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    Published on: April 4, 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.

    I’m coming to you this week from the Food on Demand conference in Chicago, a show I’ve never attended before, but thought worth visiting because the restaurant business and the technology sector - which are the show’s primary constituencies - are facing many of the same issues as the supermarket industry. The most pressing - how to handle consumer demand for delivery, and all that this demand entails.

    We heard some success stories and some skepticism, but what stood out to me is the fact that, unlike supermarket chains, restaurants often work with multiple delivery services to satisfy consumer demand; I’d never really thought about this before, but one restaurant or restaurant chain might be doing business with GrubHub, DoorDash, UberEats and maybe even Amazon.

    This is unlike the supermarket industry, where if companies want to outsource their e-commerce and delivery functions they often will choose one vendor - like Instacart … and you all know how I feel about Instacart’s potential for siphoning off customers and diluting a store’s brand identity and equity.

    But some of the restaurant folks whom I heard speak seem to be very much aware of the fact that they are putting their brands at risk by dealing with so many vendors; there is a worry - justified, I think - that they can become a me-too offering that is completely undifferentiated within a digital environment.

    One executive from GrubHub seemed to be very much aware of this concern when he assured the audience that he has absolutely, positively no intention or desire to open his own restaurant chain under the GrubHub banner; he emphasized that he knows logistics, not the restaurant business, and said he wants to be in the business of serving restaurant brands. But he did concede that GrubHub might well get into the so-called ghost kitchen business, creating a commissary facility where multiple restaurants could fulfill digital orders away in an environment more specifically engineered for this purpose.

    Differentiation also comes where you can get it. A fellow from a delivery business called BiteSquad pointed out that while his company has a tiny percentage of the delivery marketplace, it is top-rated (at least in one survey) for the cleanliness of its trucks. But what was even more interesting about the claim is what he attributed it to, which was that BiteSquad pays its drivers by the hour, not by the delivery, as one way of getting them invested in the culture and going above and beyond to keep the trucks clean.

    There’s a lesson in there somewhere for every marketer, I think - that saving money with one policy can hurt your broader bottom line in ways that you should be able to anticipate.

    The only person I heard with whom I completely disagreed was a fellow sitting at our lunch table who is a franchisee operating a number of formats such as Einstein’s Bagels and Moe’s. He was a little cranky about the whole Food on Demand concept, and said it would never really matter to his business, and certainly would never amount to as much as 50 percent of his stores’ volume. (He ate quickly and left before the lunch speakers. Go figure.)

    He may be right or may be wrong … but I certainly think that it makes sense to plan for what can happen, not what you think will happen. Planning for the latter, I think, limits your options if you are wrong.

    I also think that I can make a case that at some level, retailers - including restaurants - should want delivery to go to 50 percent. If you have a strong enough brand that people want your products in their home, and go through the process of placing those orders, I would think it indicates a certain level of loyalty. You can’t take it for granted or be complacent about it, but it is an important step in creating a sustained relationship with the consumer. And that strikes me as worth nurturing.

    That’s what’s on my mind, reporting from the annual Food on Demand show. As always, I want to hear what is on your mind.

    KC's View:

    Published on: April 4, 2019

    by Kevin Coupe

    There have been a couple of stories this week about how Starbucks, which claimed last year that it had achieved 100 percent pay equity for all people, regardless of gender or race, now has signed onto the Employers for Pay Equity Consortium, which supports a set of “Pay Equity Principles” designed to address pay equity issues in a wide variety of industries and companies.

    Starbucks isn’t alone in this. There are a couple of dozen companies involved, including Accenture, Chobani, Deloitte, Gap, Ikea, Lyft and PepsiCo. (Starbucks just seems to have the most aggressive press agents. Good for them. They got my attention.)

    What the press release got me to do was do a little research on the issue, and I ended up finding a recent Harvard Business Review piece about pay discrepancies and government-mandated transparency, which was based on what it called the “the first empirical study on the impact of mandatory wage transparency.”

    This study concluded that wage transparency can “in fact narrow the gender wage gap. It also can: Increase the number of women being hired, indicating that the supply pool of female employees increases as gender pay transparency improves … Increase the number of female employees being promoted from the bottom of the hierarchy to more senior positions … Lower companies’ overall wage bills, largely by slowing down the growth of male wages.”

    Now, I’m not sure that people who have suffered from wage discrimination because of gender exactly hoped that resolving the problem would mean “slowing down the growth of male wages,” as opposed to say, increasing female wages.

    It also was interesting that when doing the study, HBR found that while wage transparency caused some reduction in productivity - presumably because some folks weren’t happy about this particular shift in corporate culture - that was more than compensated for by the reduction in wage costs. Again, probably not what people in the system were hoping for … they’d probably be disappointed by the productivity decrease as well as the decrease in wages.

    Now, let’s be clear - not all of these conclusions may necessarily be applicable to the US. The study, after all, was done in Denmark. But HBR seems persuaded that the “research suggests that governments’ efforts to address these disparities through transparency can be effective — and beneficial to firms as well as to their female employees.”

    I must be honest here. For the most part, it is hard for me to accept that in 2019, any company would knowingly sanction lower wages for women. I get that some companies probably are victims of antiquated corporate cultures that devalued women’s contributions, but there has been so much attention to this issue that it is hard to believe that any CEO has not done a deep dive into his or her company’s pay policies to make sure that everything is equitable.

    Employees - of any gender- should accept no less.

    Of course, it no longer is just about traditional definitions, and not just about pay discrimination.

    The Human Rights Campaign Foundation is out with its Corporate Equality Index, which looks at the best places in the US to work if you are a member of the LGBTQ community. At this time, there are more than 180 US businesses that are signatories on HRC’s Business Coalition for the Equality Act; these signatories , according to the Campaign, support “federal legislation that would provide the same basic protections to LGBTQ people as are provided to other protected groups under federal law. Coalition member companies represent nearly every industry, employ over 8.9 million people in the U.S., command over $4 trillion in revenue and have operations in all 50 states.”

    That’s not just mainstream. It’s also Main Street.

    The campaign points out that it is an ongoing and often controversial effort: “As hundreds anti-LGBTQ bills proliferated across the states over the last several years of legislative sessions, businesses spoke out and rebuked attempts to undermine LGBTQ civil rights at record rates from state-to-state. These corporate leaders are speaking out not just on principle but also because anti-LGBTQ bills that attempt to curb access to public services for transgender people, or deny basic services to LGBTQ families, or preempt local non-discrimination ordinances ultimately put their employees and their families, as well as their customers, at risk.”

    Again, it is a shame - in fact, a tragedy - that all companies and business leaders are not where they ought to be. But it is Eye-Opening, in all these cases, the degree to which some companies are embracing the moment to level the playing field and empower employees to be their best selves.
    KC's View:

    Published on: April 4, 2019

    CNBC reports that the total market share of online sales of general merchandise was higher than in-store sales for the same segment during February 2019 - the first time this has happened.

    According to the story, US Commerce Department numbers showed that “in February, online sales narrowly beat brick-and-mortar, or ‘bricks.’ Non-store retail sales last month accounted for 11.813 percent of the total, compared with 11.807 percent for general merchandise.”

    The study points out that “online sales is now the fourth largest sector overall, bringing in about $59.8 billion in adjusted sales for February. Motor vehicles and parts is the largest segment, making up about 20 percent of all retail spending. Food and beverage store sales and restaurants and bar sales each make up about 12 percent.”
    KC's View:
    Sure, this is a statistically small- and category-limited - margin of victory for online sales. But ti seems pretty clear to me that it provides a warning shot for anyone who thinks this is going away, or that maybe everything will go back to the way it was.

    It isn’t going back, and it isn’t going away. You either have to get with the program, or figure out how to develop your own competitive program. Either way, you have no choice but to make differentiation your highest priority.

    I think you can trust me on this.

    Published on: April 4, 2019

    The Wall Street Journal has a story about drones that deliver a variety of consumer products have become commonplace in a number of places as distant as Iceland and Australia.

    Here’s how it frames the story:

    In Iceland, the story says, “These deliveries are made by Icelandic subsidiary Aha, the equivalent of DoorDash or Postmates in the U.S. Its drones can carry food and small consumer goods in a 2.5-mile radius, soon to expand to 5 miles with the introduction of more powerful drones from China’s DJI. Aha’s drone-delivery service is one of only a handful in the world. Another is Alphabet Inc.’s subsidiary Wing, whose most recent trial delivered coffee and other necessities like sunscreen and chocolate to 160 households in Canberra, Australia.

    “Drones might never make it in the big city: too many concrete canyons, errant pedestrians and unpredictable truck drivers, not to mention too few backyards to serve as drop points. That’s why drone developers have their sights on the suburbs, where other forms of delivery are still generally unprofitable. Whether drones can be a saving grace depends on whether they can make a half-dozen backyard deliveries an hour in a five-mile radius without hitting any houses, cars, people, trees or power lines.

    “Those are big ifs, but according to their creators and industry experts, Aha and Wing are demonstrating that drone delivery can work.”

    You can read the story here.
    KC's View:

    Published on: April 4, 2019

    The Reputation Institute (RI) is out with its annual US RepTrak 100 study, which looks at the 100 US companies with the best reputation, putting Netflix at the top of the list for the first time.

    Like last year, the organization says, it isn’t a good time for corporations: “For the first time in a long time, less than half of the U.S. population trusts corporations—that is core to why reputation didn’t recover much,” says Brad Hecht, senior managing director of the Americas at RI. “Companies haven’t done enough to build trust, that benefit of the doubt that even when no one is looking, they will do the right thing. That is the difference between the U.S. and other countries.”

    Netflix, Forbes writes in its coverage of the list, “has positioned itself on the right side of scandal more often than not. Perhaps the best example of this can be seen in the way Netflix navigated its #MeToo moment. After allegations of sexual assault were made against Kevin Spacey, the company found itself at a crossroads: It could carry on, continuing to spotlight one of its biggest stars on one of its biggest series, or it could do the right thing. Netflix chose the latter, and that made all the difference.”

    In addition, the story says, “Netflix hasn’t shied away from reinventing itself. Evolving from DVD deliverer to streaming service to content creator, Netflix produced more than 800 original films and series in 2018 alone, giving subscribers plenty of motivation to choose it over its main competitors, Amazon Prime and Hulu.”

    Other tech companies haven’t fared so well, largely because of concerns about their approaches to issues like privacy and transparency; Amazon fell out of the top 10, to # 54, a drop perceived as reflective of CEO Jeff Bezos’ personal controversies.

    Albertsons Companies makes the list for the first time, at # 46 - just behind Kroger and one ahead of Publix. Aldi is # 81. Walmart is not on the list.

    Forbes points out that “Albertsons’ efforts to be tech-forward through its partnership with Microsoft, and its commitment to sustainability, is paying off.  Albertsons now has a strong reputation and its innovation and citizenship scores have increased by 10.6 pts and 7.7 pts, respectively.”
    KC's View:
    This shows that reputation can be a delicate thing, and should be something that companies think about all the time. Generally speaking, the best way to burnish one’s reputation is to do the right thing for the right reasons.

    Not to oversimplify, but I think sometimes companies overthink this stuff … sometimes unanticipated events have an unexpected impact … and sometimes personal behavior by business leaders impact the businesses with which they are associated.

    Published on: April 4, 2019

    Jesper Højer, the CEO of Lidl for the past two years, has resigned his post, effective immediately.

    The European Supermarket Magazine notes that Højer “took on the CEO role in early 2017, following the departure of Sven Seidel, who left the discounter due to disagreements with its owners on the future direction of the business.” He has been replace don an interim basis by deputy purchasing director Ignazio Paternó.

    Lidl has seen a lot of management turnover in recent years, with its problematic US division having had three CEOs in four years. European Supermarket Magazine notes that “Højer’s departure follows just weeks after Patrick Kaudewitz resigned as the CEO of Kaufland, Lidl’s sister company in the Schwarz Group.”

    In a statement, Højer said that “the decision to make my position available was not easy for me, but it's time to realign my family and professional future.”
    KC's View:
    Which sounds a lot like the standard “I want to spend more time with my family” statement that departing executives make, which always makes me wonder if these families really want to spend more time with them.

    I got an email from an MNB reader yesterday who wondered if we have a Fresh & Easy situation here, in which a European company comes to the US with “lots of thunder” (meaning driven by “hype” and “slanted, self-serving research) and ended up with “little rain” (meaning insufficient sales); then CEO’s lose their jobs when things don’t work out.

    It is not that the US is hostile that European retailers, this reader said. It’s just that they are hostile to tone-deaf retailers who make a lot of assumptions about what US shoppers want.

    It all sounds like a reasonable assessment to me. Unless, of course, Højer actually did want to spend time with his family.

    Published on: April 4, 2019

    Business Insider has a story about how Walmart seems to be dominating the click-and-collect segment of the food business, with financial services firm Cowen & Company releasing an analysis suggesting that Walmart has “cemented its position as an industry leader by ‘aggressively’ scaling, to the point where the firm estimates that 11% to 13% of Walmart customers currently use curbside pickup.

    “Meanwhile, Cowen's report indicates that Walmart is courting a whole new swath of shoppers through its approach. The firm estimated that anywhere from 40% to 60% of Walmart's curbside sales can be attributed to new shoppers.”

    The report suggests that by 2020, click-and-collect will be a $30-35 billion business, and that by that time, “a quarter of Americans will have tried some kind of curbside pickup service, ‘given high customer satisfaction, younger customer preferences for curbside, and higher spend in this channel’.”
    KC's View:
    This is important, and not entirely surprising - it makes sense that Walmart would dominate curbside pickup because it owns so many curbs.

    I will say that one of the things I keep bumping into is an attitude, expressed by retailers and technologists, that delivery will end up being more important than click-and-collect.

    But you take advantages where and when you can get them, even if they are temporary.

    Published on: April 4, 2019

    • Earlier this year, it was reported that Woody Allen has sued Amazon in federal court for at least $68 million, accusing the company of breach of contract because it would not release its films despite having a four-movie deal.

    Allen accused Amazon of improperly backing out of their deal because of press attention to allegations that he was guilty of sexual abuse - allegations that never have been proven, and for which he never has been convicted or even charged.

    While Amazon made the deal with Allen in 2017, the culture has shifted, especially because of similar charges made against powerful show business men including Harvey vWeinstein, Kevin Spacey and Louis C.K.

    Now, the New York Times reports that Amazon is firing back, “saying in a court filing that it was ‘justified in terminating’ movie deals with the filmmaker and pointing to his public comments about the #MeToo movement as proof.”

    Amazon cited “cited a BBC interview in which Mr. Allen seemed to express sympathy for Harvey Weinstein, the accused Hollywood producer. Mr. Allen was also seen as pouring cold water on the #MeToo movement, saying, ‘You don’t want it to lead to a witch-hunt atmosphere, a Salem atmosphere, where every guy in an office who winks at a woman is suddenly having to call a lawyer to defend himself’.” And Amazon pointed out that in the wake of the renewed publicity and Allen’s comments, “Scores of actors and actresses expressed profound regret for having worked with Allen in the past, and many declared publicly that they would never work with him in the future.”
    KC's View:
    I’ll repeat what I said before … I checked, and it looks to me like Woody Allen’s last five movies didn’t together generate a total of $68 million in box office receipts. On that basis alone, I’d question why Amazon even made the deal … especially because it knew Allen’s reputation.

    I don’t know if the courts will find that Amazon was legally justified to pull out of the deal. But I certainly don’t blame it. I always was a Woody Allen fan, but I cannot even watch his films anymore. It is all just too distasteful, and just feels wrong.

    I think Amazon is right to end its relationship with Allen. After all, a relationship is like a shark - it has to constantly move forward or it dies. And I think what Amazon and Allen have is a dead shark.

    Published on: April 4, 2019

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

    • The Cincinnati Business Courier reports that even as Kroger does its best to lower prices to compete with the likes of Walmart and Aldi, while investing in digital initiatives it needs to compete with Amazon and Walmart/Jet, now it has to deal with malcontent analysts concerned that it will not be able to hit its profit goals.

    In the short term, writes Scott Mushkin, an analyst at New York-based Wolfe Research, “We believe (Kroger’s) price cutting activities are likely to hurt profits.”

    No kidding. Staying competitive and seeking differential advantages is an expensive business, requiring investment. It isn’t for the squeamish. I think companies like Kroger have to have the courage to adjust their financial calculations and think about more than stock analysts as they move forward.
    KC's View:

    Published on: April 4, 2019

    Yesterday, we took note of an Associated Press report that the Massachusetts Food Association has said that it could support a statewide ban on single-use plastic bags that is being considered by lawmakers there if a longer-phase in time than 3-4 months is adopted. The trade association seems to feel that a statewide ban is preferable to a patchwork of local regulations that makes it hard on companies operating in a number of communities. But they also seem to feel that taking an approach similar to New York - which recently implemented a ban, but gave retailers a year to get ready for it - makes more sense.

    One MNB reader responded:

    This is crony capitalism at its best, or worst I guess. Same thing happened here in California. Retailers working with the state government and environmentalists to ban plastic bags. Why? Not for to save the whales my friend. No, No, No. Environmentalists get their way, and supermarket retailers get to turn one of their biggest supply expenses into a revenue stream. Go figure.

    I confess that I have trouble seeing why this is a bad thing. If legislation can be implemented that is good for the environment - I happen to like the ideas of saving the whales - that doesn’t hurt retailers and in fact may even be good for their bottom lines, I’m enough of a capitalist to think that this is a good thing.

    Crony capitalism at its worst, it seems to me, is when the entire goal is to line certain people’s pockets. That doesn’t seem to be the case here.

    On another subject, from MNB reader Anne Hubele:

    CVS isn’t really interested in my health or they would have hand sanitizer lotion or wipes readily available as you enter/exit the store.    Had the unpleasant experience of shopping at CVS this past winter at the peak of the cough/cold season.   Quite a few shoppers sneezing and blowing, the guy in line in front of my obviously very sick and purchasing an assortment of OTC cough/cold remedies, but I had to ask the cashier (before I picked up the stylus to sign for my credit card purchase) for some hand sanitizer.   They had it – behind the counter, for the employees. Nice. I’m not really a germaphobe, but I think most people would agree that a high percentage of sick people shop at drug stores. Even my local IGA store has hand sanitizer wipes at the entrance!

    Consider your concerns communicated to the folks at CVS.

    Yesterday, MNB reported on data showing that if the Trump administration follows through with its threat to shut down the US-Mexico border over immigration issues, it could have an enormous impact on what food stores are able to sell, and in turn, what people are able to eat. Among the products that we’ll run out of - maybe in as quickly as three weeks - are avocados, which would then create a guacamole shortage.

    I commented, in part:

    Forget the political implications of all this. As far as I’m concerned, we’ve just crossed the line. We’re going to have hoarding, maybe guacamole lines stretching as far can see, with people only allowed to buy guac on specific days, depending on their birth date. From there, it will be inevitable … Fire and brimstone coming down from the skies! Rivers and seas boiling! 40 years of darkness! Earthquakes, volcanoes! The dead rising from the grave! Human sacrifice, dogs and cats living together, mass hysteria!

    MNB reader Jim Huey responded:

    I loved the Ghostbusters reference, one of my favorite comedies of all time.

    Although I am not old enough to have experienced the gas lines, when I was in school we still studied such things in History class. I appreciate your hyperbole as it sheds light on the unintended consequences of our actions. No matter which side of the aisle we stand on I think we can agree that our elected officials do not always think about these unintended consequences. If they did (in this case the Trump administration) I would expect some sort of news release that acknowledges the downside but makes a case for why the measure needs to be enacted anyway. Show some empathy but appeal to their patriotic pride. If politicians really believe what they are doing is for the best, this should work, but all too often what we get are mandates that smack of “we know what is best for you so just do it”.

    I don’t want to be over-sensitive about my age here, but the comment that you are not old enough to have experienced gas lines but studied them in history class may be one of the meanest things ever written to me by an MNB reader.

    Well, not really. But it was a dose of cold reality.
    KC's View:

    Published on: April 4, 2019

    I’ll be attending the Home Delivery World 2019 conference and exhibition today at the Philadelphia Convention Center, and If there are any MNB readers who'd like to get together, I'll be camping out today from 1:30-3 pm at the Fleat booth, #005 - just inside the main entrance, to the right.

    Fleat also is making copies of my book available, and I’m happy to sign them, as well as catch up with members of the MNB community.

    Hope to see you there…
    KC's View:

    Published on: April 4, 2019

    Recorded at the annual South by Southwest (SXSW) festival in Austin, Texas, this Retail Tomorrow podcast offers a deep dive into the promises and challenges inherent in the cannabis industry. While it still is not part of the mainstream retail world, the momentum is there for an inevitable explosion of product, marketing muscle, and profit, especially in the self-care segment.

    Taking us inside the business are two cannabis industry experts: Genevieve Gilbreath, co-founder and general partner at Springdale Ventures; and Mary Olivar, managing director at Greenbelt Capital.

    Here’s where you can check our guests’ websites:

    Genevieve Gilbreath:

    Mary Olivar:

    The Retail Tomorrow Podcast is sponsored by the Global Market Development Center (GMDC), seeking to focus not just on best practices, but next practices. This podcast, as well as past editions, also can be found on the site. In addition, check out more details about GMDC’s Retail Tomorrow initiative here.

    Pictured below, from left to right: Mary Olivar, Kevin Coupe, Genevieve Gilbreath

    KC's View: