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    Published on: September 6, 2019

    This special podcast, recorded in front of a live audience at the recent Retail Tomorrow Immersion conference in Boston, goes inside the evolving world of LL Bean, the iconic catalog business that has engineered a dramatic and highly successful shift into omnichannel retailing through transformational leadership and a willingness to disrupt from within.

    Our special guest is CEO Stephen Smith, the first outsider to ever run the company, who offered a unique perspective on how a legacy retailer - founded in 1912 - has been transformed into a model of 21st century marketing savvy.

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

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

    This edition of the Retail Tomorrow podcast is brought to you by the Global Market Development Center (GMDC), connecting people & companies to opportunities for growth.

    Pictured, left to right: Kevin Coupe, Stephen Smith






    KC's View:

    Published on: September 6, 2019

    by Kevin Coupe

    The Wall Street Journal has a piece by Marc Randolph, co-founder and first CEO of Netflix, in which he counts the time that he and his co-founder, Reed Hastings, traveled to Seattle to have a conversation with Jeff Bezos about possibly being acquired by Amazon.

    Here’s how he starts:

    “It was the summer of 1998. DVDs had been in the U.S. market for a little over a year, and Netflix, the e-commerce company Reed Hastings and I had co-founded to sell and rent them through the mail, had been live for just over two months. I was the company’s CEO, Reed its largest investor.

    “Netflix was still pretty small, but we had big dreams: We saw ourselves as an alternative to Blockbuster and Hollywood Video. The bad news was that we weren’t making much money. And what little money we were making was coming almost entirely from DVD sales, not rentals. I feared that once others started selling DVDs, our margins would shrink to nothing.

    “So when Joy Covey, Amazon’s chief financial officer, called Reed to see if we would be interested in coming up to Seattle to meet with her and Jeff Bezos, Amazon’s founder and CEO, I felt a mixture of both fear and hope.

    “Amazon was only a few years old, but Bezos had already decided his site wouldn’t just be a bookstore. It was going to be an everything store. And we knew that music and video were going to be his next two targets.

    “We’d also heard that Bezos planned to use a good chunk of the $54 million raised during his company’s 1997 IPO to finance an aggressive acquisition of smaller companies.

    “It didn’t take us long to figure out why Jeff and Joy wanted to meet. Netflix was in play.”

    Now, it obviously didn’t happen. But it is a really good piece - which you can read here - adapted by a new book by Randolph entitled “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea,” which based on this piece I’ve already pre-ordered.

    This all only happened two decades ago, but it seems like ancient history … for one thing, I didn’t even remember that Netflix sold DVDs, and I think I was pretty early to the Netflix party. (I checked online, and my first Netflix rental was in 2003 … so maybe I wasn’t as early as I thought.) But it is interesting to think about what might’ve happened had these two disruptive businesses made a match.

    I do love this particular Eye-Opening passage:

    One of the key lessons I learned at Netflix was the necessity of focus. At a startup, it’s hard enough to get a single thing right, much less a whole bunch of things. Especially if the things you are trying to do are not only dissimilar but actively impede each other.
    KC's View:

    Published on: September 6, 2019

    CNN reports that three retailers - CVS, Wegmans and Walgreens - have joined Walmart and Kroger in announcing that they will ask customers not to openly carry guns into their stores even in states were open carry is legal.

    These moves come in the wake of an August 3 mass shooting at an El Paso, Texas, Walmart by a person described as a white nationalist and domestic terrorist in which 22 people were killed and 25 were injured. There also have been other gun-related incidents at Walmart, as well as in other public places, that seem to have drawn greater attention to the gun issue.

    "We support the efforts of individuals and groups working to prevent gun violence, and continually review our policies and procedures to ensure our stores remain a safe environment," CVS said in a statement.

    "The sight of someone with a gun can be alarming, and we don't want anyone to feel that way at Wegmans," the food retailer said in its statement.

    CBS News notes that this is not exactly new ground. In 2013, Starbucks banned open carry in its stores, and Target did essentially the same thing in 2014. But the movement seems to have gained traction in view of recent gun-related incidents and mass shootings. And, the CBS story also points out that “retailers seem to be walking a fine line between trying to respond to the rash of mass shootings of late while not angering customers who support gun rights, experts said, noting that the new policies stop short of outright bans on firearms in stores. “

    Shannon Watts, founder of advocacy group Moms Demand Action, tells CNN, "Prohibiting open carry sends a very strong cultural signal that companies are siding with the safety of families. They know their customers are with them on this ... they want to be on the right side of history but they also know that these actions are good for business.”

    CBS News reports that “most U.S. states allow residents to openly carry firearms in public spaces, but the rules vary. By contrast, guns can be prohibited on private property.”
    KC's View:
    I do think that these retailers are making calculated decisions - they believe that their customers will be better served by these decisions, and, maybe just as important, will feel better served by these decisions. Optics matter.

    In its analysis of the situation, The New Yorker provides some context:

    Gun massacres, in addition to the death and horror that they bring, are reshaping our culture in ways so destructive— producing perverse exercises in school architecture and the constant, usually needless, but real panic in parents’ hearts—that to register their damage even in terms of the lives lost is insufficient. (That damage is as incomprehensible as it is real—as one chronicle shows, there have been more mass shootings this year than there have been days in the calendar.)

    “Yet we can see some small signs that the inevitable process of democratic reform—in which legislation is a lagging, not a leading, indicator, and public outrage eventually directs political conduct more than political conduct can defeat public outrage—is under way. This week’s announcement that Walmart, the second-largest retailer in the world, will end the sale of some kinds of ammunition—and end the sale of handguns in Alaska, the only state where it still sells them—might seem pitifully minimal to visitors from other countries, not least because it was paired with a “request” that customers in the states that allow open carry refrain from openly bringing guns into Walmart stores. But the announcement is nevertheless significant, even astounding.


    The New Yorker goes on:

    “Though it can’t change everything, Walmart’s act is likely to change something … It’s the primary rule both of social agitation and of social reform: the more micro-changes you make in more places, the more effective the macro-change becomes. Banning the sale of some of the most dangerous kinds of guns and ammunition is just one step. But many steps make long marches.”

    You can read The New Yorker piece here. And yes, to be clear, I’m aware that The New Yorker brings its own demographic, geographic and philosophical perspective to the commentary. That’s why they call it commentary.

    But as someone who was born in New York, has spent most of his adult life living in New England, and who has a wife and daughter working as educators in public schools just 30 miles south of the Sandy Hook Elementary School, I must confess to being sympathetic to this point of view, though I recognize that the discussion must be broad enough to accept the legitimacy of opinions other than mine.

    Published on: September 6, 2019

    The Wall Street Journal reports this morning that Kroger is jumping into the meatless business, rolling out “plant-based burger patties, grinds and other products, seeking to capitalize on consumer interest in new meat replacements that have recently been added to menus at big fast-food chains and other restaurants.”

    According to the story, “Kroger - which also sells Beyond Meat Inc. ’s meat-replacement patties and sausages - will put its own plant-based deli slices, sausages and other products on shelves at 1,800 of its 2,800 stores this fall. Kroger’s patties are pea-based, designed to resemble beef.

    “The company said those products will be priced below plant-based products from Beyond Meat but wouldn’t say by how much.”

    The Journal story notes that “the plant-based meat market is estimated to hit $85 billion by 2030, according to a recent report by UBS.”
    KC's View:
    If the product is good, having a proprietary entry in this burgeoning category makes a ton of sense. That’s how you differentiate yourself.

    Published on: September 6, 2019

    Axios reports this morning that former Starbucks chairman/CEO Howard Schultz, who earlier this year launched an exploratory committee designed to see if he had a viable path to the presidency in 2020, has decided that he does not have an immediate future in electoral politics.

    Later today, the story says, he will send an email to supporters saying that he is ending his campaign. The effort had been put on hold earlier this summer when Schultz said he had hurt his back and required several surgeries. But now, Schultz says in his email, he has decided that he does not want to run the risk of serving as a spoiler if the Democrats nominate a moderate, potentially blocking that nominee from defeating President Trump in the general election next year.

    However, Schultz will pledge to spend the $100 million that he planned to commit to his campaign on other public service initiatives.

    Here’s the letter, as released by Axios:

    In January, I announced that I was considering running for president. My intention was to represent millions of Americans who want to see problem solving, accountability, compassion and decency in our federal government. I was fueled by a love of country, a profound concern for people’s well-being, and optimism about our nation’s potential to live up to its ideals.

    Throughout the country, people continue to find new ways to address pressing issues and achieve grand goals. That’s what it means to be American. In our own communities, we don’t have to look far to see proof that empathy, respect, civility and a collaborative spirit run deep.

    But not in Washington, D.C., where Democrats and Republicans have consistently put party over country, perpetuated divisiveness and gridlock, and failed to solve big problems and enact solutions on which a majority of people in both parties already agree. The American people are more united than our leaders, and we deserve better.

    Done watching our two parties fail, I chose to explore running as an independent, committed to finding common ground and delivering results. I saw a path in the unprecedented frustration of today’s electorate.

    Eighty-four percent of Americans do not consider themselves far right or far left. Among them are an “exhausted majority” who want common sense, collaborative and truthful governing. From heartland farmers to border-town storeowners, students to veterans, so many people I met during my travels feel our government is not working for them.

    Statistically and anecdotally, there is an undeniable appetite for meaningful political reform in America. I had hoped to represent this common-sense view, but I’ve come to face a few truths about this moment in time:

    First, despite a variety of efforts to initiate conversations about political reform, extreme voices currently dominate the national dialogue, often with a vitriol that crowds out and discourages thoughtful discussions. And despite their hunger for reform, the exhausted majority has largely tuned out of political life online and in the news, leaving the extreme voices to define the debate.

    In addition, not enough people today are willing to consider backing an independent candidate because they fear doing so might lead to re-electing a uniquely dangerous incumbent president. There is considerable concern that four more years of a Trump administration pose a graver threat to our democracy than four more years of political dysfunction. I agree, but I’m also concerned that far-left policy ideas being advanced by several Democratic candidates will further alienate voters who believe those ideas will inflict more economic harm than good. The nomination of a far-left Democratic candidate could result in more votes for Trump—unless a moderate independent is also on the ballot.

    Unfortunately, election rules in each state and the way this Democratic nomination process has unfolded pose another challenge: It has become more likely that the Democratic nominee will not be known before the deadlines to submit the required number of signatures for an independent to get on the ballot. If I went forward, there is a risk that my name would appear on ballots even if a moderate Democrat wins the nomination, and that is not a risk I am willing to take.

    Finally, a back injury in April and three subsequent surgeries have required a level of recovery that has prevented me from continuing my travels and engaging with people to the degree that is necessary.

    My belief in the need to reform our two-party system has not wavered, but I have concluded that an independent campaign for the White House is not how I can best serve our country at this time.

    I will spend this election cycle and the years ahead supporting bold and creative initiatives to transform our broken system and address the disparity of opportunity that plagues our nation.

    The money that I was prepared to commit to a presidential campaign will instead be used to invest in people, organizations and ideas that promote honesty, civility and results in our politics, and that move the country beyond two-party gridlock. Common-sense policies and initiatives that can help address widening inequality at home, while strengthening America’s standing in the world, will be a priority. Among my early efforts will be to advocate for increased national service opportunities for young people.

    I will continue to work with my wife, Sheri, supporting our nation’s veterans and opportunity youth at the Schultz Family Foundation. And I will personally continue to encourage business leaders to play a larger role in creating access to opportunities for people in the communities they serve, and beyond. The public, private and non-profit sectors have untapped ability to come together to improve lives, as Starbucks and other corporations have proven. Government is only part of the solution.

    I implore my fellow Americans not to become hopeless or complacent. We each have a responsibility, and a chance, to help our country reform its politics and live up to its ideals. How we do so is a journey we all must take. To everyone who has joined my journey, especially my family, my gratitude is limitless.

    As we embrace our potential, let’s commit to revealing the best of ourselves on the national stage, and to the world. Let us agree that we will always have differences, because that is the nature of the republic we have created, but let’s also acknowledge that we are stronger when we unite under shared values. Let’s agree that we owe our children a less divisive America, and that we have the power to create a healthier climate, one where opinion and truth can stand side by side, where disagreement is followed by compromise, extremes are tempered by moderation, and divisiveness is eclipsed by decency.

    As we elevate humanity in every corner of our lives, let us create a truly magnificent future for America.

    Onward with love of country, Howard.
    KC's View:
    Never thought Howard Schultz had much of a path to the presidency. It always seemed to me that his campaign was as much about his own messiah complex as it was about public service. I respect everything he did at Starbucks, but I was pretty sure that his second act was not going to take place in the White House.

    Published on: September 6, 2019

    • The Wall Street Journal reports this morning that the New York State Liquor Authority is considering a regulation that would require that “any delivery app that is paid more than 10% of a restaurant’s profits to be listed on its liquor license if it has one, or to reduce its fees … That would snare services like Grubhub or Uber Eats, which charge restaurants a commission based on the percentage of the total amount of food ordered or delivered through their platforms. Those can run as high as 30% of a total order, and may exceed the profit threshold.”

    The point of the proposed regulation - currently in the public comment phase - would be to reduce what some see as the onerous fees charged by some apps. But opponents say that the regulation would force businesses to choose between a liquor license and delivery revenue, which could be a losing proposition.


    • The Associated Press reports that Amazon “is apologizing for a ‘technical error’ which led to some copies of Margaret Atwood’s ‘The Testaments,’ the year’s most anticipated novel, being ‘inadvertently’ sent early. The online giant issued a statement Thursday saying that a ‘small number’ of customers received Atwood’s sequel to ‘The Handmaid’s Tale’ before its Sept. 10 release date … Atwood’s new novel was tightly embargoed, a common publishing tactic for topical non-fiction such as political memoirs, but rare for fiction.”
    KC's View:

    Published on: September 6, 2019

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

    Crain’s Chicago Business reports that Starbucks’ new Reserve Roastery store in Chicago - a 43,000 square foot, four-story store, located in the old Crate & Barrel location on Michigan Avenue - will open on November 15 - just in time for the end-of-year holiday shopping season.

    Interestingly, while the story notes that this will be the largest Roastery, its third in the Us and sixth overall, it also says that “the company has no plans for more locations.”

    Let’s not forget that the Reserve Roastery initiative was a Howard Schultz baby … and we know that Schultz has left the building. This likely will not end up being a major growth area for Starbucks, especially in the short term, because it could find itself out of synch when the economy at some point goes into recession. These are great showplaces and even labs, but not formats, I’d guess, with a ton of upside.


    Fox Business has an interview with Stew Leonard Jr., in which he says that the low unemployment rate is creating problems as his eponymous company hires for a new store scheduled to open in New Jersey.

    We opened a store in Farmingdale, [NY,] back in 2016, [and] we hired 400 people,” Leonard said. “We had one job fair, filled it up … The new store we’re opening in Paramus, we’ve had to have three job fairs, and the average rate of everybody we’re hiring is $15.50 an hour" or more, Leonard said.

    The story goes on to say that “the higher costs complicate a broader challenge, one facing bricks-and-mortar retailers nationwide: fending off fierce competition from online rivals, such as e-commerce giant Amazon, which now owns grocer Whole Foods.”

    “You know it’s tough,” Leonard tells Fox Business. “We’re a family business here, and they’re really masters at, you know, data mining.”

    With all due respect to my friend Stew, being a family business doesn’t mean you can’t data mine. You just have to make a commitment to doing so … and I think that data is the ultimate weapon without which any retailer is at a significant disadvantage. I know smaller retailers than Stew Leonard’s that do a wonderful job of accumulating and using consumer data.

    As someone who has shopped at Stew Leonard’s for 35+ years - I once calculated that I’ve spent well over $200,000 there over the years - I can tell you that I don’t think I have ever received a targeted communication from the store that suggested any use of data or any understanding of my value as a customer.

    Now, I think that’s a choice. I think Stew’s decided at some point that a loyalty marketing program - usually the best way to gather data - was the antithesis of how it wanted to go to market. Which is fine. Or at least was fine. But it may not be fine anymore, and it certainly isn’t just the province of online giants.

    KC's View:

    Published on: September 6, 2019

    • Carol Lynley. a stalwart of 1960s film and television perhaps best known for The Poseidon Adventure (in which she played a singer, though her songs were dubbed), has passed away at age 77. The cause of death was said to be a heart attack.

    Among her other credits: Return to Peyton Place, Under the Yum Yum Tree, Bunny Lake Is Missing, The Pleasure Seekers, and The Cardinal, as well as TV shows that included “The Big Valley,” “Mannix,” “It Takes a Thief,” “Night Gallery,” “The Invaders,” “Kojak,” and “Hawaii Five-O.”
    KC's View:
    I know this may seem like an odd obit to write here - Lynley was something of a bit Hollywood player who had a couple of big moments, to the extent that I’m surprised that she didn’t show up in Once Upon A Time … in Hollywood. But I had a bit of a crush on her when I was a teenager, especially because of her roles in the pilots for “The Night Stalker” (with Darren McGavin) and “The Immortal” (with Christopher George).

    So I figured, what the hell.

    Published on: September 6, 2019

    Yesterday, MNB reported:

    California-based Raley’s said yesterday that - and we quote - “as part of their continued investment in eCommerce, began offering home delivery service today through Instacart … Raley’s has been offering pickup and delivery through their own online platform, eCart, since 2017, but this new partnership will allow the family-owned grocer to bring healthy, fresh, high-quality offerings at affordable prices to even more customers.”

    The company says that “Instacart delivery will be available at 93 Raley’s, Bel Air and Nob Hill Foods locations throughout Northern California and Nevada.”

    The announcement then quotes Deirdre Zimmermann, Raley’s Chief Customer Experience Officer, as saying: ““The demand from customers for delivery service has continued to steadily grow, and this partnership with Instacart will expand our services to reach more customers. We are excited to bring Raley’s great products and competitive prices to Instacart’s loyal customers.”

    I commented:

    This is, with all due respect to my friends and wonderful marketers at Raley’s, and with a tip of the hat to Raymond Chandler, as crazy as two waltzing mice.

    I can see three ironies here.

    First, Raley’s already has done the hard part. It built its own platform and had been running it - establishing that the service was part of its broader and distinctive value proposition - for two years. Now, it may be that to this point having a proprietary service wasn’t economically feasible … but wait until they have to deal with the economics of having Instacart marketing to and taking ownership of Raley’s customers, not to mention competitive running dark stores in Raley’s geographic markets.

    Second, Deirdre Zimmermann - who, to be fair, I do not know - is identified as Raley’s Chief Customer Experience Officer … and she’s farming out the customer experience to a company that with which she may find herself competing.

    Third, there is a comment from Deidre Zimmerman in the prepared statement: “We are excited to bring Raley’s great products and competitive prices to Instacart’s loyal customers.” They’re not supposed to be Instacart’s loyal customers. They’re supposed to be Raley’s.

    Unless I’m missing something. But I don’t think so.

    The two mice are waltzing, and the ironies get thicker and thicker.


    I got the following email from Deirdre Zimmermann:

    We appreciate the pick-up of our Instacart announcement but, respectfully, since you asked...you are missing something.

    Our new partnership with Instacart is an addition to our own successful ecommerce platform that we have proudly operated since 2003.  We see Instacart as yet another door to introduce new customers to our healthy, high-quality products at affordable prices. Simply put, we are customer-centric. We are meeting customers on their own terms -  by offering delivery through our existing raleys.com or the Instacart marketplace.
     
    You are correct, we have not previously met. I would welcome the opportunity to discuss how this strategy plays into our commitment to remain a privately-held, family-owned retailer in this highly competitive environment. I invite you to make a visit to Sacramento or connect over coffee at GroceryShop or CGA later this fall.
     
    In the meantime, it would be great if you could provide an update and clarification in an upcoming MorningNewsBeat edition.


    First of all, I am happy to provide you with the opportunity to respond.

    Second, I’d love to come to Sacramento … or meet you at GroceryShop or CGA.

    Third, you’re not even the first person to tell me this week that I got something wrong.

    Finally … I’m glad that Instacart is only an alternative to your own e-commerce program. I remain dubious about the Instacart model and worry that this decision will come back to bite you, but I also acknowledge that you are the professionals and I am but a lowly pundit.

    Speaking of biting, I also got this email about the Raley’s story:

    Many of the movies about vampires make the claim that the vampire can’t enter a home without being invited in. I think Raley’s has not only invited the vampire in, but offered up the necks of all its shoppers. Soon they will all be “loyal Instacart customers.”

    That would be my worry.

    However, I could be proven wrong. We’ll see.



    Also got a number of emails yesterday about my grill story on FaceTime.

    MNB reader Peter Talbott wrote:

    Someone told me once the secret to a long marriage is neither one of you wanting a divorce on the same day.

    From MNB reader Glenn Cantor:

    When we first purchased a gas barbecue grill, about 25 years ago, I shared your experience in assembly.  The box contained hundreds of parts, nut, bolts, washers, etc.  It took hours, with all of the parts spread out all over the deck.  The process also included several choice words from Dad and, I am sure, a bit of blood.  However, the next time I had to assemble a new grill, Weber had improved the process so that most of the grill came already assembled.  There were only a few large pieces to put together.  It took less than an hour, kind of like an IKEA piece of furniture.

    I’m not sure that IKEA is the best benchmark.

    I love the Tina Fey line: IKEA is where marriages go to die.

    MNB reader Stacy McCoy wrote:

    I would guess that most marriages have a story similar to yours… early on in our marriage, my husband and I decided that if we wanted to stay married we would no longer attempt any furniture / grill assembly together, and NEVER play board games against each other. My marriage was almost sunk by a game of Battleship.

    And from another MNB reader:

    I had no idea Amazon offered product assembly. You may have just hit on my retirement gig … sounds like fun!

    Maybe to you.
    KC's View:

    Published on: September 6, 2019

    In Thursday Night Football - the opening game of the NFL season - the Green Bay Packers defeated the Chicago Bears 10-3.
    KC's View:

    Published on: September 6, 2019

    …will return next week.
    KC's View: