business news in context, analysis with attitude

Published on: January 17, 2019

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

This week’s video was recorded at the new Starbucks Roastery in New York City, which was opened in Manhattan’s Meatpacking District in mid-December.

I’ve always been a big fan of the theatricality of the original Roastery in Seattle - it always has struck me as a unique sort of brand and image builder, with the added advantage of offering great coffee drinks - while having expressed some reservations about the company’s plans to open a bunch of these. Those reservations are largely connected to a concern that when (not “if”) the economy begins to falter, Starbucks might be focusing too much on an upscale format that might not do well in that environment.

It may be that the current CEO, Kevin Johnson, shares those concerns; he’s let the world know that the Roastery and Reserve stores were former CEO Howard Schultz’s babies, and he doesn’t seem to share his predecessor’s infatuation with the formats.

Having now spent some time in the New York Roastery, I have a lot more reservations, mostly because I’m not sure Starbucks may be capable of delivering on the promise - it was one of the most disappointing and mediocre experiences I’ve ever had at any Starbucks, anywhere. Period.

Let me detail our visit for you.

I visited the Roastery with Mrs. Content Guy, who never had been to the Seattle version; I’d been talking about it since my first visit there and, knowing she is a Starbucks fan, I was looking forward to bringing her to the NYC outpost.

We walked in, and it was pretty busy. We were welcomed by a nice young woman, who informed us that while there were different sections for different offerings, if we went to the upper level bar, we could have an adult beverage as well as any coffee drink and bakery offering from elsewhere in the store. That sounded good to me.

We walked up the stairs and found a seat at a low table, and after a few minutes a waitress came along and offered us menus. Mrs. Content Guy was in the mood for coffee instead of alcohol, so she asked for the specialty coffee menu … and was informed that those drinks only were available at the specialty coffee bar below us. (Not what we’d been told.) That’s okay, she said, she’d just have a large nonfat latte with two Splendas (which is what she would order at any old Starbucks). I ordered what sounded like a pretty cool bourbon-and-coffee drink (for $20!), and we settled on some pizza.

It took awhile, but eventually she came with Mrs. Content Guy’s latte … but she told us that she didn’t have any Splenda, so she brought raw sugar. (She also didn’t bring anything to stir it with.) Wait a minute, I said. You don’t have any Splenda in the entire place? She said that they had it downstairs, not upstairs, and left, promising to bring me my drink right away.

I got up, walked downstairs, and got two Splendas and a stirrer, and brought it back to our seats. It took all of 30 seconds.

About 10 minutes later, the pizza showed up, and she said that she’d have my drink for me right away. The pizza was pretty good, but 10 or 15 minutes after that, the latter was gone, the pizza was almost gone, and my drink hadn’t shown up yet.

I waved her over and told her to cancel my drink order, at which point she explained that it was some sort of pour-over drink that took 15 minutes to make. I pointed out that a) it was well over 15 minutes since we’d ordered it, and b) if she’s mentioned at at the beginning, it might’ve been a different story. About two minutes later, she brought me the drink - and to her credit, told me that it was on the house. (It actually was pretty tasty, though not worth a 20+ minute wait and $20.)

While I was sipping my drink, Mrs. Content Guy said she wanted to use the restroom. I told her that if it was like Seattle, it would be an interesting experience, since the facilities are entirely unisex - everybody goes into the same room, goes into stalls, and then when done use common sinks. There was a sign pointing out that the restrooms were down a flight of nearby stairs, and off she went.

About 10 minutes later she came back, though from a different direction, and informed me that while the bathrooms were conceptually kind of cool, when she went into a stall she found ample evidence that some men lack civilized bathroom habits. (She was considerably more descriptive than that, to be honest.) And then, when she attempted to go back up the stairs to return to our seats, she was informed by a security guard that management had a rule - only employees could go up and down those stairs, and that while guests could come down them, they had to return upstairs via a more roundabout route.

Really? Well, this got my curiosity going, and so I decided to use the restroom myself. Down the stairs, no problem. Into the restroom. Chose a different stall than Mrs. Content Guy. Found yet more evidence that some men, at least, are pigs. And then, when trying to go back upstairs, had the same conversation with the security guard. Except that I pumped him a bit, asking him who exactly the “management” was that was laying down such seemingly arbitrary rules. He rolled his eyes and commented that “management” was micromanaging everything, and that if those people would spend more time on the coffee and less time on security, letting them do their job, things would work better. He clearly thought the stairs rule was stupid, but needed to do as he was told.

Oh, well. As we paid the check and put on our coats, Mrs. Content Guy looked at me, told me that she loved me, and then told me never to take her this place ever again. She hated it. A lot.

I know when not to argue, so we ventured downstairs to the front door, where I could see that the Lyft car that I’d called via the app was waiting for us. There was nobody coming in the front door, but the dour-looking guard there wouldn’t let us go out. People going out had to use the side door, he said.

Who says so, I said.

“Management,” he said.

It didn’t seem like the time or place to argue, so off we went. Besides, I knew I’d get the last word here.

The negative power of “can’t” can be enormous in a retail environment. It creates the illusion - or the reality - that the customer is less important than arbitrary rules and processes. At the Roastery, what always has been promoted as the Starbucks ethos seems not to exist. Even if this experience was unusual and isolated, you only get one chance to make a first impression, and the New York City Starbucks blew it.

One other thing. This may be entirely unfair, but I have to wonder if this would’ve happened if Howard Schultz had still been in charge. All the stuff that went wrong strike me as the kinds of things to which he would’ve paid close attention.

Anyway, that is my experience and what is on my mind. As always, I want to hear what is on your mind.

Published on: January 17, 2019

by Kevin Coupe

The Wall Street Journal reports that a new mall in New York City’s Hudson Yards development on Manhattan’s west side has embarked a “grand experiment” to see if it can actually take advantage of consumer trend - one entire floor of the mall will be devoted exclusively to stores that began as online retailers.

Among them: Shoemaker M. Gemi, men’s fitness apparel firm Rhone, sock maker Stance and the specialty men’s underwear merchant Mack Weldon.

Hudson Yards, the story says, “represents one of the biggest bets yet that a developer can counter the rise of online shopping by offering customers a chance to visit stores run by a range of popular e-retailers, from drink makers to footwear. The mall developers have offered these companies a longer-term presence at Hudson Yards, with bigger spaces and leases that run for more than a year … The aim is to pique shoppers’ interest with an environment that stands out from the cookie-cutter mall experience focused on transactions and to keep them coming back.”

Projected opening date: March 15.

Now, it seems to me that malls have a choice - they can figure out ways to be completely differentiated, or they can figure out ways to embrace the e-commerce trend and figure out how to make it work for them. (I guess another option is to sell the place to Google for office space, like the Westside Pavilion did in Los Angeles, but that’s not an option open to everyone.)

In this case, I think they’re opting for what could be a canny combination of the two - devoting a floor to brands with e-commerce roots strikes me as making a lot of sense. I’m not sure that long-term leases are the answer … in fact, it seems sort of antithetical to the theme … but I know very little about commercial real estate except to understand that B and C level malls are sucking wind these days. They have to do something.

One interesting thing about Hudson Yards is the fact that it has a “5-acre landscaped plaza and a monument called Vessel that is designed for visitors to hike its 2,500 steps.” I walked by there the other day, and it is impressive … and if one is in any kind of shape, perhaps a certain kind of unique and compelling magnet. It would appear to be, in fact, an Eye-Opener.

Published on: January 17, 2019

Marketing Daily reports that Kraft is “opening a grocery pop-up store where workers affected by the federal government shutdown can pick up free Kraft staples to help tide their families over.”

Located in Washington, DC, at 1287 4th Street NE, the store will be open through this Sunday. According to the story, “Current federal government workers showing government ID can shop and take home a bag of Kraft products, such as the brand’s mac and cheese, natural cheese, singles, salad dressings, mayo and BBQ sauce.”

Interestingly, Kraft is promoting a “pay it forward” approach, suggesting that “where possible, those who benefit from the store make a donation to a favorite charity once the shutdown is over.”

Published on: January 17, 2019

The Green Bay Press Gazette reports that “Shopko's parent company, Specialty Retail Shops Holding Corp., and 12 of its subsidiaries filed for Chapter 11 bankruptcy protection from creditors, citing excessive debt and a decline in brick-and-mortar retail store sales as customers' shopping patterns changed.”

The story says that “Shopko has until March 14 to find a way through  reorganization or it will have to liquidate its assets.” It already has announced the closure of 105 stores out of the 300 that it operates in the central U.S., West and Pacific Northwest.

Less than a month ago, Shopko said it was selling separate chunks of its pharmacy business to Kroger and Hy-Vee. The filing says it now will auction off the remainder of its pharmacy business, though it plans to move 20 optical centers - said to be doing well - from existing Shopko stores to standalone locations. 

In its bankruptcy filing, Shopko said its assets total less than $1 billion, and its liabilities are between $1 billion and $10 billion.

Published on: January 17, 2019

Engadget reports that Ahold Delhaize-owned Stop & Shop, beginning this spring in Boston, will test out robotic vehicles that will “bring a chunk of the store to your door.”

These autonomous vehicles, the story says, “will let you shop for produce, meal kits and ‘convenience items’ (think bread and eggs) just outside your home. You just have to hail one of the Robomart-made cars through a mobile app, unlock the vehicle when it arrives, and pick your food -- a combination of computer vision and RFID tagging automatically flags your purchases. It's not quite Amazon Go on wheels, but it's close.”

No word yet on how much the experience will cost.

Engadget writes that “the approach could be more practical than straightforward delivery for some. Instead of having to commit to a purchase before the vehicle has even left the store, you can browse on your own terms (albeit from a narrow selection) without having to travel beyond your home. Of course, this is helpful for grocery stores as well. In addition to providing an extra form of revenue, it could expand a store's reach to cover people who can't realistically visit, whether it's due to travel times, physical abilities, or just the lack of a personal car.”

Published on: January 17, 2019

Bloomberg reports that “key data” about how consumers spent during the December 2018 holiday shopping season won’t be issued on time by the federal government.

The reason? The US Department of Commerce, like much of the federal government, isn’t open for business because of the partial shutdown caused by a standoff between President Trump and the US Congress over funding for a wall to run across the country’s southern border with Mexico.

Bloomberg writes that “failure to reopen soon also would delay personal income and spending data, due Jan. 31.

“Together, those reports constitute the most widely-watched measures of household consumption, which accounts for about 70 percent of the economy. The disruptions come at a challenging time: plunging regional gauges of U.S. manufacturing and business surveys indicate a slowdown in growth, and some big-name retailers have issued warnings about mixed holiday results.”

Published on: January 17, 2019

USA Today reports that children’s clothing retailer Gymboree is expected to file for bankruptcy protection as soon as this week and close all of its 900 stores.

It will be the company’s second bankruptcy filing in two years. When the first one happened, the company closed some 350 stores.

Published on: January 17, 2019

The Seattle Times reports that Microsoft - which, as it happens, as signed separate deals in the past week to work with Kroger and Walgreens, putting it right in the center of the retail wars - said yesterday that it “is responding to the region’s widening affordability gap with a $500 million pledge to address homelessness and develop affordable housing across the Puget Sound region.”

According to the story, “Most of the money will be aimed at increasing housing options for low- and middle-income workers — workers who ‘teach our kids in schools, and put out the fires in our houses and keep us alive in the hospital,’ said Microsoft President Brad Smith — at a time when they’re being priced out of Seattle and parts of the Eastside, and when the vast majority of new buildings target wealthier renters.”

The story notes that the fund “marks Microsoft’s first significant foray into the politics of housing affordability, where debate over the role of big tech in addressing the widening affordability gap still simmers.”

Published on: January 17, 2019

• The Austin Business Journal reports that Amazon-owned Whole Foods, having decided to end any further opening of its “365 by Whole Foods” format, “is converting some of the locations it had in the pipeline into full-fledged Whole Foods stores.”

The 12 ‘365’ stores that have been opened to date will remain open using that banner, the company has said. The format - designed to be lower priced and more appealing to younger shoppers - was deemed no longer to be necessary because of pricing policies instituted at traditional Whole Foods stores since its acquisition by Amazon.

Published on: January 17, 2019

Got the following email from MNB reader Dave Howald:

I enjoyed your opinion on the failure of the WF 365 concept.  I was only able to visit one in-person in lake Oswego Oregon (Portland suburb) and I felt the location was totally wrong.  As you know with your teaching at PSU, Lake Oswego is an upscale enclave.  Of course, I know not everyone who lives there is well above the poverty line, but why would you put a no-frills store in an upscale community?

WF 365 may have suffered from the Fresh & Easy mistaken concept of just leasing a space because it was the right size, available, and inexpensive? I think WF only hurt its brand image by having a lower cost no-frills format.  I give them credit for trying, but why diminish your brand equity?  I know if I shop at WF I maybe paying more, but it's worth it for the quality and what they stand for.



Got a number of email about yesterday’s Eye-Opener looking at Gillette’s new Best A Man Can Be commercial, which takes direct aim at masculinity turned toxic, and the kinds of “boys will be boys” rationales that often follow bad behavior. These attitudes often fuel fighting, bullying, sexual harassment and discrimination … and the commercial, which you can see at left, reflects a reality in which old attitudes now have come face to face with new realities, especially because of the #MeToo movement.

I’m sort of glad I only got one email like this one:

Gillette: disquised tarring of men with a PC brush, while giving Hollywood and Social Media sexual instigators a free pass.  WTH. A new low!

Really? First of all, I think you meant “disguised.”

Second, I don’t think this was an attempt to tar men with a PC brush. It was a laudatory effort to address a very specific male issue - bad behavior - and I don’t think they gave anyone a pass. In fact, there is a brief clip of actor Terry Crews talking about the issue, and he was a victim of Hollywood harassment.

I’m pleased that the rest of email went like this one, from MNB reader Tim Phillips:

I also applaud Gillette for taking a stand with their “the best a man can be” ad. As the father of two young women I loved the depiction of the young man who states "that’s not cool" when the cretin leaning up on the wall steps out of line with his language/actions to a young woman walking on the street. The ad is uplifting and inspirational and what I took from it is that we as adult men have a responsibility to teach the next generation that they need to treat people as they want to be treated- with respect and dignity. Boorish and sexist behavior is not how an honorable man should act.

Terry Crews stated it well. The dinosaurs who are pushing back on the ad are the ones who need to begin to realize that the world is changing and they are headed for extinction (as the dinosaurs did) if they continue to share their dimwitted and outdated views on what being a real man is supposed to be. Clearly these men did not have a father figure who taught them that having empathy and deference for those individuals different than themselves was an important component of being a real man.Surely a good lesson to share with all young men out there seeking the right leadership examples.

MNB reader Greg Lindenberg wrote:

I think it's a great commercial. It's not asking men to sacrifice one iota of what makes them a man, physically, mentally or emotionally. It's not asking them to be "feminine" in any perceivable way, or to change who they are. It's just encouraging them to reject the damaging “stereotypes” of the past and to step up to being a good human being. Being a good husband, a good father, a good person--that's masculinity (in fact, that used to be called “chivalry” or “being a gentleman”).

It takes a lot more courage to take the actions the commercial depicts than to harass, laugh the bad behavior off or do nothing. Now, as a bearded man, I could care less that it's a razor commercial. But I approve the message. It's certainly better than most of the marketing drivel that tells us we should be a rebel and drive their car, buy their beer, smell their way, etc., or risk being left out. Keep those grill fires burning, men, but do it with real pride, not with complacency. Dare to be different. Now THAT's manly.

From another reader:

Thank you for sharing the Gillette ad, I hadn’t seen it yet but had heard some of the rumblings about it. I actually teared up at the end.

We have 2 small children - one boy and one girl - and it’s a huge concern to me that they grow up knowing what is too far, how to respect themselves and others, that crying isn’t just for girls, that no actually means no, that women are strong (not bossy), that men don’t need to mansplain things for women, that they have to work hard to get where they want to be, and be strong and use their knowledge to help make others and the world around them a better place.

I know that my husband and I cannot teach them all of these things, so we rely on our “village”, family, friends, teachers, even TV programs or movies to help convey these messages. Bravo to Gillette for realizing their influence in the culture and taking a stand. Yes, it’s going to tick some people off, but maybe those are the people who need to hear this the most. (I’m looking at you Piers Morgan!)

Piers Morgan is an idiot. (I don’t usually get personal about this stuff, but figured I’d make an exception in his case. I’m not sure why anyone pays attention to him.)

From another:

Probably because I’m a millennial cord-cutter and don’t have cable, I hadn’t yet seen this ad, but now that I have, I’m having a difficult time figuring out where the negative reaction is coming from. I think this is a great commercial. Anything that gets into the mainstream that encourages and reminds people to rise above their baser instincts and behaviors that are wrong but that are currently societally acceptable is welcome, and I’m a proponent of keeping the momentum because there is still much work to be done.

And another:

Thank you for running the Gillette ad, and for your comments. They can’t be said too many times.
 
From MNB reader Jackie Lembke:

Admittedly I am not male, but I fail to see how this ad is anything but positive. Makes me rethink which brand of razors I buy.