retail news in context, analysis with attitude

Published on: November 21, 2018

by Kate McMahon

It’s a little bit funny, this feeling inside. But I was indeed moved to tears five chords into Elton John’s signature ballad, “Your Song,” when I saw him in a recent concert and then again when I watched a new TV commercial being shared by millions around the world. (Which you can see at left.)

The retailer John Lewis & Partners’ just-released Christmas “advert” featuring the iconic showman is to the United Kingdom what the Macy’s Thanksgiving Parade is to the U.S. – the annual feel-good kickoff to the holiday season.

In past years, the high-end London-based department store chain has premiered nostalgic ads each November replete with adorable animals or a kind monster, all set to heart-tugging tunes. This year’s much-anticipated commercial “The Boy and The Piano” opens with a pensive Sir Elton himself playing “Your Song” in a quiet living room. The two-minute, 20-second clip then takes viewers down a veritable rollicking Yellow Brick Road of his musical career, back to the moment it began: when he was 3 and received his grandmother’s piano for Christmas.

The tag line: “Some gifts are more than just a gift.”

I think the ad is “spot-on” as the Brits would say, especially since John Lewis is introducing a line of pianos and keyboards for the first time in 70 years. According the British press, customers at John Lewis’ London flagship store on Oxford Street will find a mock-up of the set, be able to play a grand piano, sit in a ‘70s style recording studio, and try on recreations of John’s trademark, glitter-encrusted costumes.

The world-wide reaction to the ad has been overwhelmingly positive in mainstream media reviews and commentary on Facebook, Twitter, Instagram and YouTube, where it has 9.7 million views. As for Elton John himself: “I’ve truly loved every minute of being a part of it.” There is even a behind-the-scenes video showing how the short was developed and filmed, with a series of actors portraying the star showman over almost seven decades.

There are, of course, Grinches, in the mix. According to the tabloid The Sun, many viewers complained bitterly on Twitter the ad was simply not “Christmas-y enough” or was just an over-priced “shameless plug” for Elton John’s farewell concert tour and upcoming biopic Rocketman.

Retail competitors also jumped in the fray. Discounter Lidl tweeted about its electric keyboard vs. the pricey pianos at John Lewis, saying: "Just because you don't have £872 to spend on a piano, doesn't mean you can't be the next Elton.”

John Lewis’ sister company, the supermarket chain Waitrose & Partners, responded with an ad entitled “Fast Forward” featuring a teenager encouraging her parents to watch the Elton John commercial. They smile, grab the remote and fast-forward through the video in order to get to their holiday Stollen cake. The tag line: “Too good to wait.” According to The Independent, the John Lewis folks took the mocking ad in stride.

Count me in the camp that thinks “The Boy and His Piano” is wonderful, and a heart-warming way to begin a frenetic season. And you can tell everybody.

Comments? Send me an email at kate@morningnewsbeat.com .

Published on: November 21, 2018

by Kevin Coupe

Want to sell someone a $1,000 winter parka? Canada Goose has decided that one way to make the sale is to approximate the weather conditions in which the coat might be worn.

Which is why, according to Bloomberg, “The company is adding frigid rooms to some of its stores where shoppers can test the luxury coats in temperatures as low as -25 degrees Celsius (-13 Fahrenheit). A Montreal location, which opened Friday, is the fifth to include the fancy freezer, and Beijing will join later this year as the company rolls out its China expansion plan.”

Not surprisingly, the frigid rooms have become “selfie magnets,” but the company says it is hoping to go beyond simply buzz and establish for itself a differential advantage that will appeal to affluent consumers with disposable income.

It is Canada Goose’s own approach to going beyond simply being a coat company for rich folks … it is about selling a solution, not a product.

And it is an Eye-Opener.

Published on: November 21, 2018

Bloomberg has a story about how this is an important holiday season for Fairway Markets, which operates 15 stores and 4 wine shops in the New York metropolitan area - the company lost its edge in the years since it was sold to private equity by the founding Glickberg family and has struggled to get it back.

Fairway, which used to have a kind of iconic Manhattan status, has more than $300 million in debt, and Bloomberg writes that “its small scale puts it at a disadvantage with newer rivals like Whole Foods and Trader Joe’s that compete for upscale shoppers. It recently completed a debt overhaul and five-year extension, which Moody’s Investors Service regards as distressed deal and perhaps only a temporary respite; another restructuring is ‘highly likely’ within 18 months, Moody’s said.”

CEO Abel Porter, however, says that the company is “accumulating,” not “burning” cash, and insists that the company’s troubles are behind it.

The story says that “since taking over Fairway in 2017, Porter has focused on keeping customers inside his stores by upgrading the shopping experience and promoting variety at Fairway, where the aisles include dozens of bins of coffee beans, fresh-ground almond butter and eclectic produce such as mamey fruits.”

The story goes on: “Instead of opening new stores, Porter said he’s focused on optimizing current square footage, using small capital expenditures to add services like noodle stations and poke bars.

“He’s opening a cooking school in Manhattan at the Broadway and 74th street location. A wider selection in the produce department, which amounts to 20 percent of Fairway’s business, has generated about 7 percent more revenue in same-store sales, Porter said.

“The company has also taken on Amazon’s Whole Foods by ramping up its online presence, partnering with grocery delivery services Instacart, Shipt and Google Express to get groceries to people’s doorsteps. Fairway’s e-commerce is growing at a 50 percent clip, Porter said.”

Published on: November 21, 2018

The Wall Street Journal reports this morning that Walgreens Boots Alliance is in “preliminary discussions” with health insurer Humana that could lead to the two companies taking equity stakes in each other, “as health-industry players scramble for tie-ups that will help them compete in a rapidly evolving environment.”

Everybody in the health care business, the story says, is “looking for ways to diversify, bulk up and insulate themselves against external threats, including from Amazon.com Inc … The latest talks come nearly a year after Walgreens rival CVS Health Corp. announced a $69 billion deal to buy insurer Aetna Inc. The proposed acquisition is aimed at securing new avenues for growth for the pharmacy company and capturing more of what consumers spend on health care.”

And, “The partnership is part of a broader effort by Humana to move further into the business of providing direct care to its Medicare Advantage members. The company has become a major player in home-care and hospice services, and it also has a growing primary-care footprint, including its Partners in Primary Care clinics.”

Humana already is operating primary care clinics for older people in two Walgreens stores in the Kansas City, Mo., area.

Published on: November 21, 2018

The New York Times reports that the the Centers for Disease Control and Prevention (CDC) is saying that nobody - nobody - should consume romaine lettuce over the holiday weekend. Restaurants, the CDC, should not serve it, and if you have it in your refrigerator, you should throw it out and clean the fridge.

“The stern and sweeping advisory,” the Times writes, “caught many people off guard. But the agency said it was acting out of an abundance of caution after 32 people in 11 states fell sick with a virulent form of E. coli, a bacteria blamed for a number of food-borne outbreaks in recent years … Officials said such measures were necessary while they track down the source of the contamination, and at the moment all they could say was that investigators believe the tainted lettuce was grown or processed in Canada or the United States.”

The story notes that “these cases are genetically unrelated to an E. coli outbreak linked to romaine earlier this year that killed five people and sickened 200, the officials said. Investigators later traced that bacteria to a tainted drainage canal near a lettuce farm in Arizona.”

Published on: November 21, 2018

The Los Angeles Times reports that “Bain Capital and Kohlberg Kravis Roberts announced Tuesday that each had committed $10 million to a fund for former Toys R Us workers” who were laid off when the company went bankrupt.

The two firms are two-thirds of the ownership group that took the company into bankruptcy; the third, Vornado Realty Trust, has not committed to contributing any money.

The Times writes that “the move is considered rare among private equity-backed companies that file for bankruptcy. Even so, the amount pledged is well below the $75 million a workers rights group says those who lost their jobs are owed … exactly how the funds are distributed will be framed around company data including earnings and the number of hours worked, as well as input from former Toys R Us employees. A draft of the proposal suggests eligible employees must have worked for Toys R Us for at least one year, have made no more than $110,000 in annual income and have made no less than $5,000 in annual income.”

