business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: December 3, 2019

    by Michael Sansolo

    It is hard to imagine that there is any study more important to consumer-facing businesses than demographics. After all, the study of who we are as people opens our eyes to a massive range of issues that can lead to success or failure.

    An unexpected front in that study was opened recently by Stanford University and written about recently in the Washington Post; in my opinion, it demands focus from businesses that want to be relevant in the marketplace.

    The gist of the article is relatively simple, even if the implications are anything but. Essentially, Americans in 2019 have a life expectancy 30 years longer than our grandparents - even despite recent studies showing a small decline thanks to opioids and social ills. The implications of those 30 additional years are profound.

    People now worry greatly about outliving whatever money they put aside for retirement, especially as retirement now can stretch out to 40 years. Not surprisingly, we also worry more about finishing our lives with dementia more than we fear dying.

    Consider that the vast majority of us finish our education at age 18 or 22, yet we now can expect to live as many as eight more decades.

    We now have the likelihood of living with four or five generations of our own families gathering at the holiday table. Imagine all the holiday table arguments bound to be created.

    The Post article highlights some of the new issues such a change in lifespan brings about, from how long we work to how we stay physically active and more.

    It’s hard to read these findings and not find countless challenges for retail. Think about our staffers and how companies can creatively approach the potential of workers staying on the job into their 70s or later. Should sabbaticals, long just found in academia, become standard to help keep staffers fresh, charged and engaged? That might sound like a far-fetched idea, but imagine if you (yes you, the reader) could expect to spend another 40 years in your current job. Wouldn’t a year off to recharge or possibly re-educate yourself seem like a fabulous idea?

    We also need think about the reality of having to manage 70- or 80-year-old workers. Might tasks need to shift to allow such experienced workers to have fewer physical challenges while still finding ways to utilize their institutional knowledge and experience? Also, might recruiting - always a challenge in retail - change to provide attractive jobs to retirees looking for ways to add part-time work to augment retirement savings?

    And without question we’ll need think about the dietary and nutritional needs of a generation of older shoppers than we’ve ever seen before. At the very least, we’ll need to think about how to best use shelf space to serve these shoppers and to reconsider the type size on products, pricing and promotions to appeal to this demographic.

    Needless to say, there are some simple answers to any of these questions and no doubt there are a thousand more questions that need to be pondered. But just as we need to understand the challenges of the current young generation delaying marriage, home ownership and child rearing, we need to consider the implications of those same shoppers having to deal with aging parents, grandparents, great-grandparents and maybe more.

    Keep in mind that when it comes to demographics, the question isn’t whether these things will come to pass, it’s more a matter of how soon.

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

    KC's View:

    Published on: December 3, 2019

    by Kevin Coupe

    National Public Radio's Marketplace has a really good story about the Lathem Time Corporation, which is witnessing a product that it has been making since the early part of the 20th century slowly becoming obsolete.

    The mechanical time clock.

    The story notes that Lathem started what has been a long and good run in 1938, which was when "federal law began requiring employers to keep track of the comings and goings of workers eligible for overtime." The company then developed a mechanical time clock designed "to help businesses comply with the new rule, putting the family-owned company firmly on the map."

    This year, however, "Lathem made the last of its 2100 Series machines," and now generates a percentage of its revenue from "monthly subscriptions to cloud services that track and tabulate employee work hours." And CEO Bill Lathem "predicts that technologies like biometrics and artificial intelligence will soon migrate to employees’ smartphones.

    "Meaning no need at all for time clocks.

    "For now, employees still have to interact at least a little with machines. The latest iteration replaces paper time cards with employees’ index fingers."

    But to everything there is a time and a purpose … and sometimes a time to die and be replaced with the next iteration.

    Lathem could be hanging on with old-world technology, but instead is changing and adapting and moving on.

    Which is what you have to do … assuming your Eyes are Open.
    KC's View:

    Published on: December 3, 2019

    Kroger said yesterday that it is partnering with ClusterTruck, described as "a software platform that powers profitable, vertically integrated delivery-only kitchens," in a partnership for ghost kitchens that it says "will change the way Americans access freshly prepared meals. By offering multiple menus from one central scratch kitchen, Kroger Delivery Kitchen will deliver fresh and delicious meals on-demand without service or delivery fees."

    Yael Cosset, Kroger's CIO, says in a prepared statement that "Kroger is leveraging ClusterTruck's advanced technology to ensure our customers don't have to sacrifice quality and value for convenience when it comes to meal delivery. Kroger Delivery Kitchen Powered by ClusterTruck will allow our customers to access restaurant-quality fresh and delicious meals like never before and without having to pay excessive service or delivery fees."

    To begin, Kroger and ClusterTruck will be offering the ghost kitchen services in Carmel and Indianapolis, Indiana, as well as in Columbus, Ohio and in Kroger's King Soopers division in Denver.

    The announcement notes that "ClusterTruck was co-founded in 2015 and launched its first kitchen in 2016. The Indianapolis-based company owns and operates vertically integrated delivery-only kitchens. ClusterTruck's dark kitchens are powered by a proprietary software system that uses custom algorithms to optimize kitchen and delivery operations. This systematic approach to meal delivery ensures that nearly every order is in the hands of the customer within 7 minutes of the meal's preparation. The average time between placing an order and a customer receiving their food is less than 30 minutes."
    KC's View:
    Ghost kitchens. Dark stores. All part of the same ecosystem of unorthodox approaches to satisfying customers and doing so without putting an unbearable amount of pressure on existing infrastructures.

    And, I think, the kind of move and partnership that more companies have to make if they are going to innovate at the level they need to in order to be competitive.

    My only caveat - Kroger needs to make sure that ClusterTruck cannot weaponize its customer data against it. Because if that happens, it will simply be a repeat of what Instacart can do against its retail clients, and Kroger will find itself totally trucked.

    Published on: December 3, 2019

    Bloomberg reports this morning that Amazon "is testing a new inventory storage service to help meet holiday demand and its next-day shipping pledge without overcrowding its warehouses or running out of products." The goal, according to the story, is to fine-tune "its sprawling delivery network to ensure orders get to customers on time."

    The program is called Amazon Storage and Replenishment, and it "lets its merchants stage inventory close to Amazon’s delivery operation so products can be quickly replenished." It is, essentially, "cheap warehouse space" that is designed to supplement the "sophisticated network of highly automated warehouses that use robots, conveyor belts and thousands of people to quickly pack and ship products."

    Some context from Bloomberg: "Amazon is becoming less of an online retailer and more of a platform and delivery pipeline for online commerce. More than half of all goods sold on the company’s site come from independent merchants who pay commissions on each sale. Amazon keeps examining every leg of the supply chain for ways to make buying something online as fast and affordable as a quick trip to the store."

    The Amazon Storage and Replenishment program reportedly is being tested in Ontario, California, "about 20 miles from its closest facilities." Amazon is said to have "plans to expand the program to other locations around the country."
    KC's View:
    It is sort of like what Albert Finney, as the gamekeeper Kincade, says to James Bond in Skyfall: "If all else fails, sometimes the old ways are the best."

    Published on: December 3, 2019

    The New York Times this morning has a story about the variety of options being created to deal with the fact that more and more packages ordered via e-commerce are being stolen.

    "With online shopping surging and another holiday season unfolding," the Times writes, "customers’ mounting frustration and anger over stolen packages are driving many to take creative and even extreme measures to keep items out of the hands of thieves."

    In New York City, for example, "where more orders are delivered than anywhere else in the country, over 90,000 packages a day are stolen or disappear without explanation, up roughly 20 percent from four years ago … About 15 percent of all deliveries in urban areas fail to reach customers because of package theft and other less frequent issues, like deliveries to the wrong house, according to transportation experts."

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

    Published on: December 3, 2019

    Lovely pair of ads from the Thanksgiving holiday weekend that revolved around the same theme - parents interacting with grown children. There brands being promoted couldn't be more different - one is for Disney, the other for Stella Artois beer - but the delivery is quick, effective and authentic, which makes all the difference.

    And, if you have grown children, these ads may even elicit a tear or two.


    KC's View:

    Published on: December 3, 2019

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

    CBS News reports that Wisconsin-based Festival Foods has installed three Amazon Lockers in its stores, featuring "65 locker slots of all different shapes and sizes, used for pick-ups and returns."

    The company says that the lockers will be a safe haven for delivered packages in a market where there are concerns about package thefts from people's homes.

    A good thing for bringing in traffic and offering shoppers added convenience. Not so great if those same customers start using them to pick up grocery products they've ordered from Amazon.
    KC's View:

    Published on: December 3, 2019

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

    • The National Federation of Independent Business (NFIB) reports that "U.S. shoppers who shopped at independent retailers and restaurants on Small Business Saturday last weekend reported spending a record high total of an estimated $19.6 billion."

    Small Business Saturday was created a decade ago by American Express as a day following Black Friday that would serve to highlight the importance of small, locally owned businesses.

    Today, NFIB says, "the day has become a national tradition with seven in ten (70%) American adults surveyed by American Express and NFIB reporting being aware of the day. Shoppers this year are conscious and considering the impact small businesses have in their community. A vast majority of respondents who shopped on Small Business Saturday (96%) agree that shopping at small, independently-owned businesses supports their commitment to making purchases that have a positive social, economic and environmental impact … 97% of consumers who shopped on Small Business Saturday agree that small businesses are essential to their community and 95% reported the day makes them want to shop or eat at small, independently-owned businesses all year long, not just during the holiday season."

    • The New York Times has a story about how a four-year-old decision by the British government to impose the equivalent of a six cent tax on the purchase of plastic bags - designed to encourage people to buy "bags for life" and reduce the amount of plastic going into landfills - hasn't worked out the way supporters hoped.

    In fact, the story says, "bags for life" have turned into "bags for a week." This year, the Times writes, "the 10 companies representing most of Britain’s grocery retail market have sold over 1.5 billion 'bags for life' … which amounts to 54 bags per household. That was on top of the 959 million 'bags for life' sold in the country’s main supermarkets last year."

    The consumption of plastic, at least the plastic contained in bags, actually is increasing at a time when authorities hoped it would be decreasing.

    All of which makes me think of the Winston Churchill line: "The English never draw a line without blurring it."

    • The Wall Street Journal reports that "smaller loaves are on the rise as bread companies and grocery-store bakeries respond to new demands from shoppers. Some complain they can’t finish an entire loaf before it turns stale. Others prefer to buy half loaves more frequently so they can eat the freshest bread possible. The smaller loaves offer a permissible indulgence for people trying to cut back on calories, carbohydrates or gluten, bakeries say. They’re also better proportioned for people who live alone, a growing demographic that today accounts for nearly one-third of U.S. households."

    The story makes the point that "adjusting loaf sizes is complicated and costly for giant players, whose operations often produce thousands of loaves per minute, he says. In addition to buying new pans, large-scale bread makers must calibrate dough dispensers and packaging capabilities." But I'd suggest that the winners will be the ones that adapt quickly and aggressively - the ones that hem and haw are not likely to be rewarded for their reticence. It is like Michael says in his column this morning … you either pay attention to and respond to demographic changes, or you lose relevance and resonance.

    • The Wall Street Journal reports that Hostess Brands, manufacturer of Twinkies, has come to an agreement to acquire Voortman Cookies, maker of popular creme-filled wafers and sugar-free cookies, The cost of the deal: $320 million in cash.

    According to the story, "Ontario, Canada-based Voortman’s products will help diversify Hostess’s lineup of products, which include classic sweet-baked goods like Twinkies, Ding Dongs and Zingers, company executives said. Its offerings have grown about 5% over the past three years on a compound basis, more than double the 1.8% growth rate for the broader cookie category, according to Hostess."

    USA Today reports that McDonald's has decided to play chicken, entering the chicken sandwich war that was launched earlier this year between Chick-fil-A and Popeyes'.

    The story says that "the fast food giant is testing two new chicken sandwiches – the Crispy Chicken Sandwich and the Deluxe Crispy Chicken Sandwich – in Houston and Knoxville that could be rolled out to restaurants nationwide."

    Here's what we do know - McDonald's will have better fries. Unless, of course, something horrible occurs and there ends up being a French fry shortage. Not that such a thing could ever happen…

    The Hill reports that the United States "may face a French fry shortage due to a poor potato crop caused by cold and wet weather this year … The potato crop forecast in the U.S. is at the lowest since 2010, according to a U.S. Department of Agriculture report."

    Yikes. Time to start hoarding.
    KC's View:

    Published on: December 3, 2019

    • The National Grocers Association (NGA) announced that Maggie White, the Manager of Donor Relations and Development for the NGA Foundation, has been promoted to the role of Director of the NGA Foundation.
    KC's View:

    Published on: December 3, 2019

    • The Financial Times reports that the Trump administration "on Monday proposed the imposition of 100 per cent tariffs on up to $2.4 billion of French goods, including champagne, after concluding that the country’s digital services tax unfairly discriminated against American technology companies … The new tariffs on French goods follow months of complaints in Washington about the digital services tax introduced by the government of President Emmanuel Macron, which targets companies such as Google, Apple, Amazon and Facebook."

    According to the story, "The plan came at the end of a day marked by escalations in trade tensions between the US and key allies, starting with an announcement that Washington would restore tariffs on metals from Argentina and Brazil to punish them for their currency policies."

    FT notes that "Paris has hit back at the Trump administration’s threat … with France’s finance minister vowing the EU was ready to retaliate with 'a strong riposte'. Bruno Le Maire called the tariff plans 'unacceptable' and not worthy of an ally. 'It’s in no one’s interest, it’s not in the interest of growth, or of political stability,' he said in a radio interview."
    KC's View:

    Published on: December 3, 2019

    Yesterday MNB took note of a Washington Post report that "a decade of historically low interest rates has allowed companies to sell record amounts of bonds to investors, sending total U.S. corporate debt to nearly $10 trillion, or a record 47 percent of the overall economy."

    The story suggested that there may not be any immediate danger, but that some experts "say the borrowing has gone on too long and could send financial markets plunging when the next recession hits, dealing the real economy a blow at a time when it already would be wobbling."

    I commented, in part:

    I'm no economist, but to me it almost sounds like in the skyscraper that is the American economy, there are a number of companies that have spent so much time on the upper floors and penthouses, expanding amenities and improving the view, that they have not tended to shoring up the foundation so that it can withstand inevitable tectonic shifts.

    When the recession comes - not "if," because an eventual recession is inevitable - it seems likely that businesses and consumers may all be facing some sort of reckoning…

    This prompted one MNB reader to disagree:

    What this means is that companies are investing for the first time in a long time and they are taking advantage of the opportunities of having a strong economy.

    There is no debate that the economy is strong - the National Bureau of Economic Research says that the US officially in its longest expansion, having started in June 2009.

    I think the argument of these worried economists is that there has been less investment than one would hope for, and that "lured by low rates, companies have splurged on debt to repurchase their own shares, pay higher dividends to investors and fund acquisitions." Only one of those three options, the argument goes, reflect an investment that would have value in a recession.

    As I said, I'm no economist. But this seems like a reasonable assessment to me.

    I complained a bit yesterday about a commercial for Xfinity that plays like a sequel to E.T.: The Extra-Terrestrial - I hated the idea that the ad turned E.T. into a salesman for a cable company.

    Two MNB readers, however, made an oppositional point:

    Brian Blank wrote:

    Here is my good-natured rebuttal to your disappointment at ET being used as a salesman:  Two words—Reese’s Pieces.

    And MNB reader Sandra Cotter wrote:

    He was a salesman before.  Just a different product this time.

    A fair point. But it just feels different this time.

    On another subject, from MNB reader Karl Konrad:

    Interesting point you make about Target workers being retrained to fulfill online shopping. I ran into one of these associates this weekend finding items, scanning them and putting them on a very full cart. I noticed her because as I passed her I overheard her muttering to herself out loud, “My god, how much is this person buying?”
    My thought was, “how about some gratitude for job security?”

    It may not have been a complaint or criticism. It could've been someone who was impressed.

    But I take your meaning.

    Finally, we had a story the other day that went like this:

    "The Boston Globe reports that the Massachusetts state legislature is taking up a pair of bills that "would require public buildings, including restaurants, to provide at least one diaper-changing station that’s accessible to all caregivers, regardless of sex, gender, or disability. The proposals would apply to new construction and to any public building that undergoes substantial renovation or remodeling."

    The big complaint: ladies' rooms tend to have diaper changing stations, but not men's rooms.

    I commented:

    I'm generally okay with proportional legislative responses to important issues, but I'm not entirely sure this rises to that standard.

    For one thing, I've noticed lately that a lot of men's rooms have changing tables. For another, a lot of rest rooms are gender neutral, and so have changing tables as a matter of course.

    The other thing is that it seems to me that this is one of those cases where a business can create for itself a differential advantage by having changing tables in the men's rooms. Of course, that would only be an advantage in the perception of men willing to change diapers. I know some guys who would deliberately choose a restaurant that only has changing tables in the ladies' room precisely for that reason.

    Not me, though.

    One MNB reader responded:

    …Just sharing my viewpoint with someone who probably hasn’t changed diapers in a while.

    I can certainly agree with you that changing tables in men’s rooms shouldn’t require legislative response.  I can also agree that a lot of men’s rooms have changing tables.  However, I can certainly say that a lot isn’t enough, if there is no changing table when you need one.  I’m tired of my husband returning and handing me the baby and diaper bag and saying the men’s room doesn’t have a changing table, he’s tired of it too.  We have 3 small kids, it’s nice to know we can divide and conquer when in public, but the tools don’t always exist for us to do that.  And what’s he to do when I’m not there?  Should he not be able to take the kids in public without me? 

    Fortunately he’s not one of those guys who would deliberately choose a restaurant where he can slack off and let me change diapers while my food gets cold, (he’s normally done eating before me, aka, food is not getting cold).  He tries to be a partner to me.

    And, while yes, we could choose businesses based on their differential advantage of offering a changing table, but are you serious?  You want me/us to check out all the restrooms and keep a mental note of this (which we may never need…) and choose based on this versus on other characteristics far more relevant to said business?
    Yes, this hits a nerve.  Life of a working mom is hard enough, let a guy help out and change a diaper.

    I agree with you … on pretty much everything. Including the fact that I haven't changed diapers in a while.

    I was going to save this for Friday's OffBeat, but now seems like a pretty good moment to recommend a comedy special on Netflix entitled "The New One," which is written and performed by Mike Birbiglia, focusing on what happens before and after you have your first baby.

    It would be inaccurate and insufficient to call this a stand-up special. Birbiglia is a wonderful storyteller, and while there are sections of this that are wildly funny, there also are moments of gentle and moving reflection. I love the way he weaves his tale, often seeming to digress but always finding his way back to the main themes - the structure he builds is lovely thing to behold, at once delicate and robust, recognizable and revelatory, and loaded with heart.

    I was unfamiliar with Birbiglia's work until I saw "The New One,", but I now count myself as a big fan.

    And I think that if you watch it, you will be, too.
    KC's View:

    Published on: December 3, 2019

    In Monday Night Football, the Seattle Seahawks defeated the Minnesota Vikings 37-30.
    KC's View:

    Published on: December 3, 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: