business news in context, analysis with attitude

Published on: December 10, 2018

by Kevin Coupe

It is a measure of how central sexual harassment has become to the cultural zeitgeist that Schweppes, the sparkling beverage brand, has decided to make it part of a marketing campaign.

To be honest, I’m not sure how many more beverages this campaign will sell. There will be some - people who support feminist values and basic human dignity - who will want to support the brand precisely because of this effort, just as there will be some who will decide that they don’t need to be lectured by beverage company. What this does, however, is effectively put the company front and center in an important cultural debate.

The initiative is taking place in Brazil, a place where, according to a story in Fast Company, more than eight out of 10 women complain of being harassed while in nightclubs. In an attempt to illustrate just how bad the situation is, the company hired engineers and designers who created a dress outfitted with sensors; three different women wore the same dress to three different clubs on the same evening, and the technology tracked how many times and where they were touched/groped during that time.

The result - in a period of almost four hours, they were touched a total of 157 times, or more than 40 times an hour. And it was all chronicled in a video (see above).

This is the second time in less than a week that I’ve found myself writing about business decisions and initiatives that are related to the Me Too movement. Last week, it was about the pressure places on a number of radio stations to ban the playing of “Baby, It’s Cold Outside” because of lyrics that, in the context of current sensibilities, seem perilously close to hinting at date rape. (More about this in “Your Views.”)

I suppose it could be argued that this is just ephemeral, that in a few months the culture will be on to something else. But I wouldn’t buy that argument. I think - and hope - that this is a persistent awakening of the public consciousness, that we’re all learning something in this moment, that our sons and daughters will be more aware and sensitive as a result.

It won’t be an easy process. There always are bumps and potholes on the road to enlightenment, and people will be confused and perplexed and even a little scared along the way. But if it ends up with people having their Eyes Open, I think it’ll be worth it.

Published on: December 10, 2018

Two interesting stories over the weekend looking at the cultural, economic and infrastructural impacts of the changing retail economy.

• The Wall Street Journal has a story about how e-commerce delivery companies are having to get creative in how they approach logistics, doing everything from putting up tents on vacant suburban lots to converting parts of indoor parking garages into staging facilities.

“The explosive growth of e-commerce and the competition among retailers to deliver goods quickly is running hard up against the scarcity of warehousing near population centers, triggering a land grab for distribution space that experts say is accelerating this year,” the Journal writes. “Unlike the sprawling fulfillment centers typically built on the outskirts of cities, the newer, more streamlined handling sites are set up in densely populated areas so that companies can package up orders as close to the ‘last mile’ as possible.”

One example: “In downtown Chicago, real-estate firm JLL is converting a 3.8 million-square-foot parking garage under the city’s famed Millennium Park into last-mile logistics facilities for retailers. The site is right at the center of the city and its population of 2.7 million people, just a few blocks from Chicago’s popular ‘Magnificent Mile’ shopping district.” The irony, of course, is that the growth of e-commerce has meant that fewer people are driving into the city to shop, and so there is underutilized space in parking garages that now can be repurposed.

• The Boston Globe has an excellent story about how the enormous changes taking place in retailing - some iconic chains are shutting down and some malls are desolate, as e-commerce becomes an ever-growing factor and more of the American population moves to cities - are reshaping the urban environment in some fundamental ways.

An excerpt:

“When you can have basic necessities delivered to your door, it means that retail has less power to enrich neighborhoods and nurture the …social world … So, are we building cities based on an obsolete vision of urban commerce? What does a post-Amazon future look like for urban centers whose neighborhoods are defined by their stores? Will e-commerce stunt them — or revive them?”

And, it goes on:

“Today’s retail futurists have ditched pneumatic tubes for visions of drones flying with packages and self-driving delivery vehicles zipping around town. But the problem they’re trying to solve is the same. Stores are an efficient way to transfer goods from manufacturers to consumers. Today, double-parked delivery trucks and porches cluttered with Amazon boxes are the growing pains of an evolving industry … The market for urban industrial real estate is growing as Amazon and other companies race to open small distribution centers filled with all the toothpaste, earphones, and running shoes that customers might be craving.”

You can read the Globe story here.

Published on: December 10, 2018

CNBC reports that Amazon “is looking at bringing its futuristic checkout-free store format to airports in an effort to win business from hungry, time-pressed travelers, according to public records and a person familiar with the strategy.”

Currently there are seven Amazon Go stores - three in Seattle, three in Chicago, and one in San Francisco (with one more being built there). Opening Amazon Go stores is seen as being a way not just to generate sales from a captive consumer base, but also a way to continue to drive brand awareness.

“A person familiar with the strategy confirmed that Amazon is studying how to get the checkout-free stores into airports and that an employee with experience in business development was assigned to the task,” the story says, pointing out that some airports also have approached Amazon about the possibility.

Published on: December 10, 2018

The Financial Times has a story about Starbucks CEO Kevin Johnson, who has the task of leading the company now that its de facto founder, Howard Schultz, has moved on.

An excerpt:

“Inspiration has been a part of Starbucks’ mission statement for most of its 47 years and its new boss shares Mr Schultz’s taste in uplifting management mantras. Mr Johnson’s Starbucks is one where each store is a community-boosting ‘third place,’ where empowered baristas ‘nurture the human spirit’ by remembering their regulars’ names and just how they take their brew.

“It is a venti-half-full description that does not chime with every customer’s experience of a chain that now serves 100m people a week from 29,000 stores in 78 countries. Mr Johnson concedes that ubiquity makes it harder to replicate the premium buzz that draws tourists to the Pike Place store where it all began, but his recipe for making Starbucks stand out again starts with the 350,000 people he must inspire to follow someone other than the man who personified their company for decades and may run for the presidency in 2020.”

You can read the story here.

Published on: December 10, 2018

Business Insider reports that athleisure retailer Lululemon “has been testing a new loyalty program in Edmonton, Canada.”

According to the story, “For a $128 annual fee, members are given a free pair of training pants or shorts, access to classes, and free shipping for online orders.

“CEO Calvin McDonald said this new program will be rolled out to more markets in 2019.”

Here’s the money passage from the Business Insider story:

“Loyalty programs have become a major trend in retail as more stores look to recreate one of the industry's leading memberships: Amazon Prime. Amazon's $119-a -year service now has over 100 million paying members globally.

“These programs are designed to make customers more loyal to the brand and, ultimately, encourage them to spend more money at these stores. This is especially important for Lululemon as the athletics wear market has increasingly been flooded with more options and new brands such as Outdoor Voices, Bandier, and Kate Hudson's Fabletics have taken market share.”

Published on: December 10, 2018

MarketWatch has a really good story pointing out that Barnes & Noble is out with its annual list of 20 top holiday gift ideas in five categories.

There’s only one book on the list: “Homebody: A Guide to Creating Spaces You Never Want to Leave,” by Joanna Gaines.

The company’s Nook e-reader doesn’t make the list.

There are socks, mittens, games and electronics.

But just one book … on the Christmas list posted by what used to be the nation’s dominant bookseller.

However, MarketWatch writes … “that’s actually one more book than last year, as the company’s 2017 list of 27 ‘top gift items’ didn’t include a book. In 2016, the list of 40 ‘unique gift ideas’ included seven books, while the list of 19 ‘last-minute’ gift ideas included five books.”

Published on: December 10, 2018

• Axios has a story about how “Walmart CEO Doug McMillon said he keeps a photo of the top 10 retailers in the United States throughout the last few decades to remind him how quickly ‘companies come and go’ and how quickly they can fold.”

You can - and should - see the screen grab here.

Published on: December 10, 2018

• The Associated Press reports that shareholders of the Sonic restaurant company have approved its sale to Inspire Brands, parent company to Arby’s, for $2.3 billion.

Published on: December 10, 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.
• The New York Timesm reports that the US Department of Agriculture (USDA) has announced “final plans to lower nutrition standards for grains, flavored milks and sodium in school cafeterias that were part of the Healthy, Hunger-Free Kids Act of 2010 and that Michelle Obama, the former first lady, had advocated … The Trump administration asserts in the new rules that administrators have struggled to find food products that meet these standards while also pleasing students. Schools have been able to request exemptions from the rules if they demonstrate financial hardship, and the government has said the most popular requests have been for regional staples like grits in the South and tortillas in the Southwest.

“But the current administration asserted that the exemptions process was not sustainable and that some schools found it too burdensome.”

However, the Times notes that “a 2016 news release from the USDA said that more than 99 percent of schools in the country reported that they were meeting the Obama-era standards.”

The Times writes that “the changes, all of which will go into effect by July, apply to school meals that qualify for at least some federal reimbursement. They may seem relatively minor on paper, but like many Trump administration moves to reverse Obama-era policies, they come with some controversy.”

Among the specific changes…

While Obama-era rules “required that schools must serve entirely ‘whole grain-rich’ foods,” meaning that such products had to “contain at least 50 percent whole grains,” the new rules say that “only half of the grain products on the cafeteria’s weekly menu must be whole grain-rich. Theoretically, that means schools could serve all whole grain-rich food three days a week and food made with refined grains the other two days.”

As for milk, “the Trump administration is allowing schools to serve low-fat flavored milks, rather than just the nonfat version. This change was already in place for this school year, but Thursday’s announcement made it permanent. The rationale, according to the new rules, is to make sure children keep up their milk consumption.”

The Times goes on: “The School Nutrition Association, an advocacy organization that represents school-food professionals, cheered the new regulations in a news release on Thursday, praising the Trump administration for its flexibility with the standards. The group counts many of the country’s largest food companies among its backers.”

Published on: December 10, 2018

MNB reader John Rand had some thoughts about Kate McMahon’s review of the Amazon 4 Star store in New York:

Read Kate’s commentary with interest as I have not been anywhere near NYC to visit the Amazon 4-Star location. It set me to thinking about the difference between “targeted curation” and “popular”.

I have little doubt that Amazon does indeed have enough data to say with some accuracy  “Here are the things appearing as desired or highly rated from a large sample of America”. And at the same time, any given individual looking at such a list might well think “Why would I need any of this stuff?”.

We are no longer a country of broadly similar tastes, lifestyles, or desires. That is so 1950s. It is why mass media gives way to targeted media, why undifferentiated retailers fail where they once were successful doing (more or less) the same things.  Our ability to satisfy our individuality is now stronger and in many ways easier than our willingness to accept commonalities.

Any organization (whether retailing, social, political, technological) that starts out with the premise that just because some people like something than everyone else will like it – is missing the most fundamental social trend of the last 50 years – high degrees of variance. Different schools, different churches, different backgrounds, different tastes, different family structures. Some people are overwhelmed by all this diversity, some celebrate it, some leverage it, some resist – it still remains the most important underlying subtext of the 21st century.

Several decades ago you probably watched the TV shows that were popular for your age group and community. You listened to the music that was top of the charts.  You read the same newspaper, shopped in the same stores, and frankly, it was a deadly dull world by comparison, dominated by the lowest common denominator of everything.  It gave us fast food, packaged meals, uniform clothing, life in cubicles, and some truly awful interior color schemes. (If you recall some of the décor of the 60s and 70s you know what I mean).

I am stunned that Amazon, of all companies, does not understand this. “Most popular” and “4 Star Rated” is the spiritual successor to “As Seen On TV” .  Amazon is the company that first learned how to take advantage of the “Long Tail” – how could they have missed this?



Also got several emails about the “Baby, It’s Cold Outside” controversy.

One MNB reader wrote:

Just like TV shows the radio station could, just prior to playing, give out a warning that the following may be offensive. The listener can turn down the volume, change channels, or just turn it off. Or just listen.

A movie reference: Do the needs of the one or the few outweigh the needs of the many?

MNB reader Mike Griswold wrote:

I hope your email box size is flexible as I am sure your observation on the “Baby It’s Cold Outside” will garner plenty of responses. I am struggling with addressing a lack of attention to important issues like #me too and retroactively attacking songs, shows, etc. where there was no malicious intent. When the song in question was written, it was not created with the intent to promote date rape. Nor was Rudolph created to promote bullying, yet people want to go there as well. I agree completely that people have the right to protest, businesses have the right to respond as they see fit. Unfortunately any business who responds by saying we hear you, but we don’t see it that way; are often then labeled as insensitive.

Lastly, I would suggest we would be better off looking at much more recent content such as the “50 Shades” series, and music lyrics as an example of things to find offensive, not things created 40 years ago. 

From another reader:

If they don't want to hear a particularly song, they should switch stations.  They have no right to prevent everyone else from listening to it.

And another:

Sheesh, forget the movie scene, enjoy the song, and the holiday season because as I look at the national weather map, Baby it is truly cold outside.

From MNB reader Jimmy Ducey:

Talk about making something out of nothing.

A simple solution for those who are offended is to remove the song from your play list, or change the station.

Those of us that don’t have such a cynical approach to life will keep listening.

And from another:

Its not about the song, or content so much .. it PC police running amok. Now a candy cane ban is proposed, reason: alternatively because the J shape could mean Jesus, or the feminazis call it phallic imagery. Your thoughts smart guy??

One MNB reader wrote in to agree with me:

Thank you, Kevin, for this morning’s comments, with which I wholeheartedly agree. More folks with the influence you have should speak out.

I’m not sure how much influence I have … and the volume of email I got disagreeing with me suggests that it ain’t much.

Let me respond a little bit…

First about the candy cane reference.

Apparently an elementary public school principal in Nebraska put out a memo saying that candy canes should not be displayed in school during the holidays because the shape is for the first letter of Jesus’ name, and the red and white colors represent his blood and purity, in that order. He also banned a lot of other Christmas-related stuff - even items like Elf-on-a-Shelf connected to the secular view of the holiday - but was overruled by the district, which said his memo was not consistent with district policy.

For the record, I think the principal was wrong. I understand and agree with the idea that public schools ought not be in the religious observance business, but he went way over the line in my view. But I think a lot of schools go way over the line in a lot of ways. (We can have that conversation another time.)

But I think equating the candy cane story with the “Baby, It’s Cold Outside” story is not entirely fair. And, I think you undermine your argument by using such an offensive and antiquated term as “feminazi” … it suggests you are unwilling to even consider the thoughts and feelings of people who are not like you. (If my daughter were not a feminist, I’d figure I did something wrong in raising her. And the last thing she needs is neanderthals suggesting that feminists are Nazis.)

People are absolutely right when they say that the radio stations have the right not to bend to the will of these protestors. Listeners can change the station, if they want. All true.

My reason for bringing this up is that in this case the businesses have a decision to make - one that is not just a business decision, but one with cultural and societal implications. They can do they want, and listeners will do what they want … but the only thing they can’t do is ignore the context of whatever decision they make.

The ideals of compassion and sensitivity, it seems to me, are built on the premise that as human beings we ought to be able to put ourselves in the shoes of people not like us, to understand how and why their view of the world differs from ours. We can try to be nuanced in how we think and act …or not.

This isn’t really about a song. It is about how the world is changing. Like it or not.

I’m not the most sensitive guy in the world, but I’ve decided that I’m going to try … because I think it makes me a better person. Sometimes I change the way I think and act, and sometimes not. (Such a lapse is when I call someone with whom I disagree a “neanderthal.” What can I say? I’m not perfect.)

Published on: December 10, 2018

In Week Fourteen of National Football League action…

Carolina 20
Cleveland 26

Baltimore 24
Kansas City 27

Indianapolis 24
Houston 21

New England 33
Miami 34

NY Giants 40
Washington 16

New Orleans 28
Tampa Bay 14

Atlanta 20
Green Bay 34

NY Jets 27
Buffalo 23

Cincinnati 21
LA Chargers 26

Denver 14
San Francisco 20

Philadelphia 23
Dallas 29

Pittsburgh 21
Oakland 24

Detroit 17
Arizona 3

LA Rams 6
Chicago 15