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Monday, March 02, 2015

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Monday Morning Eye-Opener: A Logical Sense Of Humor

by Kevin Coupe

Friday late morning, when the news of Leonard Nimoy's death at 83 broke, I made the decision to do a special alert to the MNB community. I did it because I know that many MNB readers are Star Trek fans (as I am), and because I simply did not want to wait the weekend to write an appreciation. And, I did it because I wanted to.

You can read the original piece here. (To be honest, not everybody thought the piece appropriate. But we'll get to that below, in "Your Views.)

Among his many achievements, Nimoy was a very, very smart marketer. Over the years, he took his connection to Mr. Spock very seriously ... but also with a leavening sense of humor and a twinkle in the eye that only increased his appeal. That's a good and Eye-Opening lesson for any marketer.

Here is a commercial for Audi that Nimoy did immediately after the Star Trek reboot that cast Zachary Quinto as a young Spock. The two men apparently had great affection for each other, and teamed up for a delightful web commercial that illustrates it ... and does a great job selling cars. I loved it when it ran, and it is worth looking at it again here.

Warren Buffett Apologizes For An Investment That Wasted Away In Tesco

Bloomberg reports that Warren Buffett, in his annual letter to shareholders in Berkshire Hathaway, apologized for keeping the company's investment in Tesco for too long, saying that "an attentive investor ... would have sold Tesco shares earlier. I made a big mistake with this investment by dawdling." Buffett added, "“My leisurely pace in making sales would prove expensive."

Buffett continued: "During 2014, Tesco’s problems worsened by the month. The company’s market share fell, its margins contracted and accounting problems surfaced. In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.”

KC's View: Wow. Cockroaches. Helluva metaphor to use for a company in which one has invested.

To be fair, Buffett made the same mistake that a lot of people made - thinking that Tesco, after so many years of success, simply was incapable of not finding a way out of its problems. What was unclear at the beginning, but became clear as time went on, was that the culture there was more toxic than many people realized.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From ReposiTrak...

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The Artisanal Movement Goes To Pot

The San Francisco Chronicle reports that as marijuana sales go mainstream - medical marijuana is legal in almost half the states, and recreational marijuana is legal in three states and the District of Columbia - the pitch is for artisanal, hand-crafted product.

The story talks about how, in California, "those with medical marijuana cards were able to make high-grade, sun-grown cannabis appear on their doorsteps within an hour. Flow Kana, the startup behind it, celebrated its new farm-to-table — or farm-to-bowl — service by passing joints at a Berkeley hills launch party Thursday night." And the sales pitch is simple - if you;re going to buy cannabis, you ought to buy it from a company with values.

KC's View: What will be even more eye-opening will be when some major corporation decides to get into the marijuana business ... corporatizing something that has largely been on the fringes.

To be clear, I remain extremely conflicted about legalizing recreational marijuana. I see both sides of the argument, and I simply cannot make up my mind.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

FTC Says Identity Theft Remains Number One Consumer Complaint

CNN reports that "identity theft was once again the number one complaint from Americans this year, according the Federal Trade Commission’s annual tally."

Number two: "Fraudsters pretending to be someone they’re not as a way to get money from you ... While con artists sometimes impersonate a friend or family member asking for money, more complaints are about fraudsters claiming to be a government official, like an IRS agent."

The story says that "rounding out the top five complaints of 2014 were problems with debt collectors, phone and cable companies, and banks."

KC's View: Considering the number of hacking incidents that have taken place over the past year or two, this is no surprise. The more worrying aspect of all this, I think, is the degree to which any sort of authority - moral or otherwise - has been squandered by institutions in which people used to have faith.

To quote a Latin proverb I often roll out: Trust, like the soul, never returns once it goes. That's not good for a civilized society, I think.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

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Now back to regularly scheduled editorial...

The MNB Walmart Watch

• The Guardian has a story about Walmart's decision to give a raise to some 500,000 employees to $9 per hour, quoting MNB fave, Burt Flickinger, managing director of Strategic Resources Group, as saying that Walmart almost had to make the move.

Flickinger said that "Walmart had suffered a staff exodus since Gap increased its minimum wage to $9 last year, and promised to lift it to $10 in 2015. Flickinger said Walmart now had one of the highest staff turnover levels of US firms. 'With higher turnover come higher costs of hiring, training and lower productivity per person,' he said."

The story also suggests that Walmart's decision could have a "ripple effect," impacting both the retail and the fast food sectors ... where they will have to increase wages as the fight for employees becomes more competitive.

Editorial continues after a word from our sponsor...

Industry Drumbeat

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Now back to regularly scheduled editorial...

Worth Reading: Getting China's Food Supply Chain Under Control

There is an excellent piece in the New York Times about the challenges inherent in China's food industry, the difficulties in regulating it, and how technology companies may be providing a solution.

An excerpt:

"Controlling China’s sprawling food supply chain has proved a frustrating endeavor. Government regulators and state-owned agriculture companies have tried to tackle the problem in a number of ways — increasing factory inspections, conducting mass laboratory tests, enhancing enforcement procedures, even with prosecutions and executions — but food safety scandals still emerge too often.

"Chinese technology companies believe they can do it better. From the farm to the table, the country’s biggest players are looking to upgrade archaic systems with robust data collection, smartphone apps, online marketplaces and fancy gadgetry."

You can read the entire piece here.

Editorial continues after a word from our sponsor...

Now back to regularly scheduled editorial...

E-conomy Beat

Cnet reports that Amazon is looking to start doing business in South Korea, and could open an office there as soon as next month.

According to the story, "The move into South Korea is expected to have a significant impact on the local market, especially against established brands such as local online auction and shopping site Gmarket.

"Amazon is busily hiring employees who have experience with Korea's online retail business, according to local reports, with an estimated 300 open positions that need to be filled. The positions are mostly IT-related, so the chances of Amazon stocking a warehouse filled with goods are low. It's more likely the Kindle, which has never been available in Korea, will be the first launch product."

KC's View: I guess this means that in South Korea, at least, Amazon will be pitched as a tech company, not a retailing company. I don't think this is a small shift in emphasis.

Editorial continues after a word from our sponsor...

Industry Drumbeat

From USC...

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• The Pacific Business News reports that Kroger "may be eyeing Hawaii for its first location in the Islands." The story says that Kroger has "registered as a new business in Hawaii in early February, according to public records." The company made a similar move in 2006, but withdrew the registration.

Experts say that it is tough for companies to come to Hawaii since they are unaccustomed to high land prices and rents.

Kroger has not commented on the reports.

Reuters reports that Whole Foods has rescheduled its annual meeting for September 15, pushing it back from the original date, March 10.

The story notes that "the meeting had drawn attention after Whole Foods won permission from the U.S. Securities and Exchange Commission (SEC) to leave off its proxy statement a proposed shareholder resolution meant to make it easier for investors to run their own director candidates ... The SEC backed off its decision in January, however, amid criticism from shareholder activists who said the grocer had preempted the resolution with a weaker version of its own."

Re/Code reports that Ron Johnson - the marketing wiz behind the Apple Stores who had a short, tumultuous and unsuccessful tenure at JC Penney, is leading a $16 million investment in Nasty Gal, an online retail site specializing in funky clothing for young women. Nasty Gal recently opened its first bricks-and-mortar store, and Johnson, who will join the board of directors, is seen as a potentially powerful asset as the company grows.

Editorial continues after a word from our sponsor...

Corporate Drumbeat


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Now back to regularly scheduled editorial...

Executive Suite

• Kroger announced that Kathleen Barclay, the company's senior vice president of human resources, plans to retire in the fall, and will be succeeded by Timothy Massa, currently the group vice president of human resources and labor relations.


• Minnie Minoso, who broke into Major League Baseball two years after Jackie Robinson and spent 17 years as a player - 12 of them with the Chicago White Sox - while becoming the game's first black Latino star, has passed away of natural causes. There seems to be some question about the age of the "Cuban Comet," , but the White Sox and the coroner's office said they believed he was 90.

KC's View: When the greatest game on the planet loses people like Minnie Minoso (still one of the greatest names ever for an athlete) and Ernie Banks, it also loses a little bit of the joy inherent of the game ... there are few people out there in today's game who bring that kind of almost uninhibited happiness to the diamond.

Your Views: Infinite Opinions, Infinite Combinations

Regarding Walmart's decision to give a raise to $9 per hour to some 500,000 employees, one MNB user wrote:

Make no mistake, this is a business decision. This impacts the lower third of their schedule, which is where you find most of the turnover. Having said that, I am hoping the industry follows their lead. After all the industry has been following them in lower wages and benefits for years. It is time to increase the standard of living for this industry that many times works 24 hours a day 7 days week often only closing at Christmas.

From another reader, about the bigger picture:

Perhaps another question here is what is being done to alleviate the huge disparities between CEO and Executive pay and that of the average worker. That disparity is only growing and we are effectively eliminating the middle class. If you knock down some of those outrageous (almost criminal) salaries, one could effectively boost morale at the lower levels by some small increases.

And another reader:

In your comments regarding “Wal-Marts wage increase” ….

“This is all incredibly complicated stuff, and I certainly don't want to minimize the importance of Walmart's wage increases. It is a positive step, especially if it creates movement on the part of other companies. I continue to believe that there are limitations, though ... I want to know how many of the Walmart employees who get raises are able to quit their second jobs because of it. I am, fair to say, dubious. And it seems to me that the issue of sufficient hours is as important as wages.”

Seems to be more Wal-Mart “bashing” as you don’t mention/ponder/opine whether the Tj Maxx, Homegoods, etc. workers “will be able to quit their second jobs” with their pay raise. Do you think only minimum wage employees of Wal-Mart might have second jobs?

Regarding my decision to send out an alert on Friday regarding the death of Leonard Nimoy, MNB reader Bob Warzecha wrote:

Excuse my language but what the f do I care about your thoughts of Leonard Nimoy (our newsletter should be  about how I can make money in the supermarket arena).

When I got the email, I immediately responded:

Call it a point of personal privilege.

Over the years, I've often quoted Spock in particular and the Star Trek films in general, sometimes when offering business lessons and sometimes just for the hell of it.  I've done it enough, and have read enough email, to know that a sizable portion of the MNB audience is comprised of Star Trek fans.  So...when Leonard Nimoy died, I figured, why not?  (If today had not been a Friday, I probably would have held the obit and commentary until the next day.   But I did not not want to wait until Monday, so I figured, why not?)

BTW...over the years you've written me email about Alex Karras and Best Buy ... two subjects that have come up on MNB not directly related to making money in the supermarket arena.  So I'm guessing that your email today is prompted in part by you not being a Star Trek fan.  That's okay.  As I said, I did it today for no other reason than I wanted to.

Part of the problem may be how we define MNB differently.  I've never thought of it as being a newsletter about how to make money in the supermarket arena.  Sure, that can be the result of reading it ... but my goal is to find interesting stores that offer intriguing and provocative business lessons on a wide variety of fronts.  And in this case, if the Nimoy obit causes one person to think about the notion of Infinite Diversity in Infinite Combinations, and what that means in terms how we treat customers and employees, and even how we think about the world we live in, I'm okay with that.

Live long and prosper...

But Bob wasn't satisfied with my response. He emailed me back:

I want you to know that the only reason I participate on your forum is that I want to have others think about how we can influence companies to increase their stock price.  If my (or my clients') investments increase, that is my main mission. For example, you and I are at odds that CVS stop selling tobacco products.  I think CVS is missing the point.  You, on the other hand are on another crusade about this which I think is foolhardy given my mission.

Ah, well ... may fortune favor the foolish. (Extra credit to anyone who gets that movie reference.)

Here's the thing. I think we have different missions. Increasing companies' stock prices is, to be honest, way down on my list of priorities ... we often write here about paying more attention to Main Street than Wall Street.

Sometimes our missions will overlap, sometimes they won't.  That's okay with me.  I hope it is okay with you.

BTW...I got a ton of email from readers who really liked what I wrote on Friday.  I know I can't please all the people all the time, so I don't even try.

Mostly I try to please myself, and hope that enough other people are willing to go along for the ride.

Finally, a word from our sponsor...

Industry Drumbeat


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With a uniquely fast-paced, provocative and entertaining approach, Kevin Coupe identifies the ways in which consumers are changing, the reasons behind these changes (technology, the economy, culture, demographics), how new and unorthodox competitors are altering the marketing landscape, and what companies need to do to find and exploit differential advantages.

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