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Friday, October 24, 2014

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Friday Morning Eye-Opener: Rock The Boat

by Kevin Coupe

This morning, I'd like to refer you to a piece in Fast Company to a piece about Anthony Bourdain, a "foodie explorer" who has used a series of TV programs on various networks to visit a wide variety of countries, taste an astounding range of foods, and understand the cultures that produced them a little bit more. His newest show, "Parts Unknown," is actually doing something for CNN that the longtime news network isn't used to - generating ratings.

But I'm intrigued by Bourdain not because he has a dream job, in my opinion - going to obscure places and eating things like grilled whole chicken hearts. It's that as he gets older, he gets more restless and more impatient, rather than learning to settle and take the road more traveled.

"For Bourdain," the story says, "it has been a long evolution: from heroin-addicted chef to punk-rock-foodie author to global citizen on a mission to simply understand a bit about our world. It's a testament to Bourdain's work ethic and creative drive that after 14 years on television, he's still pushing to get better, go deeper, seek out complexity, avoid the obvious and conventional. At a time when he could simply coast, Bourdain seems as energized as ever."

Sometimes, that means taking a wholly unorthodox approach to both his subjects and the way he shoots them. "Not all of these experiments pay off," the story says, "and Bourdain is okay with that. The point is to resist the predictable, especially when it comes to TV's ingrained conventions. "The only thing that makes me upset and, really, a dick is if something is … plodding and reasonable," he says, spitting out that last word with palpable revulsion.

I kind of like that.

I was talking to a senior retailing executive yesterday who told me that one of the hardest things for many successful people to do as they advance in their careers is to continue to take risks - that it comes more naturally when one is young, but that with age and wisdom often comes some measure of satisfaction. it isn't exactly complacency, but it certainly is a tendency to not rock the boat as much.

Having had that conversation in a different context, I found the Bourdain piece to be enlightening. And energizing. And you can read the whole thing here.

It is an Eye-Opener.

Three Top Execs, Including Renda And Dietz, To Depart Safeway Post-Albertsons Merger

In a memo to staff yesterday, Safeway president/CEO Robert Edwards announced that three of the company's top executives, including two highly ranked women, will be leaving the company shortly after the planned acquisition by Albertsons is completed.

The moves are not wholly unexpected, since the three executives had not been mentioned in recent weeks when Albertsons laid out its plans for a post-acquisition leadership team.

The three execs are Larree Renda,the company's executive vice president and chair of The Safeway Foundation, who has been with Safeway for forty years; Diane Dietz, executive vice president and chief marketing officer, who joined Safeway six years ago after a career at Procter & Gamble; and Pete Bocian, executive vice president/CFO, who joined the company in 2013.

KC's View: Edwards says all the right things in his memo, lauding these execs for the service and contributions. And I expect that they'll all have successful post-Safeway careers … they are all young, with plenty of gas left in their tanks. (I would guess they all already are fielding inquiries and that they sit high on the list of potential "gets" compiled by executive search firms.)

But I would have two observations to make.

One is that I hope that Albertsons will nurture The Safeway Foundation's goals and methods once it takes over. The kind of work that The Safeway Foundation has done is way too important to let vanish in the mists of a corporate restructuring, and I hope the folks there will pay attention and get it right.

Second, I think it is a shame that the two most highly ranked women at Safeway did not have seats at the table in a post-acquisition environment. It has been said here on MNB already, but bears repeating - the mood inside Safeway, once the game of musical chairs was completed, was that the company largely is being led by middle-aged white guys. (And they're really only middle aged if they all live to be 100 or more.)

Let me re-run an email I received and posted shortly after the announcement, because it makes the point better than I can:

It was hard not to notice as a Safeway employee that 13 of the 13 top jobs (including the president and chief executive officer) announced in the merged company will be filled by white males. This was very evident at the Town Hall meeting when pictures were shared of the new team. At Division President level, there are 2 women out of 14 and one minority male.  In an era when our customer base is incredibly diverse and our workforce similarly so, the lack of diversity at the senior leadership level is nothing short of stunning.  In total , the top 27 positions include only 2 women and one minority.  Safeway has made a lot of progress in this industry creating a diverse leadership team, and we can only assume from the recent announcement that diversity is not a priority for Albertsons.

As I said then, I will not argue that a leadership team made up of middle-aged white guys cannot succeed. But I do think that companies, especially one the size and scope of an Albertsons-Safeway combo, do better when leadership reflects the complex and diverse demographics of the markets and people they serve.

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From Barnie's CoffeeKitchen...





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Amazon Experiences Violent Deceleration in Growth

The New York Times this morning reports that Amazon yesterday announced greater than expected losses for the third quarter, and suggested that the fourth quarter is also going to have its problems.

Or, as the New York Times put it, "The chickens are not coming home to roost at Amazon just yet, but they are checking the flight schedule to Seattle."

Amazon said that its Q3 net loss was $437 million, compared to a $41 million loss during the same period a year ago. Net sales for the period were actually up 20 percent, to $20.58 billion from $17.09 billion a year ago, though they were not up as much as analysts expected.

Forbes writes that "in its so-called 'investment mode,' Amazon has created television set-top streaming boxes, invested $100 million in original online video programing last quarter and launched its first smartphone, which has been a flop. The company announced during its presentation that it took a $170 million write-down “primarily related to Fire Phone inventory valuation and supplier commitment costs.” The Fire Phone, which was announced in the spring has been hampered by weak sales, forcing the company to slash prices from $199 to 99 cents with a two-year contract with AT&T."

And, the story goes on, "As the online retailer entered the holiday quarter, it also forecasted weaker-than-expected net sales to be between $27.3 billion and $30.3 billion. That represents between 7% to 18% growth over the fourth quarter of 2013 and is below the average estimate of $30.89 billion from analysts polled by Yahoo. The Bezos-led company also said that is expected an operating loss of $430 million to $570 million next quarter, compared to a loss of $510 million in the last three months of 2013."

The New York Times reported it this way:

"Amazon’s story for several years has been that it is growing furiously, investing heavily and postponing profits until the halcyon days just around the corner when it will sell all things to all people all the time. That took the company stock on a wild ride, pushing it up to $400 a share early this year.

"But Wall Street has been questioning those assumptions in recent months, and those questions forcefully surfaced again after the earnings report. The stock fell 10.7 percent to $279.75, shaving about $15 billion off the company’s valuation. The results also indicated that the company’s take-no-prisoners attitude toward its suppliers might be catching up with it."

The Times goes on to report that "Amazon’s chief financial officer, Thomas J. Szkutak, said in a conference call with analysts after the earnings were released that a shift to renting textbooks rather than buying them and a strong 2013 quarter were responsible for the drop."

But one analyst was less sanguine: “This was a violent deceleration in growth,” he said.

KC's View: First of all, let's be clear about something. Amazon's sales grew 20 percent in the third quarter, and are expected to grow seven percent in the fourth.

Is there any retailer - any retailer - that would not be willing to sign up for that right now?
I have been and continue to be a believer that Amazon needs to continue investing in new technologies if it is going to remain in front of its competitors, but it seems sort of clear to me that to some degree, things are coming off the rails. Fire Phone, for example - there never was in my mind a clear rationale established for why consumers needed this phone to exist. (It wasn't like the phone was meeting a need we didn't know we had. We just didn't have the need.) The Hachette controversy is just indicative of a larger problem that Amazon is beginning to have with suppliers, which is affecting product availability on Subscribe and Save, which is one of the company's strongest programs.

Hubris at the top? Probably. Fixable? Certainly.

Hey, even Steve Jobs at Apple went off the rails once. Jeff Bezos is one of the smartest guys on the planet, but somehow he seems to have forgotten the mantra about Amazon existing to make it easier for people to buy stuff. Or maybe, unavoidably, it's been lost in the crush of new projects, initiatives and plans.

I'm not worried about Amazon. It isn't going away anytime soon.

But maybe they ought to start listening to customers a little bit more. That'd be a good start.

Back in the late nineties, because I was an early adopter, Amazon actually sent me a coffee mug with its logo on it, as a way of saying "thank you" for being a customer. I'm not saying they need to send out more coffee cups, but maybe they need to find a little but of that old humility.

Just a thought.

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

Worth Reading: A Tomato Grows In San Francisco

The Wall Street Journal this morning has a story about the vegetable garden that grows just beyond the centerfield fence at AT&T Park in San Francisco, home of the National League Champion San Francisco Giants.

If this subject seems familiar, it is because MNB featured a "FaceTime with the Content Guy" video on the same subject, which you can see here.

Because it is so unusual - growing fresh vegetables that are used by nearby concession stands - and at the same time so emblematic of the city's foodie culture, you may find the story interesting as well … and you can read it here.

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Now back to regularly scheduled editorial...

E-conomy Beat

• The Buffalo News reports that Dash's Market, a four-store retailer there, plans to shortly begin offering click-and-collect service, becoming "the first traditional grocer in Western New York to offer the service, which allows a customer to select a shopping list of items online, then have them either delivered at home or loaded into their vehicle at the store’s curb … Dash’s is in the final stages of negotiation with Rosie App, a click-and-collect software company, and plans to get started on the project early next year."

The story notes that "click-and-collect grocery pickup is an emerging trend that’s catching on quickly. Supermarkets across the United States and Europe already offer the service and many more are studying it," including Wegmans and Tops.

KC's View: No less an expert than Burt Flickinger III, managing director at Strategic Resource Group and someone who I trust to get it right on pretty much everything having to do with retail, puts it this way: "“It’s only a matter of time before it becomes ubiquitous."

Agreed. Couldn't have said it better myself, especially since click-and-collect is said to become profitable faster than delivery … and Flickinger himself is estimating that this service eventually could increase Dash's sales by 10 percent.

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From Park City Group...




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The MNB Walmart Watch

• At this week's Shopper Marketing Conference & Expo in Minneapolis, Andy Murray, senior vice president of creative at Walmart, said that the company is developing a new framework for its shopper marketing initiatives that is focused on content "that considers the complete customer journey across multiple touchpoints, so that it is easier for a retailer to take a brand’s story and integrate it across the path to purchase."

In a report from the Path to Purchase Institute, it notes that Murray said that instead of interrupting shoppers, "brands should seek to inspire and engage them. In terms of displays and PDQs, the retailer wants more value-added messaging at the shelf. P-O-P materials should have a very clear value proposition. Beyond just communicating value, they should create it, actually delivering a benefit." And Murray made clear that Walmart "wants information about brands that it can share in a programmatic way and that it can tailor according to different moments of truth and environments."


Fresh Fruit Portal reports that "Walmart Canada has joined the new healthy eating campaign, Half Your Plate, in an effort to get people of all ages eating more fruits and vegetables.

"The initiative was created by the Canadian Produce Marketing Association (CPMA), which it says provides simple and practical ways to add a variety of produce to every meal and snack.
Half Your Plant was successfully launched on social media this summer, and is now making its way into retail stores across Canada."

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Now back to regularly scheduled editorial...

FastNewsBeat

...with brief, occasional, italicized and sometimes gratuitous commentary…

• There were reports yesterday, from Reuters and other news services, that Sears Holdings plans to close down another 100 stores and lay off more than 5,000 employees, in addition to the 130 store closings and resultant employee layoffs that already had been announced.

The company has been on a cost-cutting tear, as it lost close to a billion dollars during its fiscal first half of the year.

However, shortly thereafter, Sears said the reports were inaccurate - though it also said that focusing on productive stores is a key part of its survival strategy, and would not comment on how many additional closures might be planned. The company said this information will be provided when quarterly results are announced next month.

It's probably 78 stores being closed and 3,547 people being laid off. But that's enough for a denial. Merry Christmas to all, and to all a good night.


• In Toronto, the Globe and Mail reports that Target Canada Co. "is betting on its top stores to become a model for the struggling discounter in its recovery efforts.

"Mark Schindele, president of the Canadian chain since May, is overseeing the launch of an array of practices from speeding up and sharpening store inventory stocking from trailer trucks (in Target lingo, 'coming clean on trailers') to creating a service culture among staff to go the extra mile and convince shoppers to buy (internally dubbed 'the vibe')."

According to the story, "The chain is quietly experimenting with ordering more merchandise than its systems think it needs for five of its best performing stores while 'over-investing' in strong selling inventory at its top 20 outlets."

The company is trying to recover from what is generally considered to be a disastrous entry into Canada, marked by having having the wrong merchandise, not enough merchandise, and poorly priced merchandise.

Yeah, but other than that, things went great…

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Now back to regularly scheduled editorial...

Executive Suite

• The Coca-Cola Co. said yesterday that Marcos de Quinto, who has been president of the company's Iberia business since 2000, has been named as chief marketing officer, succeeding Joe Tripodi, who has been in the job since 2007 and has said he is looking forward to retirement.

KC's View: In the Advertising Age profile of de Quinto, it is noted that he is not well-known in marketing circles, and in fact beat out internal candidates with seemingly more relevant resumes for the job.

It also is noted that his Twitter feed is entirely in Spanish, that he tweets every day, an that his Twitter profile, when translated, describes himself as "Pirate. I sail without a flag. I'm not trying to convince you of anything, just perhaps make you question what you believe in."

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From Samuel J. Associates...


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Your Views: WTO, WTF?

The other day, MNB took note of a Reuters report that the World Trade Organization (WTO) has ruled that "the United States had not done enough to change its labeling rules, requiring retailers such as grocery stores to list the country of origin on meat, after it lost an earlier WTO challenge.

"Canada and Mexico called on the United States to repeal the rules and said they were prepared to retaliate if needed against U.S. exports. Previous estimates have put the cost of tariffs as high as $2 billion."

The story noted that the WTO originally ruled two years ago "that the U.S. meat labelling program, known as country-of-origin labeling (COOL), unfairly discriminated against Canada and Mexico because it gave less favorable treatment to beef and pork imported from those countries than to U.S. meat, which is illegal according to WTO rules."

And I commented:

Laws and governments can resist transparency. But it only works in the short-term, because eventually, information and consumers' desire for total disclosure will win out.

Shortly thereafter, I received the following email from Leslie Sarasin, president/CEO of the Food Marketing Institute (FMI):

I read your comment in yesterday’s Morning News Beat about the WTO ruling on COOL and felt the need to clarify FMI's position on this issue.  Please know that we aren’t arguing about transparency; FMI’s members have worked diligently to meet the COOL requirements and have achieved a stellar record of providing consumers with the information required by the law.  In fact, USDA’s audits have frequently found a compliance rate of greater than 95 percent – an impressive performance made doubly so by the fact that the law covers tens, and in some cases hundreds, of thousands of SKUs.   The 2013 changes put in place by USDA, which required inclusion of "born, raised and slaughtered" language on a label, admittedly caused our compliance to slide for the first time – but this points to the fundamental nature of our concern with COOL.  These changes do nothing for consumers except confuse them with a myriad of unintelligible abbreviations crammed in to fit on a label.  The industry has had to put expensive new systems in place to handle all the added characters and may now have to make further changes to comply with the United States’ response to the WTO’s decision.  With all this in mind, our concern is that the industry will need to make additional costly changes without any certainty that they will be beneficial to consumers or even that all the changes won’t have to be redone before the process is finished.

Bottom line: Yesterday's report was about a poorly constructed law that requires labeling with wording that is confusing to customers.  The WTO report makes it clear that USDA cannot fix it through rulemaking; it is time for Congress to step in and act to fix COOL once and for all before retailers are forced to invest in another round of expensive software and equipment.


I have no problem with much of what Leslie says. I've actually argued that far too much burden has been put on retailers rather than manufacturers … but that is a cross that retailers have to bear, for the moment, because they are legally culpable.

My criticisms in this case actually were of the WTO, but I agree that Congress needs to step in and fix COOL. Of course, the problem is that getting Congress to step in and fix anything is counter-intuitive.

From The MNB Sports Desk

In Thursday Night Football, the Denver Broncos beat the San Diego Chargers 35-21.

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Contact Kevin Coupe at 203-662-0100, or email him at: kc@morningnewsbeat.com .

Now back to regularly scheduled editorial...

OffBeat: Three Things

There are three things I want to refer you to this morning…

First, Kill The Messenger, the new movie about Pulitzer Prize-winning journalist Gary Webb, who, while working for the San Jose Mercury News during the 1990's, uncovered a link between the US Central Intelligence Agency (CIA) during the Reagan administration and Nicaraguan drug traffickers. In essence, the CIA was aware of the import of crack cocaine into the US and did nothing about it because the profits were being used to support the Contras in Nicaragua. Webb never charged that the CIA and Reagan administration were actually selling drugs, but his stories - supported by reams of documentation - essentially argued that when it came to the war on drugs vs. the war in Nicaragua, the Reagan administration clearly was more concerned with the latter.

Webb's stories got an enormous amount of attention, but they also set in motion a disinformation campaign by intelligence agencies that essentially persuaded other media outlets - including the New York Times, Los Angeles Times and Washington Post, which were feeling stung because they'd been scooped by a much smaller paper - to question Webb's veracity, which led to a decision by the Mercury News to back away from its support of Webb's reporting. (Which was, by the way, accurate.)

Kill The Messenger, directed by Michael Cuesta and starring Jeremy Renner, is a very good rendition of the Gary Webb story, done in a style that is reminiscent of those great seventies-eighties paranoid thrillers, like The Parallax View. Renner is excellent, and it's nice to see him playing a real guy for a change and getting away from movies like The Avengers and The Bourne Legacy that don't seem to challenge him as much as, say, his star-making turn in The Hurt Locker. I thought that Kill The Messenger was engrossing, and a good, solid piece of moviemaking … not least because it is based in something that really happened and seems utterly, depressingly plausible.



Second, if you like Billy Joel like I do - and I've made seeing one of his monthly concerts at Madison Square Garden a goal for 2015; the scheduling just never worked out this year - then I'd suggest you read the great profile of Joel in the current issue of The New Yorker. It's a little depressing, but the writing is great and Joel remains a compelling figure - in the words of the story's title, he is a "Thirty Three Hit Wonder," and yet in some circles (like the Rock n' Roll Hall of Fame), he still gets no respect.

You can read the story here.




Finally, a wine recommendation - the Mitolo Jester 2012 Shiraz, an intense bottle of wine from Australia that is wonderful with spicy, grilled meats. (I served it with some skirt steak that was liberally seasoned with this amazing meat rub from Dorothy Lane Markets - fantastic!)




That's it for this week … except to say that I already know what Monday's Eye-Opener is going to be. (A hint - it will be entirely and shamelessly self-serving news about something that Michael Sansolo and I are up to.)

Have a great weekend.

Slàinte!

PWS 28