new driving regulations that have sent shipping costs spiraling. Walmart handles the shipping for many of its suppliers through its own trucking fleet and other transport providers, and it rolled out the tighter delivery windows in August to reduce out-of-stock items and boost sales. Now, with deliveries at risk of coming late to its 4,700 U.S. stores, Walmart is easing up.”

However, Walmart said that “the early-shipment option wasn’t related to the continuing trucker shortage, as it only applied to some of its distribution centers.”

But, Bloomberg writes, there is no question that “the capacity crunch is taking a toll.”

Published on: April 12, 2018

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

• Albertsons yesterday reported $46.3 million in net income for the just-completed fiscal year, a big turnaround from the $373.3 million loss reported a year ago and the $502 million loss two years ago. (That doesn’t even count the combined $1.2 billion loss that Albertsons and Safeway had the year before that, before Albertsons acquired Safeway.)

Sales for the year were $59.9 billion, up from $59.7 billion a year earlier.

“Our future has never been brighter,” says president/COO Jim Donald.

The Idaho Statesman writes that “executives say the consistent improvement reflects their focus on wringing out inefficiencies, improved marketing and attention to customer desires and service. And they expect the upward trend to continue.”


• White Castle has announced that it will sell the “Impossible Slider” - a veggie burger that is said to sizzle on the grill, smell like a real hamburger, and bleed like a real burger when you eat it - in 140 of its stores in New York, New Jersey and Pennsylvania.

The retailer is selling the burger on a brioche bun and topping it with smoked cheddar cheese, pickles, and onions. It costs $1.99.

Fast Company writes that “around 1,300 other restaurants, including Fatburger and Umami Burger, also now sell the Impossible Burger, though White Castle will be the first to offer it at a large scale. In March, the burger launched at the Oakland Coliseum, where it’s sold at concession stands during baseball games.”

It has got to be better than its regular burgers. Michael Sansolo and I were on a road trip a couple of years ago, and decided, on a whim, to order a sack of burgers from a White Castle that we were passing. It sounded like fun, and a reminder of our youths. Unfortunately, it only took a few burgers for the two of us to feel sick to our stomaches, and we quickly pulled off the road to a rest stop to dump the rest of the sack. In fact, I feel queasy just remembering it … so I hope the veggie burger is better.

Published on: April 12, 2018

• The Food Marketing Institute (FMI) has awarded the Donald H. MacManus Award, recognizing leadership in public affairs, industry relations and community relations, to Amy Drumm, vice president of government affairs for the Michigan Retailers Association. The award was presented at the industry’s annual Capitol Hill event in Washington, DC.


• The National Grocers Association (NGA) has presented Ronald Fong, California Grocers Association (CGA) President/CEO, with its Association Leadership Award for his commitment and service to the independent supermarket industry.

Published on: April 12, 2018

Regarding a new hiring binge on which Kroger is embarking, one MNB reader wrote:

This is an initiative Shaw's/Albertsons could definitely use, given the lack of available associates in our stores.




In response to our story about how Lucky’s Market - a place where you can drink beer as you shop - is expanding, one MNB reader wrote:

I was very interested in Lucky’s when one opened in Jacksonville before I relocated back to the Northeast, but I was let down. It was great to drink while shopping, but their prices weren’t competitive enough to justify a beer while I spend more money. Maybe if it was a glitter beer they’d have me…




And finally, on another subject from MNB reader Janis Raye:

I decided to finally break down and get an Echo Dot to see what all the fuss was about (I got it for free when I did a new subscription to Audible). Mostly, it was because of your raving about how much you use Alexa. I read the results of the survey of usage, and I’d like to report that I’m like 15% of the respondents: the best thing Alexa does for me at this point is to set a timer while I have my hands dirty preparing food. I put it in the kitchen, and the first thing I asked it to do (“Alexa, do the dishes”), she was incapable of helping me with. I’ve also found that it doesn’t really look up stuff on the Internet as well as Siri does, usually. I’m much more fond of my Roomba than I am of Alexa, if I have to show my allegiances to my appliances. But I agree with you that the hands-free aspect is, while lazy, appealing!

Well, if you’re going to use “Alexa, do the dishes” as a benchmark for responsiveness, you may be doomed to disappointment … for at least another few months, until Amazon comes up with a solution to that particular problem.