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: September 23, 2019

    by Kevin Coupe

    Fortune has an interesting piece about how Amazon - facing off against an aggressive and ambitious Walmart that just expanded its $98 annual subscription fee for grocery delivery to 1,400 markets, trying to undercut Amazon's $119 Prime membership fee - is expanding the availability of its service that offers free two-hour delivery from its Whole Foods stores.

    "As it has done before," Fortune writes, "Amazon wants to change shopping habits—in this case getting consumers more comfortable buying perishable products like bananas and yogurt online. That’s crucial if Amazon is to take on Walmart in the $840 billion U.S. grocery market.

    "Encouraged by what it calls 'very positive' customer feedback, the company has quickly extended the service to almost 30 cities, including Los Angeles, Houston, and Detroit."

    But, the story points out, "Persuading shoppers to buy fresh food online isn’t Amazon’s sole challenge. Getting groceries to customers quickly is another. Offering two-hour delivery requires Amazon to show shoppers only products that are close to them, which isn’t easy because the 25-year-old website was designed to let anyone with an internet connection buy a product anywhere in the world."

    And, Fortune provides the following context, noting that the entire industry "is grappling with how best to mesh physical and online grocery stores … Despite trying to upend the grocery market for more than a decade, Amazon remains a tiny player. Walmart and its Sam’s Club capture 25% of all grocery spending in the U.S., according to Morgan Stanley, compared with 2% for Amazon and Whole Foods. Walmart has more than 4,500 U.S. stores, about 10 times the number of Whole Foods locations.

    "Meanwhile, competition is intensifying. Walmart and Target are both investing in delivery options as well as in-store pickup of online orders, all geared toward time-strapped customers looking to simplify their errands."

    As often happens in these cases, I am reminded of something from "Star Trek" … an original series episode, "Let That Be Your Last Battlefield," in which a pair of aliens engage in an endless battle, each one convinced that he is superior - one because he is white on the right side of his body and black on the left, and the other because he is black on the right side of his body and white on the left. It was, as it happens, a fairly obvious - and even clumsy - way to address the kind of racial tensions that were evident in the US back in the late sixties … but also serves as a metaphor for the e-commerce battle being described by Fortune.

    As I read this story, I could help but think of retailers not named Walmart or Amazon (or Kroger or Target or Albertsons or any of the other giants). What must they be thinking as they consider the various strategies and tactics being embraced by companies of considerable resources?

    There is no room for indecision, and no time to be complacent. The war is ranging all around us, and every retailer - pretty much regardless of size - has to be engaged, Eyes Open, with defining their strategies and tactics so survival is at least possible.

    This isn't to say that traditional retailing is dying … just that retailers not figuring out where they are in this continuum are, at the very least, flirting with obsolescence.
    KC's View:

    Published on: September 23, 2019

    Walmart announced last Friday that it will stop selling vaping products in the US, citing "the growing federal, state and local regulatory complexity and uncertainty regarding e-cigarettes."

    The Walmart decision, the New York Times writes, deals "a new blow to the vaping industry as concerns mount over the health risks of the products and their soaring popularity among teenagers." It comes "amid a drumbeat of new reports about the potential health risks of vaping that has made parents, doctors and government officials increasingly wary of the products, which are marketed as smoking-cessation devices."

    The story points out that while vaping products are not a big revenue item - yet - they have offered Walmart an opportunity to make inroads with younger shoppers who have the potential of becoming longtime Walmart shoppers. "The e-cigarette shopper is a very important shopper for Walmart,’’ Burt Flickinger, managing director of Strategic Resource Group, tells the Times.

    The Times story notes that "Walmart is not the first major retailer to halt sales of e-cigarettes. Rite Aid, one of the country’s biggest pharmacy chains, said in April that it would stop selling vaping supplies, and in August, Dollar General, one of the fastest-growing retailers in rural parts of the country, also pulled the products from its stores. And Costco pulled all e-cigarette products from its shelves about two weeks ago, the company said. One of Walmart’s largest competitors, Target, has never sold vaping devices and took cigarettes off its shelves in 1996."

    The story makes clear that Walmart will continue selling vaping products until its current stocks run out in a few months, and also has no plans to stop selling cigarettes. This latter point has created the opportunity for some criticism of the company - including, ironically enough, from Tony Abboud, executive director of the Vapor Technology Association, who "said it was a mistake for Walmart to reduce access to vaping products while keeping cigarettes on store shelves."
    KC's View:
    I give Walmart a lot of credit for making this move. I suspect that the impact will be more symbolic than anything, but symbolism can be a powerful thing … especially when it concerns a product category designed to addict people to a product likely to kill them.

    The argument that it is hard to justify getting rid of vaping products while keeping cigarettes is a legitimate one, but I'll give them this one for the moment. It is interesting that Walmart is investing in health centers, and so I suppose it is possible that this could lead to a broader tobacco ban from its stores. But certainly not anytime soon.

    Still, applaud Walmart for taking the responsible position. More and more of that going around.

    Published on: September 23, 2019

    Axios has a story making the case that, in fact, responding to pressure from employees and customers, CEOs are moving "beyond a monomaniacal focus on profits," and taking "specific action while politicians dither."

    The story cites several examples beyond Walmart's decision to stop selling vaping products and Amazon's announcement that it is accelerating its efforts to comply with the Paris Climate Accords, to which the US government no longer is a signatory.

    Among them: "Delta Airlines returns billions in profits to employees — this year, a bonus equal to 14% of their annual pay — and has grown since making this change. Every company can do this."

    Or: "Stripe, the online payments platform, announced last month that it plans to spend at least $1 million a year to pay for direct removal of carbon dioxide from the atmosphere."

    Or: "Bank of America last year stopped lending money to makers of military-style assault weapons."

    The Axios story notes that "the new public assertiveness by corporations follows an earlier wave, after President Trump took office, of CEOs taking stands on immigration, climate, gender equality and other issues that their predecessors avoided." And, "The pressure on CEOs from employees, customers and communities seems to only be intensifying."

    Apple CEO Tim Cook puts it this way: "Apple is about changing the world. It became clear to me some number of years ago that you don’t do that by staying quiet on things that matter."

    Along the same lines, Bloomberg has a piece about Walmart CEO Doug McMillon - who just took over as president of the Business Roundtable, which recently opined that companies should not make shareholder value their number one priority - in which it describes him as "emblematic of a younger generation of business leaders who are more woke than their pusillanimous predecessors in the executive suite."

    McMillon, the story says, "along with other next-generation business leaders … see an increased need to speak out on political and social issues that don’t slice into their bottom lines. Gridlock in Congress has prevented progress on issues that matter to millions of Americans, presenting an opportunity for CEOs to become advocates."

    Under McMillon's leadership, Walmart has raised its own starting minimum wage (though not as much as some other companies) while encouraging a legislated increase in the federal minimum wage …. discontinued the sale of handgun and assault-style weapon ammunition … banned open-carry in its stores … been aggressive on environmental issues … and even spoken up about racial violence.

    There is, of course, a risk: "His public appearances could start to draw protesters who disagree with his stances on guns, wages and other issues. Opponents of gun-control legislation have threatened to challenge Walmart’s new open-carry restrictions by provoking confrontations in stores. But as McMillon said when announcing the gun-policy changes, he’s ready for it: 'The status quo is unacceptable'."
    KC's View:
    There is little question that many or even most of these executives would've been perfectly happy to run their companies in a world where they did not have to takes these kinds of positions. But forget for a moment frustration with the positions - or lack thereof - taken by politicians. One of the things that technology has given us is a consumer class that is far better informed than ever … and even more opinionated. It is interested in values as well as value, and in a world of enormous clutter and distraction, the right positions give companies a way to differentiate themselves.

    Published on: September 23, 2019

    The Observer has an interview with Jennifer Fleiss, who is running Jetblack, Walmart's concierge service in New York City, in which she talks about the goal of the startup.

    The motivation behind Jetblack, she says, is "'I’m a busy mom with three kids and constantly needing to purchase everything from paper towels to kid birthday gifts to you know… clothing for myself to wear to work (or to workout).' It can be really time consuming and inefficient. It’s made shopping into a chore, to the point where I had people, like my husband and housekeeper, texting me about stuff that we needed for the household. Sometimes, I would text myself as a reminder. This customer behavior of texting-to-shop for any product you want, that’s what Jetblack came out of - both a passion and a need that I felt as the consumer."

    The goal, though it may seem counterintuitive, actually is to make e-commerce less transactional.

    Fleiss goes on: "We’ve sort of returned to the idea of customization and attention, with e-commerce coming full circle and borrowing from retail’s interaction-heavy strategy. Perhaps at the end of the day, shoppers want someone to explain how something works or make recommendations, not just get a product shipped to them in a box … with Jetblack, it’s a combination of agents and bots. We have agents behind the scenes who are leveraging a dashboard that we built, and the dashboard has a lot of automated tools. It has many types of filters that will automatically pop up, depending on who the customer is. So the moment we get someone’s text, we know who it is and have a pre-filter based for, say, their children’s age or other preferences … Eventually, we’ll become better and able to service more and more customers quickly."
    KC's View:
    The Jetblack business model may make a lot of sense in certain markets, though I suspect that the economics may end up being challenging until a certain mass is achieved.

    But, I must admit that I'm sort of amused by a Walmart executive talking so openly about texting back and forth with the housekeeper. Nothing wrong with that, but it certainly speaks volumes about how different Jetblack is from the company's core/traditional business. And I always wonder how long such non-core businesses can survive in the Walmart ecosystem.

    Published on: September 23, 2019

    The New York Times wrote this weekend about efforts by some researchers working in the "parched landscape" of Israel to figure out how to grow wine there. That knowledge, the story said, will become even more valuable in a world with more frequent droughts and heat waves."

    In another, related story, the Times writes that it isn't just wine and that "among the most threatened crops in California," for example, "are cherries, pistachios and walnuts, which need a large number of chilly winter days. Warming will not be good for such crops.

    According to the Times, the techniques the researchers are testing "on 30 varieties of grapes include the use of nets that provide shade, trellises that coax vines to grow in formations that limit sun exposure, sensors that measure soil humidity and thermal cameras that track how much sunlight grapes and leaves absorb … The work is gaining increased interest from European winemakers as summer heat waves and other climate shifts affect their vines. In July, temperatures hit 106 degrees in the French wine-growing region of Bordeaux — the hottest day on record. Heat records were broken elsewhere on the Continent, including in Germany, Belgium and the Netherlands. In recent years, scientists and vineyard owners from France, Italy, Slovenia and other parts of Europe have visited the researchers in the Negev. Experts hope Israel’s desert agriculture can provide valuable lessons about adapting crops to extreme and unpredictable weather."

    The Times goes on: "In addition to viticulture, Israeli researchers are studying a range of techniques to grow other crops. The Ramat Negev Agro-Research Center has about 15 hectares — or 37 acres — of research plots and greenhouses where scientists cultivate wine grapes, date palms, olives and jojoba.

    "In large greenhouses, researchers cultivate cucumbers, cherry tomatoes, eggplant and other vegetables, like an edible, crunchy grass called sarcocornia that thrives in saline conditions. Even strawberries are grown in long, suspended planters."
    KC's View:
    I'm glad somebody is taking this stuff seriously. Because it doesn't get much more serious than climate change screwing up the world's wine industry.

    Published on: September 23, 2019

    CNBC has a story about how "Tru Kids, the new owner of the Toys R Us brand, is partnering with Candytopia as part of a plan to reinvigorate the toy store with interactive elements designed to bring in shoppers … Toys R Us Adventure will have more than a dozen interactive play rooms that include installations featuring the Toys R Us mascot, Geoffrey the Giraffe."

    The Toys R Us Adventure locations - there will be two, in Atlanta and Chicago, open before the end of the year - will be in addition to the 10 Toys R Us stores expected to be opened next year. Those stores, "through a joint venture with B8ta … will offer an in-house technology platform to help brands create their own mini shops within the space."

    Like the Candytopia format, the story says, "it will charge admission: $28 for adults, $20 for kids 4 through 12 and free for children under 4."
    KC's View:
    Really? Now they want to charge people to go to a Toys R Us store? Back in the day, they couldn't pay me enough to go in one.

    Okay, maybe that's a little cynical. Clearly new management is trying to rethink the brand and maybe even define it along new lines. I'll give them credit for that. A lot of retail needs to be more experiential, and that's what they're going for with this concept.

    But … I still think this is a tough lift, and I'm not entirely sure that the Toys R Us brand name is an asset in this case. Sure, it is recognizable, but not necessarily in a good way. And if the Adventure format tanks, what will it tell them about the shelf life of the new retail stores?

    Published on: September 23, 2019

    Time has a story about a grocery format that probably is unfamiliar to many people - Keedoozle, described as "history's first fully automated grocery store."

    Keedoozle was created by Clarence Saunders - also the guy who was behind Piggly Wiggly - and it went through various iterations before it (spoiler alert!) ultimately failed. But when you read it, you may find yourself wondering what Saunders, who died in 1953, would've come up with if he'd ever been acquainted with the internet.

    You can read about it here.
    KC's View:
    It was interesting to read this since someone the other day described an Amazon Go store to me as being akin to a big walk-in vending machine. (This person is a Go skeptic, to be sure.) But that also sort of sounds like a good description for Keedoozle.

    Published on: September 23, 2019

    Business Insider reports that "Macy's is rolling out a free same-day delivery pilot program in 30 markets beginning on October 1 … The offer will be available for a limited time and allows shoppers to receive free same-day delivery on online orders placed before noon Monday through Saturday, as well as before 10 a.m. on Sunday."

    The story points out that "Macy's effort comes on the heels of Amazon announcing free one-day shipping for Prime subscribers in April, and it mirrors similar efforts from competitors like Walmart, which launched its own free delivery program for orders of $35 or more in March."
    KC's View:

    Published on: September 23, 2019

    MarketWatch reports on Starbucks' plans to launch a new format, Starbucks Pickup, "that will be exclusively for Rewards members who use the mobile-order-and-pay option." The format, being tested in New York City, is said to resemble "the Starbucks Now express service store that launched in Beijing this summer."
    KC's View:

    Published on: September 23, 2019

    …will return.
    KC's View:

    Published on: September 23, 2019

    In Week Three of National Football League play…

    Miami 6
    Dallas 31

    Cincinnati 17
    Buffalo 21

    Detroit 27
    Philadelphia 24

    NY Jets 14
    New England 30

    Atlanta 24
    Indianapolis 27

    Oakland 14
    Minnesota 34

    Baltimore 28
    Kansas City 33

    Denver 16
    Green Bay 27

    Carolina 38
    Arizona 20

    NY Giants 32
    Tampa Bay 31

    New Orleans 33
    Seattle 27

    Houston 27
    LA Chargers 20

    Pittsburgh 20
    San Francisco 24

    LA Rams 20
    Cleveland 13
    KC's View:

    Published on: September 23, 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: