BRAND SECRETS AND STRATEGIES

PODCAST #71 & 72

Hello and thank you for joining us today. This is the Brand Secrets and Strategies Podcast #71 & 72

Welcome to the Brand Secrets and Strategies podcast where the focus is on empowering brands and raising the bar.

I’m your host Dan Lohman. This weekly show is dedicated to getting your brand on the shelf and keeping it there.

Get ready to learn actionable insights and strategic solutions to grow your brand and save you valuable time and money.

LETS ROLL UP OUR SLEEVES AND GET STARTED!

Dan: Welcome. I want to thank you for joining me today. Today we focus on the relevance of brands and retailers. What do I mean by that? If a brand or a retailer isn't relevant, continually relevant to their shopper, then they have no reason for being. Today's story, we talk a lot about the strategies that brands and retailers need to use and should use to remain relevant with their shoppers. Today I'm thrilled to introduce you to Kevin Coupe. Kevin is the author of Morning News Beat, a daily publication that I've been reading now for years. He also has a couple of books, podcasts, and a lot of other great resources. I highly recommend everyone check him out, and I'll be sure to put a link to Morning News Beat in the podcast show notes and on this podcast web page.

The real benefit of having someone like Kevin on the podcast is that he's able to provide insights about what's going on in other markets, other categories, other channels, and other countries. It's this unique perspective that allows brands and retailers to grow and understand what's going on beyond the four corners of their building or their package. Kevin and I were having such a great conversation and were sharing so much great content that I didn't want to end the recording. Because of the length of this episode, I've split it into two different episodes. The show notes for these episodes are going to be placed on episode 72's podcast web page. You're going to want to listen to both episodes to really get the full benefit from our conversation.

Here's Kevin. Kevin, thank you so much for coming on today. I am thrilled to have you here. Could you please start by telling us a little bit about yourself and how you started Morning News Beat? Why and what's behind that?

Kevin: I started Morning News Beat because I got tired of other people screwing up my career. My background is in journalism. I started out of college as a newspaper reporter. Although I've never taken a journalism class in my life, some people would say that shows in everything I write. I've also never taken a business class in my life, although I teach business at Portland State University as an Adjunct Faculty Member and some people would say the fact that I've never taken a business class in my life shows as well. I literally found myself writing about retailing and business and mostly about the food industry and its all, its various permutations, for more than 30 years, I guess. The reason is, quite frankly, I did a small stint in public relations, had great clients like The New Yorker and CNN and stuff like that, and then the agency that I was working for went out of business. It went out of business on the same day that my wife and I, this is a long story. So my wife and were buying a house, and two weeks to the day that we were going to be closing on the house, I was informed that the company would be going out of business and our last day of work was going to actually be the day I was closing on the house and moving in. You have that moment where you say, "Oh, gosh" and although the word "Gosh" was not the one that we used at the moment. And so, we looked at each other and we knew we could get out of it because for, you could get out of those things if you have to, but we decided, "Nah, let's go for it." She had a job and frankly was making more money than I was making, so we say, "Okay. We're going to close on the house." One of the questions they ask you at the closing is, "Has anything in your financial life changed?" I said, "Well, no," which was technically true at that moment, because I still had a job that day. Now, if they'd asked me 24 hours later, it would've been a lie, but that day, it was absolutely true. And so, we closed on the house and then I had needed to get a job. Now I'm going to date myself, but now you and your listeners may remember a movie called Kramer vs. Kramer-

Dan: Yes-

Kevin: Where Dustin Hoffman needs to get a job, because he's going into a custody hearing. He goes and he finds that one ad agency on, I think it's on Christmas Eve. He says, "You need to hire me even though I'm way overqualified for this job, but you get him to do it now. And you can get me, you get me as a bargain now. But if I walk out the door, the bargain's over." I kind of felt like that. I just went out there and I knew I had to get a job. I got a job with a magazine that doesn't exist anymore called Supermarket Business. This was 1984, and I said to myself, "Okay, I'll write about the supermarket industry for a little while, a couple of months, and then I'll get myself a job writing about stuff I'd really rather write about." That was 1984. It's now, what is it, 2018. And so, it turned into a gig.

The interesting thing to me, and as sort of an object lesson, I think and sort of a justification for telling you a long story that may seem longer than it even is, is that, I started out in newspapers and then went to magazines. Then, subsequently, I ended up going over to the company that then owned Progressive Grocer and owned a video program called Supermarket Insights as part of a broader video division called Retail Insights. I started producing videos about retailing. We had a monthly program called Supermarket Insights. I went all over the world and shot stories in almost state of the Union, on every continent except Antarctica, and met some of the most fascinating retailers you can imagine, people like Raymond Ackerman in South Africa, Feargal Quinn in Ireland, and Ian MacLaurin, who was then the CEO of Tesco in the UK, and had this amazing opportunity to really see the global retail environment.

But I started in print, and I went to video, and then, subsequently, as the internet became a thing, I think it's fair to say that it's a thing, moved over to the internet. I'm 63 years old and so, but I've recognized every step of the way that I need to stay relevant. I need to stay relevant to a changing audience. I need to stay relevant with evolving technology. I've always joked that before I'm done, I'll probably be beaming into people's offices or homes via hologram. I'm perfectly willing to do that if that's how people want to get the information that I want to provide. And to me, that's a great lesson in how to stay relevant, in the need to change, that you can't say, "Well, I'm always going to do it this way because I've always done it that way." By the way, Michael Sansolo, to a great degree, has taken the same path-

Dan: Yes-

Kevin: I mean, he didn't have the video portion of his career, but he's done much the same thing. I know you talked to him a little bit ago. He and I always joked that, if we had stayed working for newspapers, and we, by the way, worked for the same newspaper chain about 20 miles apart, and didn't know each other at the time. But if we'd stayed working for newspapers, we would probably have something else in common today, which is, we'd both be unemployed.

Dan: Yes.

Kevin: Because that world has changed so much.

Dan: Yeah.

Kevin: And like I say, that's a great lesson in how to stay relevant, and being willing to kind of accept the next challenge and say, "Okay, I'll do that. I'm going to try something different now." I've written on Morning News Beat before about the time that I saw the great William Shatner in a one-man show. Now, look, I'm a huge Trekkie, I think Michael probably talked this, huge Trekkie or Trekker is actually the preferred usage of the term. I mean, Shatner's great. I mean, Shatner's almost 90 years old, and man, he's like, the Energizer Bunny. He keeps going. But there was a, I really related to his show in the sense that, when he talked about his career, and he talked about the reason he thinks he still has a career and is still doing new things is, whenever anybody presented him with an opportunity, he responded the same way, he said, "I can do that" and would do it and would try it. And sometimes, it went down in flames and sometimes it. Sometimes it doesn't work, and sometimes, you end up with Priceline stock.

Dan: Yes.

Kevin: And it makes you a gazillion dollars. If there's one theme that has sort of infused Morning News Beat since the beginning, it's wanting to communicate to people that it's really, really important when challenges, problems occur, you just address it. You go towards it. You grab it as an opportunity, as opposed to seeing it as a challenge or a problem.

Dan: Love that.

Kevin: I know the podcast is supposed to last a long time, but I just think like, I filled all of that time with a monologue, so I apologize-

Dan: Thanks. No, seriously, I appreciate it. This is exactly why I wanted to have you on. I've been reading your content for years now, not to date myself, but the point is that, staying relevant and being tied into the community. So let me frame this. I shared this when I talked to Michael, I shared this when I talked to Phil Lempert. One of the things that brands and retailers fail to do is look beyond the four corners of their office. What I mean by that, Kevin, is that, you can't tell what's going on in the next geography or the next town, the next whatever unless you've got some sort of resources, someone that's bringing that to you, whether you get it on TV or get it in a platform like yours. So what you do is help brands, like you said, stay relevant. And that is so very important, because the reality is, retailers, if you're a brand, retailers need you to be their eyes and ears. If you're a brand, you need to stay relevant and understand what your competition is doing. If you are a brand and you're listening and learning about what other brands are doing, that's fantastic as well.

One of the things I really love about what you do is that you read articles from all over and then you condense that and tell us what we need to pay attention to, sort of the Cliff's Notes version. So thank you for sharing that. By the way, in terms of the relevance vs. book smarts vs. not having the business degree and the journalism degree, etc., honestly, learning from people like you that are out there doing the job, in my opinion, is a lot more impactful. So thank you for sharing that.

Kevin: And I guess the only thing I would semi-disagree with you on, in terms of your characterization of Morning News Beat is just one way, which is, yeah, I get the whole Cliff's Notes things. But here's the deal: Anybody can do that. There's a lot of people out there who provide links to stories-

Dan: Right-

Kevin: And if that's only what I were doing, frankly, I would work a lot less than I work, and I would be a lot less different than other people. My goal is always to yes, look at how, not just what the industry is doing, but how media covers the industry. Because I think that's incredibly important-

Dan: Yes-

Kevin: But it's also to give opinions. I think that is where, if there's a not-so-secret sauce to Morning News Beat, it's quite frankly, being perfectly willing to come out and say, "I think this is a good idea, I think this is a bad idea." And then, not just be willing to take the emails that tell me that I'm full of crap, and crap again is not often the word they use. But then run them on Morning News Beat. I love it when people think I'm wrong. I could give you a list of times that people think I'm wrong, and I'm happy to run it and have the conversation, and sometimes, I've changed my mind. I mean, somebody just said, "Here's the flaw in the way you're thinking about this," I'm perfectly happy to say, "Oh, I hadn't thought about it that way." Because if I'm going to make my living trying to help people look at the world of business and consumers and all that kind of stuff and say, "Hmm, I haven't thought about it that way," I got to be willing to take it. Right? You can’t just dish it out. You got to be willing to take it-

Dan: Absolutely-

Kevin: And take it with a sense of humor. Too many people in this industry take themselves way too seriously-

Dan: Oh, tell me.

Kevin: And I don't.

Dan: Well, no, and that's actually exactly where I was going with this is that, you've got a professor in their coat in their ivory tower or whatever, and they're telling you, "This is the way it has to be, because I said so." And where I was going to with this, and thank you for the nice segway

Kevin: Hey, let's not knock professors. I teach at Portland State University every summer. I just came back from doing a thing at Cornell. I've taught at UNC-

Dan: Cool-

Kevin: And I've taught at St. Joe's and-

Dan: Impressive-

Kevin: I love professors. I think professors are great. The key to being a great professor to me, is understanding when you walk into the classroom, you're probably going to learn as much from your students as they're going to learn from you, if you pay attention.

Dan: You had that perspective. I've known some that fall on both sides of the equation and to your point, journalism that's very one-sided or very biased, that says, "This is the way it's done because this is the way it's always done" as opposed to having that flavor, that unique perspective and being able to look at it through the insights or through the lens of talking to people in the industry. What I was going to get at is that, unfortunately, and I agree with you completely, a lot of the journalism out there, especially in this space, is just repeating what other people say, but yet not having the wherewithal or the understanding of what it's like to be in their shoes. I love the fact that you provide that.

Kevin: Yeah. We're going to end up turning this into a treatise on business reporting in journalism. But a couple of observations, and I think they're actually relevant to the broader discussion of retail and marketing and management and things like that. Traditional journalism, and there's still a lot of people in this space who are tied to print publications, when they write about business. I remember when back in the old days, I wrote for print publications for a long time, and I don't know that I would need all the fingers on both my hands to count the number of letters that we would get in providing some context or a differing opinion on a story that we had done. It just didn't happen. People would read whatever they were going to read and they'd put it aside and they'd go to their jobs.

One of the things that has happened, of course, with the internet and with being able to do blogs like Morning News Beat. And it's only recently that I've been willing to call it a blog. When I started this almost 17 years ago, I didn't call it a blog because most of my readership was made up of people who never would read blogs. And if I called it that, they'd say, "Well, I can't read that. It's a blog." Now, everybody reads blogs, so it's not a big deal. But it enables a kind of instant interaction, right? People read a story and they can instantly go and they can respond to it. Sometimes they'll respond with an email that's 20 words long. Sometimes with an email that's 200 words long, and occasionally, with an email that's 1,000 words long, because you hit a nerve, you talk about something that's relevant. You talk about something that they feel passionate about. And so, they can respond that way more instantly. So they have, so technology, in this case, has enabled a conversation to take place between a provider and consumer that wasn't able to take place before.

This is relevant if you're in retailing because it's the same thing.

Dan: Exactly.

Kevin: A good retailer, it seems to me, or any good brand, supplier, retailer, whatever has to understand that communication is a two-way street, that if you're smart and you're creating a ... You want to create a relationship with your shopper, with your consumer. And that means creating a conversation. And that means understanding that you can find out more about them if you're smart. And you can create a relationship that will survive competition, as long as you continue to nurture it, to pay attention to it, to make the consumer understand that it's a conversation. Help them understand that. It's funny, it's like loyalty programs. I have readers who disagree with me on this all the time, I've always criticized many traditional loyalty marketing programs as being not really about loyalty at all. They're just glorified coupon programs-

Dan: Yes-

Kevin: Electronic coupon programs and they do very little except to provide discount on products. And people will sometimes write me an email. In fact, I've had a story like that this morning as we're recording this, and I've already gotten an email from somebody saying, "I don't know why you're disparaging this. What's better to engender loyalty than a coupon?" And my response to that, and I'll share it with you know is that, "Listen, there's nothing wrong with providing a coupon and a discount, but all you're then is you're doing is you're providing something that somebody else can provide as well." Which is why, if you look at somebody's keychains and this is a little different now, because we all have apps. But remember how people's keychains used to have like, 20 different loyalty fobs-

Dan: Oh, yeah-

Kevin: On them, so no matter where you went, you would have a fob, and you could get a discount? Well, that doesn't strike me as loyalty. That-

Dan: It's not-

Kevin: It's, right? It's not at all. And so, companies have to figure out a way to create loyalty, to. But mostly to show loyalty. And yes, discounts are important, but I don't think it can be just about discounts. There has to be other elements that you factor in, in order to create that relationship with the consumer. Just as, and I started this by saying, "Anybody can provide Cliff Notes. You got to provide something more that creates a conversation." Same thing in retailing. You can create a conversation, you can provide some of the same things that other people provide, but you got to figure out what your differential advantage is. What's the-

Dan: Well said-

Kevin: Unique thing that you have to offer that nobody else is offering?

Kevin: But you've hit a nerve-

Dan: Yes, this is exactly why I wanted to have you on the show. I have the exact same belief. I tell people on a regular basis, "I've got a loyalty card for every airline or flyer and for every retailer I go to in my market, for every gas station I go to. They're just glorified coupons." But the point is, and I agree with you 100%, most brands spend all their time talking at us. The point of a promotion is not to reward an existing customer. There are better ways to do that, a lot better ways to do that. The point of a promotion, from their brand standpoint, is to bring new trials, to get customers that weren't buying your product to try it for the first time. And so, when you call it a loyalty program, and then you bundle it the same way as every other retailer in the local community, then yeah, you're right. You're kind of missing the point. And that goes back to a lot of what you're talking about: creating a relationship. If the brand does an effective job of creating that relationship, that conversation you were talking about, you shouldn't need a loyalty program in the form of a coupon card.

Kevin: What's interesting that you talk about new trial. And I think that is true, whether you're a vendor or a supplier with a new product or you're a new retailer, you always want to get somebody new in the store-

Dan: Right-

Kevin: But I completely buy into the truism that, "It's easier to keep a customer than to get a new one." I think that's absolutely true. And I always think about how, how many retailers or businesses of any kind, for that matter, always treat their new customers better than their existing customers-

Dan: That's exactly where I was going to go-

Kevin: Right? If you're signing on to a new cable company, inevitably you get a better price than if you've been with the same cable company for 20 or 30 years, which is why every two years, I find myself calling the cable company and saying, "Well, I'm going to DirecTV unless you give me the newbie deal." And they always do it. Most people don't ask.

Dan: Yes.

Kevin: And I think that it's incredibly important to, for retailers to kind of understand, they have to pay attention to both sides of the fence. I've been doing much of my shopping over the last 33, 34 years at a store in Connecticut called Stew Leonard's.

Dan: I've been there.

Kevin: Right?

Dan: Yeah, a nice store-

Kevin: Terrific store. Totally unique store. If we're going to talk about companies that just organically have the sense that, they need to provide something different than the guy down the street or across town, Stew Leonard's is like that. Right? They don't have 35, 40, 45,000 SKUs. They have maybe 1,200, 1,300, 1,500, much of it private label. Much of it fresh foods, and providing an environment that is different than the traditional store with the directed traffic flow, lots of entertainment value, and prices that are good. Okay? So they have always understood that. But it's funny, I had a chance to give a presentation to the folks at Stew's a couple of years ago. I did the math before I went there, and I basically said to them, "One of the things you don't do as a company is, you do not pay attention to who your customers are in any kind of granular sense. And I'll illustrate that by saying that I did the math and conservatively, I have spent, over the last 30 years something like $250,000 in your stores." You just do the math, you figure if I'm going 48 weeks a year, and spending ... I raise three kids, I spend a minimum of 150 bucks. Do the math, and it's a lot of money-

Dan: Sure-

Kevin: Except, "but if I stopped shopping at you tomorrow, would you know that?"

Dan: Love that perspective-

Kevin: And the answer to that question, by the way, is no. They wouldn't know it. I would, there is no shot I'd get an email from them saying, "Hey, Kevin. Where you been, buddy? Have we done something wrong, or have you moved? You've been a great customer and we want to make sure if everything is cool." And so, my point to them was, "At some level, you should, when I walk in your front door, you should look at my forehead to see $250,000 emblazoned on my forehead. Because that's valuable to you-

Dan: Yes-

Kevin: Now, because I've been there for, doing shopping there for more than 30 years, I'm quite frankly coming to the point where, in my life, where I'm going to start spending less. Kids are grown up and so, my food needs are less than they used to be. But what they need to understand, and I'm not picking on Stew's. I continue to shop there when I'm living in Connecticut, and I think they're terrific. But what they need to understand is that, yes, when I walk in the front door, they need to think of my forehead as having that number emblazoned on it. But what they also need to understand is the person walking in in front of me or behind me may never have been in the store before. And so, those people represent, over a 30-year period of time, potentially hundreds of thousands of dollars.

Dan: Yes.

Kevin: And they have to make sure that they nurture that customer that way. We're not just talking to somebody who's buying 150 bucks' worth of product. We're talking about somebody that, if you nurture the experience and nurture the relationship, is worth vastly more than that.

Dan: Oh, I couldn't agree with you more. Well, and to go one step further, it's not just that you as the customer, it's what else you bring in. So let me back up a little bit. I love this conversation, because this is the conversation I am so passionate about: helping small brands understand why this matters. One, helping small brands communicate this in a story to retailers, so they're not looked at as an ATM machine and more importantly, "How do they expand their message?" Because the reality is, consumers shop very different today. They look beyond the four corners of their package, they do the research, and this is the point I wanted to add: They talk to friends and family. And that endorsement by you to your neighbors, to whomever else is far more important for that retailer than having to acquire and re-acquire and re-acquire and re-acquire the same customer over and over and over again. The future of retail is changing, like you said. The brands and the retailers that are paying attention to this, that are focused on not only $240,000 stamped on your forehead, but what about all the people that you tell about that experience or you share that experience with? Phil Lempert called it theater. How many people are you sharing that journey with?

What are your thoughts around that?

Kevin: Well, I think you're absolutely right. I mean, I think that, and especially today, whenever you're talking to one customer or dealing with one customer, you are potentially talking to or dealing with hundreds of thousands-

Dan: Yes-

Kevin: Or millions of customers. I think this came up in your session with Michael Sansolo. So he and I co-wrote a book called The Big Picture: Essential Business Lessons from the Movies.

Dan: Yeah.

Kevin: And one of the things, so we believe strongly in the power of narrative and the power of story. We use movies as a metaphor. I bring that up not because I'm trying to sell more copies of my book, although I will point out, it is available now on Amazon.com and Michael and I are working on a sequel.

Dan: Good.

Kevin: So, but put that aside for a second. My publisher says, "Got to keep selling, Kevin. You got to keep selling." Anyway, one of the movies in the original book is a movie called When Harry Met Sally. This is a great example of what we're talking about in terms of the viral nature of making an impression on a customer-

Dan: I know where you're going with this-

Kevin: Right? So let's think about the famous scene, right? The famous scene, Harry and Sally, Meg Ryan and Billy Crystal are in the deli, they're having a sandwich. Harry is bragging about his romantic exploits. I'm going to keep, I'll make this as PG-related as I can. And so, Harry's talking about how successful he is in the romance department. Sally says, "Well, how do you know that the women that you are with are having a good time and that they're always as satisfied with the experience as you are?" He says, "Oh, I know that they are." And she says, "How do you know that I'm not faking it?" He says, "I would know." At that moment, she puts down her tuna fish sandwich or whatever she's eating and she spends about 30 seconds in middle of this crowded New York deli simulating, let me put this, a positive romantic experience.

Dan: Love that.

Kevin: And it goes on and on and on and she finishes with a flourish, let's say.

Dan: Yes.

Kevin: And then picks up her sandwich and she starts eating again, and Harry is nonplussed. And then, of course, there is the great line where the woman at the other end of the table looks at the waiter and says, "I'll have what she's having." Okay. Great line, and by the way, that was-

Dan: Classic-

Kevin: Rob Reiner's mother, Rob-

Dan: It was-

Kevin: Rob Reiner directed it. And that is Estelle Reiner, Rob Reiner's mother and Carl Reiner's wife. And she, let me tell you something, she knew how to deliver a line. Maybe one of the funniest lines in the history of movies. But that's not my point. My point is, when that movie was made, it was a certain period of time. And so, something that would exist today, that didn't exist then. You shoot that scene today in that deli, and what's going to happen is, every person in that deli is going to have their smartphone out. And it's all going to be on video. It's on YouTube in about 20 minutes, and she's on Colbert within 48 hours-

Dan: Yes-

Kevin: Right? Because it becomes a sensation. That's how the world has changed. That's exactly how consumer interactions at retail take place. You have to understand that everything is for public consumption. Sometimes retailers and by the way, consumer brands, they don't always want to be as transparent as maybe they should be. My feeling is always, "I'll just be transparent, because if you're not transparent to yourself, other people are going to be transparent for you. And it's not going to go well."

Dan: Agreed.

Kevin: But can I go back on something-You made me think about something before that I had not thought of before, that maybe is an idea. You talked about small brands. I wonder, this may exist. We may both get emails saying, "Oh, you're an idiot, Kevin, every company has one of these." But let me suggest it anyway. What would happen if retailers, and I'm talking retailers of any size, that do their buying, okay? What if they had one person and they were in charge of attracting and marketing small, innovative brands. So if you're a startup, and you've got something cool, you don't go to the grocery buyer or the dairy buyer or the meat buyer or whoever happens to be in whatever category you're innovating. But you've got a person to talk to at the retail level, at the retail buying level and their specific job is to talk to you, because you're small.

Dan: Yes.

Kevin: I don't think that exists to any great extent. And I think it would make a tremendous amount of sense. Because there are so many barriers at retail, especially at big retail, to people like that getting recognized, being noticed.

Dan: I agree-

Kevin: And yet, I think we're living at a time where ... And we sort of ventured towards this when you and I were talking a couple minutes ago, 80 to 85%, maybe 90% of what it is the vast majority of supermarkets in this country or, is common to every retailer.

Dan: Yes.

Kevin: Right? It doesn't matter. You can get most product anywhere. And usually, they differentiate themselves with a couple pennies off here or a nickel or a dime off there, but largely, most product is the same. And so, retailers, if they're going to be successful today, it seems to me, have to figure out, "Okay, how do I work around the margins of that? How do I identify the products that are going to make me different, that are going to help define me as being innovative, where you can get something different that you've never had before?" And so, retailers need to figure out a way to do that. And I think one of the ways to do it is to create a mechanism that is more nurturing and more accepting, especially of small brands that are doing the innovation, and then helping them sell their product. These small companies aren't going to have money for sliding allowances.

Dan: No.

Kevin: They're not going to have money to do big sampling programs. They're not going to have the ability to do the things the big brands are going to do, but if you have somebody inside whose, their job is to be your rabbi. Right? Their job is to make it happen. It's interesting, I was at the United Fresh Conference couple weeks ago. These two young women, who both, who met each other at USC, I think they were in their probably early-to-mid-20s, they've got a product. And it's of something I've never heard of before. I'm going to give them a plug right here. The company's called Pulp Pantry, P-U-L-P Pantry. And what they do is, they take the pulp from fruit and vegetable smoothies. A lot of companies out there make smoothies. Well, there's always pulp left over. So they take that pulp and they'd turn it into a snack that's sort of granola-like in its texture.

Dan: Very clever.

Kevin: And it's great. It's very smart. But they're starting this thing out. And I said, "Oh." Frankly, when I talked to them, you and I hadn't set this date up, so I'm doing more than they even knew. I said, "Oh, I see retailers all the time. I'll tell them about your product. I've got no horse in this race. I got no financial interest here." They just seemed really smart, and this seemed like an innovative product. So I'm going to talk about them to people, but they should be able to call up a list of the top 20 retailers around the country, 50 retailers around the country, and instantly know, "Who is the person at those companies who's in charge of talking to me?" Think about what Kroger has done with its Net 90 policy that it just established. Letting brands know that basically, once you deliver a product, you have to wait 90 days to get paid. Now, that's okay for Kraft or Coke or Pepsi, because they can afford it. I mean, I don't think 90 days is right, under any circumstances. But the big companies can afford it. But if you're a small, innovative company, that's a killer.

Dan: Oh, it is.

Kevin: Why do business with Kroger? And in fact, I would argue that all of Kroger's competition should've instantly put out a press release saying, "We're on net 15. If you have a small and innovative product, come to us, because we want to do business with you, and we're going to do our best not to kill you, but to nurture you and keep you alive."

Dan: That would've been a great idea.

Kevin: Okay, yeah. I'll get off my soapbox now

Dan: I love what you're talking about it. Okay, the power of story. I developed a free course to teach brands how to leverage their selling story at retail, to your point, so that when they go to a retailer, they're not looking at it as an ATM machine. I agree with you 100%. Most of the brands that are going to listen to this, are the brands that are focused on total transparency, not a slogan, not a cheap something, a one-off, whatever. "This is how we make it, these are the ingredients. You can trace it all the way back to the person who put the seed in the ground, what kind of fertilizer was used." If anything, hopefully not, hopefully it's organic.

But my point is this: You're right. Those brands have so many barriers to entry and well, as far as talking about retailers wanting these brands on their shelves, there are so many barriers to entry. Everyone's got their hand out. Everyone wants something. Everyone wants something else, whether they're a broker or the distributor, etc. I'm not trying to bash anyone, but the reality is that, the future of this industry is in these small, disruptive brands. Not in the big guys. The big guys, to your point, can buy a lot of shelf space. They can afford to promote the heck out of their product. They don't have that runway. Can you imagine being a small business owner and being told, "God, we love your product. We appreciate that you paid slotting. We appreciate that you paid for all of our menu fees and all the other things. Oh, but we're not going to give you a check for 90 days." Can you imagine going to work for that newspaper you worked for and saying, "We really appreciate your being here, but hey, we're not going to pay you for 90 days. I know you've got a mortgage payment, I hope you can figure it out"? What a ridiculous program.

And so, to your point, you're right. Retailers need to realize that the future of CPG is with these small disruptor brands. This is exactly what I talked with Phil Lempert, the SupermarketGuru, about. About, it's these small brands that are driving traffic into stores, that are speaking to their customers, that have a one-on-one relationship with them, that are really transforming the way that people think about food, and they way people shop. Not just in a store, but online. And here's the caveat that I wanted to ask you about next, there's this thing called the internet. You alluded to it earlier. The retailers that are not paying attention to these small, disruptive brands, Bill Bishop coined the phrase that, "Everyone has their personal supply chain." If I don't like it at your store, if I can't find what I want at your store, I have the opportunity to go elsewhere. And no loyalty card in the world is going to keep me in your store if you can't find a way to meet my needs by giving me the products that I want at the price I want to pay, that keep me within your environment, the theater, as Phil was talking about. Your thoughts?

Just a reminder, I split this episode into two different sessions. You can listen to the rest of the episode on BrandSecretsandStrategies.com/session72. That's also where you're going to find today's show notes.

Dan: Welcome. Here's the continuation of a conversation with Kevin. Hope you like it.

Kevin: Yeah. Well first of all, I want to be clear, I'm not a guru of any kind. I'm just here to paraphrase ... To paraphrase Dr. McCoy. I'm just a poor country writer. But I think that the ... A couple of things. I agree that, completely, that consumers can go anywhere.

Dan: Yes.

Kevin: One of the things, sort of doubling back here, but I'll make my point. In a lot of ways Amazon is, and this is I think the first time I've used the word, I don't know that I've ever gone 45 minutes in my career without using the word Amazon. But Amazon is just the world's greatest loyalty marketing program. In a lot of ways. It is because it totally builds on them. Now one of the things that Amazon has done is by using both Prime and Subscribe & Save, they have actually created a way in which they create what is de facto loyalty, because like in my household, there's probably 12 items that we have on Subscribe & Save and for those in your audience who do not know what Subscribe & Save is, and I am sure of two things, first of all there are people in your audience who do not know what Subscribe & Save is and have never used it. That is in its own way retail malpractice, not to know that. I give a lot of speeches and I ask the question and audiences sometimes have no idea. Subscribe & Save is that basically replenishment for consumers.

Dan: Yes.

Kevin: In my household we have probably 20 items that we have on Subscribe & Save. Laundry detergent, paper towels, toilet paper, razors, dishwasher detergent, soap, lots of stuff. We have it on that way because A, I do all the shopping and I don't want my wife and my adult children who still live at home to run out of stuff while I'm traveling. I don't want to get a phone call saying, "Hey, we ran out of Tide," or whatever the laundry detergent happens to be.

Dan: Right.

Kevin: I have it on Subscribe & Save. Shows up once a month, six weeks, eight weeks, whatever it happens to be depending on usage. Not a problem. Prices are good. Not always great. Not certainly the cheapest, but in this case convenience is more important than price.

Dan: Yes.

Kevin: Knowing that it's always going to be there. The point is that each one of those items that I get through Subscribe & Save is an item that I used to buy at retail.

Dan: Mm-hmm (affirmative).

Kevin: Largely at supermarkets. I will never buy those items again as long as there's a Subscribe & Save existing at Amazon. Right?

Dan: Yes.

Kevin: They have lost that business, and they are never going to get it back. One of the things I don't understand is, and Subscribe & Save has been around for years, there are very few retailers out there who even have thought about the idea of doing replenishment.

Dan: Yes.

Kevin: Yet this is a place where, especially because the vast majority of what people buy when they go to the store every week is the same stuff. Sometimes people change, but most of the time people are buying the same thing unless given a compelling reason to buy something else. But if you can capture that replenishment business, again you're creating a connection with the customer. You're broadening the relationship with the customer. You're establishing a greater level of communication with the customer. I know for example there's a software platform out there called Replenium, which provides replenishment services for retailers not named Amazon.

Dan: Mm-hmm (affirmative).

Kevin: Yet nobody's offering it.

Dan: That is interesting.

Kevin: They don't recognize the fact that this is an example of a company like Amazon, and it's not just Amazon that can do this, sort of nibbling away at your business and not realizing that if I don't do something to stanch the bleeding, and I'm mixing my metaphors here, that it's going to be really bad long term and I'm going to lose 5, 10, 15, 20% of my business to somebody who has figured it out and has not only captured part of my customer and part of my customer sales, but is going to keep it forever.

Dan: Yes.

Kevin: If I don't do something about that, it could be fatal.

Dan: Mm-hmm (affirmative).

Kevin: Because what company can afford to lose 5, 10, 15, 20% of sales and stay in business?

Dan: Yes.

Kevin: It's just not possible. I think the whole notion of, again this loyalty, replenishment, creating that communication with the shopper, is incredibly important. By the way, not everybody gets this. I used to get all my coffee that I make at home from Starbucks.

Dan: Mm-hmm (affirmative).

Kevin: Standard. I get two pounds a month that were delivered to the house. Verona ground. That was the coffee I made. We loved it. It was terrific. I was a subscription customer with Starbucks for years. Suddenly about, I'm going to guess now a year, maybe a little longer ago, Starbucks put out a note. "We're ending our subscription business."

Dan: Oops.

Kevin: "Thanks for being such a good customer, but from now on if you want to buy it, you got to buy it in our store or you have to buy it at the supermarket." I can figure no other, I mean, why they wanted to do this is beyond me, except that I do know this.

Dan: It doesn't make sense.

Kevin: It makes no sense, because they wanted to dictate to me how I was going to buy their product. That's a mistake that brands, retailer or supplier, they can't make that mistake. You have to make it available to the customer the way the customer wants it.

Dan: Yes.

Kevin: Not the way you want to make it available to the customer. Now unless I was the only subscription customer that Starbucks had, which I don't think is true, and I was costing them a lot of money just to send out my coffee every month. There's no excuse for that.

Now, here's the interesting thing, and this ties into the whole notion of telling a story. I'm lucky. I’ve got a soap box. When something like this happens, I just don't complain about it at my dinner table and at cocktail parties. I write about this, and I'm pissed off because this is how I've been getting my coffee. I got an email from a Morning News Beat reader who happens to work for a company called City Girl Coffee out of Minnesota, and he said, "Well we have a subscription program, and one of the nice things about our company is that we only source our coffee from coffee bean plantations that are run and owned by women." By the way, it's a little bit more expensive than Starbucks, but what a great story.

Dan: Oh yeah.

Kevin: I signed up for that, so I get my coffee from them now. Go figure, my wife likes it better. It was a win all the way around, but it illustrates so many of the mistakes that companies make thinking they can control the consumer, but it also illustrates the power of story.

Dan: True.

Kevin: Because now every time, I tell the story about City Girl Coffee all the time. Terrific company, great mission. From my perspective a wonderful set of values. I hope they do great, and I'm happy to drink their coffee and tell their story and share it with people and I hope they've gotten other subscribers and other customers because of it.

Dan: Well I bet they have, and that goes back to what you were saying earlier, and again, instead of trying to reacquire and reacquire and reacquire, dating myself a little bit, I used to work for Unilever and Kimberly Clark back when Walmart was just becoming a phenomenon and regular retailers were losing almost their entire HBA category to Walmart and trying to figure out how do we survive? How do we compete?

Same scenario, only that was before the internet, and I agree with you 100%. Instead of trying to reacquire and reacquire and reacquire, how do you develop that relationship? You were talking about the Polk Company. These are the brands that I typically talk to. These brands that ripple in the pond that I always reference, and what I'm getting at is that if you throw a ripple in the pond, that's where the trend begins and before it becomes a tidal wave and ends up in a big retailer's shelf, those are the brands that are changing the way that we think about things. Those are the brands that are changing the way that we have those conversations.

To your point, not only are you sharing these insights throughout your megaphone, but you're also talking, other people are talking about this at their dinner table and to their friends, et cetera. That's how these small brands are getting so much traction. This is how these small brands are, going back to your earlier point, this is how they become relevant. This is why the bigger retailers need to pay more attention to them. I agree with you 100%. They need to reduce the barriers of entry. Small brands shouldn't have to pay slotting. Not every big brand out there pays slotting. Not every big brand out there just automatically adopts every single retailer's promotion program to broker/distributor et cetera. They have very finely-tuned programs where they can choose to put their money. Those same resources and insights, that's what I'm trying to teach to small brands. How to leverage those strategies to get more runway at the retail stores you're at. I really appreciate your sharing that.

Kevin: Yeah, and I think that one of the keys to me, and people who read Morning News Beat are right now gagging, or they're about to gag because they've heard me write this or say it so many times, but to me one of the things that's critical, and this goes for whether you're a retailer or a brand, and especially if you're a small brand, or by the way a smaller retailer, which is it's no longer enough just to be a source of product.

Dan: Yes.

Kevin: I think these days it's really important to be a resource for the consumer. That means having a story. It means having a differentiated story. It means being able to communicate with the customer in a fundamentally different way.

Dan: Agreed.

Kevin: Just having product isn't enough. It's interesting, one of the examples of this I think is, we don't know how it's all going to turn out yet, but so we're in an environment right now where Albertson's is acquiring Rite-Aid, right? Which looked like an interesting deal and certainly was going to give them a broader footprint, but it looked like a better deal until the moment that Amazon announced that it was spending a billion dollars to acquire PillPack. PillPack, which is basically a company that doesn't just sell pills but it packages them by individual days, so people, especially folks who are getting older, and let's face it, we're all getting older, some of us faster than others, but it provides in a way you know you're taking your pills every day.

While PillPack was not an enormous concern, Amazon's spending a billion dollars on it, they're going to figure out a way to make it more efficient. They're going to figure out a way to get into more people's hands, and they're going to lower the prices and the costs.

Dan: Well it's a subscription model too.

Kevin: Absolutely. Once you have the PillPack, would you ever go back to a traditional drug store?

Dan: That's what I was going to say next. Loading your pantry, getting customers out of the market, that's what people aren't thinking about.

Kevin: I was going to say, to me the Amazon PillPack deal appears to be a tomorrow deal.

Dan: Yes.

Kevin: The Albertson's Rite-Aid deal, apologies to all my friends at Albertson's, just suddenly looks like a yesterday deal.

Dan: Mm-hmm (affirmative).

Kevin: And ignores the fact that physical presence is probably going to be less important down the road than the ability to tap into a specific and growing customer need.

Dan: Mm-hmm (affirmative).

Kevin: And it has nothing to do with people going to the drug store. To me, that's an example of the kind of thinking that more retailers have to have.

Dan: I agree.

Kevin: You just can't have a store or ... Or vendors have to have, right? You can't just have a store. You can't just have a product. You have to figure out what pain moment can I help alleviate for the consumer?

Dan: Mm-hmm (affirmative).

Kevin: What problem does the consumer have that I can address in a way that nobody else is addressing?

Dan: Yes.

Kevin: That can be a lot of different things.

Dan: Well I challenge the notion that first of all, I always say that retailers generically don't make anything. They sell other people's stuff. What they sell is real estate in the form of shelf space. Now when you frame it, and I get a lot of pushback from that, but if you think about it, if you go to a retail store, their claim to fame, their reason for being, is the customers that they can attract, that they can nurture, back to your Stew Leonard's comment, and so I'm trying to challenge the notion that brands need retailers more than retailers need brands. The reality is that they need each other. The reality is that consumers, going back to what Bill Bishop said, have a myriad of choices as to where they can shop.

Amazon buying PillPack, that takes customers out of the market that might have gone to Rite-Aid or might have gone someplace else. It's not just the prescription drugs, but the supplements and everything else. Think about losing that chunk of volume from a traditional mainstream store. That's pretty huge. I agree with you completely.

Kevin: Yeah. Increasingly. I think it's a really valuable mission for you to have.

Dan: Yes.

Kevin: Increasingly it seems to me traditional brands and traditional retailers are finding themselves on a small lifeboat and the lifeboat's getting smaller all the time. The problem is if they're not all rowing in the same direction, it's just not going to go well.

Dan: Uh huh.

Kevin: The problem for them is, and now I'm going to wax rhapsodic about Amazon for a moment, just to be clear I own no Amazon stock, I've never owned Amazon stock, and I now can't afford Amazon stock. It's trading at like $1800 or whatever.

Dan: Wow.

Kevin: Okay? I want to be clear about that, because I get that accusation all the time. The thing is, you look at Amazon and we know right now that Amazon is responsible for, based on a study that just came out, they're generating 49.2%, I think it is, of all online sales in the United States. Okay? They are selling basically, they're responsible for half the online sales in the country. Does anybody think that number's going to be lower a year from now?

Dan: No.

Kevin: I don't. Part of the challenge of course is that Amazon's market valuation is so much higher than everybody else's. Right? They are worth more than if you look at the next eight to 10 to 12 retailers combined.

Dan: Mm-hmm (affirmative).

Kevin: If you look at their market valuation, I don't have the numbers in front of me, but it's something like $800 billion or something like that. Amazon's market valuation is something like $900 billion. If you take Walmart out of that list, then everybody else is like $400 billion. It's extraordinary to the degree, and that gives Amazon a tremendous amount of buying power, access to capital that nobody else has.

Dan: Mm-hmm (affirmative).

Kevin: That's the reason that their market share is going to continue to grow. It's going to grow because they can access capital and they can innovate to a greater degree than almost everybody else.

Dan: I'd go one step further. One of the things that I think that, it kind of goes back to what we keep touching on, repeatedly keep going, the theme, underlying theme is they focus on the consumer. They don't focus on the old-fashioned, like you said, way of doing business. They're focused on how do we meet that customer's needs today, tomorrow, and 10 years in the future? Where a lot of other retailers ...

Kevin: You're absolutely right.

Dan: Yeah. This is what I'm getting at. Instead of trying to reacquire

Kevin: Well, and I'll tell you something else.

Dan: Go ahead.

Kevin: Yeah, I'll tell you something else. They focus on lifetime customer value.

Dan: Yes.

Kevin: They don't look at transactions. They look at lifetime customer value. They recognize that not every transaction is going to make them as much money as every other transaction, but that's okay because they created this ecosystem in which they're looking at the totality of the customer value to them, and that's why they don't just sell products, but they have videos and they stream NFL games and they do all these other things and they create home security systems and they can help to outfit a smart home. They have all this because they are trying to create a situation in which Amazon is always going to be the first and often the best choice for consumers.

It's not for nothing that Amazon is the second biggest, or second busiest search engine in the country or the world. I can't remember which. Probably the world. And Amazon's not a search engine. They're second only to Google. Retailers and brands have to figure out a way to get ... How are they together going to combat this?

Dan: Yes.

Kevin: By the way, that doesn't mean, combating with eCommerce doesn't always mean doing eCommerce. Sometimes it means how am I going to make my store so compelling? How am I going to make the brands that I'm selling in the store so compelling that people say, "I'm going to get off the couch."

Dan: Yes. Well, and that gets back to what we've been talking about, how do retailers leverage these small brands who have that relationship with their core customers who have become brand evangelists almost? How do they help them keep coming back to the store time and time and time again? There will always be traditional retailers. That's a given. The reality though is that their share of the pie I think is going to shift. I think this goes back to what you're saying, Kevin, that all the big brands are in small little lifeboats out on the ocean, whereas I remember years ago working for Unilever where my boss told at the time one of the largest retailers in the country, "Hey, try to run your soap section without Dove." Oh, that's pretty scary stuff.

The reality now is these small brands are the ones that are driving sales. I've done a lot of work in this area. I did a project for the 2016 Category Management Handbook where I wrote a feature where I identified one example of how it's these small natural organic brands that are driving all the sustainable growth across every category. If you remove them from every category, then every category is flat or declining. Thus, that's why retailers need to be paying more attention to the small brands. That's why these small brands need to have fewer barriers of entry so that they can help the retailer maintain their, back to your original point, their relevance in their communities.

Kevin: Let me challenge that for a second though.

Dan: Okay.

Kevin: Let me ask you a question.

Dan: I'm ready.

Kevin: Let's suppose a retailer, let's just say Walmart, because why not, right?

Dan: Sure.

Kevin: Let's supposed Walmart announced tomorrow that they were going to, I'm going to make some people just nuts by saying this, but that's okay. Let's suppose they announce tomorrow that they are going to dramatically overhaul their laundry detergent section.

Dan: Mm-hmm (affirmative).

Kevin: And from now on, they are going to carry four SKUs of Tide. Small version ... Let's say six SKUs of tide. They're going to carry small traditional Tide, and then whatever the biggest jug is that they sell with it of the regular Tide. They're going to get a small version of Tide Free & Clear, and the biggest jug of Free & Clear that they have, and then they're going to sell two SKUs of the Pods. That's it.

Dan: Mm-hmm (affirmative).

Kevin: They're also going to sell one or two ... And then they're going to sell two SKUs of a private brand or a smaller brand, Parasol or whatever. Right?

Dan: Mm-hmm (affirmative).

Kevin: They're going to have total in their laundry detergent section eight to 10 SKUs.

Dan: Mm-hmm (affirmative).

Kevin: Okay. And they said, "And the private brand is going to be priced lower than the national brand, but we recognize people want one national brand, so we're going to give them a little bit of an option. Then we're going to take the other four, eight, 12, 16 feet that we have traditionally devoted to the laundry detergent section, and we're going to somehow convert that and we're going to carry products that nobody else carries. We're going to make that part of an innovation section that we're going to have in all of our stores."

Do you think honestly that anybody is going to stop shopping at Walmart because they've only got 10 SKUs of laundry detergent?

Dan: The answer to that question is they already did this once. They did this several years ago. It was the greatest gift to Target. Target was somewhat on life support if I remember the story correctly, but I was there. Yeah, so what happened was Walmart said that, "Hey, we're only going to carry the top two brands plus our stuff," and customers said, "You know what? That's not good enough. I want my X brand." Customers left and went to other retailers. That's the first part of your question.

The second part of your equation, in terms of the innovative products, it's not just a matter of how innovative the products are. Now let me explain, and I use the bread example a lot for this. Kevin, if you walk up to a store shelf and you see the cheap generic bread and you buy that and you eat that and you're hungry not even before you're finished eating the sandwich, and if you buy the more expensive mainstream bread and it's right next to its organic natural counterpart, and let's say the organic bread is maybe $0.50 more expensive, okay? If you are what you eat, then what you eat matters. What I mean by that is if the mainstream bread fuels you for three or four hours, but because you have better nutrients in the natural organic bread and that fuels you for an extra hour, then that $0.50 is actually cheaper. The consumers are actually a lot more savvy today, and they're paying attention. Okay, what meets their needs nutritionally? What meets the needs of their family? That's the first point.

The second point is, the way that retailers merchandise products doesn't make sense. The reality is that I find the mainstream bread in one section because that schematic is controlled and managed by the mainstream bread manufacturer, and the natural organic bread is in another area. There is a misconception that organic is more expensive because, and it doesn't need to be. It's a waste of money. You hear this all the time, but the reality is the consumer that reads the label, that understands what's in that product, that understands how that product provides the nutrients their body needs more efficiently, more effectively than mainstream bread, that consumer is going to pick that bread up, and here's the rest of the conversation. That consumer buys organic bread, is also going to buy organic spread, organic dairy, organic whatever else. Their market basket is dramatically higher than the customer that buys the mainstream product.

Now I'm not trying to diss any companies, but my point is this. If Walmart or any retailer had the wherewithal to merchandise products around the way consumers shop, and I know I'm going to get a lot of blow back from that, but if they're able to merchandise products around the way that consumers shop to make shopping easy, convenient, et cetera, so that I can not have to go push my Amazon button, then that's how retailers are going to become relevant.

I interviewed, for example, Mathis Martines, former national natural category captain for Kroger, and we had a great conversation. He agrees with me completely. I had a really good conversation with Ben Friedland, the VP of Marketing for Lucky's Market. He agrees completely, and my point being is that these retailers have developed a relationship, specifically Lucky's, with that customer. Your idea of having that number tattooed on your forehead when you walk in to Stew Leonard's, the customers that walk into a Lucky's, another plug for them, are focused on the lifetime value of that customer. Are focused on how do they develop an ongoing relationship with that customer, realizing that that consumer has a lot of choices. In fact, one of the more successful Lucky stores is within walking distance, literally almost in the same parking lot, as their biggest competitor in the state of Colorado.

My point is that retailers need to think differently about how they're putting products on the shelf. The large brands and the large retailers need to stop thinking about the only way to get a product to move off your shelf is through price. I hate listening to the quote unquote gurus say, "Price is the only motivator at shelf." Reality is that the consumer that's going to pay extra for the organic product is buying quality, value, et cetera, more so than they're buying price. It's a different consumer altogether, but it's that consumer that's driving profitable sales in the category, in the retailer, et cetera. Go ahead.

Kevin: Well okay. It's funny, we started this conversation, I don't know even how many minutes ago, with me saying, "I love it when people tell me I'm wrong." You just told me I was wrong on the Walmart premise. See, I'm totally cool with that. I'm married 35 years. I got three kids. I am totally used to being told I'm wrong.

Dan: You know how to say yes.

Kevin: Yeah. You know. Yeah, it's always a matter of figuring out how many different ways to say, "I'm sorry, I was wrong." But, let me push back a little bit.

Dan: Okay.

Kevin: Because I think you just compared not apples to oranges. You compared apple pie to oranges.

Dan: Yes.

Kevin: Or you compared apple pie to organic oranges. I think that laundry detergent is not organic bread. I think that their in totally different experiences. I also think I'm probably, part of my mistake was maybe using Walmart as an example because Walmart may depend on having that wall full of different laundry detergents.

Dan: Right.

Kevin: That's what people expect from Walmart. Although I will tell you that years ago I wrote that exact scenario as an April Fool's story and got people very upset with me because they thought it would give Walmart ideas. But, if I were a small retailer and I'm trying to differentiate myself in the marketplace by having innovative products, and I'm not so dependent necessarily on how much Tide I sell ... I'm making the Procter people just nuts here.

Dan: Right.

Kevin: If I'm not dependent on that, then maybe I can make that decision. I also think, by the way, that I could only make that decision if I sell it. By that I mean I put up a big fricking sign over my laundry detergent section saying, "Here's why we decided to do this." Or I send an email to every one of my customers. Or, by the way, and this is how the world is changed, saying, "We're only going to have this in the store, but if you want to buy any one of the other 47 or 470 SKUs that are available, we're going to make that available online and we'll deliver it to you." That's changed. You don't necessarily have to have everything in store. You can figure out another way to slice that bread.

Dan: Right.

Kevin: To use the other metaphor that we were talking about before, but I think that I totally agree with you on the whole notion of organics sometimes seeming more expensive, but aren't because the value is greater. I just came back from the Organic Produce Summit and I'll tell you something, I mean it's amazing to me the degree of vitality and enthusiasm that that particular trade show has generated. They've only been around for three years, and they're growing exponentially.

Dan: Mm-hmm (affirmative).

Kevin: They're growing it exponentially not just in terms of the people who are exhibiting there, but also in terms of the people who are coming to the show as retailers who are looking for exciting and innovative products.

Dan: Mm-hmm (affirmative).

Kevin: It's at a time when other trade shows are contracting or going away completely. These guys just continue to have a secret sauce that nobody else seems to have to the same degree. I agree with you, but you got to sell it. I'm using a small S there. You got to tell the story. Right? You have to explain why the better bread is ... Yeah, it costs a quarter more, but here are the nutritional values. Here's this, here's that. Here's what you need to know.

Dan: Right.

Kevin: The days I think of just throwing product up on shelves and not telling a story about them, and you can tell that story in a lot of different ways. You can tell the story with QR codes that allow people to scan them with their smartphones and find out everything they can possibly need to know. That's not an original notion. It's not even a new notion.

Back in Ireland 25 years ago Superquinn, Feargal Quinn, one of the great innovative retailing minds of the 20th century, now retired, but great, I mean unbelievable stores in Dublin. You would go into their seafood department and they would have pictures over the seafood department of, "This is the guy who caught the fish." They would have the farmers who grew the tomatoes. The rancher who had the cows. They were telling those stories, and they were using non-technological means to do so. They were doing that 25, 30 years ago.

You don't have to be a technological genius to be able to tell a story at all. I can remember, God, it's now, it's got to be 20 years ago. Maybe 15 years ago, that I was in a store in Japan, the name of which escapes me at the moment, but at the time, and this is pre-smartphone, you could go on your phone and you could take a picture of what was a QR code, and these are the early days of QR codes, and you could ... In the produce department of a QR code on the tomatoes, and you could find out where the tomatoes were grown. You could find out what was used to fertilize the ground in which the tomatoes were grown and you could see a picture of the farmer who grew the tomatoes.

You could go into the meat department and you could do the same thing with the steaks, and you could find out where the cow came from. You could find out what the cow had been fed. The only thing they didn't give you was the name of the cow, and that's probably a good thing because I don't want to eat Bessie if Bessie has a name. They were doing that then. They were telling a story about the product.

Listen, I know when Michael did it he talked about Ben & Jerry's.

Dan: Yes.

Kevin: He told that story about Ben & Jerry's. Telling a story about the product.

Dan: Well absolutely.

Kevin: Whether you're big or small, more and more you have to do that.

Dan: Well and again that's the reason why we're having this conversation. That's the purpose of the podcast. That's the purpose of all the content I put out there, to teach these brands how to reeducate the retailers to be focused on what does a consumer want? How do these small brands help guide the consumers in their stores so that not only that the brands are relevant, but that retailers are relevant too?

Kevin: Well we're doing much the same thing, right?

Dan: Oh yeah.

Kevin: We're two prophets in the wilderness.

Dan: I've never been called a prophet before. I'll tell my wife that. She'll laugh.

Kevin: Yeah, put a small P on it.

Dan: There you go.

Kevin: My wife would say, it would have to be prophet as in P-R-O-P-H-E-T because in my business there's not a lot of P-R-O-F-I-T.

Dan: Oh, agreed. Agreed. The amount of content we deliver. But you know, we do this to raise the rising tide, we all benefit. I mean that's why we do this, so again thank you for your time. I really appreciate your time, Kevin. What are the things we've missed? What other things have you thought of that you wanted to throw in there? I'd love to have you back on to continue our conversation. We could probably go for days.

Kevin: Yes. Once you've got me talking, it's hard to slow me down. Okay, I'll tell two quick stories.

Dan: Okay.

Kevin: Which illustrate the issue, and then we'll get off because people are going, "Oh my God. Why won't you shut up?" Yeah. They're both movie references, but I think they illustrate important points and it gives me a chance to talk about movies and our book, The Big Picture: Essential Business Lessons from the Movies, available now on Amazon.com.

Dan: By the way, I was there when you introduced it at the Cinema Conference.

Kevin: Yeah, see how I did that?

Dan: I want to make sure people know about it, I'd love to help plug it.

Kevin: Cool. Appreciate it. Anyway, so one movie lesson comes from The Hunt for Red October. There's a moment in The Hunt for Red October where a lot of stuff has happened and there's this Russian submarine, Captain Marko Ramius, played by Sean Connery in his best Russian/Scottish accent. They're basically trying to defect with this submarine to the United States because he's worried that the submarine is going to be the cause of World War III. He wants to basically even the playing field between the Soviet Union and the United States. I haven't watched this in a long time given the current situation. It'll be interesting to go back and look at it.

Anyway, but the Soviet Union has sent another submarine out to hunt down the Red October, hence the title of the movie, and to sink it. At one point they fire a torpedo at the Red October and Sean Connery, Captain Marko Ramius, turns to the person at the helm and says, "Turn towards the torpedo." That's my best Sean Connery. The helmsman looks at him and goes, "What?" He says, "Turn towards the torpedo." The helmsman does, and when the torpedo hits the Red October it bounces off.

Great business lesson, because what he has done that nobody realizes is by cutting the, it takes some time for a torpedo to arm, and by cutting down the distance between the two submarines, he has managed to allow the torpedo to hit the Red October before it's armed. What's the business lesson? If there's a challenge out there, if there's a problem out there, if there's an obstacle out there, go towards it.

Dan: Yes.

Kevin: Don't back away from it. Go towards it, because if you go towards it, you can then deal with it on your own terms, not on the torpedo's terms. If you deal with the torpedo on its terms, it's going to go better for the torpedo than for you. That's lesson number one. Right?

Dan: I'd like to add, if I may, closing the distance between the shopper and the product too. The experience. Go ahead.

Kevin: Totally. Totally. Okay, second lesson. Second movie lesson comes from what's my favorite chapter in the book, and it's a movie that virtually everybody has seen, called Jaws. Jaws is a great business movie. Jaws is a movie about denial. Everybody in the movie is in denial about reality. The mayor doesn't want to close the beaches, even though body parts keep washing up on the beach. He thinks closing the beaches is bad for business. It's really bad for business if body parts wash up on the beach.

Robert Shaw wants to go hunt the shark by himself. Richard Dreyfuss keeps getting into the water with the shark, and Roy Scheider, the sheriff of the town, doesn't know how to swim, doesn't like the water, and he lives on an island. One point in the movie somebody asks him about this, and he says, "It's only an island if you look at it from the water." Everybody's in denial about reality until that point about two thirds of the way through the movie. They're out hunting for the shark and the three of them are on the boat and Roy Scheider's on the stern of the boat throwing chum into the water and the shark stick its head out of the water. It's actually the first time in the movie that he has seen the shark. First time in the movie that we've seen the shark as the audience. He backs up a couple of steps and he looks at Robert Shaw and says, "We're going to need a bigger boat."

Dan: Mm-hmm (affirmative).

Kevin: In business, you have to make sure you have the right size boat. You have to have the right vision. You have to have the right people. You have to have the right strategy. You have to have the right tactics. You have to have the right technology. Because if you don't have all those things, you're out hunting for sharks and you're doing it with too small a boat.

You can't do that. You can't be in denial about the transitional and existential forces that are out there challenging the way business has always been done. There will always be brick and mortar retailers, but what there's going to be less room for in the future is going to be mediocre brick and mortar retailers. I think they're an endangered species, and I think that's just the way it's going to be.

Dan: That's kind of what we talked about when I was talking to Michael, is that if you start out with the right stuff at the beginning, the right tools, the right strategies, it's going to give you a lot of runway. I appreciate that. Thank you for sharing that. I'll be certain to include a link to Morning News Beat in the show notes and on this podcast webpage, and I sincerely would love to have you back on in the very near future to continue our conversation. Like I said, I bet we could go for several hours.

Kevin: Anytime, happy to do it.

Dan: Thank you. Well thank you for making time for me. I hope you're enjoying the west coast, and safe travels back to the east coast and I look forward to our next conversation.

Kevin: Sounds great. Take care.

Dan: I want to thank Kevin for his time and his valuable insights. I'll be certain to put a link to Morning News Beat in the podcast show notes and on this podcast webpage. You can get there by going to BrandSecretsandStrategies.com/Session72.

For today's freebie, I want to announce that I just created a Resources tab on my website with lots of downloads, a lot of free downloads that are going to help you grow sustainable sales, help you compete more effectively, and help you get your product on more retailer shelves and into the hands of more shoppers. You can get there by going to BrandSecretsandStrategies.com/Resources. I'll put a link to it on this podcast webpage and in the show notes. Thank you again for listening, and I look forward to seeing you on the next show.

Morning News Beat http://www.morningnewsbeat.com

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