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    Published on: December 19, 2018

    by Kate McMahon

    In this unpredictable holiday retail season, I was quite pleasantly surprised to find an entertaining and innovative site where you can’t make a purchase.

    A Walmart site.

    Yes, you read that right. A Walmart site with no shopping cart. No check out. Not even a price per item.

    The giant retailer last month introduced the interactive Walmart Toy Lab, “an all-new digital playground” that allows kids to discover and virtually “test” the store’s 20 top toys on a computer or tablet.

    It’s a bold move by Walmart in the pitched battle with Amazon, Target, Kohl’s, Best Buy, Party City and more to grab the online and brick-and-mortar customers who once patronized the now-defunct Toys R Us.

    Earlier this year, Walmart launched its newly-branded “America’s Best Toy Shop” online and in stores, promising up to 40% more toy choices. The Walmart Toy Lab is a logical extension with a dual purpose – marketing product and gathering customer data.

    To become an official Walmart Toy Tester, a youngster simply needs to log in to the site hosted by an amicable kid named Burt. Using a digital “Funtroller,” users can choose a toy, play with the main feature and watch others enjoy it. They can also decide if they approve and want the toy added to their holiday gift list, or rate it “not for me.”

    I corralled a trio of siblings – 10-year-old Cristian, 8-year-old Mia and their 3-year-old brother Matteo – to test out the site. The older two maneuvered through the video effortlessly, and even Matteo happily clicked on his choices with ease. Not surprisingly, their favorite button on the Funtroller was the bright red “Don’t Push” button which, when pushed, placed Burt in all sorts of precarious predicaments. They loved the experience, especially “Don’t Push.”

    When the siblings clicked on the six choices in their “toy box” at the end, I expected to land in a shopping cart. Instead, there was the opportunity to send a link detailing their digital wish list to Santa or their parents. And that was it. Descriptions, photos, but not even a price.

    And so, the site seemed like less of a crass, commercial play and more a fun way to engage with the younger consumers.

    For this season, Walmart can mine valuable data about what these toy testers want and establish more of a two-way dialogue with them. Smart. Walmart has even linked up with 7-year-old YouTube mega-star Ryan, who has earned an estimated $22 million this year unboxing toys on his main channel Ryan ToysReview, according to Forbes.

    Going forward, I can see this interactive platform rolled out beyond the toy category. Indeed, Walmart’s reported $250 million investment in Eko, the interactive video entertainment developer of the site, would point in that direction.

    If you had told me a year ago that Walmart would be the retailer really differentiating itself in the toy category with a creative, cutting edge site, I probably would have scoffed. But there’s no question that Walmart has come to play … and make it a lot less fun for the competition.

    Comments? Send me an email at .

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    KC's View:

    Published on: December 19, 2018

    by Kevin Coupe

    I don’t pay a ton of attention to the stock market - I think there are far better ways to assess the successes and failures of the businesses in which I am interested, and often share price has little to do with sustainable and long-term business models.

    That said, there was a piece in Barron’s yesterday that caught my eye, because it was about a company that got a lot of up-front hype:

    “Blue Apron officially became a penny stock on Tuesday. Its shares closed down 11 pennies, to 90 cents, as the stock extended a long, steady post-IPO slide. The slide arguably started with the June 2017 IPO itself; at $10 a share, the deal priced lower than first anticipated.”

    That’s right - Blue Apron, which pioneered the still-burgeoning meal kit business and has influenced a lot of retailers to imitate its approach to meal preparation, continues a long and seemingly inexorable decline … despite the fact that its products are now being sold at retail by other companies, including Walmart/Jet.

    Barron’s continues: “The company has been under attack on several fronts. Its subscription and delivery model offers appealing characteristics - and many who tried it loved it, or at least liked it—but acquiring and retaining customers proved to be a costly business for Blue Apron … Those costs are even more problematic when you’re in a competitive industry - and Blue Apron certainly is, with companies such as HelloFresh, Albertson’s-owned Plated and Kroger -owned Home Chef - vying for many of same consumers and, often, doing so with comparable strategies.”

    The story also notes that the Blue Apron story is a cautionary one at a time when there are a number of new IPOs being hyped for companies like Uber, Lyft and Airbnb. “The biggest takeaway for IPO-minded investors might be a simple reminder that private valuations are far from a sure indicator of what the public markets might bear,” Barron’s writes. “In Blue Apron’s last private round, it was valued at about $2 billion. The company is worth less than a 10th of that now.”

    It may be that Blue Apron would’ve been better off it started out at retail, and then converted interest generated there into a subscription model. Hard to know.

    It all is an Eye-Opener.
    KC's View:

    Published on: December 19, 2018

    Kroger has begun using autonomous vehicles to deliver groceries to customers in Scottsdale, Arizona.

    Reuters reports that the Kroger program, developed with startup self-driving car company Nuro, “uses public roads and has no driver and is used to only transport goods … Kroger said the service would be available in Scottsdale at its unit Fry’s Food Stores for $5.95 with no minimum order requirement for same-day or next-day deliveries.”

    Kroger is not alone in this segment: Walmart, Ford and Postmates are collaborating on a similar program, though it is not yet to the point of being tested on actual roads delivering actual orders to actual customers.
    KC's View:
    There is a lot of pressure on retailers to find effective ways to deliver on what consumers seem to want, and do so in a way that is cost-efficient and effective, and at the same time keeps them in a game that is increasingly competitive and crowded. That means finding partners, but it also, I think, means keeping focused laser-like on doing things that enhance and build your own brand, not that of your partner.

    Published on: December 19, 2018

    TechCrunch reports that Target has plans to expand its Shipt grocery delivery service in 2019 so that it offers same-day delivery of all major categories carried by Target, including apparel and appliances.

    According to the story, “The move could be a potential game-changer for Target, however, which has been revamping its business to better accommodate all the ways people want to shop, both online and off. It has been remodeling its stores to add parking spaces for Drive Up customers — meaning, those who place orders online for same-day pickup from the store. It has updated stores’ layouts so online Order Pickup, self-checkout and grab-and-go grocery essentials are near the front as you walk in.”
    KC's View:
    I think this is very smart of Target, but I have to wonder if this expansion also means that other retailers doing business with or through Shipt will start to step away.

    Target is getting aggressive in all the right ways … lots to do, but the focus and momentum all seem directed in the right way.

    Published on: December 19, 2018

    Bloomberg reports that while Amazon founder-CEO Jeff Bezos predicted just a few years ago that drones would be used for delivery, these days the company “is betting on decidedly more terrestrial technology: drivers. As in real people. Tens of thousands of them. High-tailing it through town in gas-slurping vans to leave packages on doorsteps just like the milk man, postal worker, UPS guy and pizza dude before them.”

    It is an interesting story that does a deep-dive into Amazon’s launching of a new service designed to help individuals set up their own delivery businesses that would in turn deliver packages for Amazon. “Instead of charting a future that makes drivers obsolete,” the story says, “Amazon is so dependent on them it’s copying FedEx Corp. to build a network of independent couriers around the country in a frantic effort to keep pace with demand that peaks in December.”

    You can read the entire story - including its analysis of the “murky legal terrain” in which Amazon may find itself, here.
    KC's View:

    Published on: December 19, 2018

    The Food Marketing Institute (FMI) is out with a pre-release of its 2019 study called Power of Health and Well-being in Food Retail, concluding that retailers have an important and expanding role in helping their shoppers pursue healthier lifestyles.

    Among the study’s conclusions:

    • “Consumers have new wellness expectations from food retailers. This represents an opportunity for retailers to further advance their efforts to engage shoppers.”

    • “Consumers broadly eye food as ‘medicine’ to boost health. However, the details play out differently by consumer demographics, including with different generations.”

    • “Consumers believe in the health and social benefits of eating meals at home with family.”

    • “Shoppers exhibit strong opinions about food labels, health, and transparency.”

    • “Consumers are increasing their requirements for transparency, both for ingredients within packages and information about sourcing, animal welfare, and other factors that go beyond ingredients.”

    • “Consumers trust guidance from retail dietitians and other health professionals.”

    • “Consumer feedback indicates that retailers have a big role to play in advancing total-store wellness strategies, both in bricks and mortar and online.”
    KC's View:

    Published on: December 19, 2018

    Stories in the New York Times and the Wall Street Journal suggest that CVS seems to have reached at least a temporary accommodation with the federal judge who has expressed concerns about its $69 billion merger with insurer Aetna.

    The Times notes that “CVS Health, one of the nation’s largest pharmacy benefit managers, has pitched its acquisition of Aetna, the giant health insurance company, as a way to offer patients better coordinated and more efficient care. But consumer groups and others have criticized the deal, saying it would create a powerful entity that would stifle competition and harm consumers.”

    While the judge in the case is not blocking the merger, and has stopped short of demanding that the two companies keep their operations completely separate while he considers the case - CVS has argued that a completely stoppage would hurt both companies and their customers - he said he accepted CVS’s pledge “that Aetna would maintain its historical control over pricing of products and services for its insurance customers, and that CVS and Aetna wouldn’t exchange competitively sensitive information for the time being.” The judge also proposed appointing a monitor to oversee the companies operations during his review.
    KC's View:

    Published on: December 19, 2018

    • Data company Edge by Ascential is out with a report saying that “the Toys product group on sold an estimated $510M for Q3 2018, up 30% from last year … Additionally, Edge predicts that 2019 will be the year Amazon expands its private brand strategy to include the toys category.”

    In the third quarter, Edge found that “Games grew by 65% to reach an estimated $100 million in sales, made up of mostly 'analog' games such as board and card games, puzzles, and other group games like Jenga. Toys and games marketed to adults made up 8 of the top 50 toys during Q3 2018 and most of those products were board or card games.”
    KC's View:

    Published on: December 19, 2018

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

    • Here’a a story that has sort of been under my radar - Catalina Marketing, founded in 1983 and a mainstay of the supermarket checkout experience as it facilitated the delivery of coupons, has filed for bankruptcy protection.

    According to Bloomberg, “The company, which filed for Chapter 11 protection in Delaware, said it has an agreement with over 90 percent of its most senior lenders that would cut its debt by about $1.6 billion. The court-supervised restructuring will allow the business to continue operating while aiming to trim the company’s debt load to around $280 million of secured debt upon emergence, from $1.9 billion, according to court filings.”

    The story notes that Catalina, currently owned by a pair of private equity firms, has suffered as “marketing dollars have become scarce, and the company has been shifting its focus to digital apps that zero in on individual users to customize discounts based on their past purchases. It’s also tracking consumer habits for use by retailers and packaged-goods companies, saying it possesses ‘the largest shopper history database in the world’ - a potentially valuable asset for creditors.”

    • The Wall Street Journal this morning reports that food manufacturers are “devising more-expensive sizes and flavors” as a way of raising prices at a time when there is significant pressure on them to keep their prices down.

    And so, Mondelez International comes up with fudge-dipped Oreo Thins Bites, Hershey develops new stand-up pouches of candy, and Kellogg develops Eggo waffles flavored with imported vanilla - all of which they can charge more for, allowing them to generate greater margins on new items that they can’t get on legacy products.

    The Journal writes that “Food makers and grocers are used to tough negotiations over what to charge shoppers. Stores want a tight lid on prices. That said, grocers and other retailers have proven more amenable to higher prices on new flavors or styles of an existing product than to raising prices on familiar packaged foods, whose sales have fallen. Inc. has been pressing brands to rethink their packaging and product varieties to make online sales more profitable.”

    • The Atlanta Business Journal reports that Coca-Cola has made an investment in restaurant tech company Omnivore, described as focusing on an "end-to-end suite of solutions" that will “help optimize the digital restaurant experience, such as online ordering, paying at the table, third-party delivery, kiosk/digital menus and analytics. The financing will be used to accelerate current development and growth of proprietary Omnivore products that minimize friction for restaurant brands, third-party technologies, and POS companies.”

    Business Insider reports that “in a rare national advisory, the top US public health official warned Americans of the dangers of e-cigarettes like the Juul, a popular device that lets users inhale nicotine vapor without burning tobacco.

    “US Surgeon General Jerome Adams said in the advisory on Tuesday that e-cigs like the Juul are a particular danger to kids and teens and called for fresh measures to halt their rising popularity … The advisory singles out Juul multiple times, saying the sleek devices are popular among teens because they're easy to conceal and don't emit much odor. It tells parents, health professionals, and teachers to be on the lookout for all forms of nicotine-delivery devices, including e-cigs.”

    And, the special circle of hell, reserved for people who sell this crap to kids in the hope that they get addicted, gets a little larger.

    • A survey of attendees at a CEO Summit hosted the Yale School of Management’s Chief Executive Leadership Institute (CELI) revealed that approximately 50 percent of them believe that the US will be in recession by the end of 2019.

    There are a lot of other conclusions from the survey, which you can read about here if you’re interested.
    KC's View:

    Published on: December 19, 2018

    • Clorox Co. announced that it has hired Jackson Jeyanayagam, the chief marketing officer at Boxed, to be its new vice president and general manager for the direct-to-consumer part of its Nutranext dietary supplement business.

    Note: Tom Furphy and I had the opportunity to interview Jackson Jeyanayagam on a podcast about a year ago, which you can listen to here.
    KC's View:

    Published on: December 19, 2018

    Penny Marshall, who moved from a career as an actress playing Myrna, Oscar Madison’s secretary on “The Odd Couple” and LaVerne DeFazio on “Laverne & Shirley,” to directing hit films like Big, A League of Their Own and Awakenings, died yesterday of complications from diabetes. She was 75.
    KC's View:
    Most of the obits that I read mention that Marshall was the first woman to direct a movie that generated $100 million in box office receipts … and also the first woman to direct two.

    Marshall didn’t have an extensive directing oeuvre, but to steal a line from Spencer Tracy in Pat and Mike, much of what she did was “cherce.”

    Published on: December 19, 2018

    We had a story yesterday about “rampant seafood labeling fraud, which prompted MNB reader Mike Spindler - who happens to be CEO of the Fulton Fish Market - to write:

    Some supermarkets and food service folks ARE being duped.  The seafood industry is purposefully opaque, which is how companies with big time efforts around authenticity and sustainability (Kroger, Whole Foods) get  fooled.   Lots of reasons.  Almost all seafood that is offered here has traveled 5,000 miles, has been frozen at least once and probably has been processed down to fillet or portion level. Almost impossible to verify without expensive and time consuming testing. is an information Tech company that STARTS with the information.  Anything that is on our consumer site is EXACTLY what it purports to be.  We start with whole fish, most often wild-caught or raised in U.S. waters, which are the most highly regulated fisheries in the world.   We select only the finest, FRESH never frozen, tastiest, healthiest seafood in the world.

    Oops did I slip into shameless self promotion?  Damn straight.  And our customers both consumers and restaurants get the straight information on their purchases as well.

    This is the kind of shameless self-promotion that I’m happy to post.

    MNB reader Bob Wheatley chimed in:

    Food fraud is a $10 plus billion dollar problem annually in the US. It occurs at a time when the demand for transparency, authenticity and integrity are at all-time highs. Alongside this condition are the continued reports in credible quantitative studies that mark the decline of trust in food brands. One of the many reasons why new and emerging brands are getting traction: because the product creation standards these businesses operate under mandate the requirement of using higher quality, authentic and often sustainably produced ingredients.

    But in the perimeter aisle what can the consumer do but trust the retail banner — that what is represented as real tuna or organic beef is in fact true. There is a solution that could change all of this for the better — blockchain. The digitization of the food business would remove uncertainty from farm and ocean to table, creating validation of what is represented that can’t be manipulated by people. The use of scanners, sensors and algorithms in a digital ledger system would verify product quality all the way through the supply chain.

    Think of the marketing implications of being able to truly guarantee and prove the fresh items and ingredients used in packaged products are of the quality and freshness claimed. It would be transformational and would provide retailers and shoppers absolute assurance of what they’re buying. And when it comes to romaine lettuce, an ability to identify the exact source of tainted product right to the farm in a matter of seconds not days. I understand why Wal Mart is making investments in this tech. It’s a game changer.

    On another subject, from MNB reader Jill LeBrasseur:

    Just read your eye-opener about Barnes & Noble’s new ad and had to write in about an email I got this morning from Douglas Preston and Lincoln Child. Just as you have book series that you follow, I would say I am a fan of their Agent A.X.L. Pendergast series and am always excited when a new book comes out. Today’s email from the two authors made me do something I haven’t done in years – purchase a hardcover book.

    Preston and Child’s new Pendergast book, Verses for the Dead, comes out December 31 and in their email to their fans this morning, they discussed that a special version of this book will be sold only at Barnes & Noble. It will feature an epilogue that will not appear in any version of the book sold elsewhere. Their e-newsletter also included a link to the webpage where you can pre-order the exclusive Barnes & Noble edition. I immediately clicked through and purchased. I just Could Not Miss that extra epilogue!

    I haven’t read a hardcover book in years – paperbacks fit so much better in my handbag! But I was afraid to wait for the paperback and miss out on that special extra epilogue. So, did it get me to physically enter a brick and mortar Barnes & Noble store? No, and neither would the ad you featured. But I would argue that for Pendergast fans, this special edition is a great example of differentiation. I just thought it was an interesting coincidence that both your story and their email came today.

    MNB reader Sharon Stevens wrote:

    Hey there just had to chime in on your B&N piece. I went to the one in Eden Prairie MN this weekend, at the mall, and it was crazy busy! It is true they had a lot more than books. The store was packed, associates were engaged helping customers, and I found some great gifts. There were all kinds of toys, games, puzzles, books and music that I have only found at that store. The checkout experience went faster than expected. Honestly, I loved the experience and really didn’t mind the crowd at all.  I have been in there a couple of times since September, after a long stretch of buying my books online or at Target. While it wasn’t as crowded then, the shopping experience was great, the associates were engaging and I noticed their assortment of Harry Potter items and made a mental note to do some in person Christmas shopping  there this year.  I was not disappointed.

    Got the following email from MNB reader Christopher Gibbons:

    I visited a Barnes & Noble store in Maple Grove, MN this past weekend.

    Last year, I had purchased books online from B & N. This year, I decided to go to the brick and mortar store. I also brought our service dog in training, figuring this might be a mellow outing in a relatively quiet retail store.

    Here was my experience.

    The store was very busy when I arrived. I counted over 100 customers inside and there were at least 20 employees working at the time.

    I had a list of thirteen books that I was looking for. I was not expecting to find them all, but figured I could get at least half of them to cover my gift lists and then order the others online later that evening.

    As I browsed the sections, I was able to find most of the books on my list. I then went to the customer service kiosk where four employees were assisting customers. The clerk took my information and successfully helped me find the last three books on my list. He did so cheerfully and efficiently. I let him know that I had 13 books on my list and they had all 13 in stock! He seemed genuinely pleased and wished me well.

    When I got to the checkout, the line stretched to the front door. A manager was maneuvering the line so that it did not block the entrance. There were 18-20 people in front of me, but there were five cashiers moving quickly and it was less than five minutes before I was being checked out. The cashier was quick and enthusiastic. She commented on several of the books I was purchasing (“I want to read this one!” “I bought this one for my mom.”) She offered me a complimentary book bag with my purchase and showed me how to save an additional amount at checkout. I thanked her and commented that I was surprised how busy they were. We both noted that similar to Samuel Clemens, rumors of the death of book stores were greatly exaggerated.

    As I was leaving, there was a local school offering complimentary gift wrap and accepting donations. I normally pass this up, but I decided to let them wrap my baker’s dozen of books. I thanked them and dropped a large donation in the jar.

    So how did Barnes & Noble do?

    Clean, welcoming environment. Check.

    Great in stock conditions. Check.

    Knowledgeable and helpful staff. Check.

    Quick and pleasant checkout. Check.

    Community engagement and local connection. Check.

    I gave them an excellent review and told my wife and several others about my great experience. I can’t say this is always the case, but at this location, on this day, Barnes & Noble exceeded my expectations and made a strong case for visiting their store. I will definitely return.

    Regarding slow mall traffic and bored Santas, MNB reader Carolyn Schnare wrote:

    Kevin – you mean I just paid the $13 convenience fee to bypass ‘the line’ to visit mall Santa and I could probably just walk up tonight??? Grrrr..
    I’m hoping to see a huge line and send you a photo tomorrow of me smiling because I paid for the appointment to skip the line.

    You send the photo, I’ll post it. 

    From MNB reader Dennis Barthuly:

    I think there is another aspect to the Holiday Mall "crawl" - 

    Shipping.  As more and more families are spread out across the country and even the globe, buying "local" has now become an additional expense.

    Yesterday, we had a small local item that we needed to ship to our daughter in Colorado.  The box was no more that 8x8 and weighed in at about 16oz.  Shipping ranged from $30.84 to $38.00.

    The item in question cost a fraction of that.  So, while shopping local was "fun", the overall expense, was in my mind, outrageous.  The folks in front of m were shipping some toys to their grand kids - and their tab ran to just under $400!  That should be a line item expense for our 2018 returns!

    Also got the following email on the subject from the great Frieda Rapoport Caplan:

    I keep thinking about all those empty or nearly empty malls you have been talking about. . .around the country.

    In areas of heavy homelessness. . .like many parts of California. . .would the proper use of these area as a place to serve the homeless be worth considering?

    We’ve had a discussion here about various video streaming services, prompting one MNB reader to write:

    In regards to the streaming services conversation, I think that we’re going to see a future where most consumers are subscribed to 1 to 3 steaming services at a time and likely will switch some on and off. My household for example has Netflix ($12), Hulu ($12 for no commercials), and Amazon Prime ($10/mo on average); it still is cheaper than paying for cable and you have no commercials. My parents subscribe to HBO and Stars only while Game of Thrones or Outlander is on and then they unsubscribe until the next season.

    You might not be able to watch everything with only a few streaming services—I’ve never seen Star Trek Discovery even though I’d like to—but you can’t watch everything even if you have cable (not unless you pay $$$ and then you still have commercials and no Star Trek Discovery).

    Responding to Michael Sansolo’s Tuesday column, one MNB reader wrote:

    I completely relate to the classical music anecdotes. I had a fondness for the genre (although it's so broad it's hard to simply call it a genre) in college, but lost some of that in the years proceeding. I recently began exploring the genre again and came across a duo, Black Violin. 

    Two younger guys who grew up playing classical music in school and then listening to hip-hop and rap after school. They have blended the two and tour primarily as an opportunity to educate about classical music, the doors it can open and the influences it has on music today.

    I attended a Black Violin concert earlier this year. It was hands down one of the best concerts I've ever been to. I had no idea how much I would enjoy the influence in Bach and Biggie at the same time.

    Note - There are other young, fun artists out there who are blending instruments with genres (e.g., 2 Cellos), but these guys are my favorite.

    On another subject, from another reader:

    Weed in grocery stores in NY?  Gives a whole new meaning to the term "in-store bakery".  Donut sales should benefit.

    As will Oreo sales, I expect. Time for a little cross-merchandising.

    Reacting to a story about executive pay, one MNB reader wrote:

    Executive pay greed is insane!

    • 800k salary
    • 97k bonus
    • 6.3 million in stock rewards
    Isn’t that enough? Craig Jelinek still needs 107k additional pension, paid life insurance and a company car.  If I made that much in salary, bonus and stock options I would invest for retirement, pay for life insurance and get my own car.  Oh wait, I do that today!  Let’s not forget about the thousands of people who make the dream happen every day. If it wasn’t for them there would be nothing!

    KC's View:

    Published on: December 19, 2018

    One of the things that I’m most excited about in the new year is the fact that I’m going to be attend the Consumer Electronics Show (CES) in Las Vegas for the first time - I’m going to be there to start a new series of “Retail Tomorrow” podcasts.

    This podcast series is an outgrowth of the Retail Tomorrow initiative created by the Global Market Development Center (GMDC), creating a community of innovators to promote collaboration among retailers, brands, technology leaders, and universities. GMDC has done “immersion” conferences in Silicon Valley, Toronto, Seattle and New York, with upcoming events scheduled for Los Angeles and Boston - at which people can do a deep dive into not just best practices, but next practices … developing an ecosystem that will drive the retail industry into the realities and possibilities of tomorrow. And these podcasts are designed to push the conversation forward.

    So, I’ll be at CES doing the podcast, and if you’re also going to be there, I hope you’ll drop me a note. It’s a humongous show, but maybe we can find a way to meet for a drink at some point … to celebrate the new year and new business adventures.
    KC's View: