Friday Eye-Opener: Chickening Out ↓
With Record Profits, Amazon Pledges One-Day Shipping For Prime Members ↓
Walmart Opens New AI-Enabled Smart Store ↓
A Contrarian View Of The Future Of The Mall ↓
CVS Looks To Put Teeth Into New Healthcare Program ↓
Cashless Retailer Decides To Take Cash After All ↓
Worth Reading: Stores With Eyes ↓
RIP ↓
Your Views: Feargal ↓
OffBeat: The Long Goodbye ↓
Friday Eye-Opener: Chickening Out
Interesting piece in the Washington Post about how Matthew Wadiak, a co-founder of meal kit company Blue Apron, is getting into what might be called the artisan poultry business.
According to the story, his new company, Cooks Venture,, is partnering has with pure-play e-grocer FreshDirect "to sell pasture-raised, slow-growth, heirloom chickens." The Post writes that Wadiak "is banking on the idea that consumers will bypass brick-and-mortar grocery stores to buy their chicken online from name-brand producers if they believe it's more wholesome and sustainable."
Here's the background:
"On 800 acres on three farms in Arkansas, the company is raising Naked Neck Free Rangers, a three-way cross bred for its heat tolerance. With a hatchery, 30 houses for broilers and 27 for pedigree birds (these are the parent stock for the broilers), they aim to produce up to 700,000 chickens per week, chickens with unrestricted access to the outdoors, no antibiotics and feed that includes toasted soy, hemp and whole legumes like lentils and high-protein lupins.
"These birds are bred for slower growth (55 to 62 days from birth to slaughter, compared to the 42-day industry standard), with a focus on proportional growth so the birds don't develop health problems struggling to support their breast weight. The slaughter process includes creating a soothing sound environment and belly rubs to calm the animals."
Wadiak argues that "ninety-nine percent of the chicken out there is conventional poultry raised in a confinement space. There just is not any pasture-raised chicken in scale, no chickens out roaming the pastures like ours. What people buy in the grocery store — whether it said free range or organic — is all greenwashing. They are confined, with horrible genetics designed to convert feed to muscle mass swiftly, to the detriment of the bird and the environment."
The Post writes that "FreshDirect will sell the meat for $3.99 per pound. Cooks Venture on Wednesday begins taking orders for whole chickens, two for $40 — prices that are comparable to the higher-end chicken available in grocery stores."
I have to admit that I'm intrigued … and maybe even a little hungry to try this chicken. If it is as good as they say it is, it could be an Eye-Opener.
With Record Profits, Amazon Pledges One-Day Shipping For Prime Members
Amazon yesterday said that as its most recent quarterly profit hit a new high of $3.56 billion, it would begin investing some of that profit to guarantee one-day shipping to Amazon Prime members, cutting in half the current two-day shipping promise.
"We have been offering obviously faster than two-day shipping for Prime members for years — one day, same day, even down to two-hour delivery for Prime Now —so we're going to continue to offer same day and Prime Now, morphing into or evolving into a free one-day offer," says Amazon CFO Brian Olsavsky, adding, "We expect to make steady progress quickly and through the year. We feel like we're doing something very important for the customer and we're trying to take advantage of the fulfillment capacity and the transportation capacity we have."
The Wall Street Journal writes that "the e-commerce company's bottom line got a big boost in the first quarter from its cloud-computing unit and burgeoning advertising business, helping to offset sluggish growth from the core online retail business. The profit more than doubled to well above what analysts were expecting."
That "sluggish growth" refers to the fact that "revenue rose 17% to $59.7 billion. Growth was 43% in 2018's first quarter, though it was boosted by the acquisition of Whole Foods." In other words, the growth rate was less than half of what it was during the same period a year ago.
The Journal notes that Amazon continues "to lean on higher margin businesses and put a lid on costs … After years of plowing nearly every dollar made back into its business, Amazon has entered a new era of more modest revenue growth and consistent profits. The company had spent heavily in prior years to build out its warehouses to meet surging retail demand and branch into new industries such as cloud computing, filmmaking and groceries." During the most recent quarter, "expenses grew 12.6%, the lowest percentage rise in at least a decade, while Amazon's operating margin climbed to 7.4%, its best over that time."
Some additional context from the Journal:
• "As Amazon has become a behemoth with more than $200 billion in annual sales, its revenue growth has naturally shrunk. But it is also because of some trouble spots. For one, Amazon has run into problems overseas, particularly in India, where new e-commerce rules favor domestic companies over foreign giants like Amazon. The company also recently pulled the plug on its third-party online marketplace in China after struggling to battle the incumbents there."
• "Amazon started delivering record profit last year as it eased spending while newer businesses like advertising and cloud computing took off, helping to offset the lower margins of its traditional retail business. Its online retail marketplace now relies more heavily on third-party vendors—58% of sales on the platform come from taking a cut from these outside businesses, as opposed to selling goods directly itself."
• "After an early head start that has made it the dominant player in renting computing power to businesses and government agencies, Amazon is confronting stiffer competition from Microsoft Corp. and Alphabet Inc. On Wednesday, Microsoft said quarterly revenue at its Azure cloud-computing business rose 73% from a year earlier."
Meanwhile, the Washington Post points out that "sales at the company's physical stores — which include about 500 Whole Foods stores, as well as a growing fleet of Amazon bookstores, pop-ups and cashier-less convenience stores — grew just 1 percent to $4.3 billion from $4.26 billion a year ago."
KC's View: Some of the same people who have criticized Amazon over the years for not having enough profit will now be suggesting that a revenue increase of 17 percent means that the end is near and that the age of Amazon is over. Which is, of course, nonsense - maybe revenue growth has slowed a bit, but I'd argue that most retailers can only salivate at the possibility of percentage growth that size.
And sure, its growth in physical stores revenue may not be what some expected, but one of Amazon's great strengths has been its understanding that building an ecosystem is not a short-term project, but rather something that requires patience, mistakes, constant calibration and recalibration, and the combination of long-term vision and flexibility as a core competence.
I didn't see the one-day shipping promise coming, to be honest, but it makes sense - it allows Amazon to be a little more competitive with the click-and-collect options out there, and raises the stakes on what consumers expect. Which among other thing, raises the costs for companies trying to compete with Amazon on this turf.
Walmart Opens New AI-Enabled Smart Store
Business Insider reports on a new Walmart store in Levittown, New York, on Long Island, that it described as an Intelligent Retail Lab that "is focused on inventory and availability," using technology to enable what it hopes will "lead to less friction in the shopping experience, and customers will find the item they need on the shelf more often than not, and it will be more efficient to keep that experience consistent."
The store is a modified Neighborhood Market format, about 50,000 square feet in size, and will, for example, "use a combination of both cameras and analytics to trigger out-of-stock alerts for employees when a customer takes the last item, so the store can quickly restock … Walmart is also focusing on other 'real, practical solutions,' according to the company's blog post, like keeping shopping carts stocked and the right amount of registers open, and not getting too ahead of itself."
"We think it's something our associates will be excited about," says Mike Hanrahan, CEO of IRL. "The technology has been built to improve associates' jobs, to make their jobs more interesting, to help them alleviate some of the mundane tasks. AI can enhance their skill set in a very rapidly changing world." But, he cautions, "You can't be overly enamored with the shiny object element of AI. There are a lot of shiny objects out there that are doing things we think are unrealistic to scale and probably, long-term, not beneficial for the consumer."
KC's View: Stores that can use technology that evolves and learns to make work easier for associates and shopping easier for customers make a lot of sense, especially, in my view, if they are able to be part of a narrative that is more empowering, educating people about what is in the store, where it comes from, and how it fits into and affects their lives and health.
You know. Just simple stuff like that.
A Contrarian View Of The Future Of The Mall
Bloomberg has a story about how Generation Z - people born between the mid-1990s to the early 2000s - seems to have an unexpected affection for the shopping mall, which could promise new life for a retailing construct that has fallen on hard times in recent years.
According to the story, "Around 95 percent of them visited a physical shopping center in a three-month period in 2018, as opposed to just 75 percent of millennials and 58 percent of Gen X, according to an International Council of Shopping Centers study. And they genuinely like it; three-quarters of them said going to a brick-and-mortar store was a better experience than online, ICSC found."
That doesn't mean they're willing to accept the same-old, same-old mall experience: "Different is the name-of-the-game for these young adults. Nearly half of Gen Z shoppers want products tailor-made to their tastes and interests, according to a 2018 report from IBM and the National Retail Federation. To be sure, previous generations personalized their apparel and accessories in ways they wanted, like adding patches and buttons. The difference for this generation is that retailers have more technology already in place to acquiesce to their requests right from the start."
writes that Gen Z appreciates brick and mortar, "but they aren't just millennials living in a different time. Today's teens interact differently with stores than their older siblings and Gen X parents before them, and several retailers who didn't understand the fundamental differences in how they shop landed themselves in bankruptcy court."
Retailers and tech companies that understand that will be well-positioned to thrive, the story suggests. For example, "RetailMeNot, a digital coupon provider, is able to send push notifications to shoppers when they're in a mall to alert them to potential discounts. A recent survey from the startup found that an overwhelming 91 percent of Gen Z shoppers are searching for deals on their mobile phones while inside retail locations."
KC's View: Despite my general skepticism about the future of many of America's malls, I have no argument with the premise that if they evolve into something different … something more engaging, relevant and resonant for shoppers, speaking to their hearts and heads … then malls can survive. But they'll be tomorrow's malls, not yesterday's.
CVS Looks To Put Teeth Into New Healthcare Program
The Los Angeles Times reports on how CVS is looking to expand a pilot program, SmileDirectClub, that it started earlier this year.
According to the story, "The drugstore chain said Thursday that it will add SmileDirectClub locations to hundreds of its stores where customers can get started on getting their teeth straightened without an in-person visit with a dentist or orthodontist … Under the CVS plan, customers get a 3-D image of their mouth made by a SmileDirect employee at one of the drugstore locations. The image is sent to a dentist or orthodontist who approves the patient's treatment plan. Patients are shipped clear, removable aligners designed to straighten their teeth. They check in remotely with a dentist or orthodontist, often by smartphone. The service costs $1,850 before insurance."
The Times notes that "the American Assn. of Orthodontists has criticized the service, warning that in-person visits are important in this type of care. Dentists can spot gum disease during these visits and X-rays can detect bone loss not seen in a photo."
KC's View: Speaking as someone who is severely dentist-phobic - I once went more than a decade between dentist visits, and until recently needed Xanax and gas just to get a cleaning (I've evolved…a little) - I think anything that helps people understand the importance of good dental care is a good thing. I worry less about the dentists - most of whom are doing just fine, thank you - than people with bad teeth.
Cashless Retailer Decides To Take Cash After All
Salad chain Sweetgreen, which to this point has only accepted credit and debit cards, has decided that from now on it also will take the other kind of green - actual legal tender.
The New York Times frames the decision this way:
"Critics say cashless stores discriminate against people without access to bank accounts or credit cards, or who simply prefer to pay with cash. Some have also raised concerns about privacy and data security. Philadelphia and the state of New Jersey passed laws banning cashless stores last month, and New York, San Francisco, Chicago and Washington are considering similar bills.
"Sweetgreen was at the forefront of the cashless trend when it announced in 2016 that it would accept only credit and debit cards. At the time, it said eliminating cash would make transactions faster, easier and safer for customers and employees."
But now, the company says that it was not its intention to exclude people who did not have cards or preferred to use cash. In a statement, Sweetgreen said that "ultimately, we have realized that while being cashless has advantages, today it is not the right solution to fulfill our mission."
KC's View: This is going to be an evolution that may take more time than I would've thought … even Amazon Go is said to be preparing to adopt an option that can accept cash. But I'm not sure this is a long-term strategy, but rathe just reflective of short-term resistance to change.
•The Seattle Times reports that Starbucks yesterday "reported a quarterly profit of $663.2 million on revenues of $6.3 billion — up 0.5 percent and 5 percent, respectively, from the same quarter in 2018." These better-than-expected results were "thanks in part to a raft of new drinks, viral social-media campaigns and steady growth in China."
According to the story, "Starbucks saw substantial growth across all operations. Globally, same-store sales jumped by 3 percent over last year, which was also slightly ahead of Wall Street forecasts. China was a big piece of that, with a 3 percent increase in same store sales, compared with 4 percent same-store growth in the U.S."
Here's an import metric reported by the Times: "Starbucks also bolstered the ranks of its rewards program. The company now has 16.8 million active members in the United States, up some 13% over last year — a key metric, given that members account for 41% of U.S. sales." That's a critical business lesson from how Starbucks comes to market - constantly working to nurture and solidify its relationship with its best shoppers.
Worth Reading: Stores With Eyes
The Los Angeles Times has a story about technology being installed in retail stores using cameras that "guess your age, gender or mood as you walk by. The intent is to use the information to show you targeted real-time ads on in-store video screens.
"Companies are pitching retailers to bring the technology into their stores as a way to better compete with online rivals such as Amazon.com Inc. that are already armed with troves of information about their customers and their buying habits."
Among the companies testing the technology: Kroger and Walgreens.
John Havlicek, a 13-time all-star during his 16 seasons with the Boston Celtics, has passed away at age 79.
The Boston Globe provides some context for his career, noting that he was an "understated superstar who transformed an off-the-bench role into a Hall of Fame career and became the all-time leading scorer with the Boston Celtics … he set league records for games played (1,270) and consecutive 1,000-point seasons (all 16), as he played across Celtic dynasties. He was known for his huge lungs and an epic work ethic, constantly hustling the floor quarter after quarter and honing his skills long beyond when other basketball players hit the point of retirement."
And the Globe quotes Bill Russell, often called one of the best basketball players in history, who played with Havlicek for seven years, as saying that he was "the best all-around player I ever saw."
Your Views: Feargal
Got a number of emails yesterday about MNB's appreciation of Feargal Quinn, the Irish retailing legend who passed away this week at age 82.
From MNB reader Norman Rich:
Great tribute to a wonderful human being and retail genius. Never forget the first St. Patricks Day card he sent me and probably everyone else on the FMI board. To be in his company was a delight.
MNB reader Beatrice Orlandini wrote from Italy:
<>b>What a loss!
Your article kept ringing many bells.
You may not be aware of the fact that I first "met" you on a videotape, given to me by Anne O'Broin, of the interview with Feargal in 2000.I translated it and had it dubbed in Italian and it was shown numerous times around the country that year.
I bought the rights (for clients of mine) for the Italian version of "Crowning the Customer," which I translated. It was a great success, could not have been otherwise and - I agree - that it is still a must read for anyone doing retail.
I, too, had the privilege of visiting Superquinn with Feargal. He even bagged my groceries once.
I brought so many groups of Italian retailers to visit those stores that at one time the manager of the Lucan store told me I was getting to be part of the furniture.
My father, who had been with him one of the founders of Eurocommerce, still got the St. Patrick's card every year. I did not see one coming this year, though.
Feargal was a good friend to many of the best retailers I ever got to know.
Whichever way you look at it, it's a huge loss.
From MNB reader Neil Raphel:
Thanks for putting into words what so many of us felt about Feargal..
He was an inspiration to me as well as many, many other people. I remember him sitting around the hotel lobby at an FMI Convention talking to a few people. As people wandered in more and more people stopped to hear Feargal, because his stories were so entertaining. Within a half hour, scores of people were listening to him. His quick wit was enchanting, but it was always laced with compassion.
His book "Crowning the Customer" was one of the first business books we distributed (we received the American rights from the Irish publisher). Feargal was very supportive, and I was surprised (though I shouldn't have been) about how many supermarket owners ordered cases of his book to hand out to employees.
When we visited Ireland with our kids, Feargal arranged for his sons to entertain us and even babysit our kids. Ben was in second grade when we went to Ireland and his teacher told him he had to interview someone in Ireland because he was missing some school. He wanted to interview Feargal but we never could seem to find the time. Ben was disappointed the interview wouldn't take place, but, of course, Feargal showed up at the airport the day we were leaving and spent some quality time with Ben. It was one of the highlights of our trip.
We also got St. Patrick Day cards from Feargal. And, recently, he sent a really nice condolence card when my dad died. I'll miss the cards and I'll miss Feargal.
And from Neil's mom, Ruth Raphel:
There were huge announcements over the different produce counters in Feargal's supermarkets with the names of the farms where the products were grown and when they had arrived in the store. Also, I did not know about meal-ready products until we visited his stores in Ireland. He was so ahead of the industry!
The Quinns lived in a beautiful home by the Irish sea. Murray did many speaking sessions in Ireland. One time we were invited to dinner at the Quinns; but Murray had his Swiss sponsor with him, the sponsor was invited also and it turned out to be a wonderful evening.
He and his family were special people and dear friends.
Thank you for your wonderful array of memories and thoughts of Feargal (as we all knew him.)
He was a very special person. Visionary. Customer-centric (in the truest sense of the word.) Inspirational. Compassionate. Values-based. Integrity-driven. Teacher. Lover-of-life. A pleasure to be with.
I had the honor of consulting with Superquinn for a decade. I have often said since that if I had my retailing life over again I would have have wanted to have worked for Superquinn.
Here's a wee story which reflects Feargal's sense of humor (and integrity). For a number of years, to give himself some "free" time, he spent a few hours one afternoon a week riding his horse. To cover himself honestly, he named his horse "Business" … and so his assistant could always tell callers … I'm sorry, this afternoon he is away on business this afternoon.
Feargal built a unique food retailer while maintaining a unique sense of humor.
Like so many, many others, in so many diverse fields, I shall miss this special influence and friend.
Feargal—you will always be remembered.
A very nice tribute to Mr. Quinn. I remember your columns about him and how he was always innovating and trying new things. One of the grocery chains in the Sacramento region is called Nugget Markets. They are still family owned. I love how they call their customers "guests." It creates a whole different atmosphere among your employees when you treat the people who buy from you as your "guests." Every time I am in one of their stores the employees seem happy and will ask you if they can help you. They were doing this long before secret shopper programs became the norm in the grocery business. Nugget seems to employ the type of person who likes to serve the customer. Whole Foods does a great job on the customer service front as well. Sorry for the loss of your friend, he was a great man.
A lot of people have learned from Feargal Quinn.
MNB reader Gary Harris wrote:
Thanks for this, Kevin. These remembrances of yours are a special gift to your readers to give us insights into folks we've heard about but never had the pleasure to meet. You give their names the additional dimension of humanity, who they were, what they believed, and their legacy to our industry. We're fortunate to have your insights on these folks. Unfortunately for you, you're getting good at this.
Thanks. I've done way too many eulogies and obituaries lately.
And finally, from MNB fave Glen Terbeek, who knew Feargal well and spent much time in his stores over the years:
Great article re: Feargal! Well done.
He will be missed!
Already is.
OffBeat: The Long Goodbye
It somehow seems that for the last dozen years or so, a fair number of the movie reviews that I've written in this space have included the phrase, "I don't really like comic book movies, but…"
Having now seen Avengers: Endgame, I'm beginning to think that maybe I do like comic book movies, especially when they are expertly produced, terrifically acted, unapologetic about their pop culture roots and - go figure - actually have something to say.
Avengers: Endgame is the 22nd movie in a series of interconnected, labyrinthine films about the likes of Iron-Man, Captain America, Thor, Hulk, Spider-Man, Captain Marvel, and the list goes on and on. It fits into what is commonly called the Marvel Cinematic Universe (MCU), and what a vast and varied canvas it has been, as the movies have been written, directed and acted in different styles, but always with a core belief in the power of heroism and the ability of heroes to transcend their own limitations and be a positive force in the universe/Universe.
The MCU is, much as I almost hate to admit it, a remarkable achievement, and Endgame is both a fitting conclusion to this series of movies and a new beginning that, judged from this movie, is going to be even more interesting and diverse. There will be no spoilers here - I went in not knowing anything except what I knew from the previous movies, and you should do the same. But I can promise you that there are a lot of laughs, plenty of occasions for tears (some expected, some not so much), and I think you'll find it to be a satisfying experience.
I know I did. Maybe I do like comic book movies. At least the good ones, and Avengers: Endgame is a very good one.
Netflix has a new Amy Schumer comedy special called "Growing," in which a very pregnant Schumer talks about her life with about as much vulgarity - verbal and otherwise - as I can imagine being fit into an hour of stand-up.
Actually, I take that back. I've seen Kevin Hart in concert, which means I can imagine a lot of profanity.
But I'm not throwing stones here. The fact is that Schumer is laugh-out-loud funny in "Growing," which is a highly observational piece about her marriage, pregnancy, and both politics and culture. There were times I had tears in my eyes … I can't tell you about them because this is a family website, but I can assure you that they happened. She was almost George Carlin-esque, if I may be so bold as to reference a comedy god.
I'm just warning you … "Growing" isn't for the faint of heart. Or ears.
Mrs. Content Guy has become an enormous fan of Sancerre, which the appellation used for any wine grown in a specific part of the Loire Valley, in France. So, we've been trying a bunch of them, just for fun, and I have a couple to recommend to you this week…
• 2017 Nicolas Idiart Sancerre, which is 100 percent Sauvignon Blanc, is a wonderfully refreshing wine perfect as the weather gets warmer, with a lot of citrus going for it.
• 2017 Romanna Sancerre Rose, which is 100 percent Pinot Noir, which is just fantastic when served with shellfish or pasta or … hell, just drink it all by itself and enjoy.
Back Monday. Have a great weekend.
Slàinte!