Wednesday, May 31, 2017

Amazon Hits The Gas On Grocery Concept

 
(Kevork Djansezian/Getty Images)
Amazon has opened up its AmazonFresh Pickup stores to customers, expanding a test concept from employees only to Seattle shoppers. It's an indication that Amazon is getting closer to selling groceries online.
The retailer has two grocery pickup locations in Seattle, but until last week had only allowed company employees to place orders as it was still a beta test, according to the Seattle Times.
But now, Amazon Prime members can order groceries online and select a time to collect them at one of the dedicated sites.
Amazon has several test stores in the market, including Amazon Go, the highly discussed self-serve convenience stores concept that lets shoppers pick up goods and leave without every using a checkout.Everything Amazon does is significant, but the grocery store experiment is among its most important. It's an $800 billion market that cements shopper loyalty and has them coming back frequently. But online grocery has been slow to catch on with less than 10% of consumers using one of the available services.
Amazon needs shoppers to buy groceries from them. It's a lynchpin category for all retailers and a strength for Amazon's largest competitor, Walmart. And while Walmart has been making headlines with splashy e-commerce acquisitions like its recent purchases of ModCloth and Moosejaw, the fact that it has been growing market share in grocery at the expense of competitors is much more significant. 
 
Retailers other than Amazon are developing in-store pick up programs to help mitigate some of the barriers. If a shopper can order groceries and pick them up when it's convenient, there's no need to schedule delivery or have a safe place to leave the order.
This being Amazon, AmazonFresh boasts some new technology. When shoppers pull up, a scanner reads the license plate to register the order and customer. And this being Amazon, there's a nice surcharge -- $14.99 a month on top of the $99 annual Prime membership fee.
Will AmazonFresh Pickup put Amazon closer to being a top grocery seller? Time will tell, but in this race, every maneuver counts.

This 17-Year-Old Sums Up in 1 Paragraph What Great Leadership Looks Like

Take a lesson from this high-school standout athlete: Leadership is not about you.
CREDIT: Getty Images
 
If you follow my column, by now you're familiar with the ethos of servant leadership, which I often write about and firmly believe to be the best leadership philosophy on the planet.
But don't just take my word for it. The CEOs of some of the best and brightest companies in the world, including The Container Store, TDIndustries, Whole Foods Market, Zappos and countless others would all agree with me that it works. Their reputable companies operate by servant leadership principles with amazing success.
Servant leadership is also an expression of character and values in how we conduct ourselves outside the workplace -- in our schools, homes, and communities.
That expression is vividly clear and profoundly displayed in a recent column I read by David Lee, founder and principal of HumanNature@Work. Lee nails it by depicting a story on his TLNT column about servant leadership as expressed through the heart of a 17-year-old star athlete.
The story Lee paraphrases comes from the book, Stadium Status: Taking Your Business to the Bigtime by John Brubaker, a former Lacrosse head coach and now a nationally-renowned consultant, speaker and author.
I'll let Lee narrate from here, which will lead up to a heartfelt, 1-paragraph summary of the meaning of great leadership. From David Lee's column:
When [coach] Brubaker took over as a college lacrosse head coach he inherited a team that had done poorly for years. Despite this, a high school standout, Stephen, was interested in playing at Coach Bru's college, even though he was aggressively recruited by far better schools.
Coach Bru met with this young superstar and attempted to sign him, but Stephen refused, saying he wanted to wait until the following spring. He was, however, willing to give a verbal, non-binding commitment. Brubaker was desperate to sign this young star, and told him he would hold a scholarship for him until the spring.
All fall and winter, other college recruiters came to Stephen's games to watch this amazing talent and hope he would change his mind. When spring came, Coach Bru and Stephen's coach sat down with him, asking him to commit and why he waited so long.

And now, from the mouth of a 17-year-old...

As Lee tells it, to Coach Bru's astonishment, this is what the 17-year- old said next:
Coach, I don't know if you've noticed, but a lot of colleges come to see me play each week. Most of my teammates weren't getting scholarship offers or even being recruited earlier this year but now they are. By me not committing anywhere, all the college coaches who keep coming to see me play get a chance to discover how good some of my teammates really are. If I signed early with you, all the other coaches would've stopped coming to the games and none of my teammates would've gotten recruited.

The lesson for all leaders.

Lets face it: We've all just been collectively schooled by a (then) 17-year-old. In his response to his coach, not only does it define servant leadership, it illustrates the essence of great leadership, period.
The reason his response is so mind-blowing for someone his age--with star status to boot--is that the world wasn't revolving around his axis, as most self-centered 17-year-olds typically behave.
Instead, he was about helping other people--his less talented teammates. As Lee writes further about Stephen, "He was already thinking about how he can lift up others, how he could help them achieve their goals. He had confidence in his own ability to excel and achieve what he needed to achieve; he wasn't obsessed with how to make that happen because he knew it would. Instead, he focused on how he could serve others."
And therein lies the lesson for every leader in the workplace: Your role is to lift up your employees and help them to joyfully achieve their goals so they can thrive. When they succeed, you succeed, and the whole organization succeeds. It's a thing of beauty.
That reminds me of another great quote by Robert K. Greenleaf, who coined the term "servant leadership" in the modern corporate setting. He wrote these famous words in his legendary essay The Servant as Leader, published in 1970:
The servant-leader is servant first. It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead.
As I wrote in the past, when you serve first, it's for the other person's benefit. Like Stephen, you selflessly focus the attention away from yourself and put the spotlight on others. Greenleaf noticed that these leaders got the best out of their employees; they were more motivated, more creative, and more productive, which led to great business results.

7 ways to put servant leadership into action.

To add some practical elements of servant leadership into your work routine, Lee offers these great tips from his TLNT column:
1. Practice doing everything within your power to remove obstacles that make it hard for employees to do their best work. This means providing the information, technology, resources, and support for people to do great work.
2. Remember the law of reciprocity: what you put out is what comes back to you from others. If you want others to care, make sure you care about them -- and that you show you care.
3. Ask those who report to you: "How can I help you?" "What can I do -- and NOT do -- to help you be successful with this project (or in your job)?"
4. Look for opportunities to compliment -- catch people doing things right -- and show people you "see them."
5. Be on the lookout for articles, seminars, networking connections, and opportunities that would benefit those you serve. The very fact that you were thinking about them says a lot about who you are as a person.
6. Be more generous with your attention and time. Don't only ask, "Would this meeting benefit me?" Be willing to have meetings because they would help the other person.
7. Remind yourself when being a servant leader feels like it takes too much time or effort, that what you put out comes back to you multiplied, for better or for worse.

Sunday, May 28, 2017

The New Starbucks CEO Seems To Stumble Out Of The Gate




Howard Schultz, left, turned over the reins of Starbucks to Kevin Johnson in March, 2017.
Photos courtesy of Starbucks
Howard Schultz, left, turned over the key to the "original" Starbucks store to new CEO Kevin Johnson in March, 2017.
It was a touching moment, the highlight of the Starbucks annual meeting in Seattle earlier this year: Howard Schultz, the charismatic driving force behind the company's rise from quirky local chain to global coffee powerhouse, reached into his pocket and withdrew the key to the historic original Starbucks store on Pike Place. With a flourish, he passed it to his anointed successor as CEO, Kevin Johnson.
But, like so much of Starbucks these days, it was more theater than substance. The Pike Place store, which always has long lines of tourists outside, isn't really the first Starbucks at all; the original location was a block north, in a building that was torn down years ago. And Starbucks today, despite all the outward trappings of success ($20 billion in revenue, 25,000 stores in 75 countries, 250,000 employees), the company faces complex challenges to its business model (from a tsunami of third-wave coffee shops, not to mention die-hard competitors like Dunkin Donuts), its product mix (from beverages to food), and, perhaps most threatening, to its vaunted corporate culture.
Now that Starbucks has lost its magnetic micro-manager in favor of the gregarious Johnson, you'd think the new guy would have a honeymoon period, at least. But no.
Johnson's first major initiative, the North Star project, landed with a thud. One of the issues it addressed is the awkward congestion in the stores, an issue that mobile ordering was supposed to alleviate. Instead, it appears to have made things worse, with loyal customers prepaying their orders from their mobile devices only to wait around in the store for the baristas to make their drinks.
Not enough baristas? Orders too complicated? Fixing the menu is relatively easy, but hiring more workers is expensive, especially since Starbucks pays some of the industry's top wages. The danger, Starbucks has found, are declines in both store traffic and in same-store sales growth.
The Starbucks response, under Johnson, was uncharacteristically authoritarian: wagging the corporate finger at the front-line baristas.
"Each manager was required to read verbatim about a half-hour of dicta blaming the baristas for all these problems," one unidentified employee told Business Insider of the mandatory meetings.
For its part, the company sees the issue as "a fight for the heart and soul" of Starbucks. That would be the "customer experience" as defined by the relationship between the customer and the barista. 
But many employees are skeptical. They feel Starbucks is forcing baristas to take responsibility for customer-service problems caused by other issues (understaffed stores, increasing demand from mobile and drive-thru orders, time-intensive drinks). In the long pep-talk, Starbucks essentially ordered employees to find ways to improve the customer experience, or else quit the company.
The Starbucks culture has always been an (overly self-conscious) emphasis on the emotional connection between the company's partners [employees] and its customers. "We are in the business of human connection," Johnson told Business Insider in an interview earlier this year. 
A lot of the responsibility for the North Star initiative lies on the shoulders of Kris Engskov, a former investment banker who joined Starbucks 15 years ago after a White House stint as an assistant to President Bill Clinton. The "heart & soul" metaphor is Engskov's, who now holds the title of president, US retail.
It's his view that better headquarters support systems and better training can improve morale as well as customer service; it's not clear that all the front-line employees agree, or even feel that their voices are heard. "Company Kool Aid" is how one barista described the new agenda.
Most traffic jams eventually resolve themselves, and most bottlenecks straighten themselves out. This isn't the first time Starbucks has seen difficulties; Schultz had stepped aside before, from 2001 to 2008, only to see sales slump until the board of directors brought him back as CEO.
It's doubtful that sort of debacle will repeat itself under Johnson, however. Schultz, meantime, is often touted as a presidential candidate in 2020. His interpersonal skills are beyond challenge, and his liberal ideology offers a refreshing alternative to the incumbent occupant of the White House. So far, he hasn't ruled out a political career.

Faster, Fresher, Cheaper: The Grocery 

Shopping Revolution

Supermarkets are improving quality and convenience. 

CR shows you how to save money and still make healthy choices.

Marie Henry cares a lot about the food her family eats. During growing season in her town of East Nottingham Township, Pa., the 35-year-old stay-at-home mom walks down the street to her Amish neighbors’ farm to buy fresh eggs and pesticide-free strawberries, vegetables, and herbs. She skips the supermarkets near her home to purchase the “perfect” organic oranges and lemons that she says she can get only at Wegmans, a 30-minute drive away. About once per month, she’ll also make a special trip to Trader Joe’s, 40 minutes away, to load up on the organic brown rice and quinoa noodles she feeds her 1-year-old, Adam.
When Henry and her husband, Bill, 34, a public-school music teacher, feel pressed for time, they grab the basics at a local Giant supermarket. Bill goes to BJ’s Wholesale Club on occasion. They sometimes have meal kits delivered by Blue Apron and HelloFresh. And they use AmazonFresh, the online grocery delivery service, which charges $15 monthly on top of the $99 annual Amazon Prime subscription. Henry admits that getting organic produce and meats delivered to their door is an indulgence. “But the convenience factor is worth every penny,” she says.

Few families have the good fortune of having an Amish neighbor, but in every other way the Henrys typify the new American food shopper, who wants food that’s very fresh and minimally processed, and satisfies an ever-more-adventurous palate. We seek out specialty grocers and farmers markets to get it, even if it means literally going the extra mile. Each month 68 percent of Americans do their grocery shopping at five or more types of food retailers—convenience stores, discount supercenters, farmers markets, specialty/natural-food stores, supermarkets, and warehouse clubs. In addition, we might go to more than one of each type of store, according to the Hartman Group, a food and beverage industry consulting company in Bellevue, Wash. “Today the choices are extraordinary,” says Laurie ­Demeritt, the company’s chief executive officer.

End of the Middle-Class Market?

Where does the traditional grocery store fit into this mix? Experts say the supermarkets that have anchored many a community are struggling to compete with higher-end retailers such as Wegmans on one hand and bargain vendors like Walmart and Costco on the other. Witness the disappearance of the Great Atlantic & Pacific Tea Company, otherwise known as A&P, which folded in 2015 after 156 years.
“Just as the middle class is shrinking, the middle class of grocery stores is being challenged,” says Leslie Sarasin, president and CEO of the Food Marketing Institute (FMI), a grocery industry group.
The supermarkets that are doing well are premium stores such as Wegmans, specialty stores like Trader Joe’s, and discounters such as WinCo. “Traditional supermarkets are stuck in the middle,” Demeritt says.
Consumer Reports subscribers’ preferences mirror these trends. In our latest ratings of 62 supermarkets and food retailers, based on survey responsesfrom almost 58,000 subscribers, ­East Coast chain Wegmans earned the top spot, a place it has held since 2006. It’s beloved for most everything, from the quality and variety of ­produce to the courtesy of staff. (Our supermarket and grocery store ratings are available to subscribers.) 
Other stores that did very well overall include Trader Joe’s, Publix, and the family-owned Market Basket chain, serving the Northeast. Walmart, with the largest market share for food and beverages of any U.S. retailer, scored well for competitive prices but otherwise was at the bottom of our ratings.
Mainstream grocery stores still have fans. Our survey that found 70 percent of CR readers were either completely or very satisfied with the supermarkets where they do most of their grocery shopping. By contrast, only 48 percent told us they’re very or completely satisfied with their markets’ healthy offerings, and only 29 percent said the same about the price of their markets’ organic options.
Keys to Shopper Satisfaction
What draws us to a market week after week? A wide selection, high-quality produce, and good prices are the main attractions, our survey respon­dents say. But stores that offer an alluring sensory experience while grocery shopping—the scent of cinnamon-­apple pies from the bakery oven, the sight of plump purple and ivory eggplants in a rustic wooden case—bring us back.
Attention to these details might ­explain Wegmans’ popularity. The chain, with 92 stores from Massachusetts to Virginia, charmed our survey respondents with its selection of healthy options, customer service, reasonably competitive prices, and fresh store-prepared foods, and the quality of its poultry and meats, among other standout features. “Wegmans produce is the freshest in town, and the selection is huge,” Barbara Goldenberg, of Frederick, Md., says of her local store.
What else contributes to appreciation of a grocer? Stores with the highest scores for staff courtesy all did well. Increas­ingly, a commitment to principles that shoppers deem important—for instance, fair-trade goods, sustainably and locally farmed foods, and fair labor practices—also wins loyalty, says David Fikes, FMI’s vice president of communications and consumer/community affairs. “It’s now values as much as value,” he says.
But price is and always will be a great motivator. Grocers with the highest scores for competitive prices are for the most part near the top of our ratings. One such store, Woodman’s, which oper­ates in Illinois and Wisconsin, passes savings on by selling certain items in bulk. WinCo, with 115 stores in the West, also sells bulk items, and takes no credit cards to avoid transaction fees.
The growing variety of both low- and premium-priced food stores means a dedicated WinCo bargain hunter could be the same person frequenting Whole Foods for pricey organic cherries, Demeritt says. “People go to different places for different things,” she says.

The Changing Landscape

To respond to our evolving food-­shopping tastes, supermarkets are offer­ing novel formats, products, and services:
• Smaller footprints. Rather than taking a one-store-fits-all approach, some grocers are hypertargeting a single customer type and scaling back in size as a result. Those new locations offer a more “curated” grocery shopping experience—say, selling just a few choices of organic olive oil instead of many—saving shoppers the work of distinguishing among brands.
To attract time-pressed millennials, Whole Foods has opened new Whole Foods Market 365 stores in four U.S. locations. The smaller-format stores feature primarily Whole Foods’ 365 Every­day Value products. Focusing on the higher-profit store brand and managing fewer square feet also could help the company’s profit margins, notes Asit Sharma, senior consumer goods analyst at the investing website Motley Fool.
Aldi is a fast-growing, no-frills vendor that operates stores about a third the size of a typical American grocer. It sells a limited selection, mainly of private-label goods; our readers rated it highly for competitive prices.
• Local farm partnerships. Many super­markets have added locally grown produce sections. Dierbergs, which debuts in our ratings this year, is one example. The family-owned chain, with locations mainly in Missouri, shows a photo gallery of local partner farms on its website. Readers gave the quality of Dierbergs’ local produce top marks.
• Meal kits without the wait. To compete with online meal-kit vendors, Giant Food Stores, based in Pennsylvania, offers fresh meal kits through its partnership with the Peapod grocery delivery service. Each $15 box comes with enough premeasured, fresh ingre­di­ents to make two servings following a provided recipe. (See our reviews of five meal-kit services.)
• Home delivery. Responding to the threat from online grocers, many chains now offer this amenity. (For more, you can check our ratings of four online grocers.) Safeway charges $13 to deliver orders of less than $150 and $10 for orders of $150 or more. Kroger and Walmart have begun testing door-to-door delivery in certain locations, with Walmart using ­the delivery service Deliv and car services Lyft and Uber. Publix is testing home delivery in certain ­areas of the Southeast.
• Curbside service. Walmart offers a “click and collect” system called Online Grocery Pickup in more than 30 states: Consumers buy online and drive to a Walmart store to pick up their bagged orders at designated times for no fee. Kroger’s ClickList service, available in about 300 locations, works the same way. Patrons pay a $5 pickup fee, waived for the first three deliveries. AmazonFresh is experimenting with curbside pickup in two Seattle-area locations. The retailer plans to expand the service to Amazon Prime members without requiring an additional AmazonFresh membership fee.

The Rise of the Virtual Market

Amazon’s real impact on the industry, though, is in food delivery. In 2016 Consumers used its food and beverage channels—including Prime and Pantry for packaged goods and AmazonFresh for fresh and non­perishable groceries—more than any other online grocery retailer, says Cowen and Company, an investment research firm.
AmazonFresh tops our satisfaction ratings of four online grocers, though its competitors—Instacart, Peapod, and FreshDirect—are close behind. Sixty-one percent of readers who used AmazonFresh for their grocery shopping told us they were highly satisfied with the service. Grocery shopping through online grocers is still a modest portion of the marketplace; in the U.S., just 23 percent of households are buying food and beverages this way, according to research released in January by FMI and Nielsen. But interest is projected to climb; 72 percent of all ages surveyed—and 80 percent of surveyed millennials—expect to buy groceries online in the future, the report notes.
Amazon’s innovations could eventually influence the operations of walk-in stores as well. Bucking its virtual roots, the retail giant last year announced the opening of a new grocery store prototype: a location in Seattle with no checkout lanes. Instead of paying at a cashier (self-checkout or otherwise), customers would simply grab what they wanted and leave, without ever engaging with an employee. This would be made possible through a smartphone app and sensors placed throughout the store. Payment would be made automatically when the app linked to customers’ mobile-payment services. Initial customers were Amazon employees; in March the company postponed a public rollout, citing technical problems.
Could the success of online groceries spell the end of the traditional kind? Not likely, analysts say. Stores will “just be smaller, more efficient, and focused on value-added shopping,” says TrĂ© Musco, CEO and chief creative officer of Tesser, a brand-strategy and retail design firm based in San Francisco. “There will be more delivery and ordering online. Even if there’s no one at checkout, you might have face-to-face conversations with an in-house dietary consultant or the person who loads your groceries into your car, or a chef preparing meals to order.
“As long as people want to see, touch, and smell their fresh food,” Musco adds, “the brick-and-mortar store is here to stay.”