business news in context, analysis with attitude

Published on: December 18, 2018

by Michael Sansolo

Yesterday, Kevin used the metaphor of streaming video suppliers to remind us of the explosion of non-traditional competition in today’s world. That article demonstrated perfectly the reason we use so many metaphors here on MNB and in our speeches around the country (both together and separately) - these examples, we believe, provoke conversations that need to take place and shine light into corners where people may not be looking.

So let’s try another one today, using the world of classical music. The Washington Post had an interesting article recently decrying the way classical music is marketed these days - mostly as soothing, relaxing tunes to help you sleep or get through a hot yoga class. As the author explained, nothing could be further from the truth.

Classical music has an incredibly wide range of sounds, many of which are as far from soothing or sleep inducing as you can imagine. Yet, if you happen to stumble onto a radio or other broadcast of classical music, the very tone of the announcements will have you halfway to 40 winks.

The author of the article argued that classical needs to reclaim its voice so that the range of sounds the genre offers can be reintroduced and appreciated by a growing audience.

Full confession time here: my son is a professional classical musician so I’m all in favor of the genre making a huge comeback. But because of him, I have attended countless concerts and have felt the stirring power of the music.

Here’s my other confession: classical music concerts aren’t always welcoming to the uneducated like me and that’s a turn off. Increasingly, though, I notice the atmosphere is changing with conductors talking to the audience about the pieces being performed and helping to improve our enjoyment of the wondrous sounds.

Now let’s examine this as a metaphor for the retail food industry: do we make cooking, shopping and eating as enjoyable as possible. Stores are crowded with all manner of items, but frequently shoppers are given no clues on how to use/prepare/eat specific item, especially the new and different. Consequently, shoppers don’t try many new and unusual items and don’t know what they are missing.

Food, as we know, is fabulous, but only if we help all shoppers understand the incredible range of tastes they can prepare and enjoy and only if we help show them the ease of making incredible recipes. Sadly, that isn’t always the case.

Three decades ago, my then-editor at Progressive Grocer, Ed Walzer, used to rant about the horrible and condescending quality of many ads for food products. What particularly bothered Ed were the endless ads showing clueless dads getting lost in a store, buying the wrong item and landing in trouble at home. His point was simple: we were painting the shopping trip as a mistake-laden minefield, making it less attractive.

I’m not sure the same complaint holds up today especially when it comes to dads. At least the ad industry seems to understand that men are increasingly likely to do the shopping and have learned how to accomplish the task.

More than ever we have the tools to communicate and make the shopping trip and subsequent meal preparation more successful and interesting than ever. Instead, like the classical music industry, we could easily ask if we are really doing that or are we simply playing over their heads.

It’s a metaphor we need to consider just as with those video streaming services. It’s a whole new world, it’s complex and it’s our job to help our consumers succeed or someone else will do it.

It is pretty simple. An experience - music or shopping - can be on-key, or off-key.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.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.

Published on: December 18, 2018

by Kevin Coupe

Troubled bookseller Barnes & Noble is out with a new ad suggesting that its employees are “the all-knowing book lovers who can help you find the best gifts for everyone you need to shop for this year,” AdWeek writes.

In the end, the story says, “the campaign aims to get people to brick-and-mortar Barnes & Noble stores to do their shopping rather than purely online. That way, the brand highlights, shoppers can benefit from speaking with an expert—not relying on an algorithm to find a gift for a friend or family member.”

The problem, of course, is that too many Barnes & Noble stores are like mausoleums … not a lot going on, and not really offering a lot of reasons to visit.

Hell, as reported recently, when Barnes & Noble came out with its annual list of 20 top holiday gift ideas, there was only one book.

Watch the video, and judge for yourself. Is it an accurate depiction of the chain’s value proposition? Or just wishful thinking?

I know how I vote.

Published on: December 18, 2018

The Wall Street Journal reports on how in many of America’s malls, the men playing Santa Claus find themselves increasingly lonely existences - because crowds can be sparse, they often have time to read a book, whittle, or even walk around. It is yet another measure of how Americans’ shopping habits have changed, and how e-commerce, for many people, has become a preferred method of shopping.

It isn’t everywhere, to be sure. The Journal writes that “some malls, particularly new or recently renovated ones in great locations where incomes are high, still draw more than enough people to keep Santa booked.

Yet many older malls are sputtering in the face of changing consumer shopping habits and a glut of shopping centers. Mall vacancies rose to their highest level in seven years in the third quarter.”

The Santas working the slower malls end up having two major problems. One is not appearing bored. The other is having enough material so that when a kid does show up, he can keep the child occupied - the lack of lines means that Santa is available for longer conversations, which is a different kind of challenge.

Published on: December 18, 2018

Amazon announced that it is opening its second checkout-free Amazon Go store in San Francisco at 98 Post Street, about a seven-block, half-mile stroll from the first one there, on California Street. The new store is two blocks east of Union Square.

At 1,750 square feet, the new Amazon Go store is the eighth of the format opened by Amazon for public access; there is one mini-version being tested in Seattle that is in one of Amazon’s office buildings and only open to employees and their guests.

Published on: December 18, 2018

Quartz reports on a new study from the New York State Attorney General’s office saying that “seafood mislabeling is ‘rampant’ across New York.” The report says that “two-thirds of the supermarket chains the attorney general’s office purchased from had at least one instance of fish mislabeling,” with five chains - Food Bazaar, Foodtown, Stew Leonard’s, Uncle Giuseppe’s, and Western Beef - mislabeling more than half their seafood.

According to the story, “The attorney general’s office purchased fish from 155 stores across 29 supermarket brands throughout the state, and then sent them to a lab for testing. A remarkable number of the specimens—more than one in every four, or 27%—were not what the supermarkets said they were. Instead, they were often completely different, cheaper, and less sustainably raised species.

“People who buy lemon sole, red snapper, and grouper in particular are more likely than not to receive an entirely different fish, according to the report.” The report also says that “28% of ‘wild’ salmon was actually farmed salmon, despite costing one-third more on average.”

Quartz notes that “fish fraud is not restricted to New York. Little oversight and regulation has led to fish fraud nationwide. In 2013, Oceana, a nonprofit ocean protection group, took 1,215 samples of fish from across the US and genetically tested them. It found that 59% of the fish labeled ‘tuna’ sold at restaurants and grocery stores in the US is not actually tuna.”

Published on: December 18, 2018

Fast Company points out in a story that while Amazon efforts in the area of robotics have been well-documented - it has “introduced its cashierless Amazon Go stores, flirted with plans for drone deliveries, and rolled out tens of thousands of robots to shuffle goods around its fulfillment centers” - rivals Walmart and Kroger also have been aggressive in this area.

An excerpt:

“Walmart has been adding bots to many of its warehouses and stores. A grocery distribution center in Shafter, California, is set to open in 2020, with new technology in place to shuttle even perishable goods around the warehouse without damaging them. In a Salem, New Hampshire, Walmart, automated carts will soon shuttle components of online grocery orders from an attached warehouse to be packaged up by human workers.

“Other store bots include an autonomous scrubber that’s set to clean floors in 360 Walmart stores by the end of January, a robotic truck-unloading system that can sort and triage new deliveries on their way to shelves, and even machines that roll through store aisles to track inventory and spot misshelved goods … Automated pickup towers in many stores also deliver customers their online orders without them having to wait on a store employee.”

At the same time, as has been reported, Kroger has made a deal with the UK’s Ocado to build and operate robotic warehouses that are designed to make fulfillment both more efficient and effective.

But, quite naturally, these advances - which some describe as some of the most exciting technological times in memory - are raising concerns that machines will replace workers, creating long-term employment and public-private policy issues.

You can read the entire story here.

Published on: December 18, 2018

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

• Bloomberg reports that Amazon’s Alexa-powered smart speakers have run into a mundane retail issue.

Being out of stock.

According to the story, “Several of the e-commerce giant’s online stores in North America and Europe showed various models of the Alexa-powered line of gadgets temporarily out of stock on Monday, with shipment delayed to January or beyond in some places.”

The good news is that the line’s popularity continues. The bad news is that every out-o-stock is a lost sale opportunity, leaving an opening for the competition.


• Stew Leonard’s announced that three of its independently owned liquor stores - the Stew Leonard's Wines and Spirits in Norwalk, Danbury and Newington, Connecticut - now will use Instacart to deliver wines, beers and spirits. The Stew Leonard’s food stores also use Instacart for delivery

While my friends at Stew Leonard’s say that this is both innovative and convenient, I would point out them - gently, because I like them - that the one thing it isn’t is differentiated … because Instacart also serves customers of a nearby Total Wine. And King’s Fine Wines. And Balducci’s Fine Wines. And, for that matter, competing grocers that include ShopRite, King’s, Balducci’s, Acme, Fairway and Costco. I understand why companies do this … but it is important, I think, to point out that these are not undifferentiated advantages.

Published on: December 18, 2018

• Axios reports that New York Gov. Andrew Cuomo has announced that “he plans to work to legalize recreational marijuana next year in the state ‘once and for all’ — the latest in a string of recent policy shifts embracing legalization of the drug.

“The big picture: 10 states and D.C. have already legalized recreational marijuana, while it's legal in 33 states and D.C. for medical purposes. One of the biggest arguments state and local government officials have for legalization is the revenue it could bring — in New York, it could bring in more than $1.7 billion annually.”

Published on: December 18, 2018

• The Puget Sound Business Journal has a story pointing out that “Costco Wholesale Corp. CEO Craig Jelinek made 191 times more than the Issaquah-based company's median employee, according to a proxy disclosure filed Monday … Jelinek's compensation in the year prior to June 29, 2018 included an $800,000 salary, a $97,000 bonus, nearly $6.3 million in stock awards, a $107,000 change in pension value and $107,000 in other compensation including retirement contributions, life insurance and use of a company car.

“Costco's median employee – including full-time, part-time, seasonal and temporary employees – made $38,810 in the same period. Jelinek makes 150 times than the median full-time employee, which made $49,288 in 2018.”

The story makes the point that this is the first time that Costco has disclosed this ratio “since it became required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.”

There seems to be an implied criticism of Jelinek in this piece. Though it doesn’t make the comparison, if I recall correctly - and I couldn’t find the actual numbers while doing a quick online check this morning - one of the things that Jelinek’s predecessor, Jim Sinegal, was know for was a tight ratio between his salary and that of Costco’s media employee. Sinegal, if I recall correctly, never had a salary higher than $350,000 a year, though he clearly did much better than that through stock and bonuses. To be clear, though, Costco’s employees seem to be making a decent wage, and I admire companies that are transparent about wage disparities.)


• The Houston Chronicle reports that H-E-B has opened a Joe V’s Smart Shop, its value-driven banner, in the Pasadena neighborhood of Houston; it is the ninth Joe V’s that the company has opened since 2010.

H-E-B promotes the Joe V banner as having prices that are between 15 and 20 percent lower than the local competition.


• The Milwaukee Journal Sentinel reports that “Green Bay-based retailer Shopko has sold another chunk of its pharmacy business, this time to supermarket chain Hy-Vee Inc,” selling it “the business of 22 Shopko pharmacies in Wisconsin, Iowa, Illinois, Minnesota, Nebraska and South Dakota … The acquisition comes just days after Kroger Co. said it was buying the pharmacy files at 42 Shopko locations, including 25 in Wisconsin.”

The story notes that “Shopko has more than 300 stores in the central U.S., West and Pacific Northwest. Formerly a public company, Shopko was purchased in 2005 by Sun Capital Partners Inc., a private equity firm based in Boca Raton, Florida.”


• The Puget Sound Business Journal reports that the Bellevue Square shopping mall in Bellevue, Washington, cannot force Whole Foods to keep its ‘365 by Whole Foods’ store there open.

Amazon-owned Whole Foods shuttered the store more than a year ago because of underperformance, “claiming unspecified challenges at the site prevented the successful operation of a grocery store.”

Bellevue Square sued, “attempting to enforce terms in the lease that require the Whole Food store to conduct business without interruption for at least 10 years.”

A Washington State appeals court ruled this week that a provision in the lease that allowed Whole Foods to pay rent and penalties without actually operating the store was an “adequate remedy” for the mall.

Published on: December 18, 2018

• Kroger announced yesterday that J. Michael Schlotman, its CFO since 2000, will retire from the role next spring, and be succeeded by Gary Millerchip, currently CEO of Kroger Personal Finance,

Published on: December 18, 2018

Yesterday we reported about how in 2018, for the first time, there were more original television series produced for streaming services such as Amazon Prime Video, Netflix, and Hulu than there were for traditional broadcast and cable networks such as CBS, NBC, ABC, HBO and Showtime … and we used this level of disruption as a metaphor for what is happening in retail.

One MNB reader responded:

It will be interesting to see how this shakes out. Consumers are not likely to subscribe to numerous services to get their content and they won’t want to be limited to a single service.

It’s almost like, in the grocery business if each chain owned some of the CPG’s, and the consumer would have to go from chain to chain to do their shopping. That doesn’t work in grocery, and I don’t think it will work in streaming media either. Somehow, it seems the the content producers need to be separate from the distribution network.

I took the free Hulu 30 day subscription so I see the rest of SOA, but I suspect I will cancel. The app isn’t the best. It doesn’t do well remembering where you are in a series, and it plays the same freaking commercials all night long. If I’m not going to buy something after seeing a commercial 10 times, I don’t think Number 11 will have much impact.

It can be frustrating, but I have to be honest. If I have to subscribe to different services in order to see the programming I want to see, I’m willing to do it … I’d rather dump traditional cable and save money that way.



On a different subject, MNB reader Paul Schlossberg wrote:

In the US you'll find between 2-3 million vending machines and 30,000 micromarkets deployed (and that number is rising at a fast pace).

Amazon, and delivery in general, represents a genuine threat to companies in this pipeline, including office coffee service. Delivery disrupts the advantage of being the most conveniently located seller of food, snacks and beverages. 

Now we see Amazon saying that their new smaller stores can be deployed 'anywhere where there's a lot of people who are hungry and in a rush.' Every vending and micromarket operator should be nervous, very nervous. 

A leap is required to be relevant in the near-term future. This industry must deliver on "just walk out shopping.”



And regarding a pet parent predilection, MNB reader Kevin Duffy wrote:

You are correct sir!  A dog on the lap someone driving a car is ridiculous not to mention dangerous.  No one should a pet into any retail establishment that doesn’t begin with the letters P-E-T.  And don’t get me started who bring pets into restaurants…That’s all…Carry on.



Finally, responding to my observations about Sears execs, one MNB reader wrote:

Boy, you are really soft on these criminals and their criminal activities.

First time I’ve been accused of that.

Published on: December 18, 2018

In Monday Night Football, the New Orleans Saints defeated the Carolina Panthers 12-9.