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    Published on: January 30, 2020

    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, click here.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    I was fascinated by a story in USA Today the other day that talked about how some CEOs - despite the fact that there seems to be less concern about a 2020 recession than there was just a few months ago - are already getting ready.

    Some examples…

    •  "Choice Hotels plans to announce Monday that it’s launching a new mid-priced extended-stay hotel chain called Everhome Suites that it says can perform well even if the economy slows or heads south – a big drawing card for franchisees."  The average room rate will be $85 a night, and the entry is seen as having real potential in a business where close to "20% of hotel stays are at least seven nights but just 9% of all rooms are in extended-stay properties."

    •  "OC Facial Care Center of Orange County, California, recently began offering a 30-minute version of its most popular 60-minute facial. The streamlined service cuts the price to $99 from $130 for members and to $150 from $350 for nonmembers."

    •  "Experi, a tour operator in Bainbridge Island, Washington, typically raises prices 5% to 10% a year … But the firm, which is now selling tours for 2021, is holding prices steady or reducing them in some cases."  The reason?  The company got killed in the last recession, and management - understanding that this particular boom has lasted 10 years - doesn't want to get caught again with its metaphorical pants down.

    There are other companies cited in the story, from realtors to wifi providers, all of whom are working to be prepared.

    I think this is smart, and not just because we talk a lot here on MNB about getting ready for the inevitable downturn that is coming.

    I'm not trying to be Chicken Little here.  Just realistic about how recessions are cyclical, and the current up cycle has been going on for some time.  Add to that the enormous amount of student debt that has been racked up by younger consumers, and how this is affecting their ability to spend, and you have the potential of a real economic perfect storm just over the horizon.

    One of the things that the companies mentioned in the piece seem to have in common is an understanding that even if the economy starts to wilt, their customers are going to continue to have aspirations.  They're still going to want to travel or get facials or whatever.  Consumers may have less money in a down economy, but they'll still have expectations, and the retailers that will be rewarded may well be the ones that have an aspirational approach to marketing their products and services.

    I think this could be especially powerful for food retailers, who, if they're smart, will figure out ways to curate great food and great wine in a way that caters to reduced disposable income while still catering to great expectations and aspirations.

    That's what is on my mind this morning.  As always, I want to hear what is on your mind.

    Published on: January 30, 2020

    by Kevin Coupe

    The New York Times reports that Atari - the video game pioneer that came up with Pong and Asteroids - is getting into the hotel business.

    The story says that Atari soon will "begin construction on its first-ever video-game themed hotel," promising "a lodging experience that combines a one-of-a-kind video-game themed destination with immersive virtual and augmented reality experiences."

    There will, apparently, be more than one of them.  The first will be in Phoenix, with additional properties planned for Las Vegas, Denver, Chicago, Austin, Seattle San Francisco, and San Jose.

    The company says that the plan is "to create an 'ecosystem' in which players could 'eat, sleep and play,' though the size of the hotels would vary depending on the market and region."  Some rooms with be futuristic and some will be retro;  "some locations will have state-of-the-art venues and studios to accommodate e-sports events."

    Three comments:

    First, I have to be honest - a video game-themed hotel sounds pretty much like hell to me.

    Second, I'm surprised that Atari is still around, much less expanding into new areas.  (If you'd asked me, I would have bet that Atari went out of business years ago.  Who knew?)

    Third … I'm guessing that this may end up being very successful.  (In part because I find it so foreign to my existence.)  The video game and e-sports world is large and, best I can tell, getting larger … and so it makes sense for Atari to find new ways to cater to its customers, new ways to build enthusiasm for its ecosystem.

    It is an interesting approach … identify your sweet spot - that place where your brand equity has the greatest currency with customers - and figure out ways it can be expanded into new and potentially lucrative categories.

    It'll end up being an Eye-Opener.  But as Dorothy Parker once said, "What fresh hell can this be?"

    Published on: January 30, 2020

    Bloomberg has a story about FedEx founder/CEO Fred Smith, who reinvented the parcel delivery business but now is "getting disrupted himself by e-commerce and the rise of online shopping. He’s taking a pounding from Wall Street for FedEx’s disappointing performance, while analysts praise archrival United Parcel Service Inc. for reversing a decline in profit margins."

    And now, he is deliberately steering his company away from the e-commerce  lanes that Amazon has dominated, "drawing the battle lines, positioning FedEx as a kind of anti-Amazon ally for big-box retailers and pledging that his strategy will soon enable FedEx to overtake UPS."

    It hasn't been a great couple of years:  "FedEx’s international business has been plagued by setbacks, including a 2017 cyber attack and a costly air-fleet expansion that was undercut by Donald Trump’s trade wars. Back home, a falling out with Amazon.com Inc. drained $900 million off the courier’s top line."

    It is hard to say which company Smith sees as FedEx's primary enemy:  "The two biggest parcel delivery companies in North America are forging dramatically different paths as they adjust their business models to the tsunami of e-commerce. Their success will help decide the market war between Amazon and Walmart Inc., and perhaps the future course of the entire retail industry.

    "While UPS is deepening its ties to Amazon, FedEx has broken away, instead working to strengthen its relationship with brick-and-mortar retailers to help them win at e-commerce. While UPS wants to stay neutral with customers, Smith is banking on an us-against-Amazon mentality."

    Part of what FedEx is doing is taking more control over its business processes:  "UPS is relying more on the U.S. Postal Service, especially for Sunday deliveries, while FedEx is taking back about 2 million packages a day that it had been handing off to the government agency for final delivery. With the increased volume, FedEx can better leverage its more than 600 sorting and delivery facilities around the U.S. to help retailers with shipments from stores to residences."

    You can read the entire Bloomberg story here.

    KC's View:
      I may be wrong about this, but is it presumptuous for FedEx to assume that Walmart or other big retailers won't put the same kind of pressures on it long-term that it received from Amazon?

    I do think that on the face of it, FedEx seems smart for taking a path less traveled … it can be problematic, and certainly not differentiating, when everybody does the same thing.  And in general, I like when companies take ownership of their key functions, as opposed to outsourcing it.

    I also think that there definitely is a role for companies that can serve an organizing role for small retailers that may be short of investment capital but want to find ways to compete with Amazon and its brethren.  FedEx, to borrow a phrase often employed here on MNB, will have to offer a lot more resources to its customers, as opposed to just offering its usual menu of products.

    Published on: January 30, 2020

    Great piece from Bloomberg, filed from the Patagonia region of South America, where, on the Los Condores ranch - a place described as vast, treeless, with vistas of the snow-capped Andes' and "star-studded, bone-chilling nights" - there is an experiment taking place.

    They've planted grape vines.  "One row is all chardonnay, the next riesling and the next pinot noir — 150 vines in all."

    There's no reason to think that they can grow wine in such an inhospitable place.  But the owners are making a bet, albeit a "bold" and "ominous" one - that the "wicked effects of global warming" will eventually mean that "a world-class vineyard can flourish here."

    And in this case, "eventually" means perhaps as long as 50 years.

    In a world where short-term plans and profits often seem to be all that matter, this is a piece really worth reading, if only for a sense of perspective.  You can read it here.

    Published on: January 30, 2020

    The Harvard Business Review has a story about how, after a time when independent bookshops seemed like an endangered species - first because of the emergence of big box competitors such as Barnes & Noble, and then because of the runaway success of Amazon - something "miraculous" has happened.

    Starting in 2009, HBR writes, "after falling for decades, the number of independent bookstores started to rise, climbing 49 percent in the next decade to nearly 2,500 stores nationwide."

    Ryan Raffaelli, a professor in the Organizational Behavior Unit at Harvard Business School, tells HBR that there are lessons in the resurgence for other retail sectors under threat.  It all comes down to three factors, he says:  Community, Curation, and Convening.

    Some specifics:

    •  "Community: As longtime community stalwarts, bookstores have been at the vanguard of the 'buy local' movement, pioneering events such as Small-Business Saturday, and making their customers feel virtuous about spending money in their own neighborhoods … The notion goes beyond a bond with customers to include other important community actors, such as schools, chambers of commerce, and civic organizations, reinforcing the social fabric and engendering a strong sense of customer and community loyalty."

    •  "Curation: Despite the increasing sophistication of online algorithms, online platforms have been unable to replicate the knowledge and passion of indie bookstore employees, says Raffaelli … By contrast, he says, Amazon’s reputation as 'the everything store' can sometimes work against it, overwhelming consumers with too many options and an impersonal experience."

    •  "Convening: Indie bookstores are increasingly serving as points for convening, expanding beyond author events to host book groups, children’s story hours, birthday parties, music events, knitting circles, culinary demonstrations, and other events … bookstore owners are increasingly seeing their competition not as Barnes & Noble, but as Netflix and other entertainment apps that tie people to their couches."

    KC's View:
      The independent bookshops that I like most, that I think are most effective, are the ones that are most targeted.  Like mystery bookshops, for example, which would be my favorite.  I love going through the Mysterious Bookshop in New York City, or The Poison Pen in Scottsdale.  I'm less enamored of small independents that have a little bit of a lot, but not a ton of focus.  (That may just be me.  And it certainly doesn't apply to my favorite independent,  Powell's in Portland, Oregon, which is enormous and delightful.)

    But the sense of focus and curation is, to me, the most applicable lesson for other kinds of retail.  It takes stores beyond the simple role of being a source of product, and into the more nuanced role of being as resource for the shopper.  Which is the best place to be, I think.

    Published on: January 30, 2020

    •  MoviePass, which tried to reinvent the economics of going to the movies - allowing moviegoers to see multiple movies in a month for s flat fee - is no longer.

    The company filed for Chapter 7 bankruptcy protection, which will dissolve the entity and use the assets to pay off creditors.  Helios and Matheson Analytics, which owns the business, "listed its total assets at $396.5 million and total debts $276.8 million in its bankruptcy filing," according to Variety.

    The story says that "ultimately, MoviePass’ cash-burning business model proved unsustainable … Originally MoviePass launched with a one-movie-per-day plan for $30-$40 per month then cut that to the too-good-to-be-true $9.95 monthly for a daily movie. Then in August 2018, MoviePass switched that to just three movies each month for $9.95, prompting a wave of cancellations. Last year, it rolled out a refashioned 'unlimited' option, for $14.95 per month, to again allow customers to see one movie daily but warning that movie choices would be restricted based on system-wide capacity'."

    Published on: January 30, 2020

    •  The Coloradan reports that "Lucky's Market founders Bo and Trish Sharon plan to buy back seven specialty grocer stores, including the Fort Collins and north Boulder locations that remain open following the corporation's Chapter 11 bankruptcy filing Monday … The company announced last week it would close many of its stores. On Monday, it voluntarily filed for Chapter 11 bankruptcy protection and agreed to sell six Florida stores to Aldi and five Florida stores to Publix Super Markets."  The Sharon, Aldi and Publix transactions support nearly 2,000 jobs. 

    According to Scott Moses of PJ Solomon, which is acting as M&A investment banking advisor to Lucky’s on the transactions, the Sharon bid is a stalking horse in the Lucky’s Chapter 11 process.  There are active discussions taking place with other potential buyers.

    •  The Washington Post reports that Nordstrom is getting into the business of selling used clothes.

    According to the story, "Nordstrom will begin selling secondhand apparel online and in its New York flagship store this week, the latest attempt by the 119-year-old company to appeal to changing consumer tastes and capitalize on one of the few bright spots in retail. It joins Macy’s, J.C. Penney and Madewell, among others, in carving out a place for used clothing, shoes and handbags alongside new ones.

    "Resale sites such as ThredUp, Poshmark and the RealReal have become destinations as eco-friendly alternatives to fast fashion. As resale becomes mainstream - the market is expected to triple in three years - department stores are a natural next step."

    •  Add McDonald's, Ikea, Pizza Hut and Ikea to the list of retailers temporarily closing down stores in China because of the coronavirus outbreak.

    USA Today reports that "McDonalds's has closed all of its restaurants in Hubei Province, home to the city of Wuhan, the epicenter of the outbreak. While that represents hundreds of locations, roughly 3,000 McDonald's restaurants throughout China remain open."

    And CNN reports that Ikea is "shutting down" all of its 30 stores across China, saying hat it will "pay close attention to the epidemic situation."  Ikea's e-commerce operation will remain online.

    The CNN story notes that "in China,  Ikea is a popular place for shoppers to nap and hang out for long periods of time on the many bed, sofa and furniture displays. Such shopping habits would be counterproductive to containing the coronavirus, as experts and officials advise people to avoid crowded areas."

    From the New York Times this morning:

    "The World Health Organization is meeting again on Thursday to decide whether to declare the coronavirus epidemic an international public health emergency, as China said that another 38 people had died from the virus.

    "The global health agency met twice last week but was split about whether to declare an emergency, saying it did not have enough information to decide. Such rulings can rally a global response, but also put countries at the center of any outbreak under even greater scrutiny.

    "China said Thursday that the total number of deaths from the coronavirus had risen to 170, with cases now confirmed in every province and region in the country. More than 7,700 people have been sickened in mainland China, while 68 cases have been reported around the world."

    Published on: January 30, 2020

    Michael Wright, a University of Minnesota football star turned lawyer who became CEO of wholesaler Supervalu in 1981, has passed away.  He was 81, and died of complications from pneumonia.

    The <i>Star Tribune</i> writes that Wright was CEO of Supervalu "until 2000 and oversaw an acquisition spree that built Supervalu to $20 billion in annual revenue. It was the nation’s largest food distributor at that time and the tenth-largest retail grocer, with Cub Foods as its flagship."

    Published on: January 30, 2020

    …will return.

    Published on: January 30, 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.


    Published on: January 30, 2020


    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, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    I was fascinated by a story in USA Today the other day that talked about how some CEOs - despite the fact that there seems to be less concern about a 2020 recession than there was just a few months ago - are already getting ready.

    Some examples…

    • "Choice Hotels plans to announce Monday that it’s launching a new mid-priced extended-stay hotel chain called Everhome Suites that it says can perform well even if the economy slows or heads south – a big drawing card for franchisees." The average room rate will be $85 a night, and the entry is seen as having real potential in a business where close to "20% of hotel stays are at least seven nights but just 9% of all rooms are in extended-stay properties."

    • "OC Facial Care Center of Orange County, California, recently began offering a 30-minute version of its most popular 60-minute facial. The streamlined service cuts the price to $99 from $130 for members and to $150 from $350 for nonmembers."

    • "Experi, a tour operator in Bainbridge Island, Washington, typically raises prices 5% to 10% a year … But the firm, which is now selling tours for 2021, is holding prices steady or reducing them in some cases." The reason? The company got killed in the last recession, and management - understanding that this particular boom has lasted 10 years - doesn't want to get caught again with its metaphorical pants down.

    There are other companies cited in the story, from realtors to wifi providers, all of whom are working to be prepared.

    I think this is smart, and not just because we talk a lot here on MNB about getting ready for the inevitable downturn that is coming.

    I'm not trying to be Chicken Little here. Just realistic about how recessions are cyclical, and the current up cycle has been going on for some time. Add to that the enormous amount of student debt that has been racked up by younger consumers, and how this is affecting their ability to spend, and you have the potential of a real economic perfect storm just over the horizon.

    One of the things that the companies mentioned in the piece seem to have in common is an understanding that even if the economy starts to wilt, their customers are going to continue to have aspirations. They're still going to want to travel or get facials or whatever. Consumers may have less money in a down economy, but they'll still have expectations, and the retailers that will be rewarded may well be the ones that have an aspirational approach to marketing their products and services.

    I think this could be especially powerful for food retailers, who, if they're smart, will figure out ways to curate great food and great wine in a way that caters to reduced disposable income while still catering to great expectations and aspirations.

    That's what is on my mind this morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: January 30, 2020

    by Kevin Coupe

    The New York Times reports that Atari - the video game pioneer that came up with Pong and Asteroids - is getting into the hotel business.

    The story says that Atari soon will "begin construction on its first-ever video-game themed hotel," promising "a lodging experience that combines a one-of-a-kind video-game themed destination with immersive virtual and augmented reality experiences."

    There will, apparently, be more than one of them. The first will be in Phoenix, with additional properties planned for Las Vegas, Denver, Chicago, Austin, Seattle San Francisco, and San Jose.

    The company says that the plan is "to create an 'ecosystem' in which players could 'eat, sleep and play,' though the size of the hotels would vary depending on the market and region." Some rooms with be futuristic and some will be retro; "some locations will have state-of-the-art venues and studios to accommodate e-sports events."

    Three comments:

    First, I have to be honest - a video game-themed hotel sounds pretty much like hell to me.

    Second, I'm surprised that Atari is still around, much less expanding into new areas. (If you'd asked me, I would have bet that Atari went out of business years ago. Who knew?)

    Third … I'm guessing that this may end up being very successful. (In part because I find it so foreign to my existence.) The video game and e-sports world is large and, best I can tell, getting larger … and so it makes sense for Atari to find new ways to cater to its customers, new ways to build enthusiasm for its ecosystem.

    It is an interesting approach … identify your sweet spot - that place where your brand equity has the greatest currency with customers - and figure out ways it can be expanded into new and potentially lucrative categories.

    It'll end up being an Eye-Opener. But as Dorothy Parker once said, "What fresh hell can this be?"
    KC's View:

    Published on: January 30, 2020

    Bloomberg has a story about FedEx founder/CEO Fred Smith, who reinvented the parcel delivery business but now is "getting disrupted himself by e-commerce and the rise of online shopping. He’s taking a pounding from Wall Street for FedEx’s disappointing performance, while analysts praise archrival United Parcel Service Inc. for reversing a decline in profit margins."

    And now, he is deliberately steering his company away from the e-commerce lanes that Amazon has dominated, "drawing the battle lines, positioning FedEx as a kind of anti-Amazon ally for big-box retailers and pledging that his strategy will soon enable FedEx to overtake UPS."

    It hasn't been a great couple of years: "FedEx’s international business has been plagued by setbacks, including a 2017 cyber attack and a costly air-fleet expansion that was undercut by Donald Trump’s trade wars. Back home, a falling out with Amazon.com Inc. drained $900 million off the courier’s top line."

    It is hard to say which company Smith sees as FedEx's primary enemy: "The two biggest parcel delivery companies in North America are forging dramatically different paths as they adjust their business models to the tsunami of e-commerce. Their success will help decide the market war between Amazon and Walmart Inc., and perhaps the future course of the entire retail industry.

    "While UPS is deepening its ties to Amazon, FedEx has broken away, instead working to strengthen its relationship with brick-and-mortar retailers to help them win at e-commerce. While UPS wants to stay neutral with customers, Smith is banking on an us-against-Amazon mentality."

    Part of what FedEx is doing is taking more control over its business processes: "UPS is relying more on the U.S. Postal Service, especially for Sunday deliveries, while FedEx is taking back about 2 million packages a day that it had been handing off to the government agency for final delivery. With the increased volume, FedEx can better leverage its more than 600 sorting and delivery facilities around the U.S. to help retailers with shipments from stores to residences."

    You can read the entire story here.
    KC's View:
    I may be wrong about this, but is it presumptuous for FedEx to assume that Walmart or other big retailers won't put the same kind of pressures on it long-term that it received from Amazon?

    I do think that on the face of it, FedEx seems smart for taking a path less traveled … it can be problematic, and certainly not differentiating, when everybody does the same thing. And in general, I like when companies take ownership of their key functions, as opposed to outsourcing it.

    I also think that there definitely is a role for companies that can serve an organizing role for small retailers that may be short of investment capital but want to find ways to compete with Amazon and its brethren. FedEx, to borrow a phrase often employed here on MNB, will have to offer a lot more resources to its customers, as opposed to just offering its usual menu of products.

    Published on: January 30, 2020

    Great piece from Bloomberg, filed from the Patagonia region of South America, where, on the Los Condores ranch - a place described as vast, treeless, with vistas of the snow-capped Andes' and "star-studded, bone-chilling nights" - there is an experiment taking place.

    They've planted grape vines. "One row is all chardonnay, the next riesling and the next pinot noir — 150 vines in all."

    There's no reason to think that they can grow wine in such an inhospitable place. But the owners are making a bet, albeit a "bold" and "ominous" one - that the "wicked effects of global warming" will eventually mean that "a world-class vineyard can flourish here."

    And in this case, "eventually" means perhaps as long as 50 years.

    In a world where short-term plans and profits often seem to be all that matter, this is a piece really worth reading, if only for a sense of perspective. You can read it here.
    KC's View:

    Published on: January 30, 2020

    The Harvard Business Review has a story about how, after a time when independent bookshops seemed like an endangered species - first because of the emergence of big box competitors such as Barnes & Noble, and then because of the runaway success of Amazon - something "miraculous" has happened.

    Starting in 2009, HBR writes, "after falling for decades, the number of independent bookstores started to rise, climbing 49 percent in the next decade to nearly 2,500 stores nationwide."

    Ryan Raffaelli, a professor in the Organizational Behavior Unit at Harvard Business School, tells HBR that there are lessons in the resurgence for other retail sectors under threat. It all comes down to three factors, he says: Community, Curation, and Convening.

    Some specifics:

    • "Community: As longtime community stalwarts, bookstores have been at the vanguard of the 'buy local' movement, pioneering events such as Small-Business Saturday, and making their customers feel virtuous about spending money in their own neighborhoods … The notion goes beyond a bond with customers to include other important community actors, such as schools, chambers of commerce, and civic organizations, reinforcing the social fabric and engendering a strong sense of customer and community loyalty."

    • "Curation: Despite the increasing sophistication of online algorithms, online platforms have been unable to replicate the knowledge and passion of indie bookstore employees, says Raffaelli … By contrast, he says, Amazon’s reputation as 'the everything store' can sometimes work against it, overwhelming consumers with too many options and an impersonal experience."

    • "Convening: Indie bookstores are increasingly serving as points for convening, expanding beyond author events to host book groups, children’s story hours, birthday parties, music events, knitting circles, culinary demonstrations, and other events … bookstore owners are increasingly seeing their competition not as Barnes & Noble, but as Netflix and other entertainment apps that tie people to their couches."
    KC's View:
    The independent bookshops that I like most, that I think are most effective, are the ones that are most targeted. Like mystery bookshops, for example, which would be my favorite. I love going through the Mysterious Bookshop in New York City, or The Poison Pen in Scottsdale. I'm less enamored of small independents that have a little bit of a lot, but not a ton of focus. (That may just be me. And it certainly doesn't apply to my favorite independent, Powell's in Portland, Oregon, which is enormous and delightful.)

    But the sense of focus and curation is, to me, the most applicable lesson for other kinds of retail. It takes stores beyond the simple role of being a source of product, and into the more nuanced role of being as resource for the shopper. Which is the best place to be, I think.

    Published on: January 30, 2020

    • MoviePass, which tried to reinvent the economics of going to the movies - allowing moviegoers to see multiple movies in a month for s flat fee - is no longer.

    The company filed for Chapter 7 bankruptcy protection, which will dissolve the entity and use the assets to pay off creditors. Helios and Matheson Analytics, which owns the business, "listed its total assets at $396.5 million and total debts $276.8 million in its bankruptcy filing," according to Variety.

    The story says that "ultimately, MoviePass’ cash-burning business model proved unsustainable … Originally MoviePass launched with a one-movie-per-day plan for $30-$40 per month then cut that to the too-good-to-be-true $9.95 monthly for a daily movie. Then in August 2018, MoviePass switched that to just three movies each month for $9.95, prompting a wave of cancellations. Last year, it rolled out a refashioned 'unlimited' option, for $14.95 per month, to again allow customers to see one movie daily but warning that movie choices would be restricted based on system-wide capacity'."
    KC's View:

    Published on: January 30, 2020

    • The Coloradan reports that "Lucky's Market founders Bo and Trish Sharon plan to buy back seven specialty grocer stores, including the Fort Collins and north Boulder locations that remain open following the corporation's Chapter 11 bankruptcy filing Monday … The company announced last week it would close many of its stores. On Monday, it voluntarily filed for Chapter 11 bankruptcy protection and agreed to sell six Florida stores to Aldi and five Florida stores to Publix Super Markets." The Sharon, Aldi and Publix transactions support nearly 2,000 jobs.


    According to Scott Moses of PJ Solomon, which is acting as M&A investment banking advisor to Lucky’s on the transactions, the Sharon bid is a stalking horse in the Lucky’s Chapter 11 process. There are active discussions taking place with other potential buyers.


    • The Washington Post reports that Nordstrom is getting into the business of selling used clothes.

    According to the story, "Nordstrom will begin selling secondhand apparel online and in its New York flagship store this week, the latest attempt by the 119-year-old company to appeal to changing consumer tastes and capitalize on one of the few bright spots in retail. It joins Macy’s, J.C. Penney and Madewell, among others, in carving out a place for used clothing, shoes and handbags alongside new ones.

    "Resale sites such as ThredUp, Poshmark and the RealReal have become destinations as eco-friendly alternatives to fast fashion. As resale becomes mainstream - the market is expected to triple in three years - department stores are a natural next step."


    • Add McDonald's, Ikea, Pizza Hut and Ikea to the list of retailers temporarily closing down stores in China because of the coronavirus outbreak.

    USA Today reports that "McDonalds's has closed all of its restaurants in Hubei Province, home to the city of Wuhan, the epicenter of the outbreak. While that represents hundreds of locations, roughly 3,000 McDonald's restaurants throughout China remain open."

    And CNN reports that Ikea is "shutting down" all of its 30 stores across China, saying hat it will "pay close attention to the epidemic situation." Ikea's e-commerce operation will remain online.

    The CNN story notes that "in China, Ikea is a popular place for shoppers to nap and hang out for long periods of time on the many bed, sofa and furniture displays. Such shopping habits would be counterproductive to containing the coronavirus, as experts and officials advise people to avoid crowded areas."

    From the New York Times this morning:

    "The World Health Organization is meeting again on Thursday to decide whether to declare the coronavirus epidemic an international public health emergency, as China said that another 38 people had died from the virus.

    "The global health agency met twice last week but was split about whether to declare an emergency, saying it did not have enough information to decide. Such rulings can rally a global response, but also put countries at the center of any outbreak under even greater scrutiny.

    "China said Thursday that the total number of deaths from the coronavirus had risen to 170, with cases now confirmed in every province and region in the country. More than 7,700 people have been sickened in mainland China, while 68 cases have been reported around the world."
    KC's View:

    Published on: January 30, 2020

    Michael Wright, a University of Minnesota football star turned lawyer who became CEO of wholesaler Supervalu in 1981, has passed away. He was 81, and died of complications from pneumonia.

    The Star Tribune writes that Wright was CEO of Supervalu "until 2000 and oversaw an acquisition spree that built Supervalu to $20 billion in annual revenue. It was the nation’s largest food distributor at that time and the tenth-largest retail grocer, with Cub Foods as its flagship."
    KC's View:

    Published on: January 30, 2020

    …will return.
    KC's View:

    Published on: January 30, 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!







    KC's View: