business news in context, analysis with attitude

Published on: March 10, 2020

by Michael Sansolo

Sometimes it’s possible to find such a ridiculous error that it demands commentary if, for no other reason, to demonstrate a clear lessons to others.

For that reason, today we get to say thank you to Mike Bloomberg.

If you are living anywhere on the planet, I have to believe you have been beset by advertisements from the former New York City mayor in his quixotic and spectacularly unsuccessful attempt to be president.  I have no intention of commenting on the quality of the ads or Bloomberg himself, but I do have one suggestion for him:

Know your audience when you run an ad!

Here’s why I say this. Being a Baby Boomer, I happened to be listening to a classic (or dinosaur) rock station recently. In between those wonderful songs from the Beatles and Led Zeppelin a strange ad came on from the Bloomberg campaign.

Up to now, that’s no big deal. Ads run on over-the-air radio stations like the one blaring in my car. But the content of the ad nearly forced me to drive off the road.

Essentially the ad was urging younger voters to make their voices heard especially since older generations (that’s who we Boomers are now, I guess) had made such a mess of things.

The ad didn't make mer think about Bloomberg's candidacy.  Instead, I asked myself, "Do they know who listens to classic rock?"

Basically the campaign ran an ad urging young people to stand up to Boomers and older on a radio station that few under 45 are ever going to use. First off, they don’t use terrestrial radio.  Second, it was 12:30 pm on a school day.  And third, in case I wasn't clear enough -  it was classic rock!

So the campaign ran an ad that insulted the very people who likely would be hearing it.  Doing so insured Bloomberg not only missed his target market, but also basically flipped the bird to the people actually listening.

It is a perfect lesson for our times. More than ever, we have a labyrinth of demographics mixing in the marketplace. There are now more generations working together than at any time in history. Our shoppers include the traditionals (folks even older than Boomers), Boomers themselves, Xers, Millennials and now the Zs.

Marketers need to understand the vast differences between the groups to make sure products, services, jobs and everything are somehow relevant to the listeners. It means understanding who is using Facebook vs. who is using Tik Tok and recognizing that the twain rarely meet.

Most assuredly it means understanding that classic rock stations are not the place to criticize Boomers because those are basically stations geared both to us and our eternal (and correctly held) belief that quality music ended with our generation.

It’s such an obvious and foolish mistake that it bears sharing to help anyone else avoid anything quite as tone deaf as what the Bloomberg campaign managed to do to me that day.

I’d comment further, but Bohemian Rhapsody just came on and I need to sing along…

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

His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

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

Published on: March 10, 2020

by Kevin Coupe

The Wall Street Journal has an excellent story about a specific industry - movie theatres - that provides an apt and Eye-Opening metaphor for retailers.

The piece makes several important points.

Rather than blaming technology when your business starts to look obsolete, "Thales Teixeira, a former Harvard Business School professor turned consultant, has a better response … Blame the customer. If your customer was happy with your service or product, they wouldn’t be so quick to embrace the new technology."

That's what happened in the cinema business over the past few decades, as streaming services provided an economical and quality alternative to movie theatres that were seen as expensive and not all that pleasant to patronize.  Why go to the movies when you could watch Amazon Prime Video, Netflix, or any of the other streaming services that have emerged?

(The Journal story doesn't really talk about one element that has contributed to the emergence of streaming services - their willingness to invest in quality product.  Meanwhile, a lot of movies weren't all that great.)

Which meant that movie theatres - whether national chains or regionals or independents - had to invest in better seats, digital screening technology, and quality food and beverages that would make the theatre experience more compelling and attractive.  (They still need better movies, but that's another issue.)

The Journal writes:

"One of the tricks for a business disrupted by the streaming trend is to think less like Wall Street and more like a viewer. Theaters with recliners, for instance, lose at least 50% of their seating capacity. That’s a problem if you’re only operating during Christmas, New Year’s, Thanksgiving or Memorial Day, the peak moviegoing dates. But if you’re thinking about the rest of the year, when a cinema’s capacity utilization goes as low as five to 15%, you’re seeing the bigger picture."

And, it goes on:

"The anxiety felt by movie-theater executives in the face of disruption is similar to the pressure felt by grocers and retailers, taxi companies and hotel operators, sports-franchise owners and newspaper publishers. Technology allows groceries to be delivered to your door, sneakers to be bought online and advertisements to be skipped."

Like I said.  An Eye-Opening metaphor.

Be the customer.  Offer a more compelling experience.

One other thing.  Because movie theatres don't actually make movies or own studios, they can't really control the flow of product;  they're at the mercy of Universal or Disney or Paramount or whoever.  If the movies aren't good, it may not matter how comfy the recliners are.

But that's not the case for retailers, especially food retailers, which have far greater control over quality.  The time for lowest common denominator product may be passed, because people can get that anywhere.  

Published on: March 10, 2020

The Seattle Times reports that just a few years ago, Amazon's Prime Now team considered the offering of a "Green" delivery alternative that would slow down and consolidate deliveries, "a slightly slower delivery speed designed to give Amazon more time to cluster orders together and send out densely packed vehicles, saving on fuel, driver salaries and carbon emissions."

The fact is - and Amazon knew - that "t the quickest delivery options tended to be the worst for the planet," the Times writes.  "A guaranteed one-hour delivery window sometimes meant sending couriers in mostly empty vehicles darting to far-flung neighborhoods, all the while emitting roughly the same greenhouse gas emissions as a fully loaded truck or van."

Amazon knew all this - and then decided not to offer a more environmentally conscious delivery option.

The reason, at least in part, was because Amazon worried that it would give shoppers a reason to "think twice before clicking 'Buy Now'."

The Times writes that while Amazon and its CEO-founder, Jeff Bezos, have made considerable efforts to demonstrate a higher environmental consciousness, including setting ambitious goals for reducing the company's carbon footprint and pledging billions to combat climate change, "Amazon’s push to make its operations more climate friendly is at odds with elements of the company’s core business practices, some current and former employees and outside observers say.

"Bezos’ company is, in many ways, designed to promote consumption. From one-click shopping to one-day shipping, many employees are encouraged to focus on a set of goals geared toward removing barriers to shopping and inventing new ways of pleasing customers before they think to ask. That obsessive focus has helped make Amazon the largest online retailer in the world. It also makes climate activists and sustainability experts — many of whom cheer the company’s bold new goals — skeptical of Amazon’s odds of success."

Published on: March 10, 2020

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

•  From Bloomberg:

"Target Corp. has joined Kroger Co. in limiting purchases of items like hand sanitizer and disinfecting wipes in response to widespread stockpiling due to the novel coronavirus outbreak.

"Target began restricting customers to six such items per person over the weekend, spokeswoman Danielle Schumann said in an email Monday. Signs posted in stores say the move is 'due to high demand.' Kroger made a similar move earlier this month, with a limit of five items, and regional grocers across the country have done the same."

According to the story, "Target’s response comes just days after Chief Executive Officer Brian Cornell cited 'aggressive shopping' in its stores."

•  CVS said yesterday that it will start delivering prescriptions to customers for free.

"The latest steps we’re taking will help ensure patients of all ages have every option available to them when it comes to filling prescriptions,” Troyen Brennan, executive vice president and chief medical officer for CVS Health, said in a statement. "As long as COVID-19 continues to be a threat, we’ll maintain a relentless focus on how best to serve our patients, members and customers.”

The new policy begins immediately.

At the same time, USA Today reports, "Aetna, a CVS company, will also waive early refill limits on 30-day prescriptions for medicines typically needed to address chronic conditions like hypertension and asthma.  And customers who are on Medicare, or who have Aetna health policies will be able to get prescriptions for such medications that last three months."

•  CNBC reports that the Consumer Brands Association (CBA) - the trade association formerly known as the Grocery Manufacturers Association (GMA) - is calling on the US Department of Justice "to stop retailers from jacking up prices on hand sanitizer, masks and other coronavirus essentials."  The organization "wrote a letter to Attorney General William Barr on Monday urging him to take action on sellers taking advantage of the coronavirus outbreak."

“If price gouging continues over the coming months, more and more Americans will become unwilling and/or unable to pay excessive prices for these products,” wrote Bryan Zumwalt, the organization's executive vice president of public affairs.  “This will decrease the likelihood that individuals will take recommended and necessary preventative actions.”

CNBC writes that "the letter comes as Amazon, Walmart and other e-commerce companies have struggled to curb third-party sellers who are overcharging for products that have spiked in demand amid the spread of the coronavirus."

Some oversight is being provided both by the US Food and Drug Administration (FDA) and state Attorneys General, but CBA believes that tougher federal oversight is appropriate.  “Given the rapid pace with which COVID-19 is spreading and the nationwide prevalence of price gouging, it is vital that the federal government play a role in these efforts,” Zumwalt wrote.  “Accordingly, we urge DOJ to coordinate with state attorneys general to ensure a swift, effective and unified national response to price gouging."

•  The Washington Post reports that the US Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) have "sent warning letters to seven companies accusing them of marketing illegal, unapproved drugs and making deceptive or scientifically unsupported claims. It was the first time the agencies took such action involving products being touted for the coronavirus.

"The targeted products include teas, essential oils and colloidal silver."  

To be clear, there is no known cure or even treatment for the COVID-19 coronavirus.

Ironically, one of the companies targeted by federal regulators was The Jim Bakker Show, which has sold something called Silver Solution, a gel that it says is made from precious metal and can help fight the coronavirus.  Bakker, of course, is the well-known televangelist who back in eighties was accused of rape and accounting fraud and ended up serving jail time after felony convictions.  Now he's back in the news, preying instead of praying, selling useless crap to guileless believers, and saying that it believes in the product “because of the research and the advice from medical professionals that we respect."

Which makes me think that the Consumer Brands Association is right - the Justice Department has to get involved.

•  USA Today reports that Delta Air Lines announced that "it will allow travelers holding tickets to any destination in March and April to change or cancel their flight without paying a hefty change fee, regardless of when they bought the ticket.

The broad fee waiver, the first by a major U.S airline, provides travelers holding nonrefundable tickets more flexibility as trips are canceled due to the coronavirus crisis."

United, the story says, "followed suit Monday night, announcing on its website and on social media that the airline would waive change fees for the next 12 months for flights booked between March 3 and March 31, 2020."

USA Today writes that "Delta and other airlines have been sharply criticized this month for only waiving change fees for travelers buying new tickets, a policy designed to boost sagging ticket sales. Southwest is the only major airline that routinely does not charge a change fee."

I have some experience with this.  Because of the COVID-19 coronavirus outbreak/epidemic/pandemic, I've had five speaking engagements over the next six weeks cancelled or postponed … and because I booked those flights before March 1, United and Delta wanted to charge me change fees.  (Not Southwest.  It just let me cancel the ticket.  No penalty.)

I did a little research, found the email address for United's CEO, and sent him a polite email pointing out that people making reservations after March 1 were aware of the coronavirus issue, and that it was those of us who booked in January and February who really needed relief - we had no idea when we booked of how quickly things would fall apart.  I sent off the email, and within 24 hours got a phone call from United customer service informing me that they would waive all change fees for me.

It is a shame that it took an email to prompt that decision, but give credit to United for responding appropriately and quickly.  FYI … Delta did the same thing.  So it is possible to get at least some of these airlines to loosen their policies. (My kids are scheduled to go to Ireland on vacation in April, and we've been unable to get Aer Lingus to budge on its policy;  I sent its CEO the same email I sent to United's CEO, and have received no response.  Disappointing.)

•  Boston and Dublin, Ireland, both announced yesterday that they are cancelling their annual St. Patrick's Day parades next week because of concerns about the coronavirus.

New York City and Philadelphia, however, said that their plans for St. Patrick's Day parades have not changed.

Not yet anyway.

•  Variety reports that "both weekends of the Coachella Festival as well as the Stagecoach Music Festival that follows have been postponed due to concerns over the coronavirus outbreak," with plans to stage them in October.

According to the story, "Organizers have yet to release a statement, but insiders say the decision was inevitable as coronavirus panic continues to sweep the live entertainment sector.

"Dominos are falling in the festival world, as the Coachella and Stagecoach postponements follow quickly on the heels of Friday afternoon’s announcement that South by Southwest is officially off for 2020. That was preceded by a Friday morning news conference officially confirming days of reports that Miami’s EDM-based Ultra Music Festival was being called off. Today, Miami’s Winter Music Conference was also called off."

•  Italy, for the moment, has been virtually closed for business by the COVID-19 coronavirus.

From the BBC:

"Italy has extended its emergency coronavirus measures, which include travel restrictions and a ban on public gatherings, to the entire country.

"On Monday, Prime Minister Giuseppe Conte ordered people to stay home and seek permission for essential travel.

"He said the measures were designed to protect the most vulnerable. 'There is no more time,' he said in a TV address.

"Italy's coronavirus death toll jumped from 366 to 463 on Monday. It is the worst-hit country after China.

"The number of confirmed infection also increased by 24% from Sunday, official figures showed.  Cases of the virus have been confirmed in all 20 Italian regions."

•  It has become an article of faith that we have entered a period in which people should not shake hands.  Instead, people should bump fists or elbows … or maybe just wave or nod.

But in some circles, there are calls to use a very specific hand gesture, which doesn't just help avoid bodily contact, but also suggests a mindset that might be timely.

It is a gesture that, in fact, seems highly logical:

Published on: March 10, 2020

Inc. has a story about a report identifying thee trends that online retailers need to watch during the coming year, as e-commerce sales continue to grow but it becomes harder for the players to differentiate themselves.

They are:  Counterfeit Detection A.I. … Visual Search … and the Next Iteration of Voice Shopping.

Laura Kennedy, the lead retail analyst who compiled the report for CB Insights, tells Inc. that it is critical to consider these and other trends through the prism of a specific question:  "Is it going to increase conversion?"

The story can be read here.

Published on: March 10, 2020

Kantar is out with its annual look at activity in the couponing business, and it concludes that while "print promotion activity saw a decrease of 11.5% in 2019 … overall digital activity increased 9.7% to 8.7 billion coupons clipped."

Other conclusions from the report:

•  "Overall, 214 billion print coupons were printed in 2019, distributing $460 billion in purchase incentives across 129 billion pages. In looking at digital promotions, there were 8.7 billion print coupons clipped, $15 billion in purchase incentives clipped, and 2.4 billion coupon pages viewed."

•  "All digital food areas saw increases in 2019, but the single greatest driver of the increase came from dry grocery (+384% YoY)."

•  "Food accounted for 62% of all coupons clipped in digital and showed an overall increase of 13% YoY."

•  "Non-food accounted for 76% of print coupons distributed, down 9.7% YoY, due to a decline of 11.7 billion coupons in personal care from the previous year."

Published on: March 10, 2020

The New York Post reports that "Modell’s Sporting Goods is preparing to file for Chapter 11 bankruptcy," having "stopped shopping for a white-knight investor to help renegotiate its 140 leases across nine US states and the District of Columbia, and … likewise giving up on getting better terms from its vendors."

A year ago, Modell's started closing some stores, and trimmed its fleet from 150 to 140.

CEO Mitch Modell has blamed his company’s difficulties "on 'lousy' local sports teams that have depressed jersey sales, as well as a shorter holiday selling season and the warm winter, which hit jacket, boot and glove sales."

Some historical context:  "Four generations of the Modell family have run the business, which has weathered the Great Depression and multiple recessions. The first store was opened in 1889 on Cortlandt Street in lower Manhattan by Morris Modell, a Jewish immigrant from Hungary. His brother George owned a chain of pawn shops in the city."

Published on: March 10, 2020

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

•  It has been a tough few weeks for Italy, which has been hammered by the COVID-19 coronavirus epidemic and, as reported above, has basically shut down as authorities try to mitigate its spread there.

But … there was one bright spot, in the village of Settecani (located around eight miles south of Modena in Northern Italy).

In Settecani, there is a winery called Cantina Settecani that is connected to the public water supply.  Apparently someone turned the wrong valve the wrong way … and for a time, residents had Lambrusco coming out of their taps.

It took about an hour for the winery folks to notice it and turn off the supply;  during that time, it appears that some 264 gallons of premium Lambrusco was lost - some of it bottled by quick-thinking residents for later consumption.

Talk about a happy hour.  Frankly, the folks in northern Italy deserve it.

Published on: March 10, 2020

•  CNBC reports that "Chipotle Mexican Grill founder Steve Ells has stepped down from the chain’s board and relinquished his title of executive chairman after current CEO Brian Niccol was named chairman."

Ells founded the chain in 1993 and served as CEO until 2017, when he stepped down while the company was enduring food safety issues.  That's when Niccol, until then the CEO of Taco Bell, joined the company.

Published on: March 10, 2020

Reacting to Albertsons' announcement that it intends to file for an IPO - again - on a day in which the stock market had its worst performance in a decade, one MNB reader wrote:

Albertsons can’t catch a break. Every time they announce an IPO, the market goes haywire. I’m starting to wonder if they are the cause…

Responding to our story yesterday about Tupperware's troubles, MNB reader Yvonne Manganaro wrote:

You may not be aware of an interesting group within the Tupperware salesforce that has done very well. Writing as a friend of one of the top-selling Tupperware sales people in the U.S. – it can work but it is about the experience. “Kay Sedia” is a drag performer who has had extensive local TV coverage for the fun and festive events that Kay hosts. Kay also hosts Drag Queen Bingo and is part of a comedy troupe too.

Note that a party with Kay is completely different than the dour lady that was set up at a local school carnival just last year trying to sell Tupperware. That felt dated, sad, and like a huge disservice to the brand. If Tupperware licenses anybody willing to try to sell, it does not reflect well on the brand.

My grandmother’s Tupperware from the 60s is still in use in our family; I personally believe their brand is much higher quality than Rubbermaid and others of their ilk. I would hate to see the brand disappear, but if they can’t manage to elevate the expectation of their sales team while simultaneously pushing online sales, they will be a relic of the past. Not every part of the country of world can have its own salesforce of drag performers, alas.

We had a story yesterday about NASA hiring astronauts, prompting one MNB reader to write:

Where was this when I was a kid?

Right?  Though my lack of facility for math and science might've been a problem.

Finally, following up on our obit yesterday for actor Max von Sydow and listing of his diverse credits, one MNB reader wrote:

You forgot his greatest role…

Hail Ming the Merciless!!!  (in Flash Gordon)

And from another reader:

You forgot his greatest role…

Brewmeister Smith in Strange Brew.

Not Klaus Ziegler in "The Simpsons"?