business news in context, analysis with attitude

Published on: November 20, 2019

by Kevin Coupe

I had the chance the other day to visit the Woodland Hills location of the new Amazon grocery store that is scheduled to be opened next year, one in a chain of undisclosed format but with ambitions that are no doubt considerable.

All we know about the store at the moment is what it won't be - it won't be a Whole Foods, with the implication being that it will be less hifalutin in terms of merchandise and price. And it won't employ Amazon Go-style checkout-free technology, which means that there will be lines at the checkouts. (At least if all goes well. In this case, no lines will mean no business, which is most assuredly not what Amazon has in mind.)

Having visited the store location, which was guarded by a lone security person who looked up occasionally from his magazine to eye me suspiciously as I walked around taking pictures, I'd like to make two observations.

One is that while there is a main front door, off to the right there is a much smaller door (which you can see in the pictures below) off to the right that, unless I miss my guess, is likely to serve some sort of e-commerce function. It could be for click and collect, or it could be for delivery … but this Amazon store (or whatever it is going to be called) is almost certainly is going to build part of the company's secret sauce into the format.

I'd still love to see how Amazon would offer some sort of replenishment service in a bricks-and-mortar format … a physical rendering of its hugely popular Subscribe & Save business. But Jeff Bezos hasn't called lately asking for advice, though I'm happy to proffer it at any time.

My second observation is both more ironic and more situational.

This new Amazon bricks-and-mortar format is located across the street from the Promenade, a sizable mall with anchor tenants such as Macy's, Barnes & Noble and Dick's Sporting Goods. (In the more distant past, it also hosted retail names like Saks, Robinson's, Bullock's, and I. Magnin.)

Except that this shopping center is what is referred to as a "dead mall" - virtually shuttered, with no active retail, awaiting the various approvals that will be needed to knock the place down and turn it into a mixed-use development that will house some retail, some office space, and some residential. (To be fair, the Promenade isn't completely dead. It still has an AMC multiplex. But that's pretty much it.)

It seems almost funny to me that we have Amazon putting in a bricks-and-mortar format across the street from brick-and-mortar that is more like dashed hopes and dreams … especially since it is the likes of Amazon that put such places into declined and, in this case, virtual obsolescence.

Maybe "funny" is the wrong word. Though it certainly is an Eye-Opener about the past, the present, and an uncertain future.

Published on: November 20, 2019

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Published on: November 20, 2019

TechCrunch reports that "same-day delivery is coming to Target’s app. The retailer announced this morning that its same-day shopping service Shipt, which Target acquired two years ago for $550 million, will now be integrated directly into the Target mobile application. Though Shipt is widely known as an online grocery service that competes with Instacart and others, Target is putting the service to work to do more than deliver food and various household items.

"Instead, Shipt is turning into Target’s own version of Amazon’s Prime Now. Currently, Target shoppers can order 65,000 items from the app for same-day delivery, including not just groceries and essentials, but also toys, baby-care products, kitchenware and more."

This is, the story says, part of Target's ongoing efforts to modernize "its business to better compete with Amazon and help customers shop however they want — in-store, online or some hybrid of the two, as with Drive Up orders. In less than two years’ time, Drive Up became a top-rated service and it more than doubled the number of 2018 orders by fulfilling more than 5 million orders in the first part of the year, for example. Meanwhile, Target recently said that one in five customers were placing same-day orders with Target for the first time in Q2, indicating the potential for growth in same-day."

Published on: November 20, 2019

Bloomberg reports that Seattle-area Kroger customers next week "will be able to walk out with fresh parsley, cilantro and other greens grown in the store, the latest example of grocers bringing the farm right to their aisles.

"Kroger’s deal with German startup Infarm includes two stores with plans for 13 more to come online by March of next year. It’s part of a broader push by the nation’s biggest traditional supermarket chain to improve sluggish sales by amping up its fresh-food offering, while also enhancing its environmental cred. The greens - including crystal lettuce and Nero Di Toscana kale - only need tending once or twice a week and will sell for no more than Kroger’s existing store-brand organic produce, according to Suzy Monford, Kroger’s group vice president of fresh."

According to Bloomberg, "While this is Infarm’s first stateside venture, the Berlin-based company is already well established, with more than 500 farms dispersed through partnerships at more than 25 major food retailers internationally, including Edeka and Amazon Fresh in Germany, Marks & Spencer in the U.K., and Metro in France. Its farms grow a variety of herbs and leafy greens including stalwarts like parsley and kale, as well as more specialized options like green mizuna and Peruvian mint."

Published on: November 20, 2019

The Seattle Times has a story about the "hundreds of thousands of people steeped in the specific Amazon principles and practices that Jeff Bezos laid out to shape what is now a 25-year-old technology and commerce juggernaut. When they leave to start or join other companies," the story says, "they often adopt and adapt those principles in their new ventures, spreading the Bezos way, with varying degrees of success."

There are, the story says, "more than 40 current startup companies in Washington state alone … led by former Amazonians. The company won’t say how many former employees there are."

Among the differentiating principles cited in the story: "directing employees to 'have backbone; disagree and commit,' for example, and 'insist on the highest standards' … Other Bezos directives - among the most famous, teams should be small enough to be fed with two pizzas - have shaped Amazon’s corporate structure. Former employees say it functions as a collection of startups, each with the resources and support of a mega corporation. In this way, Amazon is a training ground for would-be entrepreneurs."

Published on: November 20, 2019

CNBC reports on an interview with Tim Armstrong, an internet entrepreneur and the former CEO of AOL, as well as ad chief at Google, in which he says that "Nike’s decision to stop selling merchandise to Amazon is just the 'tip of the iceberg' of brands opting to go directly to consumers."

It was just a week or so ago that Nike said it would halt a two-year experiment selling on Amazon; it had decided to sell a limited assortment there in exchange for Amazon promising to do a better job policing counterfeits.

Armstrong argues that "brands are often fearful that by partnering with Amazon they will lose control over how they’re represented on the site," and says that "the direct-to-consumer movement will be the replacement for the retail issues and commerce issues that are going on because of the platforms … if they have the option to go direct, they are going to go direct."

Published on: November 20, 2019

Neatness expert and minimalist guru Marie Kondo, having convinced the world to get rid of stuff that doesn't bring joy, now wants people to acquire stuff to replace the stuff they got rid of.

Her stuff.

The Wall Street Journal reports that Kondo, who has produced books and a Netflix series about "tidying up," is adding online shopping "to her site, konmari.com, with an initial 125 home and self-care products that 'spark joy' for her."

According to the story, "Kondo explained through a translator that she ran potential products through a 'joy check,' part of her famed KonMari method of decluttering your life by touching and contemplating the meaningfulness of an item before deciding whether to keep or toss it.

“'Of course, I don’t use every product, but all the products are founded on KonMari’s world view, if you will,' said Ms. Kondo, 'which really encourages you to choose what sparks joy for you and really cherish what you buy and what you surround yourself with'.

"Ms. Kondo and her team sourced the shop globally, but roughly half of the products come from Ms. Kondo’s native Japan, contributing to an aesthetic and sensibility that is undeniably Japanese in its simplicity and earthiness."

Published on: November 20, 2019

Eater reports that "climate-conscious states like California are taking aim at gas stoves, with 13 cities and one county adopting building codes that ban gas or encourage all-electric new construction."

According to the story, earlier this year "Berkeley became the first city in the nation to prohibit gas in all newly constructed buildings (building owners can apply for an exemption, say, if a restaurant occupies the space).

"Natural gas hookups in buildings, which are often used to power furnaces, water heaters, dryers, and gas stoves, make up 17 percent of national natural gas usage, according to the Energy Information Administration — a not insignificant number, when natural gas produces 33 percent of U.S. carbon dioxide emissions from electricity generation … If the nation’s goal is to reduce emissions and eventually become carbon-neutral in hopes of mitigating disastrous effects from climate change, that’s the wrong direction to be headed in."

Published on: November 20, 2019

The Los Angeles Times has a story saying that, while vaping company Juul has sought to distance itself from the traditional tobacco business, saying that it "has its roots in Silicon Valley, not in fields of tobacco," the facts say something different.

According to the story, "A review by the Los Angeles Times of more than 3,000 pages of internal Juul records, obtained by the Food and Drug Administration and released to a researcher through the Freedom of Information Act, found that the concept behind the formula that makes Juul so palatable and addictive dates back more than four decades" to the laboratories of RJ Reynolds.

The Times goes on: "Juul’s salts contain up to three times the amount of nicotine found in previous e-cigarettes. They use softening chemicals to allow people to take deeper drags without vomiting or burning their throats. And they were developed based on research conducted by the tobacco companies Juul claimed to be leaving behind."

Some context from the Times:

"In multiple conversations with The Times, Juul did not directly address assertions that the company embraced the very industry it sought to dismantle. A spokesperson for Juul acknowledged that the product intentionally 'mimicked' the nicotine experience of a traditional cigarette, but explained that the formula was designed that way in order to satisfy the cravings of adult smokers, not children.

“'We never designed our product to appeal to youth and do not want any non-nicotine users to try our products,' a spokesperson for Juul said in a statement to The Times. 'We are working to urgently address underage use of vapor products, including Juul products, and earn the trust of regulators, policymakers, and other stakeholders.'

"After extensive lobbying by the vaping industry and its allies, President Trump this month missed the deadline he set to ban vaping flavors, despite mounting public complaints over their attractiveness to teenagers, and it’s now unclear whether the administration will take any action. On Monday, California Atty. Gen. Xavier Becerra and Los Angeles officials announced a lawsuit against Juul, alleging it engaged in deceptive practices with kid-friendly advertising and a failure to issue health warnings." (New York State has filed a similar lawsuit, and North Carolina filed one earlier this year.)

The Times concludes that despite all Juul's protestations, "a new generation of nicotine addicts has already been established, and health experts warn that millions of teenagers who currently vape could ultimately turn to other products like cigarettes for their fix."

Published on: November 20, 2019

• TechCrunch reports that for the second time in two years, Macy's shoppers have been informed that "hackers siphoned off customers’ names, addresses, and phone numbers, but also credit card numbers, card verification codes, and expiration dates by inserting malicious code on its website and quietly sending the stolen data back to the hackers."

The hack was disclosed in a filing with the California attorney general.

"Macy’s said the breach lasted a week, between October 7 and October 15," the story says. "The retail giant did not say how many customers were affected, but the breach is likely to affect thousands of customers. It’s the latest example of hackers breaking into websites and installing credit card skimming malware."

Published on: November 20, 2019

• Newsweek reports that Walmart has adopted technology that allows people to use its mobile app to order products by scanning its annual toy catalog. The technology is powered by Digimarc, and "will be present in 35 million Walmart catalogs. Customers can find the catalogs in 4,800 Walmart stores in the U.S., and they are also available through major omnichannel toy resellers and can be mailed directly to customers' homes."

Published on: November 20, 2019

• The New York Times reports that Burger King is being sued by one of its customers - a Florida man who is a "strict" vegan, and is accusing the company of failing "to disclose that its plant-based Impossible Whoppers are cooked on the same grills as beef products.

"The class-action suit accuses Burger King of undertaking 'false and misleading business practices' in the marketing and sale of its meatless burgers, and notes that vegans would not purchase the Impossible patties if they knew they had been prepared next to meat options … The complaint calls on the fast food chain to return all the profits it had gained from selling the meat-free alternative."

Burger King has not commented on the suit.


• The Associated Press reports that yogurt culture may be on the decline in the US.

According to the story, "despite shelves full of new varieties - from Icelandic to Australian to coconut-based - U.S. yogurt sales are in a multiyear slump. Yogurt companies are confident that more new products can boost sales. But some analysts are skeptical, saying larger trends - like growing sales of protein bars - will be hard to turn around."

The stats: "U.S. sales of yogurt and yogurt drinks peaked at nearly $9 billion in 2015. In 2019, they’re expected to hit $8.2 billion, down 3.6 percent from 2018, Mintel says. They’re expected to fall another 10 percent to $7.4 billion by 2024."

The responses: "Chobani - the second-biggest yogurt maker by U.S. market share - thinks innovation can halt that slide. On Monday, the company introduced its first oat-based yogurts, capitalizing on booming sales of oat milk and consumer interest in plant-based eating. The move follows market leader Danone’s introduction last July of oat-based yogurts under its So Delicious brand."

Published on: November 20, 2019

Yesterday MNB referenced a New Yorker piece about the Park Slope Food Co-op, and I commented:

One of the things that cooperatives tend to understand better than many traditional retailers is the notion of community - of creating sustained connections between the store and its shoppers by quite literally make those shoppers into owners.

"My store" actually means something to co-op members, and translates into a competitive advantage. It can't be exactly replicated by traditional stores, but it ought to provide some clues about how to compete effectively.

Prompting MNB reader Kelly Dean Wiseman - who for purposes of this email needs to be identified as the General Manager of the Community Food Co-op in Boseman, Montana - to write:

Bravo Kevin: you nailed it!

I'm glad Kelly feels that way. I think the c o-op community in general thinks I give it too little love (and Amazon too much).

But I am in awe of how co-ops are able to compete in the modern marketplace, and think much of their model could serve as an example of how do differentiate oneself.



The other day, MNB took note of a Yahoo Finance report on a new study from the University of Texas at Dallas and Boston College, saying that Starbucks' decision to make its restrooms available to everyone - even non-customers - may be hurting foot traffic in its stores.

According to the story, "Since opening its bathroom doors to the public in the wake of a controversial incident in Philadelphia, the coffee giant has seen a 6.8% drop in store attendance per month relative to other coffee shops nearby."

Starbucks says those numbers are inaccurate.

I commented:

Starbucks didn't have a lot of options, from a public relations perspective, but to open its bathrooms even to non-customers. As I recall, the decision was prompted by a store manager calling the cops on an actual customer who wanted to use the bathroom … because race was an issue in that call, Starbucks had to defuse the situation.

I have no idea whose numbers are right. I will say this, as someone who goes to a lot of Starbucks around the country on a relatively frequent basis - even since the open door policy was announced, I generally find the Starbucks rest rooms to be clean and available - certainly a lot more pleasant than McDonald's bathrooms.

MNB reader John R. Hurguy responded:

Do you also visit a lot of McDonald’s around the country on a relatively frequent basis so you’re able to fairly make the evaluation that you generally find the Starbucks rest rooms certainly to be a lot more pleasant than McDonald's bathrooms? That seems totally out of character for you...

Absolutely.

I am a man of a certain age, which means that I use restrooms wherever and whenever I can find them. I don't usually eat at McDonald's, but when I'm on the road - which is often - I'm happy to take advantage of their facilities.



Commenting on our story about how American Express now is paying some retailers to take its cards, one MNB reader wrote:

OMG! Amex is paying slotting?? Just wondering, did Amex CEO Stephen Squeri come from the grocery industry?

Not that I can tell. Though I take your point.



Thanks to all the MNB readers who wrote in yesterday about our site's 18th birthday … which also, I hasten to point out, is the 18th anniversary of the creation of the MNB community, of which I am so fortunate to be a part.

A selection…

From MNB reader Mike Bach:

After 18 years,  you’re starting to get good at this, right?

Just starting.

From MNB reader Terry Marshall:

Congratulations on your 18 years!  I have been reading for over 15 of those years and find some great information in every edition.  I appreciate the information you share as well as your take on it.  It is a healthy perspective whether I agree or not, but it gives a view I might not have considered.  I would wish you another 18 years, but I am sure you are hoping to be retired by then and enjoying more time with the family.
 
All the best and thank you for the daily Morning News Beat.

From MNB reader Ron Brake:

Happy 18th Anniversary Kevin!!!

From MNB reader Phil Lempert:

18 more to come!!!

Well done. Congratulations.

And from another reader:

Good morning Kevin.

Congratulations on your 18th anniversary and best of luck with your continued adventures!

Keep up the great work and I look forward to MNB every day.

I love your turn of phrase … I think of this as an ongoing adventure, too. I've got the leather jacket … I just need a hat and a bullwhip.

From MNB reader Deb Faragher:

Congratulations to you and the entire MNB crew. I’ve been with you since the beginning and, as I’ve shared before, though I retired over ten years ago, I still read you every day. I enjoy the news and insights, your commentary, and, of course, your OffBeat observations and experiences. I look forward to many, many more years!

From MNB reader Patrick Posey:

Congratulations on 18 great years of success.  You make a difference in our industry.

From MNB reader Joe Axford:

Congratulations KC, you're the first email I open and read every morning. Looking forward to the next 18 years, at least!

And from MNB reader Kevin Watkins:

Congrats!  I don’t think I’ve been there for all 18, but pretty close…
From MNB reader Terry Stadheim:

Thanks for all the years of helpful insights, timely topics and concise stores to keep me informed.

And finally, from another MNB reader:

Congratulations on the start of your 19th season.  Even though you have Michael Sansolo, Kate McMahon, and Tom Furphy on the team you're still the ace of the staff.  Keep up the good work and and hope you all have many more All-Star seasons.

I don't know about that. Sansolo keeps referring to himself as the deGrom of the "staff"…

Again, thanks to all of you, and all the other folks who wrote in. I don't know if I've got another 18 years in me, but to quote Robert Frost, "I have promises to keep, and miles to go before I sleep."

Published on: November 20, 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.