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    Published on: October 22, 2018

    by Kevin Coupe

    It often has been said here that there is no such thing as an unassailable business advantage.

    That may be even more true than I thought, because it never occurred to me that this would include the fireworks business.

    The Detroit Free Press has a story this morning about how “the kind of evening celebration that might have once been the exclusive domain of fireworks is expanding to include the increasing technological prowess of drones.”

    To be sure, the technology isn’t quite there yet. Companies that want to put on drone shows have to get waivers from the Federal Aviation Administration (FAA), since current regulations limit how many drones can be flown at one time; “Current regulations stipulate that drones must fly under 400 feet, within a visual line of site, one at a time and during the day.” (Good thing, too. Accidents have have been known to happen.)

    But the fact of the matter is that fireworks, which go back as far as 9th century China, may soon see their relevance questioned, and their business model subverted.

    Go figure. Just another Eye-Opener.
    KC's View:

    Published on: October 22, 2018

    The New York Times reports that new research suggests that the recent minimum wage increases in Seattle did more good than harm - contradicting earlier research by the same group that said something different.

    The research group - which included economists from the University of Washington - looked at the fact that “Seattle increased its minimum wage for large employers to $11 an hour, from $9.47, in April 2015, then to $13 for many of those same employers in January 2016. (The minimum wage increased by less for small employers, and for large employers that contributed toward workers’ health coverage.)”

    With a little more time and distance, the research group has concluded - this time around - that the increase was good for people in low wage jobs who worked the most hours (more than 600-700 hours in a nine month period), statistically irrelevant for low wage employees who worked less than 600 hours during that period, and damaging to unemployed people who were looking for jobs but had trouble finding them because of an increased minimum wage.

    “One interpretation of the findings,” the Times writes, “is that the Seattle minimum-wage increases helped workers who had languished in low-paying jobs for some time - perhaps parents working full time to support a family - while providing fewer benefits, or even causing harm, to workers like college students who seek part-time jobs for discrete periods to earn spending money or help pay for school.”

    One of the study’s authors suggests that “the real contribution of the latest paper might be to force policymakers to consider who benefits from a minimum-wage increase and who doesn’t, and whether that allocation of benefits is consistent with what a government is trying to accomplish.”
    KC's View:
    Seattle may not be the best city in which to evaluate a minimum wage increase, since it is in the middle of an amazing boom these days. (There are a lot of companies paying more, not just because they can, but because they have to.) I also can understand why some businesses resist the idea of some minimum wage increases, especially to $15 … for some, working on narrowing margins because of a wide variety of raised costs, it becomes close to untenable.

    But … I always wonder how many of these companies where c-level executives challenge increased minimum wages but have no problem taking enormous salaries and benefits packages. I have no problem with senior executives making a lot of money, but I do question how their concerns about salaries only seem to apply to the people in an organization who make the least. It is one of the reasons that I am such a fan of employee ownership or, at the very least, employee profit sharing programs that make it possible for everybody to share in the wealth and find even greater motivation to be both efficient and effective.

    Published on: October 22, 2018

    The Wall Street Journal reports that Uber Technologies “envisions taking to the skies with a fleet of food-delivery drones in as little as three years, an ambitious timeline for a ride-hailing company that would face numerous technical challenges and regulatory hurdles.”

    The story notes that “proponents of unmanned aircraft such as Uber, Inc. and other companies are scrambling to draft wide-ranging blueprints for various home delivery efforts, ranging from training ground operators and certifying vehicles to analyzing hazardous incidents. But Uber sketched out a faster timeline than many regulators envision, and such companies generally have been careful to avoid antagonizing regulators by publicly laying out comprehensive plans before they have even been formally submitted or gone through vetting by regulators.”

    The new drone business would build on the success of Uber Eats, a food delivery service described as a “bright spot” for the company.

    One of the first steps that Uber is taking to make this happen? It is looking for an operations executive to run the business.
    KC's View:
    It was just last week that we learned that Uber plans to put greater emphasis on food and even plans to develop a short-term, on-demand staffing business … all keyed to its planned IPO.

    Which is all we really need to know. It is about the IPO.

    Published on: October 22, 2018

    Tech Crunch reports that Walmart-owned Sam’s Club “plans to offer Instacart-powered grocery delivery in over half of Sam’s Clubs stores by the end of this month.” The move comes after Sam’s began testing the service earlier this year in Dallas-Fort Worth, Austin, St. Louis, San Diego and Los Angeles.

    According to the story, “The deal also allows consumers to shop Sam’s Clubs stores without a membership, including shopping its sales. However, Sam’s Club members will receive lower, membership-only pricing, Walmart says. Deliveries are offered in as little as an hour, and may include non-grocery items, the retailer also notes.”

    More importantly, “The partnership between Sam’s Club and Instacart is significant in terms of Walmart’s larger battle with Amazon, which offers grocery pickup and delivery through its Whole Foods division, as well as grocery delivery through AmazonFresh and Prime Now.”
    KC's View:
    I get it. I’m sure Walmart thinks it makes perfect sense to use the same delivery service for Sam’s Club that is being used by Aldi for its stores.

    Makes total sense.

    Published on: October 22, 2018

    The New York Times has a story about new data from the Centers for Disease Control and Prevention (CDC) saying that “fast food - defined broadly in the survey as any item obtained from a ‘fast food/pizza’ establishment - is eaten by 37 percent of American adults at some point during the day.”

    Ironically, the better of you are financially, the more likely it is that you will consume fast food: “About 32 percent of people who earn less than 130 percent of the federal poverty line — $32,630 a year for a family of four — ate fast food daily,” the Times writes. “But 42 percent of people above 350 percent of the poverty line — $112,950 a year or more for that size family — were daily consumers.”

    Other data from the story:

    • “Among those who eat fast food, 44 percent do so at lunch and 42 percent at dinner. Men are more likely to grab fast food at lunch; women are more likely to snack on it.”

    • “The most enthusiastic consumers are 20 to 39 years old: 45 percent of them eat fast food on any given day. That figure declines sharply with age, to 38 percent among people 40 to 59, and to 24 percent among those over age 60.”

    This last passage was of great concern to Liz Weinandy, a staff dietitian at the Ohio State University Medical Center, who was not involved with the report. The fact that consumers aged 20-39 are eating so much fast food “sets the stage for health issues later in life — heart disease, dementia and so on,” she tells the Times. “Also, this is the group that’s having kids, and they’re setting them up for a lifetime of unhealthy eating habits.”

    Weinandy also notes that “when we hear about a shark attack, we’re scared and we avoid that beach. But what we really should be afraid of is double cheeseburgers and French fries.”
    KC's View:
    Makes me feel better about not swimming in the waters off Cape Cod and avoiding fast food.

    Published on: October 22, 2018

    The New York Times reports that Quaker Oats plans to bring its Quaker Oat Beverage to supermarket shelves nationwide, using the distribution infrastructure of parent company PepsiCo to make it happen: “Quaker hopes to distinguish its offering by promoting what it says are its health benefits, primarily that it contains beta-glucan, a soluble fiber from oat bran, that can reduce the risk of heart disease.”

    The story says that Quaker is avoiding the use of the words “oat milk” so it can avoid the regulatory debate about what is milk and what isn’t.

    The Times writes that “milk alternatives were originally geared toward people unable to stomach cow’s milk because they were lactose intolerant. But as vegans and other buyers embraced the plant-based choices, sales in the United States rose to more than $2 billion last year, up 61 percent from five years earlier, according to the research firm Mintel.

    “Oat milk, while gaining popularity in parts of Europe, has been mostly a trendy, fringe product in the United States. Quaker is betting it can be more than that.

    “The company’s main competitor in the category is Oatly, a 25-year-old company based in Sweden, and its namesake drink. Oatly tiptoed into the United States market about two years ago, persuading small coffee chains like Intelligentsia and some stand-alone shops to use its dairy milk alternative.”
    KC's View:

    Published on: October 22, 2018

    Environmental Leader reports that “Walmart plans to break ground on a new high-tech grocery distribution center in Shafter, California. Computer algorithms deployed at the facility are expected to improve efficiency, lower transportation costs, and reduce food waste, the retailer says … Walmart associates will use technology from global automated logistics system solutions company WITRON to manage how boxes of perishable groceries such as produce, eggs, and flowers get packed onto pallets for shipping.”

    The technological advances in the new distribution center, the company says, will help it move 40 percent more product than a traditional one.
    KC's View:

    Published on: October 22, 2018

    • Raley’s has announced that unveiling of a new website “designed to offer an enhanced customer experience with an improved e-commerce interface, while allowing customers to better understand Raley’s vision and purpose around health and wellness … The site is designed to share Raley’s stories, offer customer inspiration and enhance transparency around the products that they sell.”
    KC's View:

    Published on: October 22, 2018

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

    • Supervalu shareholders last week approved the proposed $3 billion acquisition of the company by United National Foods Inc. (UNFI). The deal is expected to close today.

    CNN reports that as bad as things are for bankrupt Sears, things are even worse for its Kmart business - it faces diverse competition from Walmart and Target and Macy’s and Dollar Tree, it has had unsustainably thin margins, and has even fewer differential advantages than Sears (which at least had brands such as Kenmore and Craftsman to fall back on, albeit ineffectively).

    The general consensus seems to be that Kmart was too far gone to be rescued when Sears CEO Eddie Lampert bought it out of bankruptcy in 2003. Another bad move by Lampert, who I wouldn’t trust to run a gas station.

    • The Associated Press reports that “New York City has announced a national effort to reduce sugar in packaged foods by 20 percent. The city’s health department said Friday the endeavor is being undertaken by the National Salt and Sugar Reduction Initiative, a partnership of about 100 health departments and related groups … The initiative is urging the industry to voluntarily meet sugar reduction goals in 13 food and beverage categories by 2025.”
    KC's View:

    Published on: October 22, 2018

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    Esquire reports that Patagonia, for the first time in its history, has decided to endorse two candidates for the US Senate - incumbent Sen. Jon Tester (D-Montana) and challenger Jacky Rosen, the Democratic member of the House of Representatives who is running for in Nevada.

    The story notes that there is context for the move; Patagonia has been public about its opposition to the Trump administration’s environmental policies, and even sued the White House at one point.

    In its statement, Patagonia wrote that “Nevada and Montana are two states where Patagonia has significant company history and a long record of conservation accomplishments, and where the stakes are too high to stay silent.
    Hundreds of corporations back political candidates. The difference with our activism is that we put our logo on it.:

    Indeed, Patagonia said this was not about being partisan: "In fact, it’s the opposite - it’s about standing up for the millions of Americans who want to see wild places protected for future generations. That’s something we will always do, regardless of political party.”
    KC's View:
    Some might think of this as a risky move, but it strikes me as being totally on brand … and most Patagonia customers will approve. And some risks, Patagonia no doubt believes, are worth taking.

    Published on: October 22, 2018

    Got the following email from MNB reader Jon Collins:

    Let me start with a thank you for a great read every morning. I had your site recommended to me by a contact offering insight into my hopeful transition from a not-for-profit marketing role to the private sector and I’ve found the daily read to be a true education.

    I thought you’d find my coincidental encounter with what I see as a (modest, admittedly) customer experience misstep by the folks at Amazon to be of interest.

    As a Canadian I read stories on Amazon's innovation with great interest but don't always have the chance to engage with the brand experience.

    Last week, I was visiting Nashville, and had the chance to take in some outstanding country music and live my first Amazon brand activation experience. The "Treasure Truck" was parked across the street from our hotel. It was a simple set up - sign up for text alerts and be notified when the truck is on the road. Each time it parks at a new location and offers a unique product deal. Ours was the Alexa dot for $49.99.

    The truck itself was on brand, and playing loud tunes through a speaker fit the bill for the product that they were selling. The sign that read "Alexa, play party music" was inviting, particularly for a friend who was sufficiently into party mode to follow its instruction. "Alexa, play Guy Clark" he shouted. No acknowledgement. After two or three tries, the sheepish staffer admitted - that won't work today, we're playing it on a Sony speaker.

    Long story short, it was a bit of an eye opener. Even the best brands with a methodically designed activation can miss. I know that the Echo Dot is not a portable speaker, but surely a replacement product could be provided to activation staff to avoid the embarrassing admission that Alexa can't play Guy Clark. Paul Pace, who plays the opening show on Thursday’s at Rippy's on Broadway, sure did.

    Thanks for the opportunity to share and again for providing great insights for both seasoned and aspiring retailers.

    On a different subject, MNB reader Tom Jackson wrote:

    I enjoyed your FaceTime piece  on outsourcing hiring for Front End Employees. What great companies  should do  is “ramp up”  their efforts for selecting front end  people. They should devote more time and attention to  this process.  Using  better recruiting, selection and especially onboarding  techniques would produce long term benefits to their company. I’m talking about more than one interview, more then one interviewer and certainly more than one day of “orientation.” Onboarding  is a commitment to  excellence and this is a critical step in building a “brand “. But, it all starts with a quality and comprehensive  selection process---“HIRE FOR ATTITUDE…TRAIN FOR SKILL”   You can’t outsource this, when you are creating and building a sustainable BRAND for your business!

    Along the same lines, MNB reader Jim Huey wrote:

    Kevin, I agree with you about outsourcing the last mile. Where I work one of my big frustrations is working with vendors (chips and soda) who do not have the same level of customer service dedication we have at the store. We do not have our own warehouse and have similar issues. Thankfully as we develop our last mile delivery (starting with curbside pickup) we are looking to do it ourselves.

    Hopefully retailers are hearing your warnings, not just about delivery, but every aspect of their operations (unless of course they are in our markets).

    Someone pointed out to me recently that on the subject of Instacart and the dangers of outsourcing customer-facing functions, I was beginning to sound like John the Baptist … and then I was reminded of how John the Baptist ended up.

    Someone else asked me why I keep beating a dead horse. My response: “The horse ain’t dead yet.”

    Metaphorically speaking, of course.
    KC's View:

    Published on: October 22, 2018

    In the National League Championship Series, it took until the seventh and deciding game, but the Los Angeles Dodgers finally defeated the Milwaukee Brewers, and now move on to the World Series, where they will play the Boston Red Sox, beginning tomorrow night.

    In Week Seven of the National Football League…

    Tennessee 19
    LA Chargers 20

    Carolina 21
    Philadelphia 17

    Minnesota 37
    NY Jets 17

    Buffalo 5
    Indianapolis 37

    New England 38
    Chicago 31

    Cleveland 23
    Tampa Bay 26

    Houston 20
    Jacksonville 7

    Detroit 32
    Miami 21

    New Orleans 24
    Baltimore 23

    Dallas 17
    Washington 20

    LA Rams 39
    San Francisco 10

    Cincinnati 10
    Kansas City 45
    KC's View:
    I was surprised to read over the weekend that the Red Sox and Dodgers have met just once in the World Series - in 1916. The Dodgers at the time were playing in Brooklyn, and weren’t even called the Dodgers; they were called the Brooklyn Robins. And while the Red Sox had moved into Fenway Park five years before, the Series was played in Boston at Braves Field, which held more spectators.

    One other thing. Playing for the Dodgers that year was a 26-year-old named Casey Stengel. And the Red Sox had a 21-year-old left-handed pitcher on its roster - Babe Ruth.

    Content Guy’s Prediction: Red Sox in 6.