business news in context, analysis with attitude

Published on: December 19, 2019

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here and this is FaceTime with the Content Guy.

There's a new term that I've seen popping up lately that strikes me as kind of interesting:

"Narrative violation."

In the venture capitalists' world, it is a kind of buzzword. It refers to what happens when the facts bump into conventional wisdom.

There was a New York Times story the other day about "a selection of recent facts that have violated the narrative: A ride-hailing start-up being profitable; crime falling in San Francisco; boomers driving the urban apartment surge."

In other words, not everything is as it appears, or as we would like it to be. Leaders are better off, in this way of thinking, if they are willing to accept this. And not, to use another buzz-phrase that we love here on MNB, engaged in "epistemic closure."

I think it is important not to think of a "narrative violation" as something that occurs outside an organization, something that we observe in someone else's story.

I actually think that a "narrative violation" is something that companies need to embrace … even instigate … though certainly in synch with a brand's value proposition.

As we move into 2020, I think that companies that want to be different ought to actually may it a goal to create narrative violations within their organizations and in the perception of their customers.

Last week in the Innovation Conversation, Tom Furphy and I talked about the importance of companies challenging themselves by playing internal games of "will / should" - ask people to talk about what they think "will" happen next year, and what "should" happen … and then focus on making the latter actually happen.

This is kind of the same thing. Challenge folks within your organization … challenge yourself … to determine where narrative violations should take place, where you can defy and exceed conventional wisdom.

It is something we all have to do. Bring on the New Year.

That's what is on my mind as we wrap up 2020. As always, I want to hear what is on your mind.

Published on: December 19, 2019

by Dr. Russell J. Zwanka and Dr. John L. Stanton

Content Guy's Note: My friends Dr. Russell Zwanka - currently of Siena College and soon to be at Western Michigan University - and Dr. John Stanton - of St. Joseph's University - are out with a new book … "Simple Solutions To Make Customers Feel Like Your Supermarket Is Their Supermarket." Well, I'm a sucker for a learning experience, and that title certainly reflects a lot of what we talk about here on MNB … and so I asked Russell and John to give us just a taste. Which seems like a nice way to begin to wrap up 2019 - with a focus on what needs to be done in 2020.

Enjoy. (And go buy their book … available, of course, on Amazon.)

Do you work in the supermarket industry, and want to have customers feel like your supermarket is their supermarket?

Well it's simple. Just solve their food shopping problems. And do it better than anyone else. And, while you’re at it, be open 24 hours, deliver groceries within the hour, never have anything rotten on the shelf, have everything rotated perfectly, have a floor you can eat off, carry everything but don’t have unproductive inventory, and don’t forget to smile!

We didn't say it was easy. We said it was simple. If--and this a big if--you approach it in a systematic manner. We can show you how to do this. And how you can make the task manageable.

This book contains simple solutions to make customers feel like your supermarket is their supermarket. These tactics are in different categories such as singles, families with children and elderly.

The perspective, and ostensibly the most important point of view you need: the customer is at the center of everything we do in Food Marketing. It’s not the other way around- you don’t create a format or offer and convince the customer to see you as a solution to their lives. It’s their life, you get to be a part of it if they want you to be part of it. Having said that, there is plenty you can do to ensure you have a better chance than your competition. In this chapter, we will make connections between customer evolution, trends and power, and how that is changing the game- and what you can do about it.

Reality is….you might not make it. The customer has been “Amazon’d”, they expect assortment from all over the world available at their fingertips, they’d like food delivered in an hour, and they expect full price transparency. If you cannot come to this realization, it’s time to close the book, literally and figuratively. The customer wants to know “What makes you special?” If you cannot wake up every morning and know exactly what makes you special, then you probably aren’t. It’s okay, maybe the food industry isn’t for you. It’s a cutthroat, low margin, high turn business where every penny counts.

Understanding you’re still reading, then let’s make you special. Let’s figure this customer out, and then maybe figure out how to “read the tea leaves” and stay ahead of changing trends.

You hear so much about the changing of the generations! Baby Boomers to Millennials to Centennials. The “Silent” generation…. what a terrible thing to call someone. The thing to remember about generations is, it’s just a start. You cannot “bucket” an entire generation into groups, and “market” to them. People are much too individualistic to be thrown into buckets. And, if you hear someone mention Millennials, make them stop! That cohort has grouped 15 years of people together and decided to treat them the same. Don’t do it. Avoid bucketing, but do look for patterns. Here are a few:

• The customers on the “up trend” in buying power have mostly never seen a life without the internet and a smartphone in their possession. In fact, the Centennials (Gen Z) claim over 95% smartphone ownership. It’s not “different” to them to have all this power- they’ve never not had it. Using a phone for a shopping list, using it to look up health attributes of their food, using it to find hot deals, and using it to check your price versus the rest of the world- it’s all second nature.

• Multicultural is the norm. A striking fact about the changing of the United States population: 21% of those over 75 years old are non-white. 46% of the US 18-21 years old are non-white, including 22% identifying as Hispanic. It is expected 90% of the US population growth the next five years will be coming from non-white. Look at your team. Do you reflect the future?

• Health and wellness is here to stay. It’s a great trend, and hopefully lasts indefinitely. Looking up calories and ingredients on the smartphone is here and now. Full transparency about what you are putting in your products is crucial. And, if you manufacture goods and/or are a retailer with a strong private label offering, get those bad ingredients out! Why are you waiting to get the high fructose corn syrup out of your drink? You know it’s not healthy, they know it’s not healthy, so why leave bad ingredients in until the government tells you to take it out? Come on, think customer first!

• Remove chokepoints. Goes with the last one. Checkout free is the future. It’s a freight train with no brakes. It shouldn’t have any either, the registers have always been the worst part of shopping from a customer point of view. Sorry, Polly running the register and holding conversations with each customer only made the next person in line angry. I love your conversation, but not at the expense of my time! If you are not able to offer checkout free yet, then go with self-checkout. Here’s the mindset you need: self-checkout is actually offering good customer service. It’s not a lamentable lack of personal interaction, it’s getting the customers out of the chokepoint they hate. Look at Walmart, they switched to self-checkout, including using the belts, and do you see a line at Walmart anymore?

• “Compare at” is rocking! If you shop TJ Maxx, you know “compare at”. It’s combining the customer desire to find “deals”, to find discounted treasures, and it’s giving the customer something to share with their friends. Everyone wants to say, “This is usually $28, and I stole it for $18!” Everyone. This is unabashedly how retail will work going forward- you have got to make the customer look smart to themselves and their friends. Nothing is smarter than getting a good deal. It doesn’t matter how much money you have.

• Limited Time Only is right there with “compare at”. Same type of idea, except this one adds scarcity. Now, instead of getting a discount, the customer will pay a premium just because they also want to share with their friends they got something no one else got. Scarcity works! Tell someone there is a “limit of 6”, and they’ll buy 6. LTO never fails to awaken the competitive spirit in customers.

• Store brands are cool. Studies show the majority of the population has become so brand non-loyal, they don’t care about buying brands. And, if you’re in craft beer, you know this- sometimes an established brand is a negative. Store brands are cool, they provide a value, they provide margin rates for retailers, and they encourage store loyalty. Store brands are a winner, and should be cultivated. As you will read later in this book, they can even give promotional retailers a sound base of value offerings for their customers.

• Data works. You have point of sale data, you have loyalty card data, you have tons of data. Past purchase behavior tends to predict future behavior. Overlapping purchases by similar groups tends to predict purchase behavior by other similar customers. You can be part of the solution for constant refilling (auto-replenish) of commodity items, suggestions for other purchases, making lives easier. For some reason, it seems only Amazon understands this- and Dunnhumby. Using data to predict future behavior makes analytical workers in the future highly valuable.

• Retailers with expertise sharing space is the future. Target combining with CVS was just the beginning. Kroger and Walgreens, etc. Rather than develop expertise, why not let experts offer that service for your aggregated customers? Think, if you could find a Lidl or Aldi inside a Target? Game changer, right?

Winners won’t always win and losers won’t always lose. Sears was on top of the world, until it wasn’t. A&P ruled from coast to coast, until it didn’t. TJ Maxx was a bit player, until it came into its own. Walmart was suffering until it grabbed a toehold, and is kicking butt again! Aldi was slowly expanding until Lidl came to the US. Target was cool, then wasn’t, and now is….they found their mojo again!

Winning means taking it from somebody. We apologize for the cold hard truth, but winning means someone will probably lose. The beauty of capitalism! Market share is a zero-sum game. Have the killer mentality and you’re going to be a winner!

You can buy the book here.

Published on: December 19, 2019

The Houston Chronicle has a story about a new H-E-B store in the city's Third Ward, described as "bringing fresh food, a pharmacy and conveniences such as curbside pickup and home delivery to … an area described as a 'food desert' for its lack of access to quality options."

The store, "four miles south of downtown at Texas Highway 288 and MacGregor Way … sits in an area with low access to quality food, defined by the U.S. Department of Agriculture as a census tract where at least 500 people or a third of the population live more than half a mile from the nearest supermarket. After the Kroger on Old Spanish Trail closed in 2017, residents in the predominantly African American neighborhood had to drive to Bellaire and Pearland to shop for fresh produce, meat and seafood."

But, it is a solution that may be creating its own set of problems.

The Chronicle writes that "while many Third Ward residents said they welcome H-E-B to the neighborhood, some worried the new grocery store will accelerate the kind of transformation — revitalization to some, gentrification to others — that has taken place in many of Houston’s traditionally African American neighborhoods, such as Freedmen’s Town."

The story notes that "H-E-B has worked closely with the Third Ward community, holding neighborhood meetings to discuss the MacGregor store and sponsoring neighborhood events, such as home tours, back-to-school snacks for local schoolteachers and food for area firefighters. At Tuesday’s preview event, which featured local college and high school bands and dancers, H-E-B presented donations to several local nonprofit organizations. The company employs 420 at its MacGregor store."

Published on: December 19, 2019

Now that Kroger has decided to divest its stake in Lucky's Markets, the South Florida Sun Sentinel asks whether "the Boulder, Colo.-based small-format chain can continue its rapid expansion into Florida … At stake are 14 stores planned for 2020 openings in Florida and the 21 stores opened in the state since 2015, including in Coral Springs, Plantation and Oakland Park."

According to the story, "While it shared numerous attributes with upscale foodie chains Whole Foods and Fresh Market, Lucky’s carved a niche by offering mid-priced meat, seafood, juices and prepared foods, plus a wide variety of health products and locally sourced packaged goods. Produce is displayed in farmer’s market-style displays, and samples are doled out generously."'

The Sun Sentinel writes that "losing Kroger could hurt Lucky’s by making the smaller company look less stable to potential creditors, including landlords, according to real estate insiders. If an anchor store like Lucky’s has a deep-pocketed partner like Kroger, a shopping center developer can command a higher purchase price from a real estate investor, while the anchor store can leverage the partnership as collateral to negotiate more favorable rent."

Published on: December 19, 2019

Seeking Alpha reports that Amazon, Apple and Google are working together to "create a new standard that will make it easier for smart home products from different companies to work together."

In other words, Alexa can talk to Siri, which can talk to Google.

The story says that the three companies are partnering with the Zigbee Alliance on Project Connected Home … Once the standard is defined, applicable products will bear a logo letting customers know it's supported by Project Connected Home."

Other companies developing smart home devices - like Samsung and Ikea - already are working with the Alliance. Standards are expected to be drafted by the end of next year.

The Financial Times writes that "the alliance said a shared, open source approach to building smart devices should “accelerate the development” of a smart home protocol — a set of rules governing format — that will “deliver benefits to manufacturers and consumers faster.”

And, the FT story notes that "the market for smart devices is expected to grow 14.4 per cent a year to 1.4bn shipped units in 2023, according to the International Data Corporation. Carolina Milanesi, an analyst at Creative Strategies, said the move would benefit consumers, who will not have to worry about which smart light, thermostat or fridge will be compatible with their voice assistant."

Published on: December 19, 2019

The New York Times has a story about how climate change has not been good for the hatch chile business.

From the Times:

"The peppers depend on hot days and cool nights, growing comfortably between 55 and 95 degrees, to develop the desired taste and heat. Since at least the 1970s, summer daytime temperatures have reached 100 degrees or higher. The excessive heat, a symptom of climate change felt across the Southwest, can blister the chiles’ fragile skin and interrupt the growth cycle … Some farmers who have grown chiles for generations are cutting back acreage to save their limited water for more reliably profitable crops like onions or watermelons. After decades of driving the Hatch Valley brand and agricultural economy, the chile has become less dependable.

"Water and labor costs are fixed, but growers cannot increase their prices by much; farms in Mexico, which sell their chiles in the United States, often pay workers less and can sell their product cheaper. Scientists are trying to find a way to automate the harvest, but for now, chiles have to be picked by hand because they bruise easily."

This is a particularly important issue in New Mexico: "Few other foods embody a state’s identity like the chile, one of New Mexico’s two official state vegetables (alongside pinto beans). Chiles are pictured on license plates, sold flame-roasted by roadsides and served on just about every food you can order."

The Times concedes that "not every farmer sees the unpredictable weather as caused by human actions and industry, but nearly all agree: The past few years have been harder. The weather has been more erratic, with winds, unpredictable frost and wetter growing seasons, which can bring pests.

"Warmer winters drop less snow in the mountains, leading to less runoff to fill reservoirs. Windier spring weather shakes the fragile sprouts, kicking up dust that can cut down new growth."

Published on: December 19, 2019

One of the more entertaining feature stories that I've read lately was in the Boston Globe, and concerned retired baseball star Kevin Youkilis, who when he retired from baseball in 2013 went back to school to get a business degree, and now is the owner-operator of the Loma Brewing Company, in Los Gatos, California.

An excerpt:

"Amidst the gleaming tanks, stylish bar, and hip West Coast menu, there is zero Red Sox memorabilia. No framed Kevin Youkilis uniforms or photos of the Red Sox Hall of Famer jumping into the pig pile while winning two World Series. No cutouts of his crazy batting stance with the bat coiled toward the center-field bleachers and the fingers creeping dangerously toward the barrel. No YOOOUUUCK chants at the bar, either … Now 40, he looks the same as he did when he legged out a triple in his last at-bat for the Red Sox in 2012. But now when he talks about hops, he doesn’t mean bounces."

Just a fun piece, about baseball and youth sports and, of course, beer … all among my favorite subjects. You can read it here.

Published on: December 19, 2019

• Amazon said yesterday that its ecosystem will feature easier returns - until the end of the year.

The e-tailer said that it is "offering customers at least one free return option on millions of items sold on Amazon.com. Free returns are now available for electronics, household items, pet supplies, kitchen appliances and more, in addition to shoes and apparel, no matter the reason for the return.

Libby Johnson McKee, director of Amazon WW Returns and ReCommerce, said in a prepared statement that “with free returns on millions of items, customers don’t need to worry if the keyboard they ordered doesn’t feel quite right or if their dog likes his new bed – they can buy with confidence, knowing they’ll be able to return it for free with just a few easy clicks."

The Verge writes that "before today, Amazon only allowed free returns on clothing, apparel, and bedding. Customers could get full refunds on orders if the item was defective or something was wrong with the delivery. In many other cases, Amazon will deduct the cost of shipping if you use its return label, but it will not cover the cost of packaging materials if you ended up tossing the box. But this new change means Amazon now offers at least one no-questions-asked free return, meaning all costs covered, on a whole slate of new products, ones Amazon knows are quite popular during the holidays."

The returns can be dropped off at any of Amazon's physical locations, Amazon Hubs, Whole Foods, Kohl's stores with Amazon sections, or any UPS location.

Published on: December 19, 2019

• Bloomberg reports on how Walmart "has quietly rolled out 'SWAT teams' -- small groups of remodeling specialists who go from store to store in big markets such as Atlanta and Dallas, near where Barnes’s outlet is located. Working at night, they tackle jobs such as building fixtures to display apparel and moving counters so new floors can be installed … There are 1,000 SWAT team members now, and the squad will rise to 1,700 by the end of next year as it expands to 13 new markets."

The story goes on: "Walmart -- which has about 4,750 locations in the U.S. -- won’t disclose how much a typical remodel costs, or how much it’s saving thanks to the swat teams. But with the retailer opening fewer stores because of the rise of e-commerce, the importance of cutting costs and minimizing customer disruptions is difficult to overstate."

Published on: December 19, 2019

• Reuters reports that JAB Holding, the investment group that owns both Peets Coffee and Jacobs Douwe Egberts, said yesterday that "it would merge the two into a single coffee and tea company which it would seek to list on the stock market in an initial public share offering (IPO).

"JAB Holding said in a statement the newly-formed company JDE Peet’s, which also owns the Pickwick, Senseo, Tassimo and L’OR brands, will have operations in 140 countries and combined annual revenue of 7 billion euros."


• The Washington Post reports this morning that "a new paper in the International Journal of Environmental Research and Public Health this week found that the Coca-Cola Company’s public relations goals included trying to shift teens’ sense of the health impacts of drinking sugary soda … The paper, produced by Australia’s Deakin University and U.S. Right to Know, a nonprofit consumer and public health group, includes another Coca-Cola document, a request for proposal for a campaign called 'Movement Is Happiness.' Its public relations goals included 'to increase Coke brand health scores with teens' and to 'cement credibility in the health and well-being space'."

Critics say that Coke is targeting a "vulnerable population" and that it is being disingenuous in its promotion of exercise, when all it really wants to do is sell more soft drinks.

According to the story, "Kent Landers, vice president of public affairs and communications at the Coca-Cola Company, says these internal documents predate Coke’s 2016 commitment to discontinue funding physical activity programs. He says Coca-Cola has repositioned itself as a 'total beverage company' with products that include water, juice, juice drinks, tea, coffee, sports drinks and energy drinks as well as sodas."

Published on: December 19, 2019

Responding to yesterday's piece about reusable egg cartons, MNB reader Brian Blank wrote:

Interesting piece on Pete and Gerry’s.  Reusable egg cartons are not new to some of us, though refilling them at a supermarket sure is.  Those of us who are fortunate enough to have access to farmers or farmer’s markets have been swapping empty cartons for full ones for years!

But, from another MNB reader:

They’re made from molded plastic. More plastic. While this feels like a step up, and in a way it is, it’s not idea and smacks of more green-washing.

Back in the not so distant past, we routinely took back paper pulp cartons from shoppers to return to our small egg suppliers. Yet, there is risk inherent in eggs for food born illness so cartons would need to be made out of something that could be sterilized. Perhaps a bio-plastic made from corn?

Meanwhile, we’ll continue to sell eggs from local family farms that come to us in recyclable paper pulp. We have only one egg line that doesn’t pack this way. Overall, It’s more sustainable and better for the environment to sell local eggs in paper, but it’s not as flashy.

And, from MNB reader Aaron Gottschalk:

Interesting concept but what I think needs more exposure and more consideration are reusable food containers and while we haven't gone there yet, there are compelling reasons to adopt a reusable food container program such as the one developed by the Good Food Store in Montana.  As a microcosm our retail grocery store with our hot bar and salad bar go through upwards of 600 to go boxes day.  A reusable container program has customers purchasing the food containers and then bringing them back to exchange with a clean and sanitized one upon their next visit.  So customers are basically renting them.  What a great way to save on packaging costs while reducing landfill.   Food service is exploding and that will hopefully drive other creative solutions.



We had a story the other day about how Oklahoma City was considering legislation that would force dollar stores to carry a certain amount of fresh food, as one way of dealing with food deserts. Which prompted MNB reader Marc Jones to write:

Thank you for your coverage of the OKC initiative to limit dollar stores and the challenges we face in giving many of our residents access to fresh food.
 
I’ll admit that I have a dog in the fight as the CEO of a small Oklahoma City based retailer (HAC, Inc aka Homeland Stores) who recently announced a tentative agreement to build a new supermarket and headquarters in this food dessert.  We worked with the councilwoman mentioned in the WSJ article, Nikki Nice, the OKC mayor and a large number of city officials over the course of multiple years before we could reach a deal that worked for everyone and we are still over a year away from opening the store.

But just because it’s complicated doesn’t mean that it’s not worth doing.  I agree with your comment that it’s worth trying different strategies and tactics and lest you think that OKC is only trying one, here’s a few other interesting initiatives in our community:

RestoreOKC – a non-profit group has opened a small food store and garden in the heart of the community.  Product selection is limited (I know because we actually supply them at our cost) but their plans are to grow the selection and ultimately to grow many thousands pounds of vegetables, fruit and even seafood (it’s quite a community garden/greenhouse system they have built in partnership with local businesses and universities) with a long term strategy not just to feed their neighbors but to also educate them and provide activities and learning for the community’s youths.

Free transportation – OKC has offered free bus service to nearby grocers (Walmart) though ridership has been low and it isn’t an ideal solution to force people to leave their community to buy food, even if you make it logistically easier.

Free Delivery – your point on using e-commerce is a good one…we are offering free delivery to the zip code affected until our store opens.  Of course challenges include access to computers, internet and/or credit cards.

Again I’m not a disinterested bystander in this, in fact I try to cheer on (and participate!) in the initiatives whenever I can.  Our city is growing but that growth is not evenly dispersed.  As businesspeople and as neighbors we owe it to each other to figure out how to help all our residents.  And while there are many many non-financial reasons to do good and feed our community, I also believe that with enough creativity these types of initiatives to bring better food choices into our urban food deserts can be profitable and self-sustaining.
 
Anyways, thought you’d find the additional detail interesting and btw thank you for your tireless daily efforts to deliver us industry news with an attitude, it is enjoyed an appreciated!

Thank you for providing this context. Food deserts continue to be an enormous problem in a lot of communities, and I'm always interested in how solutions are being crafted.

Published on: December 19, 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.