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    Published on: April 18, 2018

    by Kevin Coupe

    John Oliver, host of HBO’s “Last Week Tonight,” did his thing for bricks-and-mortar retailing last Sunday.

    It is best to watch the video. But let’s just say that it took a number of elements coming together. There was the last Blockbuster video in Anchorage, Alaska. There was an auction of old stuff that used to be owned by actor Russell Crowe. And there was Oliver’s impish humor.


    KC's View:

    Published on: April 18, 2018

    IRI is out with a new Market Shift Study, looking into “the impact Amazon’s recent acquisition of Whole Foods Market is having on the retail landscape, as well as shopper behavior and expectations.”

    According to the study, “While synergies of the acquisition, such as benefits to Amazon Prime subscribers in Whole Foods stores, are not yet fully realized, they have already begun to shape behavior. For example, 71 percent of Whole Foods shoppers with Amazon Prime memberships are more satisfied with their experience at Whole Foods and are more likely to shop there.

    “Furthermore, anticipated benefits, such as free grocery delivery, are expected to motivate over 60 percent of shoppers to buy more of their groceries at Whole Foods Market stores.”

    As the study comes out, MarketWatch reports that Whole Foods has emailed the members of its loyalty marketing program advising them that “it will discontinue its rewards program and digital coupons starting May 2,” and will shortly thereafter supplant the program with Amazon Prime.

    According to the story, “all arrows now point to consumer-facing changes in the near future, with predictions of new programs for Prime members already in the air, along with talk of a ‘disgruntled’ supplier base. Exclusive discounts of as much as 10% for Prime members were tested at an Austin, Texas, store.”
    KC's View:
    This has been inevitable, from the moment that Amazon acquired Whole Foods. In the end, cutting a few prices and streamlining the supply chain will be small potatoes (albeit small organic potatoes) compared to how Amazon should be able to impact on Whole Foods by connecting it to Prime.

    The big opportunity will be the use of consumer data to communicate more effectively with shoppers and reward them. They’ll have to be careful about this, since we’re in a moment when data usage and privacy are top of mind issues. But there are some real opportunities here.

    Published on: April 18, 2018

    Starbucks said yesterday that it will close all of its company-owned stores in the US during the afternoon of May 29 in order to conduct racial bias education programs for some 175,000 employees.

    The move comes after the company has become embroiled in a racial incident in Philadelphia, where an employee called the police and asked them to arrest two African-American men who were waiting in the store for a friend; the employee accused them of loitering, but the impression among other customers was that they were being targeted because they were black. The situation has been exacerbated by social media, where video of the incident and considerable outrage has only ramped up the pressure on Starbucks.

    "I've spent the last few days in Philadelphia with my leadership team listening to the community, learning what we did wrong and the steps we need to take to fix it," Kevin Johnson, CEO of Starbucks, said in a statement Tuesday. "While this is not limited to Starbucks, we're committed to being a part of the solution. Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities.”

    CNBC reports that “Starbucks will be working with Bryan Stevenson, founder and executive director of the Equal Justice Initiative; Sherrilyn Ifill, president and director-counsel of the NAACP Legal Defense and Education Fund; Heather McGhee, president of Demos; former U.S. Attorney General Eric Holder; and Jonathan Greenblatt, CEO of the Anti-Defamation League to create this program. Once the company has completed this training at its company-owned locations it will make it available to its licensed partners.”

    In its story, the New York Times reports that “the decision to shut all its domestic stores and provide training underscores the damage done to Starbucks’s reputation for being a socially responsible company, one that sells fair-trade coffee and promotes its stores as a meeting place. In 2015, the company was widely mocked for instructing employees to write ‘Race Together’ on its coffee cups.”
    KC's View:
    There is an irony to the fact that just a few years ago Starbucks got a lot of legitimate criticism for what seemed like a ham-fisted attempt to talk about racial issues. But if the attempt was ill-considered, the motivations were positive - the company wanted to address what it saw as a serious social ill. And now, the company finds itself on the other side of the issue, seen as part of the problem instead of part of the solution.

    I think that Starbucks is approaching this the right way. Johnson has met with the men who were victimized, and the planned closure of the stores isn’t just about education. It is a statement.

    I do think it is important to remember that this problem has been exposed because of the acts of a single employee (who apparently no longer is employed by Starbucks). There are others in the system, no doubt, who would’ve made the same mistake. And plenty of others who never would’ve called the cops.

    Even as Starbucks does what it needs to do to address the issue, it is important to remember that this does not seem to be a company where racist attitudes are typical.

    And, as Starbucks does what it needs to do to address the issue, it is important for every retailer to remember how one employee’s actions can swing perceptions and create problems. And to take note of what Starbucks is doing as a potential template when/if it happens to them.

    Published on: April 18, 2018

    The New York Times reports this morning that “a closely divided Supreme Court struggled on Tuesday to decide whether internet retailers should have to collect sales taxes in states where they have no physical presence.”

    The state of South Dakota is asking the court to reverse a precedent set by the Court in 1992, when it ruled that states could only require online retailers to collect sales taxes if those retailers have a physical presence in those states.

    South Dakota has the Trump administration on its side; President Trump has been accusing Amazon of not paying enough tax. (Amazon is not involved in the South Dakota case.) If the Court sides with South Dakota, the expectation is that it would better enable small bricks-and-mortar retailers to compete with larger online entities, as well as funnel billions in taxes to the states.

    The Times writes that “by the end of arguments on Tuesday, it was not clear whether there were five votes to overrule the 1992 decision … Several justices expressed concerns about imposing crushing burdens on small businesses that sell goods on the internet and about making them liable for back taxes.”

    Justice Sonia Sotomayor at one point suggested that this was an issue that should be decided by the US Congress, not the Supreme Court, but Chief Justice John G. Roberts Jr. said there was no mechanism for the Court to tell the Congress to do so.

    However, “both he and Justice Elena Kagan said the fact that Congress has so far chosen not to act was itself a telling indication that it was satisfied with the current system.

    “The chief justice added that the marketplace may already be addressing the problem. ‘The bigger e-commerce companies find themselves with a physical presence in all 50 states,’ he said, ‘so they’re already covered’.”
    KC's View:

    Published on: April 18, 2018

    Catalina is out with a new study today concluding that “Center Store remains a vital driver of trips and volume for grocery retailers, with more than 99 percent of all shoppers purchasing from the Center Store in 2017.” The report goes on to suggest that “brands that introduce innovative, often-niche products that address evolving consumer motivations are keeping the Center Store relevant.”

    Such products, the study says, include “non-fat/low fat ice cream, value-priced entrée frozen dinners, sparkling/seltzer water, ready-made coffee drinks, window and glass cleaners, fresh rolls, dried meat snacks, vinegar, value-priced bath tissue, and a variety of snack and candy subcategories.” And, the study says that “specific cross-category consumer preferences like ‘Heart Healthy,’ ‘Low-Fat,’ ‘Trans-Fat Avoiders,’ and ‘GMO Avoiders’ are fueling the growth of some of the fastest growing product subcategories.

    Other conclusions:

    • “The Center Store accounted for 60 annual trips per shopper, per store, down just one trip per shopper, per store from 2016.”

    • “Some 99.5 percent of all shoppers frequented the Center Store in 2017, spending an average of $1,408 a year there.”

    • “81 percent of all shopping baskets included at least one Center Store item.”
    KC's View:
    Catalina concludes that “center store is alive and well,” but one should not forget that for many retailers, center store is the most vulnerable to disruption by online grocers and replenishment systems. Retailers have to find ways to differentiate themselves in center store, but also have to deal with the probability that billions of dollars in sales will move online in coming years.

    Published on: April 18, 2018

    • Amazon announced that it has launched what it is calling an “International Shopping” experience within its app, “making it possible for customers in Colombia to browse and shop over 45 million eligible items that can be shipped to their country from the United States. This experience is available on mobile browser and mobile app within the Amazon Shopping App for both iOS and Android mobile devices. The International Shopping experience offers shopping in 5 languages, including English, Spanish, Simplified Chinese, German, and Brazilian Portuguese, with the ability to shop in 25 currencies including Colombian Peso.”

    Samir Kumar, VP of Amazon Exports and Expansion, says in a prepared statement that “customers have been asking for a way to easily find and shop only for products available to be shipped to them. The International Shopping experience solves this customer need and makes it simple to browse, shop and ship more than 45 million products to over a hundred countries around the world.”
    KC's View:

    Published on: April 18, 2018

    • The Wall Street Journal reports that Toys R Us has rejected an “11th hour offer” by Isaac Larian, the founder of Bratz dolls maker MGA Entertainment, to acquire some of its stores for $675 million, as well as its Canadian business for an additional $215 million.

    According to the story, “Larian’s offer didn’t meet the qualified bid threshold under the court-approved auction procedures.”

    An auction of Toys R Us’s US stores reportedly is scheduled for today, with the plan still to sell off the better-performing Canadian business as a piece.
    KC's View:

    Published on: April 18, 2018

    Barbara Bush, the wife of President George H.W. Bush and the mother of President George W. Bush, has passed away at age 92, after a long illness.

    It was just a few days ago that Mrs. Bush announced that she was going on “comfort care,” and no longer would be receiving medical treatments. When she passed away, her husband of 73 years reportedly was holding her hand.
    KC's View:
    There is no question that Barbara Bush was part of a great American family and a great American story - she and her husband moved more than two-dozen times during their lives, much of the time because of their shared commitment to public service in various forms.

    But when you read about Barbara Bush, you realize the degree to which she connected and influenced the American public, on issues such as literacy and civil rights. There was the time that she went to a hospital and hugged AIDS patients at a time when such people were being shunned and marginalized.

    And, of course, there was the time in 1990 when she gave a commencement speech to graduating seniors at Wellesley College in Massachusetts, where there had been protests about her appearance.

    Mrs. Bush ignored the protests and went to give the speech, bring with her Raisa Gorbachev, the wife of the Russian president. (The Berlin Wall had fallen months earlier.) In her speech, she quoted Ferris Bueller’s Day Off, and said to never forget that “you are a human being first and those human connections — with spouses, with children, with friends — are the most important investments you will ever make.”

    And, famously, she said, “And who knows? Somewhere out in this audience may even be someone who will one day follow in my footsteps, and preside over the White House as the president’s spouse …and I wish him well.”

    She got a prolonged standing ovation.

    Published on: April 18, 2018

    Responding to yesterday’s story about how major chains deal with the food waste issue, one MNB reader wrote:

    I find the waste management grades to be interesting, and somewhat misleading in regards to Trader Joe's. I happen to work for Trader Joe's on the weekends, and food waste, at least at my location, is taken seriously. We pull close-dated perishable items 2-3 days prior to expiration, record it in our system and donate it to the food pantry. All of it. Some things are spoiled but it's very minimal. I happen to believe it is one of the best systems I have ever been a part of. I am not buying the "D" rating…

    Fair enough.

    Regarding the move by Kroger to emphasize education for its employees, one MNB reader wrote:

    KC, this is the kind of move I would love to see Shaw's/Albertsons make;  that associates are assets and not liabilities, as you have said before.  I keep hearing that no one is applying for jobs, or they quit shortly after hired.  Doesn't anybody wonder why?  There are currently no training programs in place to get any department associates ready for promotion as department heads.  There hasn't been since we were owned by Sainsbury, and that's the truth.

    We had a story yesterday about how Domino’s is going to start delivering to beaches and national parks, and I admired the effort even as I admitted that I’m not a Domino’s fan. Which prompted MNB reader Deborah Faragher to write:

    Don’t know if you’ve had the opportunity to check out Ugly Delicious on Netflix yet. Great production value and quite fun watching David Chang. We’ve seen 3 thus far. So far, each is dedicated to a specific food. The first was pizza. When I saw your article and comments on Dominos today, thought you’d be interested—at least in checking out this episode. I will guarantee that the shows will definitely make you hungry so caution—do not watch on an empty stomach!

    I’ll put it on my download list.

    We had a piece yesterday about competitive problems facing Apple’s HomePod, and speculated that companies often only have a small window of opportunity when it comes to innovations. Prompting MNB reader Kris Kenyon Jackson to write:

    Excellent point, just ask Blackberry or Palm about missing a window of opportunity!!

    I ended my commentary by writing:

    The Eye-Opening point, I think, was made by Leonardo da Vinci, who once spoke of “the urgency of doing.”

    “Knowing is not enough; we must apply,” he once said. “Being willing is not enough; we must do.”

    But of course, this being MNB, MNB reader Craig Espelien responded:

    You could also have used a movie reference (instead of DaVinci) - “Try not. Either do or do not. There is no try.” - Master Yoda.

    MNB reader Terry Pyles agreed:

    And forget not the wisdom of Yoda - "Do or do not.  There is no try.”

    It makes me so happy to get emails like these. Extra credit for everybody!
    KC's View: