business news in context, analysis with attitude

Published on: August 22, 2018

by Kevin Coupe

Women’s Wear Daily has a story about a new Eileen Fisher “hybrid retail concept” in Brooklyn, New York, that is designed to integrate “the brand’s latest ideas, innovations and experiments in nearly 5,000 square feet of space” and turn it into a “community-centered” experience - not just a store.

The name of the store: Making Space.

According to the story, “Efforts to engage locals — and visitors — will take place on the lower level and include workshops, movie screenings, gallery shows and neighborhood events. Four product types will be highlighted at the store. A workshop for Renew designs will give consumers a look at how items from the company’s take-back program are given a second life.

“At the front of the store, a dedicated area will feature a different artist-in-residence every two weeks … Besides artist-led workshops, Making Space, will offer Lifework, whose goal is to help consumers build a more mindful, embodied life, which is part of the brand’s mission.”

Indeed, a mindful and deconstructed approach to life, fashion and even acquisition seems core to the brand and the space.

The location of the store, WWD writes, “has always housed makers of some sort. At the turn of the century, the building was a carriage factory. It was also a belt factory and more recently, invisible dog leashes were produced there.

“Fisher’s recycling centers receive about 800 items of the brand’s clothing every day. Garments are refurbished by designers at Fisher’s Tiny Factory in Irvington, N.Y., and Teeny Tiny Factory in Seattle using techniques such as over-dyeing with natural ingredients like pomegranate and eucalyptus or safflower to hide stains. Traditional mending methods such as boro, sashiko and embroidery celebrate flaws. Badly damaged items are salvaged by deconstructing and then engineering the pieces to minimize waste. As much of the recycled material is used as possible, with pieces stitched into Remade designs that preserve the value of the textiles.”

I think there is a lesson here for retailers about the use of space and the engagement of community, especially as bricks-and-mortar retailers seek ways to differentiate themselves from online retailers.

If you’re going to compete, it seems to me, it is critical to do things that the online guys can’t do - offer community-minded features, create theater, provide unique services, and look for ways to turn a physical space into a tangible and differentiated branding asset, not just a shell in which other brands are sold.

Such stores will be better positioned to succeed, I think. Such stores will be Eye-Openers.

Published on: August 22, 2018

E-commerce company Boxed, which has pitched itself as a kind of online version of Costco, yesterday announced that it has sold a minority stake in the company to Japanese retailer Aeon Group, which sunk $110 million into the company. The deal is said to value Boxed at around $600 million.

The New York Times notes that Boxed has been looking for investment for years, but was unable to get traction. “That changed a year ago,” the Times writes, “when Amazon bought Whole Foods Market. The $13.4 billion deal shook the grocery world, setting off a frenzy of deals and partnerships that continues to intensify. Traditional retailers pursued digital technology, and online companies reconsidered their relationship with brick-and-mortar retail.”

In the case of the Boxed deal, the Times writes that “the ownership structure allows Boxed to license its technology to its retail competitors in the United States as they try to become more digital. The company is in talks with 10 or so potential partners for various pieces of its technology. They include mobile app technology, personalization software, a packing algorithm that maximizes space in shipping boxes, software that tracks item expiration dates, order management software and warehouse robotics automation.”

The Times story points out that “food shopping is one of the last major holdouts to online retail. Groceries are unique in that their inventory is perishable, fragile and heavy. Grocery customers often shop at the last minute, like to see the food they are about to eat and don’t want to pay high delivery fees … Grocery delivery is difficult to do affordably, but tech-driven efficiencies like those developed by Boxed, Amazon and others have forced change on the industry.”

Published on: August 22, 2018

In Minnesota, the Star Tribune reports that Supervalu’s shareholders have approved a new corporate reorganization “that is designed to make it easier to sell its retail operations.”

The move comes just weeks after Supervalu’s decision to sell itself to United Natural Foods for $2.9 billion, which followed a period during which it was under investor pressure to sell the company.”

The Star Tribune writes that “Supervalu earlier this spring told shareholders it wanted to reshape itself into a holding company structure that would facilitate an easier disposition of its retail stores. After several previous sales of regional grocery chains over the past few years, Supervalu's retail holdings now chiefly consist of Cub Foods in Minnesota, Hornbacher's in North Dakota and Minnesota, and Shoppers Food and Pharmacy in several mid-Atlantic states.

“United Natural Foods executives said they would sell the Supervalu retail chains after closing the acquisition. But Supervalu is allowed to sell some or all of them first, if any such deals meet conditions the two firms agreed upon. Either way, the fate of Cub Foods, the largest grocery chain in the Twin Cities with a 25 percent market share, and Supervalu's other retail units is up in the air.”

Published on: August 22, 2018

The Houston Chronicle has a story about how some malls, desperately seeking relevance - not to mention survival - are embracing the use of green space “where adults can practice yoga, kids can run around and families can enjoy a movie night on the lawn.”

The Chronicle writes that “mall owners, facing mounting pressure from the growing popularity of e-commerce, are increasingly focused on creating a brick-and-mortar experience that can’t be replicated online. In recent years, malls have focused on adding high-end restaurants, bars and movie theaters to attract patrons.

“Green space is a natural extension of that movement, one that takes a page out of urban planning around parks.”

At one such shopping center, Houston’s First Colony Mall, “six restaurants will overlook the new green space, allowing parents to watch their children play while eating a meal on the patio. The lawn will be surrounded by Adirondack chairs and tables, shade structures and lawn games such as corn hole and oversized Connect Four. On one end, a video screen spanning 13 feet tall and 21 feet wide will be used to play films, live music and Texans and Astros games. The mall plans to host regular events on the lawn, which could include yoga sessions in the morning and game watch parties in the evenings.”

Published on: August 22, 2018

The New Yorker has a lovely piece by Michelle Zauner, who describes herself as the child of a Caucasian father and a Korean mother, and who finds that shopping at H Mart, a Korean supermarket, is simultaneously evocative of her youth and family while prompting in her a kind of sadness related to a past that never can be recaptured.

“My mom,” she writes, “was my access point for our Korean heritage. While she never actually taught me how to cook (Korean people tend to disavow measurements and supply only cryptic instructions along the lines of ‘add sesame oil until it tastes like Mom’s’), she did raise me with a distinctly Korean appetite. This meant an over-the-top appreciation of good food and emotional eating. We were particular about everything: kimchi had to be perfectly sour, samgyupsal perfectly crisped; hot food had to be served piping hot or it might as well be inedible.”

She goes on:

“I can hardly speak Korean, but in H Mart I feel like I’m fluent. I fondle the produce and say the words aloud—chamoe melon, danmuji. I fill my shopping cart with every snack that has glossy packaging decorated with a familiar cartoon. I think about the time Mom showed me how to fold the little plastic card that came inside bags of Jolly Pong, how to use it as a spoon to shovel caramel puff rice into my mouth, and how it inevitably fell down my shirt and spread all over the car. I remember the snacks Mom told me she ate when she was a kid and how I tried to imagine her at my age. I wanted to like all the things she did, to embody her completely.

“My grief comes in waves and is usually triggered by something arbitrary … catch me at H Mart when some kid runs up double-fisting plastic sleeves of ppeong-twigi and I’ll just lose it. Those little rice-cake Frisbees were my childhood: a happier time, when Mom was there and we’d crunch away on the Styrofoam-like disks after school. Eating them was like splitting a packing peanut that dissolved like sugar on your tongue.”

Like I said, a lovely piece, and you can read it here.

Published on: August 22, 2018

Business Insider writes about Ryan Carson, founder/CEO of a programming-education company called Treehouse, who three years ago generated some attention “when he announced that his 87 employees would enjoy a four-day workweek,” and would be required to only put in32 hours a week.

"There's no rule that you have to work 40 hours, you have to work more to be successful," Carson told the Atlantic in 2015.

It was an experiment that did not work.

“"There was a lack of work, like, literally a lack of work ethic … It created this lack of work ethic in me that was fundamentally detrimental to the business and to our mission," he says. "It actually was a terrible thing.”

And, he says, “The difference I want to communicate is, there is a certain amount of hard work you have to do. The whole like grind thing is kinda bulls---. I think you can work smarter, but I don't think you cannot work harder. You've got to do both.”

As for Carson, he says he now works 65 hours a week.

So much for “work smarter, not harder.”

Published on: August 22, 2018

Fast Company writes about a new app called Pinto, described an enabling consumers “to scan the back of a package and get a personalized nutrition label that focuses specifically on the ingredients and nutritional information you care about.”

In other words, the app takes all the available nutritional information and then filter it through the prism of what a consumer actually is concerned about. The story notes that “some of the information you can get in the app, like added sugars, isn’t shown on standard nutrition labels. And current labels don’t account for the increasingly divergent way that consumers eat. The startup built a data science engine that takes all of the raw nutritional data and classifies it against specific consumer needs.”

Cofounder/CEO Sam Slover says that “the data that we’re producing about food in terms of how it powers personalization, and getting the right product in front of the right consumer, is one of the harder and more interesting challenges in grocery, in nutrition, and food right now.”

Published on: August 22, 2018

• Kroger announced that Kroger Ship, its new direct-to-customer e-commerce platform, is launching in its Atlanta Division, building on availability to this point in Cincinnati, Houston, Louisville, and Nashville.

On Kroger Ship, the company says, “Customers can shop from a curated selection of 4,500 Our Brands products, which are not available anywhere else online, and more than 50,000 center-aisle groceries and household essentials, influenced by 84.51° data and insights. New and exciting food and products will continue to be added to the e-commerce platform.

“The service offers competitive e-commerce pricing and fast and free doorstep delivery by a package carrier on orders over $35, otherwise shipping is $4.99 per order.”

Published on: August 22, 2018

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

• The Washington Post has a review of one of Chick-fil-A’s new meal kits, which cost $15.80 and are not, contrary to expectations, take-home versions of the fast feeder’s signature sandwiches. Rather, they “provide the templates for other meals starring the company’s signature ingredient.”

While the kits include a lot of plastic, the reviewer says that the chicken parmesan version that was tested “was quicker and easier to cook than Blue Apron,” and “surprisingly good.”

However, there was a downside: “Then we looked at the nutrition facts and realized that we had each consumed 77 percent of our recommended daily allowance of saturated fat, and 74 percent of our daily sodium.  The ingredient list was novella-length, and packed with preservatives — though a news release proudly points out that, as in Chick-fil-A restaurants, none of the chicken contains antibiotics. Regret set in, as did thirst. We spent the rest of the afternoon chugging water and feeling vaguely puffy. I thought ahead to my next meal. It would definitely be salad.”


• The Oregonian reports that the Orchard Supply hardware store chain, a subsidiary of Lowe’s, is being shut down. All of its stores will be closed by the end of the year.

Originally a non-profit cooperative, Orchard Supply at its height had 99 stores, but has been through bankruptcy and store closures, and earlier in its existence was owned by Sears.

Liquidation sales are slated to begin shortly.


• The Columbus Dispatch reports that the BrewDog Brewery, in Canal Winchester, Ohio - about 15 miles southeast of Columbus - is about to open its DogHouse hotel there, adjacent to the brewery.

Big selling point: Each of the 32 rooms has a beer tap.

Other selling points: “A workout facility with Rogue Fitness equipment, a lobby bar, daily breakfast, and a few dog-friendly rooms, because, of course, its the DogHouse. The hotel also happens to be next to the huge outdoor patio of BrewDog’s pub in Canal Winchester and the company’s dog park.”

They had me at “beer tap.”


• Willamette Week reports that Keizer, Oregon, about 45 minutes south of Portland and a little north of Salem, soon will be home to an In-N-Out fast food restaurant. It will be the company’s third Oregon location; the other two are in Medford and Grants Pass, in the southern part of the state.

In-N-Out has not confirmed the opening, but city officials have said that meetings have taken place with the company to discuss ordinances and signage.

No information is available about possible opening dates.

Perfect. A little wine tasting in the Willamette Valley, and then a Double-Double, animal style, on the way home. It really doesn’t et any better than that. I’m estimating that I’ll be in Portland for the summer 2019 semester at Portland State University on or about June 22, so the clock is ticking…Be still my heart.

Published on: August 22, 2018

On the subject of driverless vehicles - which are getting a lot of attention these days, as Kroger tests them to deliver groceries to people and Walmart tests them to deliver customers to its stores - MNB reader Stacy McCoy wrote:

I’m pretty sure we all agree that the debate in this arena is not a question of “If” just a question of “when”. And honestly, I think I would prefer a driverless vehicle with a company logo showing up in my driveway for a delivery, over some of the questionable characters that have been making deliveries to my door… unmarked cars / vans, no uniforms – nothing to suggest they are there to make a delivery until they drop a package at my door. I usually just let my dog bark at them until they leave before I open my door to retrieve the package.



On the subject of legislation that would ban the imposition of overdraft fees on banks, introduced by Sen. Cory Booker (D-New Jersey) because of studies showing that they hit poor people far harder than the more affluent, one MNB reader wrote:

In addition to overdraft fees being a cash cow for banks, there is the fee for failure to make the required minimum payment on a credit card balance.  If a person has a $3,000 credit limit, and fails to pay a $10 minimum payment on a current statement balance of $500, that account gets hit with a fee of about $35 give or take.  Yet that cardholder could charge up to another $2,500 to that card.  I suspect that the majority of failures to make that minimum payment is due to oversight or a statement that was lost in the mail.  I may be wrong, but a person who is unable to make that payment could make a purchase with the card greater than the minimum payment, and then return that purchase before the statement due date and get a credit on the account that would be considered a payment and thus avoid the fee.  But my JPMorganChase stock has done very well so I sincerely thank all the suckers paying those fees, in addition to the 24% interest on their unpaid balances.



MNB reader Mike Bach has some thoughts about another subject:

With employment levels pretty high, few of thinking about the next recession today. In fact, it’s more common to read that Millennials are getting lots of choices in job selection, which hopefully is allowing for wage appreciation.

But, Millennials are likely to be most impacted when the next recession comes around.

The average net worth of a family headed by someone born in the 1980s is 34% below what is expected, due to the Great Recession, according to a new study from the St. Louis Federal Reserve. The study found that loss to be higher than any other age group surveyed, and the discrepancy continued well after the end of the recession — primarily because the generation carries debts but is less likely to own an appreciating asset.

Although millennial-headed families are unlikely to own real estate, they are still heavily in debt, with student loans, auto loans and credit card debt.

Which is going to have an enormous impact on the economy, because it restricts spending and investment. If you sell stuff for a living, that’s a problem.



Regarding Amazon building a new DVR that presumably will fit into its broader ecosystem, one MNB reader wrote:

At first I was excited to hear about Amazon getting into the DVR business but after thinking about it, I've backtracked to the other side of the fence.

Amazon has built its world around search and allowing people to find items quickly. In the Amazon Prime Video world, they've totally dropped the ball. Their search functionality is stuck in the 90's. With movies, it's mostly about either knowing exactly what you want by name or endless scrolling through their pre-selected suggested videos.. With today's technology, allowing people to filter using filters should be easy. Have you ever tried searching for videos via ratings? (Meaning PG, or R,  TV-14 or TV-MA not 5 stars vs 1 star). You can't. Have you noticed the suggested videos are usually a top 20ish selection and not their entire catalog of items for that genre?

If they use this same mentality for their DVR service, good grief! Customers will spend half their time scrolling  trying to find the latest episode. Amazon does a lot of things right, but their Prime Video is awful. I"m taking a wait and see approach.

Fair enough.



We had a story the other day about Walmart seeking new sources for some products because of concerns about tariffs on certain categories being imposed by the Trump administration. MNB reader William Whipple responded:

Walmart deserted middle-America for “cheapest price” foreign goods - glad to see them squirming!



Writing about a story we had the other day about decisions and strategies embraced by Walmart CEO Doug McMillon, which seem to be working out, and the decision by some upper level women to leave the company, one MNB reader opined:

The point with this announcement is not that Doug McMillon is only 51.  The point is that Walmart has a severe problem with attracting and maintaining talent, both male and especially female.

I have worked at Walmart, as well as with many other retailers.  The pressures placed on Walmart by the financial community is immense, and filters into the organization in Bentonville, and most people know their work life at Walmart can end very quickly, and often does (based on historical examples).  There are really good people at Walmart, but organizationally, they are a really tough place to work.  If you are a top performer, male or female, you will most likely be sought by other organizations and when the call comes, Walmart makes it very easy to make the decision to leave.

From another reader:

Have to admit, Mcmillon has done a great job. Definitely what Walmart needed, somebody not from the old boy network.

Just from the boy network. Not the old boy network.



Michael Sansolo wrote yesterday about E-Mart, a company in South Korea that sells a “One a Day banana” pack that includes bananas at different stages of ripeness all in the same container. The consumer thereby gets bananas reaching ripeness on different days, so they can be consumed at the perfect time for each one.

Michael thought this was a terrific and highly consumer-friendly idea. But MNB reader Aaron Gottschalk responded:

I disagree and think the banana pack is another sign of the millennial generation needing all things created and catered and so what's next?  The multi-level peach pack?  The slowly and surely ripening watermelon for single users who want that taste of freshness every day for a week on end? The perfect apple that bounces when dropped?  The self healing zucchini in which a blemish or soft spot never occurs?  

Nope, I don't agree that we need to have bananas available at different stages of ripeness.  I can only imagine the marital strife and the daily race to the homemade banana tree to get the perfect banana, leaving either the overripe or the hard green one for the partner who slept in.  Being one who is up hours before my wife I believe I would feel so guilty everyday I might give up bananas altogether.M

I think you may have an over-developed sense of guilt. But maybe that’s just me.

MNB reader Phil Britton wrote:

And then there are a weird few of us who actually like bananas best when they hit the "leopard" stage!

I don't see how this can work, though, since wouldn't the ripe banana in the package would cause the others to ripen faster?

MNB reader Chris Weisert wrote:

Been doing it for years. Never really thought I was ahead of the curve until I read this….

And MNB reader Jim Hornecker wrote:

Well, the idea certainly has a peel.

Bada-bing.



Yesterday’s Eye-Opener was about how Mondelez has, after more than 100 years, redesigned the packaging of its Barnum’s Animal Crackers box. Responding to pressure from the People for the Ethical Treatment of Animals (PETA), Mondelez has changed the box’s graphics so that the animals no longer are portrayed as being behind bars. Now, the zebra, elephant, lion, giraffe, and gorilla are all shown as roaming free.

PETA argues that “the new box for Barnum’s Animals crackers perfectly reflects that our society no longer tolerates the caging and chaining of wild animals for circus shows.”

I said I liked the idea, and that it is long overdue.

But MNB reader Bill Chiodo wrote:

Thanks PETA for solving life’s BIG PROBLEMS.

Methinks I detect a bit of sarcasm.

I get your point. This is a small thing. But sometimes, it is important to do small things, and this struck me as a nice statement about animal welfare. No more, but no less.
 
MNB reader Gary Loehr wrote:

Great idea to show the animals in a natural and humane setting.  Just don’t get rid of the string.  As I recall, that didn’t go well in the past.
 


I wrote the other day, commenting on a story about the importance of food quality over food variety, that “life’s too short to eat crap.”

Prompting one MNB reader, who clearly has been paying attention to my various rants over the years, to write:

Crap=Brussels Sprouts?

Not at all. I recognize both their quality and appeal. I just don’t like them.



Finally…

Regarding the case of the fellow in Colorado who, having won a case in which he argued that he should not have to bake a cake for a same-sex wedding because of his religious beliefs, and now is arguing that those same religious beliefs mean that he should not have to bake a birthday cake for a transgender woman celebrating the “birth” of their new identity. (The requested cake would’ve had a blue exterior and a pink interior; I hope I’m getting the language right.)

I’ve been saying that I believe that religion should not be used as an excuse for intolerance and discrimination.

MNB reader Drew Steverson wanted to follow up on an earlier exchange:

You usually are an intelligent and thoughtful guy, which is why I find it worthwhile to write to you on occasion. I want to point out what appears to be an incomplete argument. One which leaves you seeming to justify your own position without considering fully the opposing position as presented.

Mark Phillips wrote to you regarding his custom advertising displays, stating that he would not print pornographic content. Your response, if I might paraphrase, was “the cake wasn’t pornographic.” I find at least two problems with your argument.

First, you have missed the point entirely. Instead of looking to the underlying message, you have seized upon a single term in what was meant to be an illustration of a deeper idea. It is a textbook example of missing the forest for the trees.

Second, you actually support Mark’s argument while stating that you disagree. Let’s dissect that. You state that the reason there is no equivalency is because the cake isn’t pornographic. Implicit in that statement is the acknowledgement that if the cake were pornographic then it would be acceptable to refuse to make it. Why is that? Pornography is not illegal, so long as the subject(s) and consumer(s) are consenting adults (and the medium for distribution takes required precaution to prevent unauthorized content and/or consumption). So why is it acceptable to refuse to create pornographic content? The answer: moral objection.

In your response you have supported the right to refuse to create content which you find morally objectionable. This is exactly the point that Mark tried to illustrate for you (see point 1 above). The equivalency between Mark’s illustration and the situation in question is one of morally objectionable content. Mark finds pornographic advertising displays to be morally objectionable and therefore refuses to create them. The baker finds gender transition cakes to be morally objectionable and therefore refuses to create them.

Let’s be clear. I say that I believe that religion should not be used as an excuse for intolerance and discrimination. I am making what I believe is an ethical and moral point here. I recognize that this may or may not be a legal point; that will be up to courts and lawyers, and I am neither.

I also recognize that people will argue that they should not be required to adhere to my sense of ethics and morality, in the same way that I will not be bound by other people’s. That said, I believe that truth is truth, and for me, an essential truth is that intolerance of what other people are is wrong, and that religion ought not be used to justify intolerance.

I still maintain that it is a false equivalency to suggest that a person who is transgender is the same as a person who is a pornographer. Or a Nazi. Or a racist. Or a misogynist. Or a pedophile. Or a homophobe.

I understand that not everyone agrees, but for the life of me I cannot understand why. Because all of these other things are beliefs/acts that diminish other people, that promote cruelty, that have ugly and despicable actions at their core.

Someone once wrote that God judges people from the inside out; people judge other people from the outside in. That seems pretty accurate to me.

The transgender person just wants to be who he or she is. The person who marries someone of the same gender just wants to love and be loved, and make a commitment to that love. For the life of me, I cannot see why anyone who would to equate it with all that other stuff.

Then again, maybe I’m just out of step with where the culture is. But I think it is more likely that I am in step with where the culture is going, though it is proving to be a long and painful path.

My dad, who in many ways was as conservative about these things as they come, loved the Biblical verse that says, “God is love. And he who abides in love, abides in God, and God in him.” There were times in his life when, even though his instincts might’ve taken him in another direction, he found solace and guidance in those 16 words.

This discussion was started by something as small as a cake, but as big as personal intolerance cloaked in religious belief.

On this one, I’m going with my dad:

God is love.