retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 9, 2018

    by Michael Sansolo

    This column will contain some 450 words, but only one is going to stay with you … shades of “Rosebud” from the classic movie Citizen Kane. Only this isn’t fiction and the one word will hopefully make you think and should scare the hell out of you.

    Here’s what happened. I was with a business friend from Atlanta discussing our supermarket shopping patterns. This colleague is a young woman - in her 30s with a young family and for countless reasons the very picture of the ideal consumer. You know, the shopper you want to win over and hold for 30 years.

    I asked her where she shopped for groceries in Atlanta. She answered me with one word:

    “Instacart.”

    Let that sink in for a second.

    “Instacart.”

    Here’s a shopper who sits in the middle of the bull’s eye of the most coveted group of shoppers, and she perceives her favorite supermarket to be a third party service that connects her to her store. To be fair, she added that her Instacart orders are usually from Publix or Costco, but there’s no getting around which brand she mentions first.

    Instacart!

    Let me be clear. I have no problem with Instacart; in fact I admire those folks. They found a problem in need of a solution and creatively filled the void. For shoppers they provide the ease of electronic shopping and for retail companies they provide an accelerated solution to the omni-channel challenge. That’s a model of innovation in business. They created a better mousetrap and it is working.

    My esteemed colleague, the Content Guy, on the other hand, has a big problem with Instacart, or at least with retailers falling over themselves to do business with the company. “Like lemmings going over a cliff,” is how he’s put it to me. He has hammered home this point repeatedly on MNB, questioning why retailers are turning over their best shoppers - all their information, loyalty and more to a third party operator who someday could be bought and owned by a competitor.

    My Atlanta friend’s comment bears out Kevin’s concern. If shoppers start seeing Instacart as the brand to which they are loyal, those shoppers are gone. And, they were given away.

    To be overly fair, yet again, I fully understand why retailers are using Instacart’s services. Going omnichannel is really hard. It requires investment in infrastructure, people and technology that are foreign to many companies. Instacart seems like the answer to a prayer, solving those problems.

    But it comes as a price. And retailers need to know that, so they can decide if the price is too high.

    Count this episode as a cautionary tale. You may want to dismiss it as an isolated comment from a single shopper that unfortunately made its way into MorningNewsBeat and therefore into public view. Or, you may want to consider it a glimpse into the changing world of shopper loyalty and brand recognition.

    The choice you make could define your company’s ability to own the future, as opposed to mortgaging it in favor of a quick fix.


    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 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: October 9, 2018




    by Kevin Coupe

    Last June, I did a piece that I described as being “from the a-picture-is-worth-a-thousand-words file,” about how Target “desperately needs a partner to help it be more effective in grocery, and especially fresh food.”

    As proof, I had pictures of badly displayed product at its store in downtown Portland, Oregon.

    Unfortunately, it doesn’t seem to get any better.

    I recently was in that same store, and at the top of the same escalator as last time was the most haphazardly displayed bunch of pumpkins that I’ve ever seen. It just looked awful … though not as bad as a display of bananas that was near the checkouts, right in the middle of a clothing department.

    I’m all in favor of cross-merchandising., I’m all in favor of looking for opportunities to prompt impulse buying.

    But this? Just sloppy. And, I think, an Eye-Opener about how Target continues to need a sophisticated supermarket partner that can raise the quality of its game.


    KC's View:

    Published on: October 9, 2018

    Amazon said yesterday that it has opened its second Chicago Amazon Go store in Chicago, less than it opened its first one in the Windy City. At the same time, it hung up a “coming soon” sign for a third Go store in Chicago.

    The second one, a 1,200 square foot unit, is located at the corner of West Adams and South Clark in Chicago, less than a half-mile from the first one, there, at 113 S. Franklin St. The third one, a 1,700 square foot store, is to be located at the Ogilvie Transit Center and appears to be about a half-mile away in the other direction.

    When the third Chicago Amazon Go is opened, it will make six in total; there also are three open in Seattle. In addition to the original, which opened to the public in January 2018, it opened second and third stores there just about a month ago.
    KC's View:
    Of course, the third Chicago store will only be the sixth in total if Amazon doesn’t open more in other cities before that one debuts. Which I wouldn’t want to bet on … because at this point, it appears that Amazon has made a decision about the viability of the concept and its ability to open them in quick succession. I don’t know if they’re really thinking about having 3,000 of them open by 2021, as recently was rumored … but I certainly wouldn’t bet against Amazon.

    Published on: October 9, 2018

    Variety reports that Walmart “is taking its first crack at original entertainment.” According to the story, Vudu, the company’s streaming-video arm, has struck a partnership with MGM under which the studio will create original series based on franchises from its extensive film and TV catalog. Those shows will be exclusively licensed to Vudu for North America, and available on Vudu’s free, ad-supported Movies On Us service.”

    However, the story points out that Walmart is looking to compete with Amazon and Netflix, and has no plans to produce hundreds of original series. Rather, it will choose its programming to be in line with its ”family-friendly” image; in addition, the programming will be advertising-supported.

    While Walmart had been rumored to be considering a subscription-based video-on-demand (VOD) approach, Vudu said that “there’s nothing brewing” in that area for the moment. The story also notes that Walmart could strike similar deals with other studios.
    KC's View:
    MGM has an extraordinary library of films going back decades, so it is fertile ground in which to look for titles that could be turned into TV series. I must admit I’m a little surprised by this; I had doubts about Walmart’s willingness to get into the TV production business.

    Still, it seems to me that while this may be an effective move, it will be limited by the fact that Walmart is trying to be a little bit pregnant - not spending too much money, not doing too much production, and engaging in an ad-supported approach rather than the more ambitious approach used by Amazon and Netflix. I find both those services a constant source of interesting, provocative work … I am dubious about Walmart’s ability to do the same.

    Published on: October 9, 2018

    In Portland, Maine, the Press Herald has a story about Forager, a local startup that is designed to be “a digital procurement platform for local food producers, distributors and wholesale buyers that is gaining traction” and serving as “a tool to help organize the process of sourcing and ordering local ingredients.”

    Forager, the story says, has had “about $2 million in sales facilitated by its Amazon-like online marketplace over the past 18 months,” and now “has over 150 farms in its supplier network and has been signing up new buyers such as restaurants, grocers and food distributors.”

    Founder Dave Stone tells the paper that “for retailers of locally sourced foods, the traditional process of finding and doing business with multiple local farmers and other producers has been expensive, inefficient and error-prone. As a result, he said, the retailers can spend up to 60 hours a week communicating with farmers, managing orders and making payments, which can reduce their margins by 33 percent or more … Local food producers also struggle with inefficient processes such as updating product availability, invoicing and depositing payments, 99 percent of which are paper checks, Stone said. Forager lets them keep potential buyers apprised of their full range of available products in real time from a computer, tablet or smartphone, thus increasing sales opportunities, while speeding up billing and payments.”

    Indeed, at a time when competition is tighter and tougher and bering exacerbated by Amazon’s purchase of Whole Foods, the Press Herald points out that “a big part of the sales pitch for Forager is that smaller brick-and-mortar grocery outlets can better compete with online behemoths such as Amazon by stocking more locally sourced foods.”
    KC's View:
    There are a lot of businesses cropping up, looking to help other businesses compete against the growing Amazon juggernaut. Some of them - like this one - sound as if they make sense, and have the potential to effectively move national. Good luck to them.

    Published on: October 9, 2018

    Business Insider has a story in which it compares Instacart’s delivery service to Amazon Prime Now - an exercise that is more than academic since Prime Now has replaced Instacart as Whole Foods’ delivery mechanism since Amazon bought the retailer.

    You can read the entire assessment of the two services here, but the conclusion is that Instacart is superior: “The website was easy to use, and the options for delivery were considerably quicker. The main benefit is that you don't need to have a membership to use the service.”

    There is, however, “one big downside” to Instacart, according to Business Insider: “If you’re ordering on a frequent basis, the service and delivery fees do add up if you aren't an Express member, and it's hard to justify a $149 annual fee when Amazon Prime is not only cheaper but grants you access to more perks.”
    KC's View:
    I realize I seem like a dog with a bone on this subject, but I can’t help myself. That’s not the only big downside for retailers working with Instacart … and if you have any questions about this, go re-read Michael’s column above.

    Yes, I understand that Instacart may be perceived as a positive by consumers … I understand that it is a good model for Instacart that probably will make its owners and investors a lot of money when it either is acquired or goes public … but these are all the reasons that retailers should be wary of dealing with it.

    And Business Insider should know better.

    Published on: October 9, 2018

    The Boston Globe reports that e-commerce company Wayfair plans to open a pair of pop-up physical stores in the Natick Mall in Massachusetts and the Westfield Garden State Plaza in New Jersey, in November and December.

    The story notes that the move “represents a bit of a watershed moment for online commerce. Many smaller Internet startups moved into the brick-and-mortar world in the past few years; Wayfair resisted the trend … It’s an experiment — but one that could be a precursor for year-round stores to come.”

    According to the Globe, “These stores are just 400 square feet in size — smaller than some of the rooms where Wayfair’s items will end up. Wayfair will show off some furniture, alongside a limited pick of housewares and tabletop items, plus fabric swatches to help customers design their own sofas and love seats. Still, these shops will be staffed by a half-dozen people at any given time. They’ll answer design and product questions and work with customers to order online and ship to their homes directly from the warehouse. No cash registers. No inventory piling up. The only thing consumers can buy and carry out? Wayfair gift cards.”
    KC's View:
    The advantage of this approach is that it can test the waters with what appears to be a minimal investment … and in this category, it seems to me that the Wayfair showroom approach could be effective. On the other hand, this may be one of those categories in which a stronger physical presence may be important. It’ll be an interesting experiment.

    Published on: October 9, 2018

    • In North Carolina, the News & Observer reports that a Wegmans about to be built in Cary, NC, has been reduced in size from 130,000 square feet to 103,000 square feet, with spokesman Stephen Leaty saying that the “company has adopted a smaller footprint for new stores to meet the demands of the changing marketplace.”

    “We are seeing changes in the way customers buy groceries,” Leaty tells the paper. “We have a design that will be more efficient. We have seen changes in the retail environment, including the way we do business.”


    • The BBC reports that Tesco has removed “best by” labels from almost 200 fresh produce items, saying that the move “will help consumers cut food waste.”

    According to the story, “Among the produce being added to the list are apples, oranges, cabbages and asparagus. Tesco said research showed scrapping best-before dates helped consumers keep ‘perfectly good food’ for longer.”

    However, Tesco says that the expiration date labeling “on fresh products such as meat, fish, dairy or poultry will remain the same.”
    KC's View:

    Published on: October 9, 2018

    • The Wall Street Journal reports that Starbucks has hired Patrick Grismer, most recently the CFO of Hyatt Hotels, to be its new CFO. The story says that the move reflects Starbucks’ transition “from a period of rapid expansion to a more mature market position.”

    Grismer succeeds Scott Maw, who is retiring.


    • SpartanNash announced that Joseph McQuesten, the company’s vice president of center store merchandising, has been promoted to senior vice president of center store and fresh merchandising.
    KC's View:

    Published on: October 9, 2018

    Responding to yesterday’s story about Target’s new emphasis on private label, MNB reader Paree Canoy wrote:

    I’ve always thought this was the answer to their struggling grocery venture. To have private label items only available there...sort of like Trader Joe’s.

    Maybe. Though today’s Eye-Opener suggests that they have a lot of work to do, I think.



    MNB reader Chuck Kosel wrote in about new competition for the sales dollars that Toys R Us’s demise seem to have left on the table:

    What blows me away is that given the amount of time that retailers had to react to the void with Toys R Us why didn’t someone jump on this opportunity?

    Example – Walmart could have carved out space in their garden center areas with top selling toys. 

    A great retailer success story on this premise is Mills Fleet Farm in the Midwest which opens up a “toy store” in the middle of their stores every year around October 1st where yard and garden resides in the late winter, spring and summer.  They sell through what they can during Q4 and then clearance what’s left while they restock yard and garden in Q1.   Sell thorough before Christmas is likely around 75%.  They buy Mattel, Little Tykes, Ertl, Tonka etc.  I’ll bet they got some great buys from manufacturers this year!




    Regarding the bankruptcy filing by Mattress Firm, MNB reader Jen Linke wrote:

    This one is not surprising and I haven’t even been following this company.  I’ve questioned for several years who allows multiple stores within blocks of each other.  On a stretch of road I travel often, I see 5 Mattress Firm stores within 8 miles of each other.  Two of these are, quite literally, across the street from one another. It’s embarrassing!  A company that allows that to happen deserves to have problems.

    From MNB reader Bill Kadlec:

    Mattress Firm‘s bankruptcy isn’t about online competition or any other current day market issue. Their failure was set when they decided to massively overbuild stores.

    I live right next to a major shopping area in west suburban Chicago. Within the span of 1 year, I watched them buy a defunct Krispy Kreme, a dead Applebee’s (directly across the street from the Krispy Kreme) and an old small office building which they tore down and built a brand new Mattress Firm. These three locations are literally a 5 minute walk (or less) from each other. If I get in my car, I can drive to 7 locations within 5 minutes.

    How often does anyone buy a new mattress? What would possess anyone to think that mattress stores need to be more accessible than MacDonald’s, Starbucks or grocery stores (all grocery stores, not a single chain). How ridiculous and outrageously expensive. Brick and mortar locations are extremely capital intensive as we know.

    I told my family many times they were going bust, it was just a matter of time. Turns out, it didn’t take very long at all.




    On an other subject, from another MNB reader:

    In reference to Costco CFO Richard Galanti stating he does not want his members  to get used to just shopping  online … I may see his point, as I tried their 2 day grocery delivery option for some staple items. The minimum spend is $75 for free delivery, which is about $225 less than the minimum spend I make when I visit the club. (Ok I admit it I like to treasure hunt.)



    And from MNB reader Kevin Hollenbeck:
     
    I know that you give out movie recommendations…..I like to give you one.
     
    We just saw a documentary called Science Fair and would highly recommended it. Especially in today’s climate it might just restore your faith in humanity (assuming you are like me and have lost a little of that faith recently) and we might actually stand a chance of survival with these phenomenal young kids in our mist.

    So staying true to your talents and tying the movie back to business. One thing that stood out to me is the amount of US invention that has been discovered by people that have recently immigrated here (of course we are all immigrants unless you are native American).  It  highlighted to me that if US companies lose their ability to tap into the global talent we will be left behind.
     
    If you get a chance…check it out!


    I will.

    I hope these kids get with it quickly, in view of the new report just issued by the International Panel on Climate Change (IPCC), described as the scientific group that helps inform the United Nation’s member countries’ climate policies. This report is alarming, to say the least, suggesting that Earth has about a dozen years to get its act together before facing enormous repercussions for previous ill-considered behavior.

    Here’s how the New York Times begins its coverage:

    “A landmark report from the United Nations’ scientific panel on climate change paints a far more dire picture of the immediate consequences of climate change than previously thought and says that avoiding the damage requires transforming the world economy at a speed and scale that has “no documented historic precedent.” The report, according to the story, “describes a world of worsening food shortages and wildfires, and a mass die-off of coral reefs as soon as 2040 - a period well within the lifetime of much of the global population.”

    It goes on to say that “the authors found that if greenhouse gas emissions continue at the current rate, the atmosphere will warm up by as much as 2.7 degrees Fahrenheit (1.5 degrees Celsius) above preindustrial levels by 2040, inundating coastlines and intensifying droughts and poverty. Previous work had focused on estimating the damage if average temperatures were to rise by a larger number, 3.6 degrees Fahrenheit (2 degrees Celsius), because that was the threshold scientists previously considered for the most severe effects of climate change.”

    You can read the Times story here.

    Like I said, I hope those kids get busy. Fast.
    KC's View:

    Published on: October 9, 2018

    In the National League Divisional Series, the Los Angeles Dodgers defeated the Atlanta Braves 6-2, winning the best-of-five game series 3-1 and moving on to the NL Championship Series, where they will play the Milwaukee Brewers.

    Meanwhile, the Houston Astros beat the Cleveland Indians 11-3, sweeping their American League Divisional Series 3-0 and moving on to the AL Championship Series, where they will play the winner of the Boston Red Sox-New York Yankee series. The Sox lead that best-of-five series 2-1, having beaten up on the Yankees 16-1 last night.



    And, in Monday Night Football, the New Orleans Saints defeated the Washington Redskins 43-19.
    KC's View: