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Monday, September 15, 2014

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Monday Morning Eye-Opener: End Game

by Kevin Coupe

Not surprising, at least IMHO, is the Advertising Age story reporting that the YouGov BrandIndex, which rates daily brand consumer perceptions, says that the National Football League (NFL) "buzz" score has dropped from +36 to -17 in the week following the Ray Rice domestic violence controversy.

According to the story, "The NFL's score plummeted as it dealt with a constant drumbeat of negative headlines and scathing commentary, including allegations that it ignored video evidence of Ray Rice knocking out his then-fiancee in an elevator in Atlantic City in February."

This seems entirely fair to me. In fact, -17 may not be nearly low enough, and since it seems likely that the "constant drumbeat" is going to continue, I suspect that the number could get lower. A lot lower.

The stories are disgusting. The behavior of football players who seem to believe that the ability to beat up men on weekends empowers them to beat up anybody else they want during the week has thrown a pall on the league and the game, and it has been made worse by the largely ham-handed league management and ownership, which, it seems to me, has zero credibility in what it says and what it does. Maybe less.

The problem, of course, is that nothing will happen to people like Commissioner Roger Goodell until sponsors stop supporting the league, and that will only happen until consumers stop supporting those sponsors. Maybe I've been doing this for too long and I'm too cynical, but I'm not convinced that this is going to happen.

Violence is violence. Whether it is against women or children, it cannot be tolerated. There cannot be mixed messages, or these cycles of violence will only continue.

I thought NFL Hall of Famer Cris Carter got it pretty much right yesterday on ESPN's "NFL Sunday Countdown." See it here.

The whole situation has been an Eye-Opener. But not in a good way.

Walmart and Best Buy Reject Apple Pay As Mobile Payment Option

Walmart and Best Buy reportedly have decided not to accept Apple Pay, the new mobile payment system developed by Apple.

Instead, reports, "both retailers are getting behind a mobile technology group that’s owned by retailers, called the Merchant Customer Exchange. MCX is in turn launching a mobile wallet application called CurrentC coming in 2015, which will only require a software download instead of checkout scanners, and can be used on any iPhone or Android phone already in use, instead of just the new iPhone 6 and iPhone 6 Plus.

"CurrentC will connect to consumers’ checking accounts, retailer gift cards and some retail credit cards but won’t work with traditional credit cards."

The Washington Post writes that the decision by Walmart especially sets up "a high-profile race to define how Americans will pay for products in the future."

According to the Post, "The two giants hold tremendous sway over marketplace. Apple has put a smartphone in the hands of tens of millions of people in the United States and has partnered with a broad coalition of the country’s biggest banks, credit card companies and prominent retailers, including Disney, McDonald’s and Macy’s, to launch its new mobile payment system, called Apple Pay.

"Wal-Mart has a far bigger customer base — hundreds of millions of people shop at its stores every week. And the retailing giant is one of dozens of well-known brands that have rallied behind a different mobile payment method called CurrentC. Others include Target, 7-Eleven, Southwest Airlines, the Gap and Shell gas stations."

KC's View: I noticed the other day that even before the new iPhone 6 and iPhone 6 Plus have become available, Walmart has put them on sale, undercutting Apple on price. I wonder if at any level Apple can apply pressure to Walmart to accept its mobile payment option (in addition to CurrentC) if it wants to continue to sell Apple products.

I also wonder if some retailers - like the ones that compete with Walmart, which is pretty much everybody - would rather work with Apple than do business with CurrentC.

It seems to me that retailers probably ought to offer as many payment options as possible, so that consumers can use what they want to use, as opposed to what the retailer prefers.

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In War Of Words With Amazon Over Money, Authors Turn To Board

The New York Times reports on the continuing war between Amazon and publishing company Hachette over the price of e-books, which has led to Amazon either slowing down or cutting off access to Hachette-published books as it looks to negotiate a better deal. Amazon has argued that it is looking to get the best long-term deals for its customers and that traditional publishers essentially have outlived their usefulness, while Hachette argues that Amazon is trying to marginalize it.

"After six months of being largely cut off from what is by far the largest bookstore in the country, many Hachette writers are fearful and angry," the Times writes. "So this week, they are trying a new tactic to get their work unshackled.

"Authors United, a group of Hachette writers and their allies, is appealing directly to Amazon’s board. It is warning the board that the reputation of the retailer, and of the directors themselves, is at risk … The letter warns the directors that the discontent might spread."

The letter builds on a full-page ad along the same lines that was published in the Times last month. The hope seems to be that Amazon's board will push founder/CEO/chairman Jeff Bezos to resolve the issue rather than continue to take a beating in the court of public opinion.

The Times notes that "among Amazon’s board members are Patricia Q. Stonesifer, the former head of the Gates Foundation; Jamie S. Gorelick, deputy attorney general during the Clinton administration; John Seely Brown, former director of Xerox’s research center; Thomas O. Ryder, former chief executive of Reader’s Digest; and Judith McGrath, former MTV chairwoman, who officially begins next month. Jeffrey P. Bezos, Amazon’s founder and chief executive, is chairman."

KC's View: The reason, of course, that even non-Hachette authors are concerned is that they believe … with good reason … that if Amazon wins this battle, it will use the same tactics with every other publisher.

The reason every supplier ought to be concerned is precisely the same - the more selling power Amazon has, the more likely it is to apply these sorts of pressures to the other categories in which it works. I've noticed lately that categories in which I've had long-time Subscribe & Save subscriptions have had "lack of availability," and I suspect that this is because Amazon has not been able to reach deals with manufacturers.

Still, I find myself to be ambivalent about this issue. Like a lot of other small, independent writers, I know that Amazon has been largely responsible for selling the book I co-wrote, because it was virtually impossible to get into chain and independent bookstores. For that matter, getting over the sometimes high walls that surround big publishing companies can be challenging and time consuming.

What Amazon has done is disrupt the traditional publishing businesses, democratizing the availability of books and the ability of many writers to find an audience. So while I'm not a fan of its dealings with Hachette, it is hard for me to criticize Amazon on the larger issue.

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Cleaning Up: What Consumers Expect From The Supermarket Experience

The San Diego Union-Tribune reports that the experiential marketing firm Interactions is out with a study about the importance of cleanliness to supermarket shoppers, saying that "nearly one-quarter of shoppers in the Interactions survey said they will turn to a competitor instead of their local grocer if the local store's cleanliness isn't up to snuff. An additional 18 percent said they will keep shopping there, but only in a pinch."

The consumers identified the top five indicators of a clean store as 1) the way it smells, 2) good lighting, 3) clean checkouts, 4) "neat and orderly product displays," and 5) clean restrooms.

The story goes on to say that "more than half, or 55 percent, of shoppers said they're unhappy with the checkout experience at their local supermarket, and 23 percent will shop somewhere else as a result. Nearly half of consumers said it's important to have a dedicated bagger, and 33 percent said mobile checkout makes a big difference for them.

"Nearly half of shoppers who have a bad experience don't tell the retailer about it, but most of those who do use receipt surveys to communicate their frustration, and 67 percent of shoppers who haven't been offered a receipt survey would like the option."

KC's View: I've spent more than my share of time in supermarkets, and I'll tell you that the rest room is the first thing I check … if a retailer cannot keep the bathrooms clean, I have no faith in their ability to keep the back rooms or the fresh food operations clean.

The one part of this study that I don't really believe is the finding that once a consumer passes judgement on an unclean supermarket, they're willing to give it another shot. I suspect that the only way they'd do so if they absolutely had to go to that store and found new conditions that were a pleasant surprise. But otherwise, I suspect, when they're gone, they're gone.

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Study: Americans Prefer Red Wine To White

The Washington Post reports that a new study from Naked Wines, an online wine retailer, suggests that the majority of Americans prefer red wine to white, with all but three states buying red wine six out of ten times.

"Naked Wines' data dive isn't the first to find that Americans like red wine best," the story says. "A survey conducted this past spring by online wine retailer Corkguru found that 58 percent of Americans prefer red wine, and that that preference spans all ages and socioeconomic backgrounds. A separate study by California Polytechnic State University in 2013 found that over 60 percent of respondents preferred red wine to white. And a 2008 paper by the American Association of Wine Economics concluded that 'red [wine] appears more appreciated with respect to white'."

In addition, the various studies indicate that there is no gender-related preference for one kind of wine or another.

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Worth Reading: Blowing In The Wind

MNB reader Frieda Caplan drew my attention over the weekend to a fabulous New York Times story about disruption in the electric power business, which has lessons for many industries. An excerpt:

"Of all the developed nations, few have pushed harder than Germany to find a solution to global warming. And towering symbols of that drive are appearing in the middle of the North Sea.

"They are wind turbines, standing as far as 60 miles from the mainland, stretching as high as 60-story buildings and costing up to $30 million apiece. On some of these giant machines, a single blade roughly equals the wingspan of the largest airliner in the sky, the Airbus A380. By year’s end, scores of new turbines will be sending low-emission electricity to German cities hundreds of miles to the south.

"It will be another milestone in Germany’s costly attempt to remake its electricity system, an ambitious project that has already produced striking results: Germans will soon be getting 30 percent of their power from renewable energy sources. Many smaller countries are beating that, but Germany is by far the largest industrial power to reach that level in the modern era. It is more than twice the percentage in the United States.

"Germany’s relentless push into renewable energy has implications far beyond its shores. By creating huge demand for wind turbines and especially for solar panels, it has helped lure big Chinese manufacturers into the market, and that combination is driving down costs faster than almost anyone thought possible just a few years ago.

"Electric utility executives all over the world are watching nervously as technologies they once dismissed as irrelevant begin to threaten their long-established business plans. Fights are erupting across the United States over the future rules for renewable power. Many poor countries, once intent on building coal-fired power plants to bring electricity to their people, are discussing whether they might leapfrog the fossil age and build clean grids from the outset."

In other words, traditional utility companies may find themselves to be irrelevant and unable to generate - pun intended - the kinds of profits that they've traditionally produced.

You can read the entire story here.

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Worth Watching: John Oliver Nails It. Twice.

If you have HBO and you did not watch "Last Week Tonight" with John Oliver on Sunday evening, then you should go to on-demand or find out when it will be replayed, and do so. (If you don't get HBO, you ought to consider subscribing.) Because last night, as he so often does on "Last Week Tonight," host John Oliver nailed it on a couple of business stories.

First up, he went after Olive Garden, which has announced a promotion allowing people to buy a $100 "all you can eat" seven-week pass to the restaurant … only to have an activist hedge fund release a 300-slide PowerPoint presentation explaining all the ways in which Olive Garden has cut corners in preparing and serving food that is "barely edible." Oliver noted that one slide shows a picture of one particular item (vegetable lasagne topped with chicken, which is an oxymoron) as it is shown on the menu, and then a picture of how it looks when it is served, observing that "I can only presume that between the first and the second photo, that vegetable lasagne developed a massive crystal meth addiction."

It was very funny, very pointed and very true. You can see this segment here.

Then, Oliver addressed the decision by some companies to use Twitter to promote themselves … within the context of complicated and tragic themes, like 9-11 and the conversation about domestic violence. Companies, he said, should remain "respectfully silent."

But some, of course, do not. Which meant that he had the opportunity to skewer a number of companies … that deserved it.

Very funny, very pointed and very true. (This video does not appear to be available yet to non-HBO subscribers but I'll let you know when it is.)

Oliver continues to be one of the best and most trenchant observers of the global political and cultural scene, and his HBO show has quickly become must-see viewing for many of us.

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• The Associated Press reports that Heineken, the Dutch family-owned brewer, has rejected a takeover bid by SABMiller. The company said that it wants "to preserve the heritage and identity of Heineken as an independent company."

• In Great Britain, CityAM reports that "Aldi has set its sights on the UK as a market ripe for growth, and it's backing its expansion plans with £70m. 
The budget supermarket today announced plans to almost double the number of stores in the UK from 531 to 1,000, and expand its UK headquarters in Atherstone, Warwickshire.

"The German discounter said it will open its 1,000th store in 2021, while the central England base will be complete in 2017."

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From WAFC...

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Your Views: Missed

Got the following email from MNB reader Jim Donnelly:

With the passing of Glen Snyder, the HBC/GM Supermarket Industry has definitely lost one of its largest supporters.  I feel fortunate to have known and worked with Glen during most of my 46 year career in the Grocery/HBC/GM wholesale business.  With his in-depth knowledge and support and by openly sharing what he was so passionate about within the many trade magazines he wrote for and through a variety of seminars and trade shows that he always attended and participated in, Glen provided the tools that allowed many of us a means to better explain the importance of these categories within the supermarket and wholesale side of the business.  I could always count on my phone ringing a few weeks prior to one of these meetings with Glen on the other side, full of excitement and enthusiasm wanting to share something that he was going to present or looking for some current stories to support his presentation.
I can remember vividly in 1997 when Glen and the late Peter Ephraim shared the GMDC Lifetime Achievement Award, an honor that these two men truly deserved.
Both were definitely mentors of mine and each will be missed by our industry and those who had an opportunity to know them.

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From The MNB Sports Desk

In Week Two of National Football League action…

Miami 10
Buffalo 29

Detroit 7
Carolina 24

Atlanta 10
Cincinnati 24

New Orleans 24
Cleveland 26

New England 30
Minnesota 7

Arizona 25
NY Giants 14

Dallas 26
Tennessee 10

Jacksonville 10
Washington 41

Seattle 21
San Diego 30

St. Louis 19
Tampa Bay 17

Kansas City 17
Denver 24

NY Jets 24
Green Bay 31

Houston 30
Oakland 14

Chicago 28
San Francisco 20

KC's View: And yes, I am self-aware enough to realize that I started this MNB with an indictment of the NFL, and ended it with scores. I'm conflicted … but also think it is important to separate the game from the mismanagement and misplaced priorities.

But the distance is growing less pronounced, and my personal conflict more so.

PWS 28