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    Published on: March 5, 2019

    by Michael Sansolo

    Take a second to think about your smart phone and how wonderful it is. Now think of this. We are actually only months away now from the advent of 5G technology and the potential impact on business and life is going to be staggering.

    Here’s why I want you thinking about your smart phone. Think about how much better it is today than anything you had in the past and now consider this: 5G technology promises speeds 100 (yes one hundred) times faster than the 4G LTE you have today.

    Thanks to the silliness of social media these days, I recently received a link to an article predicting all manner of apocalypse thanks to 5G. The article was silly except for this: it clearly outlined that 5G speeds mean an entirely new world.

    The capacity of these coming systems mean information flow is going places beyond anything we experience today. It means that leaps in artificial intelligence and the power of the internet of things will rapidly move from science fiction to stuff we just use. I don’t think it’s the end of times, rather it is the start of new times.

    At the National Grocers Association show last week, both Kevin and I had the chance to lead sessions about the challenges and opportunities of these new technologies. If I could try to simply sum up all we discussed it would be like this: change is coming really, really fast.

    But that isn’t the entire story. In the sessions we (and others) ran, we talked about the limitations of technology as well. Your shoppers aren’t going to come to your store simply to experience the new tech unless that tech demonstrates a new level of experience. That is, unless if makes the shopping trip cooler, more compelling and more engaging than ever.

    A part of that is the recognition that technology is not simply a tool to replace front-line labor. Rather, companies will need find a way to marry the benefits of people and technology in ways that enhance the shopper experience. That goes way beyond letting machines manage simple tasks so that staffers become salespeople. It extends into how data and artificial intelligence - all fueled by 5G speed - can allow a store to customize the shopping trip to each shoppers’ needs even as those need states change trip to trip.

    For example, it might help stores recognize that a shopper is clearly making purchases geared to a party or celebration of some kind so that in-store salespeople (get used to that title) can suggest additional items be they flowers, wine, cakes and more.

    The power of this new technology will also permit smart homes to communicate directly to smart stores permitting retailers to serve customer needs to a level once though impossible and soon entirely intuitive.

    It should sound a little daunting, but it’s coming fast and today’s businesses need start preparing. That means laying the groundwork with robust use of social media connections to shoppers. Building apps that enable an easier shopping trip. And keep an eye on technology news of all kind so that this new world doesn’t sneak up on you.

    Ignoring this tidal wave of change could truly mean the end of times, but only, I am afraid, for businesses that choose to ignore what is happening.

    Michael Sansolo can be reached via email at . 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.
    KC's View:

    Published on: March 5, 2019

    by Kevin Coupe

    Speaking of the future…

    I was watching “Saturday Night Live” last weekend, starting with the cold open that satirized the Michael Cohen hearings and then guest host John Mulvaney’s excellent monologue. (Mulvaney, who used to write for the show, seems to make it funnier. I’ve turned into a big fan.)

    Then, after the monologue, came a commercial that showed an autonomous FedEx robot making a delivery.

    Now, I must admit that I was a little confused. Often, that space is used for a “fake ad” produced by SNL … and so, as I watched the FedEx piece, I kept waiting for the joke.

    Which never came. It was a real commercial, showing us a future that isn’t that far away, and very effectively.

    It is posted here … and I think an Eye-Opener.

    KC's View:

    Published on: March 5, 2019

    USA Today this morning reports on a new study from tech firm First Insight saying that 25 percent of US consumers “are subscribing to services like beauty products seller Birchbox and the Dollar Shave Club, while another 32 percent intend to sign up for such services in the next six months,” suggesting that “when it comes to shopping, Americans increasingly would rather sit and wait than head out and browse.”

    The study also found that “instead of carving out time to leisurely browse, 73 percent of men and 69 percent of women only head to an actual store when they need particular items … Getting a box of items regularly dropped on their door step appealed slightly more to men, with 28 percent currently having a subscription as compared to 22 percent of women. Among those planning to start subscribing, 35 percent of men said that was their intention, as compared to 29 percent of women.

    “Millennials who've grown up being able to access information and shop with a swipe or a click were particularly attracted to retail subscriptions, with 31 percent currently paying for them, and another 38 percent saying they will in the next six months. That's compared to 8 percent of Baby Boomers who subscribe and 22 percent who say they plan to.”
    KC's View:
    I’ve used this example here before, but my kids and wife all are enormous Stitch Fix and Trunk Club fans … they get new clothes, don’t have to actually go to clothing stores, and end up looking pretty stylish.

    It is amazing to me the degree to which subscription and replenishment services play a role in our lives … from the dozen or so Subscribe-and-Save items we get from Amazon … to the monthly coffee shipment we get from Minnesota’s City Girl Coffee (Starbucks got out of the subscription segment, and lost our drink-at-home coffee business) … to the batteries and toothbrush heads I get from Quip.

    It is not that I am against bricks-and-mortar shopping. I go to stores all the time … but there is no inherent moral superiority in the bricks-and-mortar experience, and certainly not in certain categories and segments where the experience is mundane.

    This is an area in which very few traditional retailers have played, but the argument here always has been that the upside here is extremely high, and there are real risks of being cut out of specific categories if they don’t engage.

    The clock is ticking.

    Published on: March 5, 2019

    Interesting piece in the Wall Street Journal suggesting that mall owners - many of them battered by an economy in which people increasingly go online to shop instead of to their local shopping centers - are seeing Amazon as a possible life preserver.

    The reason? Between its Whole Foods chain, its Amazon Books and Amazon Go stores, and now the new supermarket chain that it is rumored to be about to launch, Amazon is seen as a potential player in the bricks-and-mortar retail business.

    “Brokers and landlords believe that Amazon - more so than other retailers - has the expertise to draw the right crowd of shoppers, given its trove of consumer data on which products have the most demand in a given location,” the story says. “Amazon Prime members, who tend to have more disposable income, are considered especially desirable.”
    KC's View:
    Ironic, huh? And this doesn’t even include the possibility that a bunch of empty Sears stores could be used as Amazon distribution centers.

    But I wouldn’t get too hopeful … because it seems likely to me that if Amazon is going to open bricks-and-mortar stores to the degree that some think it will (and I’m not as convinced of this as some), it is likely to be in malls and shopping centers that are not distressed, and in fact have remained relevant to their core shoppers. I see very little percentage in Amazon investing in already distressed real estate that is, let’s face it, distressed for a reason.

    Published on: March 5, 2019

    CNBC reports that CVS has decided to close the some 30 hearing centers that it started opening in its stores back in 2015, saying that while it will continue to “experiment with new formats,” the hearing aid business “has evolved” since it launched the pilot program.

    According to the story, “CVS is pivoting ahead of changes that could reshape the hearing aid market. Next year, the FDA will introduce regulations to allow hearing aids to be sold over the counter, eliminating the need for CVS to dedicate space in stores for audiologists to conduct hearing tests and fit people for the devices.”
    KC's View:
    This illustrates the reality that CVS will have to be very nimble in being willing to adjust its stores and offerings based on how the health care business evolves. That’s a good thing, I think, as long as its management invests in creating a culture that is up to the challenge.

    Published on: March 5, 2019

    USA Today this morning reports that the US Food and Drug Administration (FDA) is accusing a number of retailers - including Walgreen, Walmart, Family Dollar, Kroger and Circle K, as well as a number of gas stations - of selling tobacco products to minors, saying that it is considering “enforcement avenues to address high rates of violations.”

    The piece says that “the FDA said it also sent letters to more than 40 companies that may be illegally marketing certain tobacco products or e-cigarettes. Federal regulators are concerned about increased nicotine vaping among teens, which can lead to cigarette smoking. Tobacco use is a major cause of cancer and other health problems.”

    According to the story, the FDA expressed specific concerns about Walgreens, saying it has a "disturbing" record, particularly because “the company positions itself as a health-and-wellness-minded business.”

    Walgreen responded to the accusations by saying that it is happy to work with the FDA, and that it has a “zero tolerance” policy on tobacco sales to minors.
    KC's View:
    No sympathy here for Walgreens, which, based on its history, really seems to have a zero tolerance for being caught.

    I hope the “enforcement avenues” are swift and severe.

    Published on: March 5, 2019

    Fast Company has a story about how “some of the most powerful food and beverage companies in the world” - including McDonald’s, Starbucks, Nestlé, Coca-Cola and Wendy’s - are “throwing their weight behind a collective effort to tackle a big problem: the 250 billion fiber cups that pile up in landfills each year, most of which will need 1,000 years to biodegrade since they’re actually coated in a micro layer of polyethylene The goal? To create the ultimate disposable paper cup–one that can both be composted and recycled, anywhere in the world.”

    The Next Gen Cup Challenge, run by investment firm Closed Loop Partners, “has collected 500 submissions from 50 countries, and representatives from the food companies involved have picked the most promising 12 ideas to move on.”

    You can read more about it here.
    KC's View:

    Published on: March 5, 2019

    • Albertsons announced that it is “enhancing its eCommerce platform with Glympse, a location sharing technology that will give shoppers real-time status of their grocery delivery or Drive Up & Go order … When customers are finishing their delivery order with an Albertsons Cos. store, they can now opt-in to notifications powered by Glympse via text or email that provide key updates throughout the fulfillment process. Once their order is en route, they will receive a link to a live map of their delivery truck and exact time of delivery.”

    The company said that “the service is available now on delivery orders at Albertsons, Safeway, Jewel-Osco, Vons, Randalls, Tom Thumb, and Pavilions. Glympse is not available on orders fulfilled by Instacart.”

    • Amazon announced that another checkout-free Amazon Go store is “coming soon” to San Francisco, a 1,750 square foot unit at 575 Market Street, less than a mile from the Go store on California Street.

    This will be a third Amazon Go store in San Francisco, and its eleventh overall. (The others are in Seattle and Chicago.)

    No specific opening date was disclosed.
    KC's View:

    Published on: March 5, 2019

    • Walmart yesterday announced that it is teaming up with Procter & Gamble’s Children’s Safe Drinking Water Program “to launch a 2019 Global Event program that will raise awareness of the global water crisis … Walmart International will support the ‘1 purchase = 1 liter of clean water’ campaign in countries where they have a presence, enabling shoppers to contribute to United Nations Sustainable Development Goal #6 that looks to ensure water and sanitation for all.”

    The announcement notes that “access to clean drinking water is a challenge every day for nearly 844 million people, and the burden for family household water needs disproportionally affects children around the world. In fact, nearly 1,000 children die every day from water-borne diseases - more than HIV/AIDS and malaria combined.”
    KC's View:

    Published on: March 5, 2019

    • The Dayton Daily News reports that the Rapid Fire Pizza chain, which has 27 stores in six states and is known “for baking build-your-own pizzas in three minutes,” has struck a deal that will have it placing pizza restaurants in Kroger Marketplace stores in Ohio.

    The stores will offer “build-your-own pizzas, pastas and calzones. The Kroger locations will also offer take-and-bake pre-made pizzas that customers can purchase to be baked later, according to a Rapid Fired statement.”

    • The Cincinnati Enquirer reports that People for the Ethical Treatment of Animals (PETA) is planning a protest at Kroger headquarters today, accusing the retailer of once again sourcing eggs from the Mahard Egg Farm facility in Oklahoma, which is being investigated for animal cruelty.

    A PETA investigation is said to have found that “hens were beaten, slammed against metal bins and thousands were allowed to die from ‘apparent heatstroke’.”

    Kroger says that it is sourcing eggs from the company after “Mahard passed a United Egg Producers assessment and audit” and it was determined that “Mahard has taken appropriate steps to meet the grocer's requirements.”
    KC's View:

    Published on: March 5, 2019

    Responding to yesterday’s story about troubles in the beer business, MNB reader Bob Abele wrote:

    It always bothers me when analysts looks at one KPI and then make decisions on the health of an industry.

    Yes Beer VOLUME consumption is down, but with the continued rise of Craft beers, this should not be seen as negative on the health of that industry.

    Consumers may be drinking less of the mass beers, but we should also look at the Dollar Sales.

    Compare the cost of a 6-pack of Bud/Miller - to that of a Craft Beer - massively different.

    Consumers tend not to 'guzzle' craft beers as one may do with a bottle of Coors…

    Way back in the '90s - I sold wine - and we sold a LOT of 3 and 4 liter jugs - and quite a bit of the 5 liter boxes.

    The manufacturer I worked for did all their planning and analysis on liters..... they were in a panic, but they should not have been...
    As better wines found their way to the shelves, people shifted sales to less quantity and more quality….

    So even as volume plummeted,  our Dollar Sales skyrocketed……

    This same article could have been written 20+ years ago on the impending demise of the wine industry….

    Boy, would they have been wrong.

    Regarding Kroger’ mew Visa ban, one MNB reader wrote:

    ?Costco dumped AMEX for Visa due to excessive fees.

    Now some Kroger operations are dumping Visa for fees.

    Smart retailers like Winco and food for less take this excessive cost out of the system buy accepting only debit cards.

    I think consumers— not retailers—should bare the cost/price for the convenience and for the reward points paid by credit card companies.

    Nothing is free.

    MNB reader Doug Dodson chimed in:

    Wouldn’t it be great if consumers had the option of paying the credit card fees directly at checkout? Just as we add tax to the final bill, and sometimes (rarely nowadays) there are discounts for paying with cash, it seems plausible that we could allow the customer to use their payment method of choice and pay their own fees. In this way, credit card fees would become competitively priced, and the retailer wouldn’t need to overprice items to compensate for these fees.

    On another subject, from another reader:

    Distribution logistics is prosaic and not sexy, but it is the key here.

    Amazon’s reported move into brick and mortar grocery is just another indication that it has not yet solved for its inability to recover its delivery costs. Grocery supply chains offer the thru-put and geographic reach necessary for ultra low cost supply chain operations. Said another way, it is a backhanded confirmation of the superior cost efficiency of the curbside, grocery pick-up model. What none of us may be prepared for is Amazon using an entire grocery business as a “loss leader.”

    And finally, from MNB reader Frank Squilla:

    I am a huge fan. Thanks for everything you do at MNB. I sit on the NACS Supplier Board and have been part of multiple channels selling our gift card and content and payment products into retail for more years than I care to admit. My Daughter Andrea is also a big fan. She works at Clif Bar and was the one who actually turned me on to your daily news.

    I am not a smoker and have never been. I do, though, not get the extreme animosity toward the electronic vaping business. I trust your judgement and see you as a voice of reason.

    How can the FDA ban a flavor of Electronic Cigs and cities which I find more hypocritical, like San Francisco band flavored and now menthol flavors of this product, yet allow flavored cigars and even better allow for recreational marijuana.

    Is it me or is this either hypocritical or big tobacco trying to drive down the potential 100% acquisition of companies like Juul with crazy lobbying dollars that have these rules kick in, only to have them listed after they come in and save the day and promise not to market to kids.

    There is an age restriction on all these products. There is bubble gum and Mango Vodka that kids love, peach and blueberry wines, but they are not banned. I honestly feel this has more to do about $$$, than caring about getting kids gravitating to vaping. I despise the smell of smoke on my clothes and my person when in establishments that allow it. If smokers vape, that is so much better for us who can’t stand the residual effects.

    I know that’s a mouthful, but the hypocrisy on this subject baffles me.
    KC's View: