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    Published on: October 25, 2019

    by Kevin Coupe

    The New York Times the other day had a story that reported on a blind taste test conducted by three Times columnists (and two of their kids) of six different veggie burgers currently on the market.

    "Each burger was seared with a teaspoon of canola oil in a hot skillet, and served in a potato bun," the story said. "We first tasted them plain, then loaded with our favorites among the classic toppings: ketchup, mustard, mayonnaise, pickles and American cheese."

    The Impossible Burger got the top ranking of four and a half stars, largely because it seemed to be the one that tasted most like a beef burger; the Beyond Burger came in number two with four stars.

    Ranked at the bottom was the Sweet Earth Fresh Veggie Burger, with just two stars … but it wasn't like the writers hated it; one said it was "the burger for people who love falafel," which isn't exactly a slam in my book.

    To be honest, I haven't rushed out to join the veggie burger movement, but the Times piece is kind of persuasive … it made me think that I ought to be more open minded and try some different versions on my own grill. To this point, my experience with veggie burgers eaten at restaurants has been pretty uniform - good restaurants that serve tasty food tend to make veggie burgers that are really good, while places like White Castle are no better at making veggie burgers than they are at making regular burgers.

    But maybe the next time I make burgers, I'll throw some veggie burgers into the mix and hope for an Eye-Opening experience. But I'm going to make sure I have the right accompaniments. You know. Lettuce. Tomato. Heinz 57. French fried potatoes. Big kosher pickle. And a cold draft beer.

    All of which would make everything taste better.
    KC's View:

    Published on: October 25, 2019

    Amazon announced that its Q3 net sales increased 24 percent to $70.0 billion, up from $56.6 billion in the same period a year ago. However, profit for the quarter was down 28 percent, to $2.1 billion … a reflection of the investments that Amazon has been making in its business, such as moving from two-day shipping to one day of Prime purchases - essentially buying growth at the expense of profitability.

    The New York Times writes that "Brian Olsavsky, the company’s finance chief, said the offering had increased sales to Prime customers. 'They are buying more often, and they are buying more products,' he said.

    "Amazon expects to spend about $1.5 billion for one-day delivery during this quarter, which includes the holiday season, Mr. Olsavsky said. That includes costs for faster shipping as well as other expenses, like the lost revenue from customers who used to pay extra to get something in one day.

    "The one-day offering lets Amazon get a bigger piece of consumers’ wallets on products typically bought at grocery stores or pharmacies. A typical order for items shipped in two days or more is $23.33, and Amazon spends $5.08 to fulfill and ship the items, according to a Morgan Stanley analysis. But for one-day shipping, the typical order is $8.32, and Amazon spends $10.59 to fulfill and ship it, meaning it loses money on many sales."

    The Times also writes that the increased expenses extend to Amazon’s cloud computing services, where "the company is spending to hire for sales and marketing, the types of work that Jeff Bezos, its founder, long eschewed but that have become necessary as Amazon looks to sign up bigger legacy businesses."
    KC's View:
    While this news may not be welcomed by investors, it all seems sort of in character for Amazon, which founder-CEO Jeff Bezos has long valued growth over profit … short-term investors should look elsewhere, he always has argued.

    Especially as the competition gets more intense, Amazon no doubt feels that it needs to keep innovating and investing to maintain the advantages it has. I'd guess that Bezos has long seen this coming … it was inevitable that the competition would get better and tougher. Standing pat just isn't an option. (And besides, Amazon still had $2.1 billion in profits, which ain't nothing.)

    Published on: October 25, 2019

    The Atlantic has a piece entitled "The Millennial Urban Lifestyle Is About to Get More Expensive," and writer Derek Thompson frames his argument this way:

    "Starting about a decade ago, a fleet of well-known start-ups promised to change the way we work, work out, eat, shop, cook, commute, and sleep. These lifestyle-adjustment companies were so influential that wannabe entrepreneurs saw them as a template, flooding Silicon Valley with 'Uber for X' pitches.

    "But as their promises soared, their profits didn’t. It’s easy to spend all day riding unicorns whose most magical property is their ability to combine high valuations with persistently negative earnings—something I’ve pointed out before. If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year. If you use
    Lime scooters to bop around the city, download Wag to walk your dog, and sign up for Blue Apron to make a meal, that’s three more brands that have never recorded a dime in earnings, or have seen their valuations fall by more than 50 percent."

    Thompson suggests that the competitive landscape is about to change, as the people with money start to actually value margins more than so-called "magic." Profits are going to begin to actually matter, which will mean one thing - these lifestyle-centric brands are "about to get more expensive."

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

    Published on: October 25, 2019

    Market research firm Packaged Facts is out with a new study saying that Amazon is likely to become the country's largest retailer in 2022, passing Walmart to take the top position.

    The company's growth rate, the study suggests, will mean that "Amazon's U.S. gross merchandise sales will comprise 43% of U.S. e-commerce sales in 2019, up from 28% in 2015. By 2022, we forecast that Amazon will contribute almost half of U.S. e-commerce sales."

    However, Packaged Facts cautions that even if the crown moves from Walmart to Amazon, Walmart will remain a retailer of considerable power.

    "Despite Amazon's continued growth, Walmart does have advantages Amazon presently cannot match, even when accounting for Amazon's innovative incorporation of natural supermarket chain Whole Foods in 2017 or its partnership with department store retail chain Kohl's," the study says. "Most notably, Walmart's in-store services strongly differentiate it from online competitors such as Amazon, which naturally cannot provide services, as well as from its brick-and-mortar competitors, many of which do not offer the same breadth of offerings or cannot match Walmart's pricing. These services therefore not only produce revenue but also significantly drive traffic, which is even more vital at a time when brick-and-mortar retailers of all shapes and sizes seek to revitalize in-store traffic.

    "Packaged Facts' survey data reveals that more than 20% of Walmart purchasers use in-store services (including purchasing/using a range of financial services, on-site pharmacy, and optical and photo processing). In addition, Walmart is the click-and-collect king. Among survey respondent click-and-collectors, 43% identified Walmart as the pick up location for their last click-and-collect order, three times the percentage of those who cited runner-up Target."
    KC's View:
    rst of all, let me point out that Tom Furphy has been making this prediction about Amazon for several years, right down to the year he expected it to happen. So I don't find it to be a huge surprise.

    It is important to keep in mind, I think, that it will be interesting to see how Amazon's business model shifts in the next few years. We'll see the degree to which it continues to invest in bricks-and-mortar. (We'll also see the degree to which Walmart is able to capture more online sales.) And, we'll see the degree to which Amazon continues to shift its online sales to its Marketplace, where third party vendors are able to peddle their wares via Amazon.

    None of this is static. The retail world is likely to be a different place in three years.

    Published on: October 25, 2019

    Starting in 2020, trade association National Automatic Merchandising Association announced yesterday, one-third of the offerings in the nation's vending machines with be designated as "better for you" foods.

    The association said "it has committed to substantially increasing the amount of healthy offerings in the nation’s vending machines," according to a story in the Washington Post. "With the support of the Partnership for a Healthier America and the Alliance for a Healthier Generation, two nonprofits that work to alleviate obesity in young Americans, NAMA’s 1,000 members have agreed to raise the share of healthy options from 24 percent to 33 percent."

    The story says that "the new healthier options will replace sugar-based beverages with water and non-sugary beverages, and will include apples and bananas, fresh food prepared in USDA-certified kitchens, baked (not fried) chips, string cheese, nuts, dried fruits and sealed sandwiches."
    KC's View:
    There seem to be a pair of factors at work here.

    One is the fact that technology is better. Both the vending machines and the product packaging have improved to the point that apparently it is easier to make healthier and fresher foods available.

    Just as important, the vending industry knows what everybody else knows - that people are trying to eat healthier, know more about nutrition and health, and that it is in the industry's best interests to be seen as being in synch with consumer priorities.

    Published on: October 25, 2019

    From the New York Times: "It has taken 15 years, three owners, two names and hundreds of millions of dollars worth of taxpayer incentives, but a giant mall built on a former swamp in the Meadowlands — and less than 10 miles away from the shopping haven of Manhattan — is finally opening on Friday.

    "Sort of.

    "The $5 billion development, formerly known as Xanadu and now called American Dream, will eventually feature roughly 3 million square feet of stores, water slides, a caviar bar and an indoor ski slope that promises man-made snow even in the height of a New Jersey summer. It is an attempt to lure crowds to a spot not easily accessible by public transportation and which most people know primarily from visits for National Football League games or concerts at MetLife Stadium.

    "But when the complex opens on Friday, visitors will not find anyplace to shop or much to eat. The property’s owner, the Canadian real estate firm Triple Five Group, is introducing American Dream in 'chapters.' The first consists of an ice-skating rink and a Nickelodeon amusement park that claims to have one of the world’s steepest roller coasters and will offer regular 'slime' shows."
    KC's View:
    They should've stuck with the name Xanadu … which in "Citizen Kane" was the name of the estate of Charles Foster Kane, described as "the costliest monument a man has built to himself." In the movie, Xanadu is a remote and ultimately lonely place, representing a dream than devolves into a nightmare. Which is sort of how I feel about how this place is going to end up.

    This thing was problematic for lots of reasons before mall development became a business in decline, and before some of the retailers originally slated to open stores there went into bankruptcy and folded. Hard to imagine that this thing is somehow going to transcend the trends.

    Published on: October 25, 2019

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

    CNBC reports that Target, in order to keep up with demand during the upcoming end-of-year holiday season, "expects it will spend $50 million more on payroll during the fourth quarter than it did a year ago. It said it will use the funds to offer more overtime and increase the number of workers in stores at the busiest hours.

    "Target said in September it was looking to hire more than 130,000 seasonal workers, up from its goal of 120,000 workers in 2018."
    KC's View:

    Published on: October 25, 2019

    …will return next week. I promise.
    KC's View:

    Published on: October 25, 2019

    In Thursday Night Football, the Minnesota Vikings defeated the Washington Redskins 19-9.
    KC's View:

    Published on: October 25, 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:

    Published on: October 25, 2019

    Maybe it shouldn't be a surprise, but Bruce Springsteen is a terrific film director.

    That's the inevitable conclusion from a viewing of Western Stars, which is a lovely documentary that takes the elements of a concert film based on the Boss's recent album and augments the songs with small, mini-movies that put the music into a kind of cinematic, visual context.

    Co-directed by Springsteen and Thom Zimny, the movie shifts back and forth from western scenes - Springsteen walking down a dusty road, driving a pickup truck, surveying a desolate landscape - and an old barn on his New Jersey estate, where he performs songs from the album, accompanied by his wife and fellow musician Patti Scialfa, and a 30-piece orchestra. (There's a small but largely unseen audience for the performance.) Springsteen uses the mini-movies to offer some background for the thinking behind the songs. The mood is wistful, elegiac and even a little regretful, as befits a meditation by the now-70 year old writer-singer; his eyes seem distant sometimes, as if looking at something only he can see, and we can see time and experience written across his face and especially in his hands, now gnarled by time and experience.

    I loved the album "Western Stars," which Springsteen has said was designed to evoke the work of Glen Campbell and Jimmy Webb. But seeing the movie - which is informed by the film work of John Ford (The Searchers, The Grapes Of Wrath), which is about a high as you can aim - gives the music an extra frisson, and it made me love the work even more. I heartily recommend it.

    One other thing. There's just one song in the movie that's not on the album, and it is a kind of encore piece at the end. I won't tell you what it is, but I will say that it seemed entirely appropriate, performed with enormous joy, and making this viewer, at least, unaccountably happy in the moment.

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

    Back Monday.

    KC's View: