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Tuesday, May 03, 2016

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Sansolo Speaks: Somebody Always Is Watching

by Michael Sansolo

In hopes that one person’s misery can be a teaching moment for others, we all have to give thanks to a football player named Laremy Tunsil.

If nothing else, a lot of Baby Boomers and Gen Xers can look at what happened to Tunsil and be grateful we were all adolescents before the advent of smartphones and social media. The simple truth is we all probably did stupid things when we were younger and luckily escaped both injury and YouTube.

Tunsil, not so much.

If you haven’t heard of Tunsil (and I hadn’t before this past weekend), he is a very good college football player who was expected to be one of the first chosen in the annual National Football League (NFL) draft. That is, until modern problems intervened.

Just prior to the nationally televised draft, a video surfaced on Tunsil’s own - and apparently hacked - social media account showing him enjoying marijuana through a bong attached to a gas mask. Sadly for Tunsil, he removed the mask at one point, leaving no doubt that he was the person in the video.

This indiscretion upset people in the NFL and resulted in 12 teams passing on him before he finally was chosen by Miami Dolphins. Tunsil clearly was upset with by how events unfolded, and commentators suggested that the video could cost Tunsil million of dollars in his first contract.

Welcome to the new world, where nothing goes unseen.

There are countless lessons from this incident, starting with the player’s behavior. Had he done nothing wrong there would never have been a video.

But let’s be honest: few of us live completely pure lives and the reality today is that any indiscretion can end up somewhere on the Internet. And once there, it lives forever.

That’s a harsh truth for everyone, not just job seekers. More than ever we live in a world of transparency where any action or statement can come back to haunt us.

Think about it: disparage a customer of any kind and a recording or photo may unravel what you do. Likewise, we’ve seen business leaders and politicians (among others) face storms of criticisms when comments they thought they were making privately contradicted what they said publicly.

In many ways, Tunsil is lucky. He’s blessed with physical skills and a chosen profession where his misconduct is hardly the worst anyone has seen. If he is as fast and strong as everyone expects him to be, Tunsil may well have a long and lucrative professional football career.

The rest of us don’t live in that world, though. If we say or do the wrong thing, it can deliver a death blow to our careers and businesses.

Perhaps its time to have team meetings to watch the George Clooney-Brad Pitt version of Ocean’s Eleven. Much of the denouement of this stylish caper film hinges on the notion that in a Las Vegas casino, somebody always is watching.

Vegas, it seems, is just like life these days. Someone always is watching. And while what happens in Vegas supposedly stays in Vegas, that isn't true anywhere else.

Just ask Laremy Tunsil.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . 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.

Fairway Files For Bankruptcy Protection

Fairway Group Holdings has filed for bankruptcy after a year in which its sales and profits have steadily declined, its share price has dropped 96 percent, and its image as an innovative food retailer has suffered mightily.

Bloomberg reports that Fairway, which has more than a dozen locations in New York, Connecticut and New Jersey, "has been struggling with growing competition from larger chains, including Whole Foods Market Inc., which have been drawing away shoppers looking for organic produce and unfiltered extra-virgin olive oil."

The story notes that "the company said its proposed restructuring plan would cut about $140 million in secured debt. All creditors but senior secured lenders would be paid in full, and union contracts would be honored. Senior lenders would get equity and $84 million of debt in the reorganized company. There will be no interruption to customer service at the company’s 15 stores, according to the statement."

Fairway began as a family-owned fruit stand on New York City's Upper West Side during the Great Depression, eventually and slowly expanding into becoming a full service grocery store with an emphasis on specialty foods. The founding Glickberg family sold a major stake in Fairway to Sterling Investment Partners in 2007, and Sterling expanded more quickly and brought the company public in 2013.

KC's View: As the risk of over-simplifying what clearly is a bad situation, I think it is fair to argue that when Fairway became less about the marketing and merchandising of food, and more about maximizing wealth at the ownership and then shareholder level. And I would almost always argue that food stores do better in the long run when they focus on what is important to their customers, and let profitability emerge from that.

It just doesn't work in retail if you focus on Wall Street first and Main Street second. There may be some short term gains, but eventually the whole thing will fall apart.

Editorial continues after a word from our sponsor...

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Amazon Launches New, Dedicated Prime Now Website

Amazon has launched a new website devoted to its Prime Now same-day delivery service, which previously only was accessible via smartphone applications.

The site, PrimeNow.com, can be accessed via desktop or laptop computers and allows consumers to shop for groceries and other products and get delivery in one or two hours. The first thing one sees on the site right now is a field in which one enters a zip code to find out if Prime Now is available in that market; if not, Amazon promises to let you know when it is.

The Seattle Times reports this morning that "the move seems to suggest that the Prime Now experiment, which is being offered in about 25 metro areas in the U.S., including Seattle, is getting traction among customers and more bandwidth from Amazon. It’s still, however, being showcased separately from the traditional Amazon online store."

KC's View: Not being served by Prime Now, I must confess that I did not realize that until now it was not accessible by laptop or desktop computer. I would agree with the Times analysis - this probably reflects a growing confidence on Amazon's part that same-day delivery is going to be a growing part of its business ecosystem.

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GNC Begins Strategic Review, May Sell Company

The Wall Street Journal reports that the GNC Holdings board of directors "has started a strategic review that could result in a sale of the company, days after the retailer of vitamins and supplements warned its turnaround efforts were struggling to lift sales." The board said it has hired Goldman Sachs "to assist with a 'review of a wide range of strategic and financial alternatives.' The process could result in a sale of the company or other changes, such as speeding the shift of company-owned locations to franchisees, GNC said."

KC's View: MNB reader Todd Watt had a great line the other day, when he wrote to me suggesting that "without reinvention GNC looks like RadioShack of the vitamin world.  So many of its products can been found in other retail outlets that it seems out of the way to shop at them."

That's about as accurate - and damning - an assessment of this 9,000-store retailer as I can imagine.

The company brought in a new CEO two years ago, and while there have been some attempts to make the company more relevant and modern, clearly it has not moved fast and radically enough. Which offers pretty good lessons for any retailer ... you can't wait to be borderline irrelevant before trying to turn things around, and you always have to move decisively and quickly.

When I used to coach Little League, sometimes the little kids fielding the ball would just stand there, not knowing what to do with it. And I'd always tell them, 'he who hesitates is lost." (They'd often look at me like I had two heads.) I'd offer the same comment to the folks at GNC... but these days, it may be too late.

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Now back to regularly scheduled editorial...

Credit Card Companies Introduce Transaction-Hastening Software

Bloomberg reports that MasterCard and Visa have both "introduced software that they say will speed up slow check-out times for shoppers with new chip-based cards." The new software will mean that consumers will not have to leave their new chip-enabled credit and debit cards in the payment terminals, but rather can dip and remove them - the suggestion is that leaving the cards in the terminals was adding 10 seconds to transactions, which led to retailer complaints.

The story says that "many retailers, particularly in fast food, have chosen to delay accepting chip cards for fear of increasing lines and angering customers. Since last October, these stores have had to shoulder any losses stemming from use of counterfeited cards. But with fraud levels doubling at some stores, many restaurants that held off will have to start accepting chip cards -- a transition that MasterCard, Visa and other card networks have pushed for. The new software could reduce the pain of this switch."

KC's View: I've talked to a number of retailers who are extremely frustrated by the slow pace of certifying the new and more secure payment terminals that accept debit and credit cards with digital chips, feeling that once the yoke of being financially responsible for fraudulent purchases was transferred from banks to retailers, they simply didn't give a damn.

Now, they're asking questions about what's taken so long to come up with this new software, why it wasn't available to begin with, and what will be the next hiccup that will somehow hurt retailers and benefit the banks. The banking industry must be writing bigger checks and lobbying more effectively than the food industry.

Starbucks Sued For $5 Million Over Too-Iced Coffee

Starbucks is being sued for $5 million by a Chicago woman complaining that the chain is watering down its iced coffee drinks with too much ice.

The complaint says that "plaintiff alleges that…Starbucks has engaged in the practice of misrepresenting the amount of Cold Drink a customer will receive,” the lawsuit states. As a result of this practice, Starbucks’ Cold Drinks contain significantly less product than advertised, by design and corporate practice and procedure ... "Starbucks' advertising practices are clearly meant to mislead consumers when combined with the standard practice of filling a cold drink cup with far less liquid than the cup can hold. If Starbucks truly intended to provide the amount of fluid ounces in its Cold Drinks that it advertises, there would be simple ways to do so."

Starbucks tells CNN that "our customers understand and expect that ice is an essential component of any ‘iced’ beverage. If a customer is not satisfied with their beverage preparation, we will gladly remake it."

Lawyers for the plaintiff are seeking class action status for their complaint.

KC's View: This is just so profoundly stupid.

My daughter, who gets iced drinks at Starbucks with some frequency, has observed that sometimes there is way too much ice in the cup ... but that it certainly does not seem systemic, and that baristas will fix it on request.

Also, on the Starbucks ordering app, "light ice" is one of the options. (She always uses it, just in case.)

But a five million dollar lawsuit? Jeez.

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Kmart Offers Lifetime Guarantee On Plants

Kmart yesterday announced that it has begun offering a lifetime guarantee on plants, which it says is "designed to allow customers the opportunity to purchase select trees, shrubs and perennial plants with confidence that they will last a lifetime – literally! Kmart is the first national retailer to devote a lifetime guarantee on plants, perfect for those looking to keep a well-maintained yard for years to come."

The announcement goes on: "Qualifying plants at a Kmart lawn and garden center can be identified with a 'Plants for Life, Guaranteed' tag and will automatically come with a lifetime guarantee upon purchase of the plant. For novice or even the most seasoned gardeners, keeping a plant thriving can prove challenging, so if any eligible plant dies, simply return it to a local Kmart store, along with the original receipt, and Kmart will replace it for free."

KC's View: This just feels like Kmart is willing to do almost anything to get people into the store. I will say that I alone would cost Kmart a ton of money ... because a plant does not exist that I'm not capable of killing. Whatever the opposite of a green thumb is, I have it ... and I'd be an utter nightmare for Kmart.

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Now back to regularly scheduled editorial...

E-conomy Beat

• The Chicago Tribune reports that Amazon will expand its fee same-day delivery service to Chicago's South Side, following national criticisms that the company's delivery patterns were excluding predominantly African-American neighborhoods in markets that included Atlanta, Boston, Chicago, Dallas, New York and Washington.

"In Chicago, according to Bloomberg, 2.2 million people have access to same-day delivery service, but about 742,000 people living on the predominantly black South Side do not," the Tribune writes. "Amazon said those areas were too far from its distribution center, but the more distant, largely white suburb of Oak Lawn does get same-day service, according to Bloomberg."

KC's View: We had a story yesterday about how Amazon was expanding into the Bronx, and a day earlier about how they were going to start delivering to Roxbury, Massachusetts.

Which led one MNB user to write:

Which means their delivery people will be like fish swimming into nets.

An attitude, I must admit, I find to be appalling.

I would no more assume that everybody who lives in Roxbury, the Bronx or Chicago's South Side is a thug than I would assume that Amazon's delivery decisions were dictated by overt racial prejudice.

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FastNewsBeat

• Publix said yesterday that its Q1 sales were $8.7 billion, up 4.5 percent from last year’s $8.3 billion. Net earnings for the period were $581.9 million, compared to $548.9 million in 2015, an increase of 6 percent. Same-store sales were up 3.3 percent.


• The Des Moines Register reports that "three new specialty food stores have opened in the Des Moines area since last fall, joining an already competitive grocery market and a string of established grocers that sell ethnic, gourmet and health-conscious food. The attraction is simple: Shoppers are demanding healthier and diet-sensitive food options, prompting national specialty grocery chains to seek out metro areas such as Des Moines, where they can sell organic, natural and gluten-free produce, meat, dairy and baked goods."

The story notes that "newcomers The Fresh Market and Fresh Thyme Farmers Market, both in West Des Moines, and Natural Grocers in Clive, join established grocers Whole Foods and Trader Joe’s, both in West Des Moines, and Gateway Market and Campbell’s Nutrition, both in Des Moines." And that doesn't even count Hy-Vee, the dominant Iowa retailer that has been offering "greater selections of competitively priced natural and organic foods."

Executive Suite

• The Grocery Manufacturers Association (GMA) yesterday announced that it will honor just-retired Publix CEO Ed Crenshaw with its Hall of Achievement award, described as the organization's highest honor, when GMA meets in July at The Greenbrier in West Virginia.

Your Views: A Touch Of Green

Got the following email regarding how Walmart was dropping the Wild Oats and Price First brands for different reasons:

Like other industry professionals, I was surprised that this brand at Walmart lasted as long as it did. It was doomed from the start. When this brand debuted, I was managing a $100 million dollar "entry level price brand" for a Walmart competitor. That brand had been in place for over 5 years and continued to grow year after year. One thing we clearly understood is that while packaging sometimes plays a minor role, you don't need to beat someone over the head with a cheap looking design that screams "I can't afford to buy anything else." No one wants to be seen with a cart of products that tells everyone you're strapped for money.

In addition to the basic, simple unappetizing package design, Walmart went one step further and sold this under a brand "Price First" that reinforced that nothing else mattered but the price.  Not the quality, not the nutrition, not the functionality, nothing mattered but the price. As part of our competitive review, we tested a number of "Price First" products against our own in blind consumer panels. It was hard to believe how low the quality of the "Price First" products were. Consumers aren't stupid. Regardless of the selling price, if the product fails to meet expectations, low though they may be, it's very hard to sell it a second time. I am very happy to see that other retailers did not follow Walmart down the slippery slope of declining product quality.

Given Walmart's resources, they could have launched a line with a better design, a better brand name and modest quality that would have effectively competed with the discount channel and other grocery retailers. But they chose the cheap and easy road with "Price First." Consumers responded with a resounding "I'll buy this last."





Chiming in on the debate about the North Carolina bathroom law, MNB reader Mike Moon wrote:

So, if a man identifies as a woman and wants to use a woman's restroom, he must go into a stall. That's the only choice. The other stalls in use have the doors shut. Everyone has privacy.

If a woman identifies as a man and wants to use a men's restroom, she must use a stall, as she cannot use a urinal without acrobatics. Everyone has privacy.

If we are worried about the perverts spying on little girls in the women's restroom, what about the perverts who have been sneaking looks at little boys forever in the men's restroom? Where is that outrage?

Sexual predators are all around us. They spy on our children at the beach and at the pool, and hang around playgrounds and shopping malls getting their jollies. I'm not convinced that cross use of restrooms will result in a spike in this kind of activity. Most of these folks don't want to be seen or noticed. A restroom would not give the kind of anonymity they want. Let's keep criminal acts defined as illegal sexual activity, regardless of where it takes place, and not make it a crime to simply use a bathroom, regardless of how it is labeled.

So, go use the bathroom that you identify with. Go in, close the stall door, do your business, wash your hands, then go back to life. And keep your eye out for the perverts wherever you go, not just in the restrooms.





Regarding the culture clash taking place at Lands' End, in part created by an imperious, English-as-a-second-language CEO, one MNB user wrote:

I had to literally laugh out loud reading this piece. As a lifelong Wisconsinite, I’m not surprised at a ‘culture clash’ going on. It has nothing to do with English as a second language and everything to do with being ‘too good’ to live in our state or really understand the culture of the company.

Good luck, Lands End. It’s a shame this once solid local company is no longer either.





We had a story yesterday that led me to wonder whether mainstream retail companies would embrace the legal marijuana trend (which I expressed some misgivings about). One MNB user wrote:

I agree with you that aroma of greater profits  may be too great to stop companies from being attracted.  But then socially acceptable norms are being constantly challenged and are changing (ie the LGBT bathroom debate.)  Likewise I see Marijuana becoming more socially acceptable and for companies to follow similar business practices in how they treat this issue.  But if you are talking ethics vs legality?  Look no further than the tax code and how numerous companies use foreign shell companies and offices to circumvent paying higher taxes.  While it may be legal it doesn’t set the bar very high on morals or ethics, and I would expect the first in line to inhale the profits.  And is it just me or has this thing ramped up so fast it looks like a modern day gold rush?

Another MN user wrote:

So you’re completely fine with a Man using a Ladies restroom but unsure about something illegal? I’ll bet you would support it if Walgreens adopted the same restroom policy as Target but only if you entered with a joint in your mouth.

No, I'm okay with people who are transgender using bathrooms consistent with their gender identities as opposed to their birth genders ... a practice that, by the way, seems to have led to absolutely no cases of sexual assault.

And I'm simply not sure about marijuana legalization.

This is all about nuance and trying to be a thinking person about these issues, as opposed to being an ideologue.




On a broader issue, one MNB user criticized how the "Your Views" section has been handled lately:

This column is becoming more and more often a column of you defending your viewpoints and not accepting or acknowledging contrary opinions.  Not good Kevin.  Disagreement on your part or on the part of readers is good but don’t take up all the space in defense of your personal opinions.

Point taken.

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