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    Published on: August 14, 2018

    by Michael Sansolo

    I am hesitant to quote Woody Allen these days, but the fact is that he offered a solid and indisputable business lesson when he said, “Eighty percent of success is just showing up.”

    That’s true. But in addition to showing up, it is critical to be ready to embrace whatever opportunities are offered to you.

    I thought about this last week when I read about the passing at age 78 of a former hockey player named Stan Mikita. That’s a new story you might have missed unless you were a fan of the Chicago Black Hawks or the original Wayne’s World. Personally, I always admired Mikita because his rather average size gave me hope as an athlete. What I didn’t know was he was also an important innovator and inventor - not because he was a scientist or philosopher, but rather because he just learned on the fly.

    According to a story told in Mikita’s Washington Post obituary, he broke the blade of his stick in practice one day, which was hardly unusual in the days of wooden sticks. Mikita inexplicably kept playing with the misshapen blade and discovered that it gave him greater control of the puck and a faster shot.

    According to a 1969 story in Time, Mikita and his far more famous teammate, Bobby Hull, jumped on the discovery and took to bending their blades through whatever means possible, including soaking them in hot water and wedging them under doors.

    It’s hard to know the exact impact of this serendipitous discovery, (and as my column last week showed, I don’t know much about the physics of centrifugal or centripetal forces) but Mikita suddenly became one of the top scorers in the National Hockey League. Today, virtually all players (at any level) use sticks with curved blades.

    Mikita also became one of the first players to wear a helmet, but that was due to getting hit in the head with a puck, not because of some freak discovery.

    Simply put, Mikita became a superstar both by showing up and by having his eyes wide open to new possibilities.

    There’s something incredibly inspirational in that story. All of us are exposed to so many challenges in the course of an ordinary day, but few of us examine those challenges to find new and better solutions. We know that while necessity is the mother of invention, but happenstance can play a big role as well.

    After all, Alexander Graham Bell didn’t set out to invent the telephone nor did Columbus intend to bang into an entirely new continent on his way to India. Discovery happens in all kinds of ways.

    Obviously, Mikita’s lucky discovery hardly ranks at the top of any scientific list, but it’s a reminder to us and our teams to keep our eyes firmly open because you never know what we’ll see or discover.

    Showing up is great, but doing so with our eyes open is far better. You never know what you’ll see.

    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: August 14, 2018

    by Kevin Coupe
    National Real Estate Investor has a story about how more and more retailers are investing in smaller store formats.

    Examples: Walmart, which “is building 3,000-sq.-ft. convenience stores with fuel pumps—called Walmart Fuel Station—in some parking lots of existing 180,000-sq.-ft. Walmart Supercenters that don’t already have gas pumps … Walmart continues to test other small-store formats as well. It launched a convenience/grocery pick-up store concept called Walmart Pickup With Fuel in 2016. It operates two 4,000-sq.-ft. locations in Colorado and Alabama. The stores include standard convenience store items, but also drive-throughs for picking up online grocery orders.”

    Also mention in the piece are Kohl’s, which has partnered with both Amazon and Aldi as it looks for a more convenient format with broader consumer appeal; Target, which “is building smaller, more streamlined urban-format stores as it continues to adapt its brick-and-mortar strategy and reach consumers that may live far from traditional, suburban Target stores … By the end of 2019, Target plans to operate more than 130 small-format locations nationally”; Nordstrom, which is testing a Nordstrom Local format that is all-service and no in-stock clothes; and even Ikea, which “is testing smaller-urban format stores.”

    In pretty much every case, these small store versions have some sort of integration of the companies’ online offerings. This isn’t just trying to cram 20 pounds of flour into a 10-pound bag, but rather represent attempts to rethink approaches and appeals. That’s smart.

    Beyond the desire to find ways to come at the e-commerce challenge from a different angle, these moves also represent some sort of Eye-Opening understanding that demographics are changing - companies that operated big box stores in the suburbs that catered to families with houses and minivans have to recognize that as people get married later, have fewer children, decide to live in urban areas and may not even own a car, they’ll have different needs and with patronize stores that seem relevant to their lives.
    KC's View:

    Published on: August 14, 2018

    Bloomberg reports that Walmart is facing the same challenge of rising costs as other retailers, and its size may not provide it with shelter from the storm. “Soaring costs for transportation and raw materials -- some related to tariffs -- have prompted” a number of manufacturers to raise their prices, the story says.

    Now, Walmart has a choice: “It may choose to pass along those price hikes to consumers. But that’s a riskier move nowadays as shoppers can easily defect to Inc. or deep-discounters like Dollar General Corp. and Aldi. Walmart could also play hardball with suppliers, perhaps by demanding rebates elsewhere or promoting its own portfolio of more affordable store-brand products.”

    In addition, the story says, “The tightest trucking market in years hits Walmart just as hard as its suppliers. The employee wage hike it announced earlier this year has now fully kicked in, along with other benefits like a college-tuition subsidy that could cost billions. And it’s still spending like mad to expand its e-commerce business, rolling out curbside pickup of online grocery orders and paying $16 billion to acquire most of India’s leading -- yet money-losing -- online retailer.

    “Those costs have dented Walmart’s profitability and weighed on its shares, which are down about 9 percent in 2018 after two straight years of gains. Still, most analysts and investors consider the spending necessary amid the encroachment by Amazon and the brick-and-mortar discounters.”
    KC's View:
    One of the questions that Walmart is going to have to answer is whether it is willing to make the kinds of long-term investments that will help the company’s viability and fuel growth, but often can hurt short-term share prices. That’s hard for a lot of companies to do, and we’ll have to see if Walmart’s cultural adjustments are up to the challenge.

    Published on: August 14, 2018

    Interesting piece in the New York Times this morning about how restaurants don’t have the same restrictions on how they are able to use “organic” as a descriptor for their businesses.

    Here’s how the Times frames the story:

    “While farms and other businesses that want to advertise their wares as organic have to answer to certifying organizations that conduct annual inspections for the Department of Agriculture, restaurants do not. A restaurant can seek organic certification if it wants, but is not required to.

    “Under the department’s current rules, restaurants (characterized as ‘retail food establishments)’ may call their food organic if they have made what Jennifer Tucker, the deputy administrator of the National Organic Program, called a ‘reasonable’ effort to use organic ingredients.

    “There is no precise definition, however, of what constitutes a reasonable effort, and no monitoring body for enforcement. If the department receives a complaint that a restaurant is falsely billing its food as organic, Ms. Tucker said, it will investigate the claim and if necessary, send a letter asking the owner to stop using the term.”

    Restaurants were exempted from standards established by the the National Organic Program, run by the US Department of Agriculture (USDA), Tucker tells the Times, because the “certification process is expensive, and it was thought that requiring compliance might impose too heavy a burden on restaurateurs.”
    KC's View:
    My belief is that “organic” ought to mean “organic.” Not “mostly organic,” and not “as organic as I can make it.” And the same standards ought to apply to every business.

    Published on: August 14, 2018

    The New York Times has a story about how the collection and use of biometric behavioral data is creating both new safeguards and challenges to consumer security.

    An excerpt:

    “When you’re browsing a website and the mouse cursor disappears, it might be a computer glitch — or it might be a deliberate test to find out who you are.

    “The way you press, scroll and type on a phone screen or keyboard can be as unique as your fingerprints or facial features. To fight fraud, a growing number of banks and merchants are tracking visitors’ physical movements as they use websites and apps.

    “Some use the technology only to weed out automated attacks and suspicious transactions, but others are going significantly further, amassing tens of millions of profiles that can identify customers by how they touch, hold and tap their devices.”

    An example:

    “The Royal Bank of Scotland, one of the few banks that will talk publicly about its collection of biometric behavioral data, started testing the technology two years ago on private banking accounts for wealthy customers. It is now expanding the system to all of its 18.7 million business and retail accounts, according to Kevin Hanley, the bank’s director of innovation.

    When clients log in to their Royal Bank of Scotland accounts, software begins recording more than 2,000 different interactive gestures. On phones, it measures the angle at which people hold their devices, the fingers they use to swipe and tap, the pressure they apply and how quickly they scroll. On a computer, the software records the rhythm of their keystrokes and the way they wiggle their mouse … A few months ago, the software picked up unusual signals coming from one wealthy customer’s account. After logging in, the visitor used the mouse’s scroll wheel — something the customer had never done before. Then the visitor typed on the numerical strip at the top of a keyboard, not the side number pad the customer typically used.

    “Alarm bells went off. The R.B.S. system blocked any cash from leaving the customer’s account. An investigation later found that the account had been hacked, Mr. Hanley said.”

    You can read the entire story here.
    KC's View:

    Published on: August 14, 2018

    The Cincinnati Business Courier reports that Kroger is suspending its use of eggs from the Mahard Egg Farm facility near Sulphur, Oklahoma, since an investigation by People for the Ethical Treatment of Animals (PETA) “found the farm was torturing and brutally killing unwanted hens. PETA posted a video on its website and on social media showing Mahard workers beating hens’ heads against metal boxes and keeping them in sheds where temperatures reached 106 degrees. The workers also bludgeoned hens with a board and gassed many hens with carbon dioxide, which PETA says caused extreme pain.”
    KC's View:
    I don’t think there ought to be much of a question about how to punish people who treat animals this way. It would start with metal boxes where the temperature reaches 106 degrees…

    Published on: August 14, 2018

    USA Today reports that Amazon no longer can be considered just a Seattle company - a conclusion that is completely separate from its search for a second North American headquarters city.

    “More than a quarter of Amazon's U.S. tech and managerial workers are not based in Seattle.,” the story says. “The company has 17 North American tech hubs with a total staff count of at least 17,500, a reflection of the tech expertise that’s grown up in specific areas and the reality that not everyone wants or can live in Seattle. Amazon's New York offices focus on fashion and publishing, for instance, while its Los Angeles hub concentrates on video and gaming.”

    The reason? “Amazon is engaged in a knock-down, drag-out fight for tech talent … For a company that has been hiring an average of 100 people a day across the globe for the last five years, there was no choice but to look outside Seattle, whose current population is 724,000.”
    KC's View:

    Published on: August 14, 2018

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

    • The Los Angeles Times writes that “McDonald’s Corp. and its franchisees plan to spend $390 million to update 550 McDonald’s restaurants in California through 2019. McDonald’s is modernizing its dining rooms, installing new digital menu boards and providing self-order kiosks inside its restaurants, among other improvements.”

    The moves are part of “a systemwide upgrade of most McDonald’s outlets nationwide that will cost the company and its franchisees about $6 billion … The upgrades are part of the chain’s bid to maintain sales growth in the fiercely competitive fast-food business.”

    • The Wall Street Journal reports that “Coca-Cola Co. is buying a stake in BodyArmor, the sports drink startup backed by Kobe Bryant and other athletes, marking the latest attempt by the beverage giant to break Gatorade’s lock on the sports market.

    “In addition to taking a minority stake, Coca-Cola’s bottling system could soon begin distributing BodyArmor’s drinks, executives said. The deal would also allow Coke to later take full ownership of the upstart, they added. Financial terms couldn’t be learned.”

    • In Minnesota, the Star Tribune reports that the “Mall of America will soon have another off-price concept joining Nordstrom Rack and Marshalls” - Macy’s Backstage, which is Macy’s version of an outlet store.

    Prices at the format, the story says, “are typically marked at a 50 percent discount from the ‘compare at’ or manufacturer's suggested retail price.”
    KC's View:

    Published on: August 14, 2018

    • Kroger has promoted Gil Phipps, vice president of Our Brands, to be vice president of branding, marketing and Our Brands.

    • The Fresh Market has hired  Oded Shein, most recently EVP/CFO at Stage Stores, which operates hundreds of specialty department stores and off-price stores in 42 states, as its new CFO.
    KC's View:

    Published on: August 14, 2018

    Regarding the question of what Albertsons and Rite Aid should do now that their merger has been called off, MNB reader Tom Murphy wrote:

    I always thought the Rite Aid deal was about Cerberus, and it's long web of management/investors (think Bob Miller), finding an exit strategy for all of the SuperValu, Albertsons, Safeway and other convoluted deals over the past ten or so years. Looks like the WSJ has similar thoughts. Rite Aid is likely a dead-man walking and Albertsons needs to get its crap together quick...they have the man in place who can do it (Jim Donald) if the financier idiots will give him some room or even stay out of his way.

    From another reader:

    Or, Amazon buys Rite Aid.  Not the most dynamic buy, but it immediately gets a national presence in the retail drug prescription business.  Trim poor locations, tighten processes....or am I dreaming?  Without something dramatic, Rite Aid is dead.  Maybe Amazon waits for the fire sale.

    As for what troubled Barnes & Noble should do, MNB reader Glenn Cantor wrote:

    Barnes and Noble has a really good selection of educational toys, which they don’t effectively promote.  They try to clearly identify the age-appropriate toys and group them into sections that make shopping easier.
    Now that Toys R Us is gone, they have an opportunity to expand their relevance in everything educational for kids and teachers.

    In my commentary yesterday about Barnes & Noble, I wrote:

    ”I don’t think Barnes & Noble has much of a clue where it fits in any ecosystem at the moment.”

    Prompting MNB reader Andy Barker to write:

    I would say the same applies to most retailers in today's market!

    On the subject of tattoos, apparently no longer taboo for many employers, one MNB reader wrote:

    The artistry on some of the tattoos younger people have are really a thing of beauty. I wonder what they will look like 30-40 years from now, and will these folks have any regrets. The cost of having them removed is quite expensive.The people who remove tattoos will have a lot of business down the road.

    MNB reader Larry Cobb had some thoughts about another story:
    The Monsanto suit is more than one man’s case. This is right out of a John Grisham book. Try the first case in a liberal state to get it settled for large money then hit them with a huge class action suit nationwide. I would guess that many cases are being readied to be filed as we speak. Monsanto must win this case as it has sold so much weed killer over the years it will be exposed to much more and this could take them out. May I say like a bad weed?

    And finally, from another MNB reader:

    First off, thanks for doing what you do - I've been reading you for about 2 years now and really appreciate your candid commentary. I attribute my decent sense of the food/retail landscape to reading you on a weekly basis, so thanks for making me seem well-read to my colleagues!

    On your "Offbeat" section from last Friday I really appreciated the humanity of your statement that we're all "that guy" from time to time. Lord knows I sure am. Recently learned of a mental model known as Hanlon's Razor that's helped me step back from assuming the worst intentions of people. I try to replace "stupidity" with " ignorance" or "busyness". It's all too easy to assume someone doing something inconsiderate is them being a bad person, when they may otherwise be uninformed or preoccupied. For me, it's increased my patience and empathy with others and decreased my paranoia.

    KC's View: