business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: August 15, 2019

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy.

    When I’m in Portland, as I have been all summer, it usually is my preference to go to Stumptown Coffee. I have my morning routine - I run, come back to the apartment, shower, have breakfast, and then walk the mile or so to Stumptown on Third to have two cups of black coffee. I do it that way because it forces me to get out, and I dedicate my time there to a) going through email and b) reading the New York Times online. What can I say? I’m a creature of habit.

    However, during the weeks that Mrs. Content Guy is in Portland with me, we tend to go to Starbucks, because that’s what she prefers. I’m cool with that - she’s been patient enough to allow me to go to Portland for eight summers in a row, so I’m inclined to let her choose where we go for coffee.

    The other day we were sitting in Starbucks, drinking coffee and chatting about nothing ion particular, when an older guy came in. And as he walked through the door, pretty much the entire staff perked up. “Hey, Bob!” they all called out.

    Clearly, Bob was a regular. And it seemed to me that in that moment, “Hey, Bob” were two of the most powerful words that they could have spoken … especially if you happen to be Bob.

    We all know Starbucks. Huge company. Getting huger all the time. One of the hardest thing about being a company so big has to be maintaining the right culture … and it struck me that “Hey, Bob” indicated that at least in this store, they got it right.

    When you think about it, maybe it doesn’t matter how big a company is. Treating customers like regulars and regular customers like they are special has to be at the top of the list in terms of cultural imperatives.

    We all want to be Norm from “Cheers.” Hell, I know a lot of people who want to be me when I go to Etta’s and see Morgan, my favorite bartender ever … there’s such power in being treated as regular.

    Do your people know your customers? Do they greet them by name? Are you stressing that as a point of difference? Are you finding a way to reward them for be that invested in your business?

    “:Hey, Bob!” Two critically important words that may actually spell the difference between a mediocre experience and a great one.

    That’s what is on my mind this morning and, as always, I want to hear what is on your mind.

    KC's View:

    Published on: August 15, 2019

    by Kevin Coupe

    The Washington Post has the very definition of an Eye-Opener this morning, reporting on places where the average temperature has increased by two degrees Celsius since 1895, which “has emerged as a critical threshold for global warming. In the 2015 Paris accord, international leaders agreed that the world should act urgently to keep the Earth’s average temperature increases ‘well below’ 2 degrees Celsius by the year 2100 to avoid a host of catastrophic changes.”

    The story says that an “analysis of more than a century of National Oceanic and Atmospheric Administration temperature data across the Lower 48 states and 3,107 counties has found that major areas are nearing or have already crossed the 2-degree Celsius mark … Today, more than 1 in 10 Americans - 34 million people - are living in rapidly heating regions, including New York City and Los Angeles. Seventy-one counties have already hit the 2-degree Celsius mark.”

    The potential consequences, the Post writes, “are daunting. The United Nations Intergovernmental Panel on Climate Change warns that if Earth heats up by an average of 2 degrees Celsius, virtually all the world’s coral reefs will die; retreating ice sheets in Greenland and Antarctica could unleash massive sea level rise; and summertime Arctic sea ice, a shield against further warming, would begin to disappear.”

    Climate change is not uniform, the Post writes: “In the past century, the Earth has warmed 1 degree Celsius. But that’s just an average. Some parts of the globe - including the mountains of Romania and the steppes of Mongolia - have registered increases twice as large. It has taken decades or in some cases a century. But for huge swaths of the planet, climate change is a present-tense reality, not one looming ominously in the distant future.”

    This Eye-Opening story is worth reading here, and you can even use its interactive tools to figure out where your home is on the climate change continuum.

    Spoiler alert: “Rhode Island the fastest warming of the Lower 48 states,” and is “the first state in the Lower 48 whose average temperature rise has eclipsed 2 degrees Celsius.”
    KC's View:

    Published on: August 15, 2019

    The Associated Press this morning that Walmart’s second quarter results highlighted US e-commerce sales that were up 37 percent, driven by groceries, and same-store sales that were up 2.8 percent.

    According to the story, “Total revenues grew 1.8% to $130.38 billion from $128.03 billion a year ago, beating expectations for sales of $130.11 billion. In the U.S., net sales grew 2.9% to $85.20 billion from $82.82 billion a year ago.”

    Net income rose to $3.61 billion, compared with a net loss of $861 million during the same period a year ago.
    KC's View:

    Published on: August 15, 2019

    Earlier this week MNB took note of a Wine Searcher story about how Amazon is planning a new bricks-and-mortar store in San Francisco that will be dedicated specifically to liquor.

    Well, go figure … it already has one in Los Angeles that it has been operating under the radar for six months.

    Wine Searcher says that the store is located at 3334 N San Fernando Road - pretty much at the juncture of the Glendale and Golden State Freeways, just two miles east of Griffith Park ands about four miles north of Dodger Stadium - and is doing both bricks-and-mortar business as well as using the store as a base from which to make deliveries.
    KC's View:
    This story makes me wonder how many other low-profile experiments Amazon may be running out there that nobody knows about. Betcha it is a lot more than any of us would’ve guessed …

    Published on: August 15, 2019

    The Des Moines register reports that Hy-Vee is opening a new Fast & Fresh store - its third - that “aims to provide groceries, prepared foods, gas and convenience store items at a smaller scale than a typical Hy-Vee grocery store. However, the stores are bigger than a typical convenience store and offer grocery necessities like fresh foods and pre-made dishes that can be warmed up quickly at home.”

    The store, in northwest Des Moines, “will also offer a growler and crowler craft beer station, Hy-Vee Aisles Online pickup, sushi, an alcohol section and 16 gas pumps. It also includes a Starbucks coffee drive-thru.”

    At the same time, Hy-Vee is said to have received approvals from New Hope, Minnesota, officials for a new three-lane, drive-thru, online order, pickup kiosk at its store there, designed to serve customers who use Hy-Vee’s Aisles Online e-commerce service.
    KC's View:
    Smart on all counts. It is incredibly important to keep testing new ideas and pushing the envelope. Remember the line, “Always be closing,” from Glengarry Glen Ross? These days, it is Always be innovating.

    Published on: August 15, 2019

    The New York Times has a story about restaurant businesses that don’t actually have restaurants, but rather built entirely on delivery. While “many of the delivery-only operations are nascent,” the Times suggests, “their effect may be far-reaching, potentially accelerating people’s turn toward order-in food over restaurant visits and preparing home-cooked meals.”

    “Food delivery apps like Uber Eats, DoorDash and Grubhub are starting to reshape the $863 billion American restaurant industry,” the Times writes. “ As more people order food to eat at home, and as delivery becomes faster and more convenient, the apps are changing the very essence of what it means to operate a restaurant.

    “No longer must restaurateurs rent space for a dining room. All they need is a kitchen — or even just part of one. Then they can hang a shingle inside a meal-delivery app and market their food to the app’s customers, without the hassle and expense of hiring waiters or paying for furniture and tablecloths. Diners who order from the apps may have no idea that the restaurant doesn’t physically exist.”

    The two most popular options among restaurateurs who are embracing the moment - virtual restaurants that are attached to physical establishments, but have dedicated kitchens for the delivery side of the business, and ghost kitchens, operated either individually or on a group basis, that are purely “meal preparation hubs for delivery orders.”
    KC's View:
    The Times makes the point that “even as delivery apps create new kinds of restaurants, they are hurting some traditional establishments, which already contend with high operating expenses and brutal competition.”

    Which actually makes the point - as consumer tastes and desires evolve, you may not be able to afford to be a “traditional establishment.” You have to change with them, and maybe even ahead of them. Fortune favors the bold … though trying to satisfy customers shouldn’t necessarily be the definition of “bold.”

    Published on: August 15, 2019

    The Wall Street Journal reports that retailer-owned cooperative Ace Hardware Corp. “plans to spend billions in the coming years to expand its e-commerce capabilities, including a recently launched buy-online-deliver-from-store service.”

    Each of the more than 5,000 Ace Hardware stores has “a small-business autonomy from the retailer-owned cooperative’s corporate branch, and more than half of them have yet to embrace the company’s online-delivery vision.” But, the story says, CEO John Venhuizen “believes the local focus of his company gives it an edge over bigger competitors such as Home Depot Inc. and Walmart Inc., which also are spending billions to shorten the time it takes to reach any home with a delivery, no matter the size.”

    The battle, he says, will be fought on three fronts: “The first is service. Having local stores with local ownerships who live in, work in, and know that community better than anyone at corporate ever will is a huge strategic advantage to us.

    “The second is convenience, and what we’re trying to do is exploit the geographic proximity advantage we have. Versus everyone you just mentioned—Home Depot, Lowe’s, Amazon—we have a lot more stores. We have 5,200 stores around the world in more than 67 countries, and more than 75% of U.S. households are within 15 minutes of an Ace store. We’ve got about $2 billion of inventory sitting right in the neighborhoods.

    “The third is quality. We have a fanatical devotion to locally relevant, high-quality products that are different than what you can get at some of the competitors you just mentioned.”

    To foster some degree of loyalty, the retailers also is using an Ace Rewards program that will mean that “you get anything you order over $50 delivered for free, all the time.”
    KC's View:
    Two things about this story intrigue me.

    One is that Ace has more stores out there than Home Depot and Lowe’s combined. That surprised me - I had no idea - and it strikes me as an enormous advantage if that kind of footprint can be leveraged. (Hard to do if they’re all independent businesses.)

    The other is how Venhuizen points out that Ace is “actually leveraging our local stores, their inventory, their vehicles and - here’s the key point - their people to do the delivery to their neighbors. There isn’t some random who-knows-who delivering the product to whip onto your porch … The person delivering the product knows what the product does, how to use it, how to start it, how to season it in. That matters. Now, sometimes it may be far less relevant, but the greater the degree of complexity, the more important the degree of knowledge.”

    That’s precisely the opposite of what many supermarkets are doing, outsourcing delivery to companies like Instacart. Now, a hardware store doesn’t have the same issue of fresh foods and perishables … but I love the ideas that part of their business model is owning the delivery customer experience. That’s critical, I think, if you are going to be differentiated and successful long-term.

    Published on: August 15, 2019

    CNBC reports that department store chain Macy’s, having just emerged from a tough second quarter, has decided to venture into the resale marketplace as a way of attracting millennial and Gen Z customers, who are perceived as finding this option to be attractive.

    Macy’s, the story says, “started a pilot this month with resale marketplace ThredUp at 40 Macy’s stores across the country, taking up about 500 square feet of space at each location … As Macy’s puts merchandise from ThredUp into its stores, it will be taking items from brands and categories that Macy’s doesn’t currently offer.” This, the company hopes, will avoid cannibalization.

    At the same time, CNBC reports, Macy’s “ is working with CaaStle, a start-up that assists retailers in rolling out subscription clothing services.”

    Not only will this give Macy’s an entry with which to do battle with pure play options like StitchFix, but it also follows similar offerings created by companies that include Nordstrom and Nike.
    KC's View:
    Maybe this makes sense. Or maybe it won’t matter because millennial and Gen Z customers will never go into a Macy’s, so they’ll never see the resale section.

    Published on: August 15, 2019

    Bloomberg reports that Joe Simons, chairman of the Federal Trade Commission (FTC), says that “he’s prepared to break up major technology platforms if necessary by undoing their past mergers as his agency investigates whether companies including Facebook Inc. are harming competition.” Simons says that “breaking up a company is challenging, but could be the right remedy to rein in dominant companies and restore competition.”

