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    Published on: May 21, 2018

    by Kevin Coupe

    Last week we featured an Eye-Opener about how 20 participating independent bookstores in Connecticut decided to celebrate Independent Bookstore Day on Saturday, April 28, by offering the following incentive: Shoppers could obtain a Connecticut Independent Bookstore Day Passport at any participating store and, if they visited 15 out of the 20 stores on April 28 and 29 - and got it stamped - they could will receive a $25.00 gift card from each participating location. More than 100 customers won the promotion…

    To me, this was great example of a segment of the retail community taking control of its own destiny.

    Which made it interesting to me over the weekend when the Boston Globe ran a piece about Dana Brigham, who is retiring after 39 years working at Booksmith, a bookstore in Brookline, Massachusetts.

    Some excerpts from the interview with Brigham:

    • “As far as the independent bookstore business, there is to my mind nothing like it. It’s very arduous and challenging, but it’s so much fun and there are so many great people. And what you’re selling is learning and ideas and escape and comfort — and a whole long list of adjectives. It’s just a very magical profession, and the people who work in it are all so terrific.”

    • “I’ve had the opportunity over the years to hire and mentor lots of people who went on to become either authors, journalists, work in publishing. People sort of got their feet wet here first. So that’s really my favorite thing, I would say, of all the aspects of the job. All the wonderful people with whom I’ve had the opportunity to work.”

    • “Some years back there started to be conversations about the so called ‘third place.’ There’s work, there’s home, and then there’s a third place that is sustaining for people. So we, independent bookstores, definitely think of ourselves as that third place where it’s comfortable, safe, lively, interesting. As people spend more and more time on screens and [in] the world we know so much more about what’s going on every day everywhere and so much of it is troubling, I think that we feel even more like we’re an oasis of education, safety.”

    To me, this is the way that independents need to think if they are to compete in a cutthroat competitive environment - especially the notion that such a store isn’t selling books as much as it is selling “learning and ideas and escape and comfort.”

    To be effective, retailers often have to think of themselves as not just selling the thing they are selling. They actually are selling something far greater and more meaningful.

    That’s the Eye-Opener.
    KC's View:

    Published on: May 21, 2018

    Denise Morrison, who for much of her seven years as CEO of Campbell Soup tried to revive sales by investing in fresh foods, convenience products and healthier brands, unexpectedly resigned on Friday as the company said it expects 2018 earnings to be down between five and six percent.

    Morrison had been with Campbell since 2003, when she joined the company as president-global sales and chief customer officer, after a career that started at Procter & Gamble and stops at Nestle, Nabisco and Kraft.

    Keith McLoughlin, the former CEO of Electrolux who has served on Campbell’s board since 2016, will replace Morrison on an interim basis until a permanent replacement can be identified and hired.

    In a conference call on Friday, McLoughlin said that the company would embark on a head-to-toe analysis and reassessment of its various businesses: “We must take a fresh look...with urgency … everything is on the table. There are no sacred cows.” And, he added, “Our company has clearly faced challenges. Some of those are external factors that are impacting the entire industry and others stem from our execution.”

    In its analysis, the Wall Street Journal writes: “Like other American packaged-food mainstays, Campbell’s has been under intense pressure to satisfy customers seeking healthier and more convenient foods. Beyond soup, Campbell’s makes Pepperidge Farm cookies, V8 juices, SpaghettiOs and more.

    “Companies like Campbell, Kellogg Co. and General Mills Inc. that provided safe, affordable food for decades are being squeezed on one end by higher-end, trendier brands and on the other by cheaper store brands that grocers have added aggressively in recent years.”

    Under Morrison’s leadership - the Journal writes that she “was acutely aware of what she often called a ‘seismic shift’ in the way people are eating” and was “determined to win over millennials and transform Campbell into a broader ‘health and well being’ company” - Campbell acquired brands that included Bolthouse Farms, Plum Organics, Garden Fresh Gourmet, Pacific Foods organic soups, and Snyder’s-Lance.

    However, these bets did not pay off as quickly as Morrison may have expected or, in the end, needed.

    In addition, Campbell’s flagship brand ran into a sales buzzsaw when it had a dispute with Walmart over promotional pricing; since Walmart generated roughly 20 percent of the company’s overall sales, that proved to be a problem for an extended period.

    And, Campbell also found itself in a dispute with the Trump administration, when it complained that new tariffs on steel and aluminum would result in double digit cost increases. The administration argued that the tariffs would cost the company ab out a penny per can, and that its troubles could not be blamed on the new tariffs.

    The Financial Times writes that Campbell was just one of several CPG companies to change CEOs recently; the others include Kellogg, General Mills, Hershey and Mondelez.

    “In the case of New Jersey-based Campbell, the company has been wrestling with declining demand for its flagship canned soups amid a consumer flight for fresher and healthier alternatives,” FT writes. “It has also been hit by the rise of value-driven grocery chains such as Aldi and Lidl, which makes it cheaper to cook at home, as well as increasing competition from cheaper private-label goods.”

    In its second-day story, the New York Times writes that in the wake of Morrison’s departure, “there are now just 23 female chief executives running publicly traded companies on the Standard & Poor’s 500-stock index. That is 4.6 percent of the total, a figure that edged above 5 percent for the first time last year. Those who remain include Mary Barra at General Motors, Indra Nooyi at PepsiCo and Marillyn Hewson at Lockheed Martin.”

    The Times goes on: “Research has found that while female executives are much less likely than male executives to become the ultimate boss, they are more likely than men to do so if they stay on the management path for many years. Yet women are pushed out or leave at every stage along the way. At companies in the S.&P. 500, 45 percent of employees are women, but just 37 percent of midlevel managers and 27 percent of senior managers are women, according to Catalyst.”
    KC's View:
    I may be wrong about this, but I suspect that Denise Morrison would argue that the change at the top of Campbell Soup has less to do with gender and more to do with board and investor impatience for results.

    I’m reminded of a line from William Shakespeare’s “Macbeth:

    If t'were be done, t'were well it be done quickly.

    That’s true in many things, especially the assassination of a king, which is what Shakespeare was writing about. But as much as one would like things to go faster when it comes to corporate overhauls, that’s rarely the case.

    At Campbell, Morrison needed to change the company’s focus even while tending to its traditional red-and-white can business. That’s hard to do.

    I tend to think that Morrison was making the hard decisions and moving the company in the right direction if the goal was to keep it both big and relevant. Now, it seems possible that much of her work could be dismantled, and it will be instructive to see how it all turns out.

    Published on: May 21, 2018

    Business Insider reports that Sears plans to close 40 more stores by summer, in addition to the 166 it already had announced were being shuttered.

    The closures will take place in 24 states, and will include 31 Sears units and nine Kmarts.

    The story notes that “Sears has cut its store count in half within the last five years. The company had 1,002 stores as of early February, down from 1,980 stores in 2013. It closed another 103 stores in April, in addition to the 40 stores that will close by August.”
    KC's View:
    I don’t care how much CEO Eddie Lampert now argues that he is right-sizing the company for survival. It seems entirely more likely now that he’s stripping Sears down for parts, the most profitable of which he’ll sell to himself, leaving investors and employees holding an empty bag while he continues along his merry hedge fund way.

    Published on: May 21, 2018

    The Los Angeles Times has a story about how Petco, the pet/pet supplies chain, has signed a deal that will have exhibition kitchens installed in “hundreds” of its stores that will allow customers to see human-quality pet food being prepared “from USDA-grade meats and local produce,” and then “walk out with freshly made food for Fido.”

    The deal is with San Diego-based JustFoodForDogs, which will have its staffers in-store preparing the company’s “signature meals.”

    The idea, the story says, “is to pull back the curtain on the dog- and cat-food-making process, and, perhaps more important, bring in discerning millennial buyers to Petco's physical stores. The group, known to treat their pets like family members, often patronizes independent pet stores, where they pay a premium for raw, grain-free or organic brands.”

    The Times writes that “the kitchens at Petco will be near-replicas of JustFoodForDogs stores and will be staffed by JustFoodForDogs employees, who are trained to provide in-store consultations to curious pet owners. The first in-Petco kitchen should debut before year's end, though similarly branded pantries, stocked with food made nearby, will arrive within a few months.”
    KC's View:
    That’s more than the vast majority of supermarkets provide to their shoppers, but it also suggests a potential approach that bricks-and-mortar stores could approach when differentiating themselves from the competition.

    Published on: May 21, 2018

    Starbucks has formally reached out to its staffers throughout the US, informing them that its store bathrooms and tables and chairs should be made accessible to anyone who wants to use them - no matter whether they are paying customers or not.

    The letter is meant to formalize a policy where there was none before, ambiguity that helped lead to a recent incident in which two African-American men in Philadelphia had the ;police called on them when they were waiting for a friend in a Starbucks before buying anything.

    The letter says that “any person who enters our spaces, including patios, cafes and restrooms, regardless of whether they make a purchase, is considered a customer.”

    Fortune notes that this “raises the specter of an influx of unwanted traffic, particularly to the chain’s bathrooms, but the memo laid out a seemingly sensible answer: Starbucks already has procedures in place for how staff should deal with paying customers who become disruptive. Those policies will now be clarified and expanded to include all guests in Starbucks stores, regardless of whether they’ve bought a drink.”
    KC's View:
    I can appreciate what Starbucks is trying to do here, but it seems to me that it is setting itself up for problems. What happens when paying customers can’t find a seat or get into the bathroom because there are so many non-paying customers are in the place?

    I worry that store managers are going to see their hands tied by a new policy that is so strict that it does not allow them to adapt to local circumstances. Racism never is appropriate - and let’s be clear, that’s exactly what is happening when someone is accused of sitting while black or driving while black or waiting while black. But there aren’t just two choices here … and that could be what Starbucks is reducing the situation to.

    Published on: May 21, 2018

    The Financial Times writes about how Google this week is launching a new music service that is designed to compete with what it calls the unhealthy “duopoly” of Apple’s iTuned and Spotify.

    According to the story, Google “will promote it with YouTube’s most expensive advertising campaign. The service, called YouTube Music, mimics the Spotify model: there will be a free, ad-supported tier with more limited functions, and a $10 a month subscription without advertisements and with extra functions.”

    FT notes that “Google has made previous forays into paid music streaming, such as Google Play, YouTube Key and YouTube Red, but none have proven a big hit and the competing services have confused customers. Meanwhile Spotify and Apple have added tens of millions of paying customers, powering a turnround in fortunes across the music business in recent years … YouTube’s latest push comes as music has become a bigger part of its business. YouTube is the world’s largest video site, and slickly produced videos by pop stars draws billions of views.”
    KC's View:
    I feel hopelessly anachronistic here, writing this story while listening to a Pandora station. (JJ Grey & Mofro, if you’re interested.)

    Be interesting to see how this plays out, because while Google has enormous power, there’s no question that Apple and Spotify has carved out dominant positions that will be hard to compete against.

    Published on: May 21, 2018

    The Washington Post reports that President Trump “has personally pushed U.S. Postmaster General Megan Brennan to double the rate the Postal Service charges Amazon.com and other firms to ship packages” as he has continued to argue that Amazon’s low shipping costs are a cause of the Postal Service’s financial problems. Those criticisms, the story notes, “culminated in the signing of an executive order mandating a government review of the financially strapped Postal Service that could lead to major changes in the way it charges Amazon and others for package delivery.”

    The Trump-Brennan meetings have not appeared on the president’s public schedule, the story says.

    The Post writes that “Brennan has so far resisted Trump’s demand, explaining in multiple conversations occurring this year and last that these arrangements are bound by contracts and must be reviewed by a regulatory commission … She has told the president that the Amazon relationship is beneficial for the Postal Service and gave him a set of slides that showed the variety of companies, in addition to Amazon, that also partner for deliveries.”

    Those explanations apparently have no resonated with the president, who also has accused the Post “of being Amazon’s ‘chief lobbyist’ as well as a tax shelter — false charges. He says Amazon uses these advantages to push bricks-and-mortar companies out of business. Some administration officials say several of Trump’s attacks aimed at Amazon have come in response to articles in the Post that he didn’t like.”

    Amazon CEO/founder Jeff Bezos owns the Post in a personal investment, and execs at the newspaper say he has absolutely no role in its editorial coverage.

    The Post writes that “Trump has berated Amazon and the Post on social media, briefly driving down Amazon’s stock price. And he has said publicly that he doesn’t believe the information he has been presented by some of his advisers and Brennan herself regarding the Postal Service’s contract with Amazon.”

    While the USPS has suffered through billions of dollars of losses over more than a decade, the general consensus has been that its financial problems can be traced to a decline in first class mail and pension reporting requirements imposed by the US Congress; package shipping is seen as both a bright spot and profit center for the post office.
    KC's View:
    I see no reason to disbelieve the Postmaster General.

    Published on: May 21, 2018

    • Walmart Canada announced last week that it will sell its banking operations there to a US investment firm and a Canadian financier, Centerbridge Partners LP and Stephen Smith, which in turn will providing credit card and insurance products to Walmart’s Canadian customers.

    Terms of the sale were not disclosed.
    KC's View:

    Published on: May 21, 2018

    US Today reports that Coca-Cola is upgrading its Freestyle vending machine, which allows people to customize and mix-and-match drink flavors, so that people will be able to formulate their preferences via their smartphones, using Bluetooth technology.

    In addition, the story says, Coke is equipping “the upgraded machine, called the Freestyle 9100,” with “some new, but not yet activated, features Coca-Cola expects to need in the future. With the activation of a microphone, for instance, it could mix drinks from voice commands.”

    It is, USA Today writes, “the kind of move that could give the Atlanta-based soft-drink giant an advantage in the hyper-competitive beverage market. Smartphones make sense for drink ordering, because they will not only allow you to order exact percentages of different mixtures or flavor addition but also remember your preference for next time.

    “Empowering people to customize their creations — in this case, over ice — helps companies build long-lasting relationships with them, according to consumer behavior experts. That translates into more frequent and larger purchases.”
    KC's View:

    Published on: May 21, 2018

    • Albertsons announced that Gautam Kotwal is joining the company as Executive Vice President and Chief Data and Analytics Officer. Kotwal previously was served as Vice President of Analytics, Data Platform & Data Science Engineering for Kohl’s, and before that held several roles at Netflix.

    In a prepared statement, Albertsons president/COO Jim Donald said: “Our omnichannel platform is something our organization is deeply committed to, and to best serve our customers who shop each channel, we must begin to look at data across not only our customer base but also within our company to further innovate within our industry. Gautam possesses a unique blend of technical skill, boundless enthusiasm and a commitment to developing people and teams, all of which will serve him well in this new role.”
    KC's View:

    Published on: May 21, 2018

    On Friday, we took note of a Washington Post story about how, in trying to attract millennials to the ballpark, the Class A Lexington Legends instead condescended to them in marketing and promotion efforts that served only to annoy and alienate them.

    MNB reader Eric Carlson wrote:

    It seems every generation thinks the succeeding generation is a disaster. Aristotle said:

    “They [Young People] have exalted notions, because they have not been humbled by life or learned its necessary limitations; moreover, their hopeful disposition makes them think themselves equal to great things -- and that means having exalted notions. They would always rather do noble deeds than useful ones: Their lives are regulated more by moral feeling than by reasoning -- all their mistakes are in the direction of doing things excessively and vehemently. They overdo everything -- they love too much, hate too much, and the same with everything else.”


    Not to disagree with Aristotle, but it seems to me that the world would be a better place if young people did more useful deeds, and older people did more noble deeds.

    MNB reader Jackie Lembke wrote:

    WOW! As a parent of two millennials (age difference enough that they span the group), I am insulted and can’t believe that got past anyone who was thinking beyond “Aren’t we clever?”

    I haven’t met many millennials who actually resemble the stereotype. Yes, they received participation ribbons, hardly their decision as they were children at the time. My daughters, their husbands and their friends are all hard working, intelligent adults who are fun to be around. I think this promotion says more about the marketing team and management who gave it the go ahead then it does a generation of people who are trying to make their way in a very complicated world.


    MNB reader David Vincent Dec wrote:

    I loved your piece on this. When I hear my (lazy thinking) baby boomer peers complain about millennials, I always tell them, "You know, you sound like your dad.”

    From another reader:

    Need to remember it was us that raised ‘em.



    On Friday, we wrote about a new Relex Solutions survey, “Growing and Sustaining Competitive Advantage in Grocery Retail,” which concluded, among other things, that “only 2% of grocers feel helpless because of Amazon’s massive resources” and that “71% of grocers believe that omni-channel is now essential.”

    I commented:

    Only 71 percent of retailers think that omni-channel is essential? And only 2 percent feel threatened by Amazon? Yikes.

    MNB reader Jesse Ehlen wrote:

    I was puzzled by your comment to the Relex survey results. 
     
    The quoted conclusion stated that, “Only 2% of grocers feel helpless because of Amazon’s massive resources.”
     
    But you interpreted that as, “…and only 2 percent feel threatened by Amazon”
     
    I read the conclusion as meaning that 98% of grocers don’t feel helpless in the face of Amazon’s vast resources, meaning they (at least think they) have a plan to compete, having not yet conceded victory to The Bezos.
     
    Is my Millennial optimism clouding my view?


    Nope. You are right. I misstated what I was thinking.



    On the subject of now-safe romaine lettuce, MNB reader Gary Loehr wrote:

    I have been shocked by the lack of POS in stores.  How can stores have Romaine lettuce on display and not have a sign assuring the consumer that it is safe?  If they didn’t want to state a negative, just say “from California” or something similar.  Big miss by the retailers I have shopped over the last 2 months.



    Regarding the Kroger-Ocado deal, one MNB reader wrote:

    It didn’t dawn on me until Burt Flickinger mentioned that it was the best deal Kroger has entered in 25 years. If correct, what was that best deal 25 or so years ago? Kroger started this exact way with a company called Dunnhumby (84/ 51 today) coincidently a company from across the pond. Today, Kroger not only owns Dunnhumby (84/51) but they own the largest most in-depth consumer data base in any industry!
     
    They move slow, but this could get interesting!


    Not sure it is the largest and most in-depth consumer database … Amazon has a good one, too. But I take your point.



    On another subject, from MNB reader Lee Nichols:

    Regarding your article on the scholarship you established to honor your fathers wishes: My brother had the same wish seven years ago when he passed away.  We established a scholarship in his name at a Junior College in Virginia.  Each year my brothers widow, their three children and I review the essays submitted by the students.  It is indeed a wonderful living testament to your father’s lifelong commitment to education.  I think you may also find, as we have over seven years of reading the student’s essays and learning their stories, that it can also be a very insightful and personally rewarding experience for you and your family --  bringing you all closer together with a special bond as well.

    From MNB reader Chris Connolly:

    I can think of no better way to honor your dad’s memory and his service as an educator than to have set up a scholarship in his name.   In this part of the Midwest where I live, we have some wonderful community organizations being led by dynamic people who understand the importance of continuing education (and not just at four-year institutions, but also community colleges and trade schools….).   At this time of year it can be nothing short of amazing to see the thousands of dollars being awarded to deserving students and know the significance of those gifts, realizing how incredibly expensive it has become to attend a college or trade school.  
     
    I manage several scholarship accounts that have generated awards for years and it has been truly gratifying to see the results of those awards in the form of successful young people who have been able to get a little closer to their dreams with the help of the funds they have received. 




    We had a piece last week about how Tom Wolfe’s “The Right Stuff” was an enormous influence on astronaut Scott Kelly, who subsequently wrote his own book, “Endurance.”

    One MNB reader wrote:

    Buying both books now! Thanks!

    My pleasure.



    Finally, last week we took note of a Wall Street Journal story about the beers of summer - specifically, how “Mexican-style beers have become an unexpected darling of the artisanal set, and craft-brewed takes on this category have started to bubble up all over.” The Journal recommended five, and I said I’d almost certainly be taking their suggestions.

    One MNB reader responded:

    Kevin – a noble project for your summer – to do some “quality assurance” testing on the five beers of summer. If you find the right bar in Portland, you should be able to knock them out in a week!?

    Y’think it’ll take me a week?
    KC's View: