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    Published on: September 9, 2019

    by Kevin Coupe

    Go figure.

    Rolling Stone reports that while it has become a well-known fact that vinyl records have become cool again, it appears that they;’re also hot - “Vinyl records earned $224.1 million (on 8.6 million units) in the first half of 2019, closing in on the $247.9 million (on 18.6 million units) generated by CD sales. Vinyl revenue grew by 12.8% in the second half of 2018 and 12.9% in the first six months of 2019, while the revenue from CDs barely budged. If these trends hold, records will soon be generating more money than compact discs.”

    Now, this isn’t to say that vinyl is taking over the music world, or at least making a return engagement to dominance. The story notes that “records accounted for just 4 percent of total revenues in the first half of 2019. In contrast, paid subscriptions to streaming services generated 62 percent of industry revenues.”

    I totally get this. I can’t remember the last CD I bought. But I downloaded several albums over the weekend after having streamed them and liked them. (I use Apple Music.)

    But it is interesting. If you think of streaming services as being Amazon-like, providing a massive amount of content in the most convenient way, then maybe we can think of certain kinds of stores - like, say, Dorothy Lane Market - as being vinyl in this particular metaphor - focused on quality of experience, not necessarily quantity of sales.

    In so many ways, if you can’t be Amazon (or Kroger or Walmart or pick another big retailer), then this lays out at least one of the alternative approaches - to do what the big guys can’t or won’t do.

    The metaphor and the approach won’t work for everyone, but I do think that in some cases it can provide a guiding principle.

    It is about looking for a particular sound and, in some ways, find a groove.

    It could be an Eye-Opener. And maybe even an Ear-Opener.
    KC's View:

    Published on: September 9, 2019

    The Los Angeles Times reports that Kroger and Albertsons have reached a tentative agreement with seven United Food and Commercial Workers (UFCW) locals, averting a potential strike by more than 47,000 employees at more than 500 stores.

    Kroger owns and operates Ralphs in Southern California, and Albertsons owns Vons and Pavilions there.

    Details of the tentative deal have not been disclosed. Union leadership is recommending approval, and union members are scheduled to vote this week.
    KC's View:
    This was a deal that had to get done. A strike that occurred 16 years ago in Southern California roiled the markets and seriously hurt market leaders there. (It is estimated that chains there lost $1.5 billion in sales.)

    It would be worse now, because in some ways there are a lot more options. The stakes were high, and the repercussions could’ve been devastating.

    Published on: September 9, 2019

    The New York Times reports this morning about a new trend in Finland aimed at reducing food waste: “Food that is nearly unsellable goes on sale at every one of S-market’s 900 stores in Finland, with prices that are already reduced by 30 percent slashed to 60 percent off at exactly 9 p.m. It’s part of a two-year campaign to reduce food waste that company executives in this famously bibulous country decided to call “happy hour” in the hopes of drawing in regulars, like any decent bar.

    While reducing food waste has yet to become a political issue in Finland to the degree that it has in other places, it also is being cited as “a selling point for at least one restaurant. Every dish on the menu of Loop, which is housed in a former mental hospital in Helsinki, is made from past-due ingredients donated by grocery stores and bakeries. Donations vary, so Loop’s chefs have no idea what they’ll be making until they walk into the restaurant’s kitchen.”

    The Times story frames the broader food waste issue this way:

    “About one-third of the food produced and packaged for human consumption is lost or wasted, according to the Food and Agriculture Organization of the United Nations. That equals 1.3 billion tons a year, worth nearly $680 billion. The figures represent more than just a disastrous misallocation of need and want, given that 10 percent of people in the world are chronically undernourished. All that excess food, scientists say, contributes to climate change.

    “From 8 to 10 percent of greenhouse gas emissions are related to food lost during harvest and production or wasted by consumers, a recent report by the Intergovernmental Panel on Climate Change found. Landfills of rotting food emit methane, a gas that is roughly 25 times more harmful than carbon dioxide. And to harvest and transport all that wasted food requires billions of acres of arable land, trillions of gallons of water and vast amounts of fossil fuels.

    “For consumers, cutting back on food waste is one of the few personal habits that can help the planet. But for some reason, a lot of people who fret about their carbon footprint aren’t sweating the vegetables and rump steak they toss into the garbage.”
    KC's View:
    First of all, I’m going to admit here that I had to look up “bibulous.” It means, just FYI, “excessively fond of drinking alcohol.” (Great word!)

    I think we’d all agree that there is an enormous amount of food waste, so I have to say that these businesses’ ability to turn it into a marketing tool is admirable. I’m sure there are some folks who would argue that this could hurt the bottom line, since some folks might wait until 9 pm to buy products on which the retailer makes less, if any, margin.

    Which could be true. But it also seems to me that broader concerns about things like climate change mean that we need to rethink ways we’ve always done things.

    Published on: September 9, 2019

    Reuters reports that Albertsons is asking its customers not to openly carry firearms in its stores, regardless of what is permitted under local laws.

    "We want our stores to feel safe & welcoming for all, so we respectfully ask customers to not openly carry firearms in our stores unless they are authorized law enforcement officers," the company said.

    The move follows similar statements from companies that include Walmart, Kroger, Walgreen, CVS, and Wegmans, policy changes that came in the wake of political pressure formed in the wake of mass shootings in an El Paso, Texas, Walmart that resulted in 22 people being killed and 25 being 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. At the same time, Walmart is being sued by the family of one of the El Paso victims, raising the issue of litigation as well as public safety.

    writes that “it's not clear how the companies will implement or enforce their new policies, although a Walmart spokesperson told TIME that employees will be trained on how to deal with customers who walk in with a firearm. Other changes by Walmart include an announcement last Tuesday detailing the end of handgun sales in Alaska, and the discontinuation of short-barrel rifle and handgun ammunition sales nationwide.”
    KC's View:
    I’ve gotten a number of emails from folks who say things like “banning the carrying of guns into retail stores, in states where carry is legal, makes no sense.  People determined to do harm and commit crimes are not going to follow those suggestions.  They are determined to do something bad, and someone’s suggestion to not carry a gun isn’t going to stop them.”

    All of which I get.

    I think the opposite argument is that this is a small step in an effort to address the growing number of shootings taking place in the US. I would go back to the The New Yorker piece, which made the point eloquently:

    “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.”

    Published on: September 9, 2019

    CNBC has a story about how Starbucks announced a series of employee-centric changes that it hopes will make it a better place to work … and, by implication, shop.

    One example: An initiative “centered on mental health. Starbucks hosted two sessions on mental health during the conference and has more resources about the topic in the works. Its employee assistance program, which provides short-term counseling to all U.S. employees, will be enhanced with input from employees and mental health experts.

    “Beginning in the second quarter, Starbucks store managers will begin training inspired by Mental Health First Aid, a program that teaches laymen how to help someone with a mental illness. It also will partner with organizations such as the Born This Way Foundation, Lady Gaga’s wellness-focused nonprofit organization, and Team Red White & Blue, a nonprofit focused on helping veterans, to tackle the stigma around mental health.

    “Employees in the U.S. and Canada will also have access to subscriptions to Headspace, an app that offers guided meditation, by January.”

    In addition, the story says, “Starbucks is also continuing its plan to free up more time for employees to interact with customers. In the fourth quarter of 2018, the coffee chain started moving some “remedial tasks” that baristas were doing during the day to be completed after closing. In fiscal 2020, it plans to automate, reduce or eliminate an additional 17 hours of tasks each week. For example, instead of writing out schedules by hand, store managers will create schedules digitally. Inventory of to-go items such as juices will also be automated, rather than being counted by an employee a few times a day.”

    In other Starbucks news, Bloomberg reports that Starbucks CEO Kevin Johnson “is ripping up the old store blueprints in a bid to revitalize growth. First on the list: a pick-up cafe in New York set to open this fall to cater to busy coffee-drinkers on the go.

    “The Manhattan store, which is still in development, will build off of the chain’s success with its Starbucks Now concept in China that lets customers order in advance on mobile phones and collect their items in a specialty ‘express’ shop without the wait. Starbucks could eventually roll out similar pick-up locations in other cities including Boston, Chicago, Seattle, San Francisco and Los Angeles, Johnson said.”
    KC's View:
    This support the theory that says retailers should always make employees their top priority … because if front line employees are happy, they’ll make customers happy.

    Published on: September 9, 2019

    Bloomberg reports that Nordstrom is taking a new approach to returns at its Nordstrom Local stores in New York City - it will accept returns of products bought online from other retailers.

    According to the story, the two new Local stores in Manhattan “will accept merchandise returns from rivals like Macy’s Inc. and Kohl’s Corp. in the new small-format locations, regardless of whether Nordstrom carries the same item. Returns can be a pain point for both the customer and retailer, and shoppers want a convenient way to drop off unwanted items, said Jamie Nordstrom, president of Nordstrom stores.”

    The Nordstrom Local format, originally tested in Los Angeles, is heavily service-oriented. It has tailors and salespeople and wine and cappuccino, but no racks of clothes other than items that people looked at online and asked to be shipped to the Local locations. There, they can try them on, choose what they want, get them altered and eventually pick them up. Or, they can just pick up online orders there and drop off returns.

    “The focus on services,” Bloomberg writes, “is part of the upscale department store’s strategy to win over picky New York shoppers as it makes a big push into the competitive retail market. The 1,800-square-foot location on the Upper East Side sells scant merchandise; instead, customers can book appointments online for styling consultations. The company will measure the success of the location by the market share it’s able to pick up, and not by sales-by-square-foot, a traditional retail metric, Nordstrom said.”
    KC's View:
    There always have been stories out there about how a Nordstrom employee took back tires being returned by an upset customer - even though Nordstrom never sold tires. The story may have been metaphorical, but it always made the point about how customer-focused Nordstrom was. And is.

    This certainly is one way to make an impact in Manhattan neighborhoods where people may be a little skeptical about this Seattle interloper. Smart move.

    Published on: September 9, 2019

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

    USA Today reports that at least one analyst - Mark Mahaney of RBC - is projecting that Amazon’s decision to offer one-day shipping as a Prime membership benefit “could generate $24 billion in additional revenue for the online retail giant.”

    The projection is based on a belief that one-day shipping will increase Prime membership levels, the growth of which has slowed in recent quarters, creating an impression that the market could be saturated. But one-day shipping, Mahaney believes, could change the game and give Amazon Prime a membership boost … and since Prime members spend more than twice as much on the site as non-Prime members, this would be a good thing for the company.

    So much of what Amazon does is aimed at increasing Prime membership levels that I continue to believe that it is at least possible that at some point Amazon will open bricks-and-mortar stores that only will be open to them.


    • The Associated Press reports that Amazon “is looking to fill more than 30,000 vacant jobs by early next year … The jobs range from software engineers, who can earn more than $100,000 a year, to warehouse workers who are paid at least $15 an hour to pack and ship online orders.

    “Amazon said all of the openings are for full time positions and come with benefits. And the company said the openings are not related to the usual increase in hiring it does to prepare for the busy holiday shopping season.”

    To jumpstart the process, Amazon plans a series of job fairs around the country on September 17 - in Arlington, Virginia; Boston; Chicago; Dallas; Nashville, Tennessee; and its hometown of Seattle - that the notes are “a sign of the tight job market. With unemployment near a 50-year low, employers have to work harder to fill empty positions. Recently, Amazon said it would turn to its own employees to find more tech-savvy workers, offering to retrain 100,000 employees, or a third of its U.S. workforce, and help them switch to more technical jobs, like software engineering.”
    KC's View:

    Published on: September 9, 2019

    CNBC reports that in a tight job market, Walmart is getting creative “when it comes to hiring. Of its 1.4 million U.S. workers, less than 25,000 are in high school. The company acknowledges that’s a very small percentage, and it’s especially small when compared to other companies in its industry.

    “So Walmart is trying a new recruiting approach: offering high school students free SAT and ACT prep, subsidizing a large chunk of their tuition, and the chance to earn some college credit.”

    The story notes that “hiring employees early on in their careers comes with a number of benefits. It costs less to employ them, and it’s typically easier to train them to fit the company’s needs, since there are no old habits that need to be broken.” However, “questions remain about how long these programs will last. Is this the new norm for big retailers, or will these benefits disappear when the job market turns?”
    KC's View:

    Published on: September 9, 2019

    Marketing Daily reports that CVS, which eliminated tobacco from its stores five years ago, has decided to spend $50 million to fight youth vaping. CVS says that the move is “part of its ‘Be The First’ campaign, (aimed) to create the first tobacco-free generation, building on its success in changing people’s behavior.”

    CVS says that it has evidence that its tobacco ban had an impact: “People in households that had purchased cigarettes exclusively at CVS were 38% more likely to stop buying cigarettes, and a 2017 study in the American Journal of Public Health confirmed that purchases in states where CVS has a significant market share declined, with CVS customers more likely to stop buying tobacco products from any retailer.”

    According to the story, the new initiative “includes $2 million more to the Aetna Foundation in an outreach to healthcare providers, building on CVS' previous commitment of $10 million already focused on anti-vaping training and curriculum. So far, CVS incentives have convinced more than 200 colleges and universities go tobacco-free. It’s also funded what it claims is the first-ever vaping cessation program, working with the Truth Initiative.”
    KC's View:

    Published on: September 9, 2019

    • H-E-B-owned delivery company Favor announced that it has named Fernando Trueba to be its new Chief Marketing Officer.

    The announcement says that “Trueba was most recently the CEO and co-founder of Luv.it, a technology company focused on building a more sustainable and transparent fashion industry through its mobile commerce platform that showcases ethical and sustainable fashion designers from over 20 countries … Prior to founding Luv.it, Trueba led eBay's geographic expansion to launch eBay Marketplaces in over 18 markets across Latin America.”


    • Ahold Delhaize announced that its CFO, Jeff Carr, plans to step down next April after eight years in the role to return to the UK to spend more time with his family. The company said that a search for a successor has begun.
    KC's View:

    Published on: September 9, 2019

    • Hans Rausing, the son of the founder of TetraPak and the company;’s former CEO/chairman, has passed away at age 93.

    The New York Times notes that Rausing, one of the wealthiest people in the UK, “led the company with his brother Gad for more than 30 years as its work force grew from a handful of people in Sweden to some 36,000.”
    KC's View:
    Unconfirmed rumors say that Rausing will be buried in a paperboard container that will keep his remains fresher longer.

    Published on: September 9, 2019

    On the subject of stores banning open carry of guns, MNB reader Kelly Dean Wiseman wrote:

    In our gun-respecting state we sometimes have folks come in with a pistol on the hip.

    When (gently) confronted they generally talk about their second amendment rights. We train our managers to then ask “I bet you are one of those people who defend private property rights too, huh?”

    They always vehemently concur.

    They we say “Well, you’re standing on private property. And our private property rights overrule your second amendment rights.”

    This generally ends the discussion as it is absolutely rock solid: private property comes first, carrying a gun onto someone else’s property falls below that.


    It is that simple?

    Wow.

    From another reader:

    Stores have the right to decide how much liability they'd like to take on by their shoppers. No shoes, no shirt, no open-carry, or no service. I don't think I'm alone in this - as a customer, if I see someone walking around the store with a long gun strapped to their person, I'm calling the police and I'm leaving. I'm not sticking around to shop and taking the time to find out if they intend to shoot up the place or just make a point. Do stores benefit whatsoever from this activity interrupting daily shopping? It seems like a no-brainer for general customer service. As soon as Wal-mart made the leap this week, now other retailers feel they have the cover to make that same decision.

    And another:

    Your view is the correct view, and you are not an outlier...apparently 89% of those polled agree that we should have universal background checks.  What more can you say, our government is once again on the wrong side of the debate.



    Responding to last week’s piece about the high human costs of fast shipping, MNB reader Philip Herr wrote:

    This is an interesting and important issue. And in my opinion, reflective of the place we have gotten to where the value to shareholders has become the be all and end all, of business — despite recent statements to the contrary. The issue is that indeed, consumers have no idea of the price of anything — that $5 t-shirt at Walmart? What about the energy and pollution required to grow and process the cotton — the labor of the person sewing it at $1 per day — and the cost to ship it to stores. The “externalities” are the price we pay in pollution, exploitation, carbon contribution and depletion of resources.

    Similarly, the entire “gig” economy is a cover for business to exploit labor without absorbing the risks or additional cost of benefits. After more than four decades in business I feel stained.


    And, from MNB reader Michael Kanter:

    Suggest you check out the book, “In the Absence of the Sacred” by Jerry Mander (yes, that’s his real name!). Written twenty-five years, or so, ago it made that point that all of these technologies are put out there in such a way that they are innocent until proven guilty. By the time we collectively realize how dangerous they are we lack the imagination and will to fix the messes they cause.

    I, for one, am rarely caught up in the must need ASAP delivery mind-set.




    Last week MNB took note of a Fox Business interview with Stew Leonard Jr., in which he said that the low unemployment rate is creating problems as his eponymous company hires for a new store scheduled to open in New Jersey.

    The story went 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 said, “We’re a family business here, and they’re really masters at, you know, data mining.”

    I commented:

    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.

    Prompting one MNB reader to respond:

    While you may not have received a communication from Stew’s based on your total spend  calculation you did earn about 2000 free Ice Cream cones and that’s pretty sweet.

    For those who don’t know, Stew Leonard’s traditionally has given you a free ice cream cone every time you spend $100.

    This point is a good one … but the problem is that the ice cream cones would have given me about 20-30 extra pounds and diabetes, but wouldn’t have given Stew’s one iota of data.
    KC's View:

    Published on: September 9, 2019

    In Week One of the National Football League…

    Kansas City 40
    Jacksonville 26

    Atlanta 12
    Minnesota 28

    Tennessee 43
    Cleveland 13

    Buffalo 17
    NY Jets 16

    Baltimore 59
    Miami 10

    Washington 27
    Philadelphia 32

    LA Rams 30
    Carolina 27

    Indianapolis 24
    LA Chargers 30

    Cincinnati 20
    Seattle 21

    NY Giants 17
    Dallas 35

    San Francisco 31
    Tampa Bay 17

    Detroit 27
    Arizona 27

    Pittsburgh 3
    New England 33



    And, in the US Tennis Open men’s singles final, Rafael Nadal defeated Daniil Medvedev 7-5, 6-3, 5-7, 4-6, 6-4; it was Nadal’s fourth US Open title and 19th major championship and it took an epic (and exhausting) four hours and 50 minutes.

    In the women’s singles final, Bianca Andreescu defeated Serena Williams 6–3, 7–5 to win not just her first major title, but also becoming the first Canadian player ever to win a Grand Slam singles title.
    KC's View:

    Published on: September 9, 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: