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    Published on: June 11, 2019

    by Michael Sansolo

    There are times the movies predict the future all too well. In Ocean’s Eleven (2001), the Las Vegas casino heist movie, one comment repeatedly made is that in the hotel central to the movie, “someone is always watching,” which leads to all kinds of plot issues.

    In the real world, the notion that someone is always watching is becoming truer by the day. Sometimes that leads to wonderful discoveries. The Washington Post ran two articles last week about low-level staffers in different places connecting in almost remarkable ways with autistic customers.

    In one case, it was a staffer at Universal Studios theme park in Florida who mitigated a major meltdown by a young boy disappointed when his favorite ride shut down. The staffer simply lay on the ground next to the boy and talked him through the difficult moment.

    The second case took place in Rouse’s supermarket in Baton Rogue, LA, where a stock clerk made an amazing connection with an autistic teen by allowing him to help stock a shelf. Both were small events, but thanks to the non-stop presence of smartphone video cameras, both ended up getting widely reported.

    Of course, those cameras don’t always catch the best of times. As you probably heard and saw last week, there was a viral video focused on alleged animal abuse at a Fair Oaks Farm in Indiana. The video, easily found on Google, raises all kinds of questions.

    For instance, the video was distributed by an animal rights group and that doesn’t always translate to what anyone would consider fair and balanced news. Also, the video was painful to watch especially for city kids like me who have little to no idea how things actually work on a farm.

    But here’s the other reality of today’s world. This kind of thing happens, it happens a lot and it will keep happening. The reason we need focus on stories like this is to see how other respond and to consider what we would do.

    In the Fair Oaks case, founder Mike McCloskey wasted no time posting a video of his own. Now to be clear, I’m not an unbiased observer as Fair Oaks’ products - Fairlife Milk - is distributed by Coca-Cola, my main client and frankly, I find the company’s chocolate milk to be a marvelous post-workout reward.

    McCloskey’s video was sober and sad, which I felt showed genuine concern on the part of the founder. He explained his disappointment in the workers shown in the videos, the steps Fair Oaks was taking to punish those caught on camera and also, importantly, to explain what the company would be doing in the future to back up its promises. Again, I’m biased, but I thought he handled it as well as possible. McCloskey and the folks at Fairlife (who also issued a statement) showed concern and took action, and while they referenced the motives of the animal rights group they didn’t use their moment simply attacking the accusers.

    They admitted fault, outlined action and did it with no trace of arrogance or defiance.

    Frankly, I think it’s a video everyone should be watching because everybody has a camera and a point to make - they can be friendly to our businesses or they can be hostile, and it is critical for you to consider your own training policies and crisis management procedures.

    We can all hope those videos will catch our people like the staffers at Universal and Rouse’s doing amazing things. But don’t count on it.

    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: June 11, 2019

    by Kevin Coupe

    In Maine, the Press Herald has fascinating story about customer service that could serve as a metaphor for how so many companies act.

    Here’s the set-up:

    “Back on Feb. 22, Doug MacDonald heard a knock on his front door in Scarborough’s Higgins Beach neighborhood, where he rented over the winter while his home underwent renovations. There stood two delivery guys, ready and eager to deliver and install a new washer and dryer fresh from Home Depot’s store in South Portland.”

    MacDonald didn’t know anything about the delivery, but the order listed the name of “O’Connor,” which was the name of the person who owned the home. So he lets the guys in. They installed the new appliances and took away the old ones.

    Hours later, the story says, “MacDonald’s phone rang. It was the property manager, who had just heard from Home Depot: It turned out the delivery should have gone to the home next door, whose unrelated owner also happens to be named O’Connor. Understandably, Home Depot wanted its new appliances back.”

    So they came and took them back … but didn’t return the old ones. Which apparently were gone, never to be found or heard from again.

    “For the better part of a month, not wanting to bother his landlord with such a mindless matter, MacDonald tried to resolve the screw-up on his own.

    “The best he could get out of Home Depot was an offer to replace the washer and dryer for half price. The appliance department manager’s rationale: By accepting the delivery, he was at least partially responsible for what happened.”

    Finally, frustrated by the situation (and not being able to wash and dry his clothes), MacDonald finally went to the Kevin O’Connor, who owned the rental, who got aggressive with Home Depot, at various points enlisting the help of the consumer reporter at the Boston Globe and an attorney. When that didn’t seem to work, the lawyer, Ken Pierce, decided that maybe a little competitive pressure would work - and so they went to a local independent appliance dealer, Central Furniture and Appliance owned and operated by brothers Mark and Matt Rouillard and founded by their grandfather.

    “Mark Rouillard,” the story says, “is not one to badmouth the competition, or anyone else for that matter. Yet when Pierce told him the story of the vanishing washer and dryer, Rouillard was astounded at how something so easy could become so difficult … Rouillard, upon hearing what had happened, didn’t bat an eye … we’ll give him a new washer and dryer, install it and throw in our service plan, he told Pierce. No charge.”

    Subsequently, battered around by the local press and threatened with a lawsuit, Home Depot agreed to write a check for $5,000.

    That’s right. $5,000.

    (I can understand why the folks at Home Depot resisted taking responsibility and writing that check. After all, the company’s annual revenue is only about $108 billion.)

    At Pierce’s insistence, there is no confidentiality clause in the agreement. “When the $5,000 check arrives, Pierce will distribute it among all of those affected by the debacle. Meaning Central Appliance and Furniture will get paid, after all.”

    As for Mark and Matt Rouillard, they are going to use their money down the road to help someone else who needs it. Because, as the story makes clear, that’s the kind of company their grandfather created. (These days we’d go on about “company culture,” because this kind of attitude seems out of step with the ‘I-got-mine’ ethos of the moment.)

    But beyond the simple decency that this independent retailer showed, I think it is important to point out that Mark Rouillard said it best … that Home Depot “had multiple opportunities to do the right thing. And at every turn, they chose the opposite.”

    How many companies are like that? How many companies have employees who are not empowered to do the right thing, even when it is easy to see what the right thing is? There were so many moments when someone at Home Depot could’ve said, “Stop. This isn’t good for our company, for our brand, or for our customers.”

    Nobody said it. The leadership at Home Depot need to ask themselves why, and what that says about their workplace and, yes, company culture.

    The check may be for $5,000, but the reputational damage is far worse.

    And, of course, this story prompts me to ask the Eye-Opening question:

    Could this happen in your company?

    (Thanks to MNB reader Thomas Gordon for sharing this story with me.)
    KC's View:

    Published on: June 11, 2019

    The Puget Sound Business Journal has a story about as company called Flexe, which is an on-demand warehouse start-up that can provide flexible warehouse space on a national basis - at the moment, according to the story, it has more than 1,000 warehouses that add up to roughly 40 million square feet of space.

    The story describes Flexe as “a two-sided marketplace that recruits both operators who supply warehouse space and customers who use it.” Among the retailers that contract with Flexe for space are Walmart, Ace Hardware and Casper.

    Flexe came into being, not surprisingly, as Amazon’s growth put enormous pressure on kits competitors to keep up, forcing “traditional retailers to experiment and innovate. Logistics were traditionally meant to get products to a store, but e-commerce has made it so customers expect items to be delivered to their home — fast.” Which meant that a lot of companies - both retailers and suppliers - had to reinvent their logistics systems to adapt to this new reality.

    CEO Karl Siebrecht says that “it’s inevitable that logistics will work this way. It will be fundamentally technology-driven and it will share capacity, rather than every company building their own individual network of flow of goods.”

    So far, it seems to be working - Flexe just completed a $43 million funding round that will allow it to continue to expand its footprint.
    KC's View:
    Current competitive realities mean that logistics, just like every other part of pretty much every business, have had to be rethought and reinvented. It sort of feels like the warehouse version of Airbnb or Lyft … smart people figuring out where the need are and then coming up with innovative solutions that allow their business customers to be as nimble as they need to be these days.

    Published on: June 11, 2019

    Bloomberg has a story about how “Ikea, along with developer Ikano Bostad and design lab Space10, has embarked on a project to help solve the challenges facing cities confronted with growing urbanization, aging populations, soaring housing prices and a lack of natural resources.”

    The premise is that “in a crowded urban future, kitchens, hallways and dining areas will be shared by multiple families, furniture will be robotic and closets can be shrunk when not in use.”

    Among the innovations that Ikea envisions are a “more modular refrigerators that can be adapted to suit certain foods or robotic furniture that can save space in small rooms.”

    The Bloomberg story goes on to say that “the size of the homes could range from two-family households to large hotel-like complexes featuring hundreds of bedrooms depending on need and cultural preferences … Residential compounds could feature joint kitchens and dining areas and places for fitness and play activities. Bedrooms, toilets and closets would still be separate since studies have shown people are less open to sharing these spaces.”
    KC's View:
    If the projections are right and we are moving toward a more urban future, with all these kinds of changes in how people live and move, it’ll also mean that there will be dramatic changes in how people show and cook and eat. I’m not saying this all is going to happen tomorrow or even next week, month or year. But I do think it behooves companies and their leaders to start figuring out now what this changed future might mean to them, and then start laying out potential solutions.

    Otherwise, you get caught flat-footed with business models and stores that could end up being obsolete.

    Published on: June 11, 2019

    In Minnesota, the Star Tribune reports that Target Corp. will “beef up benefits it offers its full- and part-time hourly workers, including paid family leave to care for a child or aging parent and backup child care.”

    Specifically, the company will “institute a new paid family leave policy that would include care for a child, spouse or parent … the new policy doubles paid leave from two weeks to four weeks and includes leave for birth, adoption, surrogacy or foster placement.”

    And, it will “extend a program to allow up to 20 days of what it called "affordable backup care solutions" for child care and elder care to include workers at its stores and distribution centers starting this fall. The benefit previously had only been offered to headquarters workers and had only covered care at child-care centers. The new program also covers in-home care for children and older adults. Employees pay $20 a day for center-based care and a variable hourly rate for in-home care.”

    Target also says it will “reimburse hourly and salaried workers up to $10,000 for adoption and surrogacy fees to cover such costs as application, filing, placement fees, court costs and attorney fees. The retailer said this doubles the previous amount, which it has offered for more than a decade.”
    KC's View:
    A contracting labor market forces companies to make these kinds of moves, though I sort of wish that they would see the wisdom of treating their employees this way when competition for great workers was a little less intense.

    That said, this isn’t just about a tight labor market - it is also about the fact that Target’s employees face pressures and demands because of a shifting culture that they may not have had to deal with not that many years ago. You can’t go back, you can only go forward … and that’s what Target is doing.

    Published on: June 11, 2019

    Fast Company has a story about how a cadre of employees at Amazon is pushing their employer to take a more aggressive stand on the issue of climate change.

    Some context:

    “Amazon has made public gestures toward dealing with climate change. In 2014, the company announced it would power its data centers with renewable energy. Four years later, it rolled out another initiative, Shipment Zero, with the aim of slashing carbon emissions from shipments by 50% by 2030.

    “But Amazon’s green credentials have come under fire in recent months … Amazon lags behind its peers in tackling climate change in its core operations. The company has consistently received a failing grade from the Carbon Disclosure Project (CDP) for failing to disclose its emissions, while both Microsoft and Apple were recognized by CDP in 2018 for their efforts to tackle supply-chain emissions.”

    And, the story notes, “a Greenpeace report found that Amazon has largely abandoned its plans to run its power-hungry data centers with renewable energy … And Amazon’s aggressive plans for expansion, Greenpeace warns, also come without any accompanying measures to commit to more clean energy.”

    Hence, the creation of a group called Amazon Employees for Climate Justice … and you can read about their efforts here.
    KC's View:
    Fascinating stuff, and mostly, I think, because it happens in a climate (no pun intended) where employees more and more - at least in some companies - feel empowered to push their bosses to be more engaged with issues of import to them. It is climate change, but it also can be gender equality, and dealing with toxic workplaces.

    I must say, I think this is great. I grew up at a time when employees never spoke up about such things, and in retrospect, shame on us. I’m glad there has been progress, but there needs to be more. As a customer, I want to patronize companies that take stuff like this seriously.

    Published on: June 11, 2019

    With the announcement this week by the Trump administration that it would not, after all, be imposing tariffs on goods imported from Mexico - the White House said that the tariffs were being used as a way of addressing the illegal immigration issue - Stew Leonard Jr. decided to make an announcement of his own.

    Leonard, CEO of the eponymous retailer, said that his company’s wine and spirits stores would “host a major ‘Mexican Fiesta’ … Since tariffs will be held not be placed on imported goods from Mexico, Stew Leonard’s Wine and Spirts shops in Connecticut and New Jersey will host a celebration for residents, patrons and tequila lovers with a margarita and tequila tasting.”

    The announcement noted that “Stew Leonard’s Wines and Spirits in Connecticut and New Jersey sells tens-of-thousands of bottles of tequila and beer imported products from Mexico every year. Experts estimate that costs and prices would have soared with the new Trump tariffs.”
    KC's View:
    While the celebrations were scheduled for the liquor stores, Stew Leonard’s food stores - like most Us retailers - have to breathing a sigh of relief that tariffs also were not being imposed on items like avocados, asparagus, watermelon, tomatoes, broccoli and cucumbers.

    I loved the Stephen Colbert line - it was like the US was putting a tariff on summer.

    As smart as I think the Stew Leonard’s party idea is - it always makes sense to capitalize on a moment - he may find himself having to do an encore at some point. The Los Angeles Times reports that President Trump as promised to “do something” about the French wine tariff situation.

    The Times reports that “the U.S. charges a tariff of 5 cents per 750-milliliter bottle of imported still wine and 14 cents for sparkling wine, according to the Wine Institute, an advocacy group for California winemakers. European Union tariffs for imported wine range from 11 cents to 29 cents per bottle, according to the group.” The discrepancy, the Institute maintains, inhibits US wine exports to France and other EU countries.

    Published on: June 11, 2019

    Amazon this morning announced the opening today of its second New York City Amazon Go checkout-free store - and its 13th overall - at 300 Park Avenue in midtown Manhattan.

    The 1,700 square foot store is located across the street from the Waldorf Astoria and just a few blocks east of Rockefeller Center … meaning that it will see a lot of pedestrian traffic in the high-density location.

    One of the innovations at the new store is a Starbucks self-service station that allows customers to brew their own coffee, lattes and cappuccinos; the concept has been tested in one other Amazon Go store, in Seattle.
    KC's View:

    Published on: June 11, 2019

    • The Detroit Free Press reports that Kroger has announced that it will begin selling cannabidiol-infused products at stores in several states,” including 92 stores in Michigan. CBD, the story notes, is the non-psychoactive compound in cannabis.
    KC's View:

    Published on: June 11, 2019

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

    Digital Trends writes about how “Amazon has made dozens of updates and improvements to its Echo system to not only make it more functional, but also to make Alexa sound more human. The result so far has been to change her originally somewhat drab voice into a much more pleasant, natural-sounding one. Now even more improvements have been made on that front.”

    This latest improvement, the story says, “is still in its early stages but is expected to go live in the coming months. The new algorithm has made the Alexa 20% more accurate in answering questions, according to Amazon. This means that users can have a more natural, more fluid chat with Alexa that doesn’t have that stilted, artificial quality.”

    GeekWire reports that Amazon is closing down its Amazon Restaurants food delivery business in the US, six months after it closed the same business in the UK.

    According to the story, “Amazon Restaurants first launched in Seattle back in 2015. Amazon expanded the program across more than 20 U.S. cities and later in London. The service gave Prime members a way to get meals delivered to their door, using the Amazon Restaurants website or through the Prime Now shopping app.”

    However, as the story notes, “the competition is fierce in the food delivery market, with companies such as Uber and Grubhub seeing big growth in recent years.” It was a market that Amazon was never able to really crack, though it does deliver food from its Whole Foods division.

    Fast Company reports that Amazon “has a new store credit card targeted at people with less-than-perfect credit scores. In partnership with Synchrony Bank, the ‘Amazon Prime Store Card Credit Builder’ lets people put down a refundable security deposit (yes, like an apartment), which will be used to set the card’s total credit limit. Synchrony will then collect that deposit from you and give you a line of credit.

    From there, people can spend money on using their new credit from money they footed. Depending on how much money they spend on the card, users get 6, 12, or 24 months of no interest.”

    There’s a catch though - “The card’s APR is 28.24% … According to WalletHub, the average interest rate for people with fair credit is 22.99%, and the average store credit card interest rate is 25.76%.”

    Yikes. Sounds like Amazon is focused squarely on creating a situation like that described in the old song - they’ll owe their souls to the company store. I like the idea of helping people with bad credit to improve those scores, but those usurious rates seem a little extreme and probably not helpful long-term.
    KC's View:

    Published on: June 11, 2019

    Bloomberg reports that Starbucks “this month will begin a first-of-its kind trial of reusable cups at London’s Gatwick airport … Starbucks locations at the airport will charge customers 5 pence for disposable cups while offering a reusable cup for free. Even if just 250 customers a day opt for a reusable cup, more than 7,000 cups could be saved in the monthlong trial, Starbucks estimates. The company plans to track the number of returned cups, experimenting with different collection points to maximize the return rate.”

    • The Wall Street Journal this morning reports that the $683 million deal that would have a hedge fund controlled by Elliott Management Corp. acquiring Barnes & Noble may, in fact, not be a done deal after all.

    The story says that book distributor Readerlink LLC is looking to make a competitive bid that would top the price offered by Elliott; Readerlink, is described as “a distributor of books to non-book retailers such as Target Corp. and Walmart Inc.”

    It is expected that a Readerlink bid could come as soon as the end of this week.

    Reuters reports that in the UK, Tesco says that “it will implement a 10.45% pay rise for store and distribution centre staff by October 2020, though they will lose an annual bonus … Tesco said the increase will be implemented in two stages - from September. 1 this year pay will increase by 6.9% to 9.00 pounds then on Oct. 4 2020 pay will increase again by 3.3% to 9.30 pounds.

    “The group said it had agreed with union Usdaw that it will replace a staff bonus - the Colleague Bonus Plan - permanently with the higher hourly rate.”
    KC's View:

    Published on: June 11, 2019

    Two upcoming retirements have been announced in the past couple of days, and deserve mention here.

    • Dave Jones, Kellogg Company’s Vice President of Industry Initiatives, will retire later this year after 33 years with the company. Everyone who knows Dave appreciates his passion for the business, his support of retailers - especially in the independent sector - and his willingness to contribute time and energy to ongoing educational efforts and creating connections in an often fragmented industry.

    • And Laurie Gethin, who has worked at the Food Marketing Institute (FMI) for more than a quarter-century, will retire from her role there as director of education later this month. I’ve worked with Laurie a lot over the years, as she has been kind enough to use me for various events that she has programmed, and she’s a class act - dedicated to the needs of FMI’s members, rigorous about putting on illuminating conferences, and someone with whom working always has been a pleasure.

    All I can say about Dave and Laurie is that I always figured they were younger than me, and so I can’t quite figure out why they’re retiring. But I wish them luck and happiness as they move onto the next chapters in their lives.
    KC's View:

    Published on: June 11, 2019

    …will return.
    KC's View: