business news in context, analysis with attitude

We took note the other day of a New York Times story about the demise of Henri Bendel and the closure of Lord & Taylor’s Fifth Avenue flagship in Manhattan, and what the shrinking of the department store business tells us about consumers. It prompted an email from MNB reader Donald Bland:

As the last General Manager of the Downtown JL Hudson Store in Detroit I certainly understand the demise of the “Grand Dames” of retail.

But to look on the bright side, they were the basis upon which Americans enjoyed the thrill and excitement of shopping. I too remember going to the Downtown St. Louis Emporiums of Famous-Barr, Stix, Baer and Fuller and Scruggs ,Vandervort and Barney with my Mom. Those stores had everything on 8 floors and Christmas was all about Toyland, Christmas decorations, window dressing and gifts. Of course there were no discount stores or clubs back in the day. Only Woolworths, Kresge, Sears ,Pennys and Wards and regional department stores were the competition and they all seemed to survive during those years.

After nearly 40 years in the retail business, I have witnessed and been party to the evolution of the trade and the customer driven changes brought about by demographic and societal shifts. The survivors like Walmart, Kohls, Target among others are testimony to the obvious. Give the customer selection, ease of shopping and payment, quick delivery and good deals and they will come. The online business is a reiteration in digital terms of Wards, Sears and Penny’s catalogue offerings. Those brands are gone or going just like the old department stores of my youth simply because the concept is virtually dead and change is inevitable.

I enjoy MNB as it keeps me up to date in summary fashion of the business. As a retired Walmart senior executive I am delighted to see my company continue to “test and fail” in the quest for the customer’s shopping allegiance.

Thanks for the memories and more importantly the future.




On another subject, from MNB reader Mike Bach:

Jeff Bezos has led Amazon into a great spot.

They get $12 billion upfront from 101 million people.  That's 60% of his $20B cash on hand.  Then count his $35B in vendor finances.

Perhaps most amazing is the Amazon delivery network.  Same day deliveries, making them the largest convenience store in the world with a half a billion items available.   
 
Besides FedEx, what other company has an air force?  One financed by its customers?

The financial advantage will be hard for other (competing) businesses to replicate.




Commenting on the implications of the government shutdown, MNB reader Mary Schroeder wrote:

We traveled the week between Christmas and New Years and made a point to say a thank you to each and every TSA representative we encountered.  I hope everyone does this…these unpaid people are helping so that their misfortunate doesn’t become ours…in a much more personal way.  They’re not on vacation or leave or however you want to spin it.  They should be celebrated for their selflessness.

Agreed.



Regarding the new robotics system - “Marty” - being implemented by Ahold Delhaize store sin the US, one MNB reader wrote:

I have to ask, what else do these robots do besides identify spills?  Seems like a huge expense to me for a job I do everyday in the produce department.  I am always on the lookout for loose grapes, green beans, water on the floor, spills, etc as I do my stocking.  I just don't see the benefits, am I missing something?

From another reader:

While I love the technology, Marty was as welcome during the Holidays as Uncle Eddie was to Clark. When you have tenfold the shopping  novices looking for the obscure ingredients to grandma’s stuffing mix, doing the tango with Marty by the meat case while you try to maneuver around the crowds was a real PITA. Give Marty some well-deserved time off during the holiday rush and bring him back the week after Super Bowl, when he can roam the aisles uninterrupted. BTW, why is there no Martha?



On another subject, from another reader:

You mentioned plastic bags in our oceans ....Please read the Great Pacific Garbage Patch. The Majority of plastic found is from fishing gear and lines and not plastic bottles of packaging drawing the headlines today. Fishing nets accounted for 46% of the trash and other gear, plus 20% was also debris front the 2011 Japanese tsunami…

So, accepting those numbers as accurate, this means that two-thirds of plastic in the ocean comes from something other than plastic bags. Which suggests that we can have an impact on one-third of the situation by addressing the plastic bag situation.

Call me a crazy tree-hugging child of the late sixties and early seventies who has tried (with varying degrees of success) not to totally lose touch with those roots, but I’d be willing to ban or regulate the use of plastic bags to have an impact on a lot less than that.



Responding to last week’s FaceTime commentary about the bad experience I had at the New York City Starbucks Roastery, MNB reader Matt Bernstorf wrote:

After viewing your video it reminded me of when Starbucks ended their ‘subscription’ service where you received a bag of beans every few weeks based on your consumption.  Will a bad experience at the Roastery and the end to the subscription program bankrupt Starbucks? Probably not.  However, to your point, it created the illusion the customer is less and less important.  Competitors of Starbucks are happy to capitalize on Starbucks’ lack of focus.  For example: Another coffee supplier picked up your subscription service.  Now you won’t go back to the Roastery when in NY but, will frequent a different coffee shop.  Starbucks’ lack of focus on the customer creates opportunity for a competitor.

Exactly.

There was some mention in my piece about the unisex bathrooms, in which it was clear in a couple of stalls that men had been there and somehow had not developed civilized toilet habits. (I’m trying to be discreet here.)

One MNB reader responded:

This is what happens when you take away urinals.  In the words of Ron Burgundy, “it’s science.”

From MNB reader Monte Stowell:

One simple, but a very important change for Starbucks. Get rid of the Unisex bathrooms!! That was a dead on arrival change Starbucks made. What the hell were they thinking. Yes, men are basically pigs with their bathroom manners, and women should not have to use a Unisex bathroom because of this issue.

I’m more sympathetic to this opinion than I’d like to be … but somehow, I still think that the culture would be better off if men stopped being pigs.



Got the following email from an independent retailer regarding upbeat sentiments in the wake of UNFI’s $2.9 billion acquisition of Supervalu:

At this moment in time, the people that were in that room are fooling themselves.  "Better pricing, service levels, increased fleet utilization, lower cost of goods", to which I will tell you we are not experiencing.  As a retailer I can tell you the transition has been anything but "seamless" (as an independent retailer, one of the most frustrating terms used when speaking to us and damn near always as far from the truth that you can get).  Week after week of not receiving orders and product, with no real reason except excuses with fingers being pointed.  Not to mention pricing, Ha! … Reps not being communicated with, high ups on both sides still having not met (we are talking VP level), getting credits, and the list goes on.  As an independent we don't have choice in our wholesaler on the west coast so obviously we do hope for success in this done-deal but can tell you the frustration level is high and our business growth (SALES) have been directly impacted by said wholesaler.



Walmart made delivery deals with four different companies last week, which prompted me to ask if these deals are just a precursor to possible acquisitions. MNB reader Brian Blank responded:

These contracts strike me as possibly being job interviews, with one or more companies who perform well to be on the receiving end of a purchase offer from Bentonville. Or…maybe the folks at WMT will be taking notes of what does and doesn’t work and creating their own service from what they learn.  But then again, I figured after Amazon bought Whole Foods, that Instacart would become the next Amazon acquisition, so what do I know.



And regarding the Gillette ad about men being better than they often are, MNB reader Jeff W. Totten wrote:

I agree with your readers. I think the Gillette ad was a good touch - respectful and trying to change males' attitudes (that need changing). I briefly saw a write-up about protestors and deleted it when I saw it was by the Fox News bunch.

I’m tempted to suggest that one should not take seriously commentary about this subject from an organization that tolerated bad behavior from the likes of Roger Ailes and Bill O’Reilly, but let’s be clear - that means that one also should not listen to commentary from NBC (Matt Lauer) or CBS (Les moonves, Charlie Rose) or ABC (Mark Halperin). The fact is that most media companies, I suspect, are vulnerable on this issue … and I think one could say the same thing about most businesses in general.

From MNB reader Jeff Folloder:

I'm glad the conversation has started.  There are absolutely times when men behave like asses.  And corporate marketing has done its share of intentional exploitation.  Gillette took a calculated shot with its commercial and is experiencing some backlash.  Perhaps because some felt like it was a bit much?  Perhaps because some know that Gillette has a lot of baggage that has not been acknowledged?  Seems to me that dressing up models in skin-tight PVC with your logo emblazoned on their posteriors is clearly something that would not be what Gillette is advocating.  Yet I see no admission that Gillette has been guilty of sexist marketing and I hear no pledge that they will jettison same.  That's a bit preachy.

Sure, it was a bit preachy. And it is fair to suggest that it was inconsistent with some past behavior. But … I also think it is important to allow people and companies to evolve, to recognize that the world has changed. If Gillette does something next month that is inconsistent with this statement of corporate values, then it needs to be called out on it.
KC's View: