business news in context, analysis with attitude

Published on: September 10, 2019

by Michael Sansolo

In today’s social media fueled world, where the smallest utterance can set off a tornado, companies have just gotten another powerful lesson about the unintended consequences of raising their voices. In other words, don’t poke a bear (or in this case, a chicken) without expecting something to happen.

Unless you’ve been living under a rock for the past month, you must have heard of the great chicken war of 2019. It started when Popeye’s announced a new chicken sandwich. It came with a pack of commercials and as much fanfare as the company could muster. But it surely wasn’t that big a deal.

Think again.

Chick-Fil-A, the far more dominant quick serve outlet in the world of chicken took a mocking shot at Popeye’s with a tweet. Fifteen minutes later, Popeye’s responded in kind and somehow the world shook. If you want proof I can take you to the closest Popeye’s near my home which now, like so many of the company’s outlets, has a handwritten cardboard sign on its menu board.

The sign offers regrets that this Popeye’s location is out of chicken sandwiches.

Chick-Fil-A’s little swipe set off a chain of events that has upended the world of chicken sandwiches and has given Popeye’s a level of sales and publicity that no one could have anticipated. Go figure.

The tit-for-tat chicken war has drawn near global media attention. Seeking Alpha, a website covering market events, tracked the staggering growth of Popeye’s social media presence in the days after the exchange.

Countless other media sites - including the New York Times - have written about the incredible aftermath, including the challenges Popeye’s is facing as it tries to somehow fill its supply chain with enough chicken to satisfy the unexpectedly explosive consumer demand.

There is a lot to learn from the chicken war of 2019. First, despite the ubiquity of quick serve restaurants, there clearly remain some unfilled demands, especially for products that feature improved tastes. I haven’t tasted Popeye’s new offering yet, but the reviews I’ve read praise it for delivering on the advertised promise of better taste. (For the record, I want to taste it. I’ve tried to taste it. I just can’t find it anywhere. And I know for a fact that my MNB comrades, Kate and Kevin, have tried as well but have had no success.)

It’s a reminder that new products - especially those that improve the consumer experience - still matter and can still move the needle.

Second, it’s a painful reminder that social media is a weapon that few have figured out nor have a clear idea how to use. One would assume that Chick-Fil-A, a company that has weathered other social media storms, would have had the good sense of knowing when to talk and when to be quiet and would not have made this mistake.

Instead, it took a seemingly unnecessary shot at a lesser rival and supplied the oxygen to let that rival soar. Other companies should learn the lesson here that saying nothing is at times a far better strategy than speaking up.

It’s far too early to know who will eventually win the chicken war. If Popeye’s continues to struggle meeting demand the entire event may blow over quickly. Or perhaps, both chains will watch the pecking order change as “chicken-less” products, like one now being offered by KFC, take over.

It never gets dull does it?

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: September 10, 2019

by Kevin Coupe

Forgive me. I’m going to wander into “all-you-kids-get-off-my-lawn” territory now.

Can’t help myself.

The Wall Street Journal had a story yesterday about how “winemakers, particularly in newer wine-producing countries like Australia and the U.S., are toning down discussions about tannins and terroir - and trying to outdo each other with wine nests, floating golf holes, climbing walls, petting zoos, strange museums and 35-foot-tall rabbit sculptures.” The reason? “Even a fancy restaurant or art gallery isn’t always enough to stand out or attract visitors to wineries these days, especially as many younger vacationers seek out increasingly unique experiences.”

One example: “The 35-foot-tall statue of a leaping rabbit at Hall Wines in Napa Valley … Called Bunny Foo Foo, the statue, visible from the highway, is actually a homage to the nursery rhyme that one of the winery owners used to sing with her children … The rabbit has sported illuminated antlers and a nose during Christmas, creating what some employees call Reindeer Foo Foo. When new Star Wars movies were released, a big lightsaber was placed in the front paw of the rabbit, then sometimes called Saber Foo Foo.”

Oy.

Look, I’m willing to accept some level of theatricality. I get balloon rides. Or wine blending lessons. I even like the idea of horseback riding through vineyards. (I really want to do that one of these days.)

But for me, it all needs to focus on the uniqueness of the product - these efforts ought to be aimed at opening people’s eyes and enhancing appreciation for the product, not distracting from it.

On the other hand, maybe that’s what is necessary to keep some of these vineyards alive and in business. If so, that’s an Eye-Opener … though I’m not happy about it.

Now, get off my lawn.

Published on: September 10, 2019

Re/code and Business Insider both have stories about an interview with Marc Lore, CEO of Walmart eCommerce U.S. in which he said that Walmart’s approach to online diversification is changing, conceded that there is tension between the bricks-and-mortar and digital parts of the company, and “said he plans to fulfill a commitment he made in 2016 to stay at Walmart for a full five years.”

Which, if he doesn’t stay any longer, would have him leaving in September 2021. Just FYI.

From Re/code:

• “Instead of looking to acquire commerce companies like the semi-upscale men’s apparel company Bonobos, Walmart is going to create its own ‘digital first’ brands /… Lore thinks his company can incubate new concepts and then bring them to both Walmart.com and Walmart’s network of thousands of retail outlets. He pointed to Allswell, a mattress concept designed to compete with the Caspers of the world, which he says will become a ‘multi-hundred-million-[dollar] brand’ for Walmart that’s required minimal investment.”

• “The way Lore deploys Walmart capital is of particular interest these days … tension exists between Lore and some of his fellow executives at the giant retailer, which has traditionally been focused on profit margins. But Lore’s e-commerce group will lose $1 billion this year — a number that doesn’t include the $3.3 billion it spent on Lore’s company Jet.com in 2016 … But that’s fine, he says. ‘I’m not surprised by it,’ he said. ‘That tension, I would argue, is actually good. It’s not unhealthy in any way’.”

From Business Insider:

• Lore “addressed ‘frustration and tension’ between himself and Greg Foran, the company's head of stores. ‘Greg's a great operator, and they're generating a lot of cash … Over on the e-commerce side, we're investing in it, we're losing money, and we're taking a bet on the future’ … I have much more appreciation for the store business and I think there's a real future with brick-and-mortar stores, specifically for Walmart’.” he said.

Published on: September 10, 2019

Bloomberg Businessweek has an excellent story about Daniel Zhang, who today becomes the first person other than Jack Ma to hold the title of chairman and CEO at Alibaba Group Holding, the global e-commerce platform. Ma is stepping away from the company, and Zhang is his hand-picked successor … and here is perhaps the most important passage from the story:

“Zhang is proving as radical as his predecessor. He says Alibaba is uniquely positioned to pull together the online and offline worlds in groceries and beyond, and dozens of his new initiatives are leading Alibaba deeper into fields including finance, health care, movies, and music. Especially in the U.S., where the company’s shares trade, these efforts have baffled some investors, who worry about overreach.

“In Zhang’s view, they’re a matter of survival. ‘Every business has a life cycle,’ he says during an exclusive interview at Alibaba’s Hangzhou headquarters. ‘If we don’t kill our existing business, someone else will. So I’d rather see our own new businesses kill our existing business’.”

One example of Zhang’s thinking: He “wanted to launch a startup inside the e-commerce giant that would combine a grocery store, a restaurant, and a delivery app, using robotics and facial recognition to speed up logistics and payment.

“That project, Freshippo, has since become a major part of Zhang’s blueprint for Alibaba’s future, with 150 stores (and counting) across 17 Chinese cities. On a recent weekday afternoon at a store in Hangzhou, plastic bins shuttle automatically along tracks in the ceiling, collecting goods from around the store for online orders. Deliverymen stand by to transport the goods anywhere within a 1.9-mile radius in as little as 30 minutes.”

You can read the story here.

Published on: September 10, 2019

CNBC reports that CVS has hired Adam Pellegrini, most recently the vice president of digital health at Fitbit, to be its new senior vice president of transformation consumer health products, responsible for leading “the ideation and incubation of consumer-focused health products and services that drive enterprise value and growth.”

The story notes that “CVS is trying to transform its business after acquiring a health insurer, Aetna, for $70 billion. The company is renovating 1,500 of CVS’ roughly 10,000 drugstores over the next few years to focus more on health services. Called HealthHUBs, the initial versions include an expanded health clinic, with a lab for blood testing, dietitians and wellness rooms.

“Executives hope the new services will keep people coming into CVS’ stores instead of ordering their vitamins, toilet paper and even prescription drugs online. They also recognize CVS needs to build its own digital experience in order to compete with companies like Amazon, which acquired digital pharmacy PillPack last year.”

Published on: September 10, 2019

USA Today reports that Target is planning an October national rollout of its Target Circle loyalty program that “offers personalized deals and supports local non-profits … shoppers will earn 1% on every purchase to redeem on a future Target trip. They’ll also get personalized offers like a birthday discount of 5% and can cast votes to help direct Target’s giving to approximately 800 nonprofit organizations.”

The story notes that “in April 2018, Target Circle launched as a pilot in the Dallas-Fort Worth area, and in February it expanded to Indianapolis; Phoenix; Denver; Charlotte, North Carolina; Kansas City, Missouri; and Kansas City, Kansas.” Target says the tests have exceeded expectations.

Published on: September 10, 2019

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

• Business Insider reports on how FedEx believes that its decision to stop doing business with Amazon - which has been developing the capacity to compete with shipping firms - will allow it to compete more effectively by working with the 51 percent of the e-commerce business not controlled by Amazon.

The story notes that “FedEx has been powering the e-commerce aspirations of Amazon's biggest retail competitor — Walmart. Data from Rakuten Intelligence indicates that FedEx delivered some 55% of all of Walmart's packages in Q2 2019 … Along with moving the majority of Walmart's online shipments, FedEx is rolling out Office locations in 500 Walmart stores nationwide where customers can print, ship, and pick up deliveries — a move that analysts said gives an edge to Walmart against Amazon.”

"E-commerce is driving the parcel volume in the US domestic market at a rate that we've never seen before, quite frankly," Brie Carere, FedEx's chief marketing and communications officer, tells Business Insider. "We see a world in 2026 where the market will be 100 million pieces a day, driven by e-commerce. And it's really important to remember that that's driven by e-commerce as a broad market, not by any single player.”

While FedEx’s system is not ideal for a consumer delivery network - it has more of a B2B orientation - reinventing it for a post-Amazon existence seems to be critical. But the story also makes the point that there could be a downside for FedEx if Walmart were to “pull an Amazon and build its own e-commerce delivery service that's suited to the sector of online shopping they're growing fastest in: online grocery.”


• Here’s a number for you - Amazon now has more than 53,500 employees in Seattle alone. The Seattle Times writes that Amazon “has edged above Microsoft’s local work force and is second only to Boeing among area private employers. Amazon’s rise has further diversified the region’s economy and contributed to an unparalleled economic boom, bringing prosperity but also challenges as housing and transportation infrastructure lag population and job growth.”

Amazon currently is in the process of hiring for some 30,000 new jobs - from software engineers to warehouse workers - around the country, including some 10,000 jobs in the Seattle area to be filled next year.


• The Wall Street Journal reports that “e-commerce technology company Shopify Inc. is buying warehouse robot-maker 6 River Systems Inc. for approximately $450 million as it deepens its move into physical distribution … 6 River Systems makes software and autonomous mobile robots that guide workers through warehouse aisles, lighting up when they reach the next item to pick.”

Published on: September 10, 2019

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

• Associated Wholesale Grocers (AWG) announced yesterday that it is launching a new scan-based trading (SBT) program that will provide its members with “visibility into out-of-stocks so direct store delivery (DSD) suppliers can take action to optimize on-the-shelf inventory. Additionally, AWG’s members and vendor partners will gain labor savings at the back door with expedited check in while also allowing members to free up valuable working capital.

“In today’s omnichannel world, it’s essential to the success of independent grocers to partner with their suppliers and share store data to enable more accurate store replenishment,” said Louis Stinebaugh, VP, sales and support for AWG, in a prepared statement.

AWG’s new SBT program is powered by ReposiTrak.

Two notes here. One is that this yet again points to the power of data - you can do a lot more with it than without it. Why wouldn’t you do this?

Second, I need to point out that ReposiTrak is a regular MNB sponsor. But I would’ve written this item even if it weren’t.


• The Wall Street Journal< this morning reports that Starbucks “has agreed to provide additional disclosures on how it recognizes revenue after the U.S. Securities and Exchange Commission questioned some of its accounting practices.”

According to the story, Starbucks “is one of many U.S. companies adjusting to new accounting guidelines that came into effect at the start of last year for most public companies. The new rules aim to standardize how companies from different industries account for revenue from sales and services.

“At least 208 companies received letters from the SEC about their revenue-recognition practices in 2018, according to regulatory filings and data compiled by consulting firm Audit Analytics Inc. That’s up about 56% over the annual average during the previous two years.”


• The New York Times reports that “Juul Labs, the dominant e-cigarette company, illegally marketed its vaping products as a less harmful alternative to traditional cigarettes, the Food and Drug Administration said on Monday, casting a deepening shadow over the safety of e-cigarette devices.

“The agency issued a warning letter to Juul, saying that the company violated federal regulations because it had not received federal approval to promote and sell its vaping products as a healthier option.”

The FDA move, the Times writes, “served as a reminder that the health effects of e-cigarettes are not established at a time when more than 400 people have been sickened by vaping-related illnesses. Five deaths have been linked to vaping, and hundreds of people have been hospitalized. Public health investigators have yet to determine a specific cause, but they have cited the use of cannabis and nicotine vaping products as possibilities. No one product or company has been implicated.”


• The Wall Street Journal reports that fast feeder Wendy’s is getting back into the breakfast business, and “will bring back breakfast across its U.S. restaurants next year as fast-food chains compete to lure diners during more of the day.”

Wendy’s says it “will spend $20 million to add more menu items and longer hours at its 5,813 domestic restaurants. Wendy’s said it and its franchisees will hire some 20,000 workers to help roll out the expanded offerings.”

Published on: September 10, 2019

Yesterday, MNB took note of a Bloomberg report 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.”

I commented:

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.

One MNB reader, however, was unmoved:

The “tire story” hangs in the backroom of many Nordstrom stores.

I’ve had a recent experience with them where one of their store associates gave a 3rd party company my private purchase information.  This violates their so-called “privacy policy”, as its laid out for all to read.

I got in touch with their corporate privacy leader, who listened to my story, listened to the v/mails I had from the 3rd party that initiated the call to the store.  Then, the privacy leader called me back (less than 10 days ago) to tell me that because the person who gave the information out in the specific store was not identified by name, they weren’t going to follow it up.  They wanted the person who left me the voicemail, who said directly they called the store, to layout the name, time and date of the call – before Nordstrom would act on it.
 
I’m no longer a fan of Nordstrom, to be clear.  It does make me wonder if these privacy policies of all companies are worth the paper written on.

Published on: September 10, 2019

There were two Monday Night Football games last night…

Houston 28
New Orleans 30

Denver 16
Oakland 24

Published on: September 10, 2019

Sort of a big day for me … it was 40 years ago tonight that I took the woman who would become Mrs. Content Guy out on our first date. It was to Pancho Villa’s, a Mexican restaurant in Larchmont, New York … and it was months before she told me that she didn’t really like Mexican food. I was smitten from day one (it took her a little longer, understandable since I’m an acquired taste), and it seems to have worked out.

Tonight, we’re driving back to Larchmont for a dinner at that same restaurant. It isn’t Pancho Villa’s anymore but, go figure, it is still a Mexican restaurant, Tequila Sunrise. (And, more importantly, she likes Mexican food a lot more now.)

What can I tell you? I’m a sentimentalist.

Ernest Hemingway once wrote that “people were always the limiters of happiness except for the very few that were as good as spring itself.”

Which is a pretty good description of Mrs. Content Guy. Sort of like spring itself.

Published on: September 10, 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