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Tuesday, August 19, 2014

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Sansolo Speaks: Too Much Information; Too Little Knowledge

by Michael Sansolo

It’s a news story I know is coming soon. One day we’re going to learn that we’re officially drowning in information and that it’s actually become dangerous to our health. In the meantime, we’re all awash in the world of constant information trying to figure out when and where we should actually pay attention.

There were three recent stories that got me thinking about information overload and each came with a different twist. In one case, I found information that seemed intriguing. One was just confusing and one had me wondering if I should disconnect my smart phone. Seems like a pretty average day…

Let’s start with the worst. Apparently there is a new app that allows me to determine the political leanings of every product I purchase. Called BuyPartisan, it asks me to scan bar codes and promises to give me the skinny on the companies I support.

No doubt there will be those who will jump all over this, but count me out. I fully understand that I buy products from companies whose politics may delight or offend me, but at some point I have to determine what is useful and useless information. I understand the power of partisan politics, but at what point does it stop? Do I really need to determine which peanut butter I’m going to consume based on political donations of the CEO? Do I now have to draw conclusions on my friends based on what they buy?

When it comes to BuyPartisan I find myself asking the Jurassic Park ethics question: did the creators consider whether they should do this or just if they could? I think they answered wrongly.

But the information is now out there and again companies have to decide how to explain it. I think we have a much more serious question of that type with the week’s confusing news. It came from the nutrition front, which never surprises me anymore. Every week it seems that the news contradicts everything I’ve heard before.

This week’s news is that we’ve gone too far with low-salt diets. So after all these years we are only one story away from finding out that buttered and salted popcorn is the miracle food we always hoped we’d find, able to grow hair, increase potency and improve brainpower.

Luckily I know experts who can tell me if this new report is worthwhile. Most people aren’t that connected, which reminds us of the importance of consumer communications.

This is one of those moments when outreach is necessary, useful and desired. Let’s explain the story before others do that for us. Let’s turn this information into knowledge and give our customers one more reason to build relationships with us that in turn builds business.

That’s leads to the best story of the group - the place where information is being turned into useful knowledge, which is really what we all want in business or our personal lives.

The Washington Post reported Monday on how Wendy’s is using new technology for store location decisions. No real news there right, except that this technology, called Esri, is different. It allows Wendy’s to get demographic profiles of locations that help the fast food chain determine if there is both a market for customers and a supply of likely labor in the area.

In other words the technology provides useful information on the two topics Wendy’s most needs - customers and employees. That is the formula for real value and something we should keep in mind as we spill information at our connections.

Remember, information is great, but knowledge is way better. Otherwise I’m left wondering if the hot buttered and salted popcorn I now get to eat will reflect my political beliefs.

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 by clicking here .

Tuesday Morning Eye-Opener: The Cost Of A Kid

by Kevin Coupe

The San Francisco Chronicle reports that the average, middle-income parents of a child born in 2013 can expect to spend $245,340 to raise that child through his or her 17th birthday, while high-income parents will spend $407,820 to raise a child for that same period of time. Low-income parents will spend about $176,550 in today's dollars.

The Eye-Opening numbers come courtesy of the US Department of Agriculture (USDA).

Housing is the biggest expense, accounting for about a third of these sums, followed by child care and education, though the numbers could vary "wildly" depending on families' choices. (A college education can cost upwards of $300,000, depending on where the kid goes to school.)

The USDA report has been issued each year since 1960, and over time the percentage of money spent on food and clothing has declined, while housing, education and health care have grown.

(I sense a business opportunity in these numbers, for two industries - the folks who sell college savings plans, and those who sell birth control devices.)

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

Market Basket Update: Vendors Increase Pressure On Current Management

As the two sides of the Market Basket dispute in New England reportedly have vowed to resolve their issues by the end of the week, the Boston Globe reports that a major seafood vendor has decided to cease doing business with the retailer because of erratic payments from the company.

According to the story, Boston Sword and Tuna, which has done business with Market Basket for about a decade and supplies the company with some 50,000 pounds of salmon and other seafood each week, says that the retailer fell behind in its payments by several weeks, which forced it to send a letter threatening legal action. The seafood purveyor then got a reassuring letter from co-CEO Felicia Thornton, and then, some days later, a $40,000 check - which was, in fact, more money than it was owed, and the second time it had been overpaid after bills went unpaid.

Tim Malley, CEO of the seafood company, says that this made him question the direction of current management: "There could only be two answers to these accumulating mistakes and self-destructive strategies. One was that the CEOs were way over their heads. How many mistakes like this were being made? How would the shareholders from either side of the feuding family feel knowing that mistakes of this magnitude were being made? The only other explanation seemed to be a deliberate attempt to sabotage the future of the company."

Malley tells the Globe: “Going public with these facts has been a very difficult decision for us. We have enjoyed a business relationship with Market Basket, its former owners and buyers, which many in business never get to experience … We think the time has nearly run out for saving this great institution and all those who depend on it."

Market Basket's management said it was working to resolve payment issues, and laid the blame squarely at the feet of its recalcitrant employees: "When a distribution network set up over decades is shut down in one day it is naive to assume any company would not suffer. The longtime employees that ran Market Basket's buying and distribution system walked out on their jobs, their customers and their vendors on July 18. That is precisely the reason Market Basket's stores have had only limited perishable items in stock since. We do understand the problems that the shutdown of the distribution system has caused Market Basket's vendors who are caught in the middle of this situation. We have been diligently working with vendors to limit the damage the walkout has caused."

The Globe reports that this was not an isolated incident, and that other vendors have decided not to do business with Market Basket at the present time because of the controversy surrounding the company.

KC's View: At this point, it almost doesn't matter who is in the right and who is in the wrong. Sure, Arthur S. Demoulas and his side of the family have longstanding grievances with their cousins, not to mention feeling that Arthur T. Demoulas has been too generous with employees and not generous enough with shareholders and ownership. And sure, the employees feel that Arthur T. Demoulas is the only one with the right vision for the company, in part because he's been remarkably successful at getting them to buy into that vision.

The only way Market Basket survives is if a deal is struck and Arthur T. Demoulas gets both financial and managerial control of the company. And I think it has to happen by Labor Day weekend, or it could be that the company will be beyond saving.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Starbucks To Bring Food Trucks To College Campuses

The Seattle Times reports that Starbucks "is kicking the tires of the food-truck business, with plans for mobile Starbucks stores to hit three college campuses this fall. The trucks, run by longtime Starbucks partner and food-services giant Aramark, will circulate around Arizona State University in the Phoenix area, the James Madison University campus in Virginia and Coastal Carolina University in South Carolina."

The retailer says that the menu offered by the food trucks will be "nearly identical" to that offered by its traditional stores. If the pilot works, the food truck program could be expanded to other campuses and appropriate locations.

KC's View: Smart move. In today's competitive environment, it simply makes sense to find ways to go to the consumer, rather than always assuming that the consumer is going to come to you. Besides, the whole notion of a food truck makes people think about innovation, and that's a positive association for retailers to have.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Samuel J. Associates...


Now back to regularly scheduled editorial...

Bourbon Manufacturers Place Bets On Big Future

The Associated Press reports that makers of Kentucky bourbon are betting that demand for their product is only going to improve with age, and "are putting up the tab for millions of rounds of bourbon years before they are even ordered. The production poses an inherent risk, but hitting the moment right — a big supply meshing with big demand — could mean a serious payday for companies big and small."

The story says that "straight bourbon whiskey ages a minimum of two years, though the average maturity is four years or older." Some products, including the small batch bourbons that have been growing in popularity, often can age for six years or longer. And so, manufacturers have to place their bets now on whether bourbon sales will continue their resurgence.

In part, they are counting not just on the US, but also on foreign countries like China that have been developing a taste for the stuff.

KC's View: I'm not a big bourbon drinker, but I have discovered that as I've gotten older that a little bit of bourbon sipped in front of the fire during the cold winter months can be awfully pleasant. I don't know enough to be even slightly intelligent about different brands, but I do enjoy the Angel's Envy that we keep in the cupboard…

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Slaughterhouse Four: Feds File Charges In Beef Recall Case

The Associated Press reports this morning that federal prosectors have filed charges against the owners of Petaluma-based Rancho Feeding Corp., saying that they "schemed with employees to slaughter about 79 cows with skin cancer of the eye rather than stopping plant operations during inspector lunch breaks. Then, the government alleges, plant workers swapped the heads of diseased cattle with heads of healthy cows to hide them from inspectors … Slaughterhouse co-owners Jesse Amaral Jr. and Robert Singleton and employees Eugene Corda and Felix Cabrera were charged with distribution of adulterated, misbranded and uninspected meat."


The beef was involved in a massive recall earlier this year, "including one for 8.7 million pounds of beef," the story says. "The meat was sold at Walmart and other national chains and used in products, including Hot Pockets."

No illnesses linked to the products have yet been reported.

KC's View: Not sure what the penalties are likely to be, but if they are convicted, in addition to jail time and fines, I'd make sure that they eat a steady diet of the infected meat. They'll deserve no less.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Park City Group...


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Worth Reading: The Best Beer In Baseball

If you like beer and love baseball, or love beer and like baseball, you'll enjoy this piece from the Washington Post from the other day, which looked at the proliferation of craft beers in major league ballparks - mirroring the explosion of craft beer sales all over the country.

You can read it here.

FastNewsBeat

Bloomberg reports that Walmart "is unlikely" to make a competing bid for Family Dollar stores, having completed an internal analysis of the company.

"Wal-Mart determined that Family Dollar wouldn’t be a good fit with its smaller -format stores, according to one of the people, who asked not to be identified because the deliberations were private," the story says. "The company also hasn’t approached Family Dollar about a bid, another person said."

MNB reported yesterday that Dollar General has made an $8.9 billion bid to acquire Family Dollar, a bid that is significantly higher than the $8.5 billion offered for Family Dollar by Dollar Tree.


USA Today reports that McDonald's has decided, as part of its effort to make Happy Meals more nutritious, to add clementines to its offerings this fall, and is considering the future addition of bananas and blueberries to the menu.

"This is consistent with what we've said we'd do," says Greg Watson, the company's senior vice president of menu innovation. "This is part of the journey we started four years ago to make Mom feel better about Happy Meals."

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

RIP

Don Pardo, the iconic radio and television announcer who has been a fixture on "Saturday Night Live" since its inception - he was replaced for one season, and missed one taping because of a hip injury - has passed away, at age 96. Over the past few years he has lived in Arizona, but would tape his introductions there to be used on the New York-based late night show.

Variety this morning quotes "SNL" creator Lorne Michaels as saying, “I won’t let him quit. He’s long past retirement, but I won’t acknowledge it. I can’t imagine the show without him -- and as long as he’s there, I stay young."

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

Apologies From The Content Guy

…to those of you who are getting MNB a little later than usual this morning. The simple fact is that I came down with a cold late yesterday, and when I got up this morning the pain had migrated to just behind my eyeballs, making it really hard to look at a computer screen, much less think. So I took a bunch of drugs and went back to bed, hoping that when I woke up I'd feel better. Which I do. Marginally.

I don't get a cold very often, but when I do, it's a doozy. This morning, it just seemed sensible to post late, and hope that you'd understand.

Thanks for your patience.

Your Views: Hiding In Plain Sight

Got a number of comments about the kid who was able to hide out in a Texas Walmart for several days without being discovered…

One MNB user wrote:

If you could see the disastrous conditions of the Wal-Mart Stores in Texas you would understand how a teenage boy could live in one for 4 days without being noticed.

And from another:

I can see a kid hiding in a Wal Mart pretty readily.  It’s really pretty easy to hide in plain sight.  One time, years ago as a youth counselor at my church, we took the kids down to the local mall, and assigned a pair of them a counselor.  The goal was to find the counselor wherever they were in the mall.  I hid in plain sight, for 4 hours.  I ate in the food court, checked out books in the bookstore, checked out some small shops, didn’t try to  hide at all, and I saw the kids assigned to me 3 or 4 times.  When it was done, and we all returned to the starting point, they were so mad at me when they found I was in plain sight all along, I was the only one who wasn’t found.




On another subject, MNB reader Chris La Bella wrote:

Long time reader, first time “caller”.  Although hackers have been relentlessly testing consumers' confidence in card security lately I thought it would be worth mentioning Supervalu’s reaction to the breach.  I’m sure you know by now that Supervalu is offering 12 months of complimentary consumer identity protection services through AllClear ID to customers whose cards may have been compromised.  I don’t remember if Target did anything similar but I thought that this move by Supervalu was a great way to assume responsibility and do something for their customers in return.  Hopefully it will help them maintain loyalty with those effected.

Fair point.




Responding to yesterday's piece about JC Penney's resurgence, one MNB reader wrote:

Thank you for your thoughts on JC Penney. I would agree that Ron Johnson had a beautiful idea. Unfortunately he was out of touch with Penney's core customers, with the retail environment, surrounded himself with folks who couldn't criticize him, which combined led to the near demise of the company.

As far as the turnaround is concerned, Penney still has a long way to go. To be exact, traffic was still negative in the quarter - and considering the 30%+ in sales that the company had lost between 2012 and 2013, more than half of which was due to traffic, last quarter's achievement was by no means eye-opening. The company still needs to figure out how to draw more customers in even on such easy comps.

And then, on the positive cash flow - let's be clear, the company says it will be able to achieve that by generating $250-300mm of cash via reduction of working capital and also by cutting capex to the very low levels of $250mm annually. A company in growth stage typically consumes working capital, and $250mm of capex per year is not sustainable long term.

So my view is, in the short run, it appears that JCPenny has stabilized the ship. And with its stock on the rebound the company will have more sources of liquidity as well, which feeds into a positive loop. But longer term, the outlook remains challenging, as I wonder about the impact of many of the cuts that were taken to save the company. So my short view is, the road to recovery is still a long one.


And another:

First I tend to agree with you that JCP’s future is certainly questionable and built on sand. I feel that way due to a continuous self-induced erosion of JCP’s equity through the proliferation of discounts. Which creates an environment where the only reason to shop there is BECAUSE EVERYTHING IS ON SALE.

I do not think that is sustainable for the long term.

My question though to the contrary of that is who replaces them as a clothing provider to mid income demographic? Kohl’s is locked into the same tactical plan as JCP. Walmart simply said sells junk in its apparel dept. – oops maybe that’s just an impression – well enough said – that’s their reality then.

Target might be better (I can’t really say) but their trust factor is just above zero.
 
So in the end who puts JCP out of business? That’s what makes me think JCP might just stand a chance.





On the subject of retailers pressured to ban the open carry of weapons in their stores, regardless of local gun laws, MNB reader Tim McGuire wrote:

Kevin - I think you are being so careful here not to offend anyone that you've lost sight of how positive change happens in a democratic society.  You say that "I don't think it is fair to criticize a company for following state and local laws. If you can get the laws changed, fine.  If not, asking a company to alienate a portion of its clientele doesn't make sense."

But peaceful protest and citizen pressure on influential organizations are at the very heart of many positive changes in American and world society. The laws allowed bus companies to force black passengers to sit at the back of the bus, and drugstores to have "white only" lunch counters - was it wrong to pressure those companies to change, even if it alienated some of their more bigoted customers?  The Montgomery bus boycotts and the Greensboro lunch counter sit-ins forced companies - and through those companies' actions, society - to change.  The laws allowed companies to pay women less to do the same job as men - was it wrong to pressure those companies to change, even if it alienated some of their more sexist customers

The laws allowed landlords to refuse to rent an apartment to gay couples - was it wrong to pressure those companies to change, even if it alienated some of their homophobic customers? The law allows drugstores to sell cancer-causing cigarettes - is it wrong to pressure the health professionals in those companies to stand behind their medical oaths and stop selling cancer products, even if it alienates some of their (sadly) tobacco-addicted customers?  Citizen groups putting legal, respectful, non-violent pressure on companies, governments, churches and other organizations to change in a positive way have made America and many other parts of the world a far better, more fair, more inclusive, more equal society.  Power to the people!


I'm a child of the sixties and seventies, so I agree with you on all those points, and your philosophy.

But…I guess my sense is that when it comes to gun laws, there is such polarization - much of related to a constitutional issue - that a little understanding on both sides might go a long way to crating some common ground. The way the discussion takes place now, the two sides don't seem able to do that. That's not helpful.

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