business news in context, analysis with attitude

Published on: January 21, 2020

Digital strategies aren't just about creating alternatives to the bricks-and-mortar shopping experience. Done effectively, they can actually bring people back to the store, while also eliminating customer anonymity, creating rich and actionable data, and deepen relationships between the store and consumer in a way that transcends the simple transaction.

Our newest Retail Tomorrow podcast, which brings together a terrific panel of experts from a wide range of disciplines, was recorded at Google’s New York City offices during the recent National Retail Federation (NRF) Show. Our guests:

• Matt Alexander, co-founder of Neighborhood Goods, an unusual and fascinating take on physical retailing with stores in Dallas and New York.

• Patrick Flanagan, senior vice president of digital marketing and strategy for Simon, which has more than 200 properties in 37 states and Puerto Rico.

• Tom Furphy, CEO and Managing Director of Consumer Equity Partners, a member of the Retail Tomorrow podcast family and a regular contributor to "The Innovation Conversation" on MNB.

• And Jalna Silverstein, a leader in Ernst & Young’s Transaction Advisory Practice and its Real Estate, Consumer Experience and Retail Strategy.

You can listen to the podcast here.

This Retail Tomorrow podcast is sponsored by the Global Market Development Center (GMDC).

Pictured below are our panel members, from left: The Content Guy, Matt Alexander, Tom Furphy, Patrick Flanagan, Jalna Silverstein.

Enjoy!

Published on: January 21, 2020

by Michael Sansolo

Pains me as it does, I constantly get reminders that I’m getting old. My cultural references simply don’t resonate with a growing percentage of the population.

Seriously, it pains me.

The other day my wife and I were dazzled at our supermarket watching our young cashier sack our reusable grocery bags with speed and accuracy. She did this even while constantly assuring me that the bags would be even in weight so that I wouldn’t get stuck carrying one monster bag. (Yes, I whine.)

And she did it flawlessly.

I explained to her that there is an annual bagging competition held at the National Grocers Association (NGA) convention, something she had never heard of. My wife assured her this was true and I added that past winners had gotten to meet and have a competition with David Letterman.

At that point, the conversation died. My wife quickly pointed out that clearly the young cashier had no idea to whom I was referring and I was only mildly helped by a neighboring cashier who yelled out, “The Late Show!” Turns out my cashier was also blissfully unaware of Stephen Colbert (who replaced Letterman in 2015).

I'm just glad I hadn't referenced Jack Paar or Steve Allen. I was grateful to have managed a small connection with a young person.

Here’s the thing. Every year there’s some college that puts out a list of things that the entering freshman class has never encountered or heard of. I always giggle at the list including things like dials or cords on phones, the Soviet Union or Johnny Carson.

But it’s also a stark reminder that the world I know isn’t the world everyone knows. The Content Guy and I had a recent conversation speculating whether either of us would know Billie Eilish or Lizzo if either of them punched one of us in the nose. We agreed that we wouldn’t. (Though Kevin noted that he'll probably end up with at least one Billie Eilish song on his laptop - she's been hired to do the theme for the new James Bond movie, No Time To Die, which comes out in early April. I'm pretty sure that this does not qualify Kevin as being anything close to current.)

None of this matters, of course, unless matters, unless you happen to be managing or are part of a team for which any of these names are mysteries. Which is entirely possible, because not many people will get all these cultural references, which means that you could say something to someone that will fall as flat as what I said at checkout lane 7.

The truth is none of us can know it all because we are who we are. That may be cause for interesting discussions here at MNB, but it is significantly more important if you need motivate people of different generations, ethnicities, background or whatever and especially if your customers are different than you, which they are.

We talk a lot here about epistemic closure and the growing inability to recognize why someone else’s opinion or worldview seems so alien and wrong to us. Obviously, we see this is politics constantly. But in business, it’s a failing we cannot ignore. We need to constantly challenge ourselves to understand the new and different because that’s where business opportunity lies or where gigantic mistakes can be avoided.

And it might save me from getting punched by Lizzo and not knowing how cool that is.


Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . 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.

Published on: January 21, 2020

by Kevin Coupe

Talk about the impact of disruptors.

Variety reports that "U.S. movie admissions slid 4.6% last year to 1.24 billion, the second lowest admissions number during the current century … North American box office for the year declined 4.1% to $11.4 billion."

This despite the fact that Avengers: Endgame, which was an enormous hit, making $858 million  domestically, came lout last year. And Star Wars: The Rise of Skywalker also came out at the end of the year. And there were some other major hits: the live-action remake of The Lion King, plus Toy Story 4, Frozen 2, and Captain Marvel.

(It is worth pointing out that Disney made all of these films, which were the year's top grossing films.)

At least part of the reason, it seems to me, has to be the availability of streaming services like Amazon, Apple, Disney+, etc…, which to varying degrees are spending hundreds of millions of dollars to be able to offer at least as much entertaining product as movie theaters, but you get to get food and drink from your own kitchen, and use your own bathroom … and can stop the show if necessary and return to it whenever you like.

And this doesn't even count all the other options fighting for your entertainment dollars.

Go figure. It turns out that movie theatre companies can do anything but Netflix and chill.

Published on: January 21, 2020

Bloomberg reports that at the Digital Life Design conference in Munich, an Amazon executive took Facebook to task for what he deemed to be inadequate privacy protections for users.

“If you don’t pay for the product, you are the product,” Werner Vogels, Amazon’s chief technology officer, said to Nick Clegg, Facebook’s vice president for global affairs and communications.

Vogels, the story says, asked "how Facebook could claim to protect users if many weren’t aware of how their data is being used."

Clegg conceded that Facebook could do more in terms of transparency, but argued, "Unlike you, I believe an advertising business model where the user doesn’t have to pay is a very ingenious and good thing."

Bloomberg notes that both companies have been criticized on privacy grounds. Amazon has been scrutinized for ways in which its Alexa-driven systems allow Amazon employees to collect and listen to conversations between users. And Facebook "has come under fire for giving third-parties access to user data, particularly in the wake of the Cambridge Analytica scandal. Last year, it agreed to pay a record $5 billion fine to the Federal Trade Commission to settle an investigation stemming from that controversy, where an outside researcher collected personal data on tens of millions of Facebook users without their consent, and then sold that data to a consultancy working with Donald Trump’s presidential campaign."

Published on: January 21, 2020

The Wall Street Journal reports that China "will introduce new measures to aggressively cut back on its use of plastic, its first such move in more than a decade as booming e-commerce and food deliveries dramatically increase the country’s production of plastic waste."

By the end of the year, the story says, "nonbiodegradable plastic bags will be largely banned from major cities, and single-use straws will be prohibited in restaurants across the country, Beijing’s top economic-planning office and its Environment Ministry said on Sunday. The ban will extend to all cities and towns by 2022 and to markets selling fresh produce by 2025.

"The agencies are also targeting plastic utensils and packaging used for takeout and parcel deliveries, a major source of growth in recent years in the country’s plastic waste. Restaurants must reduce single-use plastic items by 30% by 2025. The agencies didn’t specify punishment and enforcement but said business owners who violate the rules would be named and shamed."

The New York Times writes: "The plan is likely to be welcomed by many Chinese, who have become increasingly worried about polluted air, water, soil and natural surroundings. But it could be a hard sell for a society used to the convenience of online retailers and couriers who deliver hot meals and packages swaddled in plastic.

"Although people in China generally generate less plastic waste per capita than Americans, almost three-quarters of China’s plastic waste ends up in poorly managed landfills or out in the open."

It is said to be China's most definitive moves in the sustainability regulatory space since 2008.

Published on: January 21, 2020

From the Washington Post:

"Burger King touched off the plant-based-meat revolution in the restaurant world when it launched its Impossible Whopper in August. It was followed by Dunkin’ with its Beyond Sausage breakfast sandwich and White Castle with Impossible Sliders. Subway introduced meatless meatballs, Little Caesars started delivering Impossible Sausage pizzas, KFC added Beyond Fried Chicken, and Hooters announced Unreal Wings. Taco Bell, Qdoba, Panera — the list of fast-food and quick-serve restaurants rolling out plant-based options was encyclopedic.

"With one notable holdout, right in the middle of the alphabet … McDonald’s, the world’s biggest food-service retailer, sat mostly on the sidelines."

To be sure, McDonald's has done some small tests, but nothing on the scale of its competitors. There are three apparent reasons.

First, there are supply issues - McDonald's has some 38,000 restaurants, and assuring a consistent supply of plant-based burgers has been problematic.

Second, it generally has been conservative about introducing premium-priced sandwiches, and plant-based burgers would be a high-end product in its mix, not to mention a little more innovative than it is used to being.

And third, McDonald's seems to feel that chicken is the future, not plant-based meats, and so that's where it is putting its time, money and attention.

Published on: January 21, 2020

The New York Times reports that Uber has sold off its food delivery business in India, saying that it was a matter of gettin rid of money-losing businesses, responding to investors who want to see a profit out of the company.

The buyer is Zomato, a local startup and competitor in the food delivery space, which in turn is giving Uber a just under 10 percent stake in the company.

According to the story, "All delivery drivers for the service, known as Uber Eats, and basic information about customers, including their phone numbers and order history, will be transferred to Zomato, the companies said. In addition, Uber’s app will send Indian users to Zomato for six months when they click on the 'Get Food Delivery' button."

Not that it may matter much. The Times writes that "Uber Eats never managed to attract many restaurants or customers in India, despite the company’s ride-hailing business. There was little synergy between the two businesses, since food delivery in India is done by motorcycle couriers, while rides are provided mostly by cars."

Published on: January 21, 2020

• The Chattanooga Times Free Press reports that Krystal, the nation's second oldest fast food chain, has filed for bankruptcy protection, saying that it has debts of between $50 million and $100 million.

The chain has more than 300 restaurants in the southeast US. The story notes that Krystal's filing "came just two months after the company announced a new executive team and hired an investment firm to try to franchise 100 to 150 of the Krystal units to other owners … The restaurant chain will continue to operate its fast-food restaurants, including more than two dozen in the Chattanooga market, while it restructures its debt and pays off creditors in the bankruptcy proceedings."

The story notes that "Monday's bankruptcy filing comes 23 years after Krystal filed for bankruptcy in 1997 due to millions of dollars of employee claims for unpaid overtime. Krystal was acquired from bankruptcy at that time by Port Royal Holdings in a $145 million deal. The company was later sold and relocated its headquarters from Chattanooga to Atlanta in 2013 when it was purchased by the private equity firm Argonne Capital."

Published on: January 21, 2020

MNB reader Julie Lyle wrote yesterday, following up on the passing of former Walmart CEO David Glass:

You are right.  David Glass was very low ego and a very compassionate man.  He was certainly "no-nonsense" and performance focused, but he was a gentleman and he had a wicked sense of humor.

I learned a ton from him in the years I worked at WMT, often directly reporting to him on key initiatives like our photo labs and the Walmart TV/Radio business.  He was opinionated - but he gave me the chance to turn that business around...even though he did NOT believe in the business model.  Without his willingness to to "give me enough rope"  that property would not be the successful profit center it is today...and it would not have paved the way for many of the "media platform" initiatives that WMT has explored and deployed off of that learning experience.

He was also a phenomenal impersonator and I know he will be greatly missed.



On another subject, got the following email from MNB reader Roy St.Clair:

A few years ago, the city of Portland (Maine) instituted a per bag charge in grocery stores for plastic and paper bags.

Hannaford gave away re-usable bags for a short time and I got into the habit of using them for each shopping trip. Now I almost never have to “buy” a bag when doing my grocery shopping.

If I forget or find myself making an unexpected shopping trip, I might have to buy a new re-usable bag. They only cost about a buck, and they get used for more than grocery shopping.

About six months ago, I got into the habit of bringing my own ‘Thermos’ beverage container to fill at the various places that I stop into on the way into the office or when traveling. Many of these coffee shops, convenience stores, and small markets even give you a little break for having a refillable mug…charging just the price of a small coffee, for example, no matter the size container.

The point is, little changes in habits can be easily incorporated into our daily routine.

Imagine the difference we could make if everyone used their own bags and brought their own cups. The plastic and Styrofoam saved from going into landfills or oceans would be considerable.

It may not reverse global climate change, but every little bit helps, don’t you think?
 
 

Yesterday we took note of a Wall Street Journal report that Best Buy CEO Corie Barry is being investigated by the board of directors following charges that she "had an inappropriate romantic relationship with a fellow executive, who has since left the electronics retailer." The charges were made via an anonymous letter saying that "Ms. Barry had a romantic relationship for years with former Best Buy Senior Vice President Karl Sanft before she took over as CEO last June … Mr. Sanft, former senior vice president of retail operations, had no comment for this article. He left Best Buy in early 2019 and is now the chief operating officer of 24 Hour Fitness Worldwide Inc."

Barry also did not comment about the charges, except to say she was cooperating with the investigation.

I commented:

There clearly are a ton of cases out there of business executives and other people who have used their power positions to abuse and sexually harass people who work and/or report to them. And that's wrong. No excuses.

But I do find myself wondering if the lines always are being drawn in the right places. Aren't there situations in which two people in an organization can have a romantic relationship? It increasingly seems like the answer to that question is no, but so many people spend so much time at work … isn't the workplace one of the places where a person would be most likely to meet someone who shares interests, concerns and habits?

Maybe it just isn't possible anymore. But isn't there room for any nuance? (To be clear, I am not prejudging the Best Buy situation - there hasn't been enough information released to know one way or the other. I'm just musing.)

One MNB reader responded:

From one of your faithful readers, not self employed, which means I sit through each annual sexual harassment class, I can tell you that the problem with workplace romance is the perception that someone is missing out on choice projects, advancement, raises, etc. because they’re not having an intimate relationship with the boss.  Just sayin…
 
From another reader:

Per Bloomberg, in a 2019 study at the University of Texas and Emory University, CEOs who cheat on their spouses are twice as likely to cheat at work.

And I'm sure given the previous scandal in 2012 at Best Buy, Ms. Barry must have signed a legal agreement which she knowingly violated.

That's not who I'd want running my company.

I worked for a major company where there were long-term relationships between married senior managers and younger women employees.  These 'affairs' compromised business decisions and definitely affected who was hired and promoted.

Now, I responded to this email saying that I had not seen anything about either of the executives being married; it was then pointed to me that stories about Barry when she got the Best Buy CEO job noted that she was married with children.

To be clear, I am not defending anyone. I have no idea what her personal situation is, nor what agreements she may have signed as part of her contract.

By the way, I once had a job in which I was the immediate superior of a woman who was married to the CEO. So I have some familiarity with how awkward those situations can be.

I just am wondering - out loud, which is sort of what I do - if there is any room for nuance here, if every situation should not be judged as if they all are the same.

Published on: January 21, 2020

Assuming that everything is on time, as you read this I'm under anesthesia, getting my regularly scheduled colonoscopy.

I just hope MNB makes sense this morning, since I've been working on it while simultaneously going through colonoscopy prep. It is hard to get any writing momentum going when there is all sorts of other momentum taking place. If you get my meaning.

And now, a public service announcement: This is not something to be afraid of, or to delay or avoid. It's really important, when you reach a certain age or your specific health issues call for it, to make an appointment and get one. I've been getting them every few years since 2004, and while I won't go so far as to say I look forward to them, I do think they are a critical part of my ongoing efforts to stay healthy.

I'll see you tomorrow.

Published on: January 21, 2020

by Kevin Coupe

On Saturday morning, Frieda Rapoport Caplan passed away. She was 96, and leaves behind not just a family company that continues to push the boundaries in terms of new and unfamiliar produce items imported into the US, but also a life in which she pushed boundaries in terms of what was appropriate and acceptable.

I feel the loss enormously. Frieda was my friend.

In 1962, Frieda launched Frieda's Produce Specialties in Los Angeles. It was the first wholesale produce company owned and operated by a woman.

The Los Angeles Times, in its obit, describes her as "the woman who broke the glass ceiling in the testosterone-doused produce world and forever changed the way Americans eat fruits and vegetables … a tenacious maven credited for introducing kiwis, mangoes, habanero and shishito peppers, passion fruit, bean and alfalfa sprouts, baby carrots, sugar snap peas, starfruit, blood oranges, shiitake mushrooms, turmeric, and hundreds more fruits and vegetables into the supermarket mainstream. Into the bellies of American consumers."

Frieda, the Times writes, "was loquacious, driven and loved to take risks … In heels and a skirt, she revolutionized the way the produce world did business, adding recipes and cooking instructions on packages of exotic produce to tame the distrust of an unsuspecting public."

CBS Sunday Morning produced a piece about Frieda that was supposed to run last fall, but was held until they had more time to devote to the piece; now an appreciation of a wonderful life, the piece ran yesterday, and you can watch it here.

I'm not exactly sure how we became friends. I think we saw each other at the occasional industry event, and suddenly I was getting emails from this wonderfully opinionated woman in her late eighties and early nineties, relentlessly curious, making suggestions about things to read, people to get to know, offering critiques about this story or that commentary, and even telling me when she didn't like the picture I was using, and expressing approval when I changed it.

I last saw Frieda on November 16. I knew she'd been laid up by a broken leg and subsequent complications, and so I stopped by her house in Southern California to say hi. It wasn't just a quick visit with an ailing friend. She asked me questions about MNB stories she'd read, told me about books she'd been reading, and was thoroughly engaging - I think I was there for a couple of hours.

When I heard that Frieda has passed away, it hit me like a freight train … I know she was 96, but I fully expected that she’d be around for many more years. She had such a wonderfully indomitable spirit, infectious enthusiasm for life, and mischievous sense of humor - she was the kind of old person that I would like to be, which is to say not really old at all. Sometimes the parts wear out, but the heart and soul continue on. In Freida’s case, they will be sustained by the business she created and that her family - Karen and Jackie and Alex - shepherd and grow. But they also will find life in those of us lucky enough to know her.

She opened our eyes to what is possible. I'll always treasure her friendship.

Published on: January 21, 2020

David Glass, who replaced founder Sam Walton as CEO of Walmart in 1988 and shepherded the company through a time of growth and expansion into the grocery business, has passed away. He was 84, and had been suffering from pneumonia.

The Wall Street Journal writes that "during his 12 years as CEO, annual sales soared to $165 billion from $16 billion as Walmart built supercenters, combining groceries with general merchandise, and expanded international operations and the Sam’s Club chain.

"When Mr. Glass became CEO, Walmart was the third-largest U.S. retailer after Sears, Roebuck & Co. and Kmart Corp. Within a few years it surged past both."

Glass joined Walmart as CFO in 1976, personally recruited by Walton. After succeeding him, Glass "stayed out of the spotlight and for years worked at a desk said to have been bought for $75 at a garage sale. When he had visitors at the office, he was known for fetching their coffee down the hall at a vending machine rather than asking an underling to serve beverages."

After retirement, Glass satisfied a longtime passion for baseball by buying the Kansas City Royals for $96 million in 2000. In 2015, the Royals won the World Series. Glass sold the team last year for $1 billion.

Published on: January 21, 2020

The Wall Street Journal reports that Best Buy CEO Corie Barry is being investigated by the board of directors following charges that she "had an inappropriate romantic relationship with a fellow executive, who has since left the electronics retailer."

According to the story, the charges were made via an anonymous letter saying that "Ms. Barry had a romantic relationship for years with former Best Buy Senior Vice President Karl Sanft before she took over as CEO last June … Mr. Sanft, former senior vice president of retail operations, had no comment for this article. He left Best Buy in early 2019 and is now the chief operating officer of 24 Hour Fitness Worldwide Inc."

Barry also did not comment about the charges, except to say she was cooperating with the investigation. The Journal notes that "she succeeded Hubert Joly, who led a turnaround at the retailer and still serves as its executive chairman. Mr. Joly’s predecessor as CEO resigned abruptly in April 2012 after the board opened an investigation into his personal conduct. The company was exploring whether he misused company assets in the course of an alleged relationship with a female subordinate."