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    Published on: September 10, 2018

    by Kevin Coupe

    Just when I think I’ve heard everything, and that there are no more original business ideas, along comes the concept of “rage rooms,” where people actually spend money to break stuff.

    That’s right. Some people jog, some people do yoga, and some meditate. But there is a growing availability of rooms where people can take out their frustrations by swinging a sledge hammer or a baseball bat, and smashing furniture, old electronics, and other stuff. Some places will let you bring your own stuff to smash, and the advantage is that they clean up the mess.

    The cost depends on the place. Stories suggest that it can be as low as $10 for five minutes, though there is a place in New Jersey that has a $195 package.

    All in the service of giving people a place to vent their anger.

    I guess this makes sense. Like I say, some people jog, some people do yoga, and some meditate. Some get therapy. And some ought to.

    Me, I have MNB.

    But rage rooms? That’s what I call an Eye-Opener.
    KC's View:

    Published on: September 10, 2018

    Engadget reports that Standard Cognition, which describes itself as an artificial intelligence platform, has opened a checkout-free store that “lets you purchase goods without scanning items at a checkout or passing through a turnstile. Once you've arrived and checked in using an app, Standard Market tracks the items you pick up using a camera system, and it can tell when you return products (even in the wrong spot) or place them in a bag or your pockets. Once you leave, the company will process your payment, and send your receipt via email.”

    The store is located around the corner from AT&T Park in San Francisco, and less than a mile from Zippin, another checkout-free concept store in the city.

    According to the Engadget story, “The San Francisco store will let Standard Cognition test how its tech scales, and trial some new features. The startup plans to expand opening times (it's currently only open for a couple of hours per day) and the number of products over the next few weeks. It will also let more people shop in the store simultaneously.”

    Both the Standard Market and Zippin stores appear to have beaten Amazon Go to the punch in terms of offering checkout-free retail experiences to San Francisco residents. Amazon announced last May its plans to open a Go store in San Francisco, but it has yet to debut there.

    Amazon also has announce its intention to open Go stores in Chicago and New York, in addition to the three stores it already has opened in Seattle.

    And, Mashable writes that “Walmart is reportedly working on its own cashier-less Amazon Go store competitors and might use Microsoft technology to accomplish it.”
    KC's View:
    One of the interesting things about the Standard Cognition test is that, according to the story, “it is providing its tech to other companies, and it will outfit thousands of stores in Japan ahead of the Tokyo Olympic Games in 2020.”

    Which means that we could be seeing a lot more checkout-free stores popping up on the landscape, under lots of different banners.

    I said from the beginning that Amazon Go’s influence goes way beyond just what it has in its stores, or even beyond any potential usage in any bricks-and-mortar store owned y Amazon. It is a game changer - potentially on the scale of scanning - that pushes the world forward and demands a competitive response.

    Published on: September 10, 2018

    Last week, Walmart announced that it would launch a premium online outdoor store, curated by its Moosejaw subsidiary, what would sell high-end brands of hiking boots, camping gear, and outdoor apparel.

    Not everybody was thrilled with the move, which was designed to attract more high-end shoppers.

    The Wall Street Journal reports that Walmart now is getting blowback on its plans, with some brands - such as outdoor gear manufacturers Leki, Deuter and Black Diamond Equipment - asking to be taken off Walmart’s website.

    Walmart reportedly has complied with those requests.

    The reason for the blowback? According to the story, “When the products appeared on Walmart.com, outdoor stores contacted the brands, some expressing concern that Walmart would eventually push product prices lower, said executives from outdoor-gear companies and retailers. In some cases, Walmart’s competitors told brands they would stop selling their products if they remained on the site.”

    The Journal goes on: “The dust-up highlights the pressures faced by both brands and retailers as they struggle to adapt to the rise of online buying. Brands are looking to boost sales online while still controlling the price and selection available. Traditional retailers are more aggressively facing off with Amazon, ensnaring brands. For Walmart, the outdoor-store challenges point to the balancing act of maintaining its reputation for low prices while attracting more premium brands that want to keep prices high.”
    KC's View:
    It is an interesting conundrum for upscale brands, who no doubt would like the sales that Walmart may be able to generate for them, but there is a matter of evaluating risk-reward. The risk, of course, is that Walmart does drive down prices (and, of course, it will) and that just an association with Walmart will somehow diminish their brand equity (and, of course, it could).

    It was about a dozen years ago that a premium lawn mower manufacturer got a fair amount of publicity for deciding not to do business with Walmart because the folks there saw such an association as being the beginning of a death spiral, because Walmart represented “a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion” of their quality value proposition.

    And, to be fair, a lot of these brands’ attitude toward Walmart’s online presence has been poisoned by their experiences and attitudes toward Amazon, which in some ways is seen as creating the same sort of pricing/value morass.

    Published on: September 10, 2018

    The Financial Times reports that Jack Ma, the founder and chairman of China’s Alibaba, plans to step down in September 2019. He will be succeeded by Daniel Zhang, who will add the chairman role to his role as CEO.

    FT notes that Ma is a former English teacher who has said that one of his goals is to return to education “because this is what I love to do.”

    According to the story, “The transition has been a decade in the making, with Mr. Ma focusing on a long-term vision and playing a more ambassadorial role since stepping down as chief executive in 2013. He will remain a lifetime member of the 36-person Alibaba partnership, the torchbearer for corporate culture and mission, and a shareholder in the group.” He will remain on the company board until 2020.
    KC's View:
    Ma may be a former English teacher, but he’s also clearly pretty good at math. In less that two decades, he’s built Alibaba into a technological e-commerce powerhouse worth $420 billion; he reportedly owns 6.4 per cent of Alibaba, and has a personal net worth in excess of $40 billion.

    I keep waiting for the big Alibaba move into the US, with some sort of merger or acquisition that reshapes the competitive marketplace. It’s coming … more a matter of “when” than “if.”

    Published on: September 10, 2018

    CNBC has a story analyzing why technology companies are getting into the heath care business, by offering on-campus health care clinics for employees and, in some cases, investing in broad scale expansions of those offerings.

    The reason for such moves?

    “Companies that are looking to manage their out-of-control health costs are all coming to the same conclusion,” the story says. “To really make a dent, they need to get involved when it comes to the most important, and most human, part of health care. And that's the relationship between the patient and the primary care practitioner.

    “A family doc can steer a patient to expensive specialists and to unnecessary tests and procedures, which adds to an employer's bottom line. Or they can help manage the patients' lifestyle, steer them to in-network specialists, and discourage them from taking expensive medicines they don't need. The latter can save an employer a lot of money in the long-run … It might be expensive to get employee health clinics up and running, but it might well prove to be an investment that pays off in the future.”

    Companies like “Apple and Amazon are realizing that they can't ignore opportunities in the health sector. But to get that right, they need to focus on the things they're good at.

    “Amazon is focusing on its area of expertise: the supply chain. The company bought PillPack, an internet pharmacy, and it has a grocery delivery business through Whole Foods. It is also working with two other employers, J.P. Morgan and Berkshire Hathaway, on an initiative to reduce health care costs.

    “Apple is taking a different approach in building health-tracking tools for the iPhone and Apple Watch. It has also made a number of small acquisitions in the space, including a medical record technology start-up called Gliimpse to help users access and aggregate their health information.”
    KC's View:
    I love the idea that these progressive, disruptive companies are investing in health care initiatives that they hope will have an impact on their internal cultures - going one more step in making them employers of choice - and could prove out to have an even broader return on investment because of outside-the-company applicability.

    I do think that success only will be achieved, however, to the degree that these companies understand that health care disruption cannot just be technological in nature. Human compassion also has to play a significant role.

    Published on: September 10, 2018

    The Associated Press has a story about the continuing evolution of convenience stores, where, more and more, “kombucha slushies take the place of corn-syrupy treats infused with red dye, tortilla chips are made of cassava flour instead of corn and there are vegan ice cream bars and a dizzying selection of organic produce and craft beer on tap.”

    The story goes on: “Analysts say millennials, who are willing to pay a premium for higher-quality ingredients and want to support companies in line with their values, are a driving force behind the trend for stores that are popping up around the country from Los Angeles to Philadelphia.

    “A 2018 report from EuroMonitor says convenience stores are changing their image to appeal to a more health-conscious generation, stocking up on gluten-free, grass-fed and organic products. While ‘portability and grab-and-go convenience remain critical, millennial dietary habits stand to revolutionize a channel that has been anything but health-conscious in the past,’ the report says.”

    “I don’t believe it’s a passing fad,” David Portalatin, food industry adviser for trend group NPD, tells the AP. “People bring the same demand for convenience but with a whole new set of food values to go along with it.”

    For the moment, at least, this shift is a small one, at least in terms of numbers: there are 154,000 convenience stores in the U.S., and just 200 that would fit into this convenient-and-health subset.

    But the number is expected to grow.
    KC's View:
    A couple of things here…

    First, it is interesting that this story was posted by the AP shortly after the Los Angeles Times did an excellent piece about Lisa Sedlar and her three-store c-store company, Green Zebra, based in Portland, Oregon.

    Now, I have a rooting interest in Green Zebra because a) I know and like Lisa Sedlar enormously, and b) I’m a customer - I am a frequent user of her store on the Portland State University campus, which is just a couple of blocks from the apartment I use when I teach at PSU during the summer.

    (Best tuna melt. Ever. Made with Mama Lil’s peppers. Makes me hungry just writing the words.)

    The Times gets the appeal exactly right: “If you crave a pack of Camels, a lottery ticket or a 40-ounce bottle of Olde English 800, you can blow off Green Zebra. But if you require a custom-built vegan sandwich, free-range chicken sausage, radish kimchi, organic beer or a half-gallon growler of CBD-infused sparkling lemon water, welcome home.”

    And Lisa explains, “We’re not trying to be the food police. But if healthy is your thing, we got it.” She also tells the AP, “We think of our stores as a human recharging station as opposed to the traditional convenience store, which tears down your health.”

    Lisa is close to opening her fourth Green Zebra store in Portland, and has plans to open stores up and down the west coast … which would put her at the forefront of the broader trend described by the AP.

    Here’s the thing. I think you can look at this subset and see reflections of even broader shifts that are affecting the c-store industry, and, by extension, everybody in the food retail space. As more and more companies decide to emphasize convenience - often through such services as delivery and/or pickup - convenience stores are having to expand their definition, which leads them to investing in similar services or in healthier foods that will redefine their appeal.

    It is fascinating, and is reshaping the competitive landscape.

    By the way, it may be worth mentioning here that I am speaking and moderating a panel at the NACS Show and Expo in Las Vegas, scheduled for October 7-10. My session, on Monday morning, October 8, will focus on delivery but will have as both context and subtext these competitive shifts … and one of our panelists will be Lisa Sedlar.

    Published on: September 10, 2018

    The New York Times over the weekend had an excellent piece about Lina Khan, who as a law student, argued in the Yale Law Journal that, contrary to popular legal opinion, Amazon “should not get a pass on anticompetitive behavior just because it makes customers happy. Once-robust monopoly laws have been marginalized, Ms. Khan wrote, and consequently Amazon is amassing structural power that lets it exert increasing control over many parts of the economy.”

    Khan wrote: “The thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor.”

    It is a fascinating argument, and there certainly is a counterpoint - that bigness is not in and of itself a negative, and that definitions have to change and enforcement provisions have to be adjusted for an economy that has evolved in dramatic ways.

    The piece is definitely worth reading here.
    KC's View:

    Published on: September 10, 2018

    Reuters reports that in the wake of its $16 billion acquisition of 77 percent of India-based online retailer Flipkart, Walmart now is being asked to explain its business model there.

    According to the story, “India’s National Company Law Apellate Tribunal (NCLAT), which is in charge of matters related to Indian companies, issued an order to Walmart Inc subsidiary Wal-Mart International Holdings Inc, the document dated Sept. 6 showed.”
    KC's View:

    Published on: September 10, 2018

    • The Wall Street Journal reports on how the frozen food business is on the upswing, with sales of microwavable meals “rising at the fastest pace in a decade … Sales of frozen entrees rose 5.7% over the year ended July 15, according to market-research firm Spins, after annual growth of 0.6% and 1.5% the previous two years. The latest bump outpaces the 2% rise in overall packaged-food sales and marks a change from several years of diminishing sales in frozen meals earlier this decade.”

    The story notes that “Conagra, Nestlé SA and Kraft Heinz Co. are spending millions of dollars to freshen up frozen brands, introduce new ones and expand manufacturing capacity,” while “efforts to cut salt, sugar and other less healthful ingredients from ready-made meals appear to be resonating with customers who like their convenience.”


    • In the UK, the Sun reports that celebrity chef Jamie Oliver, who ended his endorser’s relationship with Sainsbury more than a half dozen years ago, has now signed on with rival Tesco “in a renewed bid to get the nation eating more healthily.”

    According to the story, “Jamie will give millions of customers tips on how they can improve their diet. His goods will contain less sugar, salt and fat and be 12 per cent cheaper than the chain’s standard range.”


    • Healthnotes, which was a pioneer in the business of installing computerized kiosks in stores to provide information about dietary supplements, has been sold to TraceGains, which describes itself as a “compliance software solution providing information exchange across the supply chain for food, beverage, and CPG companies.” Terms of the deal were not disclosed.

    Skye Lininger, founder and former CEO of Healthnotes, serves as TraceGains’ President of Dietary Supplements. Healthnotes’ Aisle 7 suite of products and services reportedly will continue to be supported by TraceGains.
    KC's View:

    Published on: September 10, 2018

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

    • FreshDirect announced that its founder/chairman/CEO, Jason Ackerman, is stepping down after two decades at the company.

    He will be succeeded as CEO by co-founder David McInerney, who also will join the board of directors; McInerney most recently was the company’s Chief Merchandising Officer .


    Leslie Moonves, the longtime chairman/CEO of CBS Corp., who built the company into a broadcast powerhouse and profit machine, resigned yesterday after new allegations about longtime sexual harassment of underlings made his position there untenable.

    “For the past 24 years it has been an incredible privilege to lead CBS's renaissance and transformation into a leading global media company,” Moonves said in a statement. “Untrue allegations from decades ago are now being made against me that are not consistent with who I am…. I am deeply saddened to be leaving the company.”

    Moonves’ contract, ending in 2021, “made him eligible to receive an exit deal valued at about $180 million — but now that won’t happen,” the Los Angeles Times reports. “The CBS board plans to negotiate a financial settlement after the conclusion of an investigation by two prominent law firms into the allegations against Moonves … CBS announced that it and Moonves will donate $20 million to organizations that support the #MeToo movement and equality for women in the workplace. The donation, which will be made in the coming days, will be deducted from any severance benefits that might have been due to Moonves.”

    While I recognize that this business is somewhat far afield from the businesses usually covered here on MNB, I mention this because Moonves is the highest-profile senior executive - in any industry - to see his career go up in flames because of sexual harassment accusations.

    The CBS situation is specific in some ways because of a proxy fight taking place for control of the company, which added to the pressure and probably made it impossible for the CBS board to stick with Moonves at this point.

    I’d suggest you read the piece in The New Yorker that was posted over the weekend and written by Ronan Farrow, in which new allegations against Moonves were revealed, and a broader corporate culture toxicity is exposed. You can check it out here.

    These people are pigs. They are pigs even if only half the charges against them are true, and I suspect that the percentages are a lot higher than that.

    I mention all of this because I believe that while certain industries are getting all the attention at the moment, this kind of behavior can be found in many industries. Their time in the spotlight will come, and it will not be pleasant. Not should it be.
    KC's View:

    Published on: September 10, 2018

    Got the following email from an MNB reader:

    I love your work and wanted to share some research I recently completed for one of our retail clients, in regards to evaluating home delivery providers.  I know you have strong opinions about instacart (that I must admit, I agree with), and wanted to provide you some more info to support what you are saying.   In no particular order:

    • I don’t believe the Instacart model is sustainable, and as you mentioned, they are most likely positioning to be acquired.  They’ve raised over $900M in capital, and if you read their employee reviews, most of the store pickers hate their work.  It’s hard to make money in that “last mile”, and I don’t know if they can turn a profit.

    • We track their pricing, and they are dependent on markup of products to try and make money.  In looking at their pricing, we’ve noticed where they will actually sell an item less than the retailer they are serving, to try and drive traffic (i.e. gallon milk may be cheaper through instacart than instore).  I understand this, but in effect the retailer now has someone else changing their prices.  This supports your thoughts that the retailer needs to own this relationship with their customers.

    • It appears that some retailers are using Instacart to “check the box” of home delivery, and not investing themselves in new ways to serve customers, like curb side pick-up.  This surprised me, but gives you an indication of those retailers who are short on cash and just trying to get by.

    • Walmart balked at Instacart changing their prices, because they knew they would lose their EDLP image.  Hence, they continue to test alternative solutions for delivery, but are not close to figuring it out.

    • The Kroger CFO made a statement recently that they don’t see store picking orders as ever making sense (a profit).  Look at their investment in Ocado as acknowledgement of that and their plan to reduce those order picking costs significantly, and the pieces start falling into place.  In my opinion, Kroger is positioned (although 2 years out with Ocado), to potentially crack the nut on the last mile, ahead of Walmart.


    I must admit that it is nice when folks agree with me on this one. I get pushback from some circles about my unrelenting criticism of Instacart and the companies that do business with it, but I just think I’m right on this one.



    And, on another subject, from another reader:

    I love reading the blog every day and have never responded to any of your posts. But when reading your write up on Burt Reynolds, you forgot to mention my favorite childhood movie Smokey & The Bandit. My grandfather first let me watch this around the age of 8 which was probably a little too early but after that every time we went to his house we would watch it. I can now quote most of the movie. I have to say Smokey & the Bandit is my favorite Burt movie and was disappointed it did not make your list of top Burt movies on the blog.

    It may be that I’m too much of a yankee to really appreciate the charms of Smokey, but I also have to admit that I’ve seen some clips since Reynolds’ passing, and was surprised how good it was.

    Novelist Ace Atkins had a wonderful piece in Garden & Gun over the weekend entitled “A Letter to Burt Reynolds,” and subtitled, “Why you meant the world to a young kid growing up in the South.”

    You can read it here - and I recommend it - but here’s a taste that I found touching:

    “I hope you knew how much your movies, your cool style, have meant to me both as a writer and a Southerner. After a few bourbons, I’m quick to point out that Smokey and the Bandit wasn’t just a car chase film. It was about us racing into the new South, knocking corrupt cops, racist bikers, and the slow mean old ways the hell out of the way. Each one of those films, those core action movies - Deliverance, White Lightning, Smokey and the Bandit, Sharky’s Machine - had so much to say about the emerging Deep South. The clash of good vs. evil, man vs. nature, the Bandit vs. Buford T. Justice.”

    And Atkins - who I’ve interviewed several times - also reminded me of a line from Smokey that is a business lesson, that should’ve made “The Big Picture,” and that will make its way into any sequel.

    It’s when Snowman (Jerry Reed) says to Bandit (Reynolds), asking about why they are engaging in the extended car chase, “And why are we doing this again?”

    And Bandit replies, “Because they say it can’t be done, son.”

    Which is a pretty good reason to do many things, but especially to innovate.

    And, Atkins writes about the Burt Reynolds attitude and oeuvre:

    “We go. We don’t look back. We don’t complain. We drive fast. We take on the Machine. People we love come and go. Times change. People die. We fly into an unknown future.”
    KC's View:

    Published on: September 10, 2018

    • In Week One of National Football League action…

    Cincinnati 34
    Indianapolis 23

    Buffalo 3
    Baltimore 47

    Tampa Bay 48
    New Orleans 40

    Houston 20
    New England 27

    San Francisco 16
    Minnesota 24

    Tennessee 20
    Miami 27

    Jacksonville 20
    NY Giants 15

    Pittsburgh 21
    Cleveland 21

    Kansas City 38
    San Diego 28

    Dallas 8
    Carolina 16

    Washington 24
    Arizona 6

    Seattle 24
    Denver 27

    Chicago 23
    Green Bay 24



    • And, in the US Tennis Open’s Men’s Singles Finals, Novak Djokovic defeated Juan Martin del Potro 6-3, 7-6 (4), 6-3 to win his third US Open title and 14th Grand Slam championship.

    And, in a controversial Women’s Singles Final, Naomi Osaka won her first Grand Slam title by defeating Serena Williams 6-2, 6-4. Williams was fined $17,000 for a series of outbursts against the chair umpire, but there have been calls of sexism in the wake of the controversy, with people ranging from Billie Jean King to sportswriter Sally Jenkins arguing that Williams was penalized for behavior that would never would be an issue in the men’s game.
    KC's View: