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Monday, September 22, 2014

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Monday Morning Eye-Opener: Jeter's Way

by Kevin Coupe

I'm not a NY Yankee fan. I'm not even a particularly avid Derek Jeter fan, though I have enormous respect for the longtime Yankee shortstop, who has had a great and charmed career that has been amplified, I think, by the fact that he has played for a great team at an extremely successful time in its history.

Amid all the plaudits for Jeter during the 2014 season, which he has said will be his last, one of the best commercials is a new one produced for Gatorade, which you can see at left. It is actually relatively understated, portraying Jeter as walking to Yankee Stadium on one of his last days before retirement, interacting with fans along the way.

According to a variety of stories, the commercial was shot over a couple of hours last July, and largely was improvised; while everyone on the commercial was paid by Gatorade, nobody knew what was going to happen, nor that Jeter was involved.

The result is genuinely touching.

One other note. While I may not be a Jeter devotee, events in professional sports over the past few weeks have given me even greater respect for him. After all, for two decades he has done nothing other than play the game hard, conducted himself with dignity, and treated others with respect. (You can tell he was raised right.) While that's how people are supposed to behave, we're learning that it is not as common as we'd like to think.

It is an Eye-Opener.

Tesco Says Revenue, Cost Projections Were Misstated, Launches Investigation

UK-based retailer Tesco said this morning that its first half profit projections had been overstated by the equivalent of more than $400 million (US) because of what the company acknowledged was "early booking of revenue and delayed recognition of costs."

Tesco has not said that deliberate fraud was involved, Reuters reports. However, the story also says that four company employees - including Chris Bush, who runs Tesco's UK business - have been suspended, though not disciplined, pending an investigation.

Bush has been replaced on an interim basis by Robin Terrell, Tesco's multi-channel director.

"We have uncovered a serious issue and have responded accordingly," Dave Lewis, Tesco's new CEO, said in a prepared statement. "The chairman and I have acted quickly to establish a comprehensive independent investigation … The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

According to Reuters, "Tesco has appointed a new tax adviser Deloitte to undertake an independent and comprehensive review of the issues, working closely with Freshfields, its external legal advisers. Tesco's current auditor PwC, which has worked for it since 1983, declined to comment." The misstated financial numbers apparently were discovered not by auditors, but by an internal whistleblower.

The Financial Times reports that "Tesco’s former finance director, Laurie McIlwee, announced his decision to resign and step down from the board in April after the retailer reported a second consecutive year of falling profits, but agreed to remain in his role until a successor was found. In early July, Tesco announced that it had poached Marks and Spencer finance chief Alan Stewart. He is not due to start at the company until December 1, however. Tesco said that Mr McIllwee had been retained as a consultant."

KC's View: Yikes.

This does not sound good, as the Tesco image takes yet another hit. If it is proven that people at Tesco deliberately misstated numbers and projections, it will say much about the culture of a company that once was much-admired, and lately seems like just a shell of itself.

I am reminded of a line from Raymond Chandler's "The High Window":

From 30 feet away she looked like a lot of class. From 10 feet away she looked like something made up to be seen from 30 feet away.

That increasingly seems to be the very definition of Tesco.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Alibaba's Modest Goal: To Be Bigger Than Walmart. Soon.

Forbes reports that Chinese e-commerce behemoth Alibaba, which barely has a US presence at the moment but went public last week to great fanfare, has a very specific goal in mind - it wants to be bigger than Walmart. And founder Jack Ma is perfectly willing to say so.

According to the story, "Not only does Ma’s e-commerce giant want to surpass the Bentonville-based retailer, it thinks it will do so soon.  In comments reported last October, Jonathan Lu, Alibaba’s chief executive, predicted the company will overtake Walmart to become the world’s largest retail network by 2016.  Alibaba will reach transaction volume of $490 billion by that year, Lu predicted."

KC's View: I would agree with Forbes that this is easier said than done, and that Alibaba's leadership may be guilty of some level of hubris.

There are two problems with these projections. One is that the Chinese economy seems to be slowing down, which will make it harder to generate high levels of growth there. And, it remains to be seen how effective Alibaba will be in conquering the US market.

That said, it seems likely that Alibaba is going to move the needle. Competitive retailers have to hope that the needle is not on a seismometer, and that the shifts they feel in the marketplace are not tectonic.

In fact, just hoping won't do it. They have to prepare for Alibaba, and be competing with the company even before it is competing with them.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

Albertsons, Safeway Identify Presumptive Senior Leadership Team

Albertsons and Safeway have named the senior leadership team that will lead the combined companies when their merger is completed before the end of the fourth quarter, assuming antitrust regulators give it the expected go-ahead.

"We're drawing on the strong talent within both companies to build an innovative, customer-focused and growth-driven company," said Safeway President/CEO Robert Edwards, who will serve as the combined company's president and CEO.  "We are confident in this team's ability to build a great company that's positioned to win over the long term by earning the loyalty of grocery shoppers in every market we serve and delivering superior operational and financial results."

Bob Miller, Albertsons current CEO, will become Executive Chairman of the combined company upon completion of the transaction. In a prepared statement, he said that the structure is designed to "give our store teams more flexibility to make decisions that are right for their neighborhoods.  The division teams will have the responsibility to have the right assortment for their markets."

No banner changes are planned, the companies said.

The top leadership team will be:

• Bob Gordon, Executive Vice President & General Counsel;
• Shane Sampson, Executive Vice President, Marketing & Merchandising;
• Andy Scoggin, Executive Vice President, Human Resources, Labor Relations, Public Affairs & Government Affairs;
• Jerry Tidwell, Executive Vice President, Supply Chain & Manufacturing;
• Lee Wilson, Executive Vice President & Chief Administrative Officer;
• Bob Dimond, Executive Vice President & Chief Financial Officer, reporting to Mr. Wilson;
• Justin Ewing, Executive Vice President, Corporate Development & Real Estate, reporting to Mr. Wilson;
• Barry Libenson, Interim Executive Vice President & Chief Information Officer, reporting to Mr. Wilson.  Mr. Libenson is expected to be with the new company through March 2015, at which time a successor will be named.
• Wayne Denningham, Executive Vice President & Chief Operating Officer, South Region;
• Justin Dye, Executive Vice President & Chief Operating Officer, East Region;
• Kelly Griffith, Executive Vice President & Chief Operating Officer, North Region.

The companies said that "the new company will be comprised of three regions and 14 retail divisions … The 14 divisions will be supported by corporate offices in Boise, ID, Pleasanton, CA, and Phoenix, AZ."

The division presidents for the new company, who will report to the chief operating officer for their respective regions, will be:

• Dennis Bassler, Portland Division, North Region;
• Paul McTavish, Denver Division, North Region;
• Susan Morris, Intermountain Division, North Region;
• Tom Schwilke, Northern California Division, North Region;
• Dan Valenzuela, Seattle Division, North Region;
• Shane Dorcheus, Southwest Division, South Region;
• Scott Hayes, Southern Division, South Region;
• Sidney Hopper, Houston Division, South Region;
• Lori Raya, Southern California Division, South Region;
• Robert Taylor, United Division, South Region;
• Steve Burnham, Eastern Division, East Region;
• Jim Perkins, Acme Division, East Region;
• Jim Rice, Shaw's Division, East Region;
• Mike Withers, Jewel-Osco Division, East Region

KC's View: I suspect that, like in a game of musical chairs, there likely are a lot of good and talented people who will not have a home with the new entity. Which means that there is some significant talent that is going to be available to other companies.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Park City Group...



Now back to regularly scheduled editorial...

Whole Foods Makes IT Investments To Cut Across Ecosystems

The Wall Street Journal reports that Whole Foods is "investing heavily in IT infrastructure" as it looks to generate as much information about its customers as possible, provide shoppers with information about "food’s impact on their bodies and the environment," and create systems that make it easier for customers to shop its stores.

"The Austin, Texas-based grocer announced a number of new digital initiatives over the past few weeks as it tries to lure more customers through brick-and-mortar and online channels," the Journal writes. "Whole Foods will be one of the first participants in Apple Inc.’s Apple Pay program, and also said it is in the early stages of developing and testing a rewards program." And, Whole Foods has "inked a deal with Instacart to test home delivery and pickup in select cities. Instacart lets shoppers order groceries via its website or mobile app, and delivers them in as little as an hour. Both initiatives will tap into the grocer’s data sharing initiative."

“It’s not just about building custom systems or implementing package solutions,” says CIO Jason Buechel. "We need to take a broader look at the different customer ecosystems going on, and how do we plug into those?”

The challenge, Buechel says, is to make the various systems both seamless and complementary. As customers get more digital choices, he tells the Journal, “the responsibility on our side is making sure that we’re not confusing, that we show them the path they can take and how they can take it.”

KC's View: It will be interesting to see how this new approach to IT is reflected in the Whole Foods shopping experience. I'm a fairly regular Whole Foods shopper, if not one who tends to buy a lot there; there is a store within walking distance of my house, and there are certain items there that I like to buy, though I can't afford to go there with my entire shopping list.

Among their goals should be to take someone like me, use information about what I'm buying, and use their systems to find ways to get me to make one or two more purchases in each trip. Let's see if that happens.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

Walmart Accused Of Violating Federal Elections Law

The Wall Street Journal reports that "labor and advocacy groups" are accusing Walmart of violating federal election laws "by soliciting employees for donations to its political-action committee in exchange for charitable contributions to a fund that helps Wal-Mart employees in need.

"U.S. companies are banned under federal election law from giving money directly to political-action committees. Corporations can use their own funds to administer PACs but are prohibited from compensating contributors for their donations."

The groups are filing a complaint with the US Federal Election Commission, "asking the FEC to determine whether the company flouted campaign-finance laws with a program that began more than a decade ago and matches every dollar employees donate to the retailer's PAC with an additional $2 donation to the Wal-Mart Associates in Critical Need Trust."

Among the companies signing onto the complaint are Common Cause, OUR Walmart, the United Food and Commercial Workers (UFCW), and Public Citizen.

KC's View: Perhaps it is a measure of the companies I have worked for in my life, or maybe it is a measure of my own general crankiness. (Or both. Probably both.) But I've always made it a policy never, ever to donate money to political action committees supported by my employers.

There's two reasons for that. One is that my general feeling was that these companies generally had their own interests at heart, not mine. (The companies I worked for generally were guilty of seeing employees as costs, not assets.) Second, I've always thought that my political donations are my business, not theirs.

I'm so fed up with the power of money - especially big money - and the lack of transparency in politics that it makes my hair hurt.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Samuel J. Associates...


Now back to regularly scheduled editorial...

E-conomy Beat

• Nordstrom announced last week that it "is partnering with Curalate as the first company to launch Like2Buy, a platform that will enable a more seamless shopping experience for its customers through Instagram. Like2Buy helps bridge the gap between Instagram and Nordstrom.com by allowing customers to purchase items featured on the Nordstrom Instagram page."

Here's how it works, according to Nordstrom: "When a customer sees a photo posted on Nordstrom's Instagram feed that they're interested in purchasing or learning more about, they simply click on the Nordstrom profile name and then click the link on the Nordstrom profile page. Next, they will see a gallery of all the featured products and can select an item and go directly to Nordstrom.com to complete their purchase. Customers can also use the 'My Likes' function in the gallery to curate items they love for future inspiration or to purchase at another time."

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

FastNewsBeat

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

• The Boston Business Journal reports on how Roche Bros., which is in the stages of building a store in downtown Boston that will open next year, has set up "five fresh produce stands outside the historic Millennium Tower/Burnham Building where construction is currently underway on the company’s 25,000 square-foot flagship supermarket. The open-air offerings are scheduled to operate seven days a week, from 10 a.m. to 6 p.m. The produce stands will primarily feature fresh fruits, as well as some vegetables, flowers, and seasonal baked goods."

The farmers market-style setup with be open through the end of October.

Very smart, and exactly what companies like Roche should do…


• The Bellingham Herald has an interview with Haggen Inc.'s new CEO, John Clougher, who came to company after serving as CEO of Andronico's Community Markets in the San Francisco Bay area. "In his first 10 days on the job at Haggen," the story says, "he’s been busy visiting the company’s 18 stores, meeting with employees and customers to get feedback on what is working and what needs to be improved. The tour of stores and the feedback he’s been getting has him upbeat about starting Haggen’s next chapter."

The story goes on: "One reason Cougher became interested in Haggen was the Northwest Fresh theme. Calling it 'right in his wheelhouse,' Cougher wants Haggen to be known for its quality, including locally made products as well as items the store makes from scratch … Clougher said Haggen doesn’t have the purchasing power to be the low-price leader in the community, so the company has to make up for it in other ways, such as offering better products and service."


• The Hay Group is out with a survey saying that "nearly one quarter (24 percent) of retailers expect a significant increase (five percent or more) in year-over-year sales during the 2014 holiday season, while another 70 percent are predicting sales will be on par with the 2013 season … The cautious optimism around sales is reflected in companies’ seasonal hiring plans. While most retailers (70 percent) plan to hire staff at 2013 levels, the emphasis has shifted from seasonal to permanent workers, with 24 percent of companies planning to hire more permanent staff in 2014, compared to just 13 percent last season."

In addition, the survey says, "Nearly half (47 percent) of retailers surveyed in 2014 have a clearly articulated omnichannel strategy, compared to only 14 percent in 2013. Furthermore, only six percent of companies say they do not have a strategy, compared to 22 percent last year. The majority of retailers (71 percent) will be relying, at least in part, on their mobile platform to help drive holiday sales."


• The Associated Press reports that C. Dean Metropoulos & Co., owner of Pabst Blue Ribbon beer, is selling the company to Oasis Beverages, a Russian company. TSG Consumer Partners, an investment firm, will take a minority stake in Pabst, the story says.


• The Boston Globe reports that Starbucks has developed a new latte that tastes like beer - Dark Barrel Latte, which is "made with a flavored syrup that reportedly tastes like dark stout beers like Guinness."

For the moment, the new latte only is available in limited test markets.

I'd try that in a second.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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The Shopper Marketing Conference & Expo is an official event of the Path to Purchase Institute.


Now back to regularly scheduled editorial...

Your Views: Breach Of Trust

Last week, after reporting on the confirmed data breach at Home Depot, I wrote about my recent reluctance to use a debit card there, and wondered if I'm alone in that.

One MNB user wrote:

Kevin, you're not alone. Since Target's historical breach, I find myself avoiding them like the plague--but when I do have to shop there, I refuse to use my card. It seems a bit like locking the barn door after the horses are already three states away, but it speaks volumes about how uncomfortable consumers have become over using debit/credit cards. And that's a discomfort I don't see dissipating anytime soon!

From another reader:

It's really too late to be making that decision at any retailer.  The horse is already out of the barn.  Closing the barn door at this point doesn't make any sense.  These large retailers are all a target for these types of breach.  Using cash or credit cards is the safe way to pay for purchases.  Debit cards don't give the user any real recourse for the current problems.  But, if you need to use debit cards, get new cards that have the newer technology imbedded to make it more difficult for people to hack your information ... or don't shop at places that don't have the newest card reader technology.

As a consumer it is up to you to ensure your card security.  Depending on the retailer to protect data in a digital world is not a good idea.  Purchase with EYES WIDE OPEN.


MNB user Rich Heiland wrote:

I have been following the Home Depot case closely, given that in the past two years I have spent more than $20,000 there on DIY projects. I have not stopped shopping there, nor have I stopped using my credit card.

I noted that the security codes, apparently, have not been taken which greatly limits the usefulness of a card. In my case I am constantly amazed at how well my credit card company handles security, sometimes to my annoyance. I absolutely have to stop and think to notify them when I travel or use the card for something totally out of sync with my use history.

While I have changed passwords on key financial accounts - and will make a note to do it more often than I have in the past - when I read your blog and other sources and see constant posts about different forms of payment involving on-line purchasing, I suppose I accept that this is the future. And, it is a future that may be based on "when" and not "if" when it comes to our vulnerability. My hope is that events like Target and Home Depot force all companies to pay more attention to the state of their security going down the road, even though that obviously cannot provide ironclad protection.





On the subject of oppressive college costs and loans, and the long-term impact on the economy, one MNB user wrote:

While the system isn’t going to change anytime soon, there are some people that are trapped, but for most I have a simple solution.

If you don’t have the money saved, go to community college, don’t go away to school, or don’t go to that private school.  I already paid for my college, trying to pay for my kids, I don’t need to pay for anyone else’s.

I don’t recall putting a gun to anyone’s head forcing them to take out $50,60,70,000+ in loans.  Personal responsibility is sorely lacking in our society, and no, we shouldn’t forgive people's loans.


I used to be more of a hawk on the subject of not forgiving college loans, but I've mellowed … I think largely because of the enormous inflation associated with tuition and expenses, and the degree to which I think our culture has been negligent in terms of understanding why it is important to invest in a more accessible educational system.

I'd agree with you about not forgiving people's college loans, if it were not for the fact that pretty much every other loan can be forgiven, and our government is willing to engineer the forgiveness of loans given to major corporations and foreign countries. It seems to me that there is a double standard, and for some reasons, college graduates aren't getting the same consideration as a lot of other people and institutions.

Finally, your community college idea is a good one … but that strikes me as simply furthering our societal bifurcation. I'm not sure that's a positive and healthy for our culture.

From The MNB Sports Desk

In Week Three of National Football action…

San Diego 22
Buffalo 10

Dallas 34
St. Louis 31

Washington 34
Philadelphia 37

Houston 17
NY Giants 30

Tennessee 7
Cincinnati 33

Baltimore 23
Cleveland 21

Indianapolis 44
Jacksonville 17

Oakland 9
New England 16

Denver 20
Seattle 26

Kansas City 34
Miami 15

Pittsburgh 37
Carolina 19

San Francisco 14
Arizona 23

Green Bay 7
Detroit 19

Minnesota 9
New Orleans 20

Finally, a word from our sponsor...

Industry Drumbeat

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