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    Published on: January 31, 2020

    by Kevin Coupe

    There are a lot of issues that retailers have to deal with, but here's one that could challenge a commonality to a lot of business models - the ability of people to drive to their local store. (And, if you think about, the growing need for retailers to deliver products to customers via cars and trucks.)

    Let me explain…

    Fast Company is a terrific source of interesting and provocative information, such as the story currently online about how "the automobile is such an important part of American culture, life, and commerce that it can be hard to really grasp all the negative externalities of our driving habits: Commuters in Los Angeles now spend 119 hours each year stuck in unmoving traffic … There are as many as 2 billion parking spaces in the U.S. (eight times more than there are cars), often on valuable urban land that could otherwise be used—along with excess road space—for housing or parks. Pollution from tailpipes is linked to hundreds of thousands of deaths globally each year. SUVs, alone, now emit more than 700 megatons of greenhouse gases annually, more than the total emissions of the U.K. and the Netherlands. More than 1.25 million people are killed in road crashes each year."

    Yikes.

    But, the story points out, even the most vexing and entrenched problems have solutions … if communities are willing to invest in them. (Investments, one should point out, that have to be cultural as well as economic.)

    Which is why "some cities and neighborhoods are beginning to rethink where cars can go—and redesigning streets to prioritize other uses, from public transportation to parks. It’s happening around the world, including on major streets in cities like San Francisco and New York, but happening at the largest scale in several European cities. Here are a few of the most interesting examples."

    In cities such as Paris, Amsterdam, Barcelona, Brussels and Helsinki, officials are testing various approaches to developing car-free spaces and times. (You can get more specifics here.)

    https://www.fastcompany.com/90456075/here-are-11-more-neighborhoods-that-have-joined-the-car-free-revolution

    But the point is that if cars are choking a wide variety of communities, those same communities are beginning to respond. And not just cities. There are also are suburbs where we are beginning to see urban-style, multi-use campuses emerging, where people will be encouraged to walk or ride their bikes, as opposed to drive their cars.

    Is the car going away? Of course not. Certainly not anytime soon.

    But it seems likely that the trend is going to grow, and every retailer - from the single-store operator to behemoths like Amazon, Walmart and Kroger - probably needs to start thinking and planning for such a world.

    Just considering the possibilities could be an Eye-Opener.
    KC's View:

    Published on: January 31, 2020

    As it released its Q4 results, perhaps the most impressive number touted by Amazon yesterday was this one: it now has 150 million Prime members worldwide.

    CEO/founder Jeff Bezos said yesterday that more people joined Prime during the fourth quarter last year than in any other quarter - apparently driven by faster delivery guarantees, including same-day in many markets.

    Variety writes that "in addition to free shipping on products, Amazon Prime members get access to thousands of titles on Prime Video, including the company’s originals. According to Bezos, Prime members watched twice the number hours of original movies and TV shows on Prime Video in Q4 compared to the year prior, though the company would not provide more info on viewing."

    Q4 sales reached $87.4 billion, up 21 percent from the same period a year ago.

    Net income increased to $3.3 billion in the fourth quarter, compared with net income of $3.0 billion in fourth quarter 2018.

    For the full year, net sales increased 20% to $280.5 billion, compared with $232.9 billion in 2018. Net income increased to $11.6 billion, compared with net income of $10.1 billion in 2018.

    MarketWatch writes that Amazon returned "to growth after a decline in the previous quarter broke a streak of more than two years without a profit drop. After slowing down its spending in 2018, following the acquisition of Whole Foods Market Inc. and other efforts, the company enjoyed record annual profit of more than $10 billion.

    "In 2019, however, the company resumed spending to halve delivery times to Prime members and bolster its workforce, which harmed earnings in the third quarter."

    Amazon Prime is available in addition to the US, in Canada, the U.K., Ireland, Germany, Austria, India, Japan, Italy, Spain, France, Mexico, Singapore, Australia, the Netherlands, Luxembourg, the United Arab Emirates, Brazil and Australia.
    KC's View:
    The 150 million Prime member ought to drive home for competing retailers something that they should've realized a long time ago - your customers also are Amazon customers. And even if there are a few who are not, you should operate on the premise that they are - which means you need to differentiate yourself at every turn.

    Especially because, as one expert observed yesterday, it appears that "the fixed costs in building out their last-mile infrastructure are beginning to normalize earlier than expected.” Which gives them even more of a financial advantage.

    And because Amazon isn't stopping - it continues to grow and innovate and iterate.

    If you don't do the same, you may not survive. And it will be suicide, not homicide.

    Published on: January 31, 2020

    The Los Angeles Times has a story about ghost kitchens now serving Southern California, describing them as "shared commercial kitchen spaces for rent (that) primarily serve online customers and are a new category of commercial real estate that looked sexy to investors when the concept piqued widespread interest two years ago as a promising growth opportunity."

    The story notes that the concept has not taken off to the degree that some would've expected just a few years ago, but that seems to be more because of the economics of delivery as opposed to the efficacy of shared commercial kitchens. There seems to be no hesitancy about the concept in the investment class - hundreds of millions of dollars have been raised by entrepreneurs who still believe in it.

    The advantages of ghost kitchens seem clear - the kitchen facilities are cheaper to run than it would cost to retrofit a restaurant's kitchens to deal with take-out and delivery of food. There is the advantage of sharing space with like-minded businesses, with the ability to lend and borrow items when necessary and/or appropriate. Landlords handle a lot of the infrastructure issues, and they are relatively easy and fast to move into.

    And, there is the ability to test new concepts with low risk. For example, the Times writes that Canter's delicatessen, which has been operating in LA for some nine decades, is using its ghost kitchen to test a new online-only brand called Grilled Cheese Heaven, which also serves burgers, salads and quesadillas.

    “You’re already paying rent and labor,” Marc Canter tells the Times. “Why not?”
    KC's View:
    I think the thing I like most about ghost kitchens - and dark stores, for that matter - is the ability they give businesses to be more flexible, nimble and experimental.

    Retailers would be better served if they would view these facilities as giving them license to try new things, including online-only offerings that would differentiate them. Way too many retailers are taking me-too steps that don't really do anything to differentiate themselves - can you spell "Instacart"? - as opposed to gravitating to opportunities to take big swings and small swings at being different.

    There's no reason that I can think of that ever retailer could not do its own version, whatever that means, of Grilled Cheese Heaven. I mean, if a 90-year-old LA deli can, there's no excuse.

    Take a shot. Be different. Show some creativity and chutzpah.

    Published on: January 31, 2020

    From the New York Times:

    "In letters to state regulatory boards and in interviews with The New York Times, many pharmacists at companies like CVS, Rite Aid and Walgreens described understaffed and chaotic workplaces where they said it had become difficult to perform their jobs safely, putting the public at risk of medication errors.

    "They struggle to fill prescriptions, give flu shots, tend the drive-through, answer phones, work the register, counsel patients and call doctors and insurance companies, they said — all the while racing to meet corporate performance metrics that they characterized as unreasonable and unsafe in an industry squeezed to do more with less … State boards and associations in at least two dozen states have heard from distraught pharmacists, interviews and records show, while some doctors complain that pharmacies bombard them with requests for refills that patients have not asked for and should not receive. Such refills are closely tracked by pharmacy chains and can factor into employee bonuses."

    One Texas pharmacist wrote the following chilling words to the state's regulatory officials: “I am a danger to the public working for CVS."

    The Times writes that the chains say that "patient safety was of utmost concern, with staffing carefully set to ensure accurate dispensing. Investment in technology such as e-prescribing has increased safety and efficiency, the companies said. They denied that pharmacists were under extreme pressure or faced reprisals."

    And the National Association of Chain Drug Stores (NACDS) trade association says that “pharmacies consider even one prescription error to be one too many” and “seek continuous improvement," adding that it is inaccurate to “assume cause-effect relationships” between errors and pharmacists’ workload.

    You can read the story here. See who and what you believe.
    KC's View:
    I know who I think is most credible, and it ain't the chains and their trade association.

    Published on: January 31, 2020


    Walmart's first-ever Super Bowl commercial will air during the big game on Sunday - and the focus is on the company's e-commerce business, with a focus on its click-and-collect functionality.

    As Ad Age writes, it "is a licensing bonanza for entertainment companies with scenes or characters from a dozen movie or TV franchises, led by Disney's "Star Wars" and "Toy Story," plus extended appearances from NBCUniversal properties that include "Bill & Ted’s Excellent Adventure" and "Back to the Future." Scenes from or allusions to the films "Arrival," "Blade Runner," "Star Trek," "Guardians of the Galaxy," "The Lego Movie," "Mars Attacks," "Marvin the Martian" and "Men in Black" are also included. All are united by an interest in picking up curbside orders from Walmart."

    You can watch it above.


    KC's View:
    They crammed about as much stuff in there as possible. I am presuming that William Shatner was too expensive, because he is about the only thing missing.

    A friend of mine, who knows a lot more about this stuff than I do, makes the point that "the money being invested in the production of these spots, not to mention the cost of media and film and music rights is a testament that this category is on the ascend and competition for winning the consumer is at an all time high."

    Exactly.

    Published on: January 31, 2020

    Fox Business reports that when the winning coach in Sunday's Super Bowl gets a Gatorade bath in the closing moments of the game, the Pepsi-owned brand is the real winner.

    The story says that "since 1987, Gatorade baths that aired on television during the Super Bowl have generated more than $20 million in equivalent advertising value across television, radio and other mediums, according to calculations by Apex Marketing, an analytics firm. The Pepsi-owned company paid nothing to gain the additional exposure."

    The story notes that the first championship Gatorade dunk occurred in January 1987, when the New York Giants' Harry Carson doused head coach Bill Parcells after the Giants beat over the Denver Broncos in Super Bowl XXI by a score of 39-20. Gatorade execs, the story says, were almost as surprised as Parcells.


    • From the Los Angeles Times:

    "Plant-based burgers sizzled last year, boosting sales at fast-food chains such as Burger King and Carl’s Jr. Now, KFC wants to see if it can replicate that effect with fried faux chicken.

    "The nation’s largest fried chicken chain announced Wednesday that it had struck a deal with Beyond Meat to sell plant-based nuggets in more than 60 restaurants in the Charlotte, N.C., and Nashville markets. If the three-week test is successful, the plan is to offer the menu item at KFC’s roughly 4,000 U.S. outlets."
    KC's View:

    Published on: January 31, 2020

    • SpartanNash announced that it has hired David Sisk, the president/COO of OSC-WEBco, a sales company serving military and government channels, to be a corporate vice president and president of its $2.1 business serving USA military commissaries.
    KC's View:

    Published on: January 31, 2020

    Fred Silverman died yesterday at age 82.

    If you don't know Silverman, the fact is that if you are of a certain age, you are familiar with his work - he is the only person who ran programming for all three major broadcast networks at a time when there were only three broadcast networks.

    Among the shows that got on the air during his various tenures at CBS, ABC and NBC, for better or worse: “All in the Family,” “The Mary Tyler Moore Show,” “Happy Days,” “The Waltons, " “Roots," Matlock,” “In the Heat of the Night,” “Jake and the Fatman,” “Diagnosis Murder," “Maude,” “The Bob Newhart Show,” “Mannix," “Hawaii Five-0," “Rich Man, Poor Man,” “Roots,” “Charlie’s Angels” and “Starsky & Hutch.”
    KC's View:

    Published on: January 31, 2020

    Got the following email from an MNB fave, Julie Lyle:

    I enjoyed your commentary and agree that CPG companies are facing tough  challenges today, as they have been too far removed from consumers for decades.  To be fair, big brands have been beholden to their retailer intermediaries who "own" the customer relationship (especially in the consumable sectors).  These retailers are often not forthcoming with shopper insights - or they themselves have not mastered a holistic view of their buyer personas and shopper journeys.

    As retailers accelerate growth of their own private label brands, which are often knockoffs of their CPG partner products, the CPG companies find themselves in a tough position.  They are sandwiched between competing with their own distributors as well as competing with digitally-enabled upstarts like Harry's and so many others.  It's time for CPG companies to find innovative ways to form meaningful relationships directly with consumers, and thereby capture the insights they need for product innovation, promotional efficacy, increased speed-to-market, and more.


    Which could lead to something often discussed but not acted upon - a concerted effort to disintermediate traditional retail.



    We had a piece the other day about the financial issues faced by many young people, which leaves them without the disposable income that helps to drive economic growth. One MNB reader responded:

    Great discussion piece. I see many of the Democratic candidates offering to wipe away student debt as part of their campaign giveaways. Others have responded with how is that fair to all those students and/or parents that have sacrificed and saved to pay off their loans as they committed when they took out the loans.   We hear about the multitudes of students remaining living at home years after their graduation because they can’t afford to pay rent. And a large % of renting today because they can’t seem to save enough for the down-payment.

    Rather than target wiping out student debt why aren’t these candidates looking to solve the housing crisis. How about offering no down-payment loans for starter homes and reduced interest rate for the 1st five years. How about creating  affordable housing options like modular homes which have to be cheaper than some of the rents that are being charged in urban locations. My first condo was subsidized by our local bank offering 4% interest rates for the 1st 10 years when rates were as high as 14%. I found a way through my local bank to buy early on in my career when I had different barriers - exorbitant interest rates.


    Interesting idea.



    Responding to the comments here about the inevitability of a recession and the challenges retailers will face, MNB reader Matt Nitzberg wrote:

    Whenever the next recession comes, retailers who have been paying close attention to customer (shopper) data will be much better prepared to manage the belt-tightening that will inevitably accompany it. In the ~10 years since we shook off the worst of the last recession, these retailers have developed 3 advantages:

    • They've developed a much deeper understanding of their price-sensitive shoppers as well as shoppers who have become more sensitive over time.

    • They are 10 years further along in understanding which shoppers respond to which activations (by channel, content, incentive, etc.).

    • They've used the data to help create a more stratified approach to private label brands, which are likely to capture market share from national brands as shoppers trade down on price points while retaining their aspirations for high quality products.




    On a different subject, I got the following note from an MNB reader:

    I applaud Kellogg’s for there move to ban the use of glyphosate in the production of grain for use in their products. However in my opinion they should do it immediately and not wait until 2026. This product is dangerous and is purported to be cancer causing.

    The list of countries banning the use of this product is long and growing longer each year. Most of the Glyphosate restrictions or bans throughout the world were introduced following the 2015 IARC report on Glyphosate. The IARC report concluded that Glyphosate is a “probable human carcinogen.” With this knowledge why are American companies allowing farmers to spray their crops with this product? As far as the comment from the National Association of Wheat Growers that this product is safe and that if totally eradicated “producers would stop producing” is ridiculous.

    Wake up folks !!!! This is serious. Get this product out of our food chain now. Why is most of Europe and many other countries taking action and the US is doing nothing. Its time to stop the use of Glyphosates in this country in the production of our foodstuffs.




    Regarding what retailers can learn from the independent bookstore resurgence, one MNB reader wrote:

    Often times the Independent Book store is really the “beating heart” of the community.  I offer you Bookshop Santa Cruz which is a family owned Book store that has been serving the community for nearly 50 years.

    In 1989 when the Loma Prieta Earthquake hit Santa Cruz the original building was destroyed along with much of Pacific Ave which is the “Main St.”  Bookshop Santa Cruz had one opportunity to retrieve the books that were hidden in the rubble of the building.  They reached out to the community and dozens of volunteers brought their trucks, red wagons and the like to save the books for the tent that they operated out of until the facility was rebuilt.  The support from the Santa Cruz community has never wavered.  I suspect that many other communities have similar stories!




    And, responding to our story about the new Atari-themed hotel chain, MNB reader Scott Nelson wrote:

    What’s next, a Pokemon themed hotel?  That would be a worse hell.  Pikachu, Pikachu, Pikachu …

    In the words of my ancestors…Oy.
    KC's View:

    Published on: January 31, 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:

    Published on: January 31, 2020

    If you've never watched "The Good Place," the NBC-TV series that ended its four-year run last night, I'm going to urge you to catch up with it - I'm sure you can binge watch it on some streaming service. Created by Michael Schur, "The Good Place" in many ways was the perfect TV series; each of its seasons was only 13 episodes long, and the producers decided to end it way before it ever could wear out its welcome, much less its enormous originality.

    The premise was simple. Four people - played by Kristin Bell, William Jackson Harper, Jameela Jamil and Manny Jacinto - find themselves in the afterlife, in "the good place," except that they all think they are there by accident, and that they should be in, well, the other place. Their guides are played by Ted Danson and D'Arcy Carden, and the series starts out with the four not-very-good dead humans desperately doing everything possible not to be found out.

    From there, "The Good Place" went in unexpected directions, as the series ended up being a smartly written, very funny existential meditation on the difference between good and bad, about life and death and and the challenge of behaving ethically. Sounds dry, I know, but it was anything but. It had style and grace and a piercing intelligence, with elements of "Lost" and 'The Prisoner," but never losing sight of the fact that it was a comedy. And the performances - they were never less than pitch perfect.

    Last night's finale - which built on everything we've seen in the 51 previous episodes - was as perfect an end note as I can imagine. In its own way, it was a good as the storied finales of shows like "Cheers," "M*A*S*H," and "The Mary Tyler Moore Show" … I found myself simultaneously laughing and tearing up as I saw where things were going. (That's all you're going to get from me. No spoilers here.)

    "The Good Place" is going to stick with me for sometime, I think. If you haven't watched it, I encourage you to do so - it will remind you that there is good in the world, and good in the afterlife.



    Joker. I finally caught up with this much-lauded movie the other night, and I'm going to be honest with you - I cannot remember the last time that I found a major studio film, one that has gotten a lot of awards and nominations, to be so utterly, completely loathsome.

    I get what they were trying to do in creating a fresh origin story around a character known from the Batman mythology as the Caped Crusader's greatest enemy. And I cannot deny that most of the performances - especially Joaquin Phoenix in the title role - are excellent, as are the production values showing a Gotham City that looks a lot like New York City in the seventies. (Robert De Niro, essentially playing Johnny Carson, actually does something unusual for him - he is awful. And awfully miscast.)

    But in showing us the mental and emotional decline of someone who goes from being simply troubled to being a cold-blooded murderer, I found myself wondering what the point was. Is it society's fault? Is it that the filmmakers wanted to deconstruct parts of the Batman legend? Is it supposed to be a treatise on mental illness, and society's indifference to it?

    I have no idea. I mostly found it to be troubling, gratuitous, and an ethical mishmash. And by making the character the Joker instead of a criminal by some other name, it is like they are trying to give it a sheen of comic book accessibility, which I found kind of offensive. The thing about Joker is, he needs Batman … their battle is what creates dramatic balance. (You also could argue that Batman needs Joker.) But a movie with just Joker? Unbalanced, in every meaning of that word.

    I do not understand why so many people like this movie. I hAted virtually every moment of it. Joker will remind you of all that is bad in the world. All I know is that it was two hours I'm never going to get back, and I felt like I needed a shower when it was done.



    I have a wine to recommend to you this week - 2012 Signature Cuvée Pinot Noir from Oregon's Willamette Valley Vineyards, which is a complex and richly structured wine - a blend of pinot grapes from a number of WVV's fields - that is versatile enough to be perfect with a great steak or a nice spicy salmon. Wonderful.



    That's it for this week … have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View:

    Published on: January 31, 2020

    by Kevin Coupe

    There are a lot of issues that retailers have to deal with, but here's one that could challenge a commonality to a lot of business models - the ability of people to drive to their local store.  (And, if you think about, the growing need for retailers to deliver products to customers via cars and trucks.)

    Let me explain…

    Fast Company is a terrific source of interesting and provocative information, such as the story currently online about how "the automobile is such an important part of American culture, life, and commerce that it can be hard to really grasp all the negative externalities of our driving habits: Commuters in Los Angeles now spend 119 hours each year stuck in unmoving traffic … There are as many as 2 billion parking spaces in the U.S. (eight times more than there are cars), often on valuable urban land that could otherwise be used—along with excess road space—for housing or parks. Pollution from tailpipes is linked to hundreds of thousands of deaths globally each year. SUVs, alone, now emit more than 700 megatons of greenhouse gases annually, more than the total emissions of the U.K. and the Netherlands. More than 1.25 million people are killed in road crashes each year."

    Yikes.

    But, the story points out, even the most vexing and entrenched problems have solutions … if communities are willing to invest in them.  (Investments, one should point out, that have to be cultural as well as economic.)

    Which is why "some cities and neighborhoods are beginning to rethink where cars can go—and redesigning streets to prioritize other uses, from public transportation to parks. It’s happening around the world, including on major streets in cities like San Francisco and New York, but happening at the largest scale in several European cities. Here are a few of the most interesting examples."

    In cities such as Paris, Amsterdam, Barcelona, Brussels and Helsinki, officials are testing various approaches to developing car-free spaces and times.  (You can get more specifics here.)

    But the point is that if cars are choking a wide variety of communities,  those same communities are beginning to respond.  And not just cities.  There are also are suburbs where we are beginning to see urban-style, multi-use campuses emerging, where people will be encouraged to walk or ride their bikes, as opposed to drive their cars.

    Is the car going away?  Of course not.  Certainly not anytime soon.

    But it seems likely that the trend is going to grow, and every retailer - from the single-store operator to behemoths like Amazon, Walmart and Kroger - probably needs to start thinking and planning for such a world.

    Just considering the possibilities could be an Eye-Opener.


    Published on: January 31, 2020

    As it released its Q4 results, perhaps the most impressive number touted by Amazon yesterday was this one:  it now has 150 million Prime members worldwide.

    CEO/founder Jeff Bezos said yesterday that more people joined Prime during the fourth quarter last year than in any other quarter - apparently driven by faster delivery guarantees, including same-day in many markets.

    Variety writes that "in addition to free shipping on products, Amazon Prime members get access to thousands of titles on Prime Video, including the company’s originals. According to Bezos, Prime members watched twice the number hours of original movies and TV shows on Prime Video in Q4 compared to the year prior, though the company would not provide more info on viewing."

    Q4 sales reached $87.4 billion, up 21 percent from the same period a year ago.

    Net income increased to $3.3 billion in the fourth quarter, compared with net income of $3.0 billion in fourth quarter 2018.

    For the full year, net sales increased 20% to $280.5 billion, compared with $232.9 billion in 2018.  Net income increased to $11.6 billion, compared with net income of $10.1 billion in 2018.

    MarketWatch writes that Amazon returned "to growth after a decline in the previous quarter broke a streak of more than two years without a profit drop. After slowing down its spending in 2018, following the acquisition of Whole Foods Market Inc. and other efforts, the company enjoyed record annual profit of more than $10 billion.

    "In 2019, however, the company resumed spending to halve delivery times to Prime members and bolster its workforce, which harmed earnings in the third quarter."

    Amazon Prime is available in addition to the US, in Canada, the U.K., Ireland, Germany, Austria, India, Japan, Italy, Spain, France, Mexico, Singapore, Australia, the Netherlands, Luxembourg, the United Arab Emirates, Brazil and Australia.

    KC's View:

    The 150 million Prime member ought to drive home for competing retailers something that they should've realized a long time ago - your customers also are Amazon customers.  And even if there are a few who are not, you should operate on the premise that they are - which means you need to differentiate yourself at every turn.

    Especially because, as one expert observed yesterday, it appears that "the fixed costs in building out their last-mile infrastructure are beginning to normalize earlier than expected.”  Which gives them even more of a financial advantage.

    And because Amazon isn't stopping - it continues to grow and innovate and iterate.

    If you don't do the same, you may not survive.  And it will be suicide, not homicide.

    Published on: January 31, 2020

    The Los Angeles Times has a story about ghost kitchens now serving Southern California, describing them as "shared commercial kitchen spaces for rent (that) primarily serve online customers and are a new category of commercial real estate that looked sexy to investors when the concept piqued widespread interest two years ago as a promising growth opportunity."

    The story notes that the concept has not taken off to the degree that some would've expected just a few years ago, but that seems to be more because of the economics of delivery as opposed to the efficacy of shared commercial kitchens.  There seems to be no hesitancy about the concept in the investment class - hundreds of millions of dollars have been raised by entrepreneurs who still believe in it.

    The advantages of ghost kitchens seem clear - the kitchen facilities are cheaper to run than it would cost to retrofit a restaurant's kitchens to deal with take-out and delivery of food.  There is the advantage of sharing space with like-minded businesses, with the ability to lend and borrow items when necessary and/or appropriate. Landlords handle a lot of the infrastructure issues, and they are relatively easy and fast to move into. 

    And, there is the ability to test new concepts with low risk.  For example, the Times writes that Canter's delicatessen, which has been operating in LA for some nine decades, is using its ghost kitchen to test a new online-only brand called Grilled Cheese Heaven, which also serves burgers, salads and quesadillas.

     “You’re already paying rent and labor,” Marc Canter tells the Times. “Why not?”

    KC's View:

    I think the thing I like most about ghost kitchens - and dark stores, for that matter - is the ability they give businesses to be more flexible, nimble and experimental.   

    Retailers would be better served if they would view these facilities as giving them license to try new things, including online-only offerings that would differentiate them.  Way too many retailers are taking me-too steps that don't really do anything to differentiate themselves - can you spell "Instacart"? - as opposed to gravitating to opportunities to take big swings and small swings at being different.

    There's no reason that I can think of that ever retailer could not do its own version, whatever that means, of Grilled Cheese Heaven.  I mean, if a 90-year-old LA deli can, there's no excuse.

    Take a shot.  Be different.  Show some creativity and chutzpah.

    Published on: January 31, 2020

    From the New York Times:

    "In letters to state regulatory boards and in interviews with The New York Times, many pharmacists at companies like CVS, Rite Aid and Walgreens described understaffed and chaotic workplaces where they said it had become difficult to perform their jobs safely, putting the public at risk of medication errors.

    "They struggle to fill prescriptions, give flu shots, tend the drive-through, answer phones, work the register, counsel patients and call doctors and insurance companies, they said — all the while racing to meet corporate performance metrics that they characterized as unreasonable and unsafe in an industry squeezed to do more with less … State boards and associations in at least two dozen states have heard from distraught pharmacists, interviews and records show, while some doctors complain that pharmacies bombard them with requests for refills that patients have not asked for and should not receive. Such refills are closely tracked by pharmacy chains and can factor into employee bonuses."

    One Texas pharmacist wrote the following chilling words to the state's regulatory officials:  “I am a danger to the public working for CVS."

    The Times writes that the chains say that "patient safety was of utmost concern, with staffing carefully set to ensure accurate dispensing. Investment in technology such as e-prescribing has increased safety and efficiency, the companies said. They denied that pharmacists were under extreme pressure or faced reprisals."

    And the National Association of Chain Drug Stores (NACDS) trade association says that “pharmacies consider even one prescription error to be one too many” and “seek continuous improvement," adding that it is inaccurate to “assume cause-effect relationships” between errors and pharmacists’ workload.

    You can read the story here.

    See who and what you believe.

    KC's View:
      I know who I think is most credible, and it ain't the chains and their trade association.

    Published on: January 31, 2020

    Walmart's first-ever Super Bowl commercial will air during the big game on Sunday - and the focus is on the company's e-commerce business, with a focus on its click-and-collect functionality.  

    As Ad Age writes, it "is a licensing bonanza for entertainment companies with scenes or characters from a dozen movie or TV franchises, led by Disney's "Star Wars" and "Toy Story," plus extended appearances from NBCUniversal properties that include "Bill & Ted’s Excellent Adventure" and "Back to the Future." Scenes from or allusions to the films "Arrival," "Blade Runner," "Star Trek," "Guardians of the Galaxy," "The Lego Movie," "Mars Attacks," "Marvin the Martian" and "Men in Black" are also included. All are united by an interest in picking up curbside orders from Walmart."

    You can watch it at left.

    KC's View:
      They crammed about as much stuff in there as possible.  I am presuming that William Shatner was too expensive, because he is about the only thing missing.

    A friend of mine, who knows a lot more about this stuff than I do, makes the point that "the money being invested in the production of these spots, not to mention the cost of media and film and music rights is a testament that this category is on the ascend and competition for winning the consumer is at an all time high."

    Exactly.

    Published on: January 31, 2020

    •  Fox Business reports that when the winning coach in Sunday's Super Bowl gets a Gatorade bath in the closing moments of the game, the Pepsi-owned brand is the real winner.

    The story says that "since 1987, Gatorade baths that aired on television during the Super Bowl have generated more than $20 million in equivalent advertising value across television, radio and other mediums, according to calculations by Apex Marketing, an analytics firm. The Pepsi-owned company paid nothing to gain the additional exposure."

    The story notes that the first championship Gatorade dunk occurred in January 1987, when the New York Giants' Harry Carson doused head coach Bill Parcells after the Giants beat over the Denver Broncos in Super Bowl XXI by a score of 39-20.  Gatorade execs, the story says, were almost as surprised as Parcells.

    •  From the Los Angeles Times:

    "Plant-based burgers sizzled last year, boosting sales at fast-food chains such as Burger King and Carl’s Jr. Now, KFC wants to see if it can replicate that effect with fried faux chicken.

    "The nation’s largest fried chicken chain announced Wednesday that it had struck a deal with Beyond Meat to sell plant-based nuggets in more than 60 restaurants in the Charlotte, N.C., and Nashville markets. If the three-week test is successful, the plan is to offer the menu item at KFC’s roughly 4,000 U.S. outlets."

    Published on: January 31, 2020

    •  SpartanNash announced that it has hired David Sisk, the president/COO of OSC-WEBco, a sales company serving military and government channels, to be a corporate vice president and president of its $2.1 business serving USA military commissaries.

    Published on: January 31, 2020

    Fred Silverman died yesterday at age 82.

    If you don't know Silverman, the fact is that if you are of a certain age, you are familiar with his work - he is the only person who ran programming for all three major broadcast networks at a time when there were only three broadcast networks.

    Among the shows that got on the air during his various tenures at CBS, ABC and NBC, for better or worse:  “All in the Family,” “The Mary Tyler Moore Show,” “Happy Days,” “The Waltons, " “Roots," Matlock,” “In the Heat of the Night,” “Jake and the Fatman,” “Diagnosis Murder,"  “Maude,” “The Bob Newhart Show,” “Mannix,"  “Hawaii Five-0," “Rich Man, Poor Man,” “Roots,” “Charlie’s Angels” and “Starsky & Hutch.”

    Published on: January 31, 2020

    Got the following email from an MNB fave, Julie Lyle:

    I enjoyed your commentary and agree that CPG companies are facing tough  challenges today, as they have been too far removed from consumers for decades.  To be fair, big brands have been beholden to their retailer intermediaries who "own" the customer relationship (especially in the consumable sectors).  These retailers are often not forthcoming with shopper insights - or they themselves have not mastered a holistic view of their buyer personas and shopper journeys.

    As retailers accelerate growth of their own private label brands, which are often knockoffs of their CPG partner products, the CPG companies find themselves in a tough position.  They are sandwiched between competing with their own distributors as well as competing with digitally-enabled upstarts like Harry's and so many others.  It's time for CPG companies to find innovative ways to form meaningful relationships directly with consumers, and thereby capture the insights they need for product innovation, promotional efficacy, increased speed-to-market, and more.

    Which could lead to something often discussed but not acted upon - a concerted effort to disintermediate traditional retail.

    We had a piece the other day about the financial issues faced by many young people, which leaves them without the disposable income that helps to drive economic growth.  One MNB reader responded:

    Great discussion piece. I see many of the Democratic candidates offering to wipe away student debt as part of their campaign giveaways. Others have responded with how is that fair to all those students and/or parents that have sacrificed and saved to pay off their loans as they committed when they took out the loans.   We hear about the multitudes of students remaining living at home years after their graduation because they can’t afford to pay rent. And a large % of renting today because they can’t seem to save enough for the down-payment.

    Rather than target wiping out student debt why aren’t these candidates looking to solve the housing crisis. How about offering no down-payment loans for starter homes and reduced interest rate for the 1st five years. How about creating  affordable housing options like modular homes which have to be cheaper than some of the rents that are being charged in urban locations. My first condo was subsidized by our local bank offering 4% interest rates for the 1st 10 years when rates were as high as 14%. I found a way through my local bank to buy early on in my career when I had different barriers - exorbitant interest rates.

    Interesting idea.

    Responding to the comments here about the inevitability of a recession and the challenges retailers will face, MNB reader Matt Nitzberg wrote:

    Whenever the next recession comes, retailers who have been paying close attention to customer (shopper) data will be much better prepared to manage the belt-tightening that will inevitably accompany it. In the ~10 years since we shook off the worst of the last recession, these retailers have developed 3 advantages:

    •  They've developed a much deeper understanding of their price-sensitive shoppers as well as shoppers who have become more sensitive over time.

    •  They are 10 years further along in understanding which shoppers respond to which activations (by channel, content, incentive, etc.).

    •  They've used the data to help create a more stratified approach to private label brands, which are likely to capture market share from national brands as shoppers trade down on price points while retaining their aspirations for high quality products.

    On a different subject, I got the following note from an MNB reader:

    I applaud Kellogg’s for there move to ban the use of glyphosate in the production of grain for use in their products. However in my opinion they should do it immediately and not wait until 2026. This product is dangerous and is purported to be cancer causing.

    The list of countries banning the use of this product is long and growing longer each year. Most of the Glyphosate restrictions or bans throughout the world were introduced following the 2015 IARC report on Glyphosate. The IARC report concluded that Glyphosate is a “probable human carcinogen.” With this knowledge why are American companies allowing farmers to spray their crops with this product? As far as the comment from the National Association of Wheat Growers that this product is safe and that if totally eradicated “producers would stop producing” is ridiculous. 

    Wake up folks !!!! This is serious. Get this product out of our food chain now. Why is most of Europe and many other countries taking action and the US is doing nothing. Its time to stop the use of Glyphosates in this country in the production of our foodstuffs.

    Regarding what retailers can learn from the independent bookstore resurgence, one MNB reader wrote:

    Often times the Independent Book store is really the “beating heart” of the community.  I offer you Bookshop Santa Cruz which is a family owned Book store that has been serving the community for nearly 50 years.

    In 1989 when the Loma Prieta Earthquake hit Santa Cruz the original building was destroyed along with much of Pacific Ave which is the “Main St.”  Bookshop Santa Cruz had one opportunity to retrieve the books that were hidden in the rubble of the building.  They reached out to the community and dozens of volunteers brought their trucks, red wagons and the like to save the books for the tent that they operated out of until the facility was rebuilt.  The support from the Santa Cruz community has never wavered.  I suspect that many other communities have similar stories!

    And, responding to our story about the new Atari-themed hotel chain, MNB reader Scott Nelson wrote:

    What’s next, a Pokemon themed hotel?  That would be a worse hell.  Pikachu, Pikachu, Pikachu …

    In the words of my ancestors…Oy.

    Published on: January 31, 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 31, 2020

    If you've never watched "The Good Place," the NBC-TV series that ended its four-year run last night, I'm going to urge you to catch up with it - I'm sure you can binge watch it on some streaming service.  Created by Michael Schur, "The Good Place" in many ways was the perfect TV series;  each of its seasons was only 13 episodes long, and the producers decided to end it way before it ever could wear out its welcome, much less its enormous originality.

    The premise was simple.  Four people - played by Kristin Bell, William Jackson Harper, Jameela Jamil and Manny Jacinto - find themselves in the afterlife, in "the good place," except that they all think they are there by accident, and that they should be in, well, the other place.  Their guides are played by Ted Danson and D'Arcy Carden, and the series starts out with the four not-very-good dead humans desperately doing everything possible not to be found out.

    From there, "The Good Place" went in unexpected directions, as the series ended up being a smartly written, very funny existential meditation on the difference between good and bad, about life and death and and the challenge of behaving ethically.  Sounds dry, I know, but it was anything but.  It had style and grace and a piercing intelligence, with elements of "Lost" and 'The Prisoner," but never losing sight of the fact that it was a comedy.  And the performances - they were never less than pitch perfect.

    Last night's finale - which built on everything we've seen in the 51 previous episodes - was as perfect an end note as I can imagine.  In its own way, it was a good as the storied finales of shows like "Cheers," "M*A*S*H," and "The Mary Tyler Moore Show" … I found myself simultaneously laughing and tearing up as I saw where things were going.  (That's all you're going to get from me.  No spoilers here.)

    "The Good Place" is going to stick with me for sometime, I think.  If you haven't watched it, I encourage you to do so - it will remind you that there is good in the world, and good in the afterlife.

    Joker.  I finally caught up with this much-lauded movie the other night, and I'm going to be honest with you - I cannot remember the last time that I found a major studio film, one that has gotten a lot of awards and nominations, to be so utterly, completely loathsome.

    I get what they were trying to do in creating a fresh origin story around a character known from the Batman mythology as the Caped Crusader's greatest enemy.  And I cannot deny that most of the performances - especially Joaquin Phoenix in the title role - are excellent, as are the production values showing a Gotham City that looks a lot like New York City in the seventies.  (Robert De Niro, essentially playing Johnny Carson, actually does something unusual for him - he is awful.  And awfully miscast.)

    But in showing us the mental and emotional decline of someone who goes from being simply troubled to being a cold-blooded murderer, I found myself wondering what the point was.  Is it society's fault?  Is it that the filmmakers wanted to deconstruct parts of the Batman legend?  Is it supposed to be a treatise on mental illness, and society's indifference to it?

    I have no idea.  I mostly found it to be troubling, gratuitous, and an ethical mishmash.  And by making the character the Joker instead of a criminal by some other name, it is like they are trying to give it a sheen of comic book accessibility, which I found kind of offensive.  The thing about Joker is, he needs Batman … their battle is what creates dramatic balance.  (You also could argue that Batman needs Joker.)  But a movie with just Joker?  Unbalanced, in every meaning of that word.

    I do not understand why so many people like this movie.  I hAted virtually every moment of it.  Joker will remind you of all that is bad in the world.   All I know is that it was two hours I'm never going to get back, and I felt like I needed a shower when it was done.

    I have a wine to recommend to you this week - 2012 Signature Cuvée Pinot Noir from Oregon's Willamette Valley Vineyards, which is a complex and richly structured wine - a blend of pinot grapes from a number of WVV's fields - that is versatile enough to be perfect with a great steak or a nice spicy salmon.  Wonderful. 

    That's it for this week … have a great weekend, and I'll see you Monday.

    Slàinte!