eMacy’s Rises, While eSears Sinks

The Wall Street Journal: “Among a crop of five retailers analyzed by Edison Trends, including Sears, Kmart, Kohl’s, Macy’s, and J.C. Penney, Macy’s has seen the strongest online growth in 2018, climbing 28% in monthly order volume since January. Meanwhile, Sears’s online order volume fell 25% from January to May. Penney looks only marginally better than Sears. Though it, too, operated a big catalog business, Penney failed to make the necessary digital investments to stay ahead.”

“As Sears shutters stores—it announced another 60 closures last month—e-commerce could have been the company’s future. Instead it has fallen far behind traditional retailers, and is way, way behind its big competitors, Walmart and Target . Maybe Sears should have stuck with the catalog.”

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ConAgra: Fresh in Frozen

The Wall Street Journal: “Last year, Conagra freshened up of three of its frozen brands: Healthy Choice, Marie Callender’s and Banquet. Healthy Choice, a diet brand launched in 1989, rolled out new microwavable meal bowls with trendy ingredients like edamame, kale and quinoa, and exotic flavors like Cuban pork and Korean beef. Banquet, a value-oriented brand with frozen basics like chicken fingers and meatloaf that typically sell for around $1 each, also got an upgrade, including Buffalo Chicken Mac ‘N Cheese bowls that sell for $2 or more.”

“The results have been clear. Comparable sales for Conagra’s refrigerated and frozen-food segment went from declining sharply last fiscal year to rising for three quarters in a row, reaching 2.6% growth in the quarter ended Feb. 25. Conagra Chief Executive Sean Connolly summed up his approach at a Goldman Sachs conference in May: ‘When you take legacy, well-known brands and bring modern elements into the food and packaging, you will have a winner’.”

“Consumers are shying away from carbohydrates and processed foods, preferring fresh meat and vegetables. But these take more effort to cook and can look less than fresh by the end of the week. For busy, health-conscious families, picking up proteins and vegetables from the freezer aisle makes sense. Perceptions of the health properties of frozen vegetables have also improved after studies showed they can retain nutrients better than vegetables that have sat for days in delivery trucks or grocery shelves.”

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Chick-Fil-A: The Harvard of Fast Food

The Washington Post: “Carrie Kurlander, vice president of public relations for Chick-fil-A, said the Georgia-based chain receives more than 40,000 inquires per year from people interested in becoming restaurant operators (the company’s term for ‘franchisee’). After filling out an initial “expression of interest” online, they complete a formal, written application. From there, the company conducts recorded live-video and in-person interviews with applicants, taking business experience and leadership skills into consideration.”

“The chain opens 100 to 115 new restaurants a year, Kurlander said, and operators typically run one restaurant each. The company runs more than 2,200 restaurants in 47 states, and the average restaurant makes more than $4 million in annual sales. Again: that’s 40,000 people who hope to become operators, and about 100 to 115 who make it through. To compare, of Harvard’s 42,749 applicants for the school’s incoming freshman class, it admitted 1,962.”

Kurlander comments: “We are very intentional with our selection process as we believe this model is the key to ensuring our customers receive the best care and experience possible.”

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Wendy’s Cultivates Better Tomato Experience

The Wall Street Journal: “By largely moving production to the U.S. from Mexico, where Wendy’s currently gets the majority of its tomatoes, and using the more controlled setting of greenhouses, the company says it expects to be able to deliver more ripe—and therefore more flavorful—tomatoes to its restaurants. There are also fewer insects and plant diseases to contend with when tomatoes are grown inside.”

“Whether consumers will care about the change in its tomatoes remains to be seen. Although fast-food rivals have been touting the quality and freshness of their food, consumers still want their meals at a low price.”

“Some tomato purists say nothing beats the flavor of a tomato grown in the soil. But field-grown tomatoes sold for commercial use are often sprayed with ethylene gas, a plant hormone that occurs naturally in fruit, just before they reach supermarket shelves or restaurants so that they appear ripe.”

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Decibel Diet: Loud Music is Fattening

The New York Times: “Behavioral scientists who ran a series of lab studies and real-life field experiments found participants selected more unhealthful or calorie-laden items like red meat and cake when the ambient music was loud, and were more likely to choose healthful items when softer music was played in the background. The genre of music did not appear to influence the choices, the researchers said: They found the same effects whether the background music was classical; a mix of pop, rock, soul, R&B and alternative music; or heavy metal.”

Dipayan Biswas, a professor of business and of marketing at University of South Florida in Tampa and lead author of the paper, comments: “High-volume music is more exciting and makes you physically more excited, less inhibited and more likely to choose something indulgent. Low music makes us more relaxed and more mindful, and more likely to go for the things that are good for us in the long run.”

“Loud background music in a supermarket similarly nudged customers toward less healthful purchases, compared with softer music … Dr. Biswas, whose earlier research found that patrons are more likely to order healthful items when restaurants are brightly lit and more likely to indulge in dimly lit restaurants, said the findings can help consumers be aware of unconscious factors affecting their choices.”

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Lightbox Jewelry: Lab Diamonds via DeBeers

The Washington Post: “De Beers, the diamond giant that for years has promoted gemstones as pricey and precious, said it will begin selling man-made diamonds that cost about a tenth of the price of a mined gem. The line of pink, blue and white laboratory-grown diamonds, which De Beers will sell under a new brand, Lightbox Jewelry, is designed to persuade shoppers to think of synthetic diamonds as a ‘fun piece of fashion jewelry’ instead of a lifelong investment, executives said. Prices will start at as low as $200 to appeal to a new generation of shoppers.”

“The lower-priced jewelry is as much about changing consumer habits and preferences as it is about economics, industry experts say. Today’s 20- and 30-somethings — bogged down by heavy student debt loads and stagnant wages — have less spending power than their predecessors did, but they have different values, too: A recent study by De Beers found that millennials would rather splurge on overseas holidays, weekend getaways and electronics than on diamonds.”

“Lab-grown diamonds — which are created in hot, pressurized chambers over weeks, instead of a billion years underground — have been growing in popularity as Americans spend less on traditional diamonds. The stones are increasingly marketed to younger shoppers as a cheaper, ethically sourced alternative to mined diamonds. But their chemical makeup is the same (all diamonds are made of just one element: carbon), and experts say they are indistinguishable to the naked eye.”

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Sam’s Club, Walmart & Parental Pricing Supervision

Business Insider: “Sam’s Club, which is owned by Walmart, has for years told customers in stores and on social media that it won’t match Walmart’s prices, or any competitor’s prices … This is highly frustrating for customers like Craig Barnes, a Sam’s Club member for more than two decades, who said the warehouse chain should at least match the prices of its parent company if it’s charging members fees to shop there.”

“Barnes was recently shopping for a copper grill mat at his local Sam’s Club store in Torrance, California, and discovered that the price, at $8.98, was 11% higher than at Walmart. He also found that a Kumho car tire cost $84.66 at Sam’s, and $73.17 at Walmart.”

When Business Insider contacted Sam’s Club about these complaints, the company said that the price-matching policy needed clarification’.” Spokespersona Carrie McKnight “said Sam’s Club doesn’t have a specific policy enforcing price-matching, but that it empowers its store managers to use their best judgment in providing refunds or price-matching on certain items. For identical items carried at both Walmart and Sam’s Club, the club chain should match prices, she said … If customers are denied price matching on identical items by their local club, they should contact customer service or reach out to Sam’s Club on social media to resolve the matter, she said.”

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Chick-fil-A-Pay: Not Chicken Feed

The Washington Post: “By 2022, the minimum wage in California will rise to $15. But the owner of a Chick-fil-A restaurant in Sacramento plans to go ahead and raise the wages of his employees now, offering a huge bump to $17 to $18 from the $12 to $13 he pays now. While analysts can’t say whether a $17 to $18 hourly wage is the highest in the country for front-line fast-food workers, it certainly appears to be among the higher ones, said David Henkes, a senior principal with Technomic, a restaurant research and consulting firm.”

Eric Mason, owner of the Chick-fil-A location in Sacramento, comments: “I’m looking at it big-picture and long-term. What that does for the business is provide consistency, someone that has relationships with our guests, and it’s going to be building a long-term culture.”

Warren Solochek, senior vice president of industry relations for the food service practice at NPD Group, adds: “You can’t have that high level of service when you continually hire people and have to train people. You need people who’ve been in their job for a while. That’s Chick-fil-A’s reputation, and that’s very true across the country.”

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Quote of the Day: Jim Farley

“When we ask people around the world what they think of Ford, they say Mustang. Mustang means freedom. It means taking a road trip in a convertible down the West Coast. That’s what people all over the world imagine America to be. Why would we ever give that up?” – Jim Farley, president of global markets, Ford Motor Co., quoted in The New York Times.

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