    The story notes that “the FTC and the Justice Department are stepping up scrutiny of the tech industry amid a bipartisan outcry in Washington to rein in the power of the dominant companies … Antitrust experts and lawmakers argue that giant tech companies have used a wave of takeovers of startups to shut down competition by buying -- and eliminating -- emerging rivals.”

    At the same time, Simons says that “the agency is interested in hearing complaints alleging that Inc. is punishing merchants that offer lower prices on other e-commerce websites.

    “‘Anyone who wants to complain, we’re all ears,’ said Simons in an interview Tuesday. ‘That’s the type of scenario that would be among the ones that we would want to look at, but I can’t tell you we are doing it for any particular platform’.”
    KC's View:

    Published on: August 15, 2019

    CNN reports that “Walmart has removed about 1,000 third-party items from its website … after determining the products violate company policy.”

    The story notes that Walmart “regularly reviews its 75 million online offerings,” and in this case was looking for products violating its ban on merchandise that glorifies violence.

    Walmart has been criticized in some quarters for not moving fast enough to change some of its gun-related policies in the wake of the mass shooting by a white nationalist domestic terrorist that resulted in the deaths of 22 people in El Paso, Texas.
    KC's View:

    Published on: August 15, 2019

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

    • The Philadelphia Inquirer reports that Ahold Delhaize-owned Giant Food, having already invested in two small-format urban stores - dubbed Giant Heirloom Markets - in Philadelphia, now plans to open “a two-level urban flagship store in downtown Philadelphia,” a 65,000 square foot store in the RiverWalk development.

    The store is projected to be open in about a year, and is a response to fast-growing population numbers in the city.

    According to the Inquirer, “Giant said the new flagship store will take inspiration from the Heirloom Market model and dedicate shelf space to community vendors. There will also be options for customers to order online and pick up in store or have the groceries delivered. In addition, this store will have Giant’s largest plant-based department … There will be an outdoor terrace at this two-story location, where shoppers will be able to eat their food or drink a glass of wine … There will also be opportunities for a small stage with live music.”

    USA Today reports that Hy-Vee “is investigating possible security issues with payment processing systems at Hy-Vee fuel pumps, drive-thru coffee shops, restaurants and store-owned Wahlburgers locations that may have left customer payment data vulnerable … Hy-Vee said it recently detected unauthorized activity on these specific payment processing systems, which triggered the investigation with the help of leading cybersecurity firms.”

    Specific dates and locations have not been disclosed, the story says. Hy-Vee says it has “taken the appropriate actions to stop any unauthorized activity on the payment processing systems, have notified federal law enforcement and the payment card networks involved.”

    • The Associated Press reports that a trade association representing companies in the vaping industry is suing the US Food and Drug Administration (FDA), challenging its efforts to regulate the sector, saying that “most companies will not be able to afford to conduct large, expensive studies needed for FDA review. Only products that meet FDA standards would be permitted to be sold.” The suit by the Vapor Technology Association claims that the FDA keeps “moving the goalposts,” making it tough on its members to do business.

    The FDA has not commented on the suit.

    I’m sure the tobacco business would’ve loved to stop the government from conducting studies into its products, too. I’m no lawyer, but I hope this suit gets dismissed, and quickly. Vaping is a nicotine delivery system, nicotine is addictive, and as far as I’m concerned, this is just one way for companies to do an end run around growing societal disgust with the tobacco habit and business.

    • In the UK, the New York Times reports, the Committee of Advertising Practice has banned two specific television commercials, saying that they violate “new rules against harmful gender stereotypes.” In this case, the offending gender stereotypes are dumb fathers and placid women.

    A Volkswagen ad, the story says, showed “a series of men ‘engaged in adventurous activities,’ the regulator said, while the only two women depicted were asleep in a tent and sitting by a baby carriage. The main characters of the ad from Mondelez, for the cheese spread Philadelphia, were two distracted young fathers in a restaurant who appeared ‘unable to care for children effectively’.”

    The Times writes that “the rulings come at a time when advertisers are facing increasing scrutiny of the images they project and the ways in which they are likely to influence behavior, particularly in children.”

    I tend to agree that such stereotypes are offensive, but you’d think that they’d have better things to do, like maybe prevent the collapse of the country?

    • The Journal Times reports that Dick’s Sporting Goods has converted three existing stores units into Dick’s Sporting Goods Clearance Outlets, selling only clothing and footwear. The stores do not offer the exercise equipment sold in its traditional units.

    The company has not commented on the conversions, and there is no suggestion about whether they might herald a broader strategic move.

    USA Today reports on a new study suggesting “the "cancer-linked" presence of PFAS, also called "forever chemicals," in “fiber bowls used at fast casual dining spots and other restaurants including Chipotle, Sweetgreen, Dig Inn and other locations in New York City.

    “The chemicals are being investigated by scientists and government officials amid concerns over links to cancer, obesity, reproductive health problems, immunotoxicity and other health problems. PFAS have been used in consumer goods since the 1940s, according to the Food and Drug Administration. They've also been found in water. 

    “The methodology used in the report has been questioned by the Foodservice Packaging Institute, a trade group that claims the report's chemical indicators may not always prove accurate. And Chipotle contended its fiber bowls are safe and compliant with Food and Drug Administration rules.”
    KC's View:

    Published on: August 15, 2019

    Regarding the T-shirts that Walmart has pulled off its site because they seemed to promote gun violence, MNB reader Woody Weddington wrote:

    Have we became a society of people that are so intolerant that a retail market is so restricted to selling merchandise that they no longer can make a profit.  If Walmart doesn’t sell items, Amazon will.


    But what shall it profit a man, if he shall gain the whole world, and lose his own soul?

    MNB reader Steve Rash wrote on a different issue:

    Your anger with Instacart is misplaced.  You should be angry with the retailers who chose to ignore an upcoming trend and allowed the space for Instacart to be created.  This is not a new trend.  It's been almost 20 years since Peapod and MyWebGrocer began offering delivery.    Instacart is filling a need that allows these retailers to offer delivery to their customer base, with little-to-no investment, so they can still try to be competitive.  The convenience of delivery is no doubt the driving factor here.  But, I'd argue that most folks hate going to a grocery store to shop because the task is such a miserable one.  The retailers created that by being a transaction oriented merchant vs. building relationships.  The customers using Instacart were just waiting for something better to come along.  Well, it's here.

    First of all, I’m not angry at anybody. Frustrated, maybe. Passionate about this issue, certainly.

    I think I’ve actually been pretty clear that I completely understand why Instacart is doing what it is doing, and why it is a good business model - for Instacart and its investors. It is even a good short-term solution for retailers who need to get into delivery fast.

    My problem is with retailers who want to outsource this segment of their business for the long-term, and who in my opinion are being way too cavalier with customer data, virtually empowering Instacart to steal their customers and subvert their businesses.
    KC's View:

    Published on: August 15, 2019

    In this, the second of two podcasts recorded on the exhibit floor at the United Fresh Produce Association show in Chicago and produced by GMDC, we look at how companies go outside their traditional lanes to explore new consumer connections and marketing advantages as they seek fresh (in every sense of that word) levels of relevance and resonance to the shopper. Our guests are two executives from the world of retail who operate in completely different geographic areas but who, as the retail world goes through a series of revolutions, seem to have more in common every day.

    They are:

    • Greg Corrigan, senior director of produce and floral at Raley’s, where he’s worked for two decades; Greg also is the current chairman of United Fresh.

    • Tony Stallone, the “produce guru” at Ahold Delhaize-owned Peapod, where he brings a lifetime of experience in the produce business to one of the first and arguably most sustainable e-commerce business models.

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

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

    This edition of the Retail Tomorrow podcast is sponsored by Hillphoenix, shaping the future of retail through technology and design innovation.

    Pictured, left to right: Kevin Coupe, Greg Corrigan, Tony Stallone

    KC's View: