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    Published on: February 21, 2020

    by Kevin Coupe

    Is the Swiss watch industry being disrupted out of business?

    CNN reports that in 2019, "the Apple Watch outsold the entire Swiss watch industry in 2019.  The Apple Watch sold 31 million units worldwide, while all Swiss watch brands combined sold 21 million units, according to research from consulting firm Strategy Analytics."

    Now, Swiss watches still bring in more revenue than the Apple watch, but experts seem to be divided on whether this trend means that "the end is near" for the traditional Swiss watch industry.

    Part of what has happened is that Apple has accomplished something unique - it has turned its smart watches into both a fashion statement and a kind of status symbol.  And the revenue advantage that Swiss watches have might not last forever; the very nature of technology means that people will replace them with the latest and greatest, which will generate more sales for Apple.  Not to mention the fact that smart watches have managed to get a generation that is used to checking the time on its smart phones to actually wear the devices on their wrists.

    Plus, CNN writes, "The company also benefits from its greater ecosystem of iPhone, iPad and other Apple-branded products. While Swiss companies also sell smartwatches, they operate in the Android ecosystem."

    It is, I think, a metaphor for many businesses, just cruising along on tradition until someone has a transformational insight … and then, boom.  Suddenly your item movement ain't what it used to be, and people are wondering if your business is going to survive.

    Tick, tock.  Tick, tock.  Tick, tock.

    Still, there may be limits to Apple's ability to disrupt the traditional Swiss watch business.  While it could be wishful thinking, some experts believe that Swiss watches will speak to a desire for "timeless luxury" in a way that Apple watches never will.

    Which is possible.

    I say this as someone who wears a regular non-Swiss watch and has no interest in any sort of smart watch.  In fact, one of my watches was given to me in 1980 by the woman who would become Mrs. Content Guy, and it still is working just fine.  When I look at that watch, I see the time, but something else, too … and it has nothing to do with timeless luxury.

    What I see is an Eye-Opener.

    Published on: February 21, 2020

    MNB readers will remember that back in January, we reported on the passing of Frieda Rapoport Caplan at age 96.

    Frieda was a legend in the food business, having launched Frieda's Produce Specialties in Los Angeles back in 1962. It was the first wholesale produce company owned and operated by a woman, but in some ways that was not the most significant of her achievements.  Frieda changed the way Americans eat, having introduced items such as kiwis, mangoes, habanero and shishito peppers, passion fruit, blood oranges, shiitake mushrooms, turmeric, and hundreds more fruits and vegetables into the nation's diet.

    Frieda was extraordinary.

    Tomorrow, at 11 am PST, there will be a celebration of Frieda's life in Los Angeles at which many of us will have a chance to tell stories and share memories.  If you'd like to be part of it, this celebration will be live-streamed on YouTube, and also will be available to watch afterwards.

    I know I speak for the Caplan family when I say I hope you'll join us.

    Published on: February 21, 2020

    From the New York Times:

    "For the first time, five distinct generations of employees - traditionalists, baby boomers, Generation Xers, millennials and Generation Zers - coexist in the workplace, all gathering around the same water cooler or washing their dishes (or leaving them for someone else to wash) in the same communal office sink.

    "In 2018, more than 4 percent of Americans age 85 or older were still working; the millennial generation makes up about half of the American work force. The culture clash rooted in the vast age differences among colleagues — who in some industries, like retail or service, can be competing for the same jobs — is amplified by young people arriving with a digital skill set that their managers often need but might not have.

    "Across industries, hiring managers and recruiters have had to fine-tune their strategies to attract a new hiring pool: both because of the sheer number of potential workers and because no one else can figure out how to embed a GIF."

    It gets complicated.  "Growing up after - or through - the Great Depression and World War II made traditionalists comfortable with sacrifice, hard work, rules and authority; baby boomers were likely to privilege their careers above all else, competing for the big title and the corner office, leaving their personal lives at the door. Next came the 65 million people in Generation X, latchkey kids who came of age during the 24-hour news cycle and were disenchanted because of it. Boomers raised millennials, who were coddled by open communication, collaboration and casualness; they love team meetings, regular feedback and calling parents by their first names. Xers are raising tech-savvy Zers, who are pragmatic, driven and competitive digital natives - which is to say they’re on Snapchat, not Facebook."

    So, faced with generational crises, when all these people have to work together on the same project, who ya gonna call?

    According to the Times, generational consultants.

    The story describes generational consultants as "the astrologers of the workplace: making broad assessments of a person - and millions like them -  based on when they were born and advising hiring managers and human resources accordingly."

    You can read more about these consultants here.

    KC's View:

    Reading this story, I've never been so happy that I've spent most of the last 25 years - and continue to spend - my worklife as a writer.  Which is to say, essentially by myself.

    I like working with people, and spending time with people, but managing all these different groups and habits and expectations seems utterly exhausting.

    The thing is, what seems to bind all these groups together is a desire to be respected … but the ways in which they want that respect to be  shown can vary wildly.  It seems to be that the one thing you can't do is assign the same  motives to everyone or have the same expectations and reward structures for everyone.  At least, you can't if you want to manage people.

    What you can expect is that they'll get the job done, and will do it well.  It is just that everybody travels a different road to get there, and it is managerial and leadership malpractice to expect otherwise.

    Published on: February 21, 2020

    Movie Pass - which created a national subscription service that allowed people to go to the moves far more cheaply than they used to - may be out of business, but national movie theatre chains AMC and Regal have their own, hoping to build traffic and create moviegoing habits that go beyond Netflix and Prime Video.

    Now, independent Alamo Drafthouse, described by Variety as "the Texas-based cinema chain that popularized in-theater dining," is offering its own subscription service - "Season Pass, a monthly program that will be available to patrons in its 41 locations across the country."

    According to the story, "Season Pass will provide one regularly priced ticket per day, with reservations available up to seven days ahead. Prices will vary by location, corresponding to the average ticket pricing in each city. Season Pass will cost between $14.99 per month to $29.99 per month in metropolises like Los Angeles and New York.

    "For premium formats like 3D, 70mm or Dolby screens, members will have to pay a $1.99 surcharge per ticket. Season Pass holders can purchase regular tickets for accompanying family and friends at the same time, or they can reserve up to four extra seats for a discounted price."

    KC's View:
     

    This is a great example of how innovation is not reserved for just the big companies, and how even smaller entities have to find ways to … build traffic and change habits.

    That's what companies have to do.  So many people have gotten into the habit of just going online and ordering - often, but not always, from Amazon - that sometimes it takes something dramatic to make them behave differently.  This what Amazon did with Subscribe & Save - create a subscription service that dramatically changed people's behavior in a  range of categories.  But too few retailers seem to have recognized the threat and responded to it with their own subscription/replenishment services - basically conceding this business to Amazon.

    One thing you can't do is business as usual.

    Published on: February 21, 2020

    The New York Times reports that Amazon - hoping to be able to keep its reputation as the "Everything Store," but recognizing that the spread of the coronavirus and its imp[act on factories in China - has begun "making larger and more frequent orders of Chinese-made products that had already been shipped to the United States, according to company emails and consultants who work with major brands. Some of its suppliers have cut back on advertising and promotions on the site so they don’t run out of products too quickly.

    "Amazon also sent an urgent email to brands on Wednesday about Prime Day, its midsummer mega sale, indicating that it has begun worrying about inventory for the event. And the company has contacted some of its third-party merchants, whose dog leashes, crayons and other products account for about 60 percent of its sales, to figure out how their flow of goods might be impeded."

    Amazon's reliance on Chinese manufacturing, the Times suggests, has turned the online retailer "into a case study of how a giant retailer grapples with the fallout from the coronavirus and what may lie ahead for other stores … Amazon is likely to feel potential shortages of goods earlier than its American peers because it usually keeps fewer items on hand than they do. In good times, that lets the internet company run more efficiently because it does not tie up money to buy and store products that are waiting to be sold.

    You can read more about it here.

    KC's View:

    Maybe this is overly simplistic, but couldn't Amazon simply postpone Prime Day if its supply chain is too severely affected.  There's got to be a way that simple transparency - you know, treating people like adults - could turn this potential problem into an opportunity.

    If I got an email from Amazon saying that the continued impact of the coronavirus meant that it is urging it factories and suppliers to put the health of their people first, and that when things get better, it'll do a better-than-ever Prime Day, I'd respect Amazon.  I'm sure that sales and profits would take a hit, but maybe being a responsible citizen ought to count for something.

    Published on: February 21, 2020

    •  MarketWatch reports that Walmart "expects to save $60 million annually on plastic shopping bags, 'just by changing our buying process and better utilizing our scale,' Chief Financial Officer Brett Biggs said … Biggs also said the company is saving 15% on the cost of vests worn by sales staff, which are made with recyclable materials. Biggs said the vests are 'more comfortable and more sustainable'."

    The story notes that "this isn’t the first time Walmart WMT, +0.01%   has announced savings from a random corner of the business. Back in October 2018, the company said it would save $20 million annually by switching to a new floor wax that was cheaper and made it possible to buff the floors fewer times.

    Published on: February 21, 2020

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



    •  From the New York Times:

    "Leslie H. Wexner will step down as the chief executive and chairman of L Brands as the company announced Thursday that it would sell a majority stake of its crown jewel, the lingerie brand Victoria’s Secret, to a private equity firm. The sale came after months of scrutiny of Mr. Wexner’s close ties to the disgraced financier Jeffrey Epstein and questions about the company’s internal culture.

    "L Brands said it would sell a 55 percent stake of the lingerie brand to Sycamore Partners, a firm that specializes in retailers, for $525 million. Mr. Wexner will become chairman emeritus of L Brands when the deal is finalized, which is expected this spring. Bath & Body Works, also owned by L Brands, will become a separate public company."

    I think a lot of folks are supposed to feel sorry for Wexner because of what is an inglorious end to a long and successful career, but they lose me at "Jeffrey Epstein."

    I am so done with companies and executives that have cultures that prey on the defenseless, and as far as I'm concerned, anyone who was doing business with Epstein ought to be drummed out of polite society.  I'd send them to a leper colony, but lepers shouldn't have to be anywhere near these people.  Same goes for the enablers of people like Bill Cosby and Harvey Weinstein, and, while we're at it, how about anyone in a management position who moved a member of the clergy from one church to another so they can victimize more kids.  Shut all these institutions down, and send the people who ran them to jail.



    •  From the Wall Street Journal, a story about how garlic prices are rising, up 29 percent in February compared to the same month a year ago.

    "The reason: the widening coronavirus outbreak is causing disruptions in the supply chain in China, the world’s largest producer of the vegetable."  Largest is right - China grows about 80 percent of the world's garlic.

    The impact is likely to felt in the US, where the average citizen consumes about two pounds of garlic a year.



    •  From USA Today:

    General Mills said this week that it "plans to bolster sales by offering a ready-to-eat breakfast meal complete with real maple berries, dried cherries and almonds. The catch: A box is priced at more than double the cost of an average box of cereal in the U.S.," or about $13 a box.

    According to the story, "The cereal (is) aimed at health-conscious consumers also contains organic coconut oil and pumpkin seeds. For sweetness, General Mills added dried sugary cranberries and dried cherries to the blend.

    "The sales price is part of a strategy to offer 'compelling innovation' and 'health benefits' that give consumers a reason to walk down the cereal aisle at grocery stores."

    General Mills may want to consider funding defibrillators from supermarket cereal aisles, because a $13 box of cereal is going to give a lot of folks a heart attack.

    Published on: February 21, 2020

    •  Sprouts Farmers Market, which has 340 stores in 22 states, announced that it has named Doug Rauch, who spent 31 years at Trader Joe's, including 14 as president, to its board of directors.

    According to the announcement, "Rauch was instrumental in Trader Joe’s growth from nine stores in California to a national chain, as well as the development of its prized buying philosophy and creation of its unique private label food program. Rauch also founded and serves as president of Daily Table, an innovative retail concept designed to bring affordable nutrition to the food insecure in Boston’s inner city. Rauch was also a founding board member and chief executive officer of Conscious Capitalism Inc., an organization dedicated to the practice of business as a force for good, where he continues to serve as a board member."

    Published on: February 21, 2020

    The Associated Press reports on the passing of computer engineer Larry Tesler, at age 74.

    Tesler, the story points out, was the person who, while working at Xerox, developed the process that allows people to “cut,” “copy” and “paste" while working on their computers.

    “The inventor of cut/copy & paste, find & replace, and more was former Xerox researcher Larry Tesler. Your workday is easier thanks to his revolutionary ideas,” Xerox said in a tweet Wednesday.

    “Cut,” “copy” and “paste" make my work possible each morning.  It is important to remember that it is people who create such innovations, people who do seemingly small things that re-order the way we do things.

    Published on: February 21, 2020

    The other day MNB took note of a U.S. Public Interest Research Group (PIRG) report that a survey of "26 of the largest grocery stores in the United States to determine the efficacy of their policies and practices notifying consumers about food recalls" revealed that most were not getting the job done.

    FMI-The Food Industry Association begged to differ, suggesting that in fact, "this is the most fundamental service grocers provide to maintain the trust of their customers … The greater food industry is effective at recall communications, particularly grocers at the end of the supply chain due to the number of recalls they manage with varying products and volume."

    I commented:

    This is just anecdotal, but I do not think I have ever - EVER - received a notification from a supermarket chain with which I have done business about a recall.

    EVER.

    Also anecdotally, I would suggest that during various recent recalls - like of lettuce - while the product may have been pulled from the shelves, there was little if any signage in stores I visited explaining why the items were gone, and what the store knew about the situation.  And when the recalls were over, those items magically returned, but again without explanation or reassurance.

    Failing grades on this issue for most supermarket chains don't surprise me.  Most retailers I talk to about it think that being educational and informational puts them at risk if the facts change or new data becomes available, and so they'd rather say nothing.  And then they wonder why their relationship with the shopper can be put at risk by disruptive influences that understand the importance of making and maintaining such connections.

    MNB reader Roger Hancock responded:

    Thanks for posting the PIRG research report, FMI response and your commentary on recall effectiveness.  With more than two decades and thousands of recalls, of experience, it interests me to see how all of your perspectives are correct.  Surveying the world of retail, lots of work remains.  Taking a subset of retailers, many are working hard to better communicate with consumers on multiple levels.  From an individual shopper's point of view, recalls can be confusing because they are in the news, items may have been purchased, but perhaps not the specific lot or date code so no message is sent. 

    The recall process across the supply chain (or web as I think better describes it) has a level of complexity that would take pages of explanation.  Suffice it to say, the process is improving on many levels - standardization, automation, specificity and waste reduction, to name a few.  No one likes recalls.  Businesses hate them and consumers afraid of them.  Working together, having trading partners standardize information and adopt automation will better serve the public, and streamline compliance efforts.  The industry is moving slowly in this direction, and with your nudging may speed up.

    I hope so.  But I am, I must admit, at best a skeptic and at worst a cynic when it comes to many retailers' willingness to be transparent about such issues.  



    Regarding Blue Apron deciding to evaluate its strategic alternatives, MNB reader Mike Moon wrote:

    My guess is that Blue Apron has two major issues. 1. The cost of the service is a bit high, in my opinion, making it hard to get new subscribers. 2. Once the current subscribers figure out how easy it is to cook from scratch, they find they don't need the subscription anymore. Maybe Blue Apron is missing an opportunity to develop a robust Youtube and Instagram platform, sharing recipes and teaching culinary basics. Subscribers = ad revenue. Also, could they position themselves to be a source for some of the more exotic ingredients that can sometimes be difficult to find?

    We had a story yesterday from Bloomberg about how some experts believe we could be entering a time in which consumer spending will begin to soften, which prompted one MNB reader to write:

    Hard to take seriously anything reported by Bloomberg right now.

    First of all, I think Mike Bloomberg has more important things to worry about than stories about consumer spending - like making sure he doesn't get his rear end kicked again in the next debate.

    Also … I know some Bloomberg journalists, and they're not shading stories his way.  Far from it.  And they hate the idea that current events have led to people even suggesting that.



    Regarding the problems that Bed Bath & Beyond's new CEO, Mark Tritton, is trying to fix, in part by editing the selection, MNB reader Tom Murphy wrote:

    Many of the diseases that Mr. Tritton is looking to fix, have been and are still, a staple of the grocery industry.  For instance, merchandisers have always practiced “wide and deep”…how many sizes, scents and brands of liquid dish soap do you need.  Even better, how many brands of anchovies do you need…which brand is your favorite?  This is driven by poor discipline, but also constant product intros by manufacturers…most of which are cheap line extensions.

    Another problem, check the peanut butter section…in addition to the above “wide and deep” issue, how many of the products are on promotion at the same time?  I have seen 12 foot sections of national and private label brands where 80% are on promotion…and many probably have a customer loyalty card discount and/or manufacturer coupon on top.

    Finally, if you are under 50 and walk into a grocery store that doesn’t have WiFi…lookout for the stampede as these customers rush out the door.

    Unfortunately, a lot of our grocer’s pain and challenges remain “self inflicted”!

    I commented:

    One of the hardest things that Bed Bath & Beyond will have to do is retrain an entire customer base not to wait for those damned blue-and-white coupons to come in the mail before shopping there.  That's got to be a killer, and undermines its ability to communicate value beyond discounts.

    One MNB reader agreed:

    Those coupons - nailed it! I don’t even use coupons regularly for anything,  but I’ve learned to not shop there unless I have one.



    Yesterday we referenced a New York Times story about "a collective of about 40 bakers, millers, teachers and wheat-breeders who work with the Bread Lab, a famed research center affiliated with Washington State University that has long focused on developing wheat varieties specific to regions of the country. Since last April, using guidelines established by the lab, the collective has pursued a common goal: making a whole-grain loaf that’s familiar-looking and affordable enough to appeal to a mass audience."

    I loved this email and picture from MNB reader Michael Pignatello:

    Just as I was reading this article, my oven timer beeped. Here’s my contribution to more flavorful and nutritious bread. Four ingredients - flour, salt, yeast, water. All for about 60 cents. 


    Save me a slice.  It looks great.

    Published on: February 21, 2020

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

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

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

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

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

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

    You can listen to the podcast here.

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

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


    Published on: February 21, 2020

    I think I was putting off seeing Marriage Story because I just didn't need to be depressed.  Written and directed by Noah Baumbach, the film portrays the dissolution of the marriage of Charlie and Nicole Barber, portrayed by Adam Driver and Scarlett Johansson, who play a New York theater director and a California-born actress who wants to try her hand at Hollywood after a successful New York theater career.

    In the first few minutes of the film, I found myself wondering if people not familiar with the New York and Los Angeles artistic communities would find the characters a little bit too self-absorbed to be relatable.  But as the film went on, the heart wrenching performances of Johansson and Driver won me over - they strip their emotions down to the bone, and leave it all out there to be examined and dissected.

    They are ably supported by Laura Dern, Alan Alda and Ray Liotta - all fabulous as the various divorce attorneys who, to varying degrees, see the proceedings as a game in which the Charlie and Nicole are just pieces to be moved around to their best advantage.

    I found Marriage Story to be reminiscent of two of my favorite marriage dissolution movies (which is a pretty odd turn of phrase, I grant you) - Kramer vs. Kramer and Shoot The Moon (an Albert Finney-Diane Keaton drama that does not get enough recognition for how it shows a family torn apart).

    Marriage Story - which, it should be noted, is a Netflix production - is tough to watch, but worth it.



    I was jazzed to see this week that Francis Ford Coppola's The Conversation, which I've always thought of as being at least as good if not better than The Godfather and The Godfather, Part Two, is coming back to theaters in a brand new restored print.

    A meditation on the nature of privacy - amazingly prescient, considering it was made in 1974 - The Conversation stars the great Gene Hackman as Harry Caul, a surveillance expert who finds himself deep in a conspiracy that he cannot even begin to comprehend.

    Shot in San Francisco, The Conversation has an amazing cast, a kind of Coppola acting company made up of folks who appeared in other movies he made, including Robert Duvall, John Cazale, Cindy Williams, Frederic Forrest, Teri Garr and Harrison Ford.

    It is an American classic, and whether you see it on the big screen when it starts making the rounds next month and through the summer, or just watch it at home, it is definitely worth watching.



    My wine of the week - from Oregon, the 2018 Elouan Rosé, which struck me as being fruit-forward without being too sweet.  And, like revenge, it is best served very cold.



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

    Slàinte!