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    Published on: September 11, 2018

    by Michael Sansolo

    It doesn’t take much introspection to notice we’ve been trending a little old here on MNB recently. Consider some of our recent stories, from the one about 50- and 60-year-olds taking all manner of jobs, to Wegmans’ new program to help shoppers with failing eyesight, to the Content Guy’s being disoriented by being called “sir” by younger folks … like people in their fifties.

    (I’m not a lot younger than Kevin, but I am younger and I never let him forget it!)

    There’s good reason to think about all those stories with an eye on future success. Kevin and I represent a major trend in global demographics - the aging Baby Boomers - and it would be folly for businesses to ignore that trend.

    Keep in mind that our massive post-World War II generation globally changed family structure, eating habits, music, fashion, education and pretty much everything else we touched. Retirement and old age are just the next on the checklist.

    There are certainly some big reasons for concern about our inexorable aging. First, our generation isn’t in wonderful financial shape, which means many boomers are going to head into retirement with vastly reduced spending power. That means millions of shoppers who were raised to believe we could have it all (great taste and less filling!) now face sacrifices that could lead to a new large group of discount shoppers.

    Plus, this massive generation is hitting retirement age in record numbers, which means a huge drain on staffing and institutional brainpower in every kind of company you can imagine. At the same time, there is almost certainly going to be an enormous impact on governmental and community services that people our age are going to require, but are likely to be strained to - or even past - the breaking point.

    Yet there’s also gold in these demographic hills if you can make the adjustments. The Washington Post recently examined the powerful benefit of serving these new niches and highlighted some of the creative steps companies are taking to get ahead of this potentially profitable moment. Consider Gillette, which has taken many boomers - me included - through a lifetime of shaving improvements.

    The company is now launching a razor specifically designed to help caregivers shave the faces of their parents or patients. Its design is especially useful for a second-party shaving experience and incorporates innovations to make shaving simpler and easier, especially for men with cognitive issues.

    To be fair, I suspect that Gillette has been forced to think more creatively about its traditional products because it has been pressured competitively by the likes of Harry’s and Dollar Shave Club. A fundamental challenge for companies is being more creative before being forced to, not after.

    As the Post reported, retailers see the need for change as well, especially in the way shoppers do or don’t see. CVS has begun adding magnifying glasses to shelves, while Target is increasing the font size on prescription labels. Others are using brighter lighting. Best Buy has identified a competitive advantage in developing a suite of products that will make homes safer and more user-friendly for the elderly and, by extension, ease the worries of their children.

    No doubt we’ll be seeing and hearing much more along these lines in years to come, but no matter how weak your vision, this is a trend that’s easy to spot. With the population of senior citizens exploding it’s time to start thinking through all the potential benefits and problems now for yourselves, your companies and certainly your shoppers, and to get creative about meeting these needs before you are forced to, not after.

    Personally, I’m just dreading the day someone hijacks the famous Who song to remind that we hope to Buy before we get old.

    By the way … did I mention that I’m younger than Kevin?


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with the much older 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: September 11, 2018

    by Kevin Coupe

    Talk about brand consistency…

    The Wall Street Journal this morning reports that “singer Jimmy Buffett and billionaire William ‘Beau’ Wrigley Jr. are getting behind a U.S. marijuana startup, joining a scrum of companies betting on the increasingly crowded cannabis industry.

    “Mr. Buffett, whose hits like ‘Margaritaville’ evoke a beach-bum lifestyle, will license his Coral Reefer brand to Surterra Holdings Inc. for a line of cannabis products including vape pens, gel caps, edibles and lotions.”

    Surterra, the story notes, “grows marijuana, manufactures medical cannabis products and operates retail outlets. It has raised more than $100 million since 2015.”

    There are a lot of companies out there - both startups and established firms - hoping to take advantage of a shifting legal landscape that could make cannabis reach new commercial highs. Still prohibited for any usage by federal law, 30 states allow medical usage and nine states - plus Washington, DC - allow recreational usage.

    The Coral Reefer brand is said to be more focused on health and wellness than recreation.

    According to the Journal, “In the U.S., more than 60 cannabis startups have raised at least $5 million from venture capital or private equity in the past five years, according to research firm PitchBook. Others have listed on stock exchanges in Canada, where recreational cannabis will become legal in October. Three big brewers, including Corona brewer Constellation Brands Inc., have recently announced large investments in Canadian cannabis companies.”

    I was talking to a very successful independent food retailer the other day, and he said that he looked forward to the ability to sell cannabis products in his stores. (He has stores in states that for the moment only permit medical marijuana.) He observed that most marijuana dispensaries that he’d visited had no idea how to market and merchandise, and that he felt strongly that, if marketed the same way as wine, a savvy retailer could be very successful in generating sales.

    I tend to agree. I’m not sure the degree to which the industry as a whole will respond to this opportunity. But it could be a market that will be a real Eye-Opener.
    KC's View:

    Published on: September 11, 2018

    Yesterday, MNB took note of the contretemps created when 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. Some outdoor brands asked not to be featured on the new site, believing that any association with Walmart would result in prices being forced down and an erosion of brand equity; some other outdoor retailers reportedly said that they would not carry products that were being sold on the Walmart/Moosejaw site.

    Now, Eoin Comerford, the CEO of Moosejaw and GM of Outdoor at Walmart eCommerce, has penned an open letter to the outdoor supplier community in which he pushes back against the blowback and argues that this ought to be less about price and more about diversity and inclusion.

    Here’s the letter:

    “In the outdoor industry we like to talk about inclusivity. We recognize the relatively low participation by women and minorities in outdoor activities, so we create slick marketing campaigns and trumpet our moderate successes. And yet the industry remains predominantly male and remarkably white. If we're going to grow this industry beyond its exclusionary, historical norms, we need to reach new audiences... younger, more female, more diverse.

    “Moosejaw has always been about inclusion. One of our core mantras is ‘never take yourself too seriously,’ so we welcome beginning backpackers and climbers that are intimidated by other outdoor retailers that greeted them with sighs and eye rolls. It's part of the reason that Moosejaw's customers are the youngest of any major outdoor retailer.

    At Moosejaw, I have focused on integrity and respect. We treat our brands as partners, working together to build a business based on straightforward and honest communication. Our goal is to do what we say and say what we do.

    “We developed the Premium Outdoor Store on Walmart with all of these thoughts in mind. Walmart.com's huge traffic offered the ability to expose outdoor brands, activities and products to a massive audience of new and long-term outdoor enthusiasts, including the very groups that are underrepresented in our industry today. We didn't want to be just another marketplace focusing on sterile transactions and price shopping. Instead, we built a destination where we could partner with brands to tell their story through their own images, technologies and product families. We built a destination where the brands could list their product to the highest of their standards.

    “I wasn't naive enough to think that all outdoor retailers would welcome the Premium Outdoor Store with open arms, but I am surprised by the vehemence of the attacks by some of our industry’s leading retailers and the threats to drop brands that participated.

    “At the end of the day, the question becomes, ‘what industry do we want to be?’ A small, exclusionary, slow-growing industry dominated by one or two large retailers that dictate everything from distribution and promotional calendars, or a large, inclusive, fast-growing industry embraced by a growing customer base and populated by many innovative and inspiring outdoor brands.

    “For our part, Moosejaw will continue to push for growth and inclusion.”
    KC's View:
    It is an interesting and somewhat persuasive take on the subject, but I’m not sure I’m buying. I also have to wonder if Comerford would have quite the same attitude if his paycheck were not being issued from a Bentonville bank, and he were trying to carve out a differentiated and competitive image for Moosejaw’s 10 stores.

    Life looks different when Walmart is in your corner, as opposed to being the opposition.

    Brands have to protect their equity … and I can understand why some might not want to deal with Bentonville Behemoth.

    Published on: September 11, 2018

    Walgreens and Fred’s, Inc. yesterday announced they have entered into an agreement that will have Walgreens acquiring pharmacy patient prescription files and related pharmacy inventory of 185 Fred’s stores located across 10 Southeastern states. The deal is worth $165 million, though that number will be adjusted based on an inventory audit.

    The agreement allows Fred’s to eliminate its debt balance, while giving Walgreens an expanded footprint in the southeastern US.

    The companies said that “once the transaction is complete, Fred’s will continue to operate approximately 162 pharmacies across nearly 600 stores.”

    Scott Moses at PJ Solomon acted as financial advisor to Fred’s when making the deal.
    KC's View:
    I’m sure, in an ideal world, this wouldn’t have been the path Fred’s would’ve chosen. But I give them a lot of credit for doing what needed to be done in order to have a chance at being more competitive and a sustained chance at success.

    Published on: September 11, 2018

    Food retail co-op PCC in Seattle said yesterday that it will stop selling Pacific Northwest Chinook Salmon, saying that it was doing so to help protect part of the region’s ecosystem.

    The letter to members says, in part:

    “Like many of you, we have watched and learned about the struggle of our southern resident killer whales (SRKWs) to survive for lack of enough food. Our SRKWs are dependent on the health of chinook salmon runs for as much as 80 percent of their diet. For this reason, PCC Community Markets will no longer sell chinook (king) salmon caught in the waters of Washington, Oregon or British Columbia in our stores. We are simply doing our part as a co-op grocer to ensure, as we have for decades, that our supply chain helps to protect our region’s vital ecosystems.”

    The letter goes on:

    “We acknowledge that lack of prey is only one of several key threats to SRKW survival. Vessel noise makes it hard for them to communicate over long distances. Toxins accumulate in their bodies and are passed to their offspring. Dams and culverts are blocking salmon from accessing upstream waters. We can’t solve all of those issues within our co-op walls but eliminating Pacific Northwest chinook salmon from our stores is one small, actionable step we can take to help tip the scales ever so slightly in the favor of orca survival.

    “PCC will continue selling other sustainably harvested salmon, including sockeye, which is our best seller. We will sell Alaska chinook salmon, with the knowledge that a small percentage of fish caught originate in the Pacific Northwest, and that the fishery is actively working to minimize that bycatch. We also will continue to review our sustainable seafood standard so that it remains protective of marine ecosystems and SRKWs.”
    KC's View:
    I like the simultaneous ambition and modesty of this message - it is like PCC wants to change the world, while acknowledging that this is just a small drop in a - literally - big ocean. And, it has the advantage of being completely brand-consistent.

    Published on: September 11, 2018

    Bloomberg reports that Walmart, “pinched by the worsening shortage of truckers, plans to double its spending on attracting and retaining drivers by year-end.

    “The retailer, whose private fleet of 6,500 trucks is one of the largest in the nation, will offer referral bonuses of up to $1,500, shorten the on-boarding process for new hires by more than a month and broadcast its first national TV ad focused on its 7,500 truckers.”

    It is, the story says, a significant problem for Walmart - as the ranks of truckers has shrunk, trucking costs in general have increased because of higher fuel prices and higher demand. And Walmart is vulnerable: “Truckers are a big deal for Walmart -- indeed, its path to retail dominance was plowed by its drivers. Founder Sam Walton began building his own private truck fleet in the 1970s after large trucking companies declined to deliver to Walmart’s mostly rural stores, located far from established trucking routes. Walton would show up at the drivers’ break room at 4 a.m. with doughnuts and talk to them for hours to get a fresh view of how his stores were faring.

    “Today, Walmart’s truckers take goods from massive distribution centers around the nation and deliver them to its 4,700 stores in a hub-and-spoke system that allows it to replenish goods quickly.”
    KC's View:
    Michael Sansolo has been writing here for years about the trucker shortage, and how that industry is facing enormous challenges that could, in fact, quicken the move to things like self-driving vehicles that will help address the problem.

    In the meantime, Walmart is doing what it needs to do until those self-driving vehicles are ready to go mainstream.

    Published on: September 11, 2018

    Business Insider has a story saying that Sprouts Farmers Market has suffered very little, if at all, from the acquisition of Whole Foods by Amazon in markets where the two retailers compete.

    A UBS analysis says that “much of this is likely due to store placement. Most of Sprouts Farmers Market's stores are located in middle income suburbs, while the majority of Whole Foods stores are in zip codes where customers aren't as price conscious. Sprouts Farmers Market also benefits from its smaller box size, which presents a less overwhelming atmosphere for some shoppers."
    KC's View:
    While in the same general segment of the business, Sprouts has been savvy enough to carve out a different niche, which is minimizing the impact.

    My question is … when does Sprouts get acquired? And by whom?

    Published on: September 11, 2018

    CNBC reports that Citigroup is out with an analysis suggesting that “Amazon Prime subscribers will more than double to 275 million in a decade … Citi analysts concluded that Wall Street does not appreciate the full value of the platform, projecting that the company could see more than $500 billion in Prime-related gross sales per year within a decade.”


    CNBC reports that Wells Fargo is predicting that Amazon will end up being the nation’s top seller of apparel in 2018, supplanting Walmart in the top spot by generating $30 billion in apparel sales this year.

    The Wells Fargo note says that “Amazon dominates the online market for apparel and footwear (35 percent of share, or four times the #2 player) and they even have remarkably high market share in the total apparel/footwear market in the US … The gross merchandise value (GMV) of apparel and footwear that was sold on Amazon's platforms approached $25 billion in 2017 — representing five times to six times the amount of softlines sold on the site just 5 years earlier.”
    KC's View:

    Published on: September 11, 2018

    • The Duluth News Tribune reports that Hy-Vee is ramping up its Minnesota invasion strategy, with plans to have 12 stores open in the Minneapolis-St. Paul metropolitan area by the end of 2019, up from eight that have been opened since 2015.


    • Ahold Delhaize-owned Giant Food Stores said yesterday that its Cleona, Pennsylvania, store “is the first in the chain to reach zero waste. A recognized definition by the U.S. Environmental Protection Agency, zero waste means 90 percent or more of a store’s total waste is being diverted from a landfill or incineration … Cleona associates have been incorporating recycling procedures throughout the store as well as carefully monitoring what is sent to the store’s trash compactor so nothing gets thrown away that could potentially be recycled. This includes ensuring no cardboard is labeled as garbage, filling designated bins with food waste and scraps for organic recycling, and collecting plastic bags, plastic film, and empty pharmacy pill bottles to be sent back to GIANT’S recycling center.”


    USA Today reports that Subway’s iconic $5 footlong sandwich no longer will be sold in its stores, though franchisees will have the ability to keep selling it if they so choose.

    The company expects that not many will, since, after the item was returned to its menu last year, there were many complaints about the hit operators took to their margins.

    In order to get more relevant, Subway has been testing what it calls “bolder flavors” and even paninis … though the company also has said that it doesn’t want to do anything that dilutes its value message.
    KC's View:

    Published on: September 11, 2018

    Phil Straniero, who followed a three-decade career at Kellogg’s with a 16-year tenure at Western Michigan University as executive-in-residence, has passed away. He was 70.
    KC's View:
    I admired Phil enormously, and very much enjoyed our interactions when I was out at WMU. He always struck me as a giver - he enjoyed being around young people, of helping to enable their careers, and serving as a magnet for industry professionals, bringing them to campus and creating connections. He was a good guy, and I know his family and friends - and all the students whose lives he helped change - are grieving today. I join them.

    Published on: September 11, 2018

    …will return.
    KC's View:

    Published on: September 11, 2018

    In Monday Night Football action, the New York Jets defeated the Detroit Lions 48-17, and the Los Angeles Rams beat the Oakland Raiders 33-13.
    KC's View: