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    Published on: October 16, 2019


    Content Guy's Note: The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.


    Once again, Tom and I had the opportunity to do the Innovation Conversation "live on tape" - we were together at GMDC's Selfcare Summit in Indianapolis, and so we took advantage of the moment to talk about the streaming wars, and how competitive moves in that world offer some business lessons to retailers. There are some strong parallels, and we think you'll enjoy this Conversation.

    (By the way, if you'd like us to do a live Innovation Conversation for your company or group, just let me know. It is one of our favorite things to do.)

    You can see our video above. Enjoy.

    KC's View:

    Published on: October 16, 2019

    by Kevin Coupe

    Let's just say that this one belongs in the if-you-can't-beat-them-join-them file.

    AMC Entertainment, which operates movie theaters all over the world, is getting into the streaming business, in essentially joining the stream (sorry!) of companies that have decided that this is where the money is. It also positions AMC to compete with the very companies that have been competing with movie theaters, eating away at their audiences and profitability. (AMC attendance during the first six months of this year was down 3.6 percent.)

    According to a New York Times story, "The service, AMC Theaters On Demand, will offer about 2,000 films for sale or rent after their theatrical runs, just as iTunes, Amazon and other video-on-demand retailers do … Hollywood’s five biggest movie studios — Disney, Warner Bros., Universal, Sony and Paramount — have made deals with AMC for catalog and new-release movies. Although DVDs still account for billions of dollars in sales for studios, more profit now comes from digital downloads and rentals."

    Adam Aron, AMC’s president/CEO, tells the Times that "our theater business is mature. There is a high-growth opportunity in this digital expansion," which he describes as a "natural" extension of the company's core business. Aron says that the company hopes to "capitalize on the chain’s fast-growing customer loyalty program, AMC Stubs, which covers more than 20 million households."

    MarketWatch, in its story, suggests that "the news is the latest threat to the dominance of Netflix, which has seen its stock fall 23% in the past three months as it awaits an onslaught of new competitors in the streaming world. Apple Inc. and Walt Disney Co. are both set to debut streaming services in November; both are cheaper than Netflix’s offering."

    I think this is an interesting strategic move, and maybe the folks at AMC figured they didn't have much choice. But to me, it feels like a me-too effort and unlike what Apple and Amazon and Netflix and a lot of the other streamers are doing, AMC won't be offering original content … which is to say that it won't have a private label. It'll just be stocking other companies' products, which, best I can tell, also will be available elsewhere.

    In one way, this mirrors the problems that AMC has in its theaters, where it is dependent on the movies made by others. If the movies are good and/or popular, it can get fannies in the seats. While it has invested a lot in creating a better experience in its theaters (except in the one in Port Chester, New York, where they seem incapable of fixing leaking toilets in the men's room), those improvements will only go so far; plush seats and bars won't get me to go to a theater if there aren't any movies there that I want to see.

    This could be a nightmare for AMC … at the very least, it is likely to be an Eye-Opener.
    KC's View:

    Published on: October 16, 2019

    CNBC reports that Walmart is launching a new in-home delivery service in three markets - Kansas City, Pittsburgh and Vero Beach, Fla. - with which it will not just bring products to a person's home, but also put them away in their kitchens.

    According to the story, "InHome grocery delivery is a membership program that is being rolled out at an introductory price of $19.95 a month. It requires shoppers to purchase a $49.95 smart door lock kit or smart garage door kit, which comes with free installation and one month of free unlimited grocery delivery."

    More context from CNBC: "Once eligible, consumers will choose kitchen or garage fridge delivery and then corresponding smart lock device and installation; Once the lock is installed, next-day grocery delivery service can begin … For now, items available for the InHome delivery program are only those that are currently available in the Walmart grocery app, which is between 30,000 and 35,000 items which will vary by the store that fulfills the order. While it is largely grocery items, there are some general merchandise items available like health and beauty, batteries, over the counter mediation and first aid."

    The story says that "to deliver groceries, Walmart is requiring employees to have at least a year of service with the company, background checks, motor vehicle record checks and extensive training that includes how to best rearrange groceries in a packed fridge. Customers will need to restrain household pets during the delivery window as well."

    Bart Stein, Walmart senior vice president of membership and InHome, tells CNBC that this service is one that the company plans "to grow and scale aggressively." The three initial markets have been identified as those that he says "represent (a) variety of factors across demographics, stores and more operationally that set us up the best and quickest to scale nationwide.”

    And he says, "We are cooking up other cool stuff, but we can’t talk about today."
    KC's View:
    I'm sorry. I don't even like it when Mrs. Content Guy rearranges groceries in our refrigerator. I really, really don't want a Walmart employee doing it.

    At a time when so many of us are concerned about online privacy, I'm just not yet persuaded that this is a service that a plethora of consumers are looking for. But maybe I'm just being cranky.

    It is interesting to see how Walmart seems to be rearranging pieces on its competitive game board. Selling ModCloth. Considering spinning off or taking a partner for Jetblack. Dealing with apparent internal carping about the relationship between its store and online operations. Building up its click-and-collect operations.

    We don't know - yet - what the other "cool stuff" is. But one thing seems certain. There has to be more cool stuff, because there is no such thing as standing pat.

    Published on: October 16, 2019

    The Atlanta Journal Constitution reports that United Parcel Service (UPS) - facing competition not just with FedEx, the US Postal Service (PSPS) and other delivery businesses - has decided to differentiate itself by getting into the self-storage business.

    But unlike most self-storage facilities, UPS's Storage on Demand offering will allow "customers to have packed bins picked up and delivered to a UPS facility for storage … Storage on Demand will allow customers to request the 'valet storage' service through a mobile-friendly website, according to UPS. Then, customers can use the website to request same-day delivery of the stored items to their front door."

    The service is being piloted in the metro Atlanta area, with plans to expand to other US cities "in the near future." Prices start at $5 a month, with an opening promotion of the first three months free.

    The self storage industry is said to be a "$38 billion industry growing at a rate of 7.7 percent annually." UPS Storage on Demand is being aimed at millennials moving into small homes in crowded urban markets and baby boomers who are downsizing.
    KC's View:
    I like the idea of a company getting outside its comfort zone, but I can't help but feel that this sort of misses the point of self storage … which is that sometimes one needs to just go down to the warehouse, unlock the door, and sort through stuff. Maybe it is just me, but I'm not sure I could or would trust someone else to do it for me. And I say this as a baby boomer who earlier this year rented a self-storage space.

    Published on: October 16, 2019

    Tech Crunch reports that food delivery service Door Dash is opening a shared commissary - or, in the current term of art, "ghost kitchen" - in Redwood City, California, making it possible for four different restaurants to cook there in order to serve delivery customers more efficiently.

    According to the story "this first kitchen will be used by restaurants including Nation’s Giant Hamburgers, Rooster & Rice, Humphry Slocombe and The Halal Guys. The company also says it designs the kitchen spaces in collaboration with its partners, and argues that by putting all these restaurants together in one location, it can offer unique menu items and pairings — at launch, if you order from Rooster & Rice, you can add Humphry Slocombe ice cream pints to your order."

    It reflects a broader trend as seen by Uber Eats partnering with Rachael Ray, or Deliveroo opening shared kitchens for its restaurant partners.
    KC's View:
    This is so indicative of how new business models are going to make it easier and faster for new competitors to get started … they may not need the kinds of infrastructures in which traditional businesses invested. It allows them to be nimble and responsive, I think, in ways that may challenge their better established and more entrenched competition. Entrenched, as it happens, may not be an advantage.

    Published on: October 16, 2019

    The Financial Times reports on how "McDonald’s and Starbucks are pouring millions of dollars into developing eco-friendly alternatives to disposable coffee cups while struggling to find products that can be mass produced, as a global crackdown on plastic gathers pace."

    Not that anyone should worry about these companies' bottom lines suffering: "The sums spent are a tiny fraction of the profits of $5.9 billion and $4.5 billion that McDonald’s and Starbucks reported respectively last year. Both companies said they have made additional investments in eco-friendly packaging from their research and development budgets, but declined to give a specific amounts."

    However, one of the things that is really interesting is how the two companies are spending the money:
    "Six sustainable packaging businesses pitched their products before the two chains as well as venture investors at an event last month in New York, held during the UN general assembly meetings where the environment was high on the agenda.

    "Styled after the popular television show Shark Tank, which involves entrepreneurs pitching their products to investors, the event was part of a broader project that McDonald’s and Starbucks have contributed $15m to in partnership with Closed Loop Partners, which pursues sustainable investments."

    The pressure to find sustainable alternatives to common problems is coming from governments looking to impose regulations, venture capitalists who think there is money to be made in the sector, and consumers who are becoming far more concerned about environmental issues.
    KC's View:

    Published on: October 16, 2019

    Reuters has a story about how Amazon is bringing its technical expertise into the elections sector.

    According to the story, "The expansion by Amazon Web Services into state and local elections has quietly gathered pace since the 2016 U.S. presidential vote. More than 40 states now use one or more of Amazon’s election offerings, according to a presentation given by an Amazon executive this year and seen by Reuters.

    "So do America’s two main political parties, the Democratic presidential candidate Joe Biden and the U.S. federal body charged with administering and enforcing federal campaign finance laws.

    "While it does not handle voting on election day, AWS - along with a broad network of partners - now runs state and county election websites, stores voter registration rolls and ballot data, facilitates overseas voting by military personnel and helps provide live election-night results, according to company documents and interviews … Amazon pitches itself as a low-cost provider of secure election technology at a time when local officials and political campaigns are under intense pressure to prevent a repeat of 2016 presidential elections, which saw cyber-attacks on voting systems and election infrastructure."
    KC's View:
    It strikes me as sort of odd that Amazon has such a large and expanding role in the elections systems at a time when it also is the subject of a variety of legislative and regulatory probes. Odd, and maybe a little ironic …

    One of the things that I find intriguing about the situation is that while Amazon is seen as having far greater security interfaces that would make it harder for entities to hack our elections systems, the fact that so many of these systems are now being centralized under the AWS umbrella may create a much more perilous problem if someone actually we able to it.

    Somehow that seems like a metaphor for so much else that is going on with Amazon. Bigger and better in ways that have been an advantage, but that could end up being a problem.

    Published on: October 16, 2019

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

    • The Boston Globe reports that Roche Bros. will open a new 20,000 square foot Brothers Marketplace store in Cambridge's Kendall Square on November 12, with features that include "locally made products, a station to make your own marinade or salad dressing, and an 'innovation station' where new ideas will be tested out by local inventors or businesspeople."


    • Research firm DataWeave is out with a new study saying that "nine out of 10 leading retailers price their private label products lower than the average prices of their respective categories," and that "an increasing number of retailers are viewing private label brands as a way to ensure sustained profitability."

    Other insights from the study include: "Product assortment is emerging as a driver that's as critical as pricing when it comes to customer retention," with Target, H-E-B, and Kroger "offering the largest product assortments among the retailers analyzed" … "a sharp assortment strategy customized to local tastes and preferences is key to sustaining and enhancing customer satisfaction," with Albertsons, Walmart, and Amazon Fresh having the "higher focus on localized assortments" … and "Home" and "Beauty & Personal Care" leading "the distribution of private label products across retailers."

    "As the CPG space reels under intense competition, a number of retailers are doubling down on private labels to capture valuable additional margin," says Karthik Bettadapura, co-founder/CEO of DataWeave. "For instance, Kroger, Walmart, and Amazon Fresh have a higher degree of private label penetration than the other retailers we analyzed."


    CNN reports that Chipotle has announced that it "will pay for its employees to get business or technology degrees at certain colleges … The new program, which kicks off on November 15, is the restaurant chain's latest effort to attract and retain talent in a highly competitive labor market.

    "Employees who have been at the company for at least 120 days and work a minimum of 15 hours per week can choose from 75 different degree programs at five schools: the University of Arizona, Bellevue University, Brandman University, Wilmington University and Southern New Hampshire University. Chipotle (CMG) will cover tuition only if employees remain at the company, and ask that they stay for at least six months after they earn their degrees. The new benefit is an expansion of Chipotle's existing programs. The chain already offers up to $5,250 a year in tuition reimbursement as well as other education assistance programs."


    • The Cincinnati Business Courier reports that the "Toledo company whose restaurants were made famous by the hit TV series 'M*A*S*H' has reached a deal to open two restaurants in Kroger Co. stores. Tony Packo’s, the real restaurant that was a favorite of fictional character Klinger, who craved its Hungarian hot dogs with chili peppers while serving in the Korean War on 'M*A*S*H,' will have a Kroger location by year-end. A second will be opening soon after that…"

    The story notes that "Tony Packo’s plans to open additional restaurants in Kroger stores if the first two work out as well as expected … Tony Packo’s has five restaurants around the Toledo area."

    I'm sure they're not counting on the "M*A*S*H" connection, since, hard as it is to believe, the TV series went off the air in 1983 and you have to be of a certain age to even know who Max Klinger was.
    KC's View:

    Published on: October 16, 2019

    Got the following email from MNB reader Russell Zwanka:

    The discussion on vanilla ice cream, and whether or not it should contain vanilla, is a fascinating issue.  When do we sell the "essence" and when do we sell the "actual thing in the name"?  In our classes, we usually talk about Kona Brewing, with the relaxing ads about Hawaiian culture and making all day happy hour.  You see the ads, and you'd never know it could be brewed in New Hampshire, Tennessee, Oregon, or Washington....to be consumed on the beaches of Tennessee!  Kona defended their lawsuit by saying they were selling the "essence" of Aloha culture, no matter where it was brewed.  And, hate to say this, but Kona does carry an Imperial Vanilla Stout!

    From MNB reader Monte Stowell:

    I brought out my trusty old Merriam Webster dictionary to look up the definition of the word Vanilla. As a noun, Vanilla is a commercially important extract of the Vanilla bean that is used as a flavoring. As an adjective, plain or ordinary, lacking distinction or flavored with Vanilla.

    I like ice cream and I buy the branded ice creams that are pretty darn good here in the Oregon market - Tillamook and Umpqua brands are the two most popular brands. I like their Vanilla, French Vanilla, and Vanilla Bean flavors. Much better taste than Breyers or Dreyers brands of ice cream.

    You get what you pay for. If you want ice cream made with real Vanilla, you have to pay the price. Freedom of choice is what makes America great when it comes to ice cream.


    I think this is less about freedom of choice than it is about clarity and accuracy of information so that people can actually make informed choices.



    MNB reader Aaron Gottschalk wrote about our story concerning big meat companies going into the plant-based meat business:

    Where money is being spent, big business goes.

    Just look at what has transpired with the Natural Foods Industry over the past 20 years.




    And, regarding another story, from MNB reader Lisa Malmarowski:

    If readers have never been to Uwajimaya, going there is worth a trip to Seattle, and I love Seattle! It’s one of the few grocery stores (after decades in the is industry) that has never failed to bring me joy. I can’t wait to see the remodel.
    KC's View:

    Published on: October 16, 2019

    The Washington Nationals defeated the St. Louis Cardinals 7-4, sweeping the National League Championship Series in four games and moving on to the franchise's first World Series, where they will play the American League champs.

    And, in the American League Championship Series, the Houston Astros defeated the New York Yankees 4-2, taking a 2-1 lead in the best-of-seven series.
    KC's View:

    Published on: October 16, 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





    KC's View: