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Tuesday, October 06, 2015

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Sansolo Speaks: Credit Card Craziness

by Michael Sansolo

The Yiddish word chutzpah is described in many dictionaries as audacity, with one favored example being someone who kills both his mother and father and pleads for mercy because he’s an orphan.

A future definition should include something about credit card companies because when it comes to chutzpah, it’s hard to beat those guys.

October 1st heralded a new era in credit card chutzpah as every US retailer well knows. Starting on that date, according to the credit card companies, the world got much more secure for customers. That’s when retailers were supposed to switch to reading the special EMV chip on your card and not the mag stripe.

Now, with your most ironic voice, please say: Really!

Consider the following from Fast Company about this change:

“In an ideal world, a well-planned transition would allow merchants the time - and potentially even a price break on the cost of the new equipment - to move from a system that costs banks substantial money to one that's much less fraud-prone. Helping merchants make the move would ensure most of the estimated 8 to 10 million retail locations in America that accept swipeable cards would have EMV readers ready to go.”

Then comes the kicker: “Of course, we don’t live in an ideal world.”

Rather, these are our realities:

• As of October 1 the big shift is that retailers now bear the cost of fraud if they use mag stripe rather than chip readers. But there’s a huge cost in this, which is why Forbes estimates that only 31% of small businesses now have the readers.

• The best estimates are that 60% of the cards in use still don’t have the chip. That, in turn, is leading to consumer confusion, which is leading to a new explosion of scammer tricks.

• Plus, there is the universally accepted knowledge in the payment systems world that pin-based cards are significantly more secure than signature-based, which is why chip and pin cards dominate in Europe and other areas. However, in the US, card company marketers have continually pushed the benefit of signature-based cards, which are also the more lucrative transactions.

• And let’s not forget the history of how we got here, including the relentless competition among the card companies to offer and distribute ever more cards, which in turn led to more fraud; the endless legal battles between retail and the card companies over lack of true competitive practices; and the ever increasing fees to handle transactions.

I should point out here that when I worked for the Food Marketing Institute (FMI), I was part of several credit card company-related lawsuits, so I have so experience in this area. My bias is both clear and pronounced.

Normally, when I write these columns for MNB, I try to bring to them a perhaps misguided sense that I can both shed light on the situation and offer a suggestion for a course of action. By that standard, I must confess that this week's column comes up short, because I don't know what retailers can do about the situation.

To my mind, there may be only one recourse ... and, needless to say, it comes from a movie ... Network, and the words of Howard Beale, written by the great Paddy Chayefsky:

I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell, 'I'M AS MAD AS HELL, AND I'M NOT GOING TO TAKE THIS ANYMORE!' ... Things have got to change. But first, you've gotta get mad!... You've got to say, 'I'm as mad as hell, and I'm not going to take this anymore!'

Of course, if we all do so, we all may find ourselves meddling with primal forces of nature ... and we all know how that turns out.

Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Walmart, 7-Eleven Team Up In Canada On E-commerce Test

The Toronto Star reports that Walmart and 7-Eleven are teaming up in Canada on a six-month e-commerce project designed to appeal to consumers' desire for convenience and find synergies between bricks-and-mortar and online retail.

According to the story, "Online shoppers at will be able to have their orders delivered for pickup at one of six convenience stores operated around the clock by 7-Eleven. It’s an extension of a Walmart locker service, currently available at the retailer’s Canadian head office, some of its stores in the Greater Toronto Area and in Kapuskasing, Ont.

"With the lockers, Walmart customers are sent an email with a six-digit code that remains valid for seven days. It’s one of several attempts by Canadian retailers to use established store fronts as pickup points for goods bought online."

KC's View: I think this points to the path that Walmart almost certainly is going to take in the US as it looks to grow its e-commerce business ... lots of lockers and pick-up sites that it hopes will put it closer to the customer than Amazon is. I still think that Walmart has a lot of ground to make up just in terms of positioning, but the goal has to be an enormous network of pick-up sites that will especially serve its grocery customers.

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From ProLogic Retail Services...

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Target Delays Grocery Makeover From 2016 to 2017

In Minnesota, the Star Tribune reports that Target is delaying its planned makeover of its grocery departments from 2016 to 2017, saying it needs more time to effect the kind of substantial changes it is looking to implement.

“We want to get it right,” Target spokeswoman Katie Boylan said. “It’s less about how fast we go and more about making sure we implement the right kind of changes. We’re trying to be really judicious in our approach.”

The paper writes that "the new timeline shows how tricky this project is for Target as it weighs the costs and benefits of trying to differentiate in the food sector.

"Food is an area of expertise for Target CEO Brian Cornell, who previously held executive posts at Sam’s Club, Safeway and PepsiCo. In April, he hired Anne Dament, whom he worked with at Safeway, to head up the effort as Target’s senior vice president of merchandising in groceries.

"To help guide the long-term plan, Target has been rolling out a series of small tests in select stores across the country, including the SuperTarget in Minnetonka, which is finishing a $10 million remodeling."

KC's View: We've all seen evidence recently of what happens when companies try to implement a change that they are not prepared for ... you never get a second chance to make a first impression. I can certainly understand Target wanting to wait in order to get things right.

That said ... it isn't like the rest of the food industry is waiting to see what Target does. The competition will continue to innovate, and that could place Target at a competitive disadvantage.

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From MyWebGrocer...

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Study: Consumers Continue To Conflate Organic And Natural

The Organic & Natural Health Association is out with a new consumer research study saying that "1 in 3 consumers do not make a quality distinction between the terms "natural" and "organic" and/or government regulation for products with such labels."

The goal of the report is to promote the group's immediate goal - the creation of a "voluntary regulatory compliance and certification program for the term 'natural' to be released during the first half of 2016," which would serve to eliminate confusion and create some precision in the use of the word "natural."

The study goes on to say that "there remains considerable "confusion in the marketplace with the term 'natural.' Common misconceptions include the belief that most vitamins come from natural sources and that 'natural' means no pesticides are used.

"And while three-fourths of consumers perceive that organic foods must be at least 95 percent free from synthetic additives, almost two-thirds of consumers expect the same standard from 'natural' foods. Further, approximately half of the consumers surveyed believe that 'natural' means the product is free of synthetic pesticides and are non-GMO, attributes that are unique characteristics of organic products."

KC's View: It long has been a truism that "natural" is a useless word in this context ... but I'm not sure that a voluntary program will solve the misuse of the term.

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From ReposiTrak...

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Amazon Moves Onto List Of Top Ten Global Brands

Interbrand is out with its annual listing of best global brands, and MarketWatch reports that Amazon has made the top ten for the first time.

Apple is on top of the list, followed by Google, Coca-Cola, Microsoft, IBM, Toyota, Samsung, General Electric, McDonald's and Amazon.

The story notes that "technology and auto brands dominate the list, holding 28 of the top 100 spots."

Among the well-known brands that suffered declines in the past year are KFC, Caterpillar and eBay.

Keyes Named As New Meijer President

The Detroit Free Press reports that Meijer has named Rob Keyes, a long time company executive, to be the company's seventh president.

He succeeds J.K. Symancyk, who announced last week that he is stepping down to become president/CEO of Texas-based Academy Sports + Outdoors.

Keyes has been with Meijer for 26 years, joining the company in 1989 as a pharmacist. He has been the company's executive vice president of supply chain and manufacturing since 2006.

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There's Good News, And More Good News

From MNB, May 29, 2015:

USA Today reports this morning that "companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks ... The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.

"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."

This is just the beginning...and it is both good news and good news. It means that there is competition for great jobs at great companies, and that great people can find great opportunities. But they can't do it alone.

Samuel J. Associates currently is engaged in dozens of searches, matching exceptional talent to great companies that are both national and regional, chain and independent, bricks-and-mortar and online. And we have a singular reputation for identifying and recruiting winners - people who are focused, motivated, savvy and determined to excel.

If you are looking for a change, and for fresh opportunities to make a contribution and embrace new challenges, contact Samuel J. Associates today.

It's time to get to work.

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Southeastern Grocers Cuts 250 Jobs, Reacting To Sales Slowdown

The Jacksonville Business Journal reports that Southeastern Grocers - parent company to Winn-Dixie, Bi-Lo, and Harveys - is laying off about 250 people, from both stores and the Jacksonville store support office.

Analysts say that the layoffs are a reaction to diminished sales figures, which has forced Southeastern Grocers to trim expenses in order to compensate.

Winn-Dixie and Bi-Lo both are dealing with tough competition, much of it from Publix.

KC's View: Not to say that these cuts don't make sense ... but you can't cut your way to prosperity. Part of the problem at Winn-Dixie and Bi-Lo is a lack of effectiveness ... and I'm not sure that trying to be more efficient (or just spend less money, which is not the same thing) will solve that issue.

Worth Reading: The Losing Battle Waged By Liquid Sugar

The Daily Beast has a long piece about what it calls "the shady politics of big soda," which follows up on the New York Times piece we took note of yesterday about how soda companies seem to be losing the public perceptions war.

In 2015, the Daily Beast story says, "liquid sugar may have met its match. A new culture of health is booming, and has been for the past few years. It’s one where powerhouse health advocates, entire cities (Berkeley, San Francisco, New York City), and the media finally understand the effects liquid sugar plagues on the body and brain.

"More importantly, we understand the arsenal - marketing, lobbying, and philanthropy that big soda companies have used to cast a spell on society, enchanting the masses to consume what once was a special occasion 8-ounce bottle of soda pop, into a daily addiction."

Fascinating story, and you can read it here.

The MNB Walmart Watch

• In Arkansas, City Wire reports that Walmart "once again testing a new iteration of its Scan & Go shopping service in a select number of stores ... The previous forms of Scan & Go required consumers to download the Walmart application and use their iPhones as the scanning device. That method was tested in roughly 300 stores between 2012 and early 2014 before the retailer pulled the service. Since that time Walmart put it more self checkout stations and began looking at ways it could improve the Scan & Go offering at a future date."

The story goes on to say that "this new version of Scan & Go uses a scanning device provided by the store. The kiosk is located in front of the store inside the double doors and near the self check-out corral.  A shopper wishing to use the Scan & Go service just presses the screen on the kiosk and one of the handheld scanners below will light up with the works 'OK.' The shopper then picks up that scanner and begins their shopping trip."

The system is similar to one used for several years by Ahold-owned Stop & Shop.

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USA Today reports that General Mills is recalling "an estimated 1.8 million boxes of its Cheerios and Honey Nut Cheerios cereals due to an incident that may have added wheat into products labeled as gluten free ... This recall includes four days production of original Cheerios and thirteen days of production of Honey Nut Cheerios at that California facility."

"Our Lodi production facility lost rail service for a time and our gluten-free oat flour was being off-loaded from rail cars to trucks for delivery to our facility on the dates in question," writes Jim Murphy, president of General Mills’ cereal business, on a company blog. "In an isolated incident involving purely human error, wheat flour was inadvertently introduced into our gluten-free oat flour system at Lodi."

Executive Suite

• Donald G. Alvarado, the longtime general counsel at Smart & Final - he's been with the company for almost three decades, most of the time in that role - has announced his retirement. The exact date of his departure has not been determined; Alvarado expects to stay with the company long enough to assist in a transition once his successor is named.

KC's View: I don't often report on retirements here, but it so happens that I know Don Alvarado a little bit ... we actually graduated from Loyola Marymount University the same year (1977), and he serves on LMU's Board of Regents. I don't remember meeting him when we were students, but I have since ... and he's a great guy.

I just don't understand how someone so young can decide to retire ... I hope he does some teaching, because I think he'd be terrific at it.

Your Views: Long-Sighted Views

We had a story the other day about a Bloomberg piece saying that "in time for the holiday season, UPS is rolling out to 100 cities a program that requires people in some neighborhoods to fetch packages at nearby locations -- such as a druggist or dry cleaner -- if they weren’t home to meet a driver. UPS says the service, introduced a year ago in New York and Chicago, will trim costs by ending second and third delivery attempts, and can save consumers a trip to a distant customer center."

I commented, in part:

This strikes me as being a total money play, as UPS tries to get out of the service business as much as they possibly can. It would be a lot more customer-friendly to, when UPS drivers leave a note saying that they've been there but could not deliver the item, people have the option of choosing a local retailer and having the package delivered there. It ought to be up to the consumer, not the delivery service ... but it seems to me that UPS wants to be in the efficiency business, not the effectiveness business.

But one MNB user thought I was being short-sighted:

No doubt there are real cost savings for UPS.

There are other benefits. The trucks will be on the road for fewer miles.

Have you thought about: (a) Less pollutants in the air? (b) Reduction in  traffic jams, especially in cities? (c) Faster delivery of packages because drivers are not wasting time making 2nd delivery attempts? (d) Happier customers, since people will be much less frustrated  (not having to wait another day or more to get their packages)?

Customers only will be happier if they get what they paid for - and if I paid to have a package delivered to my home of officer, and I have to drive somewhere to pick it up, I'm not going to be so pleased.

I'm just saying that this ought to be an opt-in program ... not one imposed on customers.

MNB reported yesterday on the confirmed layoffs at Walmart headquarters, designed to increase the company's nimbleness quotient.

I commented:

Here's my question, just because I like to ask questions.

Is this really about being leaner and more nimble? Or is it about increasing the workload for the folks who remain? Because it seems to me that being nimble is about more than head count ... it is about fundamentally changing the way you do business, about not thinking and acting in silos, and, especially these days, about being more local and less bureaucratic.

I'm not entirely clear on which path Walmart is taking.

MNB reader Rich Heiland responded:

I think your intuitions about more work for fewer people is correct.

Most of my clients are understaffed. Too many businesses view labor as an expense. True, it does appear on that side of the balance sheet. But what is required is to mentally move it to the asset side and then ask if you are using that asset wisely.

History shows knee-jerk cost cutting is done in two areas - staff and marketing/advertising because they can be cut quickly. Yet, studies also show that companies that cut heavily in those two areas to offset hard times are poorly positioned to rebound when hard times are over. Those that stay the course or even increase those areas when times are hard benefit from the rebound because they are ready to perform.

Our world of instant information and demand for instant results from leaders and managers almost precludes strategic thinking and assessment.

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The Reviews Keep Coming In...

"Your presentation was well-received, very thought-provoking and was a great lead-in to the overall theme of our show."  - Tim Myers, CMO, Affiliated Foods Midwest

"Your presentation was unbelievable – everything we hoped for and much, much more!  Thanks for making our customers (and us) better!"
- Joe Himmelheber, Director of Marketing and Merchandising, Caito Foods

"Both of your presentations kept the audience engaged ... This was a difficult subject, but you made it easy to understand - and learn from. Everyone who has not yet seen one of your presentations, should know how informative and to the point your program is and how it will definitely enhance their event. "
- John M. Dumais, president/CEO, New Hampshire Grocers Association

"Kevin is an engaging speaker who really brought the content to life.  He customized his program to meet our needs to ensure our event was a success!"
- Kim Richardson-Roach, Network of Executive Women (NEW), New England Region

"The response to this session was overwhelmingly positive. The audience appreciated the lively and enlightening exchange between the moderator and panelists ... the spark you added to the panel as moderator contributed to the flame of excitement this event engendered ... Thank you for helping ground the material in a reality readily recognized ..." - Leslie G. Sarasin, President/CEO, Food Marketing Institute (FMI)

With a uniquely fast-paced, provocative and entertaining approach, Kevin Coupe identifies the ways in which consumers are changing, the reasons behind these changes (technology, the economy, culture, demographics), how new and unorthodox competitors are altering the marketing landscape, and what companies need to do to find and exploit differential advantages.

Want to make your next event unique, engaging, illuminating and entertaining?

Start here: Or call Kevin at 203-662-0100.

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From The MNB Sports Desk

In Monday Night Football, the Seattle Seahawks defeated the Detroit Lions 13-10.

PWS 29