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    Published on: October 4, 2019

    by Kevin Coupe

    The Associated Press this morning reports that St. Louis-based Schnuck Markets, believing that its job is to nourish people's lives, has decided that it will no longer sell cigarettes, chewing tobacco and other tobacco products in any of its 115 stores.

    The ban goes into effect on January 1.

    Schnuck already does not carry e-cigarettes or vaping products.

    According to the story, the company "said removing tobacco is part of a broader effort to focus on wellness and promote healthier choices for customers. Other efforts include a partnership with workout centers to encourage physical activity and the launch of a program that teaches life skills and health habits to children. The store’s app also allows customers to view nutritional information."

    Schnucks Chairman/CEO Todd Schnuck explained the move this way: "Tobacco products are certainly a profitable part of our business, but our company’s mission is to nourish people’s livest. Tobacco products directly contradict our core mission and that means that they simply don’t belong in our stores.”

    I have nothing to add to that. It is the best kind of Eye-Opener.
    KC's View:

    Published on: October 4, 2019

    Walmart, looking for ways to cut its employee-related health care costs and improve its bottom line, plans to test a series of related initiatives next year in several markets.

    Among the pilot programs, according to CNBC is one in which Walmart "will connect patients with local doctors in an effort to cut down on its workers relying on word of mouth or social media to find a doctor."

    Axiosnotes that Walmart will establish quality metrics for doctors and then "will steer employees to those doctors for 8 specialties: primary care, cardiology, gastroenterology, endocrinology, obstetrics, oncology, orthopedics and pulmonology."

    And it will pilot "a concierge service to help employees navigate billing and appointments, but also finding a quality provider, understanding a diagnosis and addressing other complex questions."

    Other pilot programs, according to CNBC:

    • "In Colorado, Wisconsin, and Minnesota, Walmart will expand a program that allows patients to video chat with a doctor from home for $4 per chat."

    • "The retailer will also offer workers access to fitness clubs for $9 per bi-weekly pay period and add a predictable co-pay of $35 for every visit to a primary care physician under its most popular medical plan. These services will be available nationwide."

    The story notes that with a workforce of 1.4 million, Walmart's health care-related expenses are among its biggest budget items after wages.
    KC's View:
    Add this to the number of decisions that Walmart has made in recent months that would have been impossible to have imagined just a few years ago. But the world changes, and companies like Walmart have to move in new and unexpected directions if they are to be an employer of choice … the investments they make in the short-term will, they hope, pay off and save them money on a variety of levels in the long-term.

    Published on: October 4, 2019

    Fast Company reports that "a fashion industry trade group called the American Apparel & Footwear Association (AAFA), which represents 1,000 brands, including Gap, Adidas, and Target, has recommended that five Amazon sites be added to the U.S. government’s annual list of Notorious Markets … With this letter, the AAFA was specifically reacting to third-party sellers on Amazon’s platform that are creating replicas of other brands’ products, sometimes even using their brand names."

    That list, the story says, "lays out all the online and physical markets outside the United States where large-scale copyright infringement takes place. This could lead to trade sanctions for countries with weak copyright protection enforcement. The five sites included Amazon’s U.K., Canadian, German, French, and Indian websites."

    Amazon says that it "strictly prohibits the sale of counterfeit products. We invest heavily in prevention and take proactive steps to drive counterfeits in our stores to zero. In 2018 alone, we invested over $400 million in personnel and tools built on machine learning and data science to protect our customers from fraud and abuse in our stores."
    KC's View:
    However, studies have concluded that Amazon generally is reactive rather than proactive when it comes to dealing with counterfeits, and a variety of reports - like the one in Fast Company - point to some pretty egregious examples of products that can fairly be accused of defrauding consumers.

    And it also may be fair to suggest that Amazon is complicit in this fraud … or at least is turning a blind eye to a situation deserving not just a closer look, but specific, unambiguous action.

    Regardless of the legalities, there is no excuse for this. Amazon has to know what it is selling, has to know where these products are from and how they are made, and they have to be transparent about it. Customers, I believe, will demand this more and more … Amazon would be well advised to get ahead of this wave before it gets swamped by it.

    Published on: October 4, 2019

    The Wall Street Journal has a story about how food delivery companies that traditionally served the restaurant and fast food industries - such as DoorDash and Postmates - now are targeting the supermarket and convenience store businesses for future growth.

    The additional focus, the story points out, puts these delivery companies in competition with retailers that are doing their own deliveries (like Ahold Delhaize-owned Peapod, or Fresh Direct) as well as with those using other third-party services such as Instacart, UberEats, or Target-owned Shipt. And, of course, it is competing with Amazon.

    The reason is simple and economic: "U.S. consumers spend more on groceries than they do at restaurants on average annually, according to the Labor Department, making delivering groceries an opportunity for companies that have mainly focused on restaurants until now."

    According to the Journal, "Postmates said Wednesday that it would start making deliveries from 174 Walgreens and Duane Reade stories in Manhattan and Brooklyn. Postmates said it hopes to take the partnership with the owner of those chains, Walgreens Boots Alliance Inc., nationwide.

    Postmates also makes deliveries from Seven & i Holdings Co. ’s 7-Eleven stores and Walmart Inc., the largest U.S. food retailer."

    In addition, "Walmart products are also available for delivery on DoorDash and some regional services. DoorDash in August signed an agreement with e-commerce platform Mercato Inc. to make same-day deliveries from about 750 independent grocers in 22 states."
    KC's View:
    In the fast food business, these delivery companies seem to be commodities - a lot of fast feeders are being served by a number of different services. I'm not sure that works in the supermarket business … I think there needs to be greater connection to the brand.

    The question is whether they can undercut Instacart, a company that seems to want to compete with its retail clients long-term, not just serve them. I think that makes it vulnerable, and these services may create real problems for it.

    Published on: October 4, 2019

    The Spoon reports that UK retailer Tesco has announced a partnership with technology companyTrigo that is aimed at developing a checkout-free store similar to Amazon Go.

    Tesco will invest an undisclosed amount in Trigo, which "retrofits stores with cameras, computer vision and AI software to create cashierless checkout retail experiences … This is the second retail partnership for Trigo, following one with Israel-based supermarket chain Shufersal last year."

    The Spoon suggests that "the fact that Tesco publicly name-checked Trigo is another example of how cashierless grocery checkout is maturing. Retailers are no longer privately testing out these systems, but instead making announcements about them. Giant Eagle is working with Grabango and Brazil’s Lojas Americanas has partnered with Zippin. Worth noting as well is that both Trigo and Zippin have received strategic investments from retail partners, a sign that Lojas Americanas and Tesco are serious about implementing, or at least more deeply exploring, cashierless checkout."
    KC's View:
    It was earlier this week that reports emerged that Amazon is negotiating to license out its checkout-free technology to airport shops and ballparks. I'm not sure this all means the business is maturing, but maybe getting out of diapers.

    Published on: October 4, 2019

    The National Retail Federation (NRF) yesterday predicted that end-of-year holiday sales between November and December will "increase between 3.8 percent and 4.2 percent over 2018 to a total of between $727.9 billion and $730.7 billion." Over the past five years, holiday sales increases have averaged 3.7 percent; last year, NRF notes, holiday sales were up just 2.1 percent, which was attributed to "a government shutdown, stock market volatility, tariffs and other issues."

    NRF also predicted that online and other non-store sales will "increase between 11 percent and 14 percent to between $162.6 billion and $166.9 billion, up from $146.5 billion last year."
    KC's View:
    My crack team of prognosticators (actually, just the dog, to whom I talk a lot while going for long strolls) predicts that in-store sales increases will be lower than NRF is predicting, and online sales increases will be higher.

    Let's see who ends up being right. NRF, or the dog.

    Published on: October 4, 2019

    Benzinga has a story about a presentation made by Amazon's Prime Air president, Gur Kimchi, to "an audience of clean technology and environmental policy experts" in which he explained the company's drone delivery strategy.

    "We are very comfortable that the economics of this business are great," he said, adding, "It is the safest and most environmentally responsible and also highly scalable."

    Possibly because of the audience he was addressing, Kimchi framed his message in terms of its environmental advantages, saying, "We know customers love Prime, but we know we have to implement it in a responsible manner … "Every package delivered by a drone is a package not delivered by a car. It's a net positive."

    But, it wasn't just about the environmental advantages, Benzinga writes: "Despite the nod to the potential planetary benefits, Kimchi devoted much of his 50-minute talk to  safety, a top priority for autonomous vehicle companies seeking to allay consumer fears about self-driving vehicle technology – on the ground and in the sky … Kimchi said two key metrics are continuously evaluated after the drone is released – is the airspace safe, allowing the delivery to continue, and is the ground safe to approach."
    KC's View:

    Published on: October 4, 2019

    • The Washington Business Journal reports that United Natural Foods Inc. (UNFI) CEO Steve Spinner told analysts this week that the company is getting closer to selling off its Cub Foods and Shoppers grocery chains, which it got when it acquired Supervalu last year, but which it wants to sell so it can focus on wholesaling.

    The company, Spinner said, is "working on several deals, each of which involves multiple stores, which increases the level of complexity." The company seems to be aiming for a 2020 sale, according to the story.

    • From Reuters: Costco Wholesale Corp. reported quarterly revenue below Wall Street estimates on Thursday, as the U.S. hypermarket chain struggled to attract shoppers in the competitive grocery space.

    "Costco and other U.S. grocers are slashing prices while investing heavily in stores and online operations to defend their share of the market as Inc and Walmart expand aggressively."

    However, Costco also is looking for growth opportunities abroad, having generated a record number of membership signups at its first Shanghai store; a second Shanghai store is on tap to open in 2021.

    The story says that "in the United States, comparable store sales, excluding fuel, rose 5.2% … missing the estimate of 5.32%. The company's total revenue rose about 7% to $47.50 billion helped by sales of big-ticket items like diamond rings and Kitchen Aid mixers, but fell short of estimates of $47.57 billion."

    CNBC reports that bed Bath & Beyond announced yesterday that it plans to close 60 stores by the end of its fiscal year - 40 Bed Bath & Beyond units and 20 stores from its other formats, which include World Market, Cost Plus, and Christmas Tree Shops.

    The closings represent a 50 percent increase over what previously had been announced.

    Interim CEO Mary Winston said that the goal is to optimize "the profitability of our remaining portfolio," which will still number more than 1,400 stores.

    • From the New York Times: "Illnesses and deaths linked to vaping continue to increase around the country, now totaling 1,080 cases and 19 deaths, health officials said on Thursday.

    "The Centers for Disease Control and Prevention said that cases had occurred in 48 states and the United States Virgin Islands. This week, Nebraska, Alabama, Delaware, Connecticut, Virginia and New Jersey reported deaths, which brought the total to 19 in 16 states.

    "The new case count reflects an increase of 275 in just the past week. About half of the 275 were hospitalized in the past two weeks, and the rest were older cases whose link to vaping was just recognized, Dr. Anne Schuchat, principal deputy director of the C.D.C., said during a news briefing."
    KC's View:

    Published on: October 4, 2019

    • Weis Markets announced that it has promoted Matt Burke, a vice president and district manager with the company, to the role of regional vice president. He succeeds Jimmy Daly, who has retired.
    KC's View:

    Published on: October 4, 2019

    Responding to yesterday's FaceTime commentary about how Helzberg Jewelry is having its employees ordained by the Universal Life Church so that they actually can marry people who come in for wedding rings, MNB reader Angie Dahman wrote:

    There is plenty of space in the malls to have a small chapel, heck a large cathedral!

    True enough.

    On the subject of kroger's layoffs, one MNB reader wrote:

    As a former Kroger employee and also an individual that very closely follows and evaluates Kroger nationally, I believe that Kroger is getting WAY too much credit for their "all-in" initiative on the eCommerce-side of the equation.

    With the recent news of store layoffs - with certainly more to come - what has not been published is that Kroger recently laid off nearly all of their Real Estate group (70+ individuals), meaning that Kroger will likely open only a handful of stores for the foreseeable future - and will place a very small amount of capital into store remodels. This may appear to make sense on the surface, unless you're in Houston, where Kroger is getting absolutely beat down by HEB, as HEB continues to open stores in that market; and with each new HEB, there are likely 4-5 Kroger units being impacted. And given this latest news, Kroger is certainly playing with fire as they start eliminating store personnel and likely needing to raise prices to help offset the Ocado investment.

    Kroger made huge strides several years ago with an investment in Customer Service/ Frontend experience. Any of those gains are now negated, as store conditions - and morale - are quickly eroding. Bottomline is that Kroger (Rodney McMullen) has made the conscientious decision to wager everything on eCommerce and "turning their back" on the brick and mortar experience. That's a dangerous wager and one that I believe will ultimately be the collapse of once-dominate chain.

    If I'm an independent operator or a privately-held chain, I'm "smelling blood" and looking to exploit Kroger's complete dismissal of the brick n mortar experience.  I'm sure that Amazon (the great "disruptor") is nothing but elated at Kroger's recent moves, especially as they start rolling out brick n mortar units. Not unlike the book store disruption that Amazon brought onto Borders, Barnes & Noble and Books-A-Million.

    Yesterday's Eye-Opener was about how more and more people are eating alone, and I at one point wrote:

    The Greek philosopher Epicurus once wrote that "we should look for someone to eat and drink with before looking for something to eat and drink, for dining alone is leading the life of a lion or wolf." I'm guessing he didn't see that as a good thing. I prefer, in this case, the writings of Robert B. Parker, whose detective protagonist Spenser takes pleasure in cooking and eating alone - he understands that part of living life well is being willing to take the time to cook good food and drink good wine, even if by oneself.

    Prompting this wistful email from a reader:

    Ah yes, Robert B. Parker & Spenser... we miss him around Cambridge & Boston..Thanks for the memories!

    Hard to believe in January it will be a decade since RBP passed away. But at least we still have Ace Atkins writing Spenser novels ("Angel Eyes" will be out next month), and at some point in the next few months Netflix will be out with a new Spenser movie, Wonderland, based one of Atkins' Spenser novels.
    KC's View:

    Published on: October 4, 2019

    The National League Divisional Playoffs are underway, with the St. Louis Cardinals defeating the Atlanta Braves 7-6 in game one of the best-of-five series, while the Los Angeles Dodgers defeated the Washington Nationals 6-0 in game one of their best-of-five series.

    In Thursday Night Football, the Seattle Seahawks beat the Los Angeles Rams 30-29.
    KC's View:

    Published on: October 4, 2019

    The Retail Tomorrow podcast goes to GroceryShop 2019 in Las Vegas for an in-depth discussion of not just the strategies and tactics preoccupying many of the attendees, but the motivations behind the decisions they are making with regard to brand identity and technology.

    There were some three thousand attendees at GroceryShop this year, from about a thousand companies and 30 countries, all looking for a competitive edge found in innovative technologies, disruptive business models and provocative insights. Sifting through the presentations and exhibits for Retail Tomorrow, looking for nuggets of wisdom that have the potential to animate and differentiate a retailer, are:

    • Lisa Sedlar, CEO, Green Zebra Grocery.
    • Scott Moses, Managing Director at PJ Solomon.
    • Bob Perry, Director of Business Development, NBC Universal
    • Tom Furphy, CEO/Managing Director, Consumer Equity Partners.

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

    You can listen to the podcast here, as well as on iTunes and 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, below: Lisa Sedlar, Scott Moses, Tom Furphy, Bob Perry

    KC's View:

    Published on: October 4, 2019

    It was preordained that I was going to see the film version of Downton Abbey when it opened. No way I was going to miss it.

    Longtime MNB readers may remember that I resisted watching the TV series for a long time, despite persistent entreaties by Mrs. Content Guy. Finally, she looked at me and said, "Look, I've gone to countless movies over the years that I had no desire to see, but you wanted to, and so we went. I'm asking you to watch this with me, and I think you should suck it up and do it."

    Well, I know when I've been outmaneuvered. I also know when I'm wrong. So we started binge watching the series, and I loved it. (I really, really hate it when I'm wrong.)

    Now, several years after the series ended, Downton Abbey is back as a feature film. To be honest, it sort of plays like two or three episodes strung together - all the familiar faces and attitudes are in place, and while the production values are helped by a larger budget, the improvement is marginal. This always was an entertainment that was lovingly produced, and so with the exception of a lot more aerial shots (presumably accomplished through the use of drone cameras), it looks pretty much the same, which is to say, great, and evocative of a time long gone by.

    Downton Abbey takes place in 1927, and the driving plot point is the visit of King George V and Queen Mary to the estate and all the rouble it creates for the aristocratic Crawley family (Hugh Bonneville, Michelle Dockery, Elizabeth McGovern, and, of course, Maggie Smith among them) and the domestic help (Jim Carter, Brendan Coyle, Phyllis Logan, and Joanne Froggatt, et al,) that keep the mansion running smoothly.

    One of the things that the movie continues to do well is show what happens when tradition runs up against progress. The TV series' first season took place in 1912; in fact, the first episode takes place on the day after the sinking of the Titanic. There is, of course, a sense throughout the series and the movie that we are watching an endangered time, that the social, cultural and economic systems that seem so ingrained and immutable eventually will dissolve. In many ways - especially in its treatment of women - the series showed the slow erosion of certain attitudes. Sure, there is a long way to go, but we can see the seeds of change being planted when it comes to the ruination of Britain's class system.

    The movie version of Downton Abbey doesn't deal with this as specifically - in text and subtext - as the series did, but then, it has a lot less time during which to tell its stories. But it is all there, and while it is possible to feel both a bit of sadness and relief in knowing we are watching shadows that eventually fade into memory.

    I have no idea if people who never saw the TV series will get or enjoy Downton Abbey. Maybe it doesn't matter - the movie is enough of a (surprise!) hit that there already is talk of another one.

    And I'll be there to watch that one, too.

    With Mrs. Content Guy. Of course.

    That’s it for this week. Have a great weekend.

    I'm off to Indianapolis for the GMDC Selfcare Summit, where I'll be moderating two sessions that we'll be turning into Retail Tomorrow podcasts. Can't wait.

    Back Monday.

    KC's View: