business news in context, analysis with attitude

Published on: January 15, 2019

by Michael Sansolo

There’s little doubt that omnichannel operations will be a big part of the future of business, tying together the virtual and brick-and-mortar world. The evolution of this new world of shopping will bring countless challenges in terms of technology, fulfillment, variety and service.

But let’s not forget, nothing works if it doesn’t meet the customer’s needs. That is what matters most in any form of business.

I got to experience a wonderful form of omnichannel thinking recently. In lower Manhattan, Converse has opened an incredible little store where the need for personalization and creativity perfectly merge with the world of sneakers. At the store customers have near limitless ways to customize a pair of Chuck Taylor All-Stars, once the only sneakers available to all of us, and long a retro, hipster staple.

The range of customization is incredible starting with the colors of the shoes, or the pattern it displays down to the stripes on the rubber sole, the eyelets and, of course, the shoe laces. Frankly, I was so overwhelmed by the choices that I completely forgot to inquire as to the cost of a pair of high tops featuring the New York skyline, but I’m betting it isn’t cheap.

But here’s the thing, the store - cool as it may be - is just one part of an omnichannel strategy. At www.converse.com you can easily design a custom pair yourself. (The Hello Kitty high-top version goes for a neat $75.) With little effort you can have the same experience of personalizing your sneakers with the same detail as in the hip Manhattan boutique.

That doesn’t mean, however, that Converse - no matter how omnichannel a business as it may be - is able to meet every customer’s needs.

I mentioned the cool NYC store to the Content Guy, who I know loves both cool stores and lives close to New York. Then we started playing with the website and found a problem.

One of us (I won’t say which one, but it isn’t me) has a wide foot and cannot wear any sneakers that don’t come in 2E or 3E. We hunted up and down the website and found all manner of customization except one: there are no wide width shoes!

Now think about that. Here’s a company boldly going into omnichannel operations, offering an amazing customized experience in store and on line and yet somehow they neglected to fill a need that frankly is fairly common. (Kevin told me that there are relatively few footwear brands that make shoes in wide sizes, and so the ones that do - New Balance, Rockport, Dunham and Red Wing, for example - tend to create a lot of loyalty among people like him.)

It occurs to me that there’s a powerful reminder in that. As companies rush to make themselves relevant and useful on-line, which is increasingly important, we need to remember to stay focused on real customer needs. For food retailers that means emphasizing price, nutrition, recipe ideas and convenience. Or, to put it simply, stay focused on all the things that drive shopper satisfaction in-store or risk losing the customer in a whole new channel.

No amount of technology can fix that problem.

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: January 15, 2019

The Hill reports that the federal Food and Drug Administration (FDA) plans to one again conduct inspections of high-risk foods, despite the now 25-day partial government shutdown that had forced it to suspend most of those activities.

The inspections, according to FDA Commissioner Scott Gottlieb, will be conducted by employees who have agreed to work even though they will not be getting a paycheck. Gottlieb said that “the response from our outstanding field force and inspectorate has been overwhelming and outstanding. They're among the finest, most dedicated professionals in our federal workforce and we're grateful for their service.”

The story notes that “high-risk facility inspections account for one-third of the roughly 160 inspections the FDA typically performs per week … Investigators during these routine checks typically look for unclean conditions, bug infestations and harmful contaminations … Forty percent of the agency's operations are covered by Congress, while 60 percent is funded by user fees.”

Published on: January 15, 2019

Ahold Delhaize yesterday announced that it soon will be deploying almost 500 robots to its Giant/Martin’s and Stop & Shop banners, “following successful pilots that improved in-store efficiencies and safety.”

According to the announcement, “The in-store robots, named Marty, were easily recognized by customers in stores by their friendly appearance where they were tested and used to identify hazards, such as liquid, powder and bulk food item spills and provide reporting that enables corrective action. They help stores mitigate risk caused by such spills, as well as enabled associates to spend more time serving and interfacing with customers.”

The robots were developed and tested through a partnership between the company’s Retail Business Services unit and Badger Technologies, a product division of Jabil.

“As part of our continued focus on technology transformation, we’re pleased to support one of the most significant deployments of robotics innovation in the grocery retail industry,” said Paul Scorza, EVP and Chief Information Officer for Retail Business Services.

Published on: January 15, 2019

Precima is out with new loyalty-focused research suggesting that effective loyalty-oriented marketing continues to be a major factor for retailers seeking to “to compete and thrive in today’s hyper-competitive market,” though even at this juncture, it is an approach used too little.

“The research found a lack of loyalty among many grocery shoppers, with 75% of shoppers saying they only allocate about half of their household grocery expenditures to a single store,” Precima said in its report, delivered this week at the National Retail Federation show in New York City. “This poses a direct challenge to grocery retailers, which strive to build a large and devoted customer base.”

“Our research shows that maintaining a loyal shopper base is still the most effective way for grocery retailers to compete and grow sustainably,” says Steve Hasen, AVP at Precima. “Loyalty must be earned, consistently and repeatedly. It is gained and lost across a myriad of touch points that shoppers have with retailers, so food retailers who consider shopper loyalty in every phase of the customer journey are on the best path to consolidate spending to their stores and thrive in the new grocery landscape.”

Published on: January 15, 2019

Technology company First Insight is out with a new report, The Arrival of the New Male Power Shopper, which concluded that “53 percent of men reported shopping on Amazon six or more times a month, compared to only 45 percent of female respondents.. Further, 60 percent of men (versus 52 percent of women) say that their Amazon purchases have increased in the last year.”

This data, the study says, “reflected a similar trend across traditional retail categories, as 25 percent of men versus only 15 percent of women reported shopping six or more times a month at mass department stores like Kohl’s or JC Penney. Luxury stores like Neiman Marcus, Saks Fifth Avenue, Gucci, and Prada saw 19 percent of men versus five percent of women shopping six or more times a month. Similarly, 41 percent of men surveyed reported shopping at Walmart six or more times a month, versus just 35 percent of women.”

More from the study: “Overall ownership of smart speakers showed a 75 percent relative increase over last year (24% to 42 percent). However, when comparing men and women, 47 percent of male respondents reporting owning one now, a 113 percent increase from last year (22 percent). By comparison, only 36 percent of women reported owning a smart speaker now. While that is a 38-percent increase over their reported ownership last year (26 percent), it is still 23 percent lower than smart speaker ownership among men. Usage of these speakers for researching product prices jumped 17 percent for men to 70 percent, compared to women who stayed about the same as last year at 46 percent. Further, 69 percent of men reported looking on Amazon.com before looking and/or buying anywhere else versus 63 percent of women.”

“We are seeing a significant shift in shopping behavior by men, which is shattering many age-old gender stereotypes. Men are now shopping more and increasing the frequency of their online and in-store purchases across the board, which is also beginning to outpace women in many categories,” said Greg Petro, CEO of First Insight. “It’s clear that as we head into 2019, every retailer needs to shrug off the misperception that shopping is a female-dominated activity, particularly as more men leverage the latest technologies and online tools to find the best prices.”

Published on: January 15, 2019

The New York Times has a story about how “thousands of craft beer brewers across the country have a problem: Sales are slowing, tastes are changing and stiff competition is coming from new directions. Wine and spirits have cut into market share. Cannabis deregulation looms.”

And so, many of these brewers are embracing what they see as a “post-craft” era in which they no longer can only appeal to (as the story puts it) “young white dudes with beards.”

“From niche beers to inviting taprooms and branding,” the Times writes, “the business is formally investing in its cultural diversity as never before. Not just because brewers think it’s the right move — because it’s a smart move, too.”

You can read the entire story here.

Published on: January 15, 2019

The New York Times this morning reports that New York Gov. Andrew Cuomo has announced that he plans to push for a statewide plastic bag ban in 2019, though details were “scant” and nobody seems to know exactly what is being proposed.

The Times notes that “efforts to regulate the bags in New York have been discussed for years; the governor first proposed legislation to prohibit the ubiquitous bags last April. That bill, which stalled in the Republican-led State Senate, came more than a year after Mr. Cuomo and the state Legislature blocked a 5-cent fee that New York City officials wanted to impose on the bags.

“As plastic bags have polluted sidewalks, landfills and waterways, bans on the bags have become a hotly debated issue. Several New York municipalities have shopping bag laws, following dozens of local governments across the country in adopting bans, fees or a combination of the two.”

The bill that failed, the Times writes, “offered a variety of exemptions from the ban, including bags that contained raw meat, fish or poultry; bags used for bulk packaging of fruit and dried goods; takeout food bags used by restaurants; and newspaper bags. It was unclear whether those exemptions would remain in Mr. Cuomo’s proposal this year.” It also is not known what position legislation would take on paper bags, which have their own - though different - environmental impact.

Published on: January 15, 2019

• Business Insider reports that in a presentation this week at the National Retail Federation (NRF) show in New York City, Walmart executive vice president and CTO Jeremy King said that the retailer decided to pull the plug on its Scan & Go program - which enabled consumers “to shop with just your phone or a handheld device, and no interacting with cashiers” - because it “found too many errors in the process ... making sure people were scanning things right, multiple quantities, that sort of thing.”

The technology continues to be used in the company’s Sam’s Club stores, but at Walmart, the decision has been made to “wait until the technology's better.”

According to the story, “King is predicting that that better — or different — technology is coming soon, however. On stage, King listed computer vision — technology that can use cameras and sensors to ‘see’ and understand like a human — as one example of tech he is excited about for 2019.

“Computer vision is a natural fit for retail, where it would be able to replace a program like Scan & Go with a more intuitive method that could include technology that automatically tracks customers and what they're buying, charging them appropriately.”

The Business Insider notes that Walmart is not yet testing the technology, though arch rival Amazon already has, with its Amazon Go stores.

Published on: January 15, 2019

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

• Albertsons-owned Shaw’s said yesterday that it plans to close four underperforming stores next month, three in Massachusetts and one in New Hampshire.

The Boston Globe quotes the company as saying that it is “focused on growing our business by being the favorite local supermarket, and running great stores where people love to shop.”

Shaw’s has more than 150 store locations in New England.

It would be my perception, based on both observation and conversation, that Albertsons’ Shaws and Star Market division in New England is one of those assets that needs some significant investment if it is going to be relevant to its shoppers, much less their favorite store.


• The Associated Press reports that a Washington, DC, judge has ruled that a lawsuit filed by the Organic Trade Association (OTA) against Unilever - charging that its Ben & Jerry’s brand “ misleads consumers about its environmental practices” - can move forward, saying that the suit “alleges facts sufficient to advance a plausible claim.”

The OTA says that Ben & Jerry’s “uses advertising to create a false perception that the ice cream maker is ‘committed to a clean environment and high animal welfare standards.’ The nonprofit says most of the milk used in the ice cream doesn’t meet its standards for animal care, and farms supplying the company are polluting lakes.”

Published on: January 15, 2019

• Albertsons Companies said yesterday that its Q3 revenue increased 1.8 percent to $13.8 billion compared to $13.6 billion during the same period a year ago, driven by a 1.9 percent increase in same-store sales as well as higher fuel sales; these increases, the company said, were “partially offset by a reduction in sales related to the stores closed in the first three quarters of fiscal 2018.” However, “Net income was $45.6 million during the third quarter of fiscal 2018 compared to net income of $218.1 million during the third quarter of fiscal 2017,” the company said.

Two wins pointed to by the company - Q3 e-commerce sales growth was 73 percent, while private label sales penetration “increased to an all-time high of 25.2 percent.”

Jim Donald, Albertsons’ president/CEO, said in a prepared statement that the company continues “to gain traction in our efforts to deliver a seamless shopping experience for our customers in both the four-wall and no-wall environment.”

Published on: January 15, 2019

Carol Channing, a legendary Broadway actress who played two iconic roles - as Lorelei Lee in “Gentlemen Prefer Blondes” (from 1939 to 1941) and as the title character in “Hello, Dolly!,” has passed away. She was 97.

The New York Times obit points out that Channing played the role of matchmaker Dolly Gallagher Levi - in the original, which opened in January 1964, and in numerous revivals, on Broadway and on tour, the last one in 1995 - more than 4,500 times … missing only one performance.

Published on: January 15, 2019

We had a story the other day about how customer data expert dunnhumby, out with its second annual Retailer Preference Index (RPI), rated Trader Joe’s once again as the nation’s top grocery retailer.

The grocery retailers with the highest overall consumer preference index scores are: 1) Trader Joe’s, 2) Costco Wholesale, 3) Amazon, 4) H-E-B, 5) Wegmans Food Markets, 6) Market Basket, 7) Sam’s Club, 8) Sprouts Farmers Markets, 9) WinCo Foods, 10) Walmart, 11) Aldi, 12) Peapod, 13) The Fresh Market.

I commented:

I’m willing to accept the dunnhumby analysis, though I’m not quite buying its conclusions … mostly because I’m always skeptical about “nation’s best grocery store” studies.

They’re just not fair, since not everybody has access to the same stores, and supermarkets can be so different in style and purpose - with entirely differentiated customer bases - that comparing them is kind of silly.

I mean, I’m not sure that Wegmans and WinCo belong on the same list - they operate in different parts of the country, have vastly different strategies and tactics, and appeal to entirely different people.

I also think it is a mistake to limit such studies only to “large” companies, since it often is smaller, independent stores that foster the strongest consumer emotional sentiments. Is Trader Joe’s a terrific store? Sure. For what it is. But would I feel a stronger emotional connection to it than to a Dorothy Lane Market or a Lunds & Byerlys or a Metropolitan Market or a Westborn Market or a bunch of other grocers I could name, if I could shop at any or all of them?

I think not.

One MNB reader responded:

Wegmans vs. Winco, should they be in the same list, yes they should, as they are both on the top list of retailers that shoppers like for a reason. Wegmans have beautiful stores that have perimeter departments that make for a superior shopping experience. Their stores are clean, well stocked, and are always an exciting place to shop. I was in my first Wegmans 2 years ago, and I know why they always score so high on dunnhumby. Their food court was outstanding.

Winco is on the list for a different reason, clean stores, great prices, usually 15-20% lower than their mainstream grocery competitors. The stores are stocked full everyday, out of stocks are non- existent, clean and bright stores, friendly employees. The Winco shopper knows that they are really saving real net dollars.

Both of these chains are on the Top 10 list for different reasons, but the dunnhumby results have spoken.

I’m just arguing that the comparisons of two stores with very different value propositions are not all that relevant … not that either of these companies aren’t terrific.

Another MNB reader wrote:

I agree completely with your assessment of the shortcomings of this study.  7000 shoppers is a sample size that is incredibly small to make these statements.  I also would guess that they had no survey respondents in markets where stores you mentioned (like Lunds and Byerly’s) are present.  I really find it interesting that dunnhumby’s key historical client, Kroger (now serviced by 84.51) is not present, nor is dunnhumby’s current client, Whole Foods, on the list.  Makes you wonder why, especially if I’m an executive at Whole Foods, where I know I have an extremely loyal customer base.  Somehow the math on this doesn’t seem to add up.

And from another:

I used to work for one of the large regional grocers and exclusively shopped there. Unfortunately, that is no longer the case, with Trader Joe’s grabbing the majority of my grocery dollars.

I buy ALL of my wine at Trader Joes (great selection, advice and pricing). Categories that I regularly shop at Trader Joe’s include nuts/dried fruits, cheese, lemons/limes, flowers, sandwich bread, condiments, oil, vinegar, chips & crackers, spices, greek yogurt, frozen fruit, and increasingly produce. Organic carrots are $.89. They have beautiful haricots vests. You can’t beat their pricing and it is a FAST friendly shop. If you can survive the parking lot it’s a great in-store experience.

I am increasingly frustrated with my former grocery store, from underwhelming meat to ridiculous out of stocks. Last evening my husband went there shopping at 7 pm. Rotisserie chickens were on sale. There was not one to be had and this is a common experience. The seafood department was packed up and closed for the night. And this was at a store in the chain’s headquarter state that regularly was number 1 or 2 in average weekly sales.

We also have a Whole Foods near Trader Joe’s and I may soon be defecting to them for the rest of my shopping.



Regarding the possibility that California could ban paper receipts, MNB reader Matthew Pazdziorko wrote:

I’m normally OK with legislation that saves the supply budget and helps the environment, but I wonder, personally, if the receipt ban would be the way to go.

As a consumer, I’m probably not “normal” as I use receipts to keep a register of my transactions for the month. Beyond that practicality, I do think that receipts still have value in the current economy. Buying clothes, larger ticket items (think Ryobi drills at Home Depot), gift cards and gifts in general all need receipts for smooth transactions. Warranties, gift returns, exchanges, researching double payments, and refunds are pretty common retail transactions that use receipts. Not to mention expense reports - think of the clunkiness of compiling an expense report without a sloppy stack of receipts. Working day in and day out in grocery (which really doesn’t have many big ticket items), I can easily say that I see more customers request a receipt when a cashier forgets to hand them one, than say “no thank you" - no competition.

California isn’t afraid of slapping warning labels on everything - my morning bagels have a Prop 65 warning. If this is about stopping the spread of chemicals - label it. Legislate a change. If this is about the environment - start a campaign that encourages consumers to say no to receipts.

If the legislation is mirroring a trend, then the legislation is pointless. As a retailer, I truly believe this is a solution in search of a problem.

MNB reader Mike Starkey wrote:

While it may feel like an “only in California” sort of discussion, in this case, legislation is ahead of the customer demand.  Most folks in the retail industry would welcome the move from a paper receipts to e-receipts for many reasons.  I previously worked for a company who offered these services along with the ability to drive personalized content to the shoppers including a personal repository for the consolidated households.  Our testing proved the technology could support the robust requirements of retail grocery, deliver on the promise of a personalized experience only to find the shopper interaction was lukewarm at best.
 
Reminded me of my Catalina days with CECS, electronic coupon clearing for FSI’s for retailers.  We were ahead of the demand curve and the business closed down, but the technology could definitely support the initiative.  For me, the e-receipts solution is a good one, however, IMHO, shopper education and value need development in order to achieve success.

From MNB reader Cody Thornhill:

I think it is a little premature and out of touch to assume "most customers" are in sync with getting electronic receipts. You seem to be projecting your experiences on the masses and that just simply isn't the case. Like most laws that originate in the Bay area they pay no mind to the way normal people live throughout the rest of the state. Will we be required to enter our email every single time we buy something from every single store we visit just to get a proof of purchase? That seems to be counter intuitive for the fast pace lifestyles we are told we live. Am I too foresee the possibility that I may need to return something in the future and make sure I request a receipt each time I make a purchase? Is there going to be a massive database filled with customers emails and card numbers that'll be easy to breach? What happens the first time someone goes to return a product they aren't happy with at their local grocery store and they do not have a receipt because they weren't given one? This law would put 12$/hr clerks in an awkward situation.

This is just another example of "feel good legislature" that doesn't actually accomplish anything other than adding burden on businesses and consumers and giving California lawmakers something to pat themselves on the back for. You said yourself "I'm not sure how much paper and chemicals it'll save, but some is better than none." That is not how you legislate. Laws should be well thought out and proven to be productive before they are forced on the people. Results matter.

And from another:

I’d like to see how much ink and paper is produced in one day’s CVS receipts! I always feel as if I’m getting a tree’s worth—not to mention the time it takes to print them when there are folks in line behind me. I go online and choose the ones I want yet they are compelled to give me reams that I throw away. A big yes vote from me if it includes CVS.

MNB reader Jackie Lembke wrote:

When asked, I decline on receiving a paper receipt. If I feel I need it, I can ask for it to be sent to me. Most of my receipts go in the trash can or shredder.
 
I don’t have an issue with this.



We wrote yesterday about how the US Supreme Court has agreed to hear a case that pits the Food Marketing Institute (FMI) against the Argus Leader, a Gannett-owned South Dakota newspaper that has argued that it - and, by extension, its readers - have a right to know how much federal food stamp money goes to the nation’s retailers.

The Argus Leader sued to get the information, denied to it by the federal government, back in 2011; FMI argued that to make that information public would be to give away proprietary competitive information that could hurt its member retailers.

I commented:

As a taxpayer, I think I’d like to know which retailers are the greatest beneficiaries of the food stamp system … and, quite frankly, I’d kind of like to know what the retailers and their trade association would rather not be a matter of public record.

Nobody would be surprised if Walmart is a major beneficiary. But what if we found out that, say, Whole Foods was? That was would be interesting … and not exactly worth keeping a secret.

I always get twitchy when this kind of transparency is resisted.

MNB reader Jon Townsend responded:

Couldn't agree with you more. Last time I checked, tax dollars went into the SNAP program, I would like to know where it is going from there.