retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: May 10, 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.

    Last week, we took note of a Wall Street Journal report that Diageo, owner of the Ketel One vodka brand, is going to address declining sales in the US by introducing a new vodka that isn’t technically vodka. Called Ketel One Botanical - which, I must say, is an awful name, unless you like the ideas of drinking flowers - it will be 30% alcohol by volume, which doesn’t even make it technically vodka.

    Now, we can have a long conversation about whether this is a good idea, and I’m happy to participate in a taste test if anyone is interested. To be clear, even at my age I am a relatively new vodka drinker, so I don’t have the most developed palate … but I’m happy to be proven wrong in my skepticism.

    What actually interested me most about the story was that Ketel One Botanical is designed to address what has been a persistent problem for a number of vodka brands - loss of market share to Tito’s, which has become a popular favorite.

    FYI…Titos’ was an entry vodka for me, and I tend to order it when I’m out, though I also like Boru, which is from Ireland, the home of most of my ancestors. (It was an MNB reader who turned me on to Boru, and I’m grateful.)

    After I wrote the story, I got a number of emails - most of them of the “Ketel One must be annoyed, since Tito’s is lousy vodka” variety.

    But I also got a couple that reacted to this comment:

    I may be wrong about this, but there is something about the Ketel One Botanical that somehow feels inauthentic. That’s what Tito’s has going for it - it feels entirely authentic, with a brand identity that has been baked in from the beginning. That’s hard to compete with, and I’m not sure that this new competitor will find it easy to develop any buzz.

    The point of these emails was that Tito’s may not be as authentic as I thought, and a little research shows that it has been challenged by competitors for they say are false attribute claims - mostly the whole “handmade” thing, which simply cannot be true based on how much they make. To this point, best I can tell, lawsuits against Tito’s have not been successful … but that’s not what I want to talk about.

    It was either Groucho Marx or George Burns - the internet is a little fuzzy about this - who once said, “If you can fake honesty, you’ve got it made.” The fact is that authenticity isn’t just something you have. It is something you have to effectively and consistently communicate, or it isn’t really worth very much.

    I wonder if in a lot of cases, the problem that companies have in defining and communicating their authentic message is that they don’t know what it is. They don’t know their story, the compelling narrative that should be framing every decision and initiative. If you don’t know your own story, you can’t sell it.

    If you are in the business of selling anything - whether it is a product or a point of view - you have to know your story. It is that simple.

    It’s funny. When I think about vodka, I think about Marv Imus and the late, great Al Lees - two independent retailers who used to spend a lot of time together at retail events, and their nightcap of choice always was Grey Goose. For them, it was the best … the brand that spoke to them in a resonant way.That’s what every brand has to do.


    KC's View:

    Published on: May 10, 2018

    by Kevin Coupe

    Best Buy, which seems to have confounded predictions of just a few years ago that it would follow Circuit City and Radio Shack into retailing oblivion, yesterday announced its first logo refresh in almost three decades, and one that puts a lot less emphasis on the traditional price tag.

    In Minnesota, the Star Tribune writes that the change reflects the company’s reinvigorated marketing strategy, which focuses on “helping improve customers’ lives through technology.”

    Indeed, Whit Alexander, Best Buy’s chief marketing officer, says that the new tagline is designed to inspire both customers and employees: “Let’s talk about what’s possible.”

    In other words, the goal is to be aspirational.

    The company also says that its strategy is being built around its people, as it endeavors to make expert associates a cornerstone of its brand identity … on the theory that while many of the products and brands it sells are also sold elsewhere, it can turn the service component into a hard-to-replicate differential advantage.

    This is easy to say, though hard to do … but I do think that Best Buy is on the right track here. I haven’t actually been to a Best Buy in some time, but effective communication of this narrative could, I think, make me inquisitive enough to go one of these days.

    Then, of course, comes the hard part - delivering on the message. if it can do that, it’ll really be an Eye-Opener.

    One other note: I am looking forward to seeing its new commercials, which the Star Tribune says “are narrated by actress Scarlett Johansson and directed by Errol Morris,” and “were shot in black and white except the bright blue of Best Buy employees’ shirts.”

    I’m wondering if they’ll use the movie Her as a touchpoint … since in it, Scarlett Johansson was the voice of a computer operating system with which the protagonist (played by Joaquin Phoenix) becomes intellectually and emotionally intimate.




    KC's View:

    Published on: May 10, 2018

    Walmart yesterday announced that it has acquired 77 percent of Flipkart, the India-based online retailer, for $16 billion - the largest acquisition ever by the retailer.

    In closing the deal, Walmart gets itself a foothold in a competitive and fast-growing market where global retailers have been prevented from operating except as minority owners in league with local businesses. The purchase also manages to one-up Amazon, which had itself submitted a bid for Flipkart.

    The Associated Press writes that “online buying in India has exploded in recent years, and Flipkart had net sales of $4.6 billion in its latest fiscal year, That’s a fraction of Walmart’s latest annual revenue of $485.8 billion, but the company sees big long-term potential. Walmart believes India, which has 1.3 billion people, could be the world’s top five-e-commerce markets within the next five years.”

    The AP reports that Flipkart, which is known “for its ubiquitous delivery drivers on their motorcycles with oversized backpacks,” originally allowed customers to pay for their online purchases in cash handed over to delivery personnel; India remains a country where paying with credit or debit cards is seen as risky, but Flipkart now “allows for a variety of payments, from credit cards to gift cards to direct bank transfers.”

    Walmart CEO Doug McMillon has been quoted as saying that "India is a priority market for us. We're taking action to position the company for the future.”
    KC's View:
    I saw one headline about this acquisition that said, “Walmart gets in touch with its inner Amazon.” I’m not sure that’s exactly the best way to describe it, but this clearly is a bold move - Flipkart is said to have as many customers as Amazon Prime.

    Walmart’s changed approach to foreign investment seems to be to limit the downside by getting rid of the things that aren’t contributing either to the bottom line or the long-term strategic vision, and then be take big swings when they seem in synch with its adjusted priorities.

    This all makes Walmart scarier, I think.

    But…

    The New York Times observes: “A historically frugal company that has done very few deals of significance, Walmart is now spending billions as it seeks new overseas markets, tries to capture different demographics and bolsters its grocery offerings.

    “In the process, Walmart has begun to create a global alliance of retailers and tech companies that have Amazon as their common rival. It has already teamed with Google for online shopping, while Microsoft will hold a stake in Flipkart alongside Walmart.”

    But this is a long-term strategy that is going to require a lot of investment and a lot of patience, both internally and externally. There will be pressure to deliver a return on investment faster than may be possible, and that’ll ramp up the stress felt in Bentonville, where execs will be challenged to show how they are not going too far afield from the company’s core customers and mission.

    Published on: May 10, 2018

    Amazon yesterday announced the opening of what it is calling “interactive Amazon Experience Centers” that have been installed inside Lennar model homes in various US markets - Atlanta, Dallas, Los Angeles, Miami, Orlando, San Francisco, Seattle, and Washington DC.

    In essence, these Experience Centers endeavor to create a context for the ecosystem that Amazon is creating, demonstrating how various services, such as Prime and its Alexa-powered system, come together to help consumers.

    According to the announcement, “In these Alexa-enabled smart homes, customers can simply ask Alexa to control the television, lights, thermostat, shades, and more. The model homes showcase how customers can use Alexa in their everyday lives. Customers can experience just how easy it can be to reorder household essentials with a press of an Amazon Dash Button, listen or watch Prime content with Fire TV or schedule on-demand home services through Amazon Home Services.”

    Lennar is a real estate and home building company that was the largest home construction company in the country last year.

    CNet writes that “though these locations don't sell any items, they serve as another example of Amazon's effort to maintain its lead in smart home tech, with its Echo devices holding roughly 70 percent of the US smart speaker market, analysts say. With Google offering significant competition, not to mention Apple and Samsung joining the fray, Amazon will need to use whatever tools it can to keep its own smart home gadgets at the top of people's minds.

    “The homes should also serve as another place for customers to test Amazon products before buying them, something they can't do on the company's website. Amazon already brought its gadgets to its own bookstores, mall kiosks, college drop-off centers and its Whole Foods stores, in addition to retail stores like Best Buy.”
    KC's View:
    I’m not entirely sure I’d like to live in one of these houses, but I sure would like to see one, if only to see how the Jeff Bezos ecosystem is realized in an actual, physical context.

    More retail stores should think this way - it is about going beyond product and focusing on meaning and relevance and resonance.

    Published on: May 10, 2018

    Columnist David Leonhardt has a provocative piece in the New York Times entitled “Save Barnes & Noble!”, in which he addresses what he calls the “plausible” possibility that bookseller Barnes & Noble could go out of business.

    Stores have closed and staffing has been reduced, though “the company’s leaders claim that they have a turnaround plan, based on smaller, more appealing stores focused on books. Leonhardt writes, “I hope the plan works. It’s depressing to imagine that more than 600 Barnes & Noble stores might simply disappear — as already happened with Borders, in 2011.”

    But Leonhardt argues that this is not just an example of how the wheel of capitalism turns. Rather, he says, “the full story revolves around government policy — in particular, Washington’s leniency, under both parties, toward technology giants that have come to resemble monopolies. These giants are popular, because they provide good products and service. But they have also become mighty enough to vanquish their competitors and create problems for society.”

    It is a thoughtful column, and you can read it here.
    KC's View:
    I’m not sure I entirely buy Leonhardt’s premise, in part because he gives short shrift to the idea that Barnes & Noble was putting independent bookstores out of business long before Amazon came along. (See You’ve Got Mail.) While Barnes & Noble may be endangered, independent bookstores are seeing a resurgence, largely because they have a specific story to tell that runs counterpoint to what Amazon does.

    Oren Teicher, who runs an association of independent bookstores, says that “it’s in the interest of the book business for Barnes & Noble not just to survive but to thrive.” I’m not sure I’d go that far … I think it is in the interest of the book business for people to read, and for there to be multiple places for them to buy books. But I’m not persuaded that Barnes & Noble has to be part of that. They have to earn it.

    Published on: May 10, 2018

    Engadget has a story about Panera Bread, which is expanding its lunch-and-dinner delivery program to 897 cities in 43 states, allowing people to order via its website of mobile app “as long as you live within roughly an eight-minute drive of participating outlets. Delivery is typically available between 11AM and 8PM, so long as you meet the $5 minimum order; there's also a $3 delivery fee in most areas.”

    Lots of companies are doing delivery, but here is how Panera is trying to set itself apart, according to the Engadget story:

    “Panera wants to take full control of its delivery process, and by the end of 2017 had hired more than 10,000 drivers and other employees to handle the increase in orders caused by deliveries. Digital orders now account for 30 percent of Panera's sales, so it clearly sees plenty of room to expand its delivery foothold.”
    KC's View:
    I completely agree with the notion that if Panera is going to do this right, it needs to own and control every part of the customer experience, including the delivery function. It is, in fact, the argument I’ve been making here for what seems like forever.

    Published on: May 10, 2018

    Sears Auto Centers said yesterday that it is partnering with Amazon “to provide full-service tire installation and balancing for customers who purchase any brand of tires on Amazon … With this collaboration, Sears Auto will become the first nationwide auto service center to offer Amazon.com customers the convenient Ship-to-Store tire solution integrated into the Amazon.com checkout process, which is easy and convenient. Amazon customers simply select their tires, the Sears Auto location and their preferred date and time for the tire installation. Sears Auto Centers then contacts them to confirm their appointment.”

    The service will roll out nationally in coming weeks.

    Business Insider notes that “Sears' relationship with Amazon began in July 2017, when the company started selling its Kenmore branded products on amazon.com. In December, Sears added DieHard products like jump starters and battery charges to the list of products available on Amazon.”
    KC's View:
    This is good for Amazon, but only serves to put off the inevitable for Sears for just a little bit longer.

    Published on: May 10, 2018

    • The Network of Executive Women (NEW) announced that Julie Basile - most recently director of sales and operations for the Dollar General Team at The Coca-Cola Company - has joined the organization in the newly created role of vice president for regions, community and marketing.

    Basile also had executive positions at Diageo and Kellogg Company, and, before joining NEW, was an active member and volunteer leader for NEW Atlanta, NEW Chicago and NEW Minneapolis.
    KC's View:

    Published on: May 10, 2018

    Michael Sansolo’s column about how United Airlines seems to put its customers second prompted a number of emails.

    MNB reader Jim DeJohn wrote:

    I enjoyed reading Michael’s article this morning regarding the “Uncustomer Friendly” service of United Airlines.  It brought back an experience I had with them trying to get home from a business trip.  It was the last leg of my trip – a very quick flight from Newark, NJ to Albany, NY, maybe 35 minutes flying time.  After boarding the small jet, they moved us over to a “waiting area”.  This seemed strange as the weather was great, no mechanical issues that they said, etc.

    After about 45 minutes of waiting, the flight attendant said we were waiting for a couple United employees who needed to get to Albany…  Another 45 minutes go by and folks are getting very irate (it was a late flight to begin with).  And you guessed it, another 45 minutes go by and they say their employees are almost there.  We ended up 3 hours late because of this.  They easily could have had their folks take a bus between the two cities or pay for a Lyft car.  But instead, they made at least 35 folks very late getting back to their families and causing a terrible experience, to ensure their couple employees were taken care of.  But experiences like this is why I only fly United if there are no other options…even then I think if a long drive might be better.  I can’t believe I’m alone in this thinking.


    MNB reader Mark P. O’Brien wrote:

    I'm retired a few years now so I don't fly as much as I used to. I watched these subtle changes happen to UA personnel over the years as they lost pension benefits and I know flight crew who complained bitterly about their leadership getting golden parachutes while they got hosed. It reminds me of an old Jerry Reid song I heard on the radio a few weeks ago named (I believe) 'You Got the Gold Mine, I Got the Shaft'. I understand their frustrations but I think this is another example of unintended consequences of poor leadership.

    You would think that United would make it a policy to leave open overhead bins for the most profitable customers they have.

    It's another reason in my mind why Southwest continues to grow and is so strong. Their people in very large part are engaged with the customer, care and try to make flying fun.


    Fun for most people, anyway. But, as recent events have shown, not everyone.

    From another reader:

    Thank you for writing this!  I have been part of the retail industry for over two decades and it still amazes me when you come across instances like this!   We have our own challenges of continually keeping up with training and standards given the high rate of turnover but it must be a focus or what you have worked so hard to build a reputation on will quickly erode by these sort of examples…. Take care of people, both your associates and the guests but the standard for the associates needs to be guest centric.




    Yesterday, MNB took note of how Nordstrom Rack finds itself in the middle of a racial bias incident, as employees in one of its stores, in St. Louis, apparently called the police and accused three teenagers of shopping while black. The New York Times reported that “the teenage friends had stopped into a Nordstrom Rack in suburban St. Louis on Thursday to look for last-minute deals before a high school prom on Friday night. Two employees followed them throughout the store, closely monitoring their every move, and reported them to the police … When the police arrived, the men cooperated with the officers, showed them their receipts and let them look inside their shopping bags and car, he said. The officers stressed that they were called out only because an employee had called 911.”

    The event became public, and created community outrage, especially since it came so soon after a similar incident at a Philadelphia Starbucks.

    I commented:

    Starbucks has decided to close down its US stores for an afternoon later this month so it can do some racial sensitivity training, and it remains to be seen whether Nordstrom Rack will do the same thing.

    I do think, however, that most retailers have to be aware that this could happen to them. They need to have plans in case it does, and they need to do what they can to create a company culture where it is less likely to happen.


    Now, I got one email about this story and comment, and I have debated long and hard with myself about whether I should post it. I’ve decided to do it, and here it is:

    It would be a lot less likely to happen if there weren’t so many Blacks who DO steal from stores.

    All I can say is that with attitudes like these, it is no wonder that companies get into trouble. The problem is, no amount of sensitivity or diversity training may be able to correct Neanderthal thinking like this.
    KC's View: