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Wednesday, April 23, 2014

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Wednesday Morning Eye-Opener: Slow Death Of The Middle Class

by Kevin Coupe

The New York Times this morning focuses on a new study showing that the American middle class no longer is the most affluent in the world.

"While the wealthiest Americans are outpacing many of their global peers," the story says, an analysis "shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.

"After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans."

The story goes on to say that "although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago."

And, the Times writes, "Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. The same measure, by comparison, rose about 20 percent in Britain between 2000 and 2010 and 14 percent in the Netherlands. Median income also rose 20 percent in Canada between 2000 and 2010, to the equivalent of $18,700."

It is a fascinating, Eye-Opening story. At least I think so. Though to be fair, there are some folks who think I'm working this whole wage disparity thing too hard. But I think I'm right, that the long-term implications for the culture could be devastating.

You can read the entire piece here.

Across The Pond, Amazon Achieves Retail Crown

According to a website called The Bookseller, the BBC is running a two-part program about Amazon that revealed the following fact - that more than half of Britain's online retail dollars/pounds are spent on Amazon's website.

Furthermore, apparently in the UK there are at least some people who use "Amazon" as a verb, not a noun. One shopper told the BBC, "If I want to know something, I’ll Google it. If I want to buy something, I’ll Amazon it."

That's not to say everybody is a fan. At least part of the program was devoted to publishers suggesting that Amazon is working toward a near monopoly: "The general feeling is that it is wonderful and terrifying in equal measure," says one publisher. "There is no escaping the fact that Amazon is a dominant force and monopoly is never good for business and it is certainly not good for consumers."

KC's View: I'm a pretty consistent Amazon user, but I'm not sure I've ever used the word as a verb before. I kind of like it … and I can imagine Amazon turning it into a marketing campaign. ("Do you Amazon?")

Editorial continues after a word from our sponsor...

Corporate Drumbeat

It’s Official – Wholesome Sweeteners Sells The World’s Best Honey!

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Now back to regularly scheduled editorial...

Facebook Ads Seem To Be Delivering For Media Buyers

CNet reports that Facebook had a very good first quarter of 2014, delivering "more of everything to its paying clients, specifically the things they really care about like clicks, impressions, and revenue … Clicks on Facebook ads were up 70 percent year-over-year and 48 percent quarter-over-quarter, while ad impressions also grew 40 percent and 41 percent, respectively."

The story sums it up this way: "In other words, more ads are going out and more people are seeing them, which should equate to more profit for Facebook and better results for advertisers."

"Facebook's revenue per visit is continuing to grow when everyone else's went down," says Tamara Gaffney, an analyst with Adobe, which did the research. "That tells me that the paid media program for Facebook, for retailers, is more of a core to their buy, meaning that even when their budget is smaller, they're still buying on Facebook, whereas they probably stopped buying on some of the other social media networks as much."

CNet goes on to say that "for retail sites, Facebook was also an increasingly important source of revenue as referral traffic generated $1.24 per visit, up 2 percent from the previous quarter and 11 percent from the same quarter last year. Other social networks such as Pinterest, Twitter, and Tumblr showed substantial year-over-year growth in revenue per visit, but quarterly declines, meaning they were less desirable platforms outside the hot holiday shopping seasons."

KC's View: I put this one in this morning for all those folks who may be thinking that social media doesn't matter, that they can continue to rely on traditional means of communicating with customers. (You know you're out there…)

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

The MNB Walmart Watch

Reuters writes that Walmart plans to report this week on how its executives have lived up to the company's compliance goals, which were established in the wake of accusations that its executives had engaged in systematic and systemic bribery of foreign officials as a way of greasing the wheels for global growth.

Walmart has said that its executives will be in part compensated based on their ability to achieve the company's compliance goals.

KC's View: Am I wrong, or have there been no results from the myriad investigations into the Walmart bribery investigations that started several years ago…?

Editorial continues after a word from our sponsor...

Corporate Drumbeat

If It Were Easy, Everybody Would Be Able To Do It.

It sounds like a cliche, but it actually is a fundamental truth

People are a company's most important asset.

Great business leaders know that it is critical for an organization to have the right people throughout the ranks … people who feel a sense of ownership toward the company, a sense of commitment to the mission, and a sense of dedication to their coworkers and customers.

You read about these leaders and their companies all the time on MNB.

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Now back to regularly scheduled editorial...

Macy's CEO, On Marketing To And Employing Young People

Buzzfeed has an interview with Macy's CEO Terry Lundgren in which he talks about what he says the company is doing to be successful in an increasingly competitive environment, specifically in how it markets to young people and employs them.

Some excerpts:

On marketing to the next generation… "You can talk about millennials and the changing character and diversity of the population in the same breath, because as the millennial population is the largest group that we’ve ever seen, so will be the minority population. It’s young people who are the diverse population, so we think about what needs and desires this group will have that’s going to be different from my age demographic, what we wanted…Value is very important.

"I do believe there is a reason that a handbag costs $20 versus a handbag that costs $200. Having said that, it may be totally satisfying for someone to buy that $20 one. Or the $200 may just be out of the question, they just don’t have the money so they have no choice. They’d like to have the $200 bag but they can’t afford something like that, and that’s totally understandable. We’re not seeing a big run-up in bad debt or heavy debt from young people. We are seeing people buying value prices."

On younger employees… "When people are three, four years into the company, they’re most vulnerable [to leave] because they’ve been with us for a long enough time to get some experience, so their resume is stronger than when they came to us out of college. They may be wondering, well, 'What else is there for me, what’s outside of the company, and should I try something else?' I felt that way when I was in my mid-twenties, so I said, well, why don’t I just have us identify those high-potential individuals who are three to five years in our company — 25-, 26-, 27-, 28-year-olds — and I’ll have breakfast with however many fit into the room next to my office. There happens to be 14 seats, so I’ll sit with 14 of them every month. I’m curious how it is for them, how is it for a 26-year-old living in New York City, you moved here from Tucson, Ariz., and how is that adjustment, and what are you doing about it? How many roommates do you have, or can you handle it on your own? Tell me about the highlights of your job: What do you love the most, what do you wish could be better, what would you like to see more of? I just get so much more information from young people in our company, and it’s influenced me."

KC's View: Lundgren is right to spend an inordinate amount of time focusing on the next generation of consumers and employees. After all, they are going to be the center of the target in the not-too-distant future, and the successful retailer will want to be waiting there for them when they arrive. If a marketer waits too long and has to play catch up, it may be too late to find any sort of relevance.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...


• The Food Marketing Institute (FMI) announced yesterday the release of a new sustainability resource to assist food retailers in defining, communicating and engaging senior executives.

"Making the Business Case for Sustainability: A Guide for Practitioners" is described as providing "sustainability leaders with a practical approach and dozens of specific company examples to use as a model for successful incorporating sustainability into business objectives."

It is available as a free download from the FMI Store.

• The Houston Business Journal reports that Aldi next month will break ground there on a new 650,000 square foot distribution center and division headquarters that is scheduled to open in early 2016.

• The Los Angeles Times reports that Hillshire Brands, maker of Jimmy Dean sausages and Ball Park franks, is buying Van's Natural Foods from Catterton Partners, a private equity group.

Cost of the purchase: $165 million.

According to the story, "The deal will add a line of healthful, frozen breakfast and snack foods to Hillshire's existing brands, which also includes Sara Lee foods … Van's Natural Foods, based in Phoenix, makes gluten-free pancakes and whole-grain waffles. It also makes cereals and multigrain chips."

• The Wall Street Journal reports that McDonald's "plans a marketing push to emphasize its fresh-cooked breakfasts as it battles growing competition for the morning meal." The company's CEO, Don Thompson, says that while McDonald's has not yet seen any impact from breakfast entries by competitors, the heightened competition ""forces us to focus even more on being aggressive in breakfast."

The story says that McDonald's also plans to ramp up promotion and marketing of core items such as the Big Mac the french fries, as the chain looks to reconnect with consumers and re-establish its relevance to consumers.

Editorial continues after a word from our sponsor...

Industry Drumbeat

Path to Digital Marketing Success

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Now back to regularly scheduled editorial...

Executive Suite

• Jewel-Osco said yesterday that it has promoted Doug Cygan, a three-decade veteran of the company who most recently has been serving as Director of Grocery, to be its new Vice President of Marketing & Merchandising.

Editorial continues after a word from our sponsor...

Industry Drumbeat

Diverse Skills For Diverse Challenges…

Cornell University Food Executive Program

July 13-18, 2014 … Ithaca, New York

Celebrating 50 Years of Excellence in Food Industry Executive Education.

Who Should Attend?

Retailers, Wholesalers, CPG Suppliers, Service Providers. The program prepares middle- and upper-level executives for their next promotion and beyond, and is well-suited for high-potential leaders being prepared for broader general management responsibility.

“The Cornell Food Executive Program will not only be a great learning experience, you will also develop industry relationships that will last throughout your career.”  - Ed Crenshaw, CEO, Publix Supermarkets, Inc.

For more information and to apply online, click here.

Now back to regularly scheduled editorial...

Your Views

…will return.

From The MNB Sports Desk

I love it when MNB readers come up with business lessons from unorthodox places … which is exactly what happened this week when I got an email informing me of a piece that ran on by W.P. Kinsella, author of "Shoeless Joe," which was the basis of the film Field of Dreams, which is celebrating its 25th anniversary this year.

"Having enjoyed both the book and the movie," this reader wrote, "I found it interesting to get Kinsella's perspective on the movie and its making. He provides a good business lesson as well -- he sold the rights to the book and let it go. Too often we refuse to let go of ... the way we've always done things, our great idea ... only to lose it all because we couldn't let go. Business lesson aside, it's a good book and a good movie and a unique perspective."

He's right - about the book, the movie, and the business lesson.

It's an excellent piece, and you can read it here.

Finally, a word from our sponsor...

Industry Drumbeat

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