Published on: November 21, 2018

CNBC reports that Amazon “is bidding for all of the 22 regional sports TV networks that Disney acquired from Twenty-First Century Fox.” Other companies that reportedly are in the first round of bidding include Apollo Global Management, KKR, The Blackstone Group, Sinclair Broadcast Group and Tegna.

One of the properties included in the cable package is the YES Network, which has as its main attraction cable rights to all New York Yankees games, as well as Brooklyn Nets games. The story notes, however, that the YES Network could be sold separately, or might not be sold at all, with rights returning to the Yankees.

CNBC writes that “earlier this year, Fox sold some television and movie assets to Disney, which owns the sports channel ESPN. The Justice Department forced Disney to sell the Fox regional sports networks to get that deal done.”

Amazon has streamed sports on its site, but has not been in the broadcast/cable business to this point.

Published on: November 21, 2018

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

• Bloomberg has a story about how Amazon and Target “have opened the floodgates on free shipping” by eliminating minimum purchase requirements: One study shows that “orders with the free service included have risen 13 percent so far this year through Nov. 16, including an 18 percent spike in the week that began Nov. 5., when Amazon unveiled its offer.”

But … “While free shipping can entice customers to buy, it can wreak havoc with retailers’ profit margins, which are typically razor-thin already during the holiday quarter due to rampant discounts and increased marketing costs. Web orders that included some sort of promotion since the end of October have risen 13 percent from the same period last year, DynamicAction found. It also doesn’t help that transportation costs were already soaring this year due to a shortage of truckers.”

As more companies get into this segment of retailing, the stakes will go up and profitability likely will go down … we’ve seen this movie before.


• Another print magazine bites the dust.

The New York Times reports that “Condé Nast, the legacy publisher of glossy and aesthetically rich magazines like Vogue, Vanity Fair and The New Yorker, announced on Tuesday that it was ending regular print publication of Glamour.”

The company said that it is making a pro-active mood - that subscriptions remained stable, but that online is “where the audiences are, and it’s where our growth is. That monthly schedule, for a Glamour audience, doesn’t make sense anymore.” The Times writes that “the magazine might still publish occasional print issues centered on its annual Women of the Year award or topics like power and money. Online access to Glamour will remain free for now; it has not been determined how the special print issues will be made available.”

Published on: November 21, 2018

• Publix Super Markets announced that Fort Lauderdale, Florida, will be home to the sixth announced location for its new-format GreenWise Market, which it describes as “a specialty, natural and organic store where customers can find everything from products that support their healthful lifestyle to indulgent, unique treats for their inner foodie.”

The company’s first GreenWise Market opened in Tallahassee, Florida, in October. The other announced locations are Mount Pleasant, S.C.; Lakeland, Fla.; Boca Raton, Fla.; and Marietta, Ga. The Mount Pleasant, Lakeland and Boca Raton stores are expected to open in 2019. No opening date for Fort Lauderdale has been set.


• USA Today reports this morning that while many stores will open for business at some point on Thanksgiving, hoping to get a jump on the start to the holiday shopping season, “ a growing number of retailers have made the decision to remain closed Thanksgiving.”

Among the stores closed on Thanksgiving: Ace Hardware, Allen Edmonds, Barnes & Noble, BJ’s Wholesale Club, Bloomingdale’s, Bob's Discount Furniture, Costco, Crate & Barrel, H&M, Hobby Lobby, Home Depot, HomeGoods, Ikea, Lowe’s, Marshalls, Menards, Neiman Marcus, Nordstrom, Nordstrom Rack, Office Depot and OfficeMax, P.C. Richard & Son, Patagonia, Pep Boys, Petco, PetSmart, Publix, REI (which will remain closed on Black Friday, urging its customers to go for a hike rather than engage in crass consumerism), Saks Fifth Avenue, Sam’s Club, Staples, Stein Mart, Sur La Table, The Container Store, and Trader Joe’s.



• The Wall Street Journal this morning reports that Gap Inc. is exploring whether to close hundreds of under-performing stores that do not fit the company’s strategic plans.

Gap currently has some 800 stores in North America.

“We have had a lot of stores that are in the bottom half of the fleet that have continued to deteriorate over time, and it’s my strong belief that we’ve kicked the can down the road on this and offered a deteriorating customer experience and it does have a negative effect on the health of the brand,” CEO Art Peck tells the Journal.

Published on: November 21, 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.

CNBC reports that Walmart - along with AT&T and Leidos (which describes itself as a “defense, aviation, information technology, and biomedical research company”) - has asked Sen. Cindy Hyde-Smith (R-Mississippi) to return its campaign donation to her current re-election bid (currently in the run-off stage).

The reason? Public criticisms of the donation in the light of controversial comments Hyde-Smith made about attending “a public hanging.”

Hyde-Smith said she was making a joke, and has apologized for offending anyone. Critics have pointed out that the comments are particularly offensive in view of the fact that a lot of “public hangings” - also known as “lynchings” - of black people took place during its history. The controversy got even more heated because Hyde-Smith is running against Mike Espy, an African-American.

In a tweet, Walmart said that “Sen. Hyde-Smith's recent comments clearly do not reflect the values of our company and associates. As a result, we are withdrawing our support and requesting a refund of all campaign donations.”

Published on: November 21, 2018

Yesterday, MNB took note of a Fox Business report that Sears Holding has asked the bankruptcy court overseeing its affairs for permission to pay “millions of dollars in bonuses to 18 company executives despite ongoing bankruptcy proceedings that led to the closures of dozens of store locations.

I commented, in part:

There is almost no more predictable story than this one … except the one that eventually will run, after Sears and Kmart have disappeared from the retail landscape, saying that the only person to come out of the experience with more money than he went in is Eddie Lampert, the hedge fund king who has slowly but surely mismanaged the company’s retail holdings.

All these execs still have salaries, and I’ll bet they’re pretty substantial, especially when compared to the poor schmucks still working in the company’s stores. Maybe they could actually earn the money they’re already being paid, and spread a little bonus money around on the front lines, to the people who are suffering the slings and arrows of outrageous fortune.

MNB reader Michael Renforth-Carr wrote:

I think you could of done a little better by the employees still working at Sears Stores, other than to call them poor schmucks.  People stay in jobs for a variety of reasons and fear of the future and the challenges of re-invention required to pursue different work I’m sure rank up there.  There are so many things that might have been done for those folks riding off into the sunset with Sears, but they have been spectacularly failed by the company’s top brass and not just under the current leadership.

MNB reader Monte Stowell agreed:

I think you were spot on about Lampert and his execs leaving Sears with millions and the “Schmucks” who works in the stores receiving not much compared to the execs you referenced. The definition of a Schmuck is a noun, “ a foolish or contemptible person.” I think Lampert and the execs should be called “Schmucks”, not the people who are working in the stores.

I used “poor schmuck” colloquially, not critically, but I take your point.

But “schmuck” doesn’t seem nearly harsh enough for the Sears execs. Would I have been better off if I’d referred to the Sears execs, especially Eddie Lampert, as “greedy bastards?”

One thing … I think Michael’s comment about people staying in jobs often because of “fear of the future and the challenges of re-invention required to pursue different work.” I do think that people can’t fall into that trap anymore … if you want to be relevant and you want to support yourself and your family, you can’t let fear of the future paralyze you and you have to embrace the challenges of reinvention.

If you fall victim to fear of the future, you don’t get to ride off into the sunset. They bury you at Boot Hill.

Michael Sansolo, Kate McMahon and I all know a little something about this, by the way - we all used to work in the newspaper business.

Published on: November 21, 2018

This is Thanksgiving weekend here in the US - the best holiday, I think, with food and football and family. (And almost certainly a movie or two, and maybe a couple of long runs.)

Because nobody in my house likes turkey, we’ll be doing our own thing for Thanksgiving dinner - baby back ribs, macaroni and cheese with short ribs cooked in, and asparagus. Apple and blueberry pie. And, as usual, the wines will be from Oregon, from my friends at Willamette Valley Vineyards and Carlton Cellars there. Tradition is important.

And, in keeping with tradition, MNB will be on hiatus for the four-day weekend.

Have a great holiday ... a great weekend ... and I'll see you Monday, November 26.

Slàinte!

Published on: November 21, 2018

Published on: November 21, 2018