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    Published on: September 16, 2003

    In Monday Night Football action, Bill Parcells' Dallas Cowboys upset the New York Giants in overtime, 35-32.
    KC's View:

    Published on: September 16, 2003

    In a story about the economy yesterday, we wrote that "the biggest problem for the economy is the fact that so many jobs have just disappeared - companies have folded, and hundreds of thousands of positions have vanished with them…leaving just as many people unemployed, uncertain, and unaffected by claims of a rebound circulated by official government agencies."

    We also wrote, "We know we'll probably get email on this, accusing us of being pessimistic about an economy and country that are the best in the world. And we don't argue with that characterization. It's just that we know too many people who fit into the "unemployed and uncertain" mold, and worry and that there is no sign on the horizon that things are going to get better."

    Well, we were right. We did get email…

    One MNB user wrote:

    Kevin: you are correct in this. Just last week you had an article about the folks losing their jobs in Buffalo. Thousands of IT jobs are going overseas and the people losing their jobs have to train their replacement if they want a severance package. I am in month 4 of unemployment (with no unemployment insurance because I was an independent contractor) and no job in site. I have other friends throughout the US in the same situation. I apply on line, apply to Ads in the newspaper and have contacted all my friends and acquaintances, which has led to nothing so far. What I have done is try to be proactive and am taking classes to enhance my skills.

    No, your aren't being pessimistic. The economy may be turning slightly around but employers are still afraid to hire unless pushed to the wall. People still working at the company have to pick up the slack for those that were lucky enough to find another job. President Bush can have his numbers people put out all the press releases they want but a person that is unemployed will most likely go out to the poll and vote against him in the next election. The other thing that will hurt Bush is his tax package. You now are seeing all over the news about if the top 1% getting the tax break would give back that money we would be able to pay for the $87 billion he is asking for. The people that are saying that are the ones receiving the tax break. Smart on their part.

    MNB user Mark Heckman wrote:

    Kevin, you will get no argument from me concerning your view of the job market. The creation and/or restoration of jobs continues to lag significantly behind other key economic indicators, (stock market, corporate profits, GDP growth, durable goods, etc), which are generally trending positive. Unfortunately, much of the good news from the corporate profit picture is driven by enhanced productivity, which, at least in part, stems from fewer employees doing more.

    Moreover, this recent downturn appears to have hit the "white collar executive" community with an extra dose of severity, especially in retail food.

    Many of these lost corporate positions will not likely return soon with the ongoing competitive pressure from Wal-Mart and other formats, which dictates reduced SG&A and a reduction of corporate executive overhead.

    Also be mindful of the magnitude of "new" positions that were created in the "dotcom" world, that evaporated just about as fast as they were created when the bubble burst a few years back.

    It's a new industry environment for sure.

    Yet another MNB user wrote in about the same subject, but reference another article that talked about how there seems to be some feeling among shareholders that Ahold's board ought to resign en masse because it was asleep at the switch as the company's troubles developed.

    I work in the Information Technology department for Safeway, Inc., and my last day here is the end of next week. Several hundred of my co-workers, including myself, lost our jobs because sales are down, and the stock price is down, at Safeway.

    When I read in your article that "Furthermore, there is some sentiment among shareholders that the entire board should resign. The feeling seems to be that the board may have been asleep at the switch in not paying greater attention to corporate governance, and therefore ought to be held accountable.", I thought "Bravo!".

    I've been asking (mostly to myself), why haven't the executives, from Steve Burd on down, been taken to task by the stockholders for their bad decisions, starting with the centralized purchasing system they've been pushing for the last two years. This system is probably a very large reason that Dominick's has been failing (customers aren't able to find the same products that they used to find, because the products are being purchased in Phoenix or Denver or Pleasanton, not in Chicago).

    When I was younger, I understood that the executives at a large company were paid the big bucks because they had to shoulder the responsibility for good or bad decisions, while the lower ranks were paid less, but they were "protected" from the ramifications, good or bad, of those decisions. I guess I understood wrong. These days, the only ones, at least at Safeway, who suffer the consequences are those of us who are living paycheck-to-paycheck, not the top ranks with hundreds of thousands of shares of stock in reserve.

    Another MNB user wrote:

    What I find even more troubling is reading about the number of jobs that companies, such as AT&T, Citi Corp, IBM, Delta are taking overseas - customer service, accounting departments, technical jobs, engineering jobs. I understand the need for companies to cut cost, but when jobs are being taken away from middle class, blue & white collar US citizens who pay taxes, you wonder about the future of the US economy overall.

    And MNB user Mark Rodrigues wrote:

    The bigger issue is that Bush Administration, which inherited a $230 billion surplus is now projected to incur a $550 Billion DEFICIT. The War and Terror only explains a small portion of this. The question is: What impact will this deficit financing have on the U.S. economy and its ability to compete globally?

    And then we got a letter about Tops Markets' September 11 layoff of its entire sales and marketing departments:

    I couldn't believe that any company would announce layoffs on September 11th and had shared the news about Tops with a friend from Buffalo. Here's what she said:

    "It's the absolute depth of cynicism to lay workers off on a guaranteed heavy news day, particularly when the news is so painful."

    I guess I'm not a cynic, since this rationale completely flew past me. Yet I know all about timing press announcements to get the least coverage as in the late-day-Friday-food-recall syndrome! But she has to be right. Why else would any management team pick September 11th for any type of announcement?

    Maybe it's what we do for a living, but we find that we spend a lot of time in the depths of cynicism…

    (It's only stories like "The Women of Playboy" that keep our spirits up…)
    KC's View:

    Published on: September 16, 2003

    • Tesco reported a 17 percent increase in sales, to the equivalent of $21.9 billion (US) for the first fiscal half, with same-store sales up 6.3 percent - double the company's target for the period. Tesco also posted a 21 percent increase in pre-tax profit, to the equivalent of $1.06 billion (US).

    KC's View:

    Published on: September 16, 2003

    • The Associated Press reports that Procter & Gamble Co. has begun selling what is called "fair trade" coffee, a Mountain Moonlight brand that is part of its Millstone Signature Collection and that is more expensive that traditional coffee.

      Fair-trade organizations say they work with companies to bypass middlemen and negotiate prices with coffee growers to return a greater percentage of the retail price to producers, including poor growers in Central America, South America and Africa.

    • Hershey Foods reportedly will spend roughly $30 million in advertising early next year to support the launch of several line extensions - including Swoops, which can best be described as chocolate Pringles.

    KC's View:

    Published on: September 16, 2003

    In an effort to promote its experimental Go Active Meal, a $4.99 adult version of the Happy Meal that includes salad, a bottle of water, a clip-on pedometer, and a 10-page booklet with exercise tips, McDonald's has hired Bob Greene - better known as Oprah Winfrey's personal trainer - to promote the new product.

    The program is being piloted in several Indiana cities.
    KC's View:
    Greene certainly has a lot of experience in helping people lose weight. He's worked with Oprah to lose weight. And helped her again. And again. And again. And yet again….

    Published on: September 16, 2003

    Surprising news from The Wall Street Journal, which reports this morning that average sales at some 40 Krispy Kreme stores opened between Sept. 2002 and April 2003 were about $35,000 per week in the 13-week period ended Aug. 4 - less than new stores usually generate, and less than investors expect from the company.

    In addition, Great Circle Family Foods, the company's biggest franchisee, reportedly saw its Krispy Kreme sales drop 10 percent during the most recent quarter.
    KC's View:
    Could this be the obesity/nutrition backlash having an impact?

    Maybe. Then again, it could be an anomaly…

    (How's that for pungent and decisive commentary?)

    Published on: September 16, 2003

    As part of a voluntary reorganization plan, Snyder’s Drug Stores announced that it will sell or close its Drug Emporium subsidiary and recapitalize its Snyder’s Drug Stores chain as what it termed "a strong and going concern."

    There are 77 corporately owned and operated Drug Emporium stores affected, in Pennsylvania, New Jersey, New York, Michigan, Ohio, Missouri, Oklahoma, Kentucky and Wisconsin. Several independently owned and operated Drug Emporium stores in Texas and West Virginia are not impacted.
    KC's View:

    Published on: September 16, 2003

    Wal-Mart Stores Inc. announced yesterday that the National Labor Relations Board (NLRB) has ruled that a group of employees at one of its Maryland stores was not a legitimate bargaining unit, and that Wal-Mart did not have to allow a union election.

    Reportedly, the NLRB said that the 50 employees pushing for a vote was not a big enough subset of the store's 400 employees to make an election appropriate.

    The United Food and Commercial Workers (UFCW) union filed the union election petition as part of its extended battle with Wal-Mart to try and unionize its employees. It is a battle, of course, that Wal-Mart continues to win.
    KC's View:
    It's going to be a great, extended battle. And more and more, we hear that there are an awful lot of people in the mainstream supermarket business who are, for the very first time, rooting for the UFCW.

    Published on: September 16, 2003

    Tesco has opened a new superstore in the UK that devotes nine of 27 checkouts to self-checkout technology, the biggest commitment that Britain's number one grocer has made to self-checkout.

    The decision comes after Tesco tested 20 self-checkout lanes in a total of five stores during the past year. The company reportedly also has committed to another 77 checkouts in a total of 16 stores.

    Retail Week reports that Tesco continues to describe its self-checkout moves as a pilot program. “We are looking at how far we can push the boundaries of self-checkout,” Tesco Service Choice project manager Stine Hope told the magazine. “We are asking ourselves how many self-checkouts we can actually put in.”

    He also said that self-checkout will not cost people's jobs. “The people that would be manning the tills will be used to give better service to customers. In any case, we’ll still need attendants to oversee the self-checkout tills. We see it as an opportunity to improve our service to customers.”
    KC's View:
    Words like those last ones make our heart go pitter pat. It’s nice to hear a retailer come out and say what every retailer ought to be saying - that self-checkout is an opportunity for greater customer service and redeployment of people, not a chance to save money and cut out the human connection.

    Published on: September 16, 2003

    The Washington Post reports that Illinois Gov. Rod Blagojevich has ordered the state's special advocate to look into buying inexpensive medications in Canada and bringing them back over the border for almost a quarter-million state employees and retirees. The Democratic governor made the move because of what the Post describes as "budget-breaking increases in prescription drug bills" of more than $340 million, but if he follows through, it will put the state "in direct conflict with federal regulators and signals a dramatic escalation in the civil war over U.S. drug prices."

    The US Justice Department currently is trying to shut down Rx Depot, a retailer that brings Canadian prescription medications into the US and sells them at lower prices than they would sell for in the US. The argument against the import of such drugs, beyond the fact that it is illegal, is that the drugs are not always the same as those sold in the US, do not have the same safety measures and approval processes applied to them, and are potentially dangerous.

    Those who support the import of such drugs say that drug prices in the US have been driven to unreasonable heights because pharmaceutical companies and lobbyists have too much influence over the system.

    "The status quo on prescription drugs is intolerable and unacceptable," Blagojevich said. "I am optimistic we will be able to save literally millions of dollars for the taxpayers and set a precedent other states will follow," the governor said.

    Both the US House of Representatives and the Senate have approved different 10-year, $400 billion drug plans, but the two houses of Congress have not been able to resolve their differences and send a bill to President Bush for his signature.
    KC's View:
    When we saw this story, we kept thinking of one of the ultimate Chicago movies, "The Untouchables," and the scenes with bootleg booze being smuggled in over the Canadian border. Maybe what the Justice Department needs is a modern-day Elliot Ness…

    The problem is that it is hard to justify the costs of medications in the US, which makes the US position hard to defend. It's also a story that prompts a lot of passionate email…as we've seen here on MNB since we had a story about Rx depot last week.

    Published on: September 16, 2003

    There are numerous reports this morning in papers ranging from the Chicago Sun-Times to The Los Angeles Times about the EPC Symposium in Chicago, which is featuring a wide range of presentations by field testers of Electronic product Code technology, as well as the Auto-ID Center of the Massachusetts Institute of Technology (MIT).

    "The symposium is intended to be a bit like a starting pistol for this new technology," Kevin Ashton, executive director of the Auto-ID Center, tells The Associated Press. "It's where we cross the line from research to reality."

    However, while companies like Tesco, Wal-Mart and Procter & Gamble have enthusiastically embraced the new technology, there are reports that some companies are feeling pressured to implement it, and are concerned that they will end of sharing information with suppliers and competitors that they'd rather not share. In addition, red flags have been raised by privacy advocates, who believe that RFID technology that reads EPCs will be used to track people and their individual behaviors.
    KC's View:
    We're not surprised that some companies feel pressure to implement this technology, but that, unfortunately, is the price of progress.

    Published on: September 16, 2003

    Crain's New York Business reports that Wal-Mart is shopping for sites in New York City, specifically on Manhattan's Upper West Side and Brooklyn. The move is part of the Arkansas retailer's effort to expand into urban markets; while it has stores in all 50 states, it does not have any stores in New York City.

    Among the locations reportedly under consideration: a former Kmart in Brooklyn, a retail mall that will be part of the new Penn Station at the Farley Post Office on Eighth Avenue and West 33rd Street, and a location at Pier 40 at West Houston Street.

    "We are always looking to either go into new markets or to expand in existing markets," Wal-Mart community affairs manager Mia Masten told the NY Daily News yesterday. "We don't have any stores in Manhattan right now."
    KC's View:
    We could be wrong on this one. We were, after all, born in Greenwich Village and have a somewhat parochial view of New York. But we think that by moving into New York, Wal-Mart might end up with those little town blues. It'll be fun to watch the strong unions that exist in New York go toe-to-toe with the Bentonville Behemoth…and in this battle, we wouldn’t bet against the unions.

    It is possible that Wal-Mart might be able to make a go of it in Brooklyn and Manhattan…but it ain't gonna be easy.

    Published on: September 16, 2003

    In what some perceive as a naked attempt to strike back at Wal-Mart for being restrictive about what magazines it sells in its stores, Playboy magazine has issued an open invitation to female employees of the company to submit pictures of themselves either nude or in bikinis so that they might be considered for a "Women of Wal-Mart" pictorial.

    Playboy said in a statement that it "wants Wal-Mart's sexiest assets to roll back their clothes and pose nude. It doesn't matter if the employee is a part-time cashier or a corporate officer, as long as she is a current Wal-Mart employee who is 18 or older." This follows a promotion earlier this year in which Playboy asked readers to submit their "Wal-Mart sexcapades," which reportedly generated more than 900 submissions. Some of them are on the company's website, with titles such as "Clean-up in Women's Intimates" and "Stockroom Boom".

    Wal-Mart hardly is the first institution to be targeted by Playboy. In recent months, the magazine has featured "The Women of Starbucks" and "The Women of Enron."

    Wal-Mart spokeswoman Sarah Clark told Reuters that the offer "is something that we have never even considered. If there happens to be any interest from an associate (to pose), we will look into it at that time."
    KC's View:
    We're sure they will look into any associate who poses…and then find a reason to fire their naked butts ASAP.

    Wal-Mart doesn't seem like the kind of company that would have a sense of humor about this project (unlike, say, MNB)…it conflicts too much with its wholesome, Middle- America image.

    We also suspect that the pictorial will be heavy on the part-time cashiers and a little light on the corporate officers…though one can always hope.

    Ultimately, management at the Bentonville Behemoth shouldn't worry. People only read Playboy for the articles…