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    Published on: October 21, 2019

    by Kevin Coupe

    The Washington Post has a story about how "major hotel chains such as Marriott and Hilton are expanding the footprint of the microhotel segment in big cities around the world with new brands … As they do, they are trying to lure customers who are sensitive to price, hungry for experiences and comfortable with tight spaces."

    Here's how microhotels are defined: "With rooms generally smaller (sometimes much smaller) than 200 square feet, today’s microhotels are emphasizing in-demand locations and buzzy common areas while offering rooms that are described as 'cozy,' 'highly efficient,' 'functional' and 'the most fun you’ll have in 14 sq m' (or about 150 square feet)."

    This isn't exactly as new concept. Smaller hotel chains such as CitizenM, Yotel, Mama Shelter and Pod Hotels have taken the small-is-better route, and the Post notes that "travelers have long had the option to choose minuscule accommodations, experts point out, from bunks in European hostels to capsule-size sleeping quarters in Japan."

    The new varieties are something different, however - not "spartan and utilitarian" and relatively cheap, but rather aspirational, with a focus on creating communal experiences. In some ways, there represent a logical progression from a phenomenon that I talked about here on MNB a few years ago ; at that time, I talked about how one chain, Marriott-owned Moxy, which I described as having "a vibe that was somewhere between a frat house and a youth hostel, though a lot nicer than both."

    One example: a new Hilton brand, Motto, in which rooms will average about 165 square feet.

    This, I think, can serve as a role model for how a lot of retailers ought to think…thinking not just smaller, but differently … focusing on creating experiences that are both aspirational and functional … using format to build community.

    One of the things I've been thinking about a lot - especially with Amazon's apparent plans to open a new chain of grocery stores - is what a lot of retailers would/should do if they had the opportunity to start from scratch, to build not just stores but also value propositions on a blank sheet of paper.

    What are the strengths that they have that could be built upon and maximized? And what weaknesses do they have that could be minimized?

    It is all about not just growing, but being Eye-Opening to one's customers.
    KC's View:

    Published on: October 21, 2019

    Jeff Bezos likes to say that as Amazon grows, the size of its mistakes has to grow as well.

    But that doesn't mean that this CNBC story is any more acceptable:

    An increasing number of consumers, the story says, "are finding that, just as the broader Amazon Marketplace has a major issue with counterfeits and unsafe products, the grocery section is littered with similarly problematic items in the form of expired foods.

    "From baby formula and coffee creamer to beef jerky and granola bars, items are arriving spoiled and well past their sell-by date, Amazon customers say. Interviews with brands, consumers, third-party sellers and consultants all point to loopholes in Amazon’s technology and logistics system that allow for expired items to proliferate with little to no accountability. Consumer safety advocates worry that as the marketplace grows, the problem will only get worse."

    According to the story, "An Amazon spokesperson told CNBC that products sold on the site, including those marked not for resale, must comply with laws and Amazon policies. Third-party sellers are required to provide Amazon with an expiration date if they’re selling an item meant for consumption and must guarantee the item has a remaining shelf life of 90 days."

    However, the story suggests that Amazon in some cases is either ineffective or simply negligent about enforcing these policies: "After CNBC brought a number of expired food products to Amazon’s attention, the company said it took corrective action to make sure the listings were in line with its standards. Amazon said they were isolated incidents that didn’t require enforcement action against the sellers or removal of any products.

    "Many of the identified products continue to receive complaints that they’re expired, with some showing negative reviews posted as recently as this week."
    KC's View:
    Amazon hardly is alone in being a retailer that sells expired merchandise; walk into any grocery store in America, and you'll find a number of examples. But … with Amazon's size does come greater responsibility, especially because the consumer does not have a chance to check out an item's expiration dates before it shows up in the kitchen.

    I'm sure Amazon does a lot to deal with this situation, but it clearly needs to do more. Whether it is expiration dates or counterfeits, Amazon needs to find new and better ways to impose and then communicate to consumers high levels of traceability, trackability, and transparency. If it doesn't, the lapses could end up being a growing vulnerability.

    Published on: October 21, 2019

    The Associated Press reports that Google-owned Wing, the first drone company to receive approval from the Federal Aviation Administration (FAA) to make commercial deliveries via drone, starting actually providing the service late last week.

    The deliveries, for Walgreen, FedEx and a local retailer called Sugar Magnolia, are being made in Christiansburg, Virginia. "The drones will start with a flying radius of about 4 miles (6.5 kilometers) from Wing’s distribution facility in Christiansburg. The drones are capable of flying a 12-mile (19-kilometer) round trip, and Wing expects to widen its radius eventually, though it did not give a timeline for expansion."

    Similar tests by Wing have been conducted in Australia and Finland.

    Win isn't alone. The AP reports that "UPS also got approval from the Federal Aviation Administration to fly delivery drones. The company has been running delivery tests with WakeMed’s hospital campus in Raleigh, North Carolina." And, of course, Amazon also has talked a lot about making drone deliveries mainstream.
    KC's View:
    There seems to be little question at this point that in the right markets, drone deliveries are going to be a real factor. Which probably means that some competitors are going to be investing in anti-aircraft guns.

    Published on: October 21, 2019

    Fast Company reports that Bose, best known for its high-end sound systems, is making noise with a new health division focused on heaping people with aural challenges.

    The business case is this: there are some "37.5 million American adults who suffer some form of hearing loss. The National Institute on Deafness and Communication Disorders estimates that 28.8 million U.S. adults are in need of a hearing aid, which is already a $7.7 billion business in the United States. The advent of over-the-counter hearing aids could grow the business opportunity even further."

    And if that isn't enough, Sonos figures it can apply its expertise in the noise-cancelling headphones business to people with sleep disorders. Sleep aids, as it happens, is a $70 billion business.

    That's not so suggest that this is an easy business to get into. Bose marketed Sleepbuds for $250, saying they played "white noise to drown out nagging sounds," they were discontinued temporarily because of batter life issues. But Bose remains convinced that there is opportunity and gold in the health care arena.
    KC's View:
    It is extraordinary the degree to which so many companies, especially in the retail and tech sectors, are investing in a variety of healthcare/selfcare initiatives. It is an expanding ecosystem in which companies have to be thinking about how they are positioned, because the companies that are part of it will have the opportunity to build stronger relationships with their customers/patients, which will create a competitive disadvantage for those that don't.

    Published on: October 21, 2019

    in the UK because of "pressures from gay rights activists protesting the chain for contributing millions of dollars to anti-LGBTQ groups."

    According to the story, "The store opened its 'pilot' location on Oct. 10 in Reading, which is about an hour and a half drive from London. A mall spokesperson said concerns raised by activists about the chain have made them determine 'the right thing to do' is not to extend the restaurant's lease beyond the 'six-month pilot period'."

    Fox News notes that "Chick-fil-A has launched another international storefront in Canada in September, which also drew a bevy of protesters over the same issues."
    KC's View:
    While Chick-fil-A also has faced protests in the US over positions taken by its CEO, Dan Cathy, who said that he is pro "traditional" or "biblical" marriage, those protests have been effectively counteracted by groups supporting those positions. That apparently was not the case in the UK.

    It is yet another example of how companies have to be aware - for better or worse - how how they are perceived in the larger cultural firmament. I'm not saying they shouldn't take positions; in fact, sometimes they have to because of societal or even business pressures. But you have to have 360-degree vision, and a tactile sensitivity to what's going on around you.

    Published on: October 21, 2019

    From the Washington Post:

    "Leading health organizations recently released their first consensus recommendations about what young children should be drinking: only breast milk or, if necessary, infant formula until a baby is 6 months old, with water introduced around then and plain cow’s milk at around their first birthday.

    "That’s it. No juice, no flavored or plant-based milks, no caffeinated beverages or sodas.

    "The good news is parents of infants seem to be on the right track — breast-feeding is on the rise. But once children get into the toddler zone, it’s pandemonium.

    "There’s been a boom in unhealthy foods and beverages for children 6 months to 3 years old, packaged for convenience and often promising to make children stronger and smarter … Parents are demanding convenient, on-the-go packaging. Industry’s lust for market share has driven advertising aimed at parents of toddlers. And there’s been little nutritional guidance for new parents, who glean what they can from parenting chat rooms, family lore and pediatricians, many of whom had only a single class on nutrition during medical school."

    You can read the entire story here.
    KC's View:

    Published on: October 21, 2019

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

    Reuters reports that Sears once again is going into debt, borrowing "about $150 million from lenders, including its billionaire owner Eddie Lampert, as it racks up losses less than a year after it emerged from bankruptcy protection."

    According to the story, "The new financing will help stock Sears’ store shelves for the holiday shopping season, as it struggles to become profitable. Lampert is no stranger to bankrolling Sears, having extended loans through his hedge fund ESL Investments Inc to the department store chain over the past decade until its financial collapse last year.

    "The new financing is backed by assets that include Sears’ real estate and intellectual property, the sources said. The funds are less than the roughly $200 million Sears originally sought, the sources added."

    Sears went into bankruptcy about as year ago having lost billions of dollars. Its former chairman and chief shareholder, Eddie Lampert, bought many of the company's assets out of bankruptcy and put the chain under the ownership of a company called Transform Holdco LLC. But since then, it has seemed as if Sears has done little but close stores.

    Sounds to me like the very definition of throwing good money after bad.


    Bloomberg reports that "Sanofi is voluntarily recalling heartburn medication Zantac in the U.S. and Canada amid worries that the medicine may be tainted with a compound that could cause cancer." The move comes after a number of US retailers decided "to pull the medication from store shelves. In addition, manufacturers have recalled some generic versions of Zantac products known as ranitidine."

    The story notes that "US and European Union health officials are investigating levels of the probable carcinogen NDMA in Zantac and its generic equivalent sold by numerous other companies. The FDA has advised patients that there are other medications available to treat the same symptoms that ranitidine is intended to soothe."


    • The New York Times reports that Johnson & Johnson recalled 33,000 bottles of its iconic baby powder "on Friday after the Food and Drug Administration discovered evidence of asbestos, a known carcinogen, in one of the bottles.

    According to the Times, "The recall, the first time Johnson & Johnson has pulled baby powder from store shelves over asbestos concerns, could undercut its defense against a swarm of allegations that its talc-based products caused cancer. It comes as the company, which reaches into the lives of millions of people through brands such as Tylenol, Band-Aid and Rogaine and reported nearly $82 billion in sales last year, is entangled in numerous legal battles over the safety of its products."


    USA Today reports on a new variety of apple that will start showing up in stores later this year: the Cosmic Crisp.

    Details: "Cosmic Crisp is the first apple ever bred in Washington state, which grows the majority of the United States’ apples. It’s expected to be a game changer.

    "Already, growers have planted 12 million Cosmic Crisp apple trees, a sign of confidence in the new variety. While only 450,000 40-pound boxes will be available for sale this year, that will jump to more than 2 million boxes in 2020 and more than 21 million by 2026.

    "The apple variety was developed by Washington State University. Washington growers, who paid for the research, will have the exclusive right to sell it for the first 10 years. The apple is called Cosmic Crisp because of the bright yellowish dots on its skin, which look like distant stars."
    KC's View:

    Published on: October 21, 2019

    • Reckitt Benckiser Group announced this morning that Jeff Carr will succeed Adrian Hennah as its CFO, effective next April.

    Just last month, Carr said that he would step down as CFO of Ahold Delhaize next April "to return to the UK to spend more time with his family."
    KC's View:

    Published on: October 21, 2019

    Regarding complaints from IGA Inc. that it is faced with tough competition from discounters Aldi and Lidl, one MNB reader wrote:

    Having seen and worked with IGA in the past, I would agree with you that they aren’t very good at playing offense. With the exception of some of their standout stores, they’re still playing based on the ‘old’ grocery model. Aldi has been in the US for more than 40 years… it’s hardly a surprise, and IGA has had plenty of time to watch and learn. In my area, Aldi stores are hiring, and their starting wage is about 30% more than other retail stores in the area. It’s not going to get any easier!

    From another reader:

    Aldi has been in USA over 40 years and Lidl is now in year 3.

    Aldi ( and Sav a Lot)  have scratched out a hard discount market share of 2 percent, but a long way from the disruption effect seen in Europe and Australia. The channel is growing 5 % , but it is not through broader consumer acceptance, simply more stores, i.e.  Aldi opening 100 stores a year is 5 percent increase ( Dollar General 975 new stores-2019).

    The IGA comparison is valid, because where Aldi appears to do well is rural Midwest areas that are “food deserts” lacking all the “full service, price competitive” channel options found in every USA suburb.

    Hard discounters should not be ignored, but e-commerce and dollar channels have received far broader acceptance by the USA consumer.


    MNB reader Matt Nitzberg wrote:

    Regarding the story on Aldi, Lidl, and IGA‘s reaction, businesses that thrive over time will put more emphasis on chasing the customer than the competition. That’s because playing offense with customers creates the most effective defense against competitors. While IGA has some gaps to close, they’re not alone. Retailers that aren’t relentlessly focused on creating better experiences for customers are going to fade and fold.

    And from MNB reader Alan Finta:

    Aldi is in a great position to take advantage of the growing Boomer demographic in the U.S.  I understand the comment from the Wal-Mart executive about “counting on its wider range of products and equally low prices to keep customers loyal.”  That may be important to larger families with varying tastes, but for my 80-something parents, they’ve “been there, done that.”  The close parking, smaller store format, and reduced variety is right up their alley.  They don’t want to, or simply can’t, walk a mile and a half to do their small bit of grocery shopping.  They also aren’t about to figure out on-line ordering and home delivery at this point in life.  Each time I visit the Aldi in So Cal where they live, it is apparent the folks in their +55 Senior Community are adapting to this new format.


     




    On another subject, from MNB reader Glenn Cantor:

    I work with another grocery industry business, other than Walmart, that also has a vibrant OTIF program.  Much of our business with this company is shipped by LTL carriers. Obtaining on-time deliveries is complicated by the need for multiple, small shipments as well as the availability and cost of carriers.  It is good to see that transparency is part of Walmart’s program, because correcting the causes of non-compliant shipments requires more than pushing the solutions, and fines, on suppliers.  Fines, alone, won’t correct the problem.  Instead, they will  ultimately increase costs to the consumer as manufacturers being to incorporate these new costs into their cost structures.




    Regarding the troubles being experienced by Marks & Spencer, MNB reader Beatrice Orlandini wrote:

    I always have been a great M&S fan.

    No food retailer was ever at their level in product packaging and quality and their clothes were great quality and I could always find something that I knew would last.

    More than a decade has gone by for some items and I still have them and can still wear them (it proves they stood the test of time, fashion and... weight!)

    I was in London a few months ago and more than happy to visit a nearby M&S. Besides a nightgown, there was no other item that I could lure myself to buy.

    Sad is the only definition I can give to their assortment.

    Doubly sad because though those items may not be attractive their quality could be excellent and they could linger forever on those racks…




    And finally, referring to something that I called the solution to bricks-and-mortar blues in last week's FaceTime, MNB reader David Spawn wrote:

    Let’s be careful about offering everyone booze at stores…  sure it can differentiate bricks & mortar…but so can a lawsuit from a DUI…

    I was joking. Mostly.
    KC's View:

    Published on: October 21, 2019

    The Major League Baseball World Series is set, with the win this weekend by the Houston Astros over the New York Yankees in the best-of-seven American League Championship Series in six games.

    The World Series begins tomorrow night with the Washington Nationals playing the Astros in Houston.



    In Week Seven of National Football League action…

    Oakland 24
    Green Bay 42

    LA Rams 37
    Atlanta 10

    San Francisco 9
    Washington 0

    Houston 23
    Indianapolis 30

    Minnesota 42
    Detroit 30

    Jacksonville 27
    Cincinnati 17

    Arizona 27
    NY Giants 21

    Miami 21
    Buffalo 31

    LA Chargers 20
    Tennessee 23

    Baltimore 30
    Seattle 16

    New Orleans 36
    Chicago 25

    Philadelphia 10
    Dallas 37
    KC's View:

    Published on: October 21, 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: