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    Published on: May 31, 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, I’m Kevin Coupe and this is FaceTime with the Content Guy.

    It took just eleven hours this week for Rosanne Barr to go from making a tasteless, crude and racist remark on Twitter to losing her show.

    One can minimize the story by saying that it all takes place in the rarefied air of the entertainment industry, but the fact is that her revived situation comedy was a major hit this season, and ABC built its next-season schedule around it. But this week, ABC pulled the plug on “Rosanne,” saying that her comment on Twitter was "abhorrent, repugnant and inconsistent with our values.”

    (It probably didn’t help Barr’s case that Disney owns ABC, and blatant racism doesn’t exactly fit into Disney’s image.)

    I don’t particularly want to get into how disgusting Barr’s comment was, or how it reflects the degree to which social media seduces people into believing that they can say whatever is on their mind, and even give us a view of the dark recesses of their souls, and somehow it’ll all be okay.

    It wasn’t this time.

    But my point here is simple, and has more to do with the clock than anything else.

    Axios makes the point that Rosanne Barr posted her first, offensive Tweet at 2:45 am EDT. By 1:47 pm EDT, her show was cancelled.

    There’s a lesson here about how fast bad behavior and inadequate responses can catch up to a company.

    Axios writes that “the immediate action taken by ABC … is a good example of how the #MeToo movement and social media have pushed American companies to be more stringent on not just sexual behavior, but bad behavior overall … In recent months, we’ve seen companies, and especially media companies, take action against talent, staff and leadership for behavior that we now know executives knew about for a long time, or had settled in the past, or behavior that would have not been reprimanded in years past.” But no more.

    We’re in a no-tolerance zone. While this may not leave room for many people to make mistakes, I’m not sure it is a bad thing, because it also doesn’t allow for people to engage and indulge in persistently bad behavior.

    One other note. There’s another lesson here, about the importance of diversity in management.

    I think that Disney would’ve done the right thing anyway, but I also think it mattered that the president of the ABC Entertainment Group is Channing Dungey, an African-American woman who is, in fact, the first African-American president of a major broadcast TV network.

    Along these same lines, I believe that Starbucks would’ve done the right thing in dealing with issues of racial bias, but it helped that the company’s COO is an African-American woman named Rosalind Brewer.

    Diversity does matter. It opens our eyes and makes us aware at times and in places where we would hope that we would be on our own, but sometimes aren’t.

    These two lessons are what’s on my mind this morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: May 31, 2018

    by Kevin Coupe

    A story worth noting from MediaPost, which writes that “the average person will spend a whopping 479 minutes, or nearly eight hours a day consuming media this year, 12% more than in 2011, according to Zenith's just-out Media Consumption Forecast.”

    More media consumption stats:

    • “By 2020, people will spend an even more — 492 minutes a day — plugged in, per the report, easily crashing through the eight-hour time-spent-with-media barrier.”

    • “One-quarter of this time (24%) will be spent using mobile devices, projected to reach 28% by 2020.”

    • “Time spent at the cinema increased 3% between 2011 and 2018 as cinema owners have invested in more screens and a better experience for visitors, while studios have marketed their films more effectively to international audiences. Although this activity consumes just 1.7 minutes a day currently, Zenith estimates it will grow to 1.9 minutes in 2020.” (Lesson here: “Cinema owners have invested in more screens and a better experience for visitors.” That’s what any customer-facing business has to do in order to compete with disruptive technology trends.)

    • “Time spent watching television shrank by 3% between 2011 and 2018, while time spent listening to radio dropped by 8%. But the report stresses that television channels and radio stations have gained audiences online at the same time as they have lost them offline.” (Though I would expect that these numbers will go up when I start binge-watching “The Americans.”)

    • “Time spent with other channels continues to fall. Newspapers and magazines have lost the most, specifically 45% for newspapers and 56% for magazines between 2011 and 2018 … However, this refers only to time spent reading printed publications.”

    Eye-Openers, all.
    KC's View:

    Published on: May 31, 2018

    Walmart said yesterday that it is introducing “a new associate education benefit designed to remove barriers to college enrollment and graduation.”

    “In partnership with Guild Education, a leading education benefits platform, Walmart associates will be able to access affordable, high-quality associate’s and bachelor’s degrees in Business or Supply Chain Management,” the company said. “Under the program, which will be made available to all Walmart U.S. and Sam’s Club associates, Walmart will subsidize the cost of higher education, beyond financial aid and an associate contribution equivalent to $1 a day. Degrees will be offered through the University of Florida, Brandman University and Bellevue University – nonprofit schools selected for their focus and strong outcomes on serving working adult learners.”

    “Investing in the personal and professional success of our associates is vital to Walmart’s future success. We know training and learning opportunities empower associates to deliver for customers while growing and advancing in their careers,” said Greg Foran, CEO of Walmart U.S.

    CNBC writes that “the news of this program comes as many businesses in the U.S. today face a tighter labor market, and competition for the best talent is intensifying. Chains like Starbucks and Chipotle have started offering similar education perks to get workers to stick around.”

    And, in its analysis, the Atlantic writes, “The move to help its employees go to college looks good for a company that has been pilloried over the years for its low wages, lack of room for career growth, and stingy benefits. That cocktail has made it hard for the mega-chain one-stop shop to retain its workers. But it has tried to change in recent months, boosting its base-pay by $2 to $11 per hour and expanding its family benefits—maternity leave, in particular, which went from six to 10 weeks of paid leave. Offering tuition assistance to employees is another step toward making the company more worker-friendly.”
    KC's View:
    I like this a lot, especially because it reflects Walmart’s recognition of what is going on generally at retail - employees are harder to come by, and so companies are having to find new and innovative ways to find and keep them. Educating them is a huge benefit.

    I continue to believe that the other education-related benefit that retailers could adopt is to offer employees some level of college loan payoff assistance. These loans are an onerous burden on many young people, affecting their ability to buy homes and cars, have children, and do all the things that represent economic investments that help drive the country forward. Offer that, and companies become employers of choice.

    Published on: May 31, 2018

    The Seattle Times reports that Target plans to open three new small, urban format stores in the Seattle market over the next two years - each one differentiated based on the neighborhoods in which they are located. One thing they will have in common is that they will “serve as pickup locations for the company’s faster-growing online sales.”

    The Times writes that “the 21,000-square-foot store planned for the University District, for example, will emphasize items that fit in a dorm room, as well as food and drink, and portable technology products, the company said. That store, in a Panos Properties building on University Way NE, is set to open next year.

    “In Ballard, a 26,900-square-foot Target will occupy the ground floor of Martin Selig Real Estate’s 15th + Market office project. The store is also scheduled for a 2019 opening.

    “The third new Target, considerably larger than the others at 49,000 square feet, will be part of the Bellevue South development, an office, entertainment, medical and shopping complex in the works at 116th Avenue Northeast and Northeast Fourth Street. The company plans to open this store in 2020.”

    According to the Times, “Target now has 65 small-format stores across the U.S. and plans to open about 30 a year. At the same time, it planned to close a dozen under-performing stores early this year – a relatively modest paring back in the context of a 2017 that saw more than 5,000 retail locations shuttered across several major national brands.”
    KC's View:
    Target is very smart to keep developing this format, which also builds e-commerce into the model. More people are moving to the city, and those same people are probably going to be looking for retail experiences that cater to their needs, whether they are online or in-store. Smart move. (It also, I think, makes Target even more attractive as a merger target. So to speak.)

    Published on: May 31, 2018

    CNBC has an interview with former Walmart CEO Bill Simon, who the story says “slammed Amazon for using cloud and ad revenues to support what he called meager retail profits.”

    Simon told CNBC that Amazon has been “gaining traction and profitability by other business activities that have nothing to do with retail," including Amazon Web Services and advertising. Walmart, on the other hand, “went out head to head, knuckle to knuckle and won market share in retail by executing a business model that customers wanted.”

    The story notes that Simon “wondered about Walmart's ‘expensive’ trip into e-commerce but at the same time applauded the company's commitment to online.”
    KC's View:
    First of all, let me say that I respect Bill Simon’s career and especially his military service - he spent 25 years in the U.S. Navy and U.S. Navy Reserve.

    But I’m really getting tired of his whining about Amazon - these days, he seems to make a habit of appearing either on CNBC or Fox Business and complaining about how Amazon is treated and evaluated, and how unfair it all is. I wish he’d just knock it off … though, to be fair, his comments do reflect how some folks in the retailing community think. They complain rather than compete effectively.

    Let’s just deal with these comments.

    I don’t think there’s any question that Amazon has figured out a formula that helps to support its retailing business, which continues to evolve as the company looks for new competitive advantages. But that’s a smart thing, not something to mock. They figured out a better way, or at least a more effective way, which was something that other retailers were not able to do.

    Now it is up to other retailers - such as Walmart - to figure out how to be competitive, as opposed to whining about it.

    Simon “wondered about Walmart's ‘expensive’ trip into e-commerce,” but he might have been better off wondering why he didn’t figure out a way to better compete with Amazon, and peer around the corner into the future, when he was in Walmart’s c-suite between 2010 and 2014, a time when Amazon was achieving considerable competitive traction. If he’d done a better job then - he was replaced because of disappointing store sales - maybe current CEO Doug McMillon wouldn’t have to make all the expensive strategic moves he’s making now just to close the online gap between Walmart and Amazon.

    On the other hand, it is possible that economic circumstances made it impossible for Simon to do what needed to be done then, even if he knew what to do. But he should keep in mind that economic circumstances now make it possible for Amazon to do what it does, and necessary for Walmart to do what it is doing.

    I’m just asking Simon to stop whining. Show a little style, concede that Amazon has been smart enough to reinvent the game and create a new economic model, and talk about what its competitors must do to differentiate themselves and succeed.

    Published on: May 31, 2018

    The Puget Sound Business Journal reports that Nordstrom plans to open two more Nordstrom Local stores - the 3,000 square foot format that “is designed as a neighborhood hub that allows people to shop and access Nordstrom services, but doesn't actually stock dedicated inventory. Instead, it has vans that drive to the stores to pick up product for visitors.”

    The first edition of the format opened on Melrose Place in Los Angeles: “It has a styling suite and eight dressing rooms surrounding a central meeting space where customers can sit while enjoying a glass of wine or beer or a cup of coffee from the espresso bar. Visitors can access personal stylists, pick up or return items, and can also get alterations done.”

    Now, Nordstrom plans to open two more in the Los Angeles area, and believes that it could expand the format to other cities around the country.

    "We think we have the underpinnings of something very special there," says Blake Nordstrom.

    Nordstrom Local, the story says, “is part of the retailer's strategy of switching from the legacy store view of its business to an omni-channel view that combines the physical and digital experiences and meets customers on their terms.” This strategy has taken numerous forms; earlier this year, Nordstrom acquired a startup called BevyUp, described as a technology that “bridges the precision of digital commerce with the experiential nature of physical shopping.”

    Full disclosure: BevyUp was a business that came out of Consumer Equity Partners, the venture accelerator run by Tom Furphy, who in his spare time - and he doesn’t have a ton - does The Innovation Conversation here on MNB.
    KC's View:
    You can almost cut-and-paste my comments from the Target story above into this space… Nordstrom is very smart to keep developing this format, which acknowledges that there are fundamental changes taking place in the department store model. You can change, or you can die. Pretty simple, I think.

    Published on: May 31, 2018

    Axios< reports that former JC Penney CEO Mike Ullman, at a recent conference on economic disruption, disputed projections from some quarters that roughly 25 percent of the nation’s 1,200 malls will close because of online competition and shifting consumer shopping habits.

    It will, Ullman said, be much worse.

    According to the story, “Ullman reversed the numbers, estimating that only about 300 malls will make it. The rest will close over the next five years, becoming victims of decades-long changes in consumer taste, including the recent impact of Amazonization … Ullman said malls must have adequate cash or access to financing to make the transition to a new style of retail, in addition to a location catering to the top income quartile.”

    Indeed, Ullman said that for a mall to survive, it needs either an Apple Store or a Tesla store. Or, preferably, both.

    Without those brands, Ullman suggested, a mall has an expiration date, and it isn’t that far down the road.
    KC's View:
    Wow. He’s even more cynical about this subject than I am.

    I think he may be too pessimistic…because he doesn’t factor into his thinking the possibility that more malls than expected might actually adapt new business models and attract different sorts of businesses in order to stay viable and sustainable.

    I do agree, however, that there are certain businesses almost necessary to keep a mall viable. I’ve always noticed that even in the most desolate mall, the Apple Store and Starbucks generally are doing some business.

    Published on: May 31, 2018

    Yahoo Finance reports that Amazon plans to open more bricks-and-mortar bookstores around the country, confirming “plans to open at least three more locations in Los Angeles, Bethesda, Maryland, and Lone Tree, Colorado, joining an aggressive expansion effort that includes 15 stores opened in the last two years.

    “Amazon Books can currently be found in the following U.S. cities: Seattle; Los Angeles; San Diego; Austin; Washington, D.C.; Chicago, Walnut Creek, California; San Jose, California; Dedham, Massachusetts; Lynnfield, Massachusetts, Paramus, New Jersey; Portland, Oregon; Bellevue, Washington; and two locations in New York City.”

    The openings come as Amazon also plans to open two more Amazon Go checkout-free stores, in Chicago and San Francisco, to go with the one now operating in Seattle.

    “It goes back to what Amazon is all about: We’re customer-focused, and we’re always looking to see if we can do things slightly differently and better for our customers,” says Amazon Books VP Cameron Janes. “Can we create a bookstore that adds something new and helps customers discover books in a new and interesting way? Can we help them discover and interact with our devices in person in a new and interesting way?”
    KC's View:
    This is the key to Amazon’s thinking - not just e-commerce, but the notion of customer obsession rather than competitor focus (plus, of course, passion for invention, commitment to operational excellence, and long-term thinking). That’s what other retailers have to compete against.

    Published on: May 31, 2018

    The Associated Press reports that 2018 competitive realities mean that the in dependent bookstore sector and Barnes & Noble each see in the other a kind of kindred spirit, despite the fact that not too long ago, Barnes & Noble was seen as an enemy by small bookstores that saw it as threatening their existence.

    There’s a simple reason: Amazon.

    "That does end up changing the dynamic a little bit,” says Oren Teicher, CEO of the American Booksellers Association (ABA).

    The AP writes that “while Barnes & Noble has struggled in recent years, the ABA has continued its rebound after a long decline brought on by Barnes & Noble and Borders, and then Amazon. Membership in the independent's trade group grew over the past year from 1,757 to 1,835, and the actual number of store locations from 2,321 to 2,470, at a time when online retailing has devastated numerous physical retailers. In the first four months of 2018, sales from the roughly 650-750 independent stores reporting numbers have increased more than 5 percent from the same time the year before, according to Teicher. In 2009, the ABA had just 1,401 members and 1,651 stores and had shrunk by two-thirds since the beginning of the 1990s, when membership topped 5,000.”

    And, the story notes, “it's not uncommon for Barnes & Noble outlets and locally owned stores to refer customers to each other should a given book be out of stock. On the corporate level, they are allied on First Amendment issues and on getting online retailers such as Amazon to collect sales tax. Teicher says it's vital for all so-called ‘bricks and mortar’ sellers that the superstore chain ‘not only survives, but thrives’.”
    KC's View:
    Remember the ancient proverb … The enemy of my enemy is my friend.

    Published on: May 31, 2018

    Axios has a story about a new report from the World Economic Forum and Boston Consulting saying that “almost 1 million Americans will see their occupations vanish entirely by 2026, and will have to train for a wholesale career change or probably not find equally paid work.”

    The study’s bottom line, according to the study: “In all, some 1.4 million Americans will lose their jobs to technological change in the next eight years, including 70 percent whose job type will just disappear. Without new skills, according to the report, 575,000 of them - 41% - will have either minuscule or no chance of finding other work. Women may be disproportionately affected.”
    KC's View:
    This is a problem, but also an opportunity and a responsibility … people have to start thinking right now about developing the new skills that will make them employable and even prosperous in this new world order. And, I think, the public and private sectors ought to be thinking about ways to team up in order to illuminate people about the importance of looking forward instead of backward, and seeing the future as a wellspring of possibilities as opposed to a dire threat to their ways of life.

    By the way, women may be “ disproportionately affected,” but it is my impression these days that more than ever, women are being awakened to the ideas that they need to be ambitious in their goals, aggressive in their actions, and unwilling to accept the ways things always have been. Because they’ve been underestimated and/or marginalized for so long, they actually may be better equipped to rise up and meet these challenges.

    Published on: May 31, 2018

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

    • Amazon founder/CEO Jeff Bezos, at the company’s annual meeting in Seattle yesterday, “acknowledged the e-commerce giant has come under a lot of scrutiny this year,” but “seemed open to increased inspection,” according to a CNBC story.

    “My own view on this is that all large institutions of any kind whether they be government agencies, nonprofits, universities, and certainly including big corporations, deserve to be inspected and scrutinized,” Bezos said. “It’s normal … I say, ‘Look, we are a large corporation. We deserve to be inspected. It’s going to happen. Don’t take it personally.’ Because when you take it personally, you start to do things that are counterproductive.”

    And, he said, "We have to conduct ourselves so when we are scrutinized we pass with flying colors.”

    Nice that Bezos isn’t whining about anything, but rather is seeing new challenges as simply another test that Amazon has to pass. Based on the “flying colors” remark, he doesn’t just want to pass. He wants an A+.
    KC's View:

    Published on: May 31, 2018

    • The National Retail Federation (NRF) is out with projections that “Father’s Day spending is expected to total a near-record $15.3 billion this year … A total of 77 percent of Americans will celebrate Father’s Day and spend an average of $133 per person … The expected spending would be second only to last year’s $15.5 billion, the highest in the 15-year history of the survey at an average $135 per person.”
    KC's View:

    Published on: May 31, 2018

    Yesterday, MNB took note of a Boston Globe report on the latest workout trend that seems to be gaining some traction, especially among young professionals: Pot, which apparently can help endurance and attitude.

    I commented, in part:

    I have to admit that I’m intrigued by by the notion that maybe it would help me deal with aching 63-year-old knees when I’m out for a run.

    Which prompted one MNB reader to write:

    Study after study from Stanford indicates the permanent effects marijuana has on short-term memory is devastating.   It seems to me that the Boston Globe story represents (at best) wishful thinking.
    Brain health is a new area that many companies are exploring. As early as 2000, scientists at New York’s Cold Spring Harbor were working on a protein called CREB, which was believed to create an “on-switch” in the brain to connect neurons to build long term memory / focus. It has taken many years to get them past the FDA’s initial safety phase and ready for proof of concept studies. Acetyl L-Carnitine seems to be the closest ingredient to a memory / focus tool there is today.
    All of which leads me to think that the FDA would have to undergo a similar process for approval.  I’d bet you are likely not to see the medical community approve this as a remedy for your 63-year-old knees.
    Perhaps a swimming club membership is in order?


    Regarding all the attention that Starbucks is getting for its anti-racial bias efforts, one MNB reader wrote:

    I can’t help but wonder if all the news coverage surrounding Starbucks training isn’t the cheapest advertising that can be had.

    Fair point.

    I’d argue that there’s nothing wrong with getting attention for doing the right thing. And maybe it’ll counteract all the bad publicity it got when the events in Philadelphia transpired.
    KC's View: