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Thursday, July 24, 2014

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BREAKING NEWS: Simon Says He's Leaving Walmart As CEO Of US Business

CNBC reports this morning that Bill Simon is leaving his job as CEO of Walmart US.

No reason was immediately cited for the move, which was unexpected. However, there have been a number of executive shifts at Walmart since Doug McMillon took over as the company's CEO.

According to the story, "Greg Foran will take over the reins of Walmart U.S. from Simon. Since March 2012, Foran had served as the president and CEO of Walmart China.

"Simon has been at the helm of Wal-Mart's U.S. unit, which has struggled recently to deliver positive comparable sales, since mid-2010."

In a prepared statement, Simon said that "it's been an honor to work for Walmart over the past eight years, and this felt like the right time to move on and focus on my next opportunity. I look forward to helping the company as much as I can over the next six months.”

KC's View: At least he didn't say he wanted to spend more time with his family.

This may be no more that McMillon making sure that he's going into battle with his own team in place … because things are only going to get more competitive for the Bentonville Behemoth. Still, it is an interesting move … and one has to wonder about the various machinations inside the company that led to this departure.

FaceTime with the Content Guy: Street Smarts

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

There's been a lot of conversation in recent months, even years, about how Apple may have lost its mojo, about how Apple simply isn't the same company since the death of Steve Jobs.

But this week, most of the discussion of Apple has been positive. There was, for example, its
$37.4 billion in revenue during the most recent quarter - much of it driven by iPhone sales, which was seen as extraordinary in a quarter when smartphone sales traditionally have been soft. There were reports that the next iPhone, dubbed iPhone 6, will be out this fall, and that Apple has placed an initial order with suppliers for 80 million units,. The company seems closer to releasing an iWatch, which may be called iTime. Apple announced a new partnership with IBM that is seen as giving it greater potential within business markets.

But as I stand here in Portland, there is another factor that I think continues to speak volumes about Apple's enduring cool. I'm speaking to you from the front of the Microsoft store downtown, which is a very nice little store. Very nice. The only problem is that whenever I walk by it - and I do so pretty much every day, at a variety of times - there are never more than a couple of customers inside, and it often is empty, save for lots of employees.

I remember that when I was here last summer, I noticed the same thing … and that across the street, essentially in the basement of a mall, there was one of the smallest Apple stores I'd seen in quite some time, and it was humming with activity … crowded with customers pretty much all the time.

Well, when I got here this summer, I noticed something had changed. I got off the light rail train with my luggage, to walk up to the apartment that I've been renting, and I noticed that just a block away from the Microsoft store was one of the biggest and coolest Apple Stores I've ever seen - taking up much of one side of a block, glass on three sides, with a marble back wall that is gorgeous. One of the folks working inside told me that, in fact, this is one of the last Apple Stores that the late Steve Jobs had a role in designing.

More importantly, whenever I walk by this store - and I do so pretty much every day, when I go to Stumptown Coffee - it is filled with customers.

Last summer, I remember, the location was under construction, though there were no signs to indicate that it would be an Apple Store. But I'm sure at some level, the folks at the poor Microsoft Store down the street must've just shaken their heads when it opened, because if Apple was going to kick butt from a small basement store, there was no doubt that it would do even better from this sparkling new facility that already has become a kind of midtown landmark.

Apple may have seen some bumps in the road in recent times, but there's no question that it continues to have the retail thing figured out. The Microsoft store down the street may be nice, but this Apple Store, where I'm standing now, is totally cool … and totally busy.

That's what is on my mind, and as always, I want to hear what is on your mind.

Editorial continues after a word from our sponsor...

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Thursday Morning Eye-Opener: Biogas, Anaerobic Digestion, And You

by Kevin Coupe

Okay, this is kind of interesting.

Extreme Tech reports that a Sainsbury store in the UK soon will become the first supermarket on the planet to get all of its electricity from its own food waste.

That's right.

Because I'm no scientist, and I'd probably get it wrong if I tried to paraphrase the coverage, it probably makes sense to let the folks explain:

"At the end of the day, after any usable food has been given to charity or sold to animal feed companies, the remaining waste is sent to a nearby anaerobic digester operated by Biffa (a UK waste management company). The bacteria do their job and the resulting methane powers an on-site generator. The electricity is then be piped back to the grocery store, which is about a mile away … An anaerobic digester, as you may have worked out if you did high school biology, digests biological matter (i.e. just about anything that you eat or excrete) with anaerobic organisms. These are special bacteria and yeasts that, when no oxygen is present, break down the biological matter into a wide range of interesting chemicals. Ethanol is one such chemical (yes, anaerobic digestion is used to make beer!), but in this case we’re much more interested in another product that is common in anaerobic digestion: Biogas."

And it is biogas that will be used to power that Sainsbury.

According to the story, "Sainsbury’s says the new setup will provide enough electricity that the grocery store no longer needs a connection to the national power grid — and, in fact, it will even sell any excess electricity back to the grid. It isn’t entirely clear how much food waste is being consumed to produce that much electricity, but it’s probably quite a lot. Sainsbury’s says it’s already using anaerobic digestion to produce enough electricity to power 2,500 homes."

There's no suggestion that Sainsbury could expand this concept chain-wide, or even the extent to which it is scalable. But it is an Eye-Opening initiative … and the implications for how it could help the retail business get more energy-efficient are intriguing.

Court Says Walmart Must Turn Over Internal Bribe Probe Documents To Investors

Bloomberg reports that the Delaware Supreme Court has ruled that Walmart must turn over to investors "internal documents about what directors and executives knew of alleged bribes tied to Mexican real-estate deals," saying that the "investors showed the documents were essential to their investigation of the bribery and how the internal investigation was handled."

The ruling supported a lower court ruling that pension funds holding Walmart stock had a right to the documents. Walmart replied that the ruling was simply procedural and had nothing to do with the merits of the allegations; the company noted that its internal probe is continuing.

Walmart has been accused of bribing local officials in Mexico to grease the wheels of its growth there, and subsequently there have been charges that it engaged in similar behavior in places like China, India and Brazil.

In addition to its own probe, Walmart also has been cooperating with what has turned into a multi-year, multi-agency federal investigation into its behavior, which also has not been concluded.

The big question goes beyond how bribes were being paid on the ground, and focuses on what Walmart senior officials knew about the practice and when they knew it.

KC's View: The irony is that Walmart seems to have spent a lot more money on the various probes and the lawyers needed to deal with them than it ever did on bribes.

I think it is a good thing that the documents have to be turned over to investors … because maybe that's what's needed to give some momentum to bringing the multiple investigations to some sort of conclusion. Of course, the betting here is that the results won't be positive for some of the folks who used to run Walmart … and, in fact, one of the reasons for the delay is to give the current regime some distance and what the Nixon administration used to call "plausible deniability."

Editorial continues after a word from our sponsor...

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Made In America Certification Company Hit With FTC Sanctions Over False Claims

The Imperial Valley News reports that a company claiming to certify "made in the USA" products "has agreed to settle Federal Trade Commission charges that it deceived consumers by allowing companies to use the seal without either independently verifying that those companies’ products were made in the United States, or disclosing that the companies had certified themselves.

"The company, Made in USA Brand, LLC, is required under the proposed settlement to stop its deceptive claims."

According to the story, "The Columbus, Ohio-based Made in the USA Brand, LLC charged $250 to $2,000 for a one-year license to use the certification mark, according to the FTC. But the company did not independently evaluate the products before certifying them, and had no procedures to determine whether marketers complied with the FTC’s Made in USA standard, according to the complaint. In fact, the FTC charged that Made in the USA Brand has never rejected a company’s application to use its Certification Mark or terminated a company’s use of the mark. Instead, Made in the USA Brand, LLC awarded licenses to any company that self-certified that it was complying with the FTC’s standard."

KC's View: Allowed them to settle? How about putting these clowns out of business?

I should point out that for quite some time, MNB had as one of its sponsors a company called Made in the USA Certified … which, I'm happy to say, is not the company being charged by the FTC. In fact, I'm very confident that Made in the USA Certified operates in a way that is above board, responsible, and verifiable.

I've always been an advocate for Made in America programs, and I hate it when some people decide to exploit such opportunities in an irresponsible and illegal way. But this story doesn't make me any less confident that companies that do things the right way ultimately will be rewarded.

Editorial continues after a word from our sponsor...

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Target Plans New Small Store Format

In Minnesota, the Pioneer Press reports that Target is testing a new small store format with a 20,000 square foot TargetExpress store that opened this week in Minneapolis's Dinkytown neighborhood, and another one that is planned for the Highland Park section of St. Paul.

According to the story, "TargetExpress is a new format that Target hopes will compete against drugstore chains CVS and Walgreens, which have been aggressively expanding into urban neighborhoods that can't handle a suburban-sized Target store and parking lot … The store's small size means that some traditional Target mainstays are absent, including nearly all clothing, toys and lawn-and-garden supplies, at least in the Dinkytown location."

The story says that "the Dinkytown TargetExpress features a good assortment in some categories, including health and beauty supplies, snacks, seasonal items and portable electronics. It also has a pharmacy. TargetExpress also has a far broader range of groceries than you'd find in most drugstores, including fresh fruit, salad greens and packaged fresh meat."

Target says it also plans to open three such stores in San Francisco as part of its testing pattern.

KC's View: Looking forward to visiting the TargetExpress store next time I'm in Minnesota, and hope that Target doesn't follow the Walmart small-store model of trying to squeeze 20 pounds of flour into a 10 pound bag. Small stores have to be more specific, not just a mash-up.

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Market Basket Gets A Buy-Out Offer From Former CEO

The Boston Globe reports that deposed Market Basket CEO Arthur T. Demoulas and his side of the family have offered to buy the Massachusetts-based retailer from Arthur S. Demoulas and his side of the family, a move that, if successful, presumably would resolve the management controversies that have severely compromised the company's ability to operate and compete.

“We believe that our offer is a very full and fair one and should meet or exceed a seller’s expectations of the value of the company,” Demoulas tells the Globe

The story notes that "the offer comes at a spellbinding time for Market Basket - about a month after Demoulas was fired from his position, nearly a week into a worker revolt in his support that has upended normal store operations, and two days before a scheduled board of directors meeting." That revolt, which reportedly will result in yet another mass rally of employees on Friday, the same day as a company board meeting, has focused on slowing down warehouse deliveries to the stores to the point that many shelves were empty, which prompted current leadership to fire several management-level employees.

The longtime family feud boiled over with the move by Arthur T. Demoulas’s similarly-named cousin, Arthur S. Demoulas, to oust the CEO due to a conflict over the company’s finances. The fight is characterized differently by the two sides. The Arthur S. Demoulas faction argues that Arthur T. Demoulas spends money irresponsibly and refuses to take direction from the board. The Arthur T. Demoulas side maintains that his cousin is fueled by greed, only interested in raising prices, cutting employee compensation, and threatening the formula that has built the company to a New England success story.

KC's View: Things only are getting uglier at Market Basket … and I have to admit to being conflicted on this one. For the sake of the folks employed there, I hope these controversies get resolved. But for my own sake, I could live with this story continuing for another few months … it is the gift that keeps on giving, if you are in my business.

Editorial continues after a word from our sponsor...

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Amazon Unveils Mobile Wallet App

The International Business Times reports that Amazon has "quietly launched" a mobile application it is calling Amazon Wallet, available from both Google and its own app store, that "can scan gift card and store loyalty cards … Cards added to the Amazon Wallet mobile app can also be viewed and edited through the Amazon website, which also displays credit cards and other payments saved to your Amazon account."

The application is described as bare bones at the moment, because while it allows users to scan in these cards, it "doesn’t support mobile payments, nor does it support storing credit cards and debit cards."

However, the story says, "While Amazon’s beta app doesn’t have much to offer at the moment, it may be building itself up as a contender against eBay Inc.’s PayPal and Google Wallet."

KC's View: With Amazon, it often seems to be about what's coming next, as opposed to what it is doing now … the company's ability to play retail chess allows it to put pieces in place now that it can use to attack the market later. The guess here is that it won't be much later for this idea, since waiting doesn't seem to make a lot of sense.

Worth Reading: Inside China's Food Safety Morass

Good piece in the New York Times reporting that "China has been scrambling to right its gargantuan processed-food ship ever since six infants died and thousands more were hospitalized with kidney damage in 2008 from milk adulterated with an industrial chemical. But as the latest scandal involving spoiled meat in fast-food shows, the attempted transformation over the last six years has run up against the country’s centuries-old and sprawling food supply chain.

"From factory inspections to product recalls, laboratory testing to prosecutions, China’s emergent food-quality apparatus has turned into reform on the fly, with ever-changing threats and setbacks. Now, the growing presence of big American brands means that the country’s oversight efforts — and its most glaring lapses — are playing out on a global stage."

You can read the entire story here.


Reuters reports that "OSI Group, the Aurora-based meat supplier at the center of a new food safety scandal in China, on Wednesday admitted to problems at a plant in Shanghai that have cost the company business with top fast-food chain Yum Brands Inc.

"Yum said on Wednesday it had stopped buying food from OSI in China, Australia and the United States after Shanghai police detained five people connected to the meat supplier's factory. OSI was not a major supplier of Yum, according to the restaurant."

The plant has been accused of knowingly selling meat to retailers that was out of date or had fallen on the factory floor.

• The Wall Street Journal reports that Wawona Packing Co., a central California company, "is recalling specific lots of its fresh peaches, plums, nectarines and pluots sold nationwide over concerns of possible listeria contamination." While the company said it had no knowledge of any illnesses related to the fruit, "the voluntary recall was announced after consulting with the U.S. Food and Drug Administration."

The story notes that "the recalled fruit was packed and shipped to retailers including Costco Wholesale Corp. and Trader Joe's from June 1 through July 12 … the recall came after internal testing at the company's packing house in Cutler, a community in Tulare County."

Editorial continues after a word from our sponsor...

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"The response from our staff to your presentation has been overwhelming. There has been an excitement and enthusiasm that I have not witnessed since taking over this position. The thanks in the hallways, the emails, the comments … have all been extraordinary. Thank you for capping off the perfect company event yesterday."
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Now back to regularly scheduled editorial...

Want To Grab A Beer Or A Glass of Wine?

I'm going to be in Portland enjoying what I like to think of as my "adjunctivity" (team-teaching a marketing class at Portland State University with the great Prof. Tom Gillpatrick) until August 1 … and it occurs to me that this would be a great time to try and grab a beer or glass of wine with local members of the MNB community.

I'm thinking Nel Centro, located at 1408 SW 6th Ave, Portland, … on Monday, July 28 … say, from 5:30-7 pm? No need to RSVP…I'll just be there, hanging around outside by the fire pits, looking forward to meeting with anyone who would like to hang with me.

Your Views: Transparency is The Best Policy

Got the following email regarding constitutional challenges to some state "ag-gag" laws:

I live in Idaho, and was ashamed to say so when Idaho’s government passed this law which, was heavily backed by Butch Otter and his cronies.  I think these types of bills are ‘back-woods’ and so out of touch with what the majority of what Idahoan’s wanted.  If there is nothing to hide, why put such a law into place?  I would think that responsible ranchers would welcome scrutiny.

I’m very happy the federal courts are going to look at the law and my fingers are crossed that it will be struck down.

Transparency is the best policy.


On another subject, one MNB user wrote:

Reading about the new companies that are going to offer e-books and how they are going to complete with Amazon made me want to share this with you.

I often borrow E-books from my local library and they have a problem with certain publishers letting them purchase digital books.  These are big name companies who have no problem selling their books digitally, they just don’t want the library to buy them that way.  There have been petitions out in the library asking customers to write the publishers about this.  The library knows that they need to have popular titles available to keep them a viable option.

Now with my local library, they treat e-books the same way they treat traditional books.  They only have so many copies, there is a waiting list for the new titles, and you can only have them for a specific amount of time.   Once that time is up that title is gone from your device.

So the big publishers want to make money. That is their right and it’s their business.  But what is the difference between selling a hardcover copy to the library and selling an e-book copy? 

Makes me wonder what is really going on in the e-book business and how these new companies are going to fare getting product out to their readers.

On a related subject, from another reader:

Again I stand my ground in support of actual BOOKS! I know you will think me old-fashioned but not everyone can AFFORD to buy a Kindle/nook/iPad...something to read  a book off of.  And I know that many libraries now provide "e-books" to patrons and will even loan out "e-readers" but there are many small (if not TINY) little towns and burgs across the U.S. who have only their small traditional library of paper books and no matter how 'behind the times' that little library may be they won't have the funds to get into digital reading materials no matter how popular they are. I get that digital print is an evolution but a book is affordable to most everyone and I do think it's sad that someday there may not BE books anymore.  Gutenberg made books possible for more people to have access to because it went from a few hand printed volumes to 'mass produced' (which many were still too expensive for the common person to buy or obtain).  So though digital is a sign of the times I don't feel it will absolutely eliminate BOOKS in the old-fashioned sense and I would not equate it with Mr. Gutenberg exactly.  At least, I hope not.  Do we really need a world where not a single thing survives that requires more than an on/off button?

I understand your point, but would suggest to you that what makes a book is ideas that are brought to together in words and sentences. It matters not at all whether they come via paper and ink, or via an electronic device.

PWS 29