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    Published on: August 6, 2019

    by Michael Sansolo

    The simple truth is we all make mistakes and lots of them. At our best, we learn and grow thanks to those mistakes and become all the better for it.

    That truth was illustrated this week by Sean McVay, head coach of the Los Angeles Rams football team. McVay’s team, you may recall (I know I didn’t), lost in the last Super Bowl to the New England Patriots and now, with his team gearing up for a new season, McVay had something unusual to say.

    That is, he accepted - even embraced - the blame for that championship game loss. As McVay told Yahoo Sports, “The thing that’s been consistent in all the leaders that I’ve met – business leaders, coaches – they’re constant learners. There’s a security in their vulnerability that they still need to learn things. And let’s be honest, I certainly don’t have it all figured out, either.”

    McVay admitted that he was soundly out-coached in the Super Bowl by the ever-irritating football genius Bill Belichick, which led to his team’s loss. McVay said he knew this as soon as the middle of the game, when he realized that he wasn’t prepared (and therefore neither was his team) for everything the Patriots were doing.

    There’s powerful business and life wisdom in what McVay had to say - and frankly, in what Belichick did to him. Belichick’s Patriots beat the Rams by throwing completely a completely unexpected and unpredictable game plan at them. Which is what every business has to do in order to dominate the competition. If you do what is expected, then you can expect the opposition to know how to counter it. But if you do the unexpected … well, you’re essentially channeling Belichick and the Patriots.

    So the lessons are clear. From Belichick we learn the importance of innovating. Despite his incredible success with the Patriots in the past 20 years, he’s constantly trying new ways to win and as he demonstrated in the Super Bowl, he is still capable of finding new winning formulas. It’s a reminder to all of us to keep experimenting no matter how strong our record of success.

    From McVay we learn that we have to prepare for the unexpected. As the young coach admits, he studied up hard on the Patriots tendencies, only to come up unprepared for those new wrinkles. We too face uncertainty from our competitors and frequently the cost of our losing game plans is far greater than a single game. We need to plan for the unexpected because somehow that’s what is always coming.

    McVay isn’t done. Not by a long shot. He is all of 33 years old - the youngest head coach in the history of the National Football League - and has already achieved staggering success in his field. It is a pretty good bet that he won’t make this mistake again.

    Like McVay, we need the honesty to fess up when we make a mistake. It’s a situation none of want to face, but the truth is it happens again and again. One has to believe that McVay’s team probably found additional reasons to trust and listen to their coach thanks to his candor. He volunteered to take the blame without throwing them under the bus. It will be interesting to see if his bravery is rewarded by his team’s effort this season.

    Managers at all levels can learn from that honesty because admitting mistakes may lead to learning from them. More importantly, we need create workspaces where honesty is rewarded, not punished—a lesson we’ll likely see from McVay’s bosses this year.

    To paraphrase Alexander Pope, to err is common, to learn, well that’s truly divine. Certainly, our goal is not to make errors or to lose, but if we use those moments to learn and grow we might make ourselves, our teams and our companies stronger than ever.

    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: August 6, 2019

    The Washington Post reports that despite being under pressure from anti-gun advocacy groups that have become more active in the wake of the killing of 20 people in one of its stores in El Paso, Texas, Walmart said that it “will not stop selling firearms or change its open carry policies.”

    Spokesman Randy Hargrove tells the Post, “There has been no change in company policy. With this incident just having happened over the weekend, our focus has been on supporting associates, customer and the El Paso community.”

    The Post puts the Walmart reaction in context:

    “The retail giant sells guns in about half of its 4,750 U.S. stores, making it one of the nation’s largest sellers of firearms and ammunition. It requires store employees to undergo active shooter training every three months, and allows shoppers to carry firearms openly in cities and states where it is legal … Walmart, which has been selling guns for decades, has gradually tightened its gun policies in recent years. It stopped selling assault-style rifles in 2015 and said it would focus instead on firearms for hunting and sports. Last year, it raised the minimum age for gun and ammunition purchases from 18 to 21, two weeks after a mass shooting in Parkland, Fla., left 17 students and teachers dead.”

    The story notes that the El Paso shooting, carried out by what is being described as a white nationalist domestic terrorist, did not take place in a vacuum. Just a few hours later, there was another mass shooting - in Dayton, Ohio, where a man wearing body armor shot and killed nine people, including his own sister. And as noted here yesterday, it was the second recent gun attack in a Walmart; the first was at a Walmart in Southaven, Mississippi, where, as Reuters reported, “a disgruntled colleague allegedly killed two co-workers and injured a police officer.”
    KC's View:
    An MNB reader sent me an email yesterday noting that the El Paso shootings were, in fact, the third recent gun attack at a Walmart - in late July, there was a shooting in the parking lot of its store in Auburn, Maine.

    And again, I’m a little shamed I hadn’t even seen that story. I’d seen the stories (though not reported on them because it just seemed gratuitous) about people urinating on and licking product in various Walmarts. But I hadn’t seen the stories about the shootings, and I probably read more news stories on a daily basis than most people.

    Walmart’s problems with gun violence - committed and potential - continue. Newsweek reports this morning that “a man who police said was inspired by the mass shootings on the weekend that claimed 29 lives, was arrested when he entered a Walmart in Florida on Sunday with a weapon and started making threats.”

    Let’s be clear about something. If Walmart were to stop selling guns in its stores, it probably would not have much of an impact in terms of mass shootings - the deeply disturbed individuals who traffic in the language of white nationalism and commit unspeakable acts of domestic terrorism would manage to find guns somewhere else.

    But, deciding not to sell guns would make a powerful statement … and I have to wonder at what point we all have to start making powerful statements, lest we in any way be complicit in the cowardly and despicable acts being committed in the name of some misguided and deeply disturbed ideology.

    It might even be more than that. In his New York Times column today, composed as an open letter to Walmart CEO Doug McMillon, Andrew Ross Sorkin writes that there are meaningful steps that Walmart could take:

    “You could threaten gun makers that you will stop selling any of their weapons unless they begin incorporating fingerprint technology to unlock guns, for example. You could develop enhanced background checks and sales processes and pressure gun makers to sell only to retailers that follow those measures.

    “You have leverage over the financial institutions that offer banking and financing services to gun makers and gun retailers as well as those that lend money to gun buyers. You could use your heft to influence banks and credit card systems to change their processes around tracking gun sales. They have none.”

    He goes on:

    “It would be easy for you, and other chief executives, to argue that controlling the gun violence epidemic is Washington’s responsibility, not yours. But in an era of epic political dysfunction, corporate executives have a chance to fill that leadership vacuum … The 22 people who died in your store this past weekend deserve more than words of consolation to their families. They deserve a leader who is going to work to make sure it never happens again.”

    A friend of mine wrote me an email over the weekend after the El Paso and Dayton shootings about how “the ugly world has come to our doorstep.” It is true. This is something that retailers have to think about, and for which they have to prepare. They need to know, and to communicate throughout their organizations, how to keep their people safe. How to respond when such an event occurs.

    Every school in this country has active shooter drills, so the teachers and students alike know how what to do. They think about when the moment happens, not if. Now retailers have to start thinking and acting the same way, because the ugly world is at their doorstep.

    There is a creeping darkness in the country, invading places like schools and retailers and movie theaters and concerts and community festivals - where people congregate and where innocents used to feel both safe and safety in numbers. Maybe it is up to all of us to shine a little light.

    Published on: August 6, 2019

    Bloomberg has a story detailing ways in which Amazon manipulates its site and pressures its vendors - all with the goal of assuring that it has the lowest prices on items for which it deems it important. It is, the story says, yet another example of behavior that could prove problematic when examined by antitrust regulators.

    Here’s how Bloomberg frames the story:

    “Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say,, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace -- effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon.

    “Pricing alerts reviewed by Bloomberg show Amazon doesn’t explicitly tell sellers to raise prices on other sites, and the goal may be to push them to lower their prices on Amazon. But in interviews, merchants say they’re so hemmed in by rising costs levied by Amazon and reliant on sales on its marketplace, that they’re more likely to raise their prices elsewhere … Merchants have long complained that Amazon wields outsize influence over their businesses. Besides paying higher fees, many now have to buy advertising to stand out on the increasingly cluttered site. Some report giving Amazon 40% or more of each transaction, up from 20% a few years ago.”

    And here’s how the issue could create regulatory headaches for Amazon, according to Bloomberg:

    “Antitrust experts say the Amazon policy is likely to attract scrutiny from Congress and the Federal Trade Commission, which recently took over jurisdiction of the Seattle-based company. So far, criticism of Amazon’s market power has centered on whether it mines merchants’ sales data to launch competing products and then uses its dominance to make the original product harder to find on its marketplace. Harming consumers by prompting merchants to raise prices on other sites more neatly fits the traditional definition of antitrust behavior in the U.S.”
    KC's View:
    It does seem to me that there are ways in which Amazon is going to have to be more careful about how it operates and the extent to which it applies pressure to the marketplace. The argument may be that in forcing low prices it is being consumer-friendly, but that may not be enough in the current environment, in which it seems that giving Amazon a regulatory proctological exam has managed to be one thing about which many Republicans and Democrats can agree.

    Published on: August 6, 2019

    CNBC reports that drugstore chain CVS, which already has made significant moves to establish its healthcare-oriented bona fides, is creating a new Amazon Prime-like program designed to reinforce loyalty among its customers.

    According to the story, CVS’s new CarePass program will offer consumers “free delivery on drugstore products and prescription drugs, discounts on CVS-branded items, a monthly $10 coupon and access to a pharmacy hotline” - all for $5 a month or $48 annually.

    The move follows successful pilots of the program in Boston, Philadelphia and Tampa that resulted in strong appeal to millennials - “20% of people who enrolled were born between 1981 and 1996.” In addition, “CarePass members spent 15% to 20% more at CVS.”

    CNBC notes that “pharmacy chains like CVS and Walgreens are fighting to stay relevant as consumers, especially younger ones, shop online more and in physical stores less. Their business models rely on people buying toothpaste, vitamins and other convenience items in addition to filling their prescriptions.

    “Amazon has already eaten into sales of these items, called front-store products. The e-commerce giant also threatens their pharmacy businesses with PillPack, an online pharmacy it acquired last year.”
    KC's View:
    The only thing that surprises me about this is the fact that delivery via the CarePass program takes one-to-two days, which strikes me as too long when you think about CVS being perceived as being local in orientation.

    Other than this, CarePass strikes me as a good idea … as CVS looks to extend its own version of a healthcare ecosystem.

    Published on: August 6, 2019

    The Daily Republic has a story about the Target Incubator, which is described as being “for Generation Z entrepreneurs aiming to do good for the world and the planet.”

    Last week, the story says, young entrepreneurs from eight startup companies “delivered pitches to an audience of Target executives. The Minneapolis retailer gave each company $10,000 and loaned executives to a seven-week program where the entrepreneurs learned about negotiating, branding, pitching and more.

    “Selected from a pool of 400 applicants, they are part of Target’s newest accelerator program for early-stage companies.” In addition, the story says, “there’s an accelerator for global retail startups run in conjunction with Metro AG, a German food group, an extension of the three-year program it ran with Techstars. There’s one for emerging brands called Target Takeoff.” And Target has invested in some of these startups, to varying degrees.

    Minsok Pak, Target’s chief strategy and innovation officer, explains the commitment this way: “It is a huge investment in time and resources. What we get is we get access and visibility to some really exciting innovation, technology, products and brands. But also having our teams work with and mentor these companies, we’re getting some of that startup culture infused in how to quickly develop a concept and idea, a lot of the agile thinking, the flexibility and just the vibrancy that these startups bring.”
    KC's View:
    This is what smart businesses do - they find ways to simultaneously extend their reach and intensify their embrace, looking to mine new and different mindsets for competitive advantages that will have both short-term and long-term implications for their businesses.

    Published on: August 6, 2019

    The Philadelphia Inquirer has an unexpected piece about Emily Guendelsberger, who worked for two weeks as an Amazon fulfillment center employee for her new book, "On the Clock: What Low-Wage Work Did to Me and How It Drives America Insane," for which she worked several service jobs as part of her research.

    While the work is tough enough that Amazon has vending machines on the floor that dispense OTC pain medications, Guendelsberger says that critics tend to get it wrong.

    “They’re appalled by a whole host of details — the aggressive productivity tracking, the ambulances waiting outside to take people who pass out from the heat — but for the people working there? To them it’s normal,” the Inquirer writes. “Not only that, but they see these as good jobs. The pay is well-over federal minimum wage. The hours are predictable. You even get unpaid time off — or, if you’re a permanent, full-time employee, you get to accrue paid time off, plus health insurance and a 401(K) match. The workers Guendelsberger talks to tell her that it’s one of the best jobs a person without a college degree or specialized skills could land.”

    That said, the jobs aren’t perfect. The warehouse floor employees are constantly monitored to make sure that they are meeting productivity expectations, and there does seem to be a sense of loneliness - it is designed to be almost impossible for employees to talk to each other, so the job isn’t just hard, but also isolating. The micromanagement also means that employees have no room for independent thought or innovation because “managers treat them as if they aren’t smart enough to think, like they’re just brute labor.” Or robots.

    You can read the entire story here.
    KC's View:
    Wow. Not an entirely positive story, to be sure. But “one of the best jobs a person without a college degree or specialized skills could land”? Didn’t see that coming.

    Published on: August 6, 2019

    Yesterday’s piece about the new Fulton Fish Market direct-to-consumers sales effort featured two links - one of which was broken.

    You can read the New Yorker story that prompted MNB’s interest here.

    And … you can check out the excellent site here.
    KC's View:

    Published on: August 6, 2019

    • Amazon announced today the opening of two new Amazon Go checkout-free stores - one at 53rd & Lexington in New York City (the third in the Big Apple) and the other at Embarcadero Center in San Francisco (the fourth in the city by the Bay).

    The company said that “in total, we now have 15 Amazon Go stores open overall in Seattle, Chicago, San Francisco, and New York City. We have also previously confirmed three new Amazon Go stores are coming soon to Madison & Minor in Seattle, and One Two Pru (Prudential Plaza) and Merch Mart in Chicago.”

    • The Pittsburgh Post-Gazette reports that Giant Eagle has “inked a lease deal to open a 23,000-square-foot space” that will serve as a tech hub in Lawrenceville, Pennsylvania, with “about 150 current and new employees at the office” … Giant Eagle’s planned tech annex will focus on supporting the company’s digital offerings.
    KC's View:

    Published on: August 6, 2019

    Bloomberg reports that “Walmart Inc.’s Flipkart plans to start a free Indian video streaming service in coming months, escalating a fight with Inc. by borrowing its arch-foe’s tactics.” The plan seems to be “to roll out video streaming for members of its Flipkart Plus loyalty program by September ahead of the peak Diwali shopping season, people familiar with its plans said.”

    According to the story, “Flipkart won’t initially produce originals -- a route that’s proven costly for online platforms including Netflix Inc. -- and instead license content from the likes of Walt Disney Co. and local studios such as Balaji Telefilms … In a departure from Amazon Prime, Flipkart Plus video-streaming will come free just like its no-subscription fee loyalty program. Flipkart shoppers can become members by amassing 300 ‘super coins,’ at a rate of 2 for every 100 rupees ($1.40) spent on its platform.”
    KC's View:

    Published on: August 6, 2019

    Reuters reports that UK retailer Tesco plans to eliminate some 4,500 jobs from its Metro store division in an effort “to improve the efficiency of a format that is increasingly used by customers daily rather than for a traditional weekly shop.” The retailer, according to the story, “is restructuring operations in response to changing consumer habits, driven by the rise of online shopping and increased competition from discounters Aldi and Lidl.

    “The company said the changes in its 153 Metro stores - medium-sized shops found on Britain’s shopping street and by railway stations - would allow it to shift stock more quickly to the shelves and cut the time it was held in the store room.”

    • The Wall Street Journal reports that “Tyson Foods and other major chicken companies said they received subpoenas from the Justice Department, signaling an expansion of a criminal investigation into allegations they colluded to prop up prices.”

    Similar subpoenas apparently have been issued to Pilgrim’s Pride Corp. and Perdue.

    The regulatory interest follows accusations by Walmart and other food companies that “processors coordinated chicken breeding to hold down production, monitoring one another’s operations through an industry benchmarking service, while reporting abnormally high prices to an industry index used in some supply contracts with grocery stores.”

    • The Wall Street Journal reports this morning that “Barneys New York Inc. is preparing to file for bankruptcy protection and nearing an agreement with lenders for a financing package that would give the luxury retailer time to find a buyer … The restructuring plan under discussion calls for Barneys, which operates 13 department stores and nine warehouse stores, to immediately shut down most of its locations and look for a buyer for seven core stores.”

    The story goes on to point out that “the retailer, controlled by the New York hedge fund Perry Capital, struggled to navigate the rise of e-commerce as well as a steep rent hike for its flagship store in Manhattan … Barneys’ travails come as traditional retailers are struggling with the shift to online shopping and facing off against a host of technology-driven startups like Net-a-Porter, an online fashion seller, and The RealReal Inc., which lets consumers buy or sell secondhand luxury goods.”

    This would be Barneys’ second trip to bankruptcy.

    USA Today reports that “a day after closing 29 restaurant locations, Perkins & Marie Callender’s LLC filed for Chapter 11 bankruptcy protection Monday … The Memphis, Tennessee-based company said Monday it plans to sell its Perkins’ business and a segment of its Foxtail bakery business, which supplies to its restaurants and distributors to ‘Perkins Group LLC.’  This is an arrangement known as a ‘stalking horse’ bid and sets a floor for bidding on the company's assets with a court-supervised auction expected in September.”

    More than 1,000 employees are affected by the store closures.

    MarketWatch reports that “Yum Brands will shutter hundreds of Pizza Hut locations, bringing the total U.S. store count to about 7,000, as it makes the transition to a fast-casual delivery format from a dine-in setup.”

    There currently are 7,496 Pizza Hut locations in the US, according to the story.
    KC's View:

    Published on: August 6, 2019

    • Albertsons announced that Mike Theilmann has been named EVP & Chief Human Resources Officer at the company. He comes to Albertsons from executive search firm Heidrick & Struggles, where he was Global Practice Managing Partner, Human Resources Officers Practice.

    He succeeds Andy Scoggin, who had said he would leave the company at the end of the calendar year.
    KC's View:

    Published on: August 6, 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

    KC's View:

    Published on: August 6, 2019

    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 this 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.
    KC's View:

    Published on: August 6, 2019

    Yesterday we took note of a Boston Globe story about how Spring Hill Dairy Farm, which has been identified as the source of tainted water that was sold under private labels at chains that included Whole Foods, CVS, Stop & Shop, Market Basket and Roche Brothers, has closed down its water business. The company blamed the media and the regulatory environment for the move, continuing to maintain that it had operated within federal regulations.

    I thing it was rather disingenuous - and that’s putting it mildly - to blame the media for reporting on an entirely legitimate story; I also commented that while the regulatory issues did create problems, that’s no excuse:

    I still think there is a problem that when chemicals like PFAs are found in water, there needs to be a mechanism for everybody to be told - stores and customers - and the water gets taken off the market. Way too many regulatory loopholes here for my taste.

    Not to mention companies that may have been more interested in their bottom line than consumers’ well-being.

    MNB reader Carl Jorgensen responded:

    We recently bought 6 gallons of Whole Foods 365 brand spring water. Then we saw the Boston Globe article about Spring Hill Dairy Farm water being contaminated with PFAs. We checked the 365 water labels, and sure enough, the water was from Spring Hill Dairy Farm. We took the bottles back to Whole Foods, where our money was immediately refunded, and the customer service desk told us that it had been recalled by Whole Foods. That’s the right way for a retailer to handle a situation like this, regardless of state vs. Federal standards.

    Agreed … but I would suggest that retailers can and should go farther. If you paid for that water with a card - and especially if you used an Amazon Prime membership at checkout - Whole Foods should’ve known that you bought that water, and reached out to you proactively.

    Yesterday we also reported that D-I-Y retailer Lowe’s is laying off thousands of store employees who do things like assemble barbecue grills and perform janitorial services; the company will be outsourcing those jobs in an effort to cut costs and improve profits.

    I commented:

    This strikes me as an Instacart-style mistake. Short-term it may save some money and make the quarterly results look better. But long-term, Lowe’s may be giving up the kinds of services that could be a differential advantage if properly deployed. You outsource stuff like this, and you suddenly have people doing things that could end up undermining your brand equity and value proposition.

    One MNB reader wrote:

    Almost everyday I receive an email from Home Depot about some special promotions.  On the other hand, I have a Lowes credit card and shop their occasionally, but I have never received an email from them.   Their stores are brighter and cleaner than Home Depot, but to me they have no image other than convenience.  And as they close stores, the convenience factor is going away.

    Finally, we reported yesterday that as United Parcel Service (UPS) and FedEx introduce Sunday deliveries as a way of keeping up with an e-commerce economy in which customers want everything tomorrow and retailers want to keep them happy, they’ll be paying the Sunday delivery folks lower wages than paid to weekday drivers.

    I commented:

    I could be wrong about this, but the situation strikes me as one that is ripe for labor discontent, which wouldn’t be good for FedEx and UPS if suddenly its Sunday workforce got a case of why-don’t-we-make-as-much-as-the-the-folks blues. I understand that in order to make Sunday delivery work, they need to make it cheaper to execute. But this strikes me as yet another case in which consumers are being sold something but they don’t really understand what it costs. Which is fine, until it falls apart, which it well could.

    One MNB reader disagreed:

    Nobody is forcing these people to take those jobs.  If the salary makes the supply of workers lag the demand for workers, the companies will obviously either have to increase them or abandon Sunday deliveries.

    The one thing they won’t be able to do is abandon Sunday deliveries. Once that door has been opened,. it can never be closed … at least, not without doing severe damage to the business’s customer appeal and competitiveness.
    KC's View: