business news in context, analysis with attitude

Published on: February 11, 2020

by Kevin Coupe

It is an enduring lesson in the power of customer complaints.

A retailer once told me that the most valuable thing he could get from his customers was complaints.

That's right.  Complaints.

The reason, the retailer said, is that when customers complain, it means they care.  It also gives the retailer a chance to prove that he or she cares, that they paid attention and responded.  This is what creates sustained relationships between the store and the shopper.

I learned something yesterday.  MNB readers really, really, really care.

Yesterday's reboot of MNB inadvertently lacked a component from the old site that many of you missed.  In the past, when you would click on a headline in the emailed Wake Up Call, it would take you to that story, but within the context of the entire home page - you could scroll up and down to other stories, or easily go up to the top of the page.

But yesterday, clicking on an email headline brought you to that story, and only that story.  To get to the home page, you had to go back to the email, and all the process did for many of you is create friction where it did not exist before.

The good news - if you accept the expressed wisdom of that retailer - is that you let me know about the friction.  Many of you let me know.  In a word, I got hammered via emails who worried that this was my definition of progress.

Well, it wasn't.  I just didn't realize that this was how it worked, even after weeks of testing, and I didn't realize how much it mattered until you told me.

I screwed up.

Now, I think the problem is fixed.  I appreciate your passion, the time you took to let me know about the problem, and the patience you showed in allowing us to fix it.

There will be other glitches, I'm sure.  And, I'm sure you'll let me know about them.  When you do, I'll know that you care … and I hope you know how much I care, too.

One thing:  It is taking a bit of time to move the archives over.  If there is a story you are looking for, let me know, and I'll try to dig it out and send it to you.

Published on: February 11, 2020

by Michael Sansolo

Imitation, it is said, is the sincerest form of flattery, but I wonder if it’s also the quickest path to growth.

After all, as George Bernard Shaw once wrote, "“Imitation is not just the sincerest form of flattery - it's the sincerest form of learning.” 

Sure, breakthrough innovations are stunning and are rightfully hailed as amazing achievements. What’s far more common, I’d argue, are small improvements on existing ideas that build business advantages.

Forbes dove into that topic recently fueled by, of all things, Walmart’s very creative Super Bowl ad, which featured all manner of characters from recent movies using the company’s click-and-collect curbside pick up.  Forbes liked the ad, but noted a small problem with the entire concept - basically that Walmart (and so many other retailers who weren’t seen during the Super Bowl) are essentially just catching up to a trend that’s been around for a long time.

As Forbes pointed out, curbside collection of orders would seem incredibly innovative had not McDonalds, Burger King and other fast feeders been centered around the exact same concept for decades now. In fact, many of those chains have long reported that drive-up sales dwarf what they do in-store and have for quite a while.

Granted, the parallel isn’t perfect. There is simplicity to McDonalds’ menu that no typical retailer could possibly copy. Even a limited assortment store like Aldi would have trouble making it’s entire in-store inventory available to drive up customers. However, that might miss the point of the article, which is that retailers need stay mindful of trends that delight shoppers everywhere and anywhere. Then we somehow need figure how to provide something similar.

As the Forbes columnist points out, curbside convenience is far from the end of these types of innovations and he makes a less than subtle point about the attraction of checkout-free stores such as Amazon Go.

That’s a point we cannot possibly repeat often enough. We must stay hyper-focused on the changes our shoppers see elsewhere in their lives that, fair or not, raise their expectations of what can be done everywhere. It could be the popularity of new food and beverages items in restaurants, or changed experiences in movie theaters, banking, amusement parks and elsewhere.

If something new turns shoppers on, we at least need to consider if there’s a parallel product or service we too can offer especially when the answer isn’t obvious. It’s one more reason why we also need to harvest the diversity of our teams to find out what appeals to varied groups of people so that we can understand things well beyond our own experiences. 

Or put another way: is there any application of Fortnite that might actually make the supermarket shopping trip more interesting? How about StitchFix? I have no idea, but I bet someone does and if they do it, watch out!

Michael Sansolo can be reached via email at <A HREF="mailto: msansolo@mnb.grocerywebsite.com "> msansolo@mnb.grocerywebsite.com </A>.  His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

And, his book "Business Rules!" is available from Amazon here.

Published on: February 11, 2020

by Kevin Coupe

There is a Bronx, New York, deli and convenience store called Lucky Candy where one of cashiers, Ahmed Alwan - who is the son of the owner - has begun playing a game with customers.

CNN reports that "the rules are simple: If you can solve a math equation, you get five seconds to grab anything you want off store shelves and have it for free."  Customers "scramble around the store grabbing anything from chips and ice cream to speakers and hookahs. But no matter how much they grab, or how valuable the items are, their cost is always the same: $0."

The story says that "Alwan pays for everything out of his own pocket. His main concern isn't money, he said, but helping low-income community members save for higher priority expenses, such as rent and utilities."  His dad says he's proud of him:  "It's great to see him do good and help out the community, and most importantly represent Islam.  It's impacting the business in a positive way, bringing awareness and attention to the store as well as spreading positivity throughout the community."

Indeed, "Alwan has become an internet sensation, gaining more than 300,000 followers on TikTok and 17,000 on Instagram. In his videos, Alwan can be heard asking customers simple questions such as, 'What's 5 times 5?' or '9 times 9 minus 5?'."

Now, Alwan says that "he plans to continue making videos, and even getting more creative with his questions. He even started a GoFundMe to support the game and enable him to help more people."

(I wish my dad were around.  He was a math teacher down to the deepest reaches of his soul, and he would've appreciated this young fellow.)

Community engagement by a retailer always is an Eye-Opener.  But this adds up to something really special … because in the broadest cultural sense, it is about multiplication, not division.

Published on: February 11, 2020

The Verge reports that a new eMarketer study says that 70 percent of smart speaker users in the US this year will be having conversations with one of Amazon's Alexa-powered systems.

That's a small decrease from 2019's 72.9 percent, but it is still an enormous advantage over Google's system, which will be used by 31.7 people.  Apple's Siri is so insignificant that it gets lumped into "other," which is unlikely to even break 18 percent.

According to the story, "Growth of smart speaker use in the US will slow in the coming years, eMarketer’s report finds, but the number of users will continue to increase as Alexa, Siri, and other voice assistants expand beyond just the home, and into cars and smart home appliances. The report estimates about 83.1 million people will use a smart speaker this year, a 13.7 percent uptick from last year."

The Verge goes on to explain the appeal this way:  "Amazon has consistently released features that make its Echo and other Alexa-enabled devices more intuitive, eMarketer says. Opening Alexa devices to outside developers and making them compatible with third-party smart home devices also helped boost Amazon’s smart speaker position. Those things aren’t unique to Amazon, however, as smart speakers from both Google and Apple are also compatible with many smart home gadgets."

Published on: February 11, 2020

The New York Timeshas a story about the Dart Corporation, which makes, "by the millions, white foam cups, clamshells, coffee cup lids, and disposable forks and knives — the single-use containers that enable Americans to eat and drink on the go. It employs about 15,000 people across 14 states."

The problem is that Dart's products increasingly is viewed as a threat to the environment, with "cities and states … increasingly banning one of Dart’s signature products, foam food and beverage containers, which can harm fish and other marine life … Maine and Maryland banned polystyrene foam containers last year, and nearly 60 nations have enacted or are in the process of passing similar prohibitions. Some elected officials and environmental groups say polystyrene containers are difficult to recycle in any meaningful way."

But Dart is said to be fighting back.  The Times writes that "San Diego recently decided to suspend enforcement of its polystyrene ban in the face of a lawsuit by Dart and a restaurant trade group, which argued the city should have conducted a detailed environmental impact study before enacting the law. The city is now performing that analysis."

Dart CEO Jim Lammers puts it this way:  "We don’t believe there are good, objective reasons to single out certain materials."

According to the story, "Dart is waging a broader campaign to argue that its products are being used as scapegoats for a society fueled by on-the-go consumerism. Dart says that critics of polystyrene are ignoring the negative environmental impacts of other products, like many paper cups, which are derived from trees and can emit greenhouse gases as they degrade in landfills. By Dart’s reasoning, most materials inflict some negative impact on the environment, so it doesn’t make sense to ban one  and not another."

Published on: February 11, 2020

Edgewell Personal Care, owner of Schick razors, has decided to abandon its efforts to acquire Harry's Inc. for $1.37 billion.  The decision comes in the wake of a Federal Trade Commission (FTC) suit to stop the deal, citing a probability that it would lead to higher consumer prices.

The move was pleasing to investors, who were concerned about the price of the acquisition, considering that Harry's had more visibility and cachet than profits.  (It has been losing money.)

The Wall Street Journal writes that "Edgewell’s move hands a notable victory to the FTC, which spent months considering whether the proposed transaction would lead to higher consumer prices. The commission, made up of three Republicans and two Democrats, reached the unanimous conclusion that the tie-up would eliminate one of the most important competitive forces in a shaving industry that has long been controlled by two entrenched companies."

Published on: February 11, 2020

•  The Verge reports that "in a letter sent Friday, US senators called on Amazon CEO Jeff Bezos to reform its safety practices and improve its treatment of workers … Amazon has come under fire for dodging workplace safety regulations for years."

The letter was signed by Bernie Sanders, Kamala Harris, Elizabeth Warren, and Cory Booker - all current or recent candidates for the 2020 Democratic presidential nomination - among others.

"Any practice that puts profits before worker safety is unacceptable,” the letter reads. “We urge you to take immediate steps to protect your employees from workplace injuries. Your employees’ lives and well-being depend upon your swift action.'  It’s addressed directly to Amazon founder Jeff Bezos and requests a written response, including what actions the company will take, by February 21st."

Published on: February 11, 2020

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

•  Yahoo Finance reports that when "Popeyes launched its first-ever chicken sandwich Aug. 12, 2019," it "had no idea it was about to change the fast food chicken sandwich game in America … After a Twitter feud between rivals Chick-fil-A and Wendy’s (WEN), the Popeyes Chicken Sandwich went viral and sold out in stores in just two short weeks."

It was a bottom line success:  "The popular chicken sandwich drove same-store sales of 34% during the fourth quarter at Popeyes … Popeyes' jaw-dropping fourth quarter comes on the heels of a pretty impressive third quarter when the chicken chain reported same-store sales growth of 9.7%."

•  MarketWatch reports that "Simon Property Group Inc. said Monday it has agreed to acquire mall real-estate investment trust Taubman Centers Inc. in an all-cash deal valued at about $3.6 billion … Under the terms of the deal, Simon will acquire an 80% interest in Taubman Realty Group Limited Partnership, which owns Taubman Centers. The Taubman family will sell about a third of its stake in the company at the transaction price and remain owner of the remaining 20% of shares."

The story notes that "the move comes at a time when malls are facing steep pressure from e-commerce, which has caused foot traffic to decline sharply and many are looking at new ways to draw in shoppers — and tenants. As retailers shutter stores to save costs, malls are finding themselves without the anchor tenants of the past such as Sears, and are looking to add entertainment outlets, health clubs and grocers and even dentists."

It would seem that the folks at Simon believe in the future of the mall …. I had the chance to interview Patrick Flanagan, Simon's senior vice president of digital marketing and strategy, for the Retail Tomorrow podcast, and he suggested that a) it can be a bull market for malls, and b) malls are in so many ways going to be different from what they have been in the past.  This is areal challenge for companies like Simon, which cannot just be landlords anymore.  Obviously, Simon believes it is up to the challenge.

•  QSR reports that "Dunkin’—as part of the push for NextGen remodeling—will shell out roughly $60 million for 'state-of-the-art, high-volume' brewing equipment for domestic locations, with matching investments from franchisees, it said. The brewers will allow the brand to expand the variety of drip coffee blends, increase operational efficiencies, reduce waste, and enhance the quality and consistency across the system. This is on top of the new espresso machines installed in 2018 and the new iced coffee brewers in 2019.

"The brand ended 2019 with 525 NextGen stores, a redesign including an eight-headed tap system, modern décor, front-counter bakery, efficient coffee line, and enhanced pick-up area. The company expects to end 2020 with 1,400."

•  The International Housewares Association announced that because of concerns about the coronavirus outbreak, the International Sourcing Expo - which was to be part of its annual Chicago show March 14-17 - will not open this year.

The decision was made" to protect the health, safety and well-being of the industry from concerns about exposure to the virus," said Derek Miller, IHA president.

Published on: February 11, 2020

•  Kroger yesterday announced that Keith G. Dailey, the company's vice president of corporate affairs, has been promoted to group vice president of corporate affairs.

•  Associated Wholesale Grocers (AWG) announced that Emile Breaux, SVP, Regional Supply Chain Operations, has assumed leadership of AWG’s Real Estate team, in addition to his current responsibilities. Emile will work directly with David Smith, President and Chief Executive Officer, on all real estate matters and continue to report to Dan Funk, Chief Operating Officer, on all other supply chain and division responsibilities.

Published on: February 11, 2020

Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

•  The Washington Post reports that Amazon Web Services has filed a motion in the US Court of Federal Claims looking to depose President Donald Trump, as well as Secretary of Defense Mark T. Esper, in its challenge of the Pentagon's decision to award a $10 billion cloud computing contract to Microsoft.

The move by Amazon, the Post writes, "significantly raises the stakes in a bitter procurement dispute over a long-awaited defense contract to create the Joint Enterprise Defense Infrastructure, known as JEDI. The contract would create a powerful, centralized computing system for use by the military and operated by a single commercial technology company."  Amazon is charging that Trump's antipathy toward Amazon CEO-founder Jeff Bezos, who also owns the Post in a personal investment, prompted him to interfere in the bidding process.  (The Post has been aggressive in its coverage of the Trump administration, doing things like keeping a regular tally of what it calls "false and misleading claims" by the president.)

According to the story, "In its filing, Amazon seeks to question Trump on any communications he’s had with Microsoft, as well as Oracle, another tech giant that sought the JEDI contract and whose chief executive has dined with the president … Amazon is also seeking to ask the president about his communications with Esper over his appointment, and any discussion they had about the JEDI award."

Published on: February 11, 2020

The other day we had a story about wearable technology that is going to be available to truckers to help them be safer when on the road, and I suggested that it'd be great to make it accessible to consumers, as well - except for autonomous cares, because "computers don't get sleepy."

One MNB reader responded that while computers don't get sleepy, "they do crash…"

I thought that was a fair point, but another MNB reader wrote:

Actually it's not a fair point...statistically commercial drivers crash far less often than car drivers do and whenever cars and trucks do collide, more often it's the car that is at fault because they don't know how to drive around trucks (speeding, unsafe lane changes, distracted driving, etc.).

I won't pile on a list of statistics and I'm not saying commercial drivers are perfect but there are many drivers with millions of safe, accident free miles under their belts who take pride in what they do.

Regarding NIMBY attitudes that sometimes kick in when legalized pot shops want to open in certain neighborhoods, one MNB reader wrote:

Kevin, is the issue of “pot shops” in neighborhoods a short term issue?  Will this just become akin to having a liquor store in the neighborhood?  I agree with your sympathetic bend to the current concerns.  But at some point this will be normalized, or will it?

Portland, Denver and Seattle should be the litmus test on time.  I went into a Seattle shop while visiting recently.  The whole process was very systematic and staff were super helpful, even though I did not buy anything.  That said the demographic is a little different than the wine store down the block.  

Short term, keeping access limited and selective seems prudent.  Long term, if this becomes federal legal, change is inevitable.  I support legalization to cut the black market element and gain control over efficacy and strength.  The tax income won’t hurt, and could help fund enforcement of proper use.  Pandora is out of her box, so embrace it, but let's get this right. Move slow, think deeply, be careful.

I mentioned Tennessee Ernie Ford's "16 Tons" yesterday, and lamented a bit by the fact that few people under a certain age have heard of him or it.

One MNB reader responded:

When I was a high school senior, our vocal music teacher required that all of us seniors had to take a solo piece to our state vocal music contest.   I begged her to let me do “Sixteen Tons” and she steadfastly refused.   Instead, she selected “Asleep In The Deep”, which apparently made the “greatest hits” listing of 1897.  J   I carry around Tennessee Ernie Ford’s version with me on iTunes and listen to it frequently; there is nothing better.  

And finally … yesterday I told you that on Friday, even before the new MNB had been launched, i got an email from a reader suggesting that my new investment from Accelerate is the beginning of the end for MNB - "it was a good run, congratulations," he said, pointing out that this is inevitable when mergers and acquisitions occur.

I responded:

Such cynicism … but I have to admit that it made me laugh out loud.  The new site hadn't even been launched yet!

We’ll see.  The good news is that I still own the joint … I’m not being merged or acquired.  And not only do I trust the folks with whom I am working, but I trust the MNB community to hold me - and them - accountable.

The vast majority of MNB readers yesterday - despite the glitches in the new site - were congratulatory. But not this fellow:

We have been through dozens of mergers/buyouts over the years ... your reader from Friday is not being foolish ... only experienced. You have now gone Corporate, which means no matter what you say...you will lose the intimate relationship you’ve had and morph into something else. We already see it with the new formatting. Matter of fact, I remember these very words from you when this has happened with companies in the industry over the past

18 years... laughing out loud doesn’t make it not true.

Well, I don't think I've gone corporate.  I don't think the new format reflects corporate-think … I hope we did it because we wanted to make MNB more accessible, not less.  And if the intimacy of my relationship with the MNB community suffers, that's on me … and I'm going to do my best to maintain what always has been one of the most rewarding parts of MNB.

Published on: February 11, 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.