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    Published on: November 13, 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.

    Tom and I got together a couple of days ago to talk about the investment climate that he encountered during a recent Series A financing round that was completed for two of his companies - Ideoclick and Replenium. (Both, to be transparent, have been MNB sponsors.) What Tom found was a marked change in the investment community's approach to technology companies - more long-term focused, with a greater emphasis on sustainable returns-on-investment (ROI), and with enormous potential for enabling foundational and fundamental revolution.

    These conversations convinced Tom - which convinces me - that more than ever "the train is leaving the station," and that businesses either have to be on that train, or at the very least have a ticket and a path that will allow them to re-engineer their supply chains, create new and relevant retailing experiences, and cater to the customer of the future. (If you are taking another path to consumer satisfaction, it needs to be clearly marked and have a specific direction - just wandering around is not an option, and leaves you in a hostile wilderness.)

    We think you'll enjoy this extended 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 left. Enjoy.

    KC's View:

    Published on: November 13, 2019

    by Kevin Coupe

    It was a chilly and rainy day in Cambridge, Massachusetts, yesterday, but the atmosphere was warm, welcoming and vibrant at the grand opening of the new Brothers Marketplace there, just a couple of miles down the road from Harvard Square and right in the middle of MIT's Kendall Square campus.

    This 12,000 square foot store is, to my mind, the very model of what a small-store urban format needs to be - compact, with tons of foodservice, fresh foods, and an appropriate and seemingly convenience-centric grocery selection. The new Brothers Marketplace - the fifth opened in eastern Massachusetts by area stalwart Roche Bros. - builds on what has been developed before in communities that include Waltham, Weston, Medfield, and, most recently, Duxbury. (There also are some clear learnings from Roche's Downtown Crossing store in Boston, which brings a full-format grocery store to a two-level urban center.)

    The Cambridge Brothers Marketplace is designed to appeal to a broad swath of urbanites - faculty and staff at local universities, businesses (especially high tech) that have grown up in the area, and apartments that also exist nearby; there's a ton of growth happening and around Kendall Square, with construction cranes on a number of corners. And it is mostly smart and educated people who appreciate nuance and complexity, including in their food.

    One of the things I like about the store is how the back wall is so close to the front door, with a clear view from the moment enters of several fresh food/foodservice islands, including meat and seafood service counters. This is appropriate - fresh foods are going to do more business in this store than grocery, and so it makes sense to put it at the core of the unit, not on the perimeter. (I wish more stores would do this!)

    There's a strong private label presence, with a higher percentage than in traditional Roche Bros. stores - it reflects the degree to which the company is putting a premium on brand building. Also lots of local foods - there is a thriving "eat local" community in the area.

    And, there are some very cool innovations - my favorite (and something I've never seen before) is a vending machine that allows customers to mix and customize their own olive oils and vinegars, depending on what they are using them for (marinade or dressing?) and what foods with which they are going to be paired.

    You can see some pictures below … but I urge you to go visit Brothers Marketplace for yourself for a vision of what a strong urban market can be.

    I fully expect that in a future Spenser nove by Ace Atkins (his newest, "Angel Eyes," is out next week),the gastronomically adventurous Boston-based private eye will make as quick stop there when traveling from his Charlestown apartment to Susan Silverman's Cambridge house … he'll pick up some steaks, maybe some Himalayan red rice, and some veggies, and will put them together while sipping a local ale and sneaking scraps to Pearl.

    I can fantasize, can't I?
























    KC's View:

    Published on: November 13, 2019

    9 to 5 Mac reports that Walmart is enabling its online customers to use voice ordering capability via Apple's Siri function in iOS.

    According to the story, "The new Siri Shortcut from Walmart is designed for the retailer’s Online Grocery Pickup and Delivery services. This means you can gradually add items to your shopping cart using Siri throughout the week, then place your order for pickup or delivery when you’re ready."

    Walmart describes it as being "a little like magic," and operable via an iPhone, iPad, Apple Watch, Mac, HomePod or in the car with CarPlay.
    KC's View:
    While Apple's Siri offering clearly is in third-place among similar services, taking a back seat to both Amazon's and Google's systems, this remains a smart thing to do, especially since it seems unlikely I'd be able to order from Walmart via Amazon's Alexa.

    I happen to think that the CarPlay element has the potential to be the most important here. I don't have it on my car - the Mustang is too old and doesn't have a screen or backup camera, which I miss more than I might've expected - but I use it a lot in rentals, and find it to be enormously helpful. I can easily imagine building a list while in the car and then placing an online order, and then be able to spin by a store and then pick it up.

    Published on: November 13, 2019

    MarketWatch reports that Albertsons said yesterday that it plans to phase out the subscription component of its Plated meal kit business, and instead will focus on expanding the number of offerings available under the brand name and make them more visible and available as meal solutions sold in its stores and online.

    The shift will be managed by Albertsons' Own Brands business unit.

    The story notes that "Albertsons tested meal-kit performance in its Northern California Safeway stores and found that those who purchased Plated products were more likely to have families and purchase larger baskets."

    In a prepared statement, Geoff White, Albertsons' EVP/Chief Merchandising Officer, said, "Our vision for Plated includes an expanded set of products that goes far beyond a dinner-based solution and into a comprehensive in-house culinary brand. With a broader scope of offerings, we see Plated solving customer demands around convenience, lifestyle, and cooking experience, while adding yet another layer of interest to our in-store journey."
    KC's View:
    I'm a fan of subscriptions in general, but it seems pretty clear that the business model was too restricting for the meal kit business. I think this is a smart move by Albertsons.

    Published on: November 13, 2019

    The always dependable Matthew Boyle at Bloomberg has a fascinating story friction in Bentonville. Here's how he frames the story:

    "Not long ago, a Walmart Inc. store manager asked the company’s e-commerce department if it could send over the details of any online orders that customers were planning to pick up at the store that day.

    "The internal network that usually zapped those orders from the website to the stores had temporarily crashed. The online team mocked the request, asking how that could be done with the network down. The store manager’s response: Find an adult to show you how to use a fax machine.

    "The episode illustrates a broader culture clash at the world’s largest retailer, one that pits its Bentonville, Ark., headquarters against the coastal outposts that manage most of its online business.

    "While it hasn’t dented sales, the internecine strife has had an impact: Investments backed by the digital squad have crimped Walmart’s already-thin profit margins, which have touched historic lows in recent quarters. Some high-profile acquisitions and other strategic moves have cratered. Talented executives from both camps have departed, while heralded new hires haven’t jelled."

    The goal is to transform "the big-box behemoth into a so-called omnichannel retailer." But the path to success is not just filled with technological and infrastructural potholes, but populated with personalities - and maybe some egos - that are not all headed in the same directions.

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

    Published on: November 13, 2019

    Dean Foods, the largest milk producer in the US, said yesterday that it filed for chapter 11 bankruptcy protection, and is in negotiations with national cooperative Dairy Farmers of America about selling it virtually all its assets.

    Dean's brands include DairyPure, TruMoo, Land O’Lakes, Country Fresh, Dean’s, Garelick Farms, and Friendly’s.

    “Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” said president/CEO Eric Beringause.

    Here's how Fast Company assesses the situation:

    "The decline can be blamed on everything from dairy prices to more productive cows and, of course, millennials.

    "Gone are the June Cleaver-inspired days of serving kids—and even adults—big glasses of milk with their meals. It now maybe makes a cameo in morning cereal bowls and then, boom, nothing. The shunning stems from questions about how healthy dairy is; how milk products gel with popular diets, like keto; concern over the treatment of dairy cows; the popularity of the vegan lifestyle; and the overhaul of school lunch menus.

    "That there are so many beverage choices now doesn’t help either—bottled waters (flavored or plain, with bubbles or without), juices (cold-pressed or traditional), teas (regular, green, black, red), sodas (old-school, craft, diet).

    "Even in the milk category, drinkers have many non-cow options: think nut milk, oat milk, rice milk, and soy milk. And don’t forget about organic or specialty milks, like goat milk."
    KC's View:
    It is interesting how generational divides show themselves. My kids - 33, 30 and 25 - almost never think in terms of things like cereal with milk for breakfast. Never. Now, I have cereal (usually Kashi Island Vanilla squares) and milk (always Lactaid one percent) virtually every morning for breakfast when I'm home, and they look at me like this makes me ancient. And they'll almost never pour themselves a glass of milk, and I like to do it fairly often - it is like comfort food.

    But they, and people their age, get comfort elsewhere. They're writing other culinary chapters in their lives, which in turn makes it almost inevitable that companies like Dean end up writing chapter 11.

    Published on: November 13, 2019

    The New York Times reports that United Parcel Service (UPS) "has demonstrated blockchain-verified tracking of a shipment of Black Angus beef from Kansas to the table of a Japanese steakhouse … At a dinner at Ruby Jack’s steakhouse in Tokyo on Friday, diners were given menus with QR codes they could scan for tracking information on the journey of the beef being served."

    The story says that UPS is partnering with agricultural technology firm HerdX Inc. for blockchain-traced international beef shipments. A blockchain is a network for transactions entered into digital 'ledger,' which cannot be altered without approval of those in the network."
    KC's View:
    The system builds on the belief, stated in the story, that "consumers want to know more about the food they consume, but there is no known global standard for tracing and verification."

    One of the important things to remember is that such systems are not built just for the people who use them. They're also built for people who don't use them - because they don't feel they have to because of the high level of transparency. Just knowing that businesses are willing to be open and honest with us sometimes is enough, and can give businesses a tangible differential advantage.

    Published on: November 13, 2019

    Bloomberg reports that Nike has decided to end its two-year pilot program selling footwear and clothing to Amazon for sale on its site.

    “As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”

    The Bloomberg story says that "the split comes amid a massive overhaul of Nike’s retail strategy. It also follows the hiring of former EBay Inc. Chief Executive John Donahoe as its next CEO — a move that signaled the company is going even more aggressively after e-commerce sales, apparently without Amazon’s help."

    According to the story, the pilot program originally was designed "to ease the concerns big brands had about devaluing their products on a giant e-commerce platform, where fake merchandise can flourish and unauthorized distributors can undermine prices. Under the pilot program, Nike acted as a wholesaler to Amazon, rather than just letting third-party merchants hawk its products on the site."

    Bloomberg writes that "Amazon didn’t immediately respond to requests for comment. But the company has been preparing for the move, according to two people familiar with the matter. It has been recruiting third-party sellers with Nike products so that the merchandise is still widely available on the site, they said."
    KC's View:
    I had a recent conversation with a Nike executive who told me that the company would be re-engineering its loyalty program, and was working on ways to integrate it with retailer programs at places like Foot Locker. The enduring tension, she said, centers on figuring out who owns the customer. Nike wants to own the customer, but so does Foot Locker and its brethren.

    I don't know if it is the straw the broke the camel's back, but I'm pretty sure that Amazon has strong feelings about who owns its customers - it does.

    Published on: November 13, 2019

    • Walmart said this week, as it celebrated Veterans Day on Monday, that "since launching the Military Spouse Career Connection (MSCC) on Veterans Day 2018, Walmart has hired more than 14,000 military spouses and remains ahead of schedule to meet its goal of hiring 250,000 military veterans by the end of 2020."
    KC's View:

    Published on: November 13, 2019

    • The New York Times reports that "a former McDonald’s employee who says a manager at a Michigan store grabbed her breasts and buttocks is suing the chain, blaming her mistreatment on what she calls a culture of sexual harassment at the fast-food company.

    "The former employee and the American Civil Liberties Union filed the suit in state court on Tuesday, as hundreds of McDonald’s employees in Michigan prepared to go on strike to protest the company’s handling of such allegations and demand a labor union. It increased the scrutiny of McDonald’s a little over a week after its chief executive, Steve Easterbrook, was fired for having a relationship with a subordinate."

    The story notes that the Michigan store "is owned by a McDonald’s franchisee, but the suit, the latest of dozens of sexual harassment complaints filed by McDonald’s employees in recent years, argued that the problem lies with the chain itself."
    KC's View:

    Published on: November 13, 2019

    Yesterday, I noted in a commentary that Uber CEO, Dara Khosrowshahi, did an interview on "Axios on HBO" in which he referred to the murder of journalist Jamal Khashoggi by the Saudi government as "a mistake" that is comparable to Uber's self-driving accident in which a woman died. Needless to say, there was a lot of coverage of the statement, forcing him to backtrack, saying, ""There's no forgiving or forgetting what happened to Jamal Khashoggi & I was wrong to call it a 'mistake' … I said something in the moment I don't believe. Our investors have long known my views here & I'm sorry I wasn’t as clear on Axios." The reason the question was being asked is that Saudi Arabia is Uber's fifth-largest shareholder, with a representative on the company's board of directors.

    I suggested that this could be a problem for the company.

    One MNB reader responded:

    I read yesterday in AXIOS that Dara Khosrowshahi actually backtracked @ one hour after the interview concluded – not sure that it really makes a difference that he realized on his own what he said was patently offensive or that he needed the social media outrage to comment…

    To be clear, I did include his quote in my piece.

    But to be equally clear … it makes a difference to me. America's intelligence agencies have concluded that Jamal Khashoggi - a working journalist - was assassinated inside the Saudi consulate in Turkey, that his body was dismembered before being removed, and that the killing was ordered by Saudi Crown Prince Mohammad bin Salman. (He may be rich and have strategic value to the US, but that does not make him any less a murderous thug.)

    I cannot imagine any circumstances under which anyone would describe this as a "mistake."



    MNB reported the other day that in an op-ed piece published in the New York Times, Walmart criticized the Trump administration's decision to pull out of the Paris Climate Accord as "deeply unfortunate," and said that it will not affect its commitment to the goals of the climate change agreement.

    "Walmart is one of over 3,800 American businesses, states, cities and other entities that have joined together in the coalition We Are Still In to continue our efforts to reduce greenhouse gas emissions to meet the goals of the Paris Agreement," the piece said. "Together, these entities represent nearly 70 percent of the country’s gross domestic product and two-thirds of its population. If this group were a country, it would be the world’s second-largest economy — behind the United States but ahead of China."

    The op-ed piece was co-written by Kathleen McLaughlin, executive vice president and chief sustainability officer of Walmart and president of the Walmart Foundation, and Andrew Steer, president/CEO of the World Resources Institute.

    It prompted one MNB reader to respond:

    When reviewing the increase in carbon in the atmosphere, it is important to remember that carbon makes up .04% of the atmosphere (www.climate.gov). If carbon increases 2,500 times it's current level, it would make up just 1% of our atmosphere. We all need to be good stewards our environment in all we do, but the dire predictions of doom based on increases in very small numbers relative to our overall environment seem to be more politically motivated than scientifically relevant.



    Regarding a possible acquisition of Walgreens by private equity group KR, one MNB reader wrote:

    The first step to formulating any private equity deal is anchoring in the exit strategy that takes effect after you have sucked all the cash and life out of the company and abandoned all customer and employee investments. This is why your team will invest to begin with. It is not always 100% this way, but history shows It is close when a retailer is involved. PE folks are about finance and cash, not about operations and customer experience. If you own stock, hold it until the deal closes. If Walgreens holds your prescriptions, move them now. If they were thinking about you, they wouldn't be thinking about this transaction!

    MNB reader Andy Casey wrote:

    Another possibility is what might be called the “Sears scenario”. I wonder what the various pieces and parts of Walgreens are worth?

    From another reader:

    It seems that a better solution might be for Walgreens and Kroger to try and find a solution to merge the two companies. With the investments that Kroger is making in Ocado, having these 9500+ additional brick ‘n mortar stores for pick-up would provide them with a national footprint unmatched. Plus the current partnership of Kroger providing their P/L and branded products for the food pantries within these Walgreens locations would dramatically increase their P/L penetration.



    And responding to some emails about some of Kroger's issues, one MNB reader wrote:

    I was somewhat enlightened to read that my experiences at a few Central Ohio Kroger stores in my small corner of the world was not an aberration but rather indicative of a more widespread failure to live up to the promises of their "Customer First" positioning.  I suspected that was the case due my limited interaction with Kroger headquarters such as their consumer affairs department and the absence of any response to letters directed to Kroger Management.   No one there seems to have ever read the book "A Complaint is a Gift'.   Perhaps Kroger's attitude is the way to maximizing short term profits.   Long term I think it will come back to bite them.   And a change in their logo design is essentially meaningless.  

    Another fail - today's Kroger website had a notice that there were no time slots available in the next 3 days for pick-up or delivery at the E. Broad Whitehall, OH location.  (Whitehall is a separate city surrounded by Columbus.). Screen shot to follow.

    I am waiting for their stock to go a little higher before I sell my holdings.




    Regarding yesterday's Eye-Opener about the Mini dealership who gave my daughter a video tour of her car being serviced, one MNB reader wrote:

    I saw the same thing on my last two visits to my Toyota dealer and was as impressed as you are. It is a great tool to connect with customers.

    And from another:

    My husband subscribes to your MNB blog which he shares with me on a continual basis. We had the similar “WOW” experience with our BMW. We’ve since shared it with many of our friends who were equally “WOW’ed.” As you mentioned, it’s not often that you are wow’ed over innovative customer service, one that makes you feel you are appreciated as a customer.

    Last comment, the gentleman from our service bay was so professional in his guided tour, that when he opened the video, he called us by name while providing us with the date of the service and model of our car. During his video tour he experienced the hiccups and apologized repeatedly for it.

    Cheers!

    P.S. Love your restaurant and wine recommendations. Unfortunately, we are unable to try or purchase Carlton Cellars in our state so “unfortunately” we will have to make a trip to Oregon’s Willamette/Tualatin Valleys very soon.


    Enjoy. And say hi to Dave Grooters, Robin Russell and Brandon Harlacher for me.

    Happy to make other recommendations when you decide to make your trip.
    KC's View:

    Published on: November 13, 2019

    Past Retail Tomorrow podcasts have focused on how technology can have an impact on business models and people's lives. In this edition, however, we drill down to talk about how technology affected one life … and, in fact, makes living a best life possible.

    Our guest: Heidi Dohse, senior program manager in Google's Cloud - Health and Life Sciences division. Dohse's personal and professional story makes for a compelling narrative that is at once provocative and inspiring.

    Hosted by Kevin Coupe, MorningNewsBeat’s “Content Guy."

    You can listen to the podcast here, or on iTunes and GooglePlay.

    This edition of the Retail Tomorrow podcast is brought to you by GMDC, the Global Market Development Center.







    KC's View: