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    Published on: September 28, 2018


    by Kevin Coupe

    Something I didn’t know: One-third of American farmers are women.

    I only know this because I saw a Land O’Lakes commercial the other day that also has been turned into a music video available on YouTube (you can watch it at left).

    It is called “She-I-O”, and it is an updated version of “Old MacDonald Had a Farm,” sung by country artist Maggie Rose and written by Liz Rose. It is a celebratory anthem about how women are contributing to an age-old industry, and for those of us whose knowledge of dairy farming consists of knowing one of the cow from another, it is revelatory.

    The Advertising Age story about the song and Land O’Lakes ad campaign makes the point that the people portrayed in it are the actual farmers who are members of the Land O’Lakes cooperative; during the shoot, when the cameras were not running, they continued with their regular work.

    Ad Week makes the point that it just recently that Land O’Lakes appointed Beth Ford as its new CEO, “where she makes history as the first openly gay woman to sit at the helm of a Fortune 500 company.” The Martin Agency, which conceived and executed the campaign, also is a female-led agency.

    What I really like about this video and the campaign it reflects is that it simple reeks of authenticity. Next time I see Land O’Lakes products in the store, not only will I know something about the brand that I didn’t know before, but it honestly makes me more likely to choose its products. (I like making informed purchases in this way. We subscribe to and drink City Girl Coffee at home because a) it is a women-led company, and b) they use some of their profits to benefit women-owned coffee plantations. Makes that morning coffee taste a little better, I think.)

    Not that there is anything wrong with male farmers, but this campaign makes an important point about empowerment, simply and entertainingly. It teaches men something and maybe just as important, it communicates something vital to our daughters and wives and sisters and mothers at the same time.

    It never is a bad time to make that point, though I’m feeling at the moment that this happens to be a really good time.

    And I thought it was an Eye-Opener.


    KC's View:

    Published on: September 28, 2018

    Yesterday, we reported on the launch of Amazon 4 Star, which was described as a new bricks-and-mortar store format in Manhattan’s Soho neighborhood that will only sell items that have gotten four stars or better on its website.’

    We have pictures of the 4,000 square foot store below, and some more details on the format:

    • Amazon says that the format is designed to be “a direct reflection of our customers - what they’re buying and what they’re loving.” All items in the store have a minimum customer rating on the site of four stars, with an average of 4.4 stars, and, collectively, more than 1.8 million five-star reviews.

    • Product categories include Amazon-branded devices, consumer electronics, kitchen, home, toys, books and games.

    • Prime members pay the Amazon price in-store; electronic shelf tags give Amazon the ability to do dynamic pricing. People who are not Prime members can sign up in-store for a 30-day free trial and instantly get the Prime price.

    • Products not only are starred, but also are labeled with customer reviews - something that Amazon also did in its Amazon Books format.

    • The store features a number of special sections, including “Trending Around NYC,” “Most Wished-For,” “Quirky Kitchen Gifts,” “Frequently Bought Together,” and “Amazon Exclusives” that appear to give Amazon the ability to change them out frequently.

    • The company says this is not a pop-up shop, but rather another format that it is testing to see if it has legs … as in the case of Amazon Books and Amazon Go.

    • This also is not a showroom - you walk out with the products you buy.

    I was not actually in New York yesterday - I was in Austin, Texas, and then traveling - but I was lucky that my friend Patrick Spear, president/CEO of GMDC, was in Manhattan. Not only did he travel down to see the store and photograph it for me (those are his pictures below), but he also gave me his first-person reaction to the store, from the perspective of someone with a lot more inside knowledge than I have:

    “Amazon 4-Star is the embodiment of the benefits of ‘big data,’ as Amazon has successfully aggregated local 4-Star+ user reviews to curate a locally-optimized assortment of general merchandise products. It seems they’ve built upon the merchandising concepts first deployed with their Amazon Book locations, including a liberal assortment of Amazon-specific products/platforms (Kindle, Fire Stick, Echo, etc.).

    The Soho location carries approximately 2,000 SKUs (according to a store associate I spoke with). Using dynamic shelf tags, they have the ability to update pricing 5x/day, to ensure price optimization vs. amazon.com, and a dedicated team of Amazonians adjusts and curates the assortment based on user reviews to enable weekly updates to the store assortment.

    “Amazon Prime members receive a 10% discount on most products, and customers using the Amazon app can pay for their purchases through the app.

    “It’s not hard to imagine Amazon flexing their data-based assortment curation skills and scaling this platform, perhaps adjacent to or within Whole Foods locations. Once again, Amazon has raised the bar with their 4-Star format, a compelling example of “Retail Tomorrow.”

    “From my perspective, this is yet another call-to-action for legacy brick and mortar retailers. Those involved with general merchandise categories need to give thought to how best to differentiate the in-store experience to continue to inspire their customers.

    “To use your phrase, Kevin, it’s an Eye-Opener…"













    KC's View:
    What’s the old Mike Tyson line about “everybody has a plan until you get punched in the mouth”?

    This strikes me as the kind of punch that Amazon is able to throw that most people just don’t see coming, and the kind of disruptive format that it has the ability to throw into the mix just to see what happens. And yet, as I said yesterday, it would be a mistake to think that this is random or frivolous or anything other than strategic. Among Amazon’s goals with this store are to a) test the parameters of its bricks-and-mortar ambitions, and b) learn more than it already knows about how to serve its customers.

    In addition - and maybe even more importantly, I’d guess - the Amazon 4 Star will give it the ability to see exactly how targeted it can be in translating data about customers’ online shopping habits in a geographic area to a physical location. That has to be in the equation … and will give Amazon the capability of creating highly customized experiences neighborhood by neighborhood. It isn’t exactly like having everybody seeing a different home screen when signing onto Amazon online, but that has to be the goal.

    To reiterate something I’ve said here before … I would urge folks not to see this in a vacuum, but rather as part of a broader continuum or ecosystem being developed by Amazon. That’s the point that Patrick Spear was making … Imagine if a store like this were opened adjacent to a Whole Foods store or, even more likely, a 365 by Whole Foods store … or were equipped with Amazon Go technology. It also could be attached to a pickup depot for Amazon Fresh, and could have a bank of Amazon lockers. Or, it could end up someplace that we cannot even imagine. (that’s probably the best bet…)

    And while this isn’t a pop-up shop, imagine if this format was turned into a seasonal pop-up shop in malls all over America that have lots of vacant space and are just dying for a cool format like this to come in for the holidays.

    And here’s the thing that I think ought to scare the crap out of people who compete with Amazon. They can prepare for all these possibilities, or just the things that they think are probabilities, and craft strategic plans and operational tactics to deal with them. And then, as has happened before, Amazon is likely to turn around and hit somebody in the nose with a punch that nobody sees coming.

    Published on: September 28, 2018

    A new study released by convenience store trade association NACS says that “nearly two in three Americans (64%) say they live within 5 minutes of a convenience store,” and “86% of Americans in rural communities say they are within 10 minutes of a store.” Leading to the conclusion that “convenient locations and fast service are what consumers say convenience stores provide best in an increasingly competitive retail landscape.”

    In other words, in the battle for the last mile, convenience stores already seem to have an enviable position from which to compete … if they’re able to take advantage of it.

    Some additional study results:

    • “Half of all consumers (45 percent) say they are in and out of the store with a purchase in 3 minutes or less.”

    • Consumers select “convenience stores over fast-food restaurants as the shortest wait times in lines by a 2-to-1 margin (35 percent vs. 18 percent).”

    Here’s one that should get your attention:

    • The study says that “92 percent of respondents saying they’d be interested in using automatic check-out technologies, and 67 percent saying they’d like to try same-day grocery delivery. Sixty-seven percent of survey respondents said they’d like to pick up their online shopping orders (for example, Amazon or eBay) at a physical c-store location.”

    The study is being released in advance of the annual NACS Show, scheduled for Las Vegas, October 7-10. 
    KC's View:
    I’m fascinated by this, especially because I’m doing a session at the NACS Show entitled, “The Long & Winding Last Mile: Solving The C-Store Delivery Conundrum.” It scheduled for Monday, October 8 at 8 am, and will consist not just of me talking about delivery in the current competitive climate, but also a panel discussion with folks with a variety of delivery experiences. It should be illuminating and, I think it’ll also be fun … and I hope that MNB readers attending the show will stop by and say hello.

    I’m also going to be doing a NACS podcast later in the day … talking about technology in general and, I suspect, Amazon in particular. I hope you’ll stop by for that, too.

    Published on: September 28, 2018

    BusinessInsider reports that Walmart has filed for a patent application on a “shopping cart that would track things such as shoppers' heart rates and temperatures and how strongly they're gripping the handle … the cart would use this data to figure out whether shoppers are stressed and when they might need help.”

    The story says that “employees would be alerted to check on customers who seem to be internally freaking out, based on the shopping cart's analysis.”

    According to the story, “The patent application is careful to clarify that the data would not be linked to the identity of any individual customer. However, a shopping cart that could essentially read customers' minds is a futuristic concept that may edge into creepy territory for some.”
    KC's View:
    I hope they’re grading on a freakin’ curve…because it is hard for me to imagine anyone walking around a Walmart with a shopping cart and not feeling elevated stress. I walk around a Walmart, and “freaking out” is sort of the low bar on the emotional thermometer.

    I hope they train their employees well, because how they ask the question will matter a lot. “Can I help you find something?” will play a lot differently from “Sir, are you having a heart attack?”

    Published on: September 28, 2018

    It has been widely reported that Starbucks CEO has announced a corporate reorganization that is designed to thin the ranks of headquarters executives, with a goal of making the company more nimble and responsive.

    Bloomberg follows up on this story by reporting that the move “may not have come as a surprise to anyone who’s seen its top-heavy org chart, comprising 53 names and headshots … The chain has dozens more executive-level managers listed than any of its 10 largest competitors, according to data compiled by Bloomberg from corporate websites and filings.”

    Those competitors include Darden Restaurants (19 exec-level managers), McDonald’s (16), Domino’s (14), Restaurant Brands (13), Yum China (13), Wendy’s (12), Yum! Brands (12), Dunkin’ Brands (10), Chipotle (9) and Texas Roadhouse (7).
    KC's View:
    I’m really not trying to be hostile to Howard Schultz’s political ambitions here, but it won’t serve him well to be identified as a CEO who created a bloated bureaucracy that needed to be cut shortly after he left the company.

    I mean, I know how to write that attack ad right now. I won’t, but I know how to.

    Published on: September 28, 2018

    Reuters has a story that quotes Nestle CEO Mark Schneider as saying that the company “hopes to be able to pass on rising costs resulting from higher inflation in Western countries in coming years.” Schneider points to “a rise in input costs of wages, raw materials and energy” as putting enormous pressure on corporate margins.

    “It’s a matter of time, suppliers and producers will have to pass on rising input costs sooner or later,” he says.
    KC's View:
    This seems to be a scenario that is playing out more and more, with suppliers under pressure to raise their prices because of higher costs, and retailers resisting - and sometimes, if they are big and powerful enough - outright refusing, because they’re under pressure in the marketplace to lower prices, not pass along higher prices.

    I have to wonder if all these competitive pressures mean that we’re about to embark on a period of increased suspicion and distrust between retailers and suppliers, who are going to find themselves in fundamentally different spaces on this, feeling that neither has room for compromise or comity. I’m not sure this is good for anyone …. it will open the door for new competitors to create disruption, which will only ratchet up the pressures on retailers and suppliers.

    If they’re going to make things better, they’ll have to do it together. And it isn’t like there’s a lot of time, because things aren’t going to get easier on their own.

    Published on: September 28, 2018

    MediaPost reports on a new study from Juniper Research suggesting that “smart checkouts will process more than $45 billion in retail transactions in 2023 … That will be up from about $253 million this year, for an annual growth rate of 182%.”

    Juniper defines smart checkout as “technology that automates the scanning process, including approaches using sensors like at Amazon Go stores, robotic checkout like those from Panasonic and automated facial recognition payment technology already being used in China.”

    The story notes that “Juniper estimates it will take until 2021 to have more than 2,000 retail outlets deploying smart checkout technologies.”
    KC's View:
    This sounds pretty impressive until you remember the story from just the other day about how Amazon has a plan that, if implemented, would result in the opening of as many as 3,000 checkout-free Amazon Go stores by 2021. All by itself.

    Published on: September 28, 2018

    The New Yorker has an amusing piece about Dunkin’ Donuts decision to drop Donuts from its name.

    An excerpt:

    “To most Dunkin’ customers, the change will hardly register - no one has used the full name in years. Depending on where you’re from or the circles you run in, it’s always been Dunkin’, or Dunkies, or Dunks. But, by officially dropping the ‘Donuts,’ the company has put an end to a long-running mystery: despite living nearly my entire life in the Northeast, I have never seen a person dunk a doughnut into a cup of coffee, nor heard tell of anyone actually doing it. (Somewhere, a grizzled old man, in a wool cap with earflaps, clutching an Old-Fashioned, mutters his dissent.)”

    For the record, I used to dunk my doughnuts. But while I have a wool cap, it does not have ear flaps.

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

    Published on: September 28, 2018

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

    MarketWatch reports thatWeis Markets announced that it will begin using Target-owned delivery service Shipt, to begin same-day delivery of an assortment of groceries and household essentials in four states and Washington D.C.

    According to the announcement, “This launch gives nearly 2 million households across these four states and Washington D.C. access to products delivered by Shipt from Weis Markets in as soon as one hour.”

    It also gives Target potential access to Weis customers and their shopping patterns in all those places … even if there are safeguards in place. Don’t mean to be critical here, but does Macy’s tell Gimbels? (People too young to understand that phrase should go to Google…)
    KC's View:

    Published on: September 28, 2018

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

    • The Central Pennsylvania Business Journal reports that in the wake of its cancelled merger with/acquisition by Albertsons, “Rite Aid Corp. is shaking up its board structure as it looks for a strategic move that will help it survive in the current competitive environment.

    “CEO John Standley will no longer be board chairman as that role will go to current board member Bruce Bodaken,” the story says.

    Bodaken is quoted as saying that “since terminating the transaction with Albertsons, we have engaged directly with many of our largest stockholders,” and believe that “fresh perspectives will be significant assets as we continue to oversee the development and implementation of our strategy to best position Rite Aid to create long-term value for stockholders … Over the coming year, the board will continue to seek stockholder input as we identify new candidates to further refresh the board and consider other corporate governance enhancements.”

    If it were me, I’d worry less about “governance enhancements” and new board members who can create stockholder value, and maybe focus more on developing a stakeholder-focused company that operates better than mediocre stores. I’d try to figure out how to reinvent the 21st century drug store - not necessarily by imitating what CVS and Walgreen are doing, but by at the very least understanding that they are striving to carve out specific niches that they hope will resonate with the health-minded shopper. My experience with Rite Aid is that it is a place to go buy stuff when there’s no place else available.


    • The Orlando Sentinel reports that “Publix Super Markets plans to expand its corporate headquarters in Lakeland and bring on 700 new employees … it plans to complete the expansion by 2027, bringing the workforce there to 2,100 employees.”

    The story says that “the Publix corporate headquarters expansion will add about 190,000 square feet of space and bring the building to 510,000 square feet,” and that the company has estimated that this will cost it as much as $25 million.


    • The Indianapolis Business Journal reports that Giant Eagle “has agreed to buy Indiana-based Ricker Oil Co. Inc., the owner of 56 Ricker’s convenience stores and gas stations throughout central Indiana.”

    Terms of the deal were not disclosed.

    The story notes that Giant Eagle operates 410 stores, including 210 convenience stores/gas stations, in five states.
    KC's View:

    Published on: September 28, 2018

    • Kings Food Markets and Balducci’s Food Lover’s Market announced the hiring of Stephen Corradini as Senior Vice President of Merchandising and Marketing. Corradini comes to Kings and Balducci’s with more than fifteen years’ experience in food retail including roles as Vice President of the South Region and Director of Specialty Foods at Whole Foods. Most recently, he was Chief Operating Officer of a start-up specialty ice-cream company.
    KC's View:

    Published on: September 28, 2018

    Regarding yesterday’s FaceTime video about a new Apple Store in Seattle, MNB reader Buddy Martensen wrote:

    Kevin,…I noticed that this store now (at last) has lowered the display tables, to a height that would accommodate for anyone mobility challenged.

    I’ve been perplexed that a company like Apple (that is so “socially conscious”), could not see the challenges of their table height with wheelchair bound customers. I’m from the Dallas area, and both stores that I frequent, have had tables that were of this inconvenient (insensitive height). While waiting one day for my genius appointment, I uncomfortably watched as a customer in a wheelchair trying to “play” (as we all do) with the products displayed on these counter height tables. Also, trying to maneuver around all of the movable furniture. It did not go well.

    One of the stores I frequent was recently remodeled, and I have not been in since their re-opening. I’m hopeful that Apple recognized the struggle and have has corrected by incorporating these “lower” display tables.

    Just an observation, that these “little” details affect more than those that suffer the direct affect. As an Apple loyalist, it affected me and my perception (negatively) of a brand that I have held in highest regard.


    Sometimes it takes companies - even enlightened companies - longer to wake up than many of us would like.



    MNB yesterday took note of a Wall Street Journal report that McDonald’s “is stripping artificial ingredients from more food to win over customers who, the burger chain believes, don’t want to eat things with names like calcium propionate and sodium benzoate.” The story says that artificial ingredients are either being replaced or simply eliminated, which will shorten the shelf life for many McDonald’s menu items.

    However, not every artificial ingredient is affected: “Pickles remain a challenge,” the Journal wrote. “Executives said it could take them two more years to find a pickle with the same sour taste sans artificial preservatives.”

    Prompting MNB reader Matt Mroczek to write:

    McDonald’s has figured out how to manage shelf life without artificial preservatives on everything except pickles?  Seriously?  Pickles were literally invented as a way to preserve food.

    What a crock!


    I had the same thought, but I don’t know as much about this stuff as Matt, who happens to be in the produce business. I’m glad he wrote in.



    We had a piece the other day about Amazon investing in a prefab housing company, and MNB reader Mike Bach wrote:

    Spending some time in Southern Africa countries this week and read the post about Amazon homes.  For any number of reasons, I can’t help but wonder if this a good “market entry” approach they could take.  Paired with a financial institution to provide loans, this would be very interesting.
     
    A key issue which exists in emerging markets is the cost of (and sometimes access to) data.  If Amazon were to provide basic housing models, access to lower-cost data supported by a financial institution to back qualifying consumers…..  it could be a way to establish Amazon as a purposeful company.


    Y’mean, purposeful beyond simple world domination?
    KC's View:

    Published on: September 28, 2018

    • In Thursday Night Football action, the Los Angeles Rams defeated the Minnesota Vikings 38-31.


    TechCrunch writes about how Amazon is taking full advantage of its streaming rights to Thursday night National Football League games, leveraging “Prime Video’s ‘X-Ray’ technology to give viewers access to real-time stats, team info, and the ability to shop for team merchandise on amazon.com."

    That’s right - US viewers will be able “to shop its site via X-Ray for things like team hats, t-shirts and other gear – all right from the TV screen.”

    At the same time, the story says, in addition to the regular NFL Fox Sports feed featuring play by play from Joe Buck and color commentary by Troy Aikman, Amazon also is featuring an alternative feed with sports journalists Andrea Kremer and Hannah Storm - the first time “two women commentators have covered an NFL game in its entirety,” Amazon says.

    The streaming of the game will be available via all Fire TV devices.
    KC's View:
    I’d like to say upfront that I’d have no problem watching any game in which the broadcasters were all knowledgeable women … it doesn’t matter to me.

    My first reaction to the Andrea Kremer-Hannah Storm part of this story was positive; how cool is it that anyone who wants to get a woman sportscaster’s perspective can have that option? It turns broadcasting into targeted narrowcasting.

    The more I thought about it, though, the more I wondered if this is just another symbol of striations being created, or at least exacerbated in our society … striations that eventually turn into deep and eventually insurmountable barriers.

    I can understand simulcasting in another language, but there’s something about this that concerns me. In some ways, I might’ve been happier if Amazon simply named these women as its broadcasting team, and didn’t just offer them up as an enlightened option. (Though, to be fair, Amazon’s contract with the NFL may require it to carry the main feed with Buck and Aikman, while allowing Amazon to offer an alternative.)

    Not trying to cause trouble here, or be overly sensitive. I’m just saying’…

    Published on: September 28, 2018

    I got nothing for you this week. I’ve been busy traveling, so I haven’t had a chance to go to the movies, or even stream anything of consequence. I haven’t even picked up a book this week.

    I did catch the first episodes of the “Magnum PI” and “Murphy Brown” reboots. Sorry to say that the latter feels sort of warmed over, and the new “Magnum” has none of the charm of the original - more explosions and more flash, but almost no heart. Won’t be watching any more episodes of either, I suspect.

    And so it goes…

    But … I am happy to tell you where I am going to be tomorrow night … in Bellevue, Washington, where I’m privileged to once again serve as the emcee for City of Hope’s 30th annual Harvest Celebration Ball, where supporters of the cancer and diabetes research center and hospital gather to recognize the people and companies from the food industry community - 300 retailers, manufacturers, brokers and related vendors - who every year donate time, energy and money to this incredibly important cause.

    I’m lucky to be invited; it is the third year I’ve done it, and it is a cause to which I have a personal connection … I’m even willing to put on a suit and tie in order to participate.

    I tell you this not because I do anything special. Trust me, I’m an insignificant cog in a very impressive machine. Rather, I mention it because we spend a lot of time around here talking about disruption and competition and strategy and tactics … but it is important, I think, to take a moment to recognize the people who are working relentlessly to treat and cure these diseases, and the people - many of whom I know from years of covering the business - who support them selflessly.

    My hat is off to them. And my suit and tie will be on for them.


    Oh, yeah … I do have a wine to recommend … the 2013 La Spineta il Nero Sangiovese, from Tuscany … rich and complex and perfect with pizza.



    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Sláinte!!
    KC's View: