business news in context, analysis with attitude

Published on: May 21, 2019

by Michael Sansolo

For years now we’ve been writing about the importance of standing out in the marketplace, of being distinctive and offering points of differentiation. If you don’t, you have to recognize that you are at risk of irrelevance and worse.

Not surprisingly, there are companies out there figuring this out and their examples are among the things all businesses need focus on these days.

Just last week, Kevin wrote about the problem of hotels basically fading into beige - in other words, offering no distinct reason for a consumer to choose one over the other. Kevin wrote this knowing I had a recent experience that went way, way beyond beige.

Due to reasons too complex to detail here, my wife and I had to decamp from our house to a nearby hotel in suburban Maryland. To our surprise we found a hotel called Even, and it was, well, Odd and wonderful in numerous ways. First off, at Even there are no rooms with odd numbers. But then the distinction goes much further.

Even is a wellness hotel, meaning that every room comes equipped with equipment and videos to take a guest through a great morning exercise routine. The theme can be found everywhere in the hotel. For example, climbing the stairs to our room we were constantly egged on by motivational quotes on the landings urging us to consider all the good walking does for us. Even the hotel bar reflected the theme; its name: “The Cork and Kale.”

Even isn’t for everyone, but that’s the point. To get beyond beige and stand out from the crowded field, we might need to lose some customers so we can delight and hold others ever tighter.

Oh, by the way, it works. USA Today recently wrote about retailers that are posting significant growth in the moment (including Costco), led by three that are outpacing Amazon. It’s a list worth pondering.

Each of these retailers succeeds by having a clearly defined niche with an emphasis on differentiation. None of those ideas are new in business, but they are certainly worth considering when survival is at stake.

Let’s start with Gaia, a company that I never heard of before, yet it managed to increase sales by more than 50 percent last year. Gaia offers subscribers 8,000 videos focusing on yoga, meditation and alternative healing. That might not excite you, but it has enabled Gaia to build sales of nearly $44 million.

Next on the list is Etsy, which brings together people looking to buy and sell unique and usually crafty items. Again, it’s a very specific niche, but when has that stopped success before? Etsy has nearly 40 million active buyers, two million sellers and revenues nearing $4 billion, up 40 percent in the past year.

You’ve also likely heard of Wayfair, which now boasts sales of nearly $7 billion in sales, an increase of almost 44 percent in 2018. Wayfair features home goods from more than 11,000 suppliers and has done a wonderful job targeting women between 35 and 65 with household incomes ranging from $50,000 to $250,000. Now that sounds like a niche virtually every retailer would love to pursue. Wayfair aims to simplify shopping for home décor and based on my scientific sample of my own home, it’s a formula for success.

Just in case you needed any additional motivation to consider the importance of going beyond beige, the fourth fastest growing retailer on the USA Today list was Amazon, with sales rising 31 percent. In case you need the reminder, food is high on the ecommerce giant’s own shopping list.

Sounds like it’s time to get colorful in all new ways and go way, way beyond beige.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . 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.

Published on: May 21, 2019

by Kevin Coupe

There is an interesting piece in The New Yorker about Liquid Death, which is the rather unlikely and cheeky name given to a new brand of water that is available in 16.9-ounce tallboy cans, each of them inscribed with, shall we say, irreverent language about how this particular brand of water is designed to eliminate your thirst.

That’s a mouthful. The story in The New Yorker evolved from Liquid Death’s landing of $1.6 million in venture capital funding, which presumably will be used to grow the brand. At the moment, a presence in stores is almost non-existent; it is available online, either on Amazon or via Liquid Death’s own website.

It so happens that I’m mildly familiar with Liquid Death. The entrepreneurs who developed the brand and its marketing identity appeared at the GMDC Retail Tomorrow Immersion conference in Los Angeles earlier this year, and pitched both its punk image and ecological bonafides; they say that in addition to keeping the Alps-sourced water colder than plastic bottles, the aluminum is far more recyclable.

I was intrigued, and especially liked the idea that they want to merchandise Liquid Death in stores by selling it out of a coffin. Clever, I thought. And it certainly kept the water cold.

A few days ago, having seen a number of stories about Liquid Death in the media beyond The New Yorker piece, I decided to order a 12-pack via Amazon. It wasn’t cheap by any standard - $21.99. By the standard of getting a glass and going to the sink (what my dad used to call a Croton highball, named after a reservoir that was the source of our water when growing up), it is extravagant in the extreme.

Once the water showed up, my family, quite naturally, was curious. So I suggested that my wife take a can with her to work - she is a third grade teacher - and drink it in the teachers room. (I agreed with her observation that she shouldn’t let it be seen by students.) She did, and found out two things - she didn’t like the aluminum aftertaste and her fellow teachers were appalled by the packaging and language, suggesting that it looked like she was drinking a beer at work. So she was 0-2.

My daughter, who also works in an elementary school, decided not to bring it to school. But she tried it at home, and also didn’t like the aluminum aftertaste.

0-3.
The New Yorker story makes the point that even the environmental advantages may be overstated, if not illusory. “The benefits of metal packaging are relative,” The New Yorker writes. “Aluminum may be light to transport and easy to recycle, but the industrial costs of mining and processing are considerable. Then there’s the environmental cost of freighting thousands of gallons of slosh (in Liquid Death’s case, “drinking water from the Austrian alps”) from one continent to another, and the societal cost of treating water as a private commodity.”

The story also made two other interesting points - that bottled water is an $18.5 billion business (which doesn’t surprise me) and that an “estimated 1.6 million Americans currently lack access to clean water, and, as our outdated water infrastructure feels the effects of climate change, those numbers are only going to grow.” (Which did.)

The New Yorker closes its analysis by suggesting that it is “faint praise for Liquid Death or any other company to claim that its packaged water is superior to another. Arguing about what’s punk is a cornerstone of punk culture. But most of us can agree that logging on to Amazon to buy a twenty-two-dollar twelve-pack of water is definitively not.”

The underlying theme of The New Yorker story - and, to be honest, of my limited experience with the brand - seems to be about a particular and even peculiar lack of authenticity. It is all about appealing to people who may not find certain other brands to be relevant to their lives or resonant to their attitudes. Whether Liquid Death is able to generate any sort of broad-based appeal may depend on the degree to which it can convince shoppers that the brand’s value proposition is authentic, and that it delivers on those promises.

We’ll see. I’m not yet persuaded. It’ll be an Eye-Opener.

Published on: May 21, 2019

Amazon-owned Whole Foods announced yesterday that it will “stop offering plastic straws across all of its 500 stores in the United States, the United Kingdom and Canada,” claiming that it is “the first national grocery chain to make the environmentally friendly move,” according to CNN.

CNN writes that “plastics are expected to outweigh fish in the ocean by 2050 and massive amounts of it have piled up in landfills, some emitting greenhouse gases and contributing to global warming over the near-eternity they take to degrade.”

The story says that “Whole Foods will also reduce its plastic usage in other parts of the store,” offering “smaller plastic bags in the produce department and will start using new bags for its rotisserie chickens that use 70% less plastic than the hard plastic cases they will replace.”

In a prepared statement, Whole Foods chief merchandising officer AC Gallo said, “We recognize that single-use plastics are a concern for many of our customers, Team Members and suppliers, and we're proud of these packaging changes, which will eliminate an estimated 800,000 pounds of plastics annually.”

CNN points out that Whole Foods isn’t alone: “Starbucks announced in February that it redesigned its cold cup lids so they won't require a straw at all. By 2020, it will eliminate single-use plastic straws at its more than 29,800 locations around the world. Disney is in the midst of eliminating single-use plastic straws and plastic stirrers at its parks and McDonald's announced last year plans to move from plastic to paper straws at its locations in the UK.”

Published on: May 21, 2019

CNN reports that German discounter Lidl, still struggling to get a US foothold two years after first coming to the US market, has announced that “it will open up 25 new stores by next spring on the East Coast in states such as Maryland, New York, Pennsylvania and the Carolinas. Those openings and others will bring Lidl's US footprint to more than 100 stores by the end of 2020, two years behind Lidl's original schedule.”

The story notes that “the company initially had lofty goals and planned to shake up the US market by opening 100 locations within its first year. It relied on tactics similar to Aldi's to break into the market: slashing prices, offering mostly private-label brands, and emphasizing its organic food and fresh produce selections.

“But Lidl made early mistakes. Its stores were too big and too far from urban hubs, which undercut its attempt to establish itself as a convenient option, according to analysts.”

Published on: May 21, 2019

Walmart has begun unveiling plans for its new headquarters in Bentonville, Arkansas, on more than 300 acres that it says “will be integrated into the community, designed to be an inclusive and seamless part of the natural beauty of our Northwest Arkansas region. This is part of Walmart’s strategy to win and has been contemplated for a number of years. The new facilities will help accelerate change, accommodate a more digitally native workforce, and encourage more collaboration and speed.”

Walmart CEO CEO Doug McMillon says that the company currently operates out of "a patchwork of more than 20 buildings in Northwest Arkansas. Many of these facilities, including the current Home Office, are significantly beyond their shelf life. They are expensive and inefficient to maintain, costing millions of dollars of accelerating upkeep every year. And because they are so dispersed, they literally encourage us to work in silos and cause us to waste time and energy traveling between locations, many of which have inadequate parking options. For some time now, we’ve been concerned that this ad hoc office network actually inhibits our ability to compete in the rapidly changing retail landscape.”

According to a story from Business Journals News Network, “The new Walmart campus will be designed with four quadrants, with bike paths and walking trails linking to each quadrant. There will be more than 15 acres of lakes at the new facility, and Walmart said the new facility will ‘create zero waste [and] operate with 100 percent renewable energy’.”

No cost has been disclosed for the new HQ campus. The buildings there are expected to be opened “in phases between 2020 and 2024,” the story says.

Published on: May 21, 2019

Yahoo Finance reports that in a panel discussion at the 2019 meeting of the International Trademark Association (INTA), Dunkin’ Brands VP of brand stewardship Drayton Martin tried to draw a thick line that was neither red nor blue between how his company operates and how rival Starbucks does.

““We are not Starbucks, we aren’t political … We don't want to engage you in political conversation, we want to get you in and out of our store in seconds,” she said.

At another point, Martin said, “We don't want people burning their Munchkin boxes,” which Yahoo Finance says “is a reference to multiple instances, over the last two years, of consumers burning or destroying products - from Keurig machines to Nike socks - to protest the perceived political views of those brands.”

Yahoo Finance notes that “Starbucks in the past has occasionally used its cup designs and baristas to attempt to start cultural conversations on issues like race,” and writes that “in a country that is increasingly divided politically, consumer-facing brands are finding themselves drawn into political debates, even at times when they have tried to avoid commenting on such issues. It has happened to Tic Tac, Tiki Brand torches, Papa John’s pizza, and Under Armour, to name just a few.

“Of course, even in saying that it does not wish to be political, and in accusing Starbucks of being political, some see Drayton Martin’s comment as being just as political. Twitter users, in replies to tweets about Martin’s comment, pointed out the irony.”

Published on: May 21, 2019

Bloomberg has a story about the alliance between Amazon and Kohl’s, the department store chain that both sells Amazon devices in some locations and enables returns of Amazon purchases in many more.

According to the story, “By tying up with Amazon, the department store chain gets more foot traffic from those making returns, enticing them with coupons to browse the store and buy something. For Amazon, the partnership helps solve one of the trickiest challenges in e-commerce: letting customers return products without subjecting them to nightmarish lines at the post office. About 30 percent of all online orders are sent back, triple the rate of store purchases, and Amazon keeps looking for ways to make the process affordable for itself and easy for customers. Eventually, Amazon may add private-label groceries and apparel to the electronics it already sells at Kohl’s.”

While there is speculation that the alliance could turn into something deeper, with Amazon eventually acquiring Kohl’s, Bloomberg says there are real short-term advantages for Amazon:

“Amazon’s decision to deepen its relationship with Kohl’s is necessary in part because its own brick-and-mortar efforts are faltering. Sales at the company’s physical stores have barely grown since the 2017 acquisition of Whole Foods, despite highly publicized price cuts on things like organic asparagus and strawberries. With investors asking pointed questions on earnings calls, Amazon is prioritizing Whole Foods and expanding its AmazonGo cashierless stores, according to people familiar with the matter.

“That leaves the earlier retail initiatives languishing. Amazon will tell you that it’s simply experimenting as it does online, where tests come and go without most customers noticing. It’s much harder to hide its misfires in physical stores.”

Published on: May 21, 2019

It was just a few days ago that MNB took note of a CNBC report that “almost two and a half years after the city of Philadelphia imposed taxes on soft drinks and other sweetened beverages - at the rate of 1.5 cents per ounce - sugary drink sales there actually have dropped 38 percent.”

Which, from the point of view of public health experts, might be considered a success. It may, however, just be temporary.

The New York Times reports this morning on primary elections taking place in Philadelphia today that could result in the end of those taxes.

Philadelphians, the story says, “will be indirectly voting on its survival. Though not on the ballot, the soda tax has become a heated issue in the city’s local elections this year, with emotions fanned in part by anti-soda tax television commercials and online ads paid for by the beverage industry. The two Democrats challenging Mayor Jim Kenney oppose the tax, as do a score of City Council hopefuls who decry the 1.5 cent-per-ounce tax as an unfair burden on the city’s poorest residents. The levy, on average, adds about 30 percent to the cost of sweetened beverages.”

The Times writes that despite millions of dollars spent by lobbyists to try to prevent the taxes from being imposed, and then an unsuccessful lawsuit that attempted to overturn them, there has been an economic impact from the new taxes: Millions of dollars were freed up and directed “toward creating 4,000 prekindergarten slots, 12 new community schools and an ambitious program to rebuild the city’s crumbling libraries and recreation centers. Next year, the city plans to add another 1,000 pre-K seats.” And that doesn’t even count the health impact.

Opponents, however, argue that the health benefits are illusory, since it has been demonstrated that many Philadelphians are simply leaving the city to make their sweetened beverage purchases.

Published on: May 21, 2019

• PennLive reports that Ahold Delhaize-owned Giant Food Stores is buying single-store independent Ferguson & Hassler, in Quarryville, in Pennsylvania’s Lancaster County.

Ferguson & Hassler reportedly has been in business since 1916, but the owners said in a statement that “the existing economics in the grocery industry no longer support the operation of a family-owned, independent supermarket such as ours.”


• Agweb reports that Tyson Foods is suing the US Department of Agriculture (USDA) for $2.4 million, writing that Tyson “claims it had to destroy 8,000 carcasses because a federal meat inspector lied about checking hogs at a plant in Iowa.”

According to the story, “Tyson Foods say Yolanda Thompson, who works for the USDA's Food Safety Inspection Service, signed certificates suggesting she checked slaughtered hogs at a plant in Storm Lake, Iowa in March 2018. The suit claims video footage indicated Thompson never entered the plant and actually approved inspections while sitting in her car.”


• Bloomberg reports that the market for egg alternatives, “once a fusty category targeted mostly at institutional bakers and vegans, is officially blowing up. One need only walk the aisles of the recent Natural Products Expo to spot fake egg whites in snacks of all sorts, or look around the grocery store for an uptick in the selection of ‘eggs’ made from any number of ingredients decidedly unrelated to chickens.

“But toppling real eggs isn’t going to be easy. Egg whites (the real kind) have long been the protein people refuse to do without because it’s seen as irreplaceable. Egg whites are the most efficient and allergen-light source of protein when compared with rivals such as whey, soy and pea. Moreover, food manufacturers rely on eggs because they add natural protein that’s flavorless and highly soluble.” Plus, “Nielsen data show that traditional eggs are still a $7 billion business.”


• Women’s clothing retailer Dressbarn is going out of business, closing down its 650 stores as well as shutting down its website.

CFO Steven Taylor said the decision was “necessary, as the Dressbarn chain has not been operating at an acceptable level of profitability in today's retail environment.”

Dressbarn is owned by Ascena Retail Group, which also owns brands that include Ann Taylor and Lane Bryant.

USA Today points out that “this year has been a tough year for retailers with more store closings announced than in all of 2018. With Dressbarn closures, there are more than 7,000 closings announced for 2019.”


• The Wall Street Journal this morning reports that “the U.S. Postal Service is testing self-driving trucks on a more than 1,000-mile mail run between Phoenix and Dallas, the post office’s first use of the technology for long hauls … The two-week pilot starting Tuesday will use big rigs supplied by autonomous trucking firm TuSimple to haul trailers on five round trips between distribution centers, the company said. The roughly 22-hour trip along three interstate highways is normally serviced by outside trucking companies that use two-driver teams to comply with federal regulations limiting drivers’ hours behind the wheel.”

During the test, there will be two people sitting in the truck cabs just in case.

The USPS, always under financial pressure, has been looking for ways to cut costs and raise efficiency.

Published on: May 21, 2019

Yesterday, in our Monday Eye-Opener, the focus was on two commencement addresses.

The first one I pointed to was at Biola University, described as a private evangelical Christian institution, where Lynsi Snyder-Ellingson, the owner and president of In-N-Out Burger, gave the commencement address, focusing on her “struggles with alcohol and cannabis and the abuse she endured in a past relationship. She urged Biola’s students to not let pride prevent them from being open and honest about their struggles.” She also gave all the graduates gift cards to In-N-Out with their diplomas.

The second one was by Robert F. Smith, a billionaire investor who founded Vista Equity Partners and is the richest black man in America - who told the students graduating from Morehouse College, a historically black institution, that he and his family would be paying off all their college loans.

To which MNB reader BJ Young responded:

What happened at Morehouse College this weekend was unprecedented and phenomenal. I am sorry that you buried in after the In-N-Out heiress. While it was great that you mentioned it, in light of the story’s historical nature, the growing debt facing college graduates and the unequivocal generosity of a billionaire, it really should have been your lead.

I think you missed this one.



I also got an email from an MNB reader critiquing another editorial judgement:

I have noticed in your OffBeat section that you regularly review movies that you've seen recently both good and bad, as well as any wines and beers you've had recently and the occasional lunch or dinner. However I cannot recall ever seeing a negative review of any food or drink. Is it possible that you never had a bad meal or alcoholic beverage?

A fair point.

My general policy in “OffBeat” is to celebrate the positive, though in the case of movies, TV shows and books, I sometimes think there are business lessons to be garnered from missteps or misjudgments … and MNB readers know that I’m a sucker for a business lesson.

I’m not sure that business lessons can be learned from a bad meal or drink. Though, to be clear, in other MNB stories, I’ve been known to be tough on specific meals and venues.

Besides, I tend to side philosophically with the great Robert B. Parker, who once said that “the worst beer I ever had was wonderful.”