business news in context, analysis with attitude

Published on: October 14, 2019

There is a health, beauty and wellness revolution taking place, driven by enlightened consumer thinking about selfcare and startup companies that are innovating in the space. In this new Retail Tomorrow podcast, recorded in front of a live audience at the recent GMDC Selfcare Summit in Indianapolis, two such startup companies - in very different spaces - talk about how their strategies and tactics are helping retailers perform more effectively and efficiently.

One important shift that has to take place: Retailers need to say "help me," rather than "show me." Which is more than a semantic difference.

Our guests:

• Monte Ahlemeyer, chief revenue officer at Accelerate, which is on the front lines of the CBD marketing revolution.

• Dan Bourgault, VP, Sales & Business Development at Replenium, which provides consumer-level replenishment services to retailers.

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 GMDC, the Global Market Development Center.

Pictured, below, from left: Kevin Coupe, Dan Bourgault, Monte Ahlemeyer

Published on: October 14, 2019

by Kevin Coupe

We are fond here on MNB of quoting Jean-Luc Picard:

Things are only impossible, until they're not.

This line - uttered during the first season of "Star Trek: The Next Generation" - came to mind not once, but twice over the weekend.

First, it was when Kenyan runner Eliud Kipchoge became the first human being to run a marathon - 26.2 miles - in under two hours.

To put this in context, it means he ran at a pace of about four-and-a-half minutes per mile.

Now, for a variety of reasons, this apparently will not be logged as a world record. It was done not in official marathon race conditions, Kipchoge relied on rotating pacemakers, and it took place on a circuit that w2as perfectly flat and chosen for this event.

But still … a marathon in under two hours? Amazing. Breathtaking.

And then … on Sunday, in the Chicago Marathon,Kenya's Brigid Kosgei won the women's race with a time of 2 hours 14 minutes 4 seconds, setting an actual world record that was 81 seconds faster than the previous record holder.

Amazing. Breathtaking.

Things are only impossible, until they're not.

It is true in running, and it is true in business.

If you look around your business and you're satisfied, or if you accept the less-than-exceptional because you've always done things that way … well, you're ignoring the Eye-Opening lessons taught us by Eliud Kipchoge and Brigid Kosgei.

Keep one thing in mind.

These two people and their peers are not satisfied with those numbers. In fact, those achievements likely only serve as motivation to be better and faster. Even if it seems impossible. Because things are only impossible until they're not.

Published on: October 14, 2019

The New York Post reports this morning that New York-based e-grocery pure play FreshDirect is for sale, with its largest investor, JPMorgan, seeking a buyer for the business.

Among the companies that reportedly have examined its books: Amazon and Walmart.

According to the Post, "It would be at least the third time that Amazon and Walmart — both of which are heavily investing in the grocery business — have considered acquiring FreshDirect, whose affluent customers and online delivery platform have long been attractive to rivals.

"While service glitches have besieged the company since last year, when it moved to a sprawling new facility in The Bronx from Long Island City, FreshDirect still has fiercely loyal and wealthy customers in the Big Apple, one of the most coveted food delivery markets in the country."

In the past, FreshDirect has been stubborn about staying independent. The Post says that at various times it rejected a $2.3 billion offer from Amazon and a $2.6 billion offer from Walmart. But JPMorgan now wants out, which has changed the calculation. In fact, the story suggests that the only thing stopping a sale is the likelihood that potential buyers believe that time will only drive the price down.

MNB fave Burt Flickinger tells the Post that FreshDirect's performance has been underwhelming: “FreshDirect was built to be a multi-regional operator across seven states and now it is a successful operator in four counties and one state,” he says.

The story says that "instead of expanding to new markets, FreshDirect has been fighting to keep its current customers, many of whom became irate because of botched deliveries — while others dropped the service altogether, according to social media posts … The delivery snafus were largely the result of a new technology platform for FreshDirect’s pick-and-packing functions, which control miles of conveyor belts in its Bronx warehouse. The new platform just didn’t work with the customer-facing software, according to a former executive with knowledge of the issues."

Published on: October 14, 2019

Just days after Walmart Canada said it was expanding its partnership with Cornershop, an express grocery delivery service operating in Toronto, Uber announced that it was buying the startup as a way of growing its food delivery business.

Terms of the deal were not disclosed. However, Walmart actually had tried to buy Cornershop - which also operates in Chile, Mexico, Peru - for $225 million in 2018, but was blocked by Mexican antitrust authorities.

According to the story, "Uber has long dabbled with the notion of transporting goods and items. In the past, under its co-founder and former chief executive, Travis Kalanick, the company experimented with a division called Uber Everything. Born from that, Uber Rush was the company’s attempt at an on-demand courier service.

"The logistics and financial side never worked out, however, and Uber closed Rush and scaled back some of Uber Everything’s ambitions.

"But the Uber Everything team found a bright spot in food delivery, matching restaurant takeout orders with drivers and bike messengers who work for Uber. That initiative became Uber Eats, one of the company’s sources of revenue growth."

That said, "Uber is losing millions pouring money into expanding Uber Eats, largely because it is subsidizing the costs of the service to gain market share and fend off many competitors, such as DoorDash and GrubHub."

In its announcement of the expanded partnership, Walmart described CornerShop as "an express delivery service that customers can use to order groceries on-demand in as quick as 60-minutes … Cornershop's trained shoppers then go to one of the 14 participating Walmart stores in the GTA to pick out quality groceries. They call every customer at the end of each shop, and customers can approve any replacements or request another item to be added to the cart. Cornershop has a high availability for on-demand time slots, and customers can subscribe to Cornershop Pop for $99/year to get free delivery on every order over $40 and steeper discounts."

Published on: October 14, 2019

The Wall Street Journal this morning has a story about how competition seems to be heating up in the checkout-free technology space, with a number of companies making advances in their efforts to enable competition in the Amazon Go space.

"Many startups, like San Francisco-based Zippin and Standard Cognition, are using technology similar to Amazon Go’s, with camera systems powered by computer vision and machine-learning software that track people as they take items off shelves," the Journal reports. "Other companies are trying to automate the shopping cart to avoid a costly store overhaul.

"The startups are pitching their technology to grocery chains, sports stadiums and convenience stores, promising to automate the checkout process, reduce theft and improve profit margins. Analysts expect Amazon eventually to license its technology to retailers and other businesses, and some startups already are positioning themselves as the smarter alternative."

One example of where the competition is going: "Regional grocer Giant Eagle Inc. is hoping cashierless technology will give it an edge. The Pittsburgh-based company, which operates more than 400 stores in the Northeast, plans next year to open its first 'pick and go' store in its hometown, powered by technology from Bay Area startup Grabango Co.

"Grabango says it plans to rely solely on advanced cameras to track customers and refrain from using costly shelf sensors and entrance gates. The items would be tallied automatically to speed checkout, but shoppers would still pass by a cashier, who would be available to take cash."

And, both Zippin and Standard Cognition have made deals to install the technology in stores located in sports venues - Standard Cognition with a Boston Red Sox minor league affiliate in Worcester, Massachusetts, and Zippin with the Sacramento Kings basketball arena.

Still, the Journal notes, competing with Amazon - which currently has 16 Go stores operating and two more announced - isn't easy, since it can more easily "absorb the costs" and "undercut the competition."

Checkout-free technology, the story emphasizes, "is still nascent, relegated to small convenience-store concepts selling packaged goods. And it is relatively expensive for a big-box retailer to adopt the technology at a wide scale, costing hundreds of thousands of dollars to retrofit one store."

However, Amazon has been reported to be testing the technology out in larger testing facilities. If it were to figure that piece of it out, it would have a sandbox in which to play - not only does it own Whole Foods, but it also is in the process of developing a new grocery store chain that will begin opening units late this year or early in 2020. What those stores will look like, what they will sell, and what technologies they will employ has not been revealed by Amazon.

Published on: October 14, 2019

There are numerous press reports about a series of class action suits filed against ice cream manufacturers - such as Unilever, Danone and Nestlé Dreyer - and retailers - such as Wegmans - arguing that the vanilla in their vanilla ice cream is largely derived from non-vanilla sources as opposed to real vanilla.

The suits are being filed by by attorney Spencer Sheehan of Great Neck, Long Island, who says that "class action cases provide a valuable mechanism that Americans have to address certain wrongs. This is a valid and lawful means for doing so."

Published on: October 14, 2019

In Minnesota, the Star Tribune reports that UNFI-owned Cub Foods has joined the list of retailers asking customers not to open-carry guns in its stores.

As the epidemic of mass shootings has grown in the IUS, including one at a Walmart in El Paso, Texas, retailers such as Walmart, Kroger, Walgreen, CVS, Aldi, Meijer, Publix and Wegmans have announced similar policies.

At the same time, the Star Tribune writes, Cub Foods said it will no longer sell e-cigarettes and vaporizers, a move made due to "increasing questions from the health community and complex regulatory environment associated with these products."

Published on: October 14, 2019

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

• The Los Angeles Times reports that Facebook's "effort to create a cryptocurrency was dealt a blow Friday when several key partners, including Mastercard Inc., Visa Inc., EBay Inc. and Stripe Inc., abandoned the project. The defections underscored concerns that the Libra currency won’t pass legal muster with regulators and public officials who have lined up to criticize the effort.

"The news came days before the Libra Assn., the group meant to oversee the digital currency, prepares to convene its members and ask them to sign a charter agreement." Facebook said that the meeting will continue on schedule, and that a list of charter members will be made available soon.

The Times writes that "Facebook has faced fierce backlash since it announced its plans for Libra in June. Politicians and regulators around the world have called on the company to halt its progress, and some have suggested Libra could be used for money laundering or trafficking schemes."

Call my cynical, but the idea of having Mark Zuckerberg running a currency does not exactly fill my soul with gladness.

Published on: October 14, 2019

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

• The Seattle Times reports that "a 'sizable majority' of members in a regional grocery workers union have ratified a contract with Fred Meyer and other stores, ending a 16-month period of sometimes tense negotiations, according to union officials.

"The three-year contract, agreed to Friday night, guarantees employees a minimum 20-hour workweek, provides wage increases for all workers and 'aims toward' closing a perceived gender pay gap, said United Food and Commercial Workers Local 555 spokeswoman Kelley McAllister.

"The union represents about 18,000 grocery workers in Oregon and Southwest Washington."


• The Wall Street Journal reports that while "Sears’s bankruptcy filing was supposed to give the troubled retailer a fresh start," a year later "the chain is still struggling with many of the same problems it faced before it sought court protection.

"Roughly a quarter of the 425 Sears and Kmart stores that financier Edward Lampert bought out of bankruptcy have closed or are closing, according to people familiar with the situation, a retreat the chains haven’t fully disclosed.
The shelves at some remaining locations are bare of crucial products—no lawn mowers in summer or garden supplies in spring, according to shoppers and a former executive."

This despite the fact that the new company was supposed to have stronger financial footing than in the recent past, and only kept the strongest stores. But "the stores’ performance deteriorated faster than expected," the story says, and a viable path forward seems unclear at best.

Yeah, sure. Nobody saw this coming. These guys have no plan, no vision, and no chance of success. Anybody who thinks otherwise, or who does business with them, is smoking something. (Which Sears ought to start selling, using the slogan "This stuff is so potent it even makes us think we can succeed.")

Published on: October 14, 2019

• The Fresh Market announced the hiring of Dan Portnoy - whose career has included stints as president/CEO of Kings Super Markets/Balducci's Markets and chief merchandising officer and chief marketing officer at Winn-Dixie - to be its new chief merchandising officer.

The announcement notes that Portnoy's "retail background is complemented by a deep knowledge of consumer products goods attributed to prior leadership positions at Cott Corporation, a leading beverage company, and Daymon Worldwide, a private brand development company."

Published on: October 14, 2019

Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

• The New York Times has a story about how Wisconsin-based Penzeys Spices, which is both a retailer and a supplier to other retailers, spent $92,000 of Facebook ads promoting the impeachment of President Donald Trump, making it the seventh-highest spending entity to take a position on the subject, and the only one in the top 10 that was not politically connected.

The biggest spender - the Trump re-election campaign, which spent more than $700,000 to send the opposite message.

The New York Times writes that founder Bill Penzey "declined to share financial information but said the money he spends on Facebook ads is less than what he used to spend on print catalogs, which he stopped sending out about four years ago."

The Penzey ads were not purely political. They also sold spices. But the ads clearly ventured into partisan politics in a way that many businesses would prefer tio avoid.

Penzey says, "“I like to say it’s not a line we crossed. It’s a line that crossed us. We’ve alway been about kindness and compassion. And with the recent trends in the Republican Party and unlimited political spending, it’s created this message of anger toward marginalized people in order to create votes for tax cuts for the very wealthy … If you are a company and you have values, now is the time to share them. Now is the time that it’s important to share them."

By the way, the Penzey company slogan is appropriate: "Season liberally."

Published on: October 14, 2019

Robert Forster, who essentially had three careers as an actor and enjoyed a late-in-life revival thanks to a star turn in Quentin Tarantino's "Jackie Brown," has passed away at age 78. He had been suffering from brain cancer.

Forster's early career consisted of roles in John Huston's Reflections in a Golden Eye (opposite Marlon Brando and Elizabeth Taylor) and Haskell Wexler's Medium Cool. Then, he transitioned to television, playing a thirties-era private detective on one season of "Banyon" and a Native American police deputy in one season of "Nakia." After that, there was a long creative drought - he wanted to work, but only could get roles in films such as Alligator, The Kinky Coaches and the Pom-Pom Pussycats ,Satan's Princess, and Maniac Cop 3: Badge of Silence.

Then, in 1997, Tarantino wrote his adaptation of Elmore Leonard's "Rum Punch" with Forster in mind … and he never stopped working until he passed away.

Published on: October 14, 2019

Last week we took note of a Bloomberg report that TV chef Rachael Ray is opening her first restaurant - a virtual establishment that will operate in 13 cities through the end of the year, powered via a partnership with Uber Eats.

"There will be no brick and mortar Rachael Ray to Gos," the story said, but rather will be ":a network of independent, delivery-only kitchens (that) will prepare the meals. If you want her pulled buffalo chicken chili with ranch, you have to order it via Uber Eats."

I commented:

What strikes me as the Eye-Opener here is how it illustrates how easily - and "easily," I grant you, is a relative term - new competitors can get into the food space. Companies don't have to invest in the traditional infrastructures in order to launch a business. In this case, Uber is providing the delivery mechanism and Ray is providing the recipes and the brand - she's not actually going to be in these kitchens making the food.

The competitive landscape has the potential to be changed significantly by concepts like ghost kitchens or dark stores, which can bring new energy to their spaces and new danger to traditional businesses. Attention must be paid.

MNB reader Lori Buss Stillman wrote:

Good article and very thought provoking on a few fronts.  Is this the next generation Food Truck?  The idea that a ghost kitchen, combined with last mile delivery, can further disrupt traditional restaurant purchase behavior is definitely something to watch.  The challenge will be how new players who don’t carry the brand equity of Rachael Ray build recognition across their target communities.  The role social media will play here is critical.  This will be fun to watch!

Published on: October 14, 2019

• In the National League Championship Series this weekend, the Washington Nationals took a 2-0 game lead in the best-of-seven series with 2-0 and 3-1 wins over the St. Louis Cardinals.

And, in the American League Championship Series, the New York Yankees beat the Houston Astros 7-0 on Saturday night, and then the Astros rebounded last night with a 3-2 win. Their best-of-seven series is now tied at one game apiece.



• In Week Six of National Football League action…

Carolina 37
Tampa Bay 26

Washington 17
Miami 16

New Orleans 13e
Jacksonville 6

Cincinnati 17
Baltimore 23

Seattle 32
Cleveland 28

Philadelphia 20
Minnesota 38

Houston 31
Kansas City 24

Atlanta 33
Arizona 34

San Francisco 20
LA Rams 7

Tennessee 0
Denver 16

Dallas 22
NY Jets 24

Pittsburgh 24
LA Chargers 17