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    Published on: January 25, 2019

    by Kevin Coupe

    Loved this piece in the Boston Globe about how Dunkin’ Donuts rebranding as just Dunkin’ has been achieved without any of the “backlash one might expect from cantankerous New Englanders.”

    CMO Tony Weisman says that he thinks the reason was simple - the company used iconic Fenway Park, home of the world champion Boston Red Sox, as its core creative metaphor.

    Here’s the money quote:

    “Fenway has done a beautiful job over modern ownership to both modernize the ballpark but retain its essence. I think if you look in the last decade, whether it was seats on the Green Monster or video screens, or what have you, generally speaking maybe there was a little grumbling at first.

    “But by and large, I think the community of Sox Nation has very much embraced all of these because they were done with the essence of the brand at heart … In the end, Boston and New England consumers are very focused on your intent. They are very much about authenticity. You can say a lot of things about New England stereotypes, but I think it boils down to authenticity matters above all else. If what you are trying to do is authentically you, then you’ll get a green light.”

    And they did. It’s been an Eye-Opener.

    BTW … pitchers and catchers start to report in about 16 days.

    KC's View:

    Published on: January 25, 2019

    There are a couple of stories this morning about automation and robotics that make a similar point about the impact they will have on the country.

    Axios notes that “the last wave of technological disruption — the IT revolution of the 1980s — created new jobs, but the bulk of the job and wage gains were on the high and low ends of the labor market. Scores of middle-wage, middle-skill jobs in manufacturing, largely in the middle of the country, were automated away or sent abroad.

    “Now, the new wave of automation and AI is projected to hit high- and low-paying jobs in addition to middle-income jobs, says Marina Gorbis, executive director of the Institute for the Future.”

    In fact, there are estimates that “a quarter of all jobs across the U.S. have (a) high chance of being wiped out by automation. The five states with the highest share of at-risk jobs are Indiana (29%), Kentucky (29%), South Dakota (28%), Arkansas (28%), and Iowa (28%).” This doesn’t just have economic implications, Axios argues: “As middle- and low-wage jobs in the American heartland disintegrate further, the national anger and polarization fueled by an urban–rural divide will only deepen.”

    Michael Chui of the McKinsey Global Institute expresses this as an opportunity: “The big challenge we're looking at in the next few years is not mass unemployment but mass redeployment.”

    The Axios story says that “to absorb the coming disruption, the government and corporations will have to take charge of reskilling and upskilling huge swaths of displaced workers. The bottom line: The cost of reskilling the 1.4 million people who are displaced will be close to $34 billion, according to the World Economic Forum.”

    Meanwhile, the Washington Post has a story about how, as robotics and automation and technologies such as AI become more sophisticated and responsive, they are likely to have an enormous impact when the next recession rolls around (as it inevitably will, because it always does).

    The Post writes that “robots’ infiltration of the workforce doesn’t happen gradually, at the pace of technology. It happens in surges, when companies are given strong incentives to tackle the difficult task of automation.

    “Typically, those incentives occur during recessions. Employers slash payrolls going into a downturn and, out of necessity, turn to software or machinery to take over the tasks once performed by their laid-off workers as business begins to recover.
    As uncertainty soars, a shutdown drags on, and consumer confidence sputters, economists increasingly predict a recession this year or next. Whenever this long economic expansion ends, the robots will be ready.”

    Here’s a scary passage from the Post story:

    “Middle-income work has evaporated in recent decades. Americans are now divided between the high-paid employees who design machines, the low-paid workers who sweeps up after it, or the even lower-paid service workers who serves fast-casual sandwiches to the other two.

    “In an upcoming paper from Review of Economics and Statistics, economists Nir Jaimovich of the University of Zurich and Henry Siu of the University of British Columbia found that 88 percent of job loss in routine occupations occurs within 12 months of a recession. In the 1990-1991, 2001 and 2008-2009 recessions, routine jobs accounted for ‘essentially all’ of the jobs lost. They regained almost no ground during the subsequent recoveries.”
    KC's View:
    It seems to me that any nuanced discussion of what the economy looks like going forward has to consider these possibilities - that when the economy starts to move into decline and businesses do what they always do - look for ways to get more efficient - they’re suddenly going to be eliminating jobs and getting rid of people, many of them in America’s heartland. Those are people who won’t just be able to spend at retail stores like they used to, which is going to have a cascading effect on the economy. Companies are going to go out of business, there will be further consolidation at all levels, and the American dream may end up looking more like a nightmare.

    Though, not necessarily. To my mind, there has to be some sort of sophisticated public-private partnership that focuses on how to deal with these changes in an effective way … and that means re-education, re-training, and re-skilling, all of which is going to require enormous investment in the future, because these people are the societal infrastructure of our future.

    Or, we can just ignore all this disruption, and be washed away in the deadly currents of intransigent and unforgiving realities.

    Published on: January 25, 2019

    Bloomberg reports that Walmart “has quietly withdrawn from one of Google’s marquee efforts to challenge Inc. in e-commerce …Walmart removed its products from Google’s Shopping Actions service, the internet giant said on Thursday. The retailer also recently dropped out of Google Express, a related delivery service.”

    Google’s Shopping Actions service debuted less than a year ago with Walmart and Target as “flagship partners.” Bloomberg writes that the alliance “showed the retail stalwarts attempting to curb Amazon’s expansion. Google takes a commission on sales from partners.”

    The story argues that “losing Walmart, the world’s largest retailer, is a blow for Google. Walmart has emerged as one of Amazon’s main e-commerce competitors. The Bentonville, Arkansas-based company is making a major push to hire tech talent, expand its own delivery service and use its network of physical stores to lure new customers online.”

    A Google spokesperson said that the company remains “committed to the success of retailers and partner with them in many different ways to help users discover and purchase millions of products across platforms … Walmart remains a strategic partner across multiple businesses including Google Ads.”

    And a Walmart spokesperson said that “Walmart and Google remain committed to our strategic partnership.”
    KC's View:
    It sounds like Walmart has just gotten to the point where it does not need Google for these particular services, especially because it has done so much internal work on creating a more nimble culture. That said, Google in my view is going to be an enormously powerful force and partner for many retailers … providing a viable alternative to Amazon going forward.

    Published on: January 25, 2019

    Bloomberg reports that at the Davos World Economic Forum this week, Walmart Canada announced that it will be reducing plastic bag use by 2025 in a way “that will take about 1 billion bags out of circulation, and replacing single-use plastic straws with paper alternatives by 2020.” At the same time, fast feeder KFC announced that all its “plastic-based, consumer-facing packaging will be recoverable or reusable by 2025.”

    The story notes that plastic and waste reduction is a hot topic at Davos, in part because the subject “has become a flashpoint with environmentalists and consumers, and companies are reluctant to be seen as falling behind. Oreo maker Mondelez International Inc. and Nestle SA are among food giants that announced similar sustainability goals last year. KFC parent Yum! Brands Inc. previously said it will source all fiber-based packaging from certified or recycled sources by 2020, as a supporting partner of the NextGen Consortium. Starbucks Corp., McDonald’s Corp. and Coca-Cola Co. are also partners.”
    KC's View:
    I’m still waiting to hear a legitimate, reasoned argument for why a company wouldn’t want to do its best to eliminate waste in every way possible. It may have short-term fiscal implications, but more companies need to think about long-term sustainability, and use their bully pulpits to persuade consumers to come along with them.

    Published on: January 25, 2019

    The Wall Street Journal this morning reports on how, as Amazon looks to offer proprietary and exclusive brands on its site, it is pushing its suppliers “to do most of the work.”

    According to the story, “the online retail giant is asking consumer-goods companies to create brands exclusively for Amazon after finding that developing them on its own is too costly and time-consuming, according to people familiar with the strategy.

    “Equal sweeteners and nutrition brand GNC are among the first to launch products through an accelerator program Amazon launched last year to outsource the work. Mattress maker Tuft & Needle also recently created a new brand called Nod exclusively for Amazon.”

    The Journal writes that this is just the latest example of Amazon flexing its considerable muscle as it seeks “the lowest prices and widest selection,” not to mention “a bigger piece of market share.” Suppliers are happy to go along, the story says, not just because Amazon is such a behemoth, but also because “brands get help launching their products on, faster customer feedback when testing new products, marketing support and revenue from the sales.”
    KC's View:
    Anyone surprised by this? Not me.

    Published on: January 25, 2019

    ABC News reports that Albertsons and its Safeway division have stepped up to help federal employees affected by the partial government shutdown, now in its second month.

    According to the story, “Thousands of essential government workers continue to work without pay and many thousands more have been furloughed — with unemployment pay or other short-term work proving elusive.

    “At all Safeway or Albertsons locations in Oregon or southwest Washington, federal workers will receive 10 percent off all national brands and 15 percent off Safeway/Albertsons-branded items. Federal workers will just need to show government-issued ID.

    “The company said that it has also given $1,000 in gift cards to U.S. Coast Guard sectors in Newport, North Bend and Astoria. Safeway and Albertsons also gave $1,000 in gift cards to workers with the Federal Bureau of Prisons, based in Sheridan.”

    "We are happy to be able to help the many families impacted financially during the shutdown," said Greg McNiff, President of Oregon and Southwest Washington Safeway and Albertsons.
    KC's View:
    Instead of worrying about walls, Albertsons and Safeway are building bridges to their customers. Smart move … and it also has a lot of heart. Good for them.

    Published on: January 25, 2019

    Alarming reading in the blog posted by Global Food Safety Resource (GFSR), which writes:

    “The Food and Agriculture Organization of the United Nations (FAO) has, for years, warned that climate change is going to have dramatic effects on food businesses going forward. A record drought in Texas in 2011 cost the agricultural sector $7.6 billion and similar drought conditions have more recently led to the complete relocation of the cattle industry in Australia. What’s more, according to a 2016 Global Resource Challenge Report, 66% of executives in the food and beverage, hospitality services, healthcare services, and consumer goods industries report they have already faced resource challenges due to climate change. We can no longer ignore the fact that global climate change is a reality that threatens food safety and food value chains.”

    It goes on: “The FAO says it’s imperative that all individual businesses incorporate climate change into their risk management plans and the organization has made several recommendations to mitigate the impending challenges to food safety.”

    You can read more here.
    KC's View:
    I’m still waiting to hear a legitimate, reasoned argument for why a company wouldn’t want to do its best to factor climate change into its plans, no matter how its leadership feels about causality.

    It is time to lead.

    Published on: January 25, 2019

    • The Cincinnati Business Courier reports that Kroger CEO Rodney McMullen says that its first three robotics warehouses, built in partnership with British firm Ocado, will be set in three different locations. Only one - in Monroe, Kentucky - has been announced. “The other two are likely to be announced in the coming weeks,” the story says, adding that “Kroger and Ocado’s partnership calls for them to build 20 of these customer fulfillment centers in the next three years.”

    McMullen says that the enormous warehouses - the 335,000 square foot Monroe version will cost $55 million to construct - are being developed in partnership with Ocado because “the company felt it would take five to 10 years to open warehouse-distribution facilities on its own.” They won’t go up fast, though - the Monroe facility isn’t expected to be opened until late 2020 or early 2021. 

    • The Wall Street Journal reports that Starbucks CEO Kevin Johnson’s operations-driven efforts to streamline the company seem to be paying off, as it said that US Q1 same-store sales were up four percent, even as traffic remained stagnant (which itself was an improvement over Q4, when traffic was down).

    Starbucks also “increased the number of active loyalty program members in the U.S. to 16.3 million, a 14% increase over the year-ago quarter.”

    Same-store sales in China were up one percent, and up four percent globally.

    Total revenue rose to $6.6 billion, from $6.1 billion a year ago.

    • The Charlotte Observer reports that North Carolina-based Earth Fare has opened its 50th store, in the Steele Creek area, which is its seventh in the region.

    The story quotes CEO Frank Scorpiniti as saying that “the company plans to open another 50 stores across the U.S. in the next five years, effectively doubling its store footprint. Earth Fare will add another five or so stores to the seven it currently operates in the Charlotte region, Scorpiniti added.”

    • “American adults say they will spend an average $81.30 for a total of $14.8 billion as they watch the New England Patriots and the Los Angeles Rams meet up in the Super Bowl next month,” according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics.

    “The average spending is virtually unchanged from last year’s $81.17 and is the second-highest in the history of the survey after a record of $82.19 set in 2016. The total amount is down from last year’s $15.3 billion, primarily because fewer people plan to watch the game – 182.5 million this year compared with 188.5 million last year. The overall spending is still the third-highest on record, after last year’s figure and $15.5 billion in 2016.”
    KC's View:

    Published on: January 25, 2019

    …will return.
    KC's View:

    Published on: January 25, 2019

    We spend a lot of time in this space referencing some of the disruptive sources of entertainment product, making the point and drawing metaphors from the fact that entities such as Netflix and Amazon are not just developing new business models, but also injecting new vigor and creativity into the movie and television businesses. That’s important … but sometimes, it is nice to see a well-executed example of old-fashioned mass entertainment.

    Some background … my daughter Allison and I always have had a TV show or two that is “ours” - programs that we’ve committed to watching only together, even if her class schedule or my business travel meant that we fell weeks behind. One great example of that was “Castle” - we loved the lighthearted Nathan Fillion-Stana Katic mystery series. Or “Criminal Minds,” the considerably less lighthearted series about serial killers.

    Alas, “Castle” is gone and “Criminal Minds” is facing its 15th and final season … and so we’ve adopted a new series - “The Rookie,” which also stars the charismatic and dependable Nathan Fillion as John Nolan, who joins the LAPD as a street cop at the relatively advanced age of 40.

    “The Rookie” is built to attract a big audience - it is an ensemble show with lots of gender, ethnic and racial diversity, telling solid stories in an entertaining manner. It looks great, features clever writing, and has an old-fashioned TV star at its core; Fillion is to modern TV what guys like David Janssen and James Garner were to earlier generations - solid, dependable, relatable, someone you want to hang out with each week.

    This isn’t easy - it is hard to make 22 episodes a year of a mainstream one-hour series. Without commercials, these episodes are about 40 minutes each - but that’s about 880 minutes a season, which works out to about seven full-length movies. (That’s why it is so impressive when series like “NCIS” last 16 seasons, and don’t seem close to running out of steam.)

    There may be a solid retail business metaphor here - not every store has to be a Bristol Farms or Dorothy Lane Market or Stew Leonard’s in order to survive (though it certainly helps to have that kind of differentiated approach). A store designed to have broad appeal can succeed if it solid and relatable and has some sort of core value/premise that makes you want to spend time there.

    I’m happy to recommend “The Rookie” … it is worth watching from the beginning, and following as it goes along. I know Allison and I will, and suspect we’ll be able to do so for many seasons to come.

    “Star Trek: Discovery” returned last night with the second episode of its second season, entitled “New Eden,” and it ended up being a fast paced adventure bringing the crew of the Discovery to a faraway planet where it ends up having to deal with issues of religious diversity and the Prime Directive (which requires that members of the Federation do nothing to interfere with the natural development of any civilization encountered in space), and what happens when these two concerns conflict with each other. Season two continues to be less grim than the first season, and this one felt particularly familiar in tone and pace … perhaps because it was directed by “Trek” icon Jonathan Frakes. Good stuff.

    One follow up from yesterday’s mention of the passing, at age 63, of Jeanne von Zastrow, who worked for the Food Marketing Institute (FMI) for two decades, mostly focusing on the association’s western region and issues such as sustainability.

    It hadn’t yet been posted when I wrote about it yesterday, but now her official obituary is up and you can read it here. There’s a lovely line in there, about how much she loved her some of Southern Utah, and often said that “sandstone and red rocks flowed through her veins.”

    A wine to recommend this week: the 2014 Willamette Valley Vineyards Pinot Blanc, which I served the other night with a nice piece of salmon served on a bed of spinach sautéed lightly with garlic and olive oil. Yum.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    KC's View: