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    Published on: June 29, 2022

    The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    In the last regularly scheduled Innovation Conversation before the summer break, Tom and KC talk about how retailers ought to think about innovation at a time of inflation and recession … how integrated offerings from online retailers can create a whole greater than the parts … and engage in a lightning round discussing a variety of recent technology stories.

    If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

    Published on: June 29, 2022

    by Kevin Coupe

    Variety reports on a new 2022 Streaming Satisfaction Report from Whip Media concluding that "Netflix remains the most indispensable service among major streaming platforms, with 31% of U.S. members saying they would keep the service if they could only have one video subscription."

    In addition, "Netflix ranks No. 1 for both user experience and content recommendations on the survey."

    But there's a problem:  "On perceived value, it comes in dead last among the nine subscription VOD services tracked; HBO Max ranks highest and Disney+ is in second place."

    Variety notes that "even as Netflix held the top spot in Whip Media’s 2022 survey as the single must-have service, it dropped 10 percentage points compared with the company’s 2021 survey, while HBO Max and Disney+ both made gains from last year."

    I found this fascinating because, coincidentally, I've been having virtually the same conversation with a number of people over the past month or so.  The question I've posed is this:

    If you had to give up one streaming service, which one would it be?

    More often than not, the answer to this question was:  Netflix.

    I know I feel that way.

    The thing about Netflix is, it has a ton of content and is easy to navigate.  But for me - and, apparently, a lot of other people - frequently it ends up that the content isn't anything worth navigating to.  The proprietary content - movies and series produced by or for Netflix that are its equivalent of private label - is stuff I've often found to be not very good.  Not always - there are things I've seen on Netflix that I have enjoyed, but not nearly as many or as much as on Paramount+, HBO Max, Hulu, Amazon Prime Video, and Apple TV+.

    The Eye-Opener here is that when you think about streaming services, Netflix may not have invented the venue, but it certainly has been a leader.  And yet, according to the Whip survey and my completely unscientific polling of friends and family, it seems to be losing its advantage.

    Proving yet again:  There is No Such Thing As An Unassailable Advantage. 

    The retail lesson is clear.  All the things you may think give you a differential advantage in the marketplace are only as effective as they are today.

    Tomorrow, your competition may come up with something better.  Of greater value.  Cheaper.  Different.  Faster.  Tastier.  Transcendent.  Or whatever.

    The one thing that no business ever can do is be complacent about their advantage.  

    Say it after me again:  There is No Such Thing As An Unassailable Advantage.

    Published on: June 29, 2022

    Amazon said yesterday that it plans to drive sales at its Amazon Fresh bricks-and-mortar stores by offering Amazon Prime members a 20 percent discount on select items.

    “We’re excited to launch the new Prime member savings benefit at Amazon Fresh stores today, offering 20% off everyday essentials across aisles,” Jeff Helbling, vice president of Amazon Fresh, said in a prepared statement.  “Prime members get the best of shopping, savings and entertainment every day from Amazon, and we’re thrilled to add another benefit to their membership.”

    KC's View:

    My question is simple:  What took them so long?

    It always has seemed obvious that Amazon - which has been singularly focused on driving Prime membership numbers over the years - could add a tangible benefit to the program by offering better prices in its bricks-and-mortar stores.

    And, it has so much data that it also can send targeted emails to Prime members in markets served by Fresh stores to drive greater traffic.

    I remain underwhelmed by the Fresh stores I've visited - they always seem like dark stores that happen to allow customer in.  But I think this is a good strategic move that connects the stores to the broader Amazon ecosystem.

    Published on: June 29, 2022

    Reuters reports that the Federal Trade Commission (FTC) has filed a lawsuit against Walmart, charging that the retailer has "allowed scam artists to use its money transfer services for fraud that cost consumers 'hundreds of millions of dollars' … For years, the FTC said, Walmart policy was to issue payouts even when fraud was suspected and that the retailer failed to take other actions to prevent consumers from being defrauded."

    The Reuters story says that the FTC is charging that "Walmart failed to properly train staff to help them prevent consumers from sending money to scammers," and is asking the courts "to order Walmart to return lost funds to consumers and to pay civil penalties."

    Walmart is being sued in its capacity as an agent for money transfer services such as MoneyGram and Western Union.

    The Axios story says that "the complaint claims investigations found that fraudsters relied on Walmart money transfers to receive payments from telemarketing schemes, relative-in-need 'grandparent' scams and sweepstakes stings."

    And, Axios reports, Walmart has responded to the filing with the following statement:  "A narrowly divided Federal Trade Commission brought this factually flawed and legally baseless civil lawsuit after the Chair refused Walmart the due process of hearing directly from the company, and even the Justice Department refused to take this case to court."

    KC's View:

    I'll be interested to see how this plays out, if only for educational purposes.  If I am scammed by someone, and I go to Walmart to send the scammer money via MoneyGram and Western Union, I'm not entirely sure how Walmart would know it, prevent it, or be culpable.

    I'm not saying that Walmart is blame-free.  I'm just saying that I don't really understand the mechanics of it, and am willing to be enlightened - by both sides.

    Published on: June 29, 2022

    From the Dallas Morning News:

    "H-E-B has taken the lead in a consumer preference index as the top e-commerce grocer ahead of second- and third-place finishers Amazon and Amazon Fresh.

    "Customer data science firm Dunnhumby said Tuesday that it was a near statistical tie, but San Antonio-based H-E-B narrowly edged out Amazon. Walmart ranked fourth, followed by Sam’s Club.

    "Online grocers with their own digital operations 'have a clear strength' versus relying mostly on intermediaries such as Instacart and Shipt, Dunnhumby said. The top retailers have more control over the customer online experience.

    "H-E-B purchased Austin-based delivery service company Favor in early 2018 and then built an innovation lab for e-commerce in Austin, in which Favor and H-E-B’s digital team work together.  Since then, H-E-B has added separate areas to existing stores, including to its Dallas-based Central Market division stores, that are designed for its personal shoppers and curbside customers.

    "H-E-B had the highest level of 'emotional connection' and online share of wallet among its customer base of all the retailers studied, the survey said.   Although its online business was built after Amazon and Walmart, H-E-B customers migrated their spending online the most after the pandemic hit, Dunnhumby said.

    "Customers increased their grocery spending online by 27%, which resulted in H-E-B having the highest share of wallet online."

    KC's View:

    The H-E-B sample has to be smaller than Amazon's, but it is not surprising that when H-E-B does e-grocery, it does it right.  That's usually the case with everything H-E-B does.

    Published on: June 29, 2022

    The New York Times this morning reports that even in a time of inflation, when people are trying to figure out ways to make their money go farther, coupons are not the tool they used to be.

    They are, in fact, getting "harder to come by. In 2021, Kantar Media estimates, 168 billion circulated, across both print and digital formats. That was down from about 294 billion in 2015.

    "The shrinking coupon market includes not just the number of coupons distributed but also the share turned in at checkout. Redemption rates declined to 0.5 percent of all print and digital coupons in 2020 from about 3.5 percent in the early 1980s, according to a paper by economists at Harvard University, Georgetown University and Heinrich Heine University Düsseldorf.

    "The economists see a larger phenomenon: Increasingly time-strapped consumers don’t want to deal with even small hassles to save a few dollars on toothpaste."

    The story goes on:

    "“The declining use of coupons and the declining redemption rates indicate a fundamental shift in consumer shopping behavior,” the study's authors wrote, adding, “We view this as additional evidence that declining price sensitivity reflects a longer-run secular trend.”

    KC's View:

    This is a trend that can also be attributed to the impact of Covid-19.

    It wasn't necessary for marketers to use coupons to drive demand during the pandemic, because pretty much everything that came in the back door would go out the front door.

    And now, at a time when supply chain issues are creating shortages, using coupons to drive even more demand seems counter-intuitive.

    In other words, events have conspired to disrupt a traditional business model.  It will be up to couponing companies to figure out ways to reinvent themselves, while at the same time retailers figure out ays to adapt to navigate a world in which "declining price sensitivity reflects a longer-run secular trend.”

    Published on: June 29, 2022

    Interesting piece in The Information about three startups working with direct-to-consumer online retailers to help them "work together to showcase their goods in new ways - without cannibalizing each other’s sales."

    Two of the companies - Canal and Disco - have similar business strategies, helping "one merchant sell its goods on another merchant’s site. When customers browse or place an order on one brand’s site, they get recommendations for complementary items from another brand, which they can buy without leaving the site they are currently shopping on."

    The economics are different - Canal allows merchants to get a commission on sales of other retailers' products, while Disco is just creating greater distribution, with sales being their own reward.

    But the goals are the same - to help non-competing or complementary retailers to grow market share and sales without having to rely exclusively on Facebook or Instagram.

    KC's View:

    Tom Furphy and I talked a lot about this in today's Innovation Conversation, and we agreed that there is a model here for food retailers who want to grow their businesses.  If they can find a way to sell proprietary products on other retailer's sites (or, for that matter, in their stores), it is a way for retailers to help each other at a time when competition is becoming more pitched.

    Published on: June 29, 2022

    Fox News reports that "a group of pro-abortion Amazon employees filed a public letter to the company Tuesday in which they demanded the online retailer cease any and all business in pro-life states.

    The letter said, in part:

    "We, the undersigned, come to you today to request immediate and decisive action against the threat to our basic human rights with the overturning of Roe v. Wade.

    "As part of Amazon's wide-reaching efforts toward a more inclusive and diverse workforce, we believe that Amazon cannot let this recent decision go unanswered. We ask Amazon, the world's best employer, to actively defend against this assault on our liberty."

    The call comes in the wake of the Supreme Court decision last week overturning Roe v. Wade, ending the federal constitutional right to an abortion.

    According to Fox News, "The employees requested a series of additional accommodations and actions for Amazon to put into practice, many for the emotional benefit and mental health of company staff.

    "These propositions included allowing employees 'space and time to grieve' the Supreme Court decision; Amazon-sponsored protests of the decision; donations to bail funds and abortion access providers; expanded remote work for employees seeking an abortion; an audit of all Amazon political donations; and a 'company-wide policy change going forward to ensure Amazon does not aid or abet anti-abortion causes, ideologies, groups or public figures, including via donation, product sale, public statement, or otherwise'."

    KC's View:

    Let's be clear - asking Amazon to not do business of any kind in anti-choice states is absurd.  It just isn't going to happen, and the employees demonstrate their naïveté by even asking for such a thing.

    There's no question that the SCOTUS decision has created a tectonic shift in the American political and cultural scene that will be playing out for years.  While there will be companies doing business in both pro-choice and anti-choice states that will make allowances for employees in the latter who want and need to travel to the former for reproductive medical care, not every company will do so - and to ask companies to do things such as sponsor protests is beyond what is reasonable.

    One other thing.  Over the past few days, I've covered the overturning of Roe v. Wade from a business perspective, because I think it is a legitimate business story with implications for a lot of companies.  I've gotten a number of emails on the subject that want to engage in a political debate on the subject, including a few that referenced pro-choice people as being in thrall to Satan.  (I am not exaggerating.). I'm not posting those emails, nor am I willing to engage in this debate on MNB … it is a rabbit hole that I'm not going down, because there will be no return.  This is not the place, and so I'm going to do my level best to keep the conversation business-oriented.

    By the way, a couple of people have written to me suggesting that if businesses are going to provide money to employees in anti-choice states to travel to pro-choice states to get medical care, they should also provide money to pregnant employees who carry their babies to term.  In fact, I would point out, they do - health care coverage includes pregnancy and maternity care, and usually includes maternity (though not always paternity) leave.  And, if an employee needed a medical procedure and had to travel to get it, insurance almost certainly would cover that, too.

    Published on: June 29, 2022

    •  CNBC reports that Amazon has joined the likes of Walmart, CVS and Rite Aid, limiting "sales of emergency contraceptive pills as demand spikes following last week’s U.S. Supreme Court ruling overturning Roe v. Wade and ending the constitutional right to have an abortion.

    "The company has placed a temporary quantity limit of three units per week on emergency contraceptive pills, Amazon confirmed to CNBC."



    •  Amazon released a statement yesterday saying that more than 25,000 of its employees have joined its Career Choice program this year, bringing total current participation to more than 80,000 employees.

    Career Choice is defined by Amazon as "helping frontline employees grow their skills for career success at Amazon or elsewhere. Launched in 2012, Career Choice expanded its benefits in January to include fully funded college tuition, new industry certifications, courses to improve English-language proficiency, and high school completion programs."

    Published on: June 29, 2022

    •  From Los Angeles Magazine:

    "Coming soon, if you return an item to a major retailer, you’ll get your money back and get to keep the thing. Due to a number of operating difficulties such as spiking gas prices, supply chain woes, and too much inventory, have led many stores to conclude that it’s just too much of a hassle to deal with you and your unwanted junk.

    "Over the last few weeks, major chains such as Walmart, Target, the Gap, and American Eagle have all reported in their latest earnings calls that they have too much inventory—notably in categories ranging from spring apparel, workout clothes, garden furniture, and kids’ toys. And it’s costing a fortune just to store all the excess goods that consumers wouldn’t have in their homes.

    "With all that in mind, stores are considering the idea of simply refunding the customer’s money and letting them keep the bauble they’d intended to be rid of.

    "It would be a smart strategic initiative," says Burt Flickinger, managing director of retail consultancy Strategic Resource Group. “Retailers are stuck with excess inventory of unprecedented levels. They can’t afford to take back even more of it."



    •  From the Associated Press:

    "America’s scallop fishing industry will continue to decline in catch into next year due to a decrease in the availability of the oft-pricy shellfish off the East Coast, federal regulators say. The decline in scallops is happening as prices for the shellfish, one of the most lucrative seafoods in America, has increased amid inflation and fluctuations in catch."

    Published on: June 29, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Wall Street Journal this morning:

    "Dollar Tree Inc. said its finance chief is stepping down as part of a broader executive reshuffling as the discount retailer faces pressure from an activist investor to improve its performance.

    "Kevin Wampler, chief financial officer since 2008, will step down from his role once a successor is found, Chesapeake, Va.-based Dollar Tree said Tuesday. Mr. Wampler will stay on as an adviser until April to help with the transition, the company said.

    "Dollar Tree also said four other top executives no longer work at the company: William Old, chief legal officer; Thomas O’Boyle, chief operating officer; David Jacobs, chief strategy officer; and Andy Paisley, chief information officer. The company said it is conducting searches for their successors, and in some cases is in advanced discussions with candidates, it said in a press release. It declined to comment further."

    The Journal suggests that the changes reflect efforts on the part of chairman Rick Dreiling - who once led a turnaround as CEO of rival Dollar General - to put his own team in place.

    Interesting that "chief rat hunter" is not listed among the jobs being filled, which it ought to be since Dollar Tree had to close a distribution center that was infested.  It was back in March that I wrote, "I don't how management at this company - 'leadership' would be the wrong word to use here - are keeping their jobs."

    Maybe they just decided to fumigate the c-suite.