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From The MNB Archives
Tuesday, June 26, 2012
by Michael Sansolo
There’s a simple rule to business success. Essentially, find a way to do more with less.
Do that and you become more productive, more profitable and a much tougher competitor. Simple words, of course, but the real trick is finding a way to make it happen. Certainly in tough times like we have today, doing more with less is a constant challenge and one that at times can even seem counter-productive. (Consider the chatter over Kevin’s recent article about the impact of cutting staff while emphasizing service.)
There’s good reason we spend a lot of time here talking about issues like the economy, technology and demographics. The food industry is always tightly linked to the changes in our communities - large and small - and those three issues in many ways are the catalysts for much of today’s change. But they aren’t the only ones.
It’s hard to think back just four short years, before the economy melted down, to issues that were getting massive discussion. Among them were the growing global competition for resources, spearheaded by the booming economies in China and India, the world’s two most populous countries. In 2008 we started seeing the impact of that change in sharply rising fuel and food prices caused by global competition (crises that were eased somewhat by the global economic collapse.)
Here’s the bad news: those problems didn’t go away. Not even close. That’s why the issue of efficiency requires yet another angle.
The Washington Post recently convened a panel of experts, including representatives of the retail and supply communities, to examine the strange global dynamic that currently exists: millions of people are obese at the same time that millions are starving. In a special summary report issued last week the Post highlighted some of the key statistics behind these dueling trends and the incredibly important role played by the food industry. I’m sorry to say that this won’t read nearly as easily or simply as the debate over the size of soft drinks in New York City. When it comes to problems, this is the deep end of the pool.
Consider a couple of statistics:
• Every year, 1.3 billion tons of food produced worldwide gets lost or wasted - more than 1 ton per hungry person worldwide. Food loss and waste occur in production through to consumption. More than 30 countries have experienced food riots in the past five years.
• In the US, approximately 40% of the food we grow is not eaten. By another measure, the waste equals 1,400 calories per day per person even while some 48 million Americans currently live with some insecurity about getting enough food.
These are complex issues and certainly ones that defy any pithy or rapid solution in a column such as this. These are issues that extend from nutrition to food deserts, genetic engineering to global supply chains. In other words, I don’t even have a clue how to start solving this beyond urging readers to examine how their companies contribute to waste and consider efforts to improve.
Then again, awareness matters too. This is an issue that this industry is certain to grapple with for decades to come. Economics, demographics and technology are huge issues, but so is the environment and global hunger.
Luckily, the food industry has a great record of doing more with less. So maybe there is a reason for optimism after all.
Michael Sansolo can be reached via email at firstname.lastname@example.org . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
by Kevin Coupe
Call it yet another example of how the world has changed.
The New York Times has a piece about how flight attendants shortly will be facing new challenges. It is hard enough for them to make sure that everybody turns off their mobile phones, tablet computers and laptops while planes are taking off and landing. But now, as wearable computers begin to become more popular, with technology embedded into wristwatches and eyeglasses, it is going to get a lot more complicated.
Part of the problem, experts tell the Times, is that the Federal Aviation Administration (FAA) rules covering what people can and can't do while in the air about ten years behind technological reality, not to mention out of synch with what customers want and expect. (For example, the story suggests that there is no evidence that a Kindle or iPad in "airplane" mode has any impact on airplane instrumentation, but they remain off limits during takeoffs and landings.)
This creates frustration, and it is the kind of out-of-synch frustration that institutions and companies need to avoid. There is nothing worse than seeming to be out of touch with one's consumers, and it creates a chasm between the two that often can only get wider.
Interesting piece in the New York Times the other day that considered the advantages and disadvantages of the kinds of information customization that the internet makes possible.
Essentially, it works like this. Websites are able to use software to determine things like a shoppers' gender, as well as previous shopping patterns, which then allows the site to make recommendations and show products that would appear to be more suitable and appealing.
The problem, according to the story, is that not all customers like it. Some women, for example, don't want to be directed to women's products because they often shop for men; some people don't like the fact - or are simply unaware of the fact - that they are being shown unique pages that nobody else is seeing in quite those configurations.
"When personalization gets too personal ... it can come too close for many consumers’ comfort," the Times writes. "It turns out that hyper-customization may produce reactions similar to the 'uncanny valley' effect in robotics in which people find themselves repulsed by humanoids that too closely resemble human beings."
In some ways, I've always liked the idea that I'm being shown relevant products, but sometimes it can be a little discomfiting - like when I've been on Zappos shopping for a particular pair of desert boots, and suddenly Zappos ads for desert boots pop up everywhere. I understand why this is a good thing from a marketing perspective, but it still is a little weird.
There's a story out this morning about a situation that may push the envelope a bit. It seems that Orbitz, the travel site, figured out that Mac users were willing to spend more money for hotels than Windows users. So now Orbitz is directing Mac users to more expensive hotels, and is even giving Mac users higher price quotes than Windows users. Which alone would be enough to persuade me not to use Orbitz.
• In Toronto, the Globe and Mail reports that Walmart Canada "will open 47 hiring centres across the country as it adds a total of some 4,000 new employees this year and next, about 500 more than previously announced.
"By the end of 2013, the company expects to spend some $750-million to open, relocate or remodel 73 stores. Included are most of the 39 former Zellers Inc. stores for which Wal-mart Canada purchased leasehold rights in June 2011. They will reopen as Wal-mart stores in this fiscal year."
By 2014, the story suggests, Walmart could have as many as 94,000 employees in Canada.
• The Washington Post has an interview with Andrew Sussman, president of MinuteClinic, a division of CVS Caremark that operates in-store health clinics. Among his comments about the business:
Patient demographics... "Eighty-five percent of our patients are insured. Almost all insurers accept MinuteClinic as an in-network visit. Often patients pay a primary-care co-pay. . . . For the uninsured, we have transparent, low pricing: The average visit is $79." In addition, he says, "About half of our patients don’t have a primary-care physician. If they don’t, we have a list of physicians in the area that are accepting new patients that we give them. We do that to make sure they get hooked up with a primary-care medical home..."
Continuity of care... "At the end of every visit, we give a copy of the medical record to the patient. And we send a copy to the [patient’s] physician if the patient gives permission. And as we integrate with health systems, we can do that very promptly in the electronic medical record. We send medical records of patient visits to physicians every night, usually by fax, since lots of them don’t have electronic medical records."
Profitability... "By the end of 2011, we reached break-even on an all-in basis, with all costs and benefits to the company accounted for."
• At the same time, the Wall Street Journal has a piece about how Walmart has fallen behind in the in-store health clinic race. While former CEO Lee Scott pledged to open 2000 of them by this year, the company only has 149 such clinics, and closed 33 of them this year.
Experts say that Walmart "has fallen behind in the clinic push because its initial strategy to outsource the facilities hasn't worked. While Wal-Mart has leased space to dozens of third-party care providers, other retailers have purchased clinic operators and taken control of their pricing and service standards."
And here's what John Agwunobi, Walmart's president of health and wellness, has to say about the state of the business: "By any account, clinics are still a pilot ... We continue to watch and tweak, and we're candidly evolving and innovating to see where to go."
Well, maybe not everybody thinks that the in-store health clinic business is in the pilot stage...Minute Clinic currently has 565 drugstore clinics in 25 states, and plans to reach a total of 1,000 by 2016. I'm guessing that unlike Walmart, they'll hit that goal.
I'm actually surprised that Walmart hasn't gotten this right. I wrote years ago that if they wanted to make it work, they needed to take ownership of the concept, maybe buy an existing clinic business, and really make a commitment and investment. They've done none of that.
But as the whole health care process remains expensive, uncertain and challenging to many consumers - and is likely to get more so later this week, depending on what the Supreme Court rules - I still think that there's gold in them thar' hills.
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"He’s refreshingly real and authentic…it’s more of a conversation than a presentation ... He uses everyday customer experiences to think about food retailing and the possibilities ... Many times he was reaffirming where we were headed, occasionally he pointed out something we hadn’t thought about and in at least one moment, we knew we had a lot of work to do ... " - Beth Newlands Campbell, President, Food Lion
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WE JUST WANT YOU TO READ THIS STORY IN THE NEW YORK TIMES,
ABOUT WHY "MADE IN THE USA" IS GAINING IMPORTANCE FOR CONSUMERS AND GAINING PROMINENCE AS A MARKETING TOOL FOR BOTH MANUFACTURERS AND RETAILERS.
It's that simple.
When you've read it, feel free to get in touch by clicking here.
BECAUSE WE CAN HELP YOU MAKE "MADE IN THE USA" A DIFFERENTIAL ADVANTAGE FOR YOUR BUSINESS.
Barron's is out with its annual list of the most admired companies as rated by the nation's institutional investors.
Apple is the top ranked company, followed by IBM, McDonald's, Amazon.com, Caterpillar, 3M, UPS, Coca-Cola, Nestle, and Intel.
Other notable companies on the list are Procter & Gamble (21), Kraft Foods (22), Home Depot (24), PepsiCo (30), Johnson & Johnson (32), Anheuser-Busch InBev (34), Diageo (50), Walmart (51), and Walmart de Mexico (90).
I guess that whole bribery scandal isn't really important to the investor class. At least, not yet.
Microsoft said yesterday that it will acquire Yammer - described as a secure, private social network for free that makes it easy for companies "to convert a grassroots movement into companywide strategic initiative" - for $1.2 billion in cash.
Launched in 2008, Yammer says it "now has more than 5 million corporate users, including employees at 85 percent of the Fortune 500."
According to the announcement, "Yammer will continue to develop its standalone service and maintain its commitment to simplicity, innovation and cross-platform experiences. Moving forward, Microsoft plans to accelerate Yammer’s adoption alongside complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype."
The story in the New York Times may be focusing on fashion, but here are the observations about male online shoppers that may be interesting:
• “Men aren’t necessarily driven to the Internet because of its value proposition, but rather because it’s more suited to their shopping habits,” Ashma Kunde, a global apparel research analyst for the market research company Euromonitor International, tells the Times. “For them, the shopping experience is less about exploration and more about being informed about what they should be buying. The Internet allows them to access this information and advice with relative ease and peace, without being hassled by shop assistants.”
• “Men don’t shop; they buy,” says Federico Marchetti, , CEO of the Yoox Group. “Men spend 30 percent less time browsing online than women, viewing fewer pages before purchasing, which shows why online shopping is the perfect solution for them.”
• Nash Finch Company announced that ribbon cutting festivities for two new Family Fresh Markets are scheduled for today and tomorrow, in River Falls, Wisconsin, and Farmington, Minnesota. These stores mark the third and fourth Family Fresh Market locations, which are described as delivering "the freshness and quality you expect from a gourmet store, but at an affordable price.
There is a provocative piece in The Atlantic that I think is worth spending some time with, if the title intrigues you and you are so inclined. It is called "Why Women Still Can't Have It All," and it is by Anne-Marie Slaughter, the former director of policy planning at the US State Department and currently a professor of Politics and International Affairs at Princeton University.
As much as I enjoyed it, I want to share it with my 18-year-old daughter, who - if she is lucky - will have to think about these issues and make some of these decisions in the not-too-distant future. You may want to do the same.
The article can be read here.
Got some interesting emails yesterday challenging my coverage of and assumptions about a New York Times story suggesting that perhaps, within the context of how much money Apple makes in its retail stores, employees there could be described as underpaid. The story appeared in the NYT just days after Apple announced that it would give its store employees raises of as much as 25 percent; the suggestion was that Apple made the move when it learned that the Times was working on the story. It struck me as interesting that he average Apple Store employee reportedly makes $12 per hour, would total $24,000 a year if they worked eight hours a day, five days a week, 50 weeks a year - which seems a little low for someone generating almost a half-million dollars a year in revenue, which is what the average Apple Store employee generates in annual sales.
I commented, in part:
It is interesting that while Apple has been dealing with accusations that its suppliers were exploiting employees in far off nations, the same accusations could be made of its own domestic operations.
Now, there will be those who will say that people with $24,000 a year jobs at this time in our economy ought to be grateful. But what this all goes back to is the subject that we were discussing last week here on MNB - the importance of having employees who feel that they are assets, not costs. Being paid fairly - especially in the context if what they are bringing in - is a big part of it. (Though not all of it ... Apple has been able to pay people less for a long time precisely because it has something else to offer people beside money. "Something else," however, rarely works when one has to pay the rent, or a mortgage.)
Hopefully, Apple - an exemplary company in so many of the products it produces - is learning that it needs to be exemplary in all facets of its business operations. And it'd be nice if other companies learned from Apple's example...
One MNB user replied:
It is not any of your business what Apple pays. That is between them and the employee. Only do gooders want to dictate to them. I assume if someone is underpaid they can leave.
And MNB user Robert Hemphill wrote:
Apple should be accused of exploiting employees in its domestic operations? Not really. Apple hired thousands of people who agreed to work for the amount they were paid. None of them were forced to take the job, or exploited simply because Apple concluded later that they were underpaid. In what way were they exploited? What is underpaid? It's a perception, not a fact, an opinion, a judgement.
The old trope that employees should be paid fairly runs counter to both common sense and the reality of free market capitalism. As with any un-regulated economic transaction, a "fair" price is the one that's paid for a product or service. The seller and the buyer agree on a price, and likewise the employee agrees to work for the pay that's offered. Those who believe they can define a fair rate of pay can't actually do so. Yes, you can appeal to one's sense of concern for the downtrodden, oppressed, put upon workers. Apple store employees are the cheeriest group of retail salespeople I've ever encountered, time after time.
Is a fair rate for Apple to now pay $15 an hour? Sounds like a better rate of pay than $12 for the worker, but so does $20. Why not $30? Is fairness based on what's needed to pay the rent? Who gets to decide how much that is?
From the business owner's perspective, $9 an hour sounds better than $12. If a business can hire quality workers for that rate, who want the job and don't feel somehow exploited, its probably because they can't get a better paying job, at a company that treats them better. Paying too low a rate in an open marketplace isn't a good strategy, because you'll lose good workers to other companies who pay more. Not that they are more fair by offering higher pay. It's their strategy, and it comes with tradeoffs too. Keeping costs low, and yet finding a way to have high quality results, is a winning strategy that Apple excelled at. Now they're going to pay more than before, without having unions define the required level of wages or government regulations defining what's fair. Sounds like a well considered strategy by the best brand in the world. I'd take that any day over someone's arbitrary calculus or what constitutes fairness versus exploitation.
A couple of things here, if I may respond respectfully.
First of all, if I had it to do over again, I would rewrite the sentence that implied that I thought Apple is "exploiting" its US store employees. That wasn't precisely what I meant; I was trying to suggest that some of the same issues that have been preoccupying Apple in its global sourcing operations seem to be creeping up on them here at home, though hardly at the same level.
If I choose to make what Apple pays its employees my business, I'm damn well going to do so. The whole premise of MNB, if I may be so bold, is that I sort of decide what stories capture my attention, choose the ones that I think make interesting points or will provoke worthwhile discussions, and then I write them up as best I can and see what happens. Everything is my business, as far as I'm concerned.
That was me speaking as a writer. Now, let me talk about consumers...
The reality of doing business in the 21st century is that all this information is out there, and companies are being forced into a level of transparency about their operations that probably makes some of them uncomfortable. But so it goes. Some people - not everyone, but some - are going to make consumption decisions based on how companies source product, treat employees, etc... That's because some people view the whole notion of value within a broader context than others. This doesn't make them right or smarter or even necessarily more ethical. (Well, sometimes it makes them more ethical.) They certainly have a right to make decisions using those criteria, and companies have a right to pay attention or not. Does this make them do-gooders? Perhaps. I know that on the scale of things that I've been called in my life, "do-gooder" is not one that would bother me very much.
I'm a little surprised to learn that "fair pay" is antithetical to common sense and free market capitalism. I would suggest that in an era of transparency - when the internet makes it possible for everybody to know all this stuff, comment about it and even organize responses to policies that people find unacceptable, if such a thing were ever true, it isn't true anymore. If consumers are dissatisfied with a company's behavior, they can make decisions that factor in that dissatisfaction. That's part of the free market, too. It also seems like common sense, if such things matter to the consumer.
Nobody is dictating. We're discussing. Evaluating. Making value judgements. And discussing some more.
I would argue that it seems obvious that Apple realized it had a problem in terms of Apple Store pay scales, which is why it announced the raises. Was this precipitated by the Times story? Maybe, maybe not. Doesn't really matter. They saw a problem and addressed it. For which I give them credit, regardless of the motivation. And suggesting that if $12 or $15 is fair, $25 or $30 an hour would be fairer - at least according to what you say is flawed logic - is itself a specious argument. It sounds good, because it goes to an extreme to prove a point. But nobody was suggesting the extreme.
I thought the Times story was interesting, because it raised an issue that businesses - especially retailers - need to consider. And I'm not really talking about money, though cash is always a good way to show appreciation. Businesses often forget that the people on the front lines - the ones that the customers deal with on a day to day basis, who are the face and heart and soul of the company - are among their most important assets. They sometimes say it, they put it in their annual reports, and maybe even on a sign in the employee cafeteria. But often it is just lip service, and they think that the people in the corporate offices - who customers often don't see or know or have any connection to - are the most important.
It seems to me that Apple has some wonderful assets. it has a culture of innovation. Fabulous marketing. Game changing products. And, it has the people who work in its stores, who make the difference in thousands of lives each day.
Have these people been fairly compensated over the years? I don't know how to answer that question, because it is highly subjective. You're right about that.
I do know that I was in an Apple Store yesterday, being taken care of by a very smart, very customer service oriented fellow. And he told me that as much as he loves Apple, as much as he loves the store and the people he works with, if the Microsoft Store tried to hire him away for more money, he'd have to go. "The Apple Store is a cool place to work," he said. "But cool doesn't pay the rent."
Now, let's be clear. Apple can pay this guy whatever it wants to. He can stay or leave. He is, to be sure, replaceable. And Microsoft can offer whatever it wants when trying to poach Apple Store employees. (Which, according to reports, it is.) You're right. This is a free market.
The questions I would ask is this: Is Apple putting too little of a premium on the importance of keeping people like this, people who make its stores a success? Is this a sustainable strategy? (And I ask these questions as someone who bows to nobody in his enthusiasm for Apple's culture and products.)
I concede that there are different answers to these questions. However, I feel strongly - and would tell any young person interested in my opinion - that wherever they work, they should work for people and companies that put the highest value on the front line personnel, for people and companies that treat employees as assets to be nurtured rather than as cost and/or liabilities. I think that compensation is part of this ... but hardly the only part, and not even the most important part.
I'm not sure - considering the various stories and my personal discussions with Apple employees - that Apple's retail operations necessarily get the highest marks in this area. But my sense is that they know that this is an area where they need to improve, and they are taking steps.
Feel free to disagree. But I continue to believe that this is an interesting story and a worthwhile discussion. And entirely my business.
I love it when I get emails like this one, from MNB user Gail Nickel-Kailing:
I provide marketing services to small artisan food processors - cheese, flour, grains, primarily - and occasionally spend time sampling products in one of the stores carrying them. Last Friday I was in Metropolitan Market's West Seattle store for 4 hours (3-7PM) and was amazed and encouraged at the number of staff members on the floor. They were not just stocking products - many were actually stationed in various sections to assist customers, answer questions, and locate products for them. Even in my logo'd T-shirt and apron, I was asked by 3 different people if I needed assistance in finding anything as I was purchasing items needed for my sampling.
Met Market does a great job of making the customer feel "coddled" and the West Seattle store is one of their best. Compare that with Walmart where you can't find anyone to actually help you with anything... Yes, Met Market is going to be more expensive than Walmart, but the number of customers I saw shopping there was remarkable. And the checkout lines were manageable and fast.
I think you've visited them here in Seattle - they deserve another look as a fine example!
Responding to yesterday's story about research showing that Walmart is cheaper than Amazon in a number of categories, MNB user Tom Robbins wrote:
KC, this research is really no surprise. What continues to amaze me is your bias in favor Amazon. It shines through in most of your commentaries.
No question - I have an Amazon bias. For good reason, I think. I believe it is an amazing, game-changing company. And I'm very up-front about having this opinion - which is why they call it commentary. (This would only be a problem, I think, if I claimed to be unbiased.)
Also got email about my piece yesterday about the growth of so-called "breastaurants." MNB user Russell Thomas wrote:
We were in Orlando one year, desperate for a late lunch, when I spotted a Hooters. The wife and I went in with three young sons. We had a nice lunch and left. A year later my middle son, then nine, said from out of the blue that he “really liked that place in Florida with the owls.
You didn't know that "owls" is a euphemism?
And I got the following, incredibly kind email from MNB user John McHugh:
I have been reading MorningNewsBeat for several years now. It is the only daily news I read faithfully and always find value in what you write. I, along with my entire Training Department, have read “The Big Picture.”
I have always been impressed with your personal stand on issues that relate to ethical matters. As the person who trains “Ethical Leadership” for a Convenience Chain of 10,000 coworkers, I always find your perspective refreshing and encouraging. Today, however, I felt compelled to write and compliment you. Your editorial about not taking your son to Hooters while in Baltimore impressed me. I am not a prude by stretch of the imagination but do believe places like that are demeaning to both sexes.
Your writing is excellent, your insights always right on, and your ethical perspective is what our world needs. Thanks for what you do. You may not know it, but every day you improve the quality of life in our world. The world needs more people like you. Keep up the great work!
I'm blushing. And grateful. Thanks.
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