business news in context, analysis with attitude

Published on: August 20, 2019

by Michael Sansolo

No matter how open-minded any of us might think we are, it’s easy to get surprised by changes that just make you say, “Wow!”

At least that’s what I told myself recently.

A week ago, my wife and I pulled into the local shopping center and saw a group of those ‘wow’ moments.

A car directly behind mine had a flat tire and, no surprise, AAA was on scene to handle the issue. All pretty simple right.

The first surprise was the AAA vehicle. I’ve had occasion to call those folks myself and I am used to the sizable wrecker that shows up prepared to handle all manner of suburban problems. Not this time though.

Instead of a wrecker, the AAA vehicle was a small, white Scion, one of the smallest vehicles on the road. But the AAA worker was well equipped with all the usual professional equipment stacked inside that teeny car.

As for that worker, that was surprise number two - a very nice young woman who was clearly very skilled at changing the tire. I know that gender shouldn’t surprise me, but it did.

I spoke with the couple whose car was up on the jack and found their reactions were similar to mine. In fact, the gentleman commented to me that in his youth he (like me) could quickly change a flat tire. But today, with scissor jacks and locking lug nuts, he was completely out of his league. The young AAA worker chuckled at our comments.

I told him there was a time I felt comfortable doing some basic work on my cars. Now I’m terrified to open the hood of my Prius because nothing inside looks like anything that resembles a car engine. Instead it looks like something designed for the Jetsons. Stuff changes!

Now let’s get beyond all those moments that clearly place me in an older age demographic than I’m happy being in. Let’s get rational.

First, it makes tons of sense for AAA to use a micro-car like a Scion to jobs like this. Imagine how much gas that service station is saving and clearly the car has just enough room for all the quick jobs that dominate AAA calls (flat tires and dead batteries). The wreckers can be saved for the heavy towing jobs, but the Scion makes great sense for what I assume are the overwhelming majority of AAA calls.

Second, why wouldn’t AAA have women handling this job? There’s no reason only men can change tires - or at least that’s what I told my daughter - and in times of labor shortages no company can avoid considering half the population for any job.

I share the parking lot moment for several reasons. First, so you can all know, without question, that I’m no where near as enlightened as I think I am. But more importantly it reminds us that we live in a time of rule breaking, innovation and experimentation.

There are times when replacing a massive wrecker with a Scion, literally and figuratively, makes a ton of sense. It just a change we don’t think about until someone actually does it.

I’m giving AAA an A-plus for innovation this time.

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: August 20, 2019

by Michael Sansolo

No matter how open-minded any of us might think we are, it’s easy to get surprised by changes that just make you say, “Wow!”

At least that’s what I told myself recently.

A week ago, my wife and I pulled into the local shopping center and saw a group of those ‘wow’ moments.

A car directly behind mine had a flat tire and, no surprise, AAA was on scene to handle the issue. All pretty simple right.

The first surprise was the AAA vehicle. I’ve had occasion to call those folks myself and I am used to the sizable wrecker that shows up prepared to handle all manner of suburban problems. Not this time though.

Instead of a wrecker, the AAA vehicle was a small, white Scion, one of the smallest vehicles on the road. (See picture below.) But the AAA worker was well equipped with all the usual professional equipment stacked inside that teeny car.

As for that worker, that was surprise number two - a very nice young woman who was clearly very skilled at changing the tire. I know that gender shouldn’t surprise me, but it did.

I spoke with the couple whose car was up on the jack and found their reactions were similar to mine. In fact, the gentleman commented to me that in his youth he (like me) could quickly change a flat tire. But today, with scissor jacks and locking lug nuts, he was completely out of his league. The young AAA worker chuckled at our comments.

I told him there was a time I felt comfortable doing some basic work on my cars. Now I’m terrified to open the hood of my Prius because nothing inside looks like anything that resembles a car engine. Instead it looks like something designed for the Jetsons. Stuff changes!

Now let’s get beyond all those moments that clearly place me in an older age demographic than I’m happy being in. Let’s get rational.

First, it makes tons of sense for AAA to use a micro-car like a Scion to jobs like this. Imagine how much gas that service station is saving and clearly the car has just enough room for all the quick jobs that dominate AAA calls (flat tires and dead batteries). The wreckers can be saved for the heavy towing jobs, but the Scion makes great sense for what I assume are the overwhelming majority of AAA calls.

Second, why wouldn’t AAA have women handling this job? There’s no reason only men can change tires - or at least that’s what I told my daughter - and in times of labor shortages no company can avoid considering half the population for any job.

I share the parking lot moment for several reasons. First, so you can all know, without question, that I’m no where near as enlightened as I think I am. But more importantly it reminds us that we live in a time of rule breaking, innovation and experimentation.

There are times when replacing a massive wrecker with a Scion, literally and figuratively, makes a ton of sense. It just a change we don’t think about until someone actually does it.

I’m giving AAA an A-plus for innovation this time.

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: August 20, 2019

by Kevin Coupe

The Washington Post has a fascinating story about how in China research is being done that could result in an enormous technological leap ahead of the United States.

The research means that “hacking-resistant communications networks” are being built across China, sensors are being designed “to see through smog and around corners,” and prototypes are being build of “computers that may someday smash the computational power of any existing machine.

“All the gear is based on quantum technology — an emerging field that could transform information processing and confer big economic and national-security advantages to countries that dominate it. To the dismay of some scientists and officials in the United States, China’s formidable investment is helping it catch up with Western research in the field and, in a few areas, pull ahead … Beijing is pouring billions into research and development and is offering Chinese scientists big perks to return home from Western labs. China’s drive has sparked calls for more R&D funding in the United States.”

The story defines quantum technology as seeking “to harness the distinct properties of atoms, photons and electrons to build more powerful tools for processing information.”

The Post writes that “last year, China had nearly twice as many patent filings as the United States for quantum technology overall, a category that includes communications and cryptology devices, according to market research firm Patinformatics. The United States, though, leads the world in patents relating to the most prized segment of the field — quantum computers — thanks to heavy investment by IBM, Google, Microsoft and others.”

In a recent report from the Center for a New American Security, it was said that “the United States must be prepared for a future in which its traditional technological predominance faces new, perhaps unprecedented challenges.”

It is an Eye Opening piece (and you can read the story in its entirety here). Quantum technology is way, way, way above my pay grade, but it seems to me that this story has a lot of implications that have nothing to do with technology.

Published on: August 20, 2019

Kroger announced yesterday that it is expanding its test of a relationship with Walgreen that has the potential of expanding its marketing power.

The relationship allows Kroger customers to shop on the grocer’s website and then pick up their orders at selected Walgreen stores. In addition, it installs small Kroger-branded convenient food sections in those same stores, with more than 2,000 SKUs, and puts Walgreen-branded HBC items into Kroger stores.

From an initial test in Northern Kentucky, near Kroger’s Cincinnati headquarters, the program now is being expanded to 17 Kroger stores in Knoxville, Tennessee. “The pilot in Knoxville is a continuation of the test-and-learn approach, and both retailers will continue to assess customer response,” the companies said.

Published on: August 20, 2019

The Wall Street Journal this morning reports that as many as 20 states may join together in a joint antitrust probe of big tech companies, including Amazon, which will focus on “whether a handful of dominant technology platforms use their marketplace powers to stifle competition … the states are likely to issue civil investigative demands, similar to subpoenas, to tech companies and other businesses.”

Also expected to be a target of the probes: Apple, Facebook and Google.

This new probe would add “another layer of scrutiny to an industry already under a federal spotlight” from regulatory agencies and the US Congress, the story says. Regulators, lawmakers and legal experts “worry that significant slices of the high-tech marketplace have become uncompetitive. Those include advertising, search, social media, app sales and certain retail sectors, among others.”

The Journal writes that “the political makeup of the multistate group isn’t set. A bipartisan probe could give the investigation broader leverage and help insulate GOP officials from questions over whether their actions are motivated by political concerns, such as how online platforms treat conservative speech.”

The tech companies have not commented specifically on this development, but have generally maintained that they behave in a legal and pro-competitive fashion.

Published on: August 20, 2019

CNBC reports that Target is rolling out a new private label grocery brand - “Good & Gather,” which by the end of next year should consist of some 2,000 SKUs, including “organic pizza crusts, milk and eggs, hazelnut and peanut butter spreads, frozen veggies, salad mixes and pastas.”

The story notes that Target has been on a private label and investment tear: “The Good & Gather launch follows a period of heavy investing by Target in other parts of the store and in its own labels. The company will end the year with more than 25 new owned-and-exclusive brands, like A New Day for women’s clothes, Project 62 for furniture and Hearth & Hand with Magnolia for home goods. It started making the investments in 2017 as part of its bid to keep shoppers coming to Target for things they can’t find elsewhere except for Amazon. It also has helped pull Target out of a sales slump.”

Target is projecting that Good & Gather will evolve into a multibillion dollar brand.

According to CNBC, “As part of the Good & Gather launch, Target will also be phasing out two food brands, Archer Farms and Simply Balanced. It will also scale down the number of items it sells under Market Pantry, which makes basic goods like sandwich breads, cooking oils, sauces and canned vegetables. The addition of Good & Gather to Target stores also means it will slightly increase the amount of shelf space it devotes to private-label products versus national ones. As a result, Target’s penetration of store-owned brands in the grocery category will climb.”

Published on: August 20, 2019

Walmart announced yesterday that Barbara Messing, who joined the retailer in August 2018 as senior vice president and chief marketing officer, is leaving the company to “return to the Bay Area with her family.” According to an internal memo, she will be succeeded by Michael Francis, a marketing consultant working with the company, who apparently will lead the retail marketing team while in his consultant role.

Messing joined Walmart after a seven year stint at TripAdvisor as chief marketing officer.

The memo says that the company is creating a new retail marketing team inside the marketing organization designed to “support merchandising and key initiatives across our stores and ecommerce business.”

In a statement on LinkedIn, messing wrote, “It's been an incredible experience leading US marketing at Walmart, but I'm happy to announce that we are moving back to the Bay Area! I'm really proud of everything we've accomplished - we've had an amazing year and it's truly been a pleasure working with so many wonderful associates and business partners. Thank you and all the best to my team, the leadership, our agencies and the entire Walmart family.”

Published on: August 20, 2019

• Bloomberg reports that Amazon is adding “top brand” to badges such as “best seller” and “Amazon’s choice” that it appends to items sold on its site. It is, the story says, “designating products sold by certain companies as ‘top brands’ … the company is testing the label on fashion items, basing the designation on brands that are popular with customers.”

Amazon says that companies do not and cannot pay for the designation. Among the brands getting the label are Speedo, New Balance, Under Armor and Fruit of the Loom.

The story notes that “the criteria Amazon uses to determine” which products get specific badges “have attracted the attention of critics and government officials amid a renewed focus on the market power of online platforms. Critics say the logic behind the labels isn’t always transparent to consumers or brands and fear Amazon could use them to prop up its growing range of private labels.” This new badge, Bloomberg writes, “could ease tension between the online retail giant and big-name companies used to favorable positioning at brick-and-mortar retailers.”


• The Financial Times has a story about Canada-based Shopify, which it says has expanded from its roots as an e-commerce platform into a current launch “of its own fulfillment network, offering to take on merchants’ warehousing and logistics needs - mirroring similar operations at Amazon.” In the process, FT writes, Shopify’s market capitalization has passed that of Twitter, Square, Spotify, and eBay.

The story says that Shopify is seen as helping retailers challenge Amazon’s dominance, “arming individual merchants with the same technology and capabilities, but with more control.”


• Fast Company reports that Facebook “has announced plans to open a series of five “Facebook Cafes” across the U.K. by early September. There, you will be able to get a privacy checkup along with a free coffee … The plan has been called a PR stunt, and it may be. But in the context of tech companies building a presence in cities, Facebook is late to the party. Pop-up stores, brand activations, and retail locations that also offer free events and other public-facing amenities have become a key component of  business playbooks in recent years, in part thanks to a glut of commercial real estate left behind by the retail apocalypse.”

The story goes on: “Beyond its poor privacy practices, dealing with Facebook’s opaque customer service is like shouting into a void. An offline cafe could be a clever PR move that sweetens public sentiment with honeyed lattes, sure, but it’s also the first manifestation of Facebook as a spot on the map, filled with a staff that you can actually talk to. It’s Facebook as a physical experience filled with fleshy people instead of digital ones. Like Apple, Amazon, and Google/Alphabet, Facebook wants to anchor its brand in the real world - a friendly local cafe where you can stop in for a coffee if you consent to a privacy checkup on your account.”

Published on: August 20, 2019

• MarketWatch reports that Walmart is partnering with BuzzFeed’s Tasty site “for ‘shoppable’ recipes, which will add the entire list of ingredients into a viewer's Walmart online grocery cart. Items can be picked up at any of more than 2,500 stores nationwide, or arranged for delivery from 1,100 stores. Tasty has more than 4,000 recipes. Walmart will also launch Tasty-branded products in a number of departments including deli and frozen meats.”

Published on: August 20, 2019

• PennLive reports that Ahold Delhaize-owned Giant Food Stores is acquiring three Musser’s Market stores in central Pennsylvania. Terms of the deal were not disclosed.

“In a press statement,” the story says, “Musser’s cited increased competition, the changing industry, customer buying habits, loss of their wholesaler (AWI) and online pressure as reasons they approached Giant … Musser’s has been in business for 94 years and is part of the Family Owned Markets group, which also oversees Yoder’s Country Market, John Herr’s Village Market, Oregon Dairy and Martin’s Country Market.”

It is part of a broader trend toward consolidation in the area: “Last summer, Giant purchased the former Darrenkamp’s Market in southern Lancaster County. In May Ferguson & Hassler announced it was selling its Quarryville store to Giant after 103 years in business.”


• The Wall Street Journal reports that “cereal makers, under increasing competitive pressure, are struggling to improve sales of puffed rice, wheat flakes and oat clusters that were once a standard part of Americans’ morning routines … General Mills and its peers have tried before to revive cereal’s fortunes. They doubled down on sugary versions and pitched cereal for dinner or as a late-night snack. Now manufacturers say they are stepping up spending by retooling marketing campaigns, ramping up product investments and developing new flavors to try to keep shoppers engaged.”

“It’s not that people don’t eat breakfast. It’s more that they don’t eat it the way they used to,” Tory Gundelach, a former Kroger Co. executive and analyst at Kantar Consulting, tells the Journal.

The story notes that cereal manufacturers are not alone; companies like Campbell and Kraft Heinz has struggled as consumer tastes have migrated away from traditional products such as canned soup and boxed macaroni and cheese.

And, there is a slow movement away from so-called “big food,” which doesn’t hep these companies, either.

Published on: August 20, 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

Published on: August 20, 2019

As always, lightly edited for clarity…

Yesterday MNB reported that The Business Roundtable, made up of the CEOs of the nation’s top corporations, released a statement suggesting that companies should not make increasing shareholder value their driving motivation and top priority. Rather, the statement says, companies should have a broader perspective - “delivering value to our customers,” “investing in our employees,” “dealing fairly and ethically with our suppliers,” and supporting the communities in which we work,” followed by “generating long-term value for shareholders.”

Got a number of responses to this story.

MNB reader Chris Grathwohl wrote:

Our company uses an airplane as a symbol of the company, with the various parts of the plane representing the stakeholders – customers (engine), vendors (wings), employees (propellers), owners (cockpit) and community (tail). Each stakeholder/part is important and if one fails the plane’s flight becomes erratic.

A balance must be struck among all the stakeholders, for the benefit of all.

I saw a statistic recently that the average tenure for a Fortune 1000 CEO is less than 5 years, which makes them feel the need to focus on the short term.
Too bad.  The companies that are able to take a wider and longer term strategic view are generally better off for all the stakeholders.

Another MNB reader wrote:

The statement is similar to Costco's core values/code of ethics.

From a 2008 interview of Costco co-founder Jim Sinegal published in the New England Journal of Entrepreneurship:
  
"We believe that there are four things that every business has to do (1) obey the laws,(2) take care of its customers,(3) take care of its people, and (4) respect the suppliers.  And if [the business] does all those things, pretty much in that
order, they will do what they ultimately have to do as a public company or as a corporation, which is reward the shareholders.”



The aging population was a subject yesterday, as we quoted a Washington Post story:

“From 2015 to 2050, the number of Americans 85 and older will increase by more than 200 percent, while those ages 75 to 84 will rise by more than 100 percent, according to AARP. By contrast, the number of Americans younger than 65 will increase by about 12 percent.”

And, the Post used a term I hadn’t heard before - that people 65 or older are “super aged.”

MNB reader Lisa Malmarowski wrote:

Wait, what? You mean the relentless pursuit of youth dollars may not be the only way to compete?

I’m shocked, I tell ya’.

Also, I’m trying to get past the idea that 65 is the gateway to “super aged”. (I have some years to go to get there, but it’s damn close.)

Tell me about it. I’m like 76 days away from becoming “super aged.” But who’s counting?

In Portland, Oregon, they refer to such people as “honored citizens,” which is marginally better.