business news in context, analysis with attitude

Published on: July 30, 2019

by Michael Sansolo

Count this among the things that are likely to make you say,“Wow!”

Last week we had perhaps had the most disturbing story ever here on MNB - the small piece Kevin wrote about diapers containing technology to alert parents when their child needs a change.

I doubt anyone would call us Luddites, but frankly there are places where technology simply doesn’t have to go and diapers would be high on my list. Changing diapers is never anyone’s favorite job, but determining that your bundle of joy needs tending isn’t that hard and provides some of the most colorful and memorable parenting times. (Not to mention odorous.)

It takes us back to the wonderful Jurassic Park lesson - simply because you can do something doesn’t mean you should. It’s a lesson we all need to learn repeatedly about technology. It won’t matter how much tech we load into the shopping experience if we aren’t focused on what improves the shopper experience. Otherwise, we are just making more noise.

So it’s with some joy that I have to share a story of well-used technology that made both my wife and I say “that’s cool” and in a happy way.

For reasons that require too much detail, we needed a specific product from Home Depot badly and realized it while more than an hour from home. My wife, ever the intrepid one, got on her phone and placed an order at a store we’d soon be passing, just off the highway on which we were traveling.

Home Depot told us the item was in stock and would be available at the pick up locker. They sent her a passcode and a QR code to open said locker. We thought “fine” and drove on. (I was driving obviously, in case you were worried.)

Forty-five minutes later we arrived at the store and I dutifully followed the signs to the pick up area to find my locker - only I went to the wrong place. A front-end staffer turned me around to show me a nearby sleek tower that serves as the pick up locker.

As we walked up to the monolith, a door slid open, allowing us to access a keyboard and a scanner. We scanned the QR code and the machine blinked to life like a giant candy machine. In seconds our order descended to the open window and we were on our way.

My only regret was I hadn’t filmed the entire transaction to share with you now. It was that cool.

Frankly, I’m no big fan of Home Depot for countless reasons, including my preference to use a local hardware store and my inability to do most home repair tasks without severely damaging my body, home and marriage. But the tower could bring me back.

That’s what cool technology does; it enhances the experience in new and cool ways. It’s like the Coca-Cola Freestyle machines that make every beverage an exciting purchase, or the Disneyland wristbands that make the theme parks even more fun. Cool technology can take a moment, enhance it and make it special, which is what we want. It’s not about the technology; it’s about the moment.

In contrast, on that same trip we stopped at a fast food restaurant and just as I started using the computer screen to order lunch I was diverted by an engaging staffer working the cash register, whose wit and personality quickly convinced me that I’d rather talk to her than a machine.

Making a customer experience special is what wins whether by machine or the personal touch. Even when it comes to dirty diapers.

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: July 30, 2019

by Kevin Coupe

Fascinating piece from Bloomberg about Generation X - located in between Baby Boomers and Millennials and born roughly between 1965 and 1980 - which has ended up being a generation that nobody really noticed or talked about.

But it ends up that they may be having a greater impact than expected … because they are the parents to Generation Z, born between the mid-1990s and the early-2000s. And go figure, one of the things that has been a priority for them has been making sure they don’t end up like “entitled millennials.”

“To start understanding Gen Z and its direct spending power of as much as $143 billion, companies should try studying their Gen X parents first,” the story says. “While there are reams of research linking millennial behavior to their boomer influences, experts are just starting to analyze what connections exist between the previously ignored Generation X and their Generation Z offspring.”

The story goes on: “Without even realizing it, Generation Z’s viewpoints on these topics have been shaped by their Generation X parents, who came of age amid a series of crises: Watergate, the fall of the Berlin Wall, the Challenger explosion, Rodney King. Often, the strife was closer to home: Divorce rates spiked in the 1970s, giving rise to neighborhoods full of tough-skinned ‘latchkey kids’ who craved security but rarely found it either at home or, as they grew up, in a more globalized, less-forgiving workplace.” And “like their parents, Gen Z has also got tougher skins than millennials. While nearly one in four millennials say they might leave their current job in the next two years because they don’t feel appreciated, only 15% of Generation Z cited that reason, a recent Deloitte survey found.”

One interesting trait in Gen Z is an antipathy to debt - they don’t like it, and will do everything they can to avoid it. In fact, the story says, “40% of those aged 18 to 22 have no debt at all, according to a separate survey conducted by pollster Morning Consult. They own fewer credit cards and are instead using debit more often, even if they have to use payment plans or rent stuff - clothes, furniture, gadgets, even car-sharing - rather than own it outright.”

Which is an Eye-Opening piece of information to have in the event you’re trying to sell them stuff.

Published on: July 30, 2019

QSR reports on how McDonald’s plans in coming weeks to expand new predictive technology from 700 of its US locations to some 8,000 - which some experts believe will be “remembered as the point at which the brand became so good at anticipating and catering to consumer behaviors and desires that it would force other competitors to evolve or fall by the wayside.”

The technology was developed by decision-logic company Dynamic Yield, which McDonald’s acquired for $300 million last year.

According to the story, “Dynamic Yield is a big bet on machine learning - the idea that it’s not just a passing fad, but will become the backbone of customer service and marketing for restaurant chains everywhere … Dynamic Yield essentially puts predictive abilities into McDonalds drive-thru menuboards. It gives McDonald’s the chance to create a more personalized experience by varying outdoor digital drive-thru menu displays to show food based on time of day, weather, current restaurant traffic, and trending menu items. It can instantly suggest and show additional products to a customer’s order based on their current selections.”

CEO Steve Easterbrook explains the broad reason this way: “We knew we had to evolve with our changing market and consumer dynamics, and we knew incremental progress wasn’t going to cut it … We were keenly aware that the pace of change inside McDonald’s [was] being eclipsed by the pace of change outside our business.”

Published on: July 30, 2019

Fast Company writes about how “3M is releasing a new type of packaging that requires no tape and no filler, and it can be customized to fit any object under 3 pounds - which 3M says accounts for about 60% of all items that are bought online and shipped. 3M claims that the material, called the Flex & Seal Shipping Roll, can reduce time spent packing, the amount of packaging materials, and the space needed to ship packages.”

The story says that “Flex & Seal is one way that 3M is trying to get in on the gold rush of the on-demand economy. The U.S. Postal Service handled more than 6 billion packages in 2018, and UPS recently reported net income of $1.69 billion in the second quarter of 2019, up from $1.49 billion during the second quarter in 2018. Many of those billions of packages are transported using cardboard boxes.”

However, while this new packaging is recyclable, there are limits: “it’s made of the same material as disposable plastic bags<‘ which means that “similar to plastic bags, the only way to recycle it is to take it to certain retail stores and recyclers, which might be able to include it in their plastic bag recycling program. That means you can’t toss it in your recycling bin with old milk cartons and empty soda cans. Compared to cardboard boxes, which can be easily recycled, that’s a hassle most consumers likely won’t bother with.”

Published on: July 30, 2019

• BizWomen reports that Walmart-owned ModCloth, which sells woman’s vintage clothing and was acquired by Walmart to give it greater access to the millennial market, recently “added an outlet to its online store to not only clear out excess inventory, but also to win new shoppers who have liked but felt they couldn't afford the brand.”

The company says that it “offered 1,600 items for sale initially and many sold out quickly … The company will re-focus on full-price sales from August until the winter clearance season.”

BizWomen notes that ModCloth has been moving in fits and starts since it was bought by Walmart (probably for somewhere between $50 million and $75 million). They announced a plan to open more than a dozen bricks-and-mortar units, but apparently only opened four. Now, there has been speculation that Walmart may be planning to sell ModCloth … it is seen as a non-core asset, and Walmart has been facing e-commerce losses that could be as high as $1 billion this year.

Published on: July 30, 2019

Yahoo Finance has a good interview with Scott Moses, managing director and head of the grocery and restaurants investment banking practice at PJ Solomon, in which he talks about the difficulties that so many retailers have in competing with Amazon.

In the story, Moses - who happens to be an MNB fave - makes the point that Amazon has an enormous financial advantage - a trillion dollar market cap that is bigger than all of its competitors combined, which gives it the ability to “borrow cheaper than most countries.”

“What matters in grocery is whether you’ve got the capacity to make investments in people, in price, in technology and in growth,” Moses says … with the clear implication being that if you don’t have that ability, you need to consider your alternatives.

You can watch the piece here.

Published on: July 30, 2019

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

• Bloomberg reports on how popular food delivery app DoorDash has had to “change the way it accounts for tips. Currently, the company guarantees a base pay for drivers that includes gratuity, meaning if customers tip more, the company pays drivers less of its own money to hit the minimum. DoorDash said it’ll revise the policy and pay drivers the entire amount of the tip for each order on top of their pay for the work, though it has yet to offer details … The change is in response to a flood of complaints from customers and multiple rounds of news coverage drawing attention to the issue since DoorDash instituted the policy in 2017.”

The story notes that “after the DoorDash fracas, Postmates Inc. and Uber Technologies Inc. issued statements assuring customers they give workers the full tip in addition to any promised payments for a job.”


• The Wall Street Journal reports that Amazon is now allowing advertisers to use third-part tools when purchasing ads on its Fire TV platform, rather than forcing them to go through its own systems.

According to the story, “The move extends Amazon’s effort to build its ad business and signals a degree of openness in an industry that has become wary of platforms that sell their own inventory and share limited data with advertisers, known in industry parlance as a walled garden.”

It also is seen as a move by Amazon to fight the perception that it is engaged in anti-competitive behavior, which has led to the beginning of antitrust probes by the Federal Trade Commission, the US Department of Justice and the US Congress.

Published on: July 30, 2019

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

• CNN reports that Kellogg’s is releasing a new children’s cereal called Baby Shark, made with berry-flavored loops and marshmallows, named after the toddler anthem of the same name. Since the song was posted on YouTube in 2015, it has been viewed more than three billion times. (That’s not a typo. Billion.)

The story says it is being released “in partnership with Pinkfong, the Korean entertainment brand that created the song behind the catchy kids tune.”

The story says that the cereal will be carried by Walmart and Sam’s Club while supplies last.

I’m only even aware of Baby Shark because I live with two elementary school teachers, but I do know this - it is the most annoying freakin’ song I’ve ever heard. Extending this damn song’s popularity may be unforgivable.

Published on: July 30, 2019

• Albertsons announced the hiring of Jonathan Gardner, until now the Vice President, Global Sourcing and Supplier Relations at Starbucks, to the role of Group Vice President of Strategic Sourcing.

The company also announced the promotion of David Nelsen, its VP of Manufacturing, to the post of Group Vice President of Manufacturing.

Published on: July 30, 2019

In this new Retail Tomorrow podcast, recorded at GMDC’s annual GM conference in Denver, we focus on the ways in which startups are working to disintermediate traditional retailers … how retailers can turn these innovations to their own advantage … why cultural resistance within companies can be the ultimate enemy of progress … and even brainstorm about a business model that could’ve made Toys R Us relevant again.

You can listen to the Retail Tomorrow podcast here, or on iTunes or GooglePlay.

The Retail Tomorrow podcast series is a production of GMDC, the Global Market Development Center.

Our guests:

• Patrick Fore, CEO and co-founder of Fleat.

• Sterling Hawkins, co-founder of the Center for Advancing Retail & Technology (CART).

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

Pictured, left to right: Patrick Fore, Kevin Coupe, Sterling Hawkins

Published on: July 30, 2019

I’ve gotten some emails from Portland, Oregon-area MNB readers wondering if I am going to have one of those casual get-togethers that we've done here the past few years.

The answer is yes … let's get together Thursday night, August 8, at 5 pm, at Nel Centro, located at 1408 SW 6th Ave, in Portland. I'll plan on being there for a couple of hours, hopefully on the outside patio - and I hope that any MNB readers who'd like to stop by will do so.

Once again, I’m thrilled that our get-together will be sponsored by Portland State University’s Center for Retail Leadership.

Put it on your calendar.

Published on: July 30, 2019

We reported the other day that Albertsons-owned Safeway reportedly has confirmed that a 16,664-square-foot vacant store that used to be a Safeway and later became a Fresh & Easy, in the Richmond neighborhood of San Francisco, will be converted to the Andronico’s banner … the goal is to use the Andronico’s name - it was acquired by the company in 2016 - to attract customers from upscale Seacliff, the community next door.

I commented:

Andronico’s was for many years one of the most respected specialty food retailers in the country, and so I am happy to hear that it may be getting a second life. I would, however, sound one cautionary note. Just calling it Andronico’s won’t make it an Andronico’s. You need talent and passion and commitment to high-quality food and highest common denominator service if you are going to live up to the reputation. Otherwise, you;’re just going to diminish the legacy and disappoint shoppers.

Prompting MNB reader Tom Murphy to write:

I had the experience of working as an integration consultant with SaveMart Supermarkets when they bought 120+ stores from an Albertson’s divestiture. They picked up a number of northern California sites that didn’t quite fit into their current FoodMaxx and SaveMart formats. So, they decided to reopen and rebrand these as Lucky Stores which had a long, positive relationship with NoCal customers.

However, this rebanner was less than successful for at least two reasons: 1) no one in SaveMart had any expertise in this format making it difficult to recreate the “essence” of a Lucky Store and 2) the NoCal consumers over the years since Lucky’s closed, had in their own minds “hyped” its image, services, prices, etc. to the point well beyond reality and to a point that could never be achieved in a banner relaunch.

I suspect this latter challenge will inflict itself on the Safeway efforts with Andronico’s.



We took note the other day of a New York Times story about all the efforts that beverage manufacturers engage in to support recycling education, but the “one approach to recycling that many of these companies do not support has proved to actually work: container deposit laws, more commonly known as bottle bills, which cost them lots of money.”

One MNB reader responded:

As early seventies residents in suburban Portland, where numerous walking trails were strewn with pop bottles, regional convenience chain Plaid Pantry held a weekend campaign to pay two cents for every bottle and can turned in to their stores. This was before any thoughts of legislated bottle deposits.

In that weekend, every bottle and can disappeared from those trails. That action became the basis of Oregon’s pioneering bottle bill, promoted by progressive Governor Tom McCall, and fought viciously by bottlers. The bottlers lost.
 
As a part time citizen of Oregon, I’m betting you see very little bottle/can litter anywhere, a tribute to the program’s success.

Good point.



On the subject of Amazon’s continued interest in the grocery business, despite the fact that its Whole Foods acquisition has been labeled by some as a mixed success, one MNB reader wrote:

Whole Foods has not been able to shake the “Whole Paycheck” reputation under Amazon ownership. This is partly driven by their UNFI supply contract. This expensive, long term, contract runs through 2025.

A new, stand alone, Amazon “grow” chain would allow them to price more competitively through self distribution.