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    Published on: June 26, 2018

    by Michael Sansolo

    We spend significant time here at MNB talking about what’s new and how emerging trends threaten the status quo. Taken the wrong way, it might be perceived that we no longer see value in experience and longevity.

    Nothing could be further from the truth, which is why I want to refer to a small aside from Kevin yesterday: the link he offered to the wonderful “Carpool Karaoke” video James Corden hosted, featuring Sir Paul McCartney.

    The video, as Kevin said, in almost guaranteed to make you happy but it also is guaranteed to make you remember that quality and relevance are never out of fashion. McCartney, who seems to possess an unending supply of youthful cool, opines that long ago Beatles’ songs remain popular largely because their themes are timeless, upbeat and relevant. Oh, and they are still great!

    To punctuate the point, later in the video we see a young woman with a tattoo of the Beatles logo, even though she is clearly far too young to remember a time when the Beatles were still together. (This is not unusual. I have a 19-year-old on my street who worships the Beatles.) And late in the video, as we watch Paul perform some those old songs, nearly every young person in the crowd seems to know every word.

    It almost compels us to recall why the Beatles are still so important 60 years after we first heard of them. They were original, talented and their songs spoke to us in countless way from “She Loves You” to “A Day in the Life”. There have been countless rock groups since the Beatles, some far more talented musically, but none have come close to their status or impact. That’s the power of a phenomenon, which the Beatles were.

    And, as always, we can find business lessons in everything, including the Fab Four. The Beatles were, as a friend of mine said yesterday, genuine. Their songs, as McCartney makes clear, came from their personal experiences both happy and sad. As author Malcolm Gladwell has written, they also were consummate craftsmen who worked endless hours to hone their skills.

    In truth, you can’t simply make yourself fab. You can’t inspire Beatlemania about your products, services, stores or anything. That just doesn’t happen. But you can be inspired by their creativity, their work ethic and, most importantly, their ability to find a relevant message.

    Also you can watch McCartney and find an exemplar of finding joy in whatever you do. What’s clear from the video (and anything else you ever see, hear or read about McCartney) it is that he enjoys being Paul. He loves meeting fans and understands what people love and expect from him.

    Paul is well past 64 at this point, but we still need him and love him for all of that. Relevance is not a synonym for new or cool.

    Finally, a personal note: Speaking of staying relevant, I’d like to note that today is my 35th anniversary and my wife turns my head as much today as ever. The great ones are always that way and Janice is simply great!

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: June 26, 2018

    by Kevin Coupe

    This is from the a-picture-is-worth-a-thousand-words file.

    Because I think that the pictures below speak volumes about why Target desperately needs a partner to help it be more effective in grocery, and especially fresh food.

    I took it on Saturday at the Target store in downtown Portland, Oregon.

    Those melons, mangoes, grapefruit and other assorted kinds of fruit can be seen at the top of the escalator, displayed, for some reason, with candles (which look, for some reason, about as appetizing as the food).

    It is a disgrace. Who would buy and eat any of these products?

    If this is the best you can do, you ought to do something else. It is sort of Eye-Opening when one thinks that Target would be better off being out of stock, because this display is doing nothing to help the company’s image.

    KC's View:

    Published on: June 26, 2018

    The US Supreme Court ruled 5-4 yesterday that American Express was within its legal right to include in its contracts a stipulation that retailers cannot encourage customers to use other, less expensive forms of payment.

    Joining in the majority were Chief Justice John G. Roberts Jr. and Associate Justices Anthony M. Kennedy, Clarence Thomas, Samuel A. Alito Jr. and Neil M. Gorsuch.

    The New York Times writes that “the decision has implications not only for what one brief called ‘an astronomical number of retail transactions’ but also for other kinds of markets, notably ones on the internet, in which services link consumers and businesses … Justice Clarence Thomas, writing for the majority, said the specialized nature of credit-card transactions justified what in other circumstances might have been anti-competitive conduct.”

    The Times goes on:

    “Retailers pay so-called swipe fees when customers use credit cards. American Express charges higher fees than Visa or Mastercard, meaning that merchants have good reason to prefer those other cards.

    But credit card networks create ‘two-sided platforms,’ Justice Thomas wrote, and they ‘differ from traditional markets in important ways.’ Since card companies deal with both merchants and consumers, he wrote, people challenging actions as anticompetitive must take account of the effect on both sets of market participants.

    “Viewed that way, Justice Thomas wrote, American Express promoted competition by designing rewards programs to attract affluent customers. ‘Amex’s business model sometimes causes friction with merchants,’ he wrote. ‘To maintain the loyalty of its cardholders, Amex must continually invest in its rewards program. But, to fund those investments, Amex must charge merchants higher fees than its rivals.’

    “‘Even though Amex’s investments benefit merchants by encouraging cardholders to spend more money, merchants would prefer not to pay the higher fees,’ Justice Thomas wrote. ‘One way that merchants try to avoid them, while still enticing Amex’s cardholders to shop at their stores, is by dissuading cardholders from using Amex at the point of sale’.”

    The dissenting Associate Justices were Stephen G. Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. The Times notes that Justice Breyer read his dissent from the bench, describing it as “a rare move indicating profound disagreement. He said the implications of the ruling were vast and could hurt competition in many realms.”

    The Times quotes Justice Breyer as faulting “every part of the majority’s analysis. He said that the way American Express deals with merchants should be considered in isolation and that its contracts were anti-competitive.

    Justice Breyer wrote: “If American Express’ merchant fees are so high that merchants successfully induce their customers to use other cards, American Express can remedy that problem by lowering those fees or by spending more on cardholder rewards so that cardholders decline such requests. What it may not do is demand contractual protection from price competition.”

    In a response shortly after the decision was handed down, Hannah Walker, senior director of technology & nutrition policy at the Food Marketing Institute (FMI), stated:  “U.S. merchants pay an estimated $97 billion annually in hidden processing fees. These fees, particularly credit card fees, continue to increase unchecked every year and are hidden from consumers. We’re disappointed in the Court’s decision to prohibit retailers from discussing hidden fees with their shoppers as well as banning customer incentives to use a less expensive card at checkout. This decision stifles competition and throws a curtain on transparency in the credit card market, harming both consumers and retailers.”

    Stephanie Martz of the National Retail Federation (NRF) released the following statement: “Today’s ruling is a blow to competition and transparency in the credit card market. The American Express rules in question have amounted to a gag order on retailers’ ability to educate their customers on how high swipe fees drive up the price of merchandise.”
    KC's View:
    I’m now thinking that I probably should’ve gone to law school, because I have no idea what the hell Justice Thomas is talking about, nor why any of the points he made are more important than the clear anti-competitiveness of the Amex policy.

    Retailers ought to be able to be transparent about the factors that go into the rices that shoppers pay. To prevent that kind of transparency protects one class, and victimizes the consumer … which strikes me as being a shame. I don’t get it. But then again, I didn’t go to law school … and I’m used to disagreeing with the some of the rulings made by SCOTUS.

    Published on: June 26, 2018

    Kroger has caused consternation in the manufacturer community with a letter informing them it is changing its payment terms, moving to a net 90 day payment program standardized across the store. It also is working with Citibank to charge a financing fee to suppliers who want to be paid more quickly.

    The new program reportedly will go into effect on August 1.

    The changes are of particular concern to the produce industry, where there is a belief that the new terms could violate the federal Perishable Agricultural Commodities Act (PACA, which requires that fresh vendors be paid within 30 days. George Radanovich, president of the California Fresh Fruit Association (CFFA), for example, said that “it is inappropriate, if not illegal, to force suppliers to forfeit their rights under PACA, an act created specifically to protect the perishable fruit industry … “It is our understanding the Kroger has expressed a willingness to be flexible with this new policy, but ‘flexibility’ in this matter won’t help. By this action, they have opened the door for other retailers to violate supplier rights protected by law. Our industry should not and will not stand for attacks like this.”
    KC's View:
    I have the impression that at least in some cases, there will be suppliers who will be willing to pay the financing fee in order to get paid sooner, and then will deduct that money from whatever promotional allowances they were planning to offer Kroger.

    Ninety days sounds like an awfully long time … and probably damned near intolerable for small companies that need to get paid to survive. They shouldn’t have to take a cut in order to get paid sooner.

    This may seem like a smart idea from an accounting point of view, but I also think it potentially creates a scenario in which small, innovative companies are not going to want to do business with Kroger, which could deny them a level of innovation that every business needs. It’s pretty hard to be taken seriously when talking to folks about trust and collaboration when you simultaneously have your hands in the other company’s pocket and are threatening its existence.

    Which this could do.

    Published on: June 26, 2018

    Interesting piece in the New York Times about a small but growing trend taking place in San Francisco’s restaurant business.

    It is evident, the story says, “that the forces making this one of the most expensive cities in America are subtly altering the economics of everything. Commercial rents have gone up. Labor costs have soared. And restaurant workers, many of them priced out by the expense of housing, have been moving away. Restaurateurs who say they can no longer find or afford servers are figuring out how to do without them. And so in this city of staggering wealth, you can eat like a gourmand, with real stemware and ceramic plates. But first you’ll have to go get your own silverware.”

    That’s right. What is happening is that some restaurants are adopting a kind of cafeteria business model: “You have to do much of the work of dining out yourself. You scout your own table. You fetch and fill your own water glass. And if you’d like another glass of wine, you go back to the counter.”

    “Such hybrid restaurants are spreading to other high-cost cities, and they fit what analysts say is growing demand for more flexible dining options,” the Times writes. “But here, the extreme economics have rapidly made the model commonplace.”

    It isn’t just the high cost of housing that has created a scarcity of workers. San Francisco’s minimum wage is about to hit $15 an hour, and the city requires its businesses to offer a high level of health care benefits … all of which means that employees can be expensive. Which leads to asking customers to engage in self-service.
    KC's View:

    It would be easy for some folks to blame the high wages ands benefits for this program, but I don’t know how people being paid less could even afford to live anywhere near San Francisco. I know it is enjoying enormous prosperity, but it also is creating a city of “haves,” with “have-nots” sent off to live elsewhere.

    This just seems unhealthy to me.

    Published on: June 26, 2018

    In Minnesota, the Star Tribune has a piece about how Target is putting a face - and much more - on its diversity efforts.

    An excerpt:

    “When she became Target’s chief diversity officer four years ago, Caroline Wanga tested the waters by coming to work in dreadlocks, something she had always been told was a no-no in corporate America.

    “To her surprise, no one seemed to care.

    “Next she threw out her ‘work closet’ full of blazers and cardigans and started dressing the way she prefers.

    These days, she keeps employees at Target’s headquarters guessing and smiling at her get-ups. One day, her outfit might include a giant red cape and baggy red pants, spurring jokes that she’s been sent from Wakanda, the fictional high-tech African nation from Black Panther. The next, she might wear head-to-toe sequins. Some days her hair is orange, some days it’s red.”

    In her role, the story says, “Wanga has brought that same direct approach to helping Target establish eight companywide diversity goals, from increasing its assortment of multicultural dolls, beauty products and foods to improving hiring and retention of a diverse workforce. To encourage accountability, those goals have been tied into the compensation of the company’s top 300 leaders.”

    You can check out the story here.
    KC's View:

    Published on: June 26, 2018

    Quartz reports that “Blue Origin, the rocket company owned by Amazon founder Jeff Bezos, aims to begin selling tickets for suborbital space flights to tourists next year.”

    The story notes that “Bezos said in May that the company hadn’t determined the price yet. It seems pretty likely that it’s not exactly going to be an affordable jaunt for most … Unlike other companies aiming to turn the prospect of space tourism into a reality, Blue Origin isn’t taking reservations until it’s ready to start carrying people. Virgin Galactic, on the other hand, has taken hundreds of reservations for $250,000 tickets over the last decade, but after fatal setbacks, the company is still in the testing phase, and although founder Richard Branson expects to start flying soon, that timeline remains tenuous.”
    KC's View:
    How great would it be if Amazon Prime members were offered a discount on Blue Origin tickets? I’m not talking a huge discount that would make them available to poor schlubs like me … but maybe just a few thousand bucks that would make for some pretty good press coverage. Plus, they can pitch it as Amazon’s ecosystem reaching into the solar system.

    Published on: June 26, 2018

    • Amazon-owned Whole Foods announced this morning that it is now offering delivery through Amazon’s Prime Now in Chicago, Houston, Indianapolis, Minneapolis and San Antonio … . The service launched earlier this year with plans for continued expansion across the U.S. throughout 2018. “

    Among the other markets being served by the program are Baltimore, Boston, Philadelphia, Richmond, Los Angeles, Atlanta, San Francisco, Austin, Cincinnati, Dallas and Virginia Beach.
    KC's View:

    Published on: June 26, 2018

    Reuters reports that Danone Manifesto Ventures, an investment fund sent up by food company Danone, wants to invest in as many as two dozen start-up companies that will challenge “the dominance of big brands” by 2020.

    Among the companies already invested in by Danone are “French cookie company Michel et Augustin, frozen organic baby food company Yooji, and in Farmer’s Fridge, a U.S. company which makes vending machines that sell organic salads and snacks … It also recently invested in Hawaiian bottled water Kona Deep and Harmless Harvest, a U.S. premium coconut water firm.”

    • In Minnesota, the Star Tribune reports that “Costco opens its Costco Business Center in Minneapolis on Wednesday, one of only 17 in the country and a first in Minnesota. Tailored to small businesses, it’s open to all Costco members but piled high with products for businesses such as restaurants, caterers, day-care centers, convenience stores, motels, vending machine operators and offices.”

    The story notes that “a quarter of users of its business center order online, Costco said, which relieves the parking crunch. Nearly 70 percent of the items in a business center are not sold in a traditional Costco.”

    CNN reports on market speculation that Kraft Heinz is interested in acquiring Campbell Soup, even as the latter company engages in a review of its various businesses a month after the departure of CEO Denise Morrison, which came as the company predicted a less-than-rosy short-term outlook.

    According to the story, “Kraft Heinz has reportedly been looking for another deal since it abandoned a plan to buy European food and beauty products conglomerate Unilever (UL) last year.”

    Neither company has commented on the rumors.
    KC's View:

    Published on: June 26, 2018

    Following yesterday’s reference here to Sir Paul McCartney’s “Carpool Karaoke” appearance, and before Michael wrote his column (above), MNB reader Jeff Gartner wrote:

    Hey Kevin, I was going to recommend the Paul McCartney Carpool Karaoke to you after reading your Paul Simon concert review. I was going to use the word "joyous" to describe it, you used "happy." 

    Our youngest daughter (age 29) went to last Wednesday night's Paul Simon concert in Nashville and loved it. I told her I was jealous. The last of of his many encore songs was Bye Bye Love, an old Everly Brothers tune, and our daughter said he invited Don Everly to join him on the stage.

    From another reader:

    Thank you for the link to the show with Paul McCartney. I would have never have seen it otherwise. It was wonderful. It did make me happy. Thank you.

    And from MNB reader Monte Stowell:

    What a great treat this am to watch the Paul McCartney Carpool Karaoke link. You made my day a whole lot brighter by taking me down Penny Lane and Memory Lane.

    Great content in today’s MNB.

    I suggested yesterday, a little tongue-in-cheek, that Oreo’s next flavor extension ought to be marijuana-infused, leading one MNB reader to write:

    I never inhaled either KC, but I have heard it gives you the munchies.  But the Oreo's thing, what a scam they have going!  Talk about market share, how many flavors have they come up with?  I'd love to know.  But I have to ask, none of their marketing people could have thought of this thirty years ago?

    I actually think the constant barrage of new flavors has gotten a little tiresome … like an easy excuse not to really innovate. But maybe that’s just me.

    In the context of a commentary yesterday, I made the following comment:

    When we get to the point that a person of one political persuasion is asked to leave a restaurant because of those beliefs, I think we’ve crossed a line.

    One MNB reader responded:

    When we get to the point that a person with and connected to a great deal of destructive power and who intentionally uses that power to ruin many thousands of people’s (children’s, babies) lives gets any kind of sympathy for being asked to leave a restaurant, we know as society we have our values and our priorities totally and dangerously mixed up. Now that's a huge moral line that's been crossed.

    From MNB reader Vall Ajgaonkar:

    The thoughts paraphrased below are credited to the following activists, educators, & writers: Juan Pa Brammer, Laurie Penny, Steve Schmidt, Brian Klaas…
    Sarah Huckabee Sanders was not asked to leave a restaurant because of a difference in fiscal policy approach or philosophy of the role of federal government.

    She was refused because the owner of the restaurant spoke to her employees and they (LGBTQ people, immigrants) didn’t feel comfortable serving someone who represents an administration which has implemented policies/engaged in rhetoric consistent with that of white supremacists.

    I say “white supremacists” instead of “Nazis” only because I fear you will see the word as hyperbole and not for the factual parallels that historians repeatedly cite.

    Your privilege (i.e. lack of stakes in the game) is blinding you to the real-life (or death) consequences of the “political persuasions” of this administration.
    Tolerating intolerance does not make you a better person. It makes you complicit.

    And from MNB reader Theresa Zaske:

    Not very long ago you seemed to suggest that LGBT people should be willing to go somewhere else if a florist or baker, etc. didn’t want to serve them.

    But not serving someone because of their “political persuasion” is crossing a line?
    I respectfully disagree. If folks like me can be denied service and asked to find alternatives, so can others.

    I think I am guilty of prevaricating.

    I believe in both freedom of religion and civil rights. But I also believe that sometimes people use religion as a rationale for denying other people their civil rights, and I think this is wrong.

    I believe that baking a cake is not the same thing as endorsing gay marriage. If you don’t approve of gay marriage, don’t marry someone of the same gender.

    When I talked about the gay couple perhaps going elsewhere to get their cake, it was in the interest - if I am going to be honest - of sometimes preferring the avoidance of conflict. If the baker doesn’t want the business, my reasoning went, then give the business to someone else.

    But that doesn’t always work. And people, in my view, ought not be able to decide to whom they want to sell products and services. You’re open for business, you’re open for business to everybody.

    It is correct to point out that I’ve never been denied a product or service because of who I am, or the color of my skin, or who I love. Utterly fair.

    I understand the rationale for asking Sarah Huckabee Sanders to leave the restaurant. But I cannot lie to you … I am troubled by our culture’s growing polarization and incivility. I have more friends who disagree with me politically than who agree with me, but I am not willing to give up those friendships.

    I don’t think that makes me complicit. But I am uneasy about it all, while trying to be thoughtful, and concerned that we all are going down a dark hole of intolerance from which there may be no easy return.
    KC's View: