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    Published on: September 18, 2018

    by Michael Sansolo

    Trying something new and seemingly counter to historical success isn’t always an easy or sure path, but certainly there is something to be learned by any such efforts. That is why this year we should pay attention to the Oakland Athletics baseball team and a surprisingly innovative strategy to compete successfully against far better funded competition.

    The A’s success this year - they are almost a lock to make the baseball playoffs - should interest everyone, fans and non-fans alike. I’ll try as best as possible to explain this situation in layman terms for any non-baseball fans among our readers. Simply put, this is a great example of recognizing internal weaknesses and finding a creative method to minimize their importance, while emphasizing our assets.

    First, some history: the A’s have been something of a marvel for a few decades now. A remarkably low-budget operation up against incredibly wealthy competitors, the A’s have constantly found new and creative ways to build success. A few years back the franchise’s innovative use of new metrics led to the team - and especially general manager Billy Beane - achieving cult status thanks to the best selling book “Moneyball” and the subsequent movie of the same name, starring Brad Pitt.

    The A’s strategy quickly became de rigueur in baseball and many of Beane’s disciples went on to great success with the Boston Red Sox and Chicago Cubs, although both those teams were blessed with far larger budgets. It’s worth noting that the strategy alone doesn’t lead to success. MorningNewsBeat’s favorite team, the New York Mets, have repeatedly hired former members of the A’s management staff and the result has been what Mets’ fans usually expect: losses, injuries and incredible disappointment. (Not that we’re bitter or anything…)

    The A’s are now back at it. In baseball, there is no more important position than the pitcher, whose job it is to keep the opposing team from scoring runs and thereby winning. For much of baseball history, pitchers threw hundreds of innings each year, a formula that has changed in recent years with specialists now focusing on only specific situations late in games. Starting pitchers are still expected to stay in the game for six or seven innings in order to face 20-30 batters.

    The A’s, however, thanks to injuries and budget constraints, mostly lack pitchers capable of successfully handling long stretches of the game - a problem increasingly common throughout baseball. So the team found a new solution; necessity, once again, was the mother of innovation. Oakland now uses pitchers for short stints throughout each game. So the starting pitcher might only face two or three batters before giving way to line of relief pitchers.

    Currently, Max Scherzer of the Washington Nationals has pitched the most innings of anyone in baseball this year totaling 206. The A’s have only one pitcher within 50 innings of that total and most of their massive roster of pitchers has thrown less than half as many. Yet, as of this Saturday Oakland has won 90 games in the season and Washington only 75. Consider also that Oakland’s payroll for players is $80 million, or less than half of Washington’s. (More striking, Oakland is having a far better season than their wealthier Bay-area cousins, the San Francisco Giants, whose payroll tops $200 million.)

    Keep in mind that, more than most sports, baseball is slavishly devoted to tradition. Statistics are still compared over a century and while the game constantly changes, much of it is played today in fairly much the same fashion as in 1918. So such a radical shift in strategy, as the A’s are deploying, is fairly stunning.

    But there’s the lesson for all of us. Sometimes we need to change because conditions are shifting. Sometimes this is due to necessity to account for our weaknesses and strengths. And sometimes it is simply a recognition that we cannot win playing by rules that seem to work against us.

    It seems like there might be something there that should matter to all of us these days.

    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: September 18, 2018

    Yesterday, as we reported here yesterday, Amazon opened its fourth Amazon Go checkout-free store - in Chicago, making it the first one outside Seattle.

    The store is about 2,000 square feet in size, and features the same technological advances - what it calls “Just Walk Out technology” - that made the Seattle stores such a draw for consumers and retailing experts alike.

    The Chicago Amazon Go seems to be the same kind of draw … witness the picture at left that was provided by an MNB user, taken at the South Franklin Street address, just a block or so from Willis Tower, in the Loop.

    That’s my idea of an Eye-Opener.

    KC's View:

    Published on: September 18, 2018

    Supervalu said yesterday that it has agreed to sell 19 of its 36 Shop ‘n Save grocery stores, primarily located in the St. Louis, Mo. area, to Schnuck Markets, while also signing an agreement to serve as the primary supplier for nine of Schnucks’ existing stores located across northern Illinois, Iowa and Wisconsin.

    “Since announcing plans to pursue the sale of our Shop ‘n Save banner earlier this Spring, the team has worked diligently and successfully to put this agreement together,” said Mark Gross, Supervalu’s president/CEO, in a prepared statement. “This transaction is an important step in the continued transformation of our business.”

    Supervalu said that “all Shop ‘n Save stores and fuel centers not included in this announcement currently remain open,” but in the event that Supervalu cannot sell them, they will be closed later this year.

    The St. Louis Post Dispatch reports that the stores “will be closed in waves of three beginning Oct. 7, undergo a renovation and reopen as a Schnucks store less than three days later. A schedule of the closures and re-openings has not yet been released.”

    Terms of the deal were not disclosed.

    Scott Moses of PJ Solomon served as financial advisor to Supervalu on the transaction.
    KC's View:
    I hope that Supervalu is able to find buyers for the other stores, because if they close, it will leave the communities they serve a little poorer. As for the stores being acquired by Schnucks, the people who patronize them are lucky, because they’re getting a quality retail environment with a strong customer focus.

    Published on: September 18, 2018

    The Wall Street Journal has a story this morning about how, two months before the beginning of the end-of-year holiday shopping season, US retailers are grappling with finding enough employees to work their stores, a situation exacerbated by “record-low unemployment and rising wages in other industries.”

    The Journal writes that “some 757,000 retail jobs were open across the country in July, about 100,000 more than the same time a year ago. The number of openings of all types surpassed the number of hires from March through June for the first time in a decade, according to the Bureau of Labor Statistics.”

    Retailers, the story says, “have begun their annual push for holiday workers earlier than ever, raising pay and offering perks such as profit-sharing and paid time off for part-time associates. They also are hosting recruiting marathons with the goal of hiring thousands of workers in a single day.”

    “There’s going to be a war for retail talent,” Andrew Challenger, vice president of outplacement firm Challenger, Gray & Christmas, tells the Journal. “We might be getting to a point where there is a limit to how much companies can grow because it’s hard to get labor.”
    KC's View:
    This isn’t just a US problem; I spent time today with a group of European retailers who were hoping that they could learn something about attracting employees from US retailers. Not so much…

    It isn’t the only problem for retailers, but I do believe that many of them have helped create their own problem through an unwillingness to prioritize their employees, to make their stores great places to work. They’ve put far more effort into reducing labor costs rather than investing in their employees. And this approach has come back to haunt them.

    Published on: September 18, 2018

    Last week, MNB took note of a Washington Post report on a new poll from the Pew Research Center concluding that “in several countries around the world, large majorities of people believe it is most likely that robots will be doing much of the work done by humans within 50 years.” Greece sat atop the list - 91 percent of survey respondents there think that robots and computers “definitely” or “likely” will do much of the work done by people. In the US, the number was lower but still a majority - 65 percent.

    Now comes a report from the World Economic Forum (WEF) saying that while “machines will overtake humans in terms of performing more tasks at the workplace by 2025,” there still could be “58 million net new jobs created in the next five years” by this technological revolution.

    That’s right - the WEF says that a lot more jobs will be created this revolution than will be displaced by it.

    Here’s some of the context reported by CNBC:

    “Developments in automation technologies and artificial intelligence could see 75 million jobs displaced, according to the WEF report ‘The Future of Jobs 2018.’ However, another 133 million new roles may emerge as companies shake up their division of labor between humans and machines, translating to 58 million net new jobs being created by 2022, it said.

    “At the same time, there would be ‘significant shifts’ in the quality, location and format of new roles, according to the WEF report, which suggested that full-time, permanent employment may potentially fall.

    “Some companies could choose to use temporary workers, freelancers and specialist contractors, while others may automate many of the tasks. New skill sets for employees will be needed as labor between machines and humans continue to evolve, the report pointed out.”
    KC's View:
    There may be new jobs with new parameters made available by the robot revolution, but it is up to people to make sure they are trained in the skills and expertise they need to qualify for those jobs. This is a matter of personal responsibility, but I think it also requires public investment and nuanced public policy decisions to make sure that these opportunities exist.

    Published on: September 18, 2018

    In Oklahoma City, News 9 has a story about how a number of local supermarket chains - Buy For Less, Smart Saver, Supermercado and Uptown Grocery - have announced the launch of “a new delivery service through autonomous vehicle company Udelv.”

    The story says that “this is the first service of its kind in Oklahoma, and the goal is to help get healthy foods to those who do not have access … Some of the stores already offer online ordering for pickup or delivery, but the range is limited. This service will allow the vehicles to delve into food deserts farther away.”

    News 9 says that “the Udelvs will have a backup driver to start, with a local command center monitoring each vehicle's path. The command center will continue to keep an eye on the roads and make corrections when needed once the research phase is complete.”

    However, it is not as simple as just putting the self-driving vehicles on the road. The story says that “there are still some hoops to jump through, as there are currently no Oklahoma laws to govern the vehicles.”
    KC's View:
    Good to see that these kinds of programs can be adopted by smaller, independent retailers, and not just left for the behemoths to implement.

    Published on: September 18, 2018

    CNN reports that the Coca-Cola Company is “closely watching” the CD-infused drinks trend, with an eye toward a possible investment in Aurora Cannabis, “a Canadian cannabis company. Aurora has also expressed interest in cannabis drinks. Neither would comment on a possible deal.”

    CBD, the story explains, is “a non-psychoactive component in marijuana, as an ingredient in what it called functional wellness beverages … CBD, which does not produce a high for the user, has been used for medical purposes, including easing inflammation, pain and nausea … Both cannabis and CBD are still illegal in the United States under federal law, even though a number of states have legalized marijuana. But the prohibition against CBD is not strictly enforced. There are third-party sellers offering CBD-based products on Amazon, for example.”

    “The space is evolving quickly,” the company said. “No decisions have been made at this time.”

    CNN notes that “Constellation Brands, the maker of Corona beer, Svedka vodka and Casa Noble tequila, announced last month that it is investing an additional $4 billion in the Canadian cannabis company Canopy Growth … And Lagunitas, a craft beer label of brewing giant Heineken, already has a drink infused with THC, marijuana's active ingredient, which does produce a high. It can be purchased at marijuana dispensaries in California.”
    KC's View:

    Published on: September 18, 2018

    RTT reports that a new analysis from Citi Research suggests that Amazon “should split into two companies to avoid antitrust scrutiny from Trump administration.”

    According to the analysis, “By separating the retail and AWS businesses, Amazon could minimize or avoid the risk of increased regulatory pressure.” After such a separation, the story says, Amazon’s retail business would have an estimated $400 billion value while Amazon Web Services would have a $600 billion value.

    RTT notes that Amazon has been getting “more scrutiny due to its $1 trillion valuation and CEO Jeff Bezos being the richest man in the world. President Donald Trump is ‘obsessed’ with the e-commerce giant and his administration could potentially go after the company on antitrust grounds.” Trump has made such threats a number of times.

    • The Washington Post reports on the development of a new mobile application called StoreMe, described as enabling a service “that allows people to park their gym bags or luggage with cooperating merchants for short periods of time. The idea - which is sort of a cross between Uber and Airbnb for luggage - transforms unused storage space around the city into something like those coin-operated lockers that used to be found in many airports, bus depots and train stations. StoreMe users can take the backpack off their backs for as little as $7.50 a day.”

    The company says that “since its soft launch in New York City in January, the service has rolled into the District, Boston and Philadelphia, and it’s picking up about 1,500 active users a month.”

    The story goes on: “The way StoreMe works is simple. Users download the app on their smartphones, signing up via an email address or a Facebook account. When activated, the app shows pins around the user’s location showing potential storage sites at participating merchants and retailers. The user then selects a location, inputs the number of bags he needs to store and takes a photograph that the storage site will review and use for identifying the bag. Hosts have the right to refuse bags and inspect them and their contents.”
    KC's View:

    Published on: September 18, 2018

    • The Cincinnati Business Courier reports that “Dip, the clothing brand created by Kroger Co. and fashion designer Joe Mimran, is making its national debut this week,” with availability at both the company’s Fred Meyer chain and its Marketplace stores.

    According to the story, “Dip will replace more than a dozen private-label clothing brands that had previously been available at Kroger stores … More than 80 percent of the collection costs $19 or less. It includes styles for men, women, young men, juniors, kids, toddlers and babies.”

    The Week reports that “Tesco is planning to close dozens of stores as it prepares to launch its new chain of discount supermarkets … Up to 30 poorly performing city centre Metro stores will be axed and a further 60 shops converted to Jack’s stores, putting thousands of jobs at risk.”

    The new chain, called Jack’s (after Tesco founder Jack Cohen), “will seek to rival Lidl and Aldi, which currently occupy more than 13% of the UK grocery market.”

    Nation’s Restaurant News reports that the Dave & Busters casual dining chain is going to test a new fast casual format - “a street-tacos-oriented concept called ‘TNT Tacos’” that “will open in a converted special-event/functions room at a Dave & Buster’s restaurant in its headquarters city of Dallas.”

    • The Wall Street Journal reports that Staples “has agreed to acquire office-supplies company Essendant Inc. in a deal worth $482.7 million in cash, a combination that would strengthen one of the world’s largest office-solutions providers.” The story notes that Staples “was acquired a year ago by Sycamore Partners, a private-equity firm that also owns about 11% of Essendant.”
    KC's View:

    Published on: September 18, 2018

    At the risk of ruining my reputation for being a prig and/or a cynic, I’d just like to say that I choked up a bit when I saw this newly released trailer yesterday. I’m all in … especially once I saw the listing of stars at the end, which included the mention of one particular actor who was in the original 54 years ago.

    Yup. I’m all in.

    KC's View:

    Published on: September 18, 2018

    Responding to yesterday’s piece analyzing whether Jeff Bezos and Amazon really are a “reincarnation of ancient evil,” and trying to put his recent $2 billion commitment to philanthropy in some sort of context, MNB reader Kelly Dean Wiseman wrote:

    Two billion dollars out of $150 billion?

    Here’s a guy who has a lot of employees on government assistance, and he has to keep piling up his own personal billions?

    This is cynical greed, and should be called out rather than admired.

    We need to change the tax code so companies pay based on the difference between their lowest and highest paid employees.

    Once it reaches a certain point (50X? 100X?) they get dinged hard, and the percentage escalates the greater the gap.

    Let the boards justify the crazy pay scales to stockholders with real taxed loss of profit.
    This could have a real impact and address the ridiculous hoarding of economic resources by the super-rich.

    And from another reader:

    My personal view of Amazon is strongly negative. I fear the accumulated power — which as you would acknowledge — will continue to grow. Not only does the organization have enormous influence over millions of households, but hundreds of thousands of workers as well. And it is this area that has drawn the condemnation of the Archbishop of Canterbury as reflective of the gig economy.

    The gig economy is a natural outcome of Wall Street driving business decisions — remember the “China Price” predominant at Walmart during the 90s and 00s? Driving cost out of the supply chain at all costs. The impact has been to suck wealth from the general working population and reposition it at the very top. It isn’t big business that is exclusively to blame — as Bezos blithely claims — it is the behaviors of those who run business (both big and small).

    My final point concerns the “outsourcing” of policy to billionaires. We now have a group of extremely wealthy people (Gates, Buffet, Zuckerberg) who have pledged to donate their wealth to charity. Admirable, but for two factors: The fact that they have accumulated so much of the world’s wealth and that they decide what causes to donate to. In this last instance they, rather than elected officials decide what is worth pursuing and what is not. And to further complicate this, their actions may give governments a “pass” to ignore issues that are rightly their responsibility.

    I would never argue that this ought to give government the ability to sidestep responsibility. I believe in good public policy, rooted in compassion, that helps the sick, homeless, poor and disadvantaged … but I also believe in public-private partnerships.

    We had a story the other day about how Jimmy Buffett is licensing out his Coral Reefer brand to Surterra Holdings Inc. for a line of cannabis products including vape pens, gel caps, edibles and lotions. (It seems like we have a cannabis story every couple of days. I’m not that smart, but I think this means something.)

    This struck me as a natural combination, completely in synch with Buffett’s image and brand.

    MNB reader Mike Bach wrote:

    Buffet is also opening 3 new retirement communities in FL and SC. Maybe he'll get a franchise to service the aging parrot heads…. I think you’re right about brand consistency!

    I’m actually not sure I entirely agree.

    When this business first was reported about a year and a half ago, I argued that it seems to firmly establish Buffett and Margaritaville as an old-person's brand ... and at a certain point, that is likely to make it less attractive to younger consumers.

    I wrote:

    One of the goals of the leader of any brand - and that's what Jimmy Buffett essentially is - has to be to make sure that the brand outlives them. Hopefully, Buffett will be performing for years to come, keeping the brand alive. While this move into the retirement community business may seem like a smart short-term play, I'm not sure it is the best way to make the brand relevant to the next generation on which it will depend for future growth.

    If I'm going to waste away in Margaritaville, I'm going to find a real island and a real beach and order myself an authentic local beer and maybe some conch. But hang out in a senior citizens’ retirement community with a bunch of old people? Not me.

    On the subject of giving better treatment to best customers, MN reader Tom DeLuca wrote:

    I travel, a lot.  It does feel nice when the #1 Flight Attendant makes his/her way to my seat and says, “thank you for flying with us today Mr. …”

    Or when I arrive bleary eyed at a Marriott anywhere and the front-desk attendant looks at their monochrome screen and then acknowledges me by saying, “we appreciate your business. Thank you for being a Platinum member...don’t forget you’ve got access to the super-secret manager’s reception on the 6th floor [along with 50% of guests, but you, you’re going to feel special because you too can join them]”

    Seems foolish to not acknowledge your most loyal shoppers and hold onto them tightly.  As if someone is trying to pry them away from you...guess what, they are.

    I got an email today from United telling me that as a lifetime Gold member (I’ve flown almost two million miles on the airline over the years), I now get to board with the “number one” group, not the “number two” group. Now, this may just be a trick, but it made me feel better … and it cost them nothing. That’s smart.

    Retailers should ask themselves, every day: What did I do today to make my best customers feel good about shopping with us? If you don’t have an answer, then at some level you’ve failed.

    And finally, from another MNB reader:

    This longtime reader remembers when you bragged about completing a marathon. So it made me wonder why Monday's sports update omitted a new world record in the marathon. Perhaps you were too busy yelling at kids to get off your lawn?

    This seems a little harsh.

    But first, let’s be clear. I’ve finished two marathons. Not one.

    Second … you make an excellent point. I should’ve reported on the fact that this past weekend, Eliud Kipchoge of Kenya ran the Berlin Marathon in a record 2:01-39, becoming the first person in history to break 2:02 on a certified course.

    Runner’s World notes that this is an average pace per-mile of 4:38.4.


    For the record - and I went back to check, just so I could assure accuracy - I ran my first Marine Corps Marathon in 2001 in 5:35:29. (It was just weeks after 9-11, and started in the shadow of the still-smoldering Pentagon. Chilling.) I ran my second Marine Corps Marathon in 2004, just days before I turned 50, in 5:29:03.

    Which means that in the time that it took me to run one marathon, Eliud Kipchoge could’ve run almost three.

    These days, he could probably run four in the time it would take me to do one … I’ve had meniscus surgeries on both knees, I’m slower than ever, and I’ve given up on the idea of ever running another one.

    I can still do 20 miles a week, though. I don’t delude myself that slow and steady wins the race. But slow and steady can finish the race … and a certain point, that becomes its own kind of victory.

    But apologies for yesterday’s omission, and congrats to Eliud Kipchoge … who proved that barriers are just temporary, and created the expectation that it won’t be long before someone runs a marathon in less than two hours.
    KC's View:

    Published on: September 18, 2018

    In Monday Night Football action, the Chicago Bears defeated the Seattle Seahawks 24-17.
    KC's View: