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    Published on: April 30, 2019

    by Michael Sansolo

    Sure we are supposed to be highly focused on Gen x, Millennials and Gen Z with their youth and burgeoning spending power. But let’s not forget the older generations with their enormous numbers, needs and long-earned customer loyalty.

    And certainly, let’s not forget the reality that we boomers are getting older (and somedays faster than others).

    According to the World Health Organization (WHO), the global population over the age of 60 will double in decades to come and by 2035 people aged 65 and older will outnumber children in the US. While we may still be listening to the Beach Boys, our physical needs when shopping are going to change substantially.

    The New York Times had a fascinating and important story last week about how the airport and hotel industries are preparing for this new age wave and the lessons that shouldn’t be missed by any customer-facing business, most especially retailers.

    As the article reported, design firms are sending key staff into airports in “age simulation suits” designed to help a 30-year-old experience the challenges of someone more than twice their age. The suits hamper vision and hearing plus provide added weight - just some of the wonderful joys of aging. The findings are important.

    For instance, the designers found obvious needs while inside the suits - such as the importance of benches and other seating areas. Granted, airports are much larger than retail stores, but that’s a problem that provides relatively easy solutions. Other findings were less expected but equally important and possibly harder to address. Consider that older people have trouble looking up and thus miss many signs hung from ceilings - a rather common situation in supermarkets like airports.

    Likewise, many avoid shiny floors because they create concerns about slipping. Diminished vision and hearing mean a lot of in-store marketing might become invisible to older shoppers.

    Frankly, the entire article looked like must-reading to me (though I did need to increase the font size a bit.) I’ve written in the past about the opportunities and challenges in serving aging boomers (and older generations) but the airport study highlights important needs in store design. If stores are to survive and create welcoming experiences for shoppers, it would seem obvious to solve the real world problems of all shoppers, especially those who are more likely to visit brick and mortar locations.

    It might not even require age simulation suits or special designers. There are many “older” executives in the industry who with their family members could provide important input on how to serve the needs of shoppers with the limitations brought on by age.

    This is a vitally important topic and one that I imagine will grow even more important in years to come. However, I have one important quibble with the Times article: the suggestion that anyone over 55 is “old.” I think the best response I can offer up to that is “bite me” … only not too hard. Apparently, I’m getting kind of frail.

    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: April 30, 2019

    by Kevin Coupe

    The Wall Street Journal reports this morning that Marriott, apparently not satisfied with the fact that it owns its eponymous hotel banner as well as Sheraton, W Hotels, and Ritz-Carlton (and two dozen others), now is getting into Airbnb’s business.

    The company, according to the story, “is starting a new home-rental business, aiming to take on Airbnb Inc. and other home-sharing companies in one of the lodging industry’s hottest segments … starting next week it will offer accommodations in about 2,000 high-end homes throughout 100 markets across the U.S., Europe and Latin America.”

    In other words, Marriott wants to disrupt the disruptor.

    The Journal makes the point that while Marriott already is the world’s biggest hotel operator with about 1.3 million guest rooms globally,” the fact remains that “Airbnb's platform now offers more rooms than the largest hotel operators.” Airbnb also has been targeting business and corporate customers, which really hits the hotel business where it lives; there’s no question that the home sharing model is eating away at hotel revenues and profits in the same way that Uber and Lyft have affected traditional taxi and car rental businesses.

    Marriott has some experience with this side of the business, having run a pilot in Europe…But now, its ambitions are global. (Not to suggest that this is an easy transition. The home sharing business has an entirely different infrastructure than the hotel business, with an entirely different set of risks, not to mention that it puts a company like Marriott - and others getting into this space - at risk of diminished brand equity because of circumstances it cannot control.)

    I found all of this Eye-Opening enough … and then I got to this passage in the Journal story:

    “At the same time, Airbnb has been moving aggressively into the traditional hospitality business. Airbnb said last month it was acquiring Hotel Tonight Inc., a company that culls inventory from hotels and offers discounted rooms. It also recently invested in the Indian hotel-booking company Oyo Hotels & Homes.”

    This sort of sounded to me like what happened when Amazon disrupted so many bricks-and-mortar businesses by operating an online store, and then circled back to itself get into the bricks-and-mortar business. For Amazon, it is less about satisfying consumers with one kind of venue or another than it is about just satisfying customers in ways that are relevant and resonant to them.

    Which is what seems to be happening in the hospitality space - the disruptor disrupts a traditional business model by offering a clear alternative, which forces a traditional player to find a way to compete on that turf, even as the disruptor decides to play not just on the turf that it has created, but also at the game originally engineered by the legacy business.


    The Eye-Opening lesson is that competition can from from anywhere at anytime, and that even as a business works to maintain and sustain its competitive and differential advantages, it also has to be seeking ways to extend them … because there always is going to be someone out there who is gunning for you.
    KC's View:

    Published on: April 30, 2019

    Business Insider reports that Wegmans will begin offering “on-demand delivery of its freshly prepared foods such as sandwiches, pizzas, sushi, soups, and salads,” using DoorDash to make the deliveries.

    According to the story, “the new service, called Wegmans Meals 2Go, has launched at Wegmans stores in Sterling, Virginia, and Rochester, New York. It will expand to more than 40 stores — or nearly half of Wegmans' locations — by the end of the year … Orders must be placed through the new Wegmans Meals2GO app, which provides options for carryout, curbside pickup, or delivery.

    “In addition to prepared foods, Wegmans customers will have the option to order ready-to-heat meals such as chicken parmesan with spaghetti and green beans; barbecue pulled pork with macaroni and cheese and green beans; or homestyle meatloaf with whipped potatoes and green beans.

    “Deliveries powered by DoorDash will be available on orders costing more than $20 to addresses within a five-mile radius of participating Wegmans stores.”
    KC's View:
    There is a difference between being in the supermarket business and being in the we-feed-people business … and Wegmans is staking out its claim in the latter.

    So much of this is about self-definition, and then how that definition is converted into a value proposition, and the degree to which that value is delivered. But it starts with definition.

    Published on: April 30, 2019

    As Walmart looks to compete with the Amazon and Netflix in the streaming video market, Verge reports that it is planning “ to bring at least six new original programs to its Vudu platform in the next year … the lineup will be comprised of family-friendly content, including a reboot of the 1983 film Mr. Mom that’s set for a June 2019 debut. It’s also reportedly chasing deals for a science fiction show and a procedural crime drama like CSI.”

    But what makes this development potentially interesting, and different from what is being offered by its competitors - for better or worse - is that Walmart plans to make the video content “shoppable.”

    What does that mean? According to the story, “New advertising technology may be coming to Vudu that will enable viewers to purchase products as seen in TV shows and movies. Without knowing exactly how it will be implemented, it seems similar to Amazon’s X-Ray technology that displays IMBd information on a per-scene basis — except instead of a list of actors in each scene, you’ll theoretically see stuff like toilet paper or a 12-pack of soda. With this model, Walmart could make its money back from viewers who buy products and have them delivered to their homes or pick them up in store. Advertisers may also sponsor this content, so brace yourself for the awkwardly forward placement of branded products.”

    Engadget reports that “Walmart has been pitching ad agencies on its plans over the last several weeks, while suppliers have committed to tens of millions of dollars in ad sales.”
    KC's View:
    I have no particular problem with the idea that if I see an item onscreen while watching a TV show or movie, it’d be nice if on occasion I could get information about where or how to buy it. I’d like it to be non-intrusive … I wouldn’t be inclined to stop what I’m watching to make a purchase, but would rather be able to go back somehow through a kind of index. But I’m probably an outlier on this … I’m hardly the target audience for this service.

    I do find it a little perplexing that they want to offer this functionality and sell commercial time. Really? Both? Seems a little much to me … but again, I’m not the target.

    It is worth noting that the story suggests that Walmart wants to do this so it can lay off as many of its content costs onto outside companies via this functionality … which is very different from Amazon, which sees its content investments as part of a larger ecosystem play. I’m not saying which one is right, or that both cannot survive. But I prefer the Amazon approach … it is somehow less overtly commercial to me, though the commercial aspects of connecting millions of people to its ecosystem clearly is powerful.

    Published on: April 30, 2019

    The New York Times has a pair of stories posted on its website this morning about the potential impact of climate change on our food supply.

    One story, while conceding that the impact is not yet obvious at the store and consumer levels, says that if you “drop a pin anywhere on a map of the United States … you’ll find disruption in the fields. Warmer temperatures are extending growing seasons in some areas and sending a host of new pests into others. Some fields are parched with drought, others so flooded that they swallow tractors.

    “Decades-long patterns of frost, heat and rain — never entirely predictable but once reliable enough — have broken down. In regions where the term climate change still meets with skepticism, some simply call the weather extreme or erratic. But most agree that something unusual is happening … Because the system required to feed the country is complex and intertwined, a two- or three-week shift in a growing season can upset supply chains, labor schedules and even the hidden mechanics of agriculture, like the routes that honeybees travel to pollinate fields. Higher temperatures and altered growing seasons are making new crops possible in places where they weren’t before, but that same heat is also hurting traditional crops. Early rains, unexpected droughts and late freezes leave farmers uncertain over what comes next.”

    The story points to 11 everyday foods - including watermelon, raspberries, chickpeas, cherries, and popcorn - on which climate change is having an impact … and you can read the details here.

    The Times also has the story of tomato farmer Brad Gates, a successful California tomato farmer for a quarter century. “For most of that time, he sold his tomatoes to top restaurants, including Chez Panisse in Berkeley. But a few years ago he completely rethought his work. Galvanized by climate change, he joined a growing number of farmers who are trying to find a future for their threatened crops — in his case, the queen of the farmers’ market.

    “Mr. Gates now grows thousands of tomato plants each year, selling the young ones to local shops and the seeds all over the country through his website and catalogs, encouraging people to grow their own at home. He believes that the tomato’s survival and continued deliciousness depend on the plant’s diversity, and he considers breeding hardy, cold-tolerant and heat-tolerant varieties an essential part of his work — not just to provide food, but also to expand the number of places where the plant can flourish.”

    You can read Gates’ story here.
    KC's View:
    I think these are important stories, because everyone in the food chain - from farmers to stores to consumers - has to be aware of how climate change has the enormous potential to reshape our lives. For me, the debate about how much of it is manmade is specious - as a culture, if we want to survive, we do everything we can to reduce humanity’s impact on a fragile planet, because it is irresponsible to do anything less.

    I find one comment from Gates to be enormously illuminating: “In the last 10 years, tomatoes have changed more than in their entire existence.”

    Some of this is because of climate. Some if it is because of breeding. Some of it is because of innovation.

    But to ignore the realities of change is to risk everything that can happen when the dominoes begin to fall.

    Published on: April 30, 2019

    Amazon said yesterday that it has started the staffing process at the new HQ2 offices that it plans to open in Northern Virginia, near Washington, DC, and also has begun renting office space.

    Reuters reports that Amazon said that “it was on track to create 400 jobs at the future Arlington, Virginia, campus this year. It said the new hires will work out of a temporary space on Crystal Drive in June, as the company aims to open its first building in the fall. The drive is in Crystal City, part of Arlington.” The goal for Amazon is to “invest approximately $2.5 billion, create more than 25,000 jobs with an average wage of over $150,000, which will generate more than $3.2 billion in tax revenue.”

    The story notes that this happens as “Amazon cleared a key funding vote in Arlington in March, when local officials approved a financial package worth an estimated $51 million amid a small but vocal opposition. The $51 million is a small fraction of the $481 million promised by the county and a $750 million package offered by the state.”

    Amazon also planned to open HQ2 space in New York City, but walked away from the deal when a vocal opposition threatened a series of procedural roadblocks and political resistance that it clearly found to be more trouble than it was worth.
    KC's View:

    Published on: April 30, 2019

    The New York Post reports that Toys R Us is planning its return to the bricks-and-mortar retail arena, albeit with much smaller stores than it used to operate.

    Here’s how the Post reports the development:

    “Tru Kids Brands, a licensing firm formed last year by creditors following the toy chain’s September 2017 bankruptcy filing, plans to open a handful of US stores in time for the holidays that will span about 10,000 square feet each … That’s downsized sharply from the 600 stores that were shuttered for good last spring, which had typically spanned 20,000 to 50,000 square feet.”

    The story notes that “While Toys R Us disappeared from the American retail landscape, the brand is licensed to more than 900 stores in Asia and Europe, which generated sales of more than $3 billion for Tru Kids last year. In February, Tru Kids said it will open 70 more stores overseas this year.”
    KC's View:
    The question I’d ask is, was it size that was Toys R Us’s biggest problem?

    I don’t think so. I think it may have been some combination of irrelevance and indifference, with a side of bloat. Which are the real issues the new owners have to address, in my not-so-humble opinion.

    Published on: April 30, 2019

    Some time ago we reported here on MNB about how the Westside Pavilion mall in Los Angeles, which had fallen from stagnation into near-desolation as retailers defected, followed by shoppers (though it actually was the shoppers who defected first, which forced retailers to close their doors), is being converted by its developer-owner into an office complex that will be dominated by Google.

    Now, the New York Times has a story about how this is a development that is being repeated in other locations. It is, the story says, “one of the latest examples of a nationwide trend in commercial real estate: the conversion of malls into office space.

    “Offices are less risky than retailers, and in some cases they can generate foot traffic for the mall’s remaining stores and restaurants.

    “The biggest beneficiaries of the conversions are co-working enterprises, like WeWork, which provide shared work spaces primarily to entrepreneurs, freelancers and start-ups. The highest concentration of co-working spaces in retail nationally is in malls, according to an August study by the global property company Jones Lang LaSalle. The same study predicted that co-working space in retail in general would grow at an annual rate of 25 percent through 2023.”
    KC's View:
    It seems pretty clear that in places where such conversions make sense, they are a good thing for everybody. Developers et more stable tenants, and communities get a stronger tax base. And consumers don’t give a damn, because those malls had largely outlived their usefulness anyway.

    I have a mall near me, the Stamford Town Center in Connecticut, that if they shut it down tomorrow and converted it to office space, I’m not sure all that many people would notice. Or care. Hell, they could already use much of it as a bowling alley, because there are many times that you roll a bowling ball down its corridors and not hit anyone.

    With few exceptions, just another casualty of the fast-changing retail environment.

    Published on: April 30, 2019

    CNBC reports that Sainsbury has opened a checkout-free store in the UK.

    According to the story, “All customers at the Sainsbury's convenience store, in Holborn Circus, London, will scan and pay for their shopping using an app that they download to their smartphone.  As shoppers walk around the store, they will scan the items they wish to buy, pay using an app and then scan a QR code to confirm they have paid … A help desk has been installed to support shoppers who want to pay with cash or cards.”

    The store is said to be a three-month test to see if the technology is worth expanding.
    KC's View:

    Published on: April 30, 2019

    • The Oakland Press reports that BJ’s Wholesale Club has broken ground for its first store in Michigan, in the community of Madison Heights. The company also plans to open a second Michigan store, in Taylor.

    BJ’s has some 200 locations, but to this point the furthest west it has pushed has been into Ohio.

    • The Wall Street Journal reports that lawmakers in states where rice is grown are beginning to argue that products not actually not made from rice should not be allowed to use that moniker.

    According to the story, a “Louisiana bill, sponsored by a Democrat, passed unanimously in the state Senate earlier this month and is now in the House. If it passes there, it would head to Democratic Gov. John Bel Edwards. He hasn’t yet taken a position on the legislation, a spokeswoman said.

    “In March, a similar bill passed in Arkansas, the nation’s largest rice producer, and other states are considering such legislation. Rice is also a major crop in Texas, Mississippi, Missouri and California.”

    This is, the Journal writes, “the latest salvo from traditional agriculture groups and their supporters, who say makers of plant-based alternatives like cauliflower rice - made from bits of cauliflower - almond milk and non-meat hamburgers are causing confusion with their marketing. But advocates on the other side say such moves won’t stop a broad public shift to what they call healthier offerings.”
    KC's View:

    Published on: April 30, 2019

    will return.
    KC's View:

    Published on: April 30, 2019

    In this new edition of the Retail Tomorrow Podcast, we discuss the unique partnership between Kroger and Microsoft, developing cutting edge innovations that will take each of them to the next level when it comes to things like digital shelving, video analytics, sensor networks, temperature tags … and beyond. And here’s the thing - the innovations that emerge are not proprietary, but will be available to any retailer looking to leap into the future.

    This podcast was recorded at GMDC’s recent Retail Tomorrow Immersion conference in Los Angeles.

    Our guests:

    • Kevin Fessenden, Senior Product Manager at Sunrise Technology, which is a Kroger company.

    • Chris Dieringer, Senior Director of Industry Solutions for the Retail and CPG Industry at Microsoft.

    The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

    You can listen to the podcast here, or on iTunes and Google Play.

    Pictured, from left to right:

    Kevin Coupe, Chris Dieringer, Kevin Fessenden.

    KC's View: