business news in context, analysis with attitude

Published on: October 10, 2019

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here … and this is FaceTime with the Content Guy.

I love it when retailers come at competition from different angles. For example…

There is a bar in St. Louis called Open Concept where they don't charge for the drinks. They just charge you for the time that you're there. Ten bucks an hour, for access to an open bar.

Here are the basic rules, as found on its website:

"Yes, you can arrive as late as you want. Yes, your time starts when you get your first drink. Yes, we will issue you a full refund if you miss your booking time. No, we don't sell food. But, you can order in any food you'd like."

That's pretty much it. The bar serves batched cocktails on draught, beer, and wine. The owners say they got the idea from fund raising parties that it used to cater - they seemed to make money, and costs were reduced because they could mix drinks in advance.

This would seem to be a nightmare ready to happen, but St. Louis magazine writes that proprietor Michael Butler has put safety measures in place: "When patrons book their time at Open Concept, they create a profile and are assigned a confirmation code, which is used to place drink orders at the bar. Bartenders will only serve one drink per person at a time, and a proprietary point-of-sale system will track consumption. Butler says the system will scan driver’s licenses and use a patron’s height and weight to assign a number of drinks per hour to keep the bar in compliance with legal limits."

I suspect that Uber and Lyft drivers are going to be hanging out nearby.

The Washington Post has a story about the Wine Attic in wealthy Clifton, Virginia, which the Post writes "provides a window into how a little company can stay alive paying super-close attention to the customer base."

It is owned and run by Juan and Renée Navarro, and Juan says that "we sell ourselves. It’s the Juan and Renée experience. Every second with the customer counts. Once I meet them, I know what every customer wants when they come in. You can’t do that in a high-volume business."

Here's the core rule at the Wine Attic: "One owner always on premises, providing personal service, knowing your customers and enough of a connection to draw customers back." And they've used that knowledge to create a wine club with 80 members that "creates the recurring revenue stream." Indeed the Navarros say that they have 10 customers who "account for a significant chunk of sales."

One advantage the Wine Attic has is that it is not trying to compete with the likes of Total Wine … it is using the "Moneyball" strategy - playing by a different set of rules with different expectations and different benchmarks for success. But successful it is.

Finally … let's talk about Sonos, the high-end speakers and sound system company, which, according to the Verge, in the Netherlands has just launched "a new subscription service that lowers the initial barrier to taking home its costly connected speakers." For the equivalent of about sixteen bucks a month, you can rent speakers on what essentially is a "try before you buy" program … and they even throw in free delivery and installation.

If it works in the Netherlands, there seems every likelihood that it could expand globally. Sonos seems to be doing this as a way of lowering the cost of entry for people looking to improve their sound systems, and even lower the confusion level that often accompanies such systems. At a time when there are plenty of competitors in the space, Sonos is smart to figure out how to reduce the friction between it and its customers.

Reducing friction. Knowing your customers. Changing the rules of engagement. All great ways of coming to market, and all ways that are helping these businesses to differentiate themselves.

And I love it.

That's what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: October 10, 2019

by Kevin Coupe

The Financial Times has a story about how some banks are using Netflix-style algorithms and artificial intelligence "to target individuals with products and third-party rewards based on their specific needs and tastes, as part of a broader effort to strengthen customer relationships by homing in on the 'segment of one'."

As the story notes, "Analysing customer data to set basic loan sizes and terms has become standard practice at most retail banks: they can dissect a user’s profile and recurring transactions to predict when they might want to take out an overdraft or insurance policy, for example. But some banks are starting to analyse customers’ ad hoc spending to offer discounts with retailers, restaurants and other partners that are tailored specifically to them."

It is yet another example of how important data is to businesses when trying to evolve more nuanced consumer relationships. Sure, banks want to be in the financial services business … but at a time when there is plenty of competition in the space, it simply makes sense to analyze transactional information that allows for behavioral interpretation, and then the extension of promotions that cater to what people want and/or need.

That's how enduring relationships are created.

Now, it isn't always easy, and such strategies can create the opportunity for abuse. FT notes that especially in the US these days, there are privacy concerns that are important for banks to take into consideration.

But, what the banks are doing, modeled on what Netflix and other companies have done, also makes a lot of sense - especially if it creates real value for their customers.

It can be, for both sides, an Eye-Opener.

Published on: October 10, 2019

MediaPost reports that Walmart has "filed a patent application for a system for retrieving a package delivered by an Unmanned Aerial Vehicle (UAV) or drone."

The system involves "a receiving structure mounted to and extending from a wall of a building, the receiving structure being configured to receive the package delivered by the UAV … The structure would include a trap door configured to open and close an opening leading to a transport system."

It gets more complicated: "The drone would land on the platform and drop off a package. The trap door then would open, and the package would be released to a transport system, such as a chute or slide system, a conveyor, an elevator or an automated guided vehicle, and the package would be delivered to the recipient inside the building."

Published on: October 10, 2019

Institutional Investor has a piece about retailing's last mile and the challenges it presents to those who look to conquer it.

Here's how the story frames the issue:

"The last mile of a marathon is always the toughest — and Amazon, the capitalist colossus intent on owning much of the world’s wallet share, is in the closing sprint alongside increasingly web-savvy brick-and-mortar rivals like Walmart and Target. The victor will be the firm that can most rapidly deliver online orders to customers’ homes, within a day or less.

"Amazon, with its online prowess, is undeniably ahead. Yet worryingly for the Seattle company and its enigmatic CEO and founder, Jeff Bezos, it cannot match the thousands of stores that Walmart and Target have in close proximity to consumers and that are being used to warehouse and quickly distribute products ordered online. It is these warehouses that pose a serious threat to Amazon — perhaps the most serious threat it has faced in decades."

You can read the entire story here.

Published on: October 10, 2019

Fast Company has an interesting piece about how Ikea, which has faced some significant product safety issues in the past, is investing in a new "Safer Homes" initiative, described as a suite of tools and activities "geared toward helping create a safer life at home for families and children." However, the story suggests that the initiative may be more aimed at shifting responsibility than it is at insuring customers' safety.

According to the story, Ikea is hosting in-store workshops that focus on making sure furniture doesn't tip over (which has been a problem for some of its items, leading to injuries, including to children). And, Ikea "launched an app and a landing page devoted to the initiative, where consumers can access information about product safety. Parents will be able to create a child safety checklist based on their child’s age, and browse through rooms to see how they can make each space safer."

But … at every juncture, the story says, Ikea stresses parental responsibility. "In a video, a narrator says, 'As a parent, you child-proof everything . . . but you may not have thought about one thing, and that’s securing your drawers and chests to the walls.' At another point, the page reads, 'Most injuries happen at home, but with a bit of knowledge, many can be prevented'." And, Ikea also is emphasizing how much product testing it does before items are sold.

"This initiative," Fast Company writes, "does help parents find useful information about how to secure their furniture - but the brand’s language seems to subtly shift the blame for injuries squarely onto parents."

Published on: October 10, 2019

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

• Advertising Age reports that "in late September, Amazon filed a trademark application for Alexa-branded home appliances. The filing is exhaustive and includes more than 100 different household products, from the mundane - 'smart home connected LED lighting systems' - to the rare - 'voice-responsive ice-cream makers'."

The story notes that the application leaves open the possibility that Amazon will team with existing brands to develop Alexa-powered appliances, and that just because a trademark application is filed, that doesn't mean that the plans will necessarily come to fruition.

But … we all know that Amazon is ambitious and highly focused on expanding the boundaries of its ecosystem. If that means connected toasters and ice cream makers, why not? As the story says, "Amazon’s Alexa-enabled devices are already in more than 100 million homes - but an Echo may be just the beginning of the Seattle-based ecommerce giant’s foray into the home."

Published on: October 10, 2019

• So much for health and social responsibility as consumer motivators.

The Wall Street Journal reports that "McDonald’s USA President Chris Kempczinski said most of its customers order based on taste, not nutritional value or environmental impact … 'There is a very, very small group of consumers out there who will buy something that doesn’t taste great because it conforms to their particular values,' Mr. Kempczinski said."

And "Dirk Van de Put, chief executive officer of Oreo maker Mondelez International Inc., said at the forum that even as the snack company cuts sugar in some of its products and adds probiotics to others, indulgences such as Cadbury chocolate and Chips Ahoy continue to drive sales."

The comments were made at the Wall Street Journal Global Food Forum in New York.


• CNBC reports that "German grocer Lidl will offer medical benefits for all of its 1,200 U.S. part-time employees effective Jan. 2020."

“We want our team to have the peace of mind knowing they have healthcare coverage,” said Lidl U.S. Chairman Roman Heini in a statement. “Giving team members working part-time at Lidl access to medical benefits is incredibly important and it will help them succeed. As we continue to expand, we are committed to supporting all our employees so they can be at their best.”

Lidl currently operates more than 70 stores across nine East Coast states.


• The Vegconomist reports that Albertsons has announced a revamp of "its lineup of frozen entrees with 55 new items, from organic plant-based meals for vegan and flexitarian consumers to premium high-protein power bowls and more … In partnership with the Plant Based Foods Association (PBFA), Albertsons introduced new plant-based frozen bowls and plant-based meatless proteins, all of which are certified USDA-certified organic and contain the Plant Based Foods Association 'Certified Plant Based' seal."

Published on: October 10, 2019

• Target Corp. announced that Michael Fiddelke, its SVP - Merchandising Capabilities, has been promoted to the role of CFO, succeeding Cathy Smith, who is retiring.

At the same time, Bed Bath & Beyond announced that it has hired Mark Tritton, Target's chief merchandising officer, to be its new president/CEO. Tritton is the former president of Nordstrom's executive of the Nordstrom Product Group who joined Target in 2016.


• Tops Friendly Markets announced the promotion of William Smith, the company's category business manager for condiments, juice and candy, to the position of director of private brands.

Published on: October 10, 2019

We had some conversation here yesterday about an observation I made earlier this week, prompted by a story about how some retailers are selling through current vaping inventory before eliminating the category from their stores:

I was interested to see a story yesterday about how Dick's Sporting Goods did not decide to sell through its inventory of assault style rifles after announcing (after the mass shootings at Marjory Stoneman Douglas High School in Parkland, Fla.) that it would no longer sell them because of concerns about the epidemic of gun violence in this country. No, Dick's actually destroyed more than $5 million worth of assault-style weapons … preferring, as it were, to bite the economic bullet rather than feel complicit in future mass shootings.

MNB reader Mike Carter responded:

Many may not remember a similar story when the great Texas grocer, HEB, also “did the right thing.” In the 1980’s, in the aftermath of copycats to the Tylenol poisons in Chicago, HEB was threatened by extortionists claiming that they had poisoned products in some of the 5 HEB stores in Waco. It was pre-Thanksgiving and the stores were packed with holiday merchandise. HEB execs quickly made the decision to close the stores over four days and dump every item that could possibly be contaminated by opening the package or even penetrated by a syringe. This saved only most canned good items and created the need to restock all stores with new product. Needless to say this was very costly but gave HEB tremendous customer and community support, a strong reason for their continued success today.



MNB took note yesterday of a Bloomberg report that US consumers could see tightening bacon supplies next year … and, go figure, it is all China's fault.

Apparently there is a "pig-killing disease in China" that is rippling "through the global market. According to the story, "Smithfield will prioritize supplying its long-held U.S. customer base before directing meat for export to China, Silver said. But strong demand from Asia means more U.S. pork exports could flow to the Asian country, and some cuts of meat could face particular tightness."

MNB reader Bob Samples responded:

It was interesting to see Smithfield, a Chinese owned company, talk about putting a priority on US pork customers. Have they been watching what is going on in Hong Kong? I find the source a little suspect.

A completely legitimate point. China's leadership seems these days to be utterly uninterested in tolerating any sort of dissent, either inside or outside their country.



We wrote yesterday about how Glenlivet is putting its scotch whiskey in edible capsules, like the Tide Pods you throw in your washing machine.

I commented:

I don't know. At some level, this seems like an idea that is totally wrong, totally ripe for a nightmare scenario. (Though one has to admire innovative impulses, however misguided.)

Me, I think certain drinks simply call for a thick glass tumbler, something with weight to it. Doesn't have to be crystal, but it has to have some heft. Call me a traditionalist.

MNB reader Suann M. Ingle wrote:

I think the "on the go" part is what I can't get past. Does the company think customers want to have a drink on hand in case you want to sip, while driving? Save the disappearing glass for the laundry.

Agree with you that good scotch deserves the weighty, substantial glass. After all, that's how Denny Crane closed every episode of "Boston Legal." Cheers.

And MNB reader Gary Harris wrote:

I’ve often paraphrased Choral composer Healey Willan who once remarked he was, "English by birth; Canadian by adoption; Irish by extraction; Scotch by absorption."
 
I still use that. My version; “Dutch by adoption, Welsh by extraction, Scotch by absorption.”
 
Much to my (of Dutch heritage) wife’s dismay, as I’m sure you’d understand.

I also commented:

On the other hand … I wonder what would happen if I tried to wash my clothes in Glenlivet.

Prompting MNB reader Gary Goff to write:

For peat's sake, don't do it!

Badda-boom.



Finally, thanks to all the MNB readers who got this reference yesterday, made on the bacon story:

Of course, it is possible that the Chinese could turn to mutton … and as we know, there is nothing better in the world "than a nice MLT - mutton, lettuce and tomato sandwich, where the mutton is lean and the tomato is ripe…"

Lots of reaction.

Sometimes just one word: "Inconceivable!"

One person wrote: "Have fun storming the castle!"

One of the best responses:

Loved your Miracle Max reference.  If you research the scenes, it is said that Billy Crystal ad-libbed half the lines (such as the one you quoted about the MLT) and that even Reiner had to leave the set as background laughter kept ruining the takes.

The movie, of course, is The Princess Bride … and I'll leave you today with a bit of William Goldman's wisdom:

"Life is Pain. Anyone who says different is trying to sell you something."

Published on: October 10, 2019

In the fifth and deciding game of their National League Divisional Series, the St. Louis Cardinals devastated the Atlanta Braves 13-1.

And, in their fifth game of a best-of-five series, the Washington Nationals staged a late-inning comeback and beat the Los Angeles Dodgers 7-3 in extra innings.

The Nationals now will meet the Cardinals in the NL Championship Series, playing for the right to go to the World Series.

Published on: October 10, 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

Published on: October 10, 2019