business news in context, analysis with attitude

On the subject of a possible $1 billion acquisition of Jessica Alba's Honest Co. by Unilever, MNB user John Phillips wrote:

The potential acquisition of Honest, by Unilever, might possibly be focused not on a direct to consumer strategy (as you stated) but could be aimed at the wealth of consumer intelligence that Honest possesses. As was done in the acquisition of Dollar Shave Club , learning more about these types of consumers, their purchase habits and their need states might potentially help Unilever with their partnerships with retailers-which continues to be (by far) the biggest piece of their consumer business. Clearly consumer intelligence is a differentiator for any CPG company and Unilever could be at the forefront of this trend with this acquisition and what they discern from Dollar Shave Club. I personally think this makes Unilever a better trading partner to help retailers in the future and not a potential competitor.

I think in many ways they are the same thing. A direct-to-consumer strategy results in greater consumer intelligence ... and you're right that this makes Unilever potentially a better partner. Though it also could make it a stronger competitor.

On the subject of Walmart's patent on self-driving shopping carts, one MNB user wrote:

Is Walmart concerned about shoppers or labor?  Why not adopt the cart system already successfully in Europe where shoppers pay to use carts and are refunded when they return the carts?  They could also adopt the use of motorized people movers that take the shopper and cart into the store.

MNB fave Glen Terbeek wrote:

Isn’t the "self-driving shopping cart” just another example of trying to incrementally improve the large, “logistics” based real store shopping experience?  But what would you expect based on Walmart’s history and their investment in large, category based stores.

The future will be winning the “logical” shopping experience through small, locally focused value added real stores (ideas, information, solutions, social, convenience, etc) supported by a “logical”, personal virtual shopping experience for staples and other needs.

Regarding the employee badges that track movement and behavior with the idea of creating greater efficiency and productivity, sort of like "a Fitbit for work," one MNB user wrote:

As a fan of technology and the beneficial new tools it provides for many aspects of life, this is simply crossing a line.  Tech gone too far!

Responding to our pieces about Target's grocery strategy, which suggested that the company will focus on CPG products rather than fresh/servicer departments - wanting to be known for convenience rather than offering a full shopping experience - MNB reader Tom Murphy wrote:

I like the fact that Target is trying to figure out where to BEST invest their energies and capital to be a differentiator with their chosen customer segment(s).  I don’t think any amount of investment is going to make Target a grocer of choice for fresh, organics, prepared foods, etc.  I think they recognize that at best, this is a convenience/center store play.  If I am in a Target for their private label clothing, and remember I need milk & eggs…bingo.  Conversely, if Target is more convenient to home or office than a grocer, I can make a stop and get most of what I want.  Too many retailers think anyone with a dime in their pocket should be a customer…which leads to bad business decisions in trying to be all things to all people…and their related bad investments.

I questioned whether Target can differentiate itself only by carrying products that everybody else carries, and MNB user Andy Huth responded:

I agree Kevin.  It seems that Target is going in exactly the opposite direction from every other retailer.  In my humble opinion the last thing customers want is more dry goods, however they are displayed.  If you are not in the fresh game then you are not in the game, period.  Target would be far better served to get out of grocery entirely.

I did a FaceTime last week about the mismatch between the millions of jobs available in the US and the skill levels of people who are looking for work.

Which led one MNB user to write:

I think the mismatch of 5.2 million jobs is indicative of a cultural issue I’ve seen in many organizations.  We have a disposable culture when it comes to consumer goods, and it often bleeds over into our work cultures.  Leaders see people as equipment and statistics rather than assets.  Rather than looking for development opportunities to alleviate mismatches within an organization, managers look to replace the employees.  I’ve heard many managers say, “Well, we’ll just fire him and get someone else.”  I’ve been in training and development for a couple of decades, and I know that training is the first “expense” to be cut when the belt gets tightened.
I’m told I’m a good worker, intelligent, skilled, and hard to replace. Even so,  I’ve been in the workforce for over 40 years, and I’ve only had one manager ever ask me where I wanted my career to go and discuss my development.  Unfortunately, she was promoted two months after she hired me, and I’ve since moved to another company.   As a society, until we see employee development as an investment, the mismatches are just numbers.


I wrote, in part:

Wouldn't it make sense to open a bunch of computer programming schools in coal mining communities and say to the people there who are out of work, "Hey, we're going to make it possible for you to go to school for almost no money, and we're going to do our best to help you position yourselves for the economy we're going to have, not the economy in which you grew up?"

One MNB user responded:

That would be great. It’s your approach I take issue with. The solution, in my opinion, ought to be market driven. Companies in need of computer programmers should partner with tech. schools to make classes available in target areas and then help cover the costs. I wouldn’t be opposed to offer tax incentives for this, but that’s as far as I’d be willing to go.

But MNB user Gary Loehr wrote:

Dead on,  as usual, in your observation.  It would seem like community colleges could be the ideal conduit for filling this gap.  Inexpensive and community based. Forget teaching the core class requirements, just hit the classes needed for the job requirements.  Local employers could work with the schools to define the requirements.

While this may provide a quick fix to help bridge the gap, there is another fundamental cause of job gap.  We need to find a way to make kids believe that they can and should be a part of the American dream.  How do we get kids to take advantage of the opportunities they have to get an education and marketable skills.  There is definitely a cultural problem in some communities that makes it “uncool” to stay in school and learn.  Kids who don’t want to be in school disrupt classes so that no one can learn and they make it impossible for teachers to do their job. Everyone gives up and everyone loses.  It has to start in the homes, expand to neighborhoods and communities.  It starts with respect…for yourself, your parents and your community.  We have a long way to go, let’s hope we can get there.

We wrote last week about a study suggesting that e-grocery is a failure because it only does about four percent of industry sales, and that retailers ought to focus more on marketing to people with kids than on marketing to millennials. (I disagreed with both conclusions, as you can see here.

One MNB user responded:

Agree with your view and while I have not read the full study it also seems like it was poorly conducted.

Of course Amazon has grown as they are one of the only pure play, full e-commerce grocery options that has expanded rapidly into new cities (it does not sound like the study is looking at comp. sales). I mention pure play, full e-commerce grocery options because I think it's important to examine companies that offer a full shopping experience (fresh, center store, well developed site, etc) before making such bold claims.

What % of customers actually have regular access to full e-commerce grocery (seems like a reasonable benchmark for a study making such bold claims)?

Even if the study accounts for Instacart, click and collect, etc. it makes sense that these efforts would not lead to widespread adoption since by definition these efforts are mostly conducted by companies that are dipping their toes into e-commerce grocery vs. making a full commitment (some do it better than others and they often have other competing priorities so the slower growth makes sense).

There are successful grocery e-commerce players that exist - why can't they/won't they be replicated???

I could go on but will leave it at that. There are few things that bother me more than cherry picked statistics being passed off as reliable information.

From another reader:

Millennials are also harder to target with deals than other demographic groups since their participation in deals is well below the national average, particularly circulars and free standing inserts. Despite an uptick in participation in 2016, millennials use of circulars remains a full 12 percentage points below the study average of 42 percent. The gap for free standing inserts is even larger at 14 percentage points below the study average of 34 percent."
I get a kick out of this statement when we are using the traditional communication vehicles of Boomers to measure Millennials.  Maybe the problem is that they don’t know how to speak to them in a manner that suits them.  Most of them don’t even take a newspaper so no wonder they don’t respond to circulars and FSIs.

From your lips...

MNB reader Philip Calderone wrote:

I’ve never written in before, but felt compelled to based on this recently released study.  I must say…my wife and I are in our early 30’s and have an 18 month old boy.  My wife LOVES to shop at the brick and mortar grocery stores, including Target and Costco.  Why? of the reasons is it gets her out of the house and she gets a break from our son while I babysit (she is a stay at home mother).  I think we are overlooking that sometimes parents just want to get out of the house and have a small break away from the kids…this is something e-commerce cannot replicate.  Obviously these thoughts are based on a two parent household, I would think if mom (or dad) was single with kids, that the e-commerce solution would be more advantageous.

I wouldn't argue with any of your statements. I've never argued that e-commerce will totally take over the food shopping experience ... just that it has a role, it is going to grow, and will someday will be seen as a feature that most relevant grocers will have to offer, in the same way as they offer scanning.

One MNB reader last week took issue with Kate McMahon's column criticizing the manufacturer of the EpiPen for gauging consumers with high prices that seem largely designed to pay senior execs enormous salaries.

In part, that reader wrote:

Why would you even care about the cost of EpiPen? You have no right to complain about what profit or salary someone is paid. Let's try this, an iPhone cost $15 to make but sells for $600, what is the difference? Hillary Clinton charges $250,000 to speak, I have not heard you complain about that fee. Same profit but no one complains ... By the way, I use and carry the EpiPen as well, I have no problem paying $600.00 because I'm grateful something is around that can save my life in an emergency. There is no need for me to look the gift horse in the mouth.

Another MNB reader responded:

This response might be the most ignorant comment in the history of Morning News Beat. No one is against capitalism and companies/working individuals making money. You are worth what someone is willing to pay you. However, when it comes to life and death medicine, maximizing profit margin cannot be the ultimate business model. I’m glad this person can afford an EpiPen at all costs. Have some empathy for those who cannot.

And, from another reader:

To the person who wondered why you would care about the cost of an EpiPen- whether I need one or not I do care that there are children who need access to the Epipen and their parents have to choose whether to purchase a pen or have dinner. There is a huge difference between needing a potential lifesaving drug and the latest iPhone.


Finally, responding to my enthusiastic review of "Debt To Pay," the new Jesse Stone novel by Reed Farrel Coleman (following in the footsteps of the late Robert B. Parker), one MNB user wrote:

I agree with you on Reed.  I picked his name up from you a couple of years ago…am current on everything he has written.
If you like the Jesse Stone novels, you should also like Craig Johnson’s Longmire series…a Wyoming sheriff (current day setting).  You can also catch the series on Netflix if you want to start there…although the novels and series diverge from each other slightly, but no in the core storyline.

I've not read the Longmire books, but I love the series ... and it is worth noting for other fans that the fifth season begins streaming on Netflix this Friday. If you haven't seen it, it is worth catching up ... and I heartily recommend starting with the first season and engaging in a little binge watching...
KC's View: