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    Published on: November 26, 2018

    by Kevin Coupe

    I recently had the opportunity to participate/co-host a podcast with Jeff Lenard of the National Association of Convenience Stores (NACS) in which we chatted with Tanner Krause, president of the 400-unit Kum & Go c-store chain, and Mark Stanley founder of Why! Company, about an “entrepreneurial operating system” that can serve as a framework for planning, process and company culture, the importance of both effectiveness and efficiency, and how to cultivate employee superstars.

    It was a fascinating conversation, I was grateful for the chance, and I hope you find it as interesting and Eye-Opening as I did … the podcast is going live this morning, and you can listen to it on the NACS “Convenience Matters” podcast site. (It also is available on iTunes, Google Play, Stitcher, and Spotify.

    KC's View:

    Published on: November 26, 2018

    The US Government - specifically more than a dozen federal agencies, ranging from the Department of Agriculture to the National Science Foundation, including a team of more than 300 experts and guided by a a 60-member National Climate Assessment and Development Advisory Committee - published a major report, as required by law, documenting and updating the impact of climate change, with a specific emphasis on the economic implications.

    Bloomberg explains that “the fourth U.S. National Climate Assessment since 2000 (the last one was in 2014) … departs from predecessors in that it focuses on money, and how much of it America stands to lose to climate change. The costs assessed range from household expenses to the availability and pricing of food, energy and other goods people use in modern society … The report catalogs the observed damage and accelerating financial losses projected for a climate now unmoored from a 12,000-year period of relative stability. The result is that much of what humans have built, and many of the things they are building now, are unsuited to the world as it exists. And as time goes on, the added cost of living in that world could total hundreds of billions of dollars—annually.”

    The New York Times characterizes the report this way: “In direct language, the 1,656-page assessment lays out the devastating effects of a changing climate on the economy, health and environment, including record wildfires in California, crop failures in the Midwest and crumbling infrastructure in the South. Going forward, American exports and supply chains could be disrupted, agricultural yields could fall to 1980s levels by midcentury and fire season could spread to the Southeast, the report finds … All told, the report says, climate change could slash up to a tenth of gross domestic product by 2100, more than double the losses of the Great Recession a decade ago.”

    Here’s one of the money passages from the report:

    “In the absence of significant global mitigation action and regional adaptation efforts, rising temperatures, sea level rise, and changes in extreme events are expected to increasingly disrupt and damage critical infrastructure and property, labor productivity, and the vitality of our communities. Regional economies and industries that depend on natural resources and favorable climate conditions, such as agriculture, tourism, and fisheries, are vulnerable to the growing impacts of climate change.

    “Rising temperatures are projected to reduce the efficiency of power generation while increasing energy demands, resulting in higher electricity costs. The impacts of climate change beyond our borders are expected to increasingly affect our trade and economy, including import and export prices and U.S. businesses with overseas operations and supply chains. Some aspects of our economy may see slight near-term improvements in a modestly warmer world. However, the continued warming that is projected to occur without substantial and sustained reductions in global greenhouse gas emissions is expected to cause substantial net damage to the U.S. economy throughout this century, especially in the absence of increased adaptation efforts. With continued growth in emissions at historic rates, annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century - more than the current gross domestic product (GDP) of many U.S. states.”

    The Times writes that “such disasters will temporarily shutter factories both in the United States and abroad, causing price spikes for products from apples to automotive parts, the scientists predicted. So much of the supply chain for American companies is overseas that almost no industry will be immune from the effects of climate change at home or abroad, the report says.”

    The Times coverage goes on: “The report puts the most precise price tags to date on the cost to the United States economy of projected climate impacts: $141 billion from heat-related deaths, $118 billion from sea level rise and $32 billion from infrastructure damage by the end of the century, among others … But the new report also emphasizes that the outcomes depend on how swiftly and decisively the United States and other countries take action to mitigate global warming. The authors put forth three main solutions: putting a price on greenhouse gas emissions, which usually means imposing taxes or fees on companies that release carbon dioxide into the atmosphere; establishing government regulations on how much greenhouse pollution can be emitted; and spending public money on clean-energy research.”

    The other US agencies that are part of the US Global Change Research Program, which published the report, include the Department of Commerce, the Department of Defense, the Department of Energy, Department of Health and Human Services, Department of the Interior, Department of State, Department of Transportation, Environmental Protection Agency, National Aeronautics & Space Administration, Smithsonian Institution, and the US Agency for International Development.

    While all of these agencies are part of the government’s Executive Branch, the Trump Administration said upon its release that the findings were “‘largely based on the most extreme scenario’ of global warming and that the next assessment would provide an opportunity for greater balance.”

    Critics of the administration observed that while it did not appear that any alterations of the report’s findings had taken place, it was telling that it had been released the day after Thanksgiving, when press and public attention were likely to be minimal. And, the Times notes, the report “is notable not only for the precision of its calculations and bluntness of its conclusions, but also because its findings are directly at odds with President Trump’s agenda of environmental deregulation, which he asserts will spur economic growth. Mr. Trump has taken aggressive steps to allow more planet-warming pollution from vehicle tailpipes and power plant smokestacks, and has vowed to pull the United States out of the Paris Agreement, under which nearly every country in the world pledged to cut carbon emissions.”
    KC's View:
    I’m sure that there will be naysayers about this report, but it strikes me as both irresponsible and irrational to dispute the kind of scientific evidence contained in this report. I’m not a scientist, but these conclusions seem pretty persuasive to me.

    What also seems clear is that it is in the business community’s best long term interests to take this stuff very, very seriously. After all, business leaders in every company have a fiduciary responsibility for both the short-term and long-term health of the companies they guide … and I think more and more that means not just recognizing the enormous threat that climate change poses to the culture and the economy, but to actually do something about it, through lobbying and action.

    Business must take the lead. No choice, in my view. It is a challenge, but also an opportunity to demonstrate surpassing leadership.

    Now, I also am sure I will email from some folks suggesting that the scientists prognosticating about the devastating potential impact of climate change have a political or economic agenda for doing so. Some will say that there are plenty of other scientists who disagree (though they rarely question those scientists’ political or economic agendas). Some will say that it was cold last week, so how can there be global warming? And some will say that because Al Gore lambasted the Trump administration’s positions, that is enough to tell them that the administration is right.

    Frankly, I don’t give a damn what Al Gore says, and I think that focusing on the politics of climate change is like playing “Nearer My God To Thee” as the ship goes down. Which, now that I think about it, may end up being more than just a metaphor.

    Published on: November 26, 2018

    The Wall Street Journal reports that “a surge in online shopping and higher spending by low-income Americans gave a lift to the start of the holiday season, even as initial reports showed that foot traffic to traditional stores continued its long decline.

    “During Thanksgiving and Black Friday, traffic to U.S. stores fell between 5% and 9% compared with the same days last year, estimated RetailNext, which uses cameras to track people in both mall-based and stand-alone retailers. Another measurement firm, ShopperTrak, estimated traffic fell less sharply, about 1% over the two-day period from a year ago.”

    The story goes on: “Overall, buying online surged over Thanksgiving weekend, as shoppers juggle time with family and a hunt for deals. Even shoppers who came to stores made many of their purchases online. Store pickups of online orders rose 73% over Thanksgiving and Black Friday compared with the same days last year, said Adobe.”

    The Associated Press put it this way:

    “ The physical rush of Black Friday and the armchair browsing of Cyber Monday are increasingly blending into one big holiday shopping event as more customers buy items online and pick them up at brick-and-mortar stores. Adobe Analytics reported Saturday that more customers are going to stores to get items they bought online. That trend contributed to a record $6.22 billion spent online Thursday, up nearly 24 percent from last year … Adobe says a record of more than $2 billion in sales were done from smartphones alone.”

    And, the New York Times writes:

    “Black Friday has long been, and will most likely remain, the busiest shopping day of the year.
    But the features that have made it a cultural phenomenon — the discounted electronics, the predawn openings, the curbside campsites, the incivility — are changing with the broader retail landscape.

    “Shoppers can now find bargains well before and long after Black Friday, and some deals are explicitly intended to draw spending away from the main event. The retail bonanza is increasingly met with indifference or disapproval by Americans who want to spend time with their families, sleep in and give underpaid retail employees a break. Foot traffic into stores on Black Friday is slipping while e-commerce claims a growing portion of the sales.”

    Meanwhile, A.T. Kearney is out with a new holiday shopping survey, concluding that “customers have a negative recollection of their in-store shopping experiences last year, especially at mass retailers. The most prevalent complaint is long lines (84% overall, 61% for mass retail alone). Out of stock items are also top of mind for mass retail shoppers, more than twice the rate of any other brick and mortar format (38% mass retail, 5-15% other formats).

    “With these problems, avoiding the holiday rush has become the second most important objective for shoppers only behind getting the best deal. 45% of holiday shoppers said they’d shop at non-peak times to avoid the rush. 16% even said they’d get their shopping done before today (Black Friday).

    “These concerns are an increasingly important differentiator for brick and mortar stores, with more than 60% of holiday shoppers are willing to change where they shop based on negative experiences last year with either long lines or out of stock items, the two top drivers of switching behavior.”
    KC's View:
    I avoided stores like the plague on Friday. In fact, for most of the weekend. (Didn’t do much shopping online, either. Bought one e-book for my Kindle.) But it seemed to me, as I ran errands, that the roads were not particularly busy in my neck of the woods, and that parking spaces were not hard to come by. So I’m not particularly surprised by Black Friday traffic being off.

    Anyone who expects that the shopping patterns of the past can or will be sustained into the future are delusional. Smart retailers realize that, and are adjusting … and to illustrate this, I’ll go back to something that Steve Bratspies, chief merchandising officer of Walmart US, recently said: That the company is “agnostic” about whether people shop online or in its stores.

    That’s the kind of belief system that most retailers have to have, being willing to go to consumers where they are, with that they want, when they want it and how they want it … not trying to perform life support on a dying construct.

    Published on: November 26, 2018

    The Wall Street Journal reports that Amazon “is gearing up to challenge Apple Inc. in the mobile-payments race,” and is trying to “persuade brick-and-mortar merchants to accept its Amazon Pay digital wallet … attempting to expand a service now used primarily for purchases online.”

    According to the Journal, “The push to become a bigger player in consumer payments shows Amazon’s desire to further integrate itself into the lives of its customers. It isn’t clear exactly how customers would use Amazon Pay in stores: They could tap their phones at checkout, much the same way they use Apple Pay, or scan a code on their phones, among other options. Apple says Apple Pay was accepted at more than five million in-store locations in the U.S. as of May, and the number of merchants accepting its wallet is growing.”

    Amazon’s initial efforts, the story says, are aimed at making the case to retailers with which it does not compete, such as restaurants and gas stations.
    KC's View:
    Wait a minute. There are businesses with which Amazon does not compete?

    Okay, maybe gas stations. For the moment. But Amazon certainly has products and services that compete with restaurants. (And I could even argue that Amazon competes against gas stations, not because it doesn’t sell gas - yet - but because shopping on Amazon almost certainly means buying less petrol.)

    But put that aside. The question I think I’d ask myself is whether I want to give Amazon this kind of access to information about my business. It could be akin to sleeping with the enemy.

    Published on: November 26, 2018

    Digiday reports that Walmart has launched a new website, dubbed Toy Lab, designed to help children “learn about its products through demonstrations and then put them on wish lists for the holidays.”

    In addition to marketing these toys to kids, the site also is able to compile data about the products that kids find most appealing, which Walmart should be able to convert into buying, marketing and merchandising actions.

    For the moment, 20 toys are demonstrated on the Toy Lab site, with some of them Walmart exclusives; Toy Lab will be live online through the end of the holiday buying season.

    Walmart has been making a big push in toys - calling itself “America’s Best Toy Store” - as it tries to fill a perceived gap left by the demise of Toys R Us.
    KC's View:
    Cool idea. Again … it is an example about going beyond serving as a source of product, and evolving into a resource for consumers. While, at the same time, collecting actionable data that helps it be an even more valuable resource.

    Published on: November 26, 2018

    HuffPost has a story about what it calls the Dollar Store Resistance, writing that it is “a plucky little movement that barely exists, can’t win, but, by God, it tries.”

    The Resistance, according to the story, is working to find legal ways to stop the growth of dollar stores, which are seen as killing off many independent, traditional supermarkets.

    An excerpt:

    “Dollar stores are popping up all over the country, outnumbering McDonald’s restaurants and Walmart supercenters combined. The low-cost stores are part of a broader transformation of the American retail landscape, which recently has seen the demise of malls and the rise of Amazon’s home delivery service.

    “And they’re a part of an even bigger, longer, sadder trend: the decline of local business. In the 1980s, independent retailers sold half the goods bought in U.S. stores, but by 2012 the independent share of sales had fallen to about a quarter, according to the Institute for Local Self Reliance, a national think tank that advocates for preserving local economic power.

    “Once or twice every month, someone from a small town reaches out to ILSR for help confronting a dollar store development, said Stacy Mitchell, the group’s director. Laws vary by state, and there’s usually not much that can be done. But Mitchell said there’s a familiar pattern for what happens after the store opens: If the town already has a grocery, that store will lose roughly 30 percent of its business.”

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

    Published on: November 26, 2018

    The Wall Street Journal reports that the Federal Aviation Administration (FAA) “is significantly behind earlier schedules for crafting airborne-identification rules for drones,” with some now believing that they may not be in place until 2022, three years behind the original schedule.

    These delays, the story says, inevitably will delay the use of drones for commercial purposes such as delivery.

    The Journal notes that some of the delays can be attributed to technical issues, but many also can be traced to law enforcement and national security concerns about the safety of the technology, especially how it could be used by terrorists and other hostile actors.
    KC's View:
    I think drone delivery systems are inevitable … but I’m happy to let the law enforcement and national security folks take all the time they need to make sure that these systems are safe.

    Published on: November 26, 2018

    • The Washington Post reports that Amazon has informed some of its customers “that their names and email addresses had been ‘inadvertently disclosed’ as a result of a ‘technical error’ … Amazon did not say how many of its users had been affected or where and how emails had been exposed. It only said that its website and other systems had not been breached.”

    Amazon did not provide any further details about the “incident.”

    Bloomberg reports that Amazon employees in Germany, Spain, and France “walked off the job at Amazon fulfillment centers on Black Friday, one of the busiest online shopping days of the year. In Italy and the United Kingdom, workers protested at several facilities.” The workers said their goal was to persuade Amazon CEO/founder Jeff Bezos that he should raise their wages and treat them with greater dignity and respect.

    Amazon said that the demonstrations did not affect operations.
    KC's View:

    Published on: November 26, 2018

    • The Washington Post reports on how supermarkets, aware of the glut of products on the market and the often confusing claims made about them, are jumping on the “wellness bandwagon” and hiring dietitians “to help shoppers navigate their store.”

    The Post writes: “When it was founded in 2001 the Supermarket-Retail Dietitians practice group of the Academy of Nutrition and Dietetics had 14 members. Today, it has 720, a testament to the grocery industry’s growing emphasis on providing food and nutrition guidance as a service for shoppers. Fifty-five percent of consumers see their primary food store as an ally in their wellness efforts, ranking right up there with health clubs (57 percent), according to the 2018 U.S. Grocery Shopper Trends report published by the Food Marketing Institute. Beyond needing help deciphering labels and choosing ingredients, shoppers surveyed said they want real-life meal solutions, inspiration and guidance in the form of recipes, grab-and-go options and nutritional recommendations. Retail dietitians who provide those things benefit businesses as well as customers.”

    Kim Kirchherr, a dietitian working with Independent Grocers Alliance (IGA), tells the Post, “This is where the rubber meets the road. It’s where people are making their food decisions.”

    • The Buffalo News reports that “Wegmans Food Corporation has agreed to pay $750,000 in civil penalties for managing five liquor stores without a proper license, according to the state Liquor Authority … The penalties levied against Wegmans are intended to settle eight charges — including six violations for availing their license to five affiliated liquor stores, one charge for availing the license of a wholesaler, one charge for aiding and abetting illegal gifts and services and one charge for illegally trafficking in wine.”

    According to the story, Wegmans, even while paying the fines, denied some of the charges.

    "What these stores have in common is that each is individually owned by a Wegman family member, and each owner is trying to run their store like we run Wegmans, with low prices, great selection and great service," its statement read, adding, "It’s unfortunate that the (Liquor Authority) chose to credit complaints from competitors of these liquor stores over the actual facts presented to them during the investigation.”
    KC's View:

    Published on: November 26, 2018

    Two major film directors who made highly influential and controversial movies during the seventies have passed away … Nicolas Roeg, who made Walkabout, The Man Who Fell To Earth and the unforgettable Don’t Look Now, died at age 90 … and Italian filmmaker Bernardo Bertolucci, who made Last Tango In Paris and then, in 1988, The Last Emperor, died at age 77.
    KC's View:

    Published on: November 26, 2018

    Last Wednesday’s Eye-Opener was about how Canada Goose has decided that one way to sell high-end winter parkas that cost $1,000 or more 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.”

    It is, I wrote, 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.

    One MNB reader was not amused:

    I can’t be the only one that thinks the Eye-Opener part is how needless the waste of energy and refrigeration chemicals because, honestly, few are buying this coat for the warmth factor - it’s a status symbol.

    This type of over-the-top disregard of our environment and energy usage is indicative of the waste in our world and frankly what’s wrong with us as humans. Meanwhile, in my city, the temperatures are plummeting and homeless people are living in tents this winter, in Wisconsin. A luxury company like this could take the money they spent on freezers and donate coats to those that are really cold or help build homeless structures. But that doesn’t lend itself to selfies, eh? So, yeah, it is an Eye-Opener.

    Fair point. I am reminded of what F. Scott Fitzgerald once wrote, in a short story entitled “All The Sad Young Men:”

    “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.”

    I also like what football coach Barry Switzer said about the same subject:

    Some people are born on third base and go through life thinking they hit a triple.”
    KC's View:

    Published on: November 26, 2018

    In Week Twelve of National Football League play…

    Chicago 23
    Detroit 16

    Washington 23
    Dallas 31

    Atlanta 17
    New Orleans 31

    NY Giants 22
    Philadelphia 25

    Jacksonville 21
    Buffalo 24

    Seattle 30
    Carolina 27

    Oakland 17
    Baltimore 34

    San Francisco 9
    Tampa Bay 27

    Cleveland 35
    Cincinnati 20

    New England 27
    NY Jets 13

    Arizona 10
    LA Chargers 45

    Pittsburgh 17
    Denver 24

    Miami 24
    Indianapolis 27

    Green Bay 17
    Minnesota 24
    KC's View: