The other day I attended a tasting session at the wonderful O’Shaughnessy Distilling Company in Minneapolis, where they describe their vision as bringing "together the best of Irish and American whiskey making traditions." (The whiskeys are wonderful, especially the Keeper’s Heart.) It was during the tasting, when I sipped on some Rye, that I got a business lesson in the power of memory and emotional connections.
Stew Leonard, Sr., who founded Stew Leonard's with a single store in Norwalk, Connecticut - built largely because a highway was putting the family dairy farm out of business - that evolved into a $600 million company with seven stores that celebrated fresh food, strong customer service, and a highly differentiated approach to marketing and merchandising, has passed away after a brief illness. He was 93.
Stew Leonard's and its founder became iconic - presented with the Presidential Award for Entrepreneurial Excellence in 1986 President Ronald Reagan, featured in books by management guru Tom Peters, and praised for his accomplishments and philanthropy by his peers and in the media. He exulted in the description of his store - using a directed traffic flow that focused largely on fresh and private label products - as "the Disneyland of dairy stores." He was proud of the enormous boulder that stands outside each of his stores bearing the legend, Our Policy: Rule 1, The customer is always right! Rule 2, If the customer is ever wrong, reread Rule 1. He delighted in creating what he called "Wow!" moments around the stores
It was a blemish on his reputation when, in 1993, he pleaded guilty to tax fraud and served 44 months in prison. But in typical Stew Leonard fashion, he reflected frankly on the experience in a memoir, "Stew Leonard: My Story," in which he not only talked about and expressed contrition for his misdeeds, but also offered suggestions on how to make incarceration more productive.
I've been shopping at Stew Leonard's original Norwalk store once or twice a week since 1984, and I've known Stew Sr. for almost that long. He was a wonderfully enthusiastic public speaker, and when he complimented me a few years ago after I spoke to a Stew Leonard's company meeting it was one of the nicest and most treasured comments I've ever received.
I have some additional thoughts:
I have often written here about the degree to which Stew Leonard's was a reflection of the family - Stew's name was on the door, which created a degree of connection (and yes, personal accountability) that many stores don't have. This continued yesterday as Stew Jr. sent an email to all Stew Leonard's customers.
Amazon yesterday reported Q1 net sales of $127.4 billion, up nine percent from $116.4 billion during the same period a year ago. North American sales were up 11 percent compared to the same period a year ago, while international sales were up one percent.
Pretax profits for the quarter were $3.2 billion, a significant shift from a $3.8 billion loss during the first quarter of 2022.
Amazon's advertising business was up 21 percent.
The Wall Street Journal writes that "Amazon’s vital cloud business rained on the party a bit. Revenue growth for the AWS segment was a record low 16% year over year and only barely exceeded Wall Street’s forecasts. And the unit’s operating income for the quarter of $5.1 billion was about 4% below analysts’ forecasts."
The Journal also writes that while AWS accounts for just 16 percent of Amazon's total business, it also is "the sole source of operating profit, as the retail side has been losing money for the past six quarters. It also suggests Amazon may be losing ground to arch-rival Microsoft, which projected better-than-expected growth for its Azure cloud business for the same period—and even noted some small contributions starting to come in from the generative artificial intelligence technology the company has only recently been adding to its products."
CEO Andy Jassy, the Journal reports, "touted Amazon’s own efforts in generative AI, including the development of its own in-house chips to power the technology. But he also noted that much of AWS’s staff are busy helping customers 'optimize' their cloud spending, which means spending less as the economy slows. The reasoning is that such efforts produce greater customer loyalty in the long run."
And the New York Times writes:
"For years, even decades, Amazon chose growth over profits. Making money took a back seat to establishing new markets. Sometimes this worked so well it changed the fundamental nature of the company. AWS grew at such a torrid rate that its profits have done much to compensate for Amazon’s anemic returns on the retail side.
"On the other hand, many small ventures remained small. When to shut them down is a decision that for years Amazon could put off, but no longer. Rising interest rates and balky consumers forced its hand."
The coverage of Amazon's results suggests that the cuts and adjustments that Jassy has been making are helping to improve the company's bottom line, but there also remains a possibility that there could be additional layoffs in the not-to-distant future as well as the elimination of business segments that aren't carrying their own weight and/or showing no signs of doing so in the foreseeable future.
Amazon seems to be doing something that so many businesses have done over the years - putting the focus on "core" businesses. The problem at Amazon is that "core" traditionally has been defined differently and more broadly - and yes, more ambitiously - than at many other companies.
I continue to believe that one of the problems that Amazon and Jassy are going to face is the challenge of inspiration when the cutting has been done. They've pivoted, largely successfully, to a new era of fiscal responsibility since pandemic-area advances subsided. But at a certain point, they're going to have to get ambitious again.
Data analysis company 84.51° is out with a new white paper on the subject of loyalty and how consumer perceptions of it have evolved.
Some key findings:
• The definition of loyalty in most shoppers’ minds has shifted away from exclusivity. This presents both a challenge and opportunity for brands to strengthen their relationships with shoppers.
• Brand trust and value are paramount. If trust in a brand is high, the perceived brand value increases—and the opposite is true.
• Brand loyalty is strong for certain grocery and household items and rising in other categories.
• Across the 19 categories analyzed, a higher percentage of shoppers say loyalty is increasing versus decreasing.
• The top things shoppers say brands and retailers can do to increase loyalty are centered around value, trust, selection, and relevant rewards.
Seems to me that one of the casualties of the e-commerce revolution has been the idea that proximity creates loyalty. The fact is that geography can be a factor, but we all have so many other choices for where to get almost anything, it is less important than ever. Authenticity, value and trust become far more critical to the consumer decision-making process.
Which is really what this study seems to be saying.
Digiday has a story about how some marketers are seeing value in age and experience. An excerpt:
"Marketers’ obsession with getting their brands in front of younger generations, particularly Gen Z as they move on from millennials, has most focusing on influencers in that younger demographic. But there’s a slow trickle of marketers who recognize the potential of working with older influencers and reaching older generations, according to agency executives, who say they are doing so as a way to stand out while tapping into the growing number of older influencers garnering massive followings online.
"Earlier this month, for example, Mountain Dew threw a party in Florida to promote its new alcoholic beverage, Hard Mountain Dew, but instead of tapping Gen Z and millennial influencers, the brand threw a party for retirees. Clean beauty brand Ilia and Alaska Airlines, to name a few, have also generated press around their work with older influencers. Influencer marketing experts and agency execs expect that, in the coming years, more brands will recognize the viability of working with older influencers."
"Americans have faced substantial inflation at grocery stores and restaurants. Over the past year, overall food prices were up 8.5 percent as consumers paid more for staples like eggs, fruit and meat.
"And corporations that wrested back pricing power during the pandemic may be reluctant to give it up. In earnings reports over the past week, some of the biggest packaged food companies said they raised their prices last quarter and saw their profits go up.
"But there have been signs that consumers are starting to resist price increases by cutting back or trading down to lower-priced options. Some of the same multinational companies that raised prices on food said the volume they sold went down.
"Brands risk alienating consumers with these high prices, said Sucharita Kodali, a retail analyst at Forrester. 'Customers may or may not come back,' she said. 'At some point, they will say enough is enough'."
• From the Associated Press:
"Applications for unemployment benefits in the United States fell last week as the labor market continues to show strength despite some weakness in other parts of the economy.
"The number of Americans filing for jobless claims for the week ending April 22 fell by 16,000 to 230,000, the Labor Department reported Thursday.
"The four-week moving average of claims, which flattens some of the week-to-week volatility, fell by 6,000 to 236,000. At the start of the year, weekly claims were running around 200,000, and they have gradually moved higher."
• After it filed for bankruptcy protection and said it would be closing down, Bed Bath & Beyond said it would no longer be accepting the familiar - some would say, ubiquitous - blue and white coupons that defined its marketing approach.
However, the coupons will still have some value - both The Container Store and Big Lots said they will accept the 20-percent-off coupons for the next few weeks as they look to fill the void left by Bed Bath & Beyond's demise.
I'm a fan of Warren C. Easley, who is a former scientist and business executive who now lives in Oregon and writes mystery novels - for me, it sounds like the best sort of life. I interviewed him about two years ago when his eighth novel, "No Witness," came out, and now a new novel featuring lawyer Cal Claxton, "Fatal Flaw," has been published.
I remember that when I talked to Easley I asked him if, like a lot of novelists, he planned to either ignore or marginalize the pandemic as a plot point in future books, and he said that he planned exactly the opposite - he was going to make it central to his next book.
That's exactly the case in "Fatal Flaw," a solidly plotted mystery that I found somewhat disquieting. It takes place during the early days of the pandemic, long before vaccines and before we knew much about how it would be transmitted from person to person. Which means that as characters make observations about Covid-19, or act in certain ways that they think are safe, I found myself talking back to the book, saying, "No, no, no…".
At the same time, the plot revolves around the murder of an executive at a medical technology company that says it has found a way to instantly detect Covid - there are hints of Theranos sprinkled throughout the book, which makes it timely.
"Fatal Flaw" is light reading, but I enjoy my time with Easley and Cal Claxton. As the protagonist shuttles between the Pearl District in Portland and his home in the wine country, eating salmon, sipping pinot noir, walking his dog, jogging along the Willamette River and solving a murder mystery, I found myself in a comfort zone. Pass the pinot.
Season three of "Star Trek: Picard" is now finished, and I think it was a satisfying end to the adventures of characters we first met in 1987 and followed through seven seasons and four feature films. They're all older now - Patrick Stewart is 82, Jonathan Frakes is 70, and even LeVar Burton is 66. But in the final season of "Picard," they all brought a relaxed energy and deep commitment to their characters' legacy to the screen. Of course, they save the galaxy from terrible villains. Of course, their interplay and dialogue is laced with knowing humor. Of course, they reflect a view of humanity's future - tolerant, resilient, with an equal emphasis on heart and mind - that is idealized. But for people like me, whose commitment to the franchise dates back to the original series that debuted on September 8, 1966, this nostalgic and emotional final act was everything I could have asked for.
(And the good news is that there are four other Star Trek series in production at the moment for Paramount+, with plans for more movies and series in the future. There are always, as Spock once said, possibilities.)
Season three of "The Mandalorian," part of the Star Wars franchise, also is in the books, and the longer the series goes on, the more indifferent I am about it. Maybe it is because I've always been more a Star Trek guy, but to me there is no emotional resonance in "The Mandalorian." It seems to be more about mythology than people, and while I watch it out of curiosity, I can't get excited about it.
My wine of the week - the 2016 Notebook red from the J. Bookwalter vineyards Washington State's Columbia Valley, which is a lovely blend of Cabernet and Syrah (with just a touch of Merlot), and perfect for sitting outside by the fire pit on an evening when a chill descends and summer still seems far off.