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 22, 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, coming to you this week from the classroom at Portland State University in Oregon, where I am concluding my annual summer adjunctivity. This is the eighth summer that I’ve spent time here, team-teaching a class with Tom Gillpatrick, and I’ve always found the experience to bed rewarding on a number of levels. I hope my students feel the same way.

    One of the things we did recently was have a little experiment. I asked each of the students to go up to the white board and write down three food or beverage items that they’d always like to have in their kitchens; it could be aspirational or actual, but could only be three items.

    Being college students, there were a number of people who wrote beer and pizza. Lots of bottled water. Some wine. Eggs. Bread. I wrote: eggs, olive oil and Albariño (a white wine from Spain) … for me, if you can make eggs and wash them down with Albariño, everything is fine.

    The point of the exercise was to discuss the power of replenishment models - whether via Amazon’s Subscribe & Save business, or an independent offering like Replenium, which allow retailers and suppliers to provide consumers with a constant stream of the products that they use most often and that are both resonant and relevant to their lives. The students all were enthusiastic about replenishment, saying that they believed such systems will be important to their lives as consumers … retailers not offering replenishment options may find themselves at a disadvantage when seeking their business.

    One fellow wrote down bagels, bottled water, and hot dogs, which I thought was interesting. He wrote down bagels but not butter or jelly or cream cheese or lox. He wrote down hot dogs, but didn’t write down hot dog rolls or mustard or ketchup or relish. (Or grilled onions and cream cheese, which go on what is called a Seattle Dog, which is wonderful … I wrote about it here. But I digress…)

    I asked him about this, and he replied that I only allowed him to write down three items. Then, I asked him if a retailer, knowing that those are three items he buys a lot of, could use that information to sell him all those other things, and maybe even other stuff that would enhance his bagel-eating and hot dog-eating experiences. Absolutely, he said. He’d love love.

    That, I pointed out, is the power of data. Sometimes people think about data in abstract and numerical terms, but data’s real power is in knowing specifically what people buy, and then being able to market to that, up-selling them and expanding their shopping parameters.

    So as you go forth in your work lives, I suggested to the students, you should think of data in that way … how much can you collect, and then how can you act on it. And always think about bagels and hot dogs.

    We had another discussion during the same class in which the students came up with an interesting idea.

    We were talking about Amazon at one point (there was a lot of talk about Amazon - these are people who have no memory of a world without Amazon), and then were talking about Kroger’s decision to start charging a small fee for cash back requested at checkout in its stores. And the students suggested that maybe Amazon could get into the cash-back business. What if you placed an order on Amazon, and along with the products you order, you also could request $100 or $200 in cash back that would be charged to your card? And what if Amazon Prime members could get that cash back without paying a fee?

    Now, there probably are all sorts of complications in such an offering. There’s security to think about, and making sure that the cash doesn’t get stolen. There’s the question of who provides that service - would Amazon have to own a bank (the government likely would never allow that), or would it just have to have banking relationships in every market it serves (which it already does)? And it probably would be an offering with an expiration date, since we seem to be moving toward a cashless world.

    But … the students didn’t see the problems. They just saw the possibilities, and they thought that this would be a service that would be relevant to how they live their lives.

    Which is instructive on all sorts of levels.

    I always hope that the students learn something from me … and from the various guests who join us in class each week.

    Thanks to Jon Stine of the Open Voice Network … Benjamin Conwell of Cushman Wakefield … Mike Burrington of Ideoclick … Patrick Spear of GMDC and Retail Tomorrow … and Lisa Sedlar of Green Zebra … all of whom enriched our class this summer with their candor and insights. Thanks also to Tom Gillpatrick, who gave me this opportunity years ago … and to the folks at Portland State and the Center for Retail Leadership, who each summer give me a home away from home.

    I’m already looking for folks to join us next summer, so let me know if you are interested. I know that we’re always going to learn something from our guests, and we all learn something from our students … they all make me smarter, and keep me young.

    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 22, 2019

    by Kevin Coupe

    Crazy week. So it is time for some good news. Not to mention the ultimate comfort food.

    Fast Company reports that “The Museum of Ice Cream, which opened its first pop-up experience in New York City three years ago, is announcing today that it is returning to the city with a permanent installation this fall … The new New York flagship location will be in Manhattan’s Soho neighborhood.”

    The story goes on: “Museum of Ice Cream NYC will span nearly 25,000 square feet across three floors with 13 new installations, including the MTA inspired ‘Celestial Subway’ a giant beehive, and the museum’s largest sprinkle pool to date, all of which is designed and produced in-house.”

    I had no idea.

    More from Fast Company:

    “Since Museum of Ice Cream first launched, its creators have been steadily carving a more permanent place for themselves in the world of experiential retail. Under its parent company Figure8, which raised a $40 million series A round of funding last week, the Museum of Ice Cream brand has extended to a retail collection at Target, a makeup collaboration with Sephora, and, yes, actual ice cream. But most importantly, the Museum of Ice Cream moved away from its pop-up format in lieu of flagship locations, first in San Francisco and now in New York City.
    Through interviews and focus groups, the company has collected a sizable amount of both quantitive and qualitative data from its 1.5 million visitors to aid in how and where it should build out its brand.”

    Fast Company isn’t just interested in the ice cream: “The Museum of Ice Cream is charting a unique course in how to build a sustainable business off the back of a pop-up experience.”

    But as for me … I’m interested in the ice cream.

    I just hope there is a Hall of Fame, and that Graeter’s Black Raspberry Chocolate Chip is an inductee.

    A Museum of Ice Cream? Total Eye-Opener.
    KC's View:

    Published on: August 22, 2019

    In Toronto, Longo’s has announced the opening of a new format store - Prontos Eat, described by the retailer as “a small scale, convenience-based grocery model that will cater to the busy worker and commuter, offering 1,000 square feet of quality food options for each of the 35 meal and snacking occasions a week. Shoppers can expect to find a wide variety of ready-to-eat and semi-prepared meal options, along with a specialized Longo’s Café service.”

    The company says that “along with free Grocery Gateway same day pick-up (Grocery Gateway is the company’s longtime e-commerce business), Pronto Eats will also be the grocer’s first cashless location, and will allow guests to skip the lines with the Ritual food app.”

    Pronto Eats is located inside the iconic Hudson’s Bay Centre at Yonge and Bloor in downtown Toronto, “in the heart of the PATH, linking 30 kilometers of shopping and entertainment and connecting more than 50 buildings and office towers.”

    Longo’s says that it piloted the concept at its Maple Leaf Square location earlier this summer.

    “While the size of the store is a smaller scale than what our guests are used to, the fundamentals of the business remain unchanged. No matter the concept, location, or size of the store, we are committed to carrying only the highest quality of food and merchandise, matched with excellent guest service,” says Rosanne Longo, a spokesperson for the company.
    KC's View:
    I’ve always admired Longo’s willingness to try new things and test different kinds of formats that seem appropriate to specific markets … in fact, I did an FaceTime video back in 2015 about the company’s format strategies, which you can see here.

    I’m a huge believer in this - find new opportunities in unusual but relevant locations, and then create new formats that build on your strengths and expand your ecosystem. Kudos to Longo’s.

    Published on: August 22, 2019

    The Washington Post has a story about how, after years during which bricks-and-mortar retailers have been hurt by changing shopping habits despite the growing economy, many retailers may find it even tougher to survive a recession.

    According to the story, “Analysts say another reckoning might be in store as a slowing global economy, volatile stock market and new tariffs are likely to take their toll on American consumers in coming months. There is little middle ground left in the retail industry: Companies are either doing brisk business or struggling to hang on, analysts say — a trend that is likely to become even more pronounced if the economy sours.”

    The Post notes that while “Walmart, Target and Lowe’s all posted better-than-expected profits in the past week, boosting shares of their stock and reassuring investors that U.S. consumers are still opening their wallets,” the same cannot be said of department stores and apparel retailers like Macy’s and JC Penney. At the same time, Barney’s has filed for bankruptcy, and even Nordstrom - which seemed to be making smart moves - has struggled.

    The cold reality: “So far this year, retailers have announced the closures of more than 7,500 stores, according to data from Coresight Research. By comparison, 5,500 stores were shuttered in all of 2018. A number of national chains, including Payless ShoeSource, Gymboree and Things Remembered, have also filed for bankruptcy protection citing declining sales and mounting debt.”
    KC's View:
    The only thing I want to add to this story is that it is not “if the economy sours.” It is when “the economy sours.” That’s not politics. It is economics. And maybe gravity.

    Inevitability is exactly that. The retailers that survive will be the ones that innovate constantly, build consumer ecosystems, and do things like what Longo’s is doing in Toronto.

    Published on: August 22, 2019

    • The Washington Post reports that repercussions persist from the mass shootings in an El Paso, Texas, Walmart that resulted in the deaths of 22 people at the hands of a man described as a white nationalist domestic terrorist.

    This week, the story says, “Walmart employee Thomas Marshall sent a petition to chief executive Doug McMillon calling on the retailer to stop all sales of firearms and ammunition, ban the public from carrying firearms into stores and end all donations to politicians backed by the National Rifle Association. The petition had grown by Wednesday morning to more than 129,160 signatures, signaling sustained pressure on one of the nation’s largest retailers of firearms and ammunition.”

    “Customers no longer feel as safe as they once did in our stores,” Marshall wrote in a note to McMillon. “We must do more. We have the power to do more.”

    The Post writes that “McMillon responded to Marshall’s note Wednesday morning, Walmart spokesman Randy Hargrove said, to reiterate that the company is listening to a wide variety of perspectives and considering how it might respond. The retailer also is ‘encouraging others’ to consider what actions they could take on gun issues, though Hargrove wouldn’t specify whom he meant.”

    The El Paso killings were actually the third gun-related event to take place at a Walmart in a matter of weeks, and there have been what appear to have been a number of copycat gun-related threats at its stores since.

    • Meanwhile, CNN writes that while Walmart has long been a seller of guns and a supporter of gun rights, the current situation and the El Paso events mean that “it has begun to take on a more activist role in the gun debate and, for the first time, it has detailed how big a role it plays in the firearms industry.”

    Walmart has said that it generates about two percent of total US gun sales and 20 percent of US ammunition sales. The story says that “Burt Flickinger III, a veteran retail analyst with Strategic Resource Group, estimates that US retail gun sales total around $11 billion a year. That would mean Walmart makes about $220 million a year on guns. The company earned $331 billion in US sales in its latest fiscal year. By that measure, US gun sales represent less than a tenth of a percent of Walmart's business in the United States, and an even smaller percentage of its $514 billion in global sales.

    “Flickinger said firearms are becoming less important to Walmart's bottom line and estimates that sales have fallen 6% to 8% annually in recent years.”

    "Gun sales is the fastest declining big category in the US and, just based on sales, is reaching a point of retail irrelevancy," Flickinger tells CNN.
    KC's View:
    Could Walmart doing with guns what CVS did with tobacco?

    The big problem, it sounds like, is not the lost revenue, but the loss of face among folks who may not buy their guns at Walmart but who would find that such a decision by the company a unacceptable capitulation to political correctness.

    Published on: August 22, 2019

    • From Reuters: Target said yesterday that its spending of “billions of dollars on its push to compete with the ease of delivery provided by Inc and Walmart Inc, buying grocery delivery firm Shipt, and building in-store pickup and drive-up services,” seems to be paying off.

    “One out of five customers who used its same-day service in the quarter were new,” the company said, “with shoppers collecting their orders from stores within a couple of minutes of placing them through the company’s mobile app or website … Wednesday’s results showed the company’s same-day services drove more than three-fourths of a 34% increase in comparable digital sales in the quarter. Those online sales accounted for more than half of its total same-store sales.”

    • From CNBC: Nordstrom said yesterday that as its “sales at full-price department stores fell 6.5% during the quarter ended Aug. 3, compared with a 5% drop last year. Net sales at its off-price Nordstrom Rack stores fell 1.9%, a steep decline from the 7% rise in the same year-ago period.”

    But … “Nordstrom also said its digital sales, which represent 30% of the business, grew 7%. In the same quarter last year, its digital sales represented 28% of its total sales.” Which investors seemed to think was a positive sign, in addition to the fact that it “exited the quarter in a favorable inventory position.”
    KC's View:

    Published on: August 22, 2019

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

    • The United Fresh Produce Association has announced the three recipients of the 2019 Frieda Rapoport Caplan Family Business Scholarships: Richard Castaneda, Project Manager at Field Fresh Foods … Christopher Ferachi, Operations Analyst at Capitol City Produce … and Kathy Sponheim, Co-Owner/Sales at Michael Family Farms.

    The announcement points out that the Frieda Rapoport Caplan Family Business Scholarship Program “was founded in 2001 by sisters Karen Caplan and Jackie Caplan Wiggins, in honor of their mother, Frieda Rapoport Caplan. The program provides the opportunity for representatives from family-owned, United Fresh member businesses to attend the United Fresh Washington Conference. The three scholarship recipients receive complimentary airfare, hotel and registration to participate in the conference, September 16-18 in Washington, D.C.”

    I know this may seem like a small story, but I love Frieda’s and I especially love Frieda … just a wonderful inspiration and, I don’t mind saying, an MNB reader and supporter.

    BTW … Karen Caplan wrote a lovely blog, on the occasion of Frieda’s 96th birthday, about lessons she’s learned from her mom, and you can read it here.

    • The Wall Street Journal this morning reports that “Simply Good Foods Co. the maker of Atkins-branded food products, is buying … Quest Nutrition in an all-cash $1 billion deal that is expected to be completed by the end of the year.” Quest is described as selling “bars, cookies, chips, pizzas and powders that are all meant to deliver more protein to consumers.”
    KC's View:

    Published on: August 22, 2019

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    The New Yorker has a piece worth reading about the political currents that could result in the breakup of various technology companies, including Amazon.

    The piece starts with Robert Bork’s 1978 analysis called “The Antitrust Paradox,” in which he argued that “when deciding whether a particular enterprise posed an antitrust threat … the government should only take action in cases where concentration of power in the market harmed consumers in the form of higher prices.” Bork, however, could not have foreseen “the rise of online companies such as Facebook and Google, which offer their products to consumers for free. The companies make money by monitoring their customers’ online activity and selling the data, largely to advertisers.” It may be defined by some as anti-competitive, but it does not necessarily result in higher prices … and so these companies have avoided antitrust scrutiny.

    The New Yorker takes a look at the plan introduced by Sen. Elizabeth Warren (D-Massachusetts), a candidate for the Democratic 2020 presidential nomination, “that aims to reverse what is now a nearly four-decade trend in the concentration of corporate power in the U.S. economy. The proposal … would both break up the major technology companies and regulate them more heavily. Central to her argument is the idea that, though consolidation might not have raised prices for certain online services, it has helped depress wages, inflate executive pay, and stifle the rise of new businesses. This, in turn, has contributed to the decline of middle-class financial security and the rise of income and wealth inequality.

    “Left unchecked, concentration will destroy innovation,” Warren says. “Left unchecked, concentration will destroy more small companies and startups. Left unchecked, concentration will suck the last vestiges of economic security out of the middle class.”

    Fascinating piece, and an illustration of one perspective - of many - that could result in a reshaping of the technology sector. You can read the entire piece here.
    KC's View:

    Published on: August 22, 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:

    Published on: August 22, 2019

    Regarding the Kroger-Walgreen alliance, one MNB reader wrote:

    I've said to anyone who would listen that Kroger's sheds will disrupt markets without ever opening a store. Pick a metro area in the USA where they don't have a footprint, and they'll find a player like Walgreen's to help build out the volume until they get autonomous home delivery perfected to  the urban and rural markets. Walmart will use their existing infrastructure for distribution, while Amazon is, frankly behind the fresh home delivery curve. Watch the food deserts shrink! (and, sadly, the small rural independents who won't have the technology to compete.)

    MNB reader Ron Melton had a thought about another Kroger story:

    On the subject of Kroger adding fees to cash back. Our first thought was,. when we need cash back we’ll shop down the street at Safeway, Albertsons, Costco and on down the list until there is on one left. As they adjust so will we as consumers.

    See my FaceTime above.

    Responding to our store about McDonald’s “new” takeout-only format, one MNB reader wrote:

    Got a chuckle from your comment, “My first thought was that it was sort of amazing that this is the first of its kind for McDonald’s.”

    I’m old enough to have visited that format when I was a kid.  Of course, the technology wasn’t there, so employees took orders.  But there was no eat-in dining; you took it to go.  There was a limited menu including hamburgers, cheeseburgers, fries, soft drinks, and shakes; and that was all.  Of course, back then, they made fries from whole potatoes, so you always had to buy at least one extra order of fries for the ride home.

    MNB reader Chuck Potter wrote:

    You are too young to remember, but the first McDonald’s were carry out only. The order/pick-up windows were even outside.  Not a single table in sight. You ate in your car, or took it home.

    I wish I were too young to remember.

    Got a lot of nice response to yesterday’s Eye-Opener about Trestle, the start-up that makes it easier for consumers to buy from companies who are connected to important ethical values, and can help companies establish their bona fides when it comes to values and matters of conscience. You can read the interview with CEO Jennifer Johnson here.

    One MNB reader wrote:

    The world changes fast, Kevin. I’ve tried to make conscious decisions for decades now, searching for products that are not only good for me and my loved ones, but also good for the world. A case in point is “Tom’s of Maine.” I’ve used their Lavender Deodorant for years because I thought it was “Natural.” It’s in my gym bag, and I just used up a tube. One the shelf at the drug store, I noticed it at the top of the display, sporting several different types. All of them use aluminum sulfate now, which I consider harmful. They didn’t used to, that’s why it was so “natural.” I know P&G bought them . . . so is that the legacy of big business? Buy up some successful smaller company, rely on the brand heritage, but change it to make more money?
    P&G . . . we’re watching. Now I’ve switched to a brand that doesn’t use aluminum sulfate. When are the MBAs going to realize that bottom line stuff can/will destroy their brands?

    MNB reader Sandy Voit wrote:

    I would like to point out that food co-ops have been leaders in values-driven missions, and having more bottom lines than just financial (social, environment, for example). Our members and shoppers have placed their trust and shopping dollars with us as we are looking out for their best interests, not shareholders, nor Wall Street. We have earned that faith and trust over many years of curating products to ensure our members and shoppers that they can have confidence not just with their product selection, but in knowing that our profits (yes, we are for-profit entities) remain in the community through providing great wage-paying jobs with great benefits, through supporting organic farmers and producers with fair prices, through supporting community-based initiatives and other issues, through protecting our environment, and so on.

    Other retailers are late to this process - and we welcome them and  hope that all companies invest in this thinking... Kudos to Jennifer Johnson for taking the initiative to focus a spotlight on these important matters…

    From MNB reader Carl Jorgensen:

    I too was struck by the nice confluence of your interview with Jennifer Johnson of Trestle, and the story about Unilever looking for the purpose behind its brands. If your brand has to go looking for its purpose, it’s already in trouble. You shouldn’t have to look! Legacy CPG brands are almost by definition made-up brands, free of any authentic origin story, higher purpose or larger benefit other than solving for an immediate consumer need.

    I was, however, happy to see the quote from CEO Alan Jope: “If a brand can’t find its purpose, we may sell it.” After all, if the 28 brands Unilever counts as ‘purposeful’ contributed almost two-thirds of revenue and drove 75% of sales growth in the first half of 2019, then NOT selling the others would be business malpractice.

    And, from MNB reader Kelly Dean Wiseman:

    Speaking of greenwashing, a big driver of opposition to any significant movement toward carbon reduction and other environmental laws, not to mention women’s health, prenatal care, preschool funding, and a giant list of other issues is the money being funneled into various dark political action groups. These groups, including most especially those funded by Koch Industries, buy Congress which in turn loads the Supreme Court to uphold the laws keep dark money dark. It would be enlightening to know what PACs large companies fund because that is the center of the rot in American policy. It’s not open giving by Company X, it’s where they quietly send their support. Until a light is shone on this I find it hard to believe very many claims by the giant corporate players.

    I’ve always been a big believer in utter transparency on this stuff. If you give more than $100 to a candidate or political cause, it needs to be posted somewhere. And any organization that gives any money to a political candidate or cause needs to be required to post all of its donors on a monthly basis. No exceptions. Ever.
    KC's View: