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    Published on: July 11, 2005

    Interesting pair of stories over the weekend taking a look at on the occasion of the company’s 10th anniversary.

    The New York Times focuses largely on whether or not Amazon CEO Jeff Bezos needs to “find a professionally trained chief executive with a deep background in operations to take the reins.” In essence, the Times seems to suggest that it may be time for the man who conceptualized, founded and directed Amazon during its sometimes troubled decade of existence.

    Certainly Amazon has been less profitable that investors or company management would like, and Bezos can fairly be accused of missteps and miscalculations. But at the same time, while profitability has been elusive, the company has managed to survive the ups and downs of the Internet to become a viable and vital marketing system that has defined e-commerce to a great degree.

    Mark R. Anderson, who writes a technology newsletter, tells the NYT that “Bezos's relentless focus on the customer - at the expense of his other audience, his shareholders - is ‘both Jeff's brilliance and his curse. If you're a long-term investor, you're probably thinking that it will be worth a lot of money to be the Wal-Mart of the online world. On the other hand, if you're the kind of investor who has run out of patience, you're probably wondering whether there's any trained management in place that knows how to get a return on investment."

    Perhaps not surprisingly, the Seattle Times takes a rosier view of Amazon’s growth since its first sale a decade ago. “What began with the sale of a science textbook — its first order — has morphed into an online retail juggernaut that last year sold $218.86 worth of books, music ,toys and other goods every second.

    “But the alchemy that created Amazon — venture capital invested in an unproven retail concept, a stock market that rewarded growth over profits, lucrative stock options to motivate and retain the best employees — may be a once-in-a-lifetime event.”

    Here’s one interesting statistic about Amazon that the Seattle Times reports: “If you had bought 100 shares of Amazon stock in 1997 at $18 a share, it would be worth $39,708 today — a 2,100 percent return.”

    Of course, Bezos notes that he is a bargain – he makes just $81,000 a year, and doesn’t take stock options. (Of course, he also owns about 25 percent of the company – and at current prices, that means he is worth somewhere in the neighborhood of $3.5 billion. That’s a pretty healthy neighborhood.)
    KC's View:
    It is ironic that in certain quarters, a “relentless focus on the customer” can be considered a curse.

    Especially when the person with said relentless focus is a retailer.

    We could use a lot more people in the retailing biz with this approach.

    While Amazon hasn’t been a perfect company by any means, it has achieved what it has through a peculiar combination of timing, ambition and even a touch of arrogance. But it doesn’t seem to be the kind of arrogance or ambition driven by concerns about the people who buy stock, but rather driven by the needs of people who buy products.

    Which seems to us to be exactly right.

    Replacing Bezos with someone who may, in fact, be a better manager would be an enormous mistake, in our view. It would replace leadership and vision with management…which definitely would be trading down.

    There are too many managers in the ranks of retailing who have their eyes on the stock tables, and too few leaders with their eyes on the customer.

    Published on: July 11, 2005

    Stop & Shop Supermarkets announced that it will close four Super G stores in New Jersey after what CEO Marc Smith said was “a thorough review of the operating performance of all of the New Jersey Super G stores.”

    The units will be closed within a month. About 200 full-time and part-time employees are expected to be affected by the moves.

    At the same time, eight southern New Jersey Super G stores are being rebranded as Stop & Shop stores.

    The moves are part of Stop & Shop’s absorption of Giant Food, centralizing operations in Massachusetts.
    KC's View:
    As we’ve said before, Stop & Shop’s biggest challenge will be making sure that centralization does not result in losing touch with local customers.

    Published on: July 11, 2005

    CNN reports that US Secretary of the Treasury John Snow has said that the government is looking to overturn a court-ordered temporary injunction blocking the import of Canadian cattle into the United States.

    Calling the injunction “ill-considered,” Snow said, "The border ought to be open. There's no justification for not having it open. We'd like to see that good Canadian beef coming into the United States."

    The government had decided to eliminate the ban on Canadian beef, but a federal court in Montana sided with a group of ranchers that said letting this cattle into the US would raise the odds on US beef becoming infected with mad cow disease.

    This assessment has, of course, become more complicated now that the first case of native mad cow disease in the Us has been identified in a Texas cow.

    The US government is appealing the temporary injunction later this week.
    KC's View:

    Published on: July 11, 2005

    Michigan-based Meijer has announced its intention to take advantage of Saturday morning’s official publication of “Harry Potter and the Half-Blood Prince,” the latest and sixth book in the enormously popular series, to have a special 12:01 a.m. unveiling and sale of the book in its stores.

    The company will feature a “Midnight Magic” event during which kids can dress up as characters from the books, play games and enter to win numerous prizes.

    And, according to the company, “Meijer will kick off a 24-hour Midnight Magic super sale of spellbinding deals, giving parents a chance to do some shopping while their children immerse themselves in their new book.”
    KC's View:
    We love it when companies take advantage of cultural touchstones such as Harry Potter to build sales and excitement.

    It does more than just make magic. It makes sense.

    Published on: July 11, 2005

    “Word-of-mouth has long been considered one of a supermarket's most valued assets,” Phil Lempert writes in this month’s edition of Facts, Figures and The Future. “The butcher who takes the time to explain how to prepare a certain cut of meat perfectly and the baker who always has a warm cookie ready for the after school treat, have been effective ways to get customers to tell their friends just how great service a particular supermarket offers.

    “Over the past 50 years, we've seen an enormous evolution of consumer power. What started out as backyard discussions over clotheslines where our mothers would discuss their opinions about retailers and products, evolved into 24 hour toll-free consumer hotlines, full-time consumer affairs staffs, letters to the editor and at times, even protests and boycotts.”

    But now, just as the Internet has fundamentally changed ways that people buy things and how people communicate, it also has made possible a new form of communication that can be sliced a number of ways: the Blog.

    “Blogs are now commonplace,” Lempert writes, “and with high speed Web access available on 40 million lines, and to over a third of people on the Internet, retailers and brands are using blogs to create buzz (the new terminology for word-of-mouth) and measure just how new store formats and promotions are being accepted by their customers.

    “A blog is created about every 2.2 seconds. In simple terms, a blog is a web site, where people (and smart retailers and CPG brands) write on an ongoing basis. The latest postings show up at the top, so your web visitors can read what's new first. Then they can add their own comments directly on the blog, or email you.”

    The challenge, Lempert writes, is “to use the technology and relationships with shoppers to build your brand.” And, he says, “Blogs offer a unique opportunity to reach out to shoppers and build relationships and sales by doing the exact same thing that the corner store shopkeeper did 100 years ago - listening to what the shopper has to say.”
    KC's View:
    While we’ve never defined MNB as a blog – in part because there some differences between what we do and how many blogs work, most specifically in the way we edit and shape the “Your Views” discussions – in essence, that’s what we’ve been doing for a lot of years now.

    We mention this because there is a critical factor that can make blogs work for marketers – they tap into people’s passions, and allow for the expression and expansion of those passions. That’s an extremely important function, and one that cannot be underestimated and should not be undervalued.

    Take a look at what Stonyfield Farm does with a number of blogs on its site – addressing issues that it feels are important to its consumers, and creating both community and communication. It’s something that every marketer ought to consider…sure, it has risks, but properly managed and intelligently written, it could be an enormous success.

    We hope more people and companies take a cure from Phil Lempert’s piece and embrace this new way of reaching out to customers.

    By the way, if you want to check out this month’s edition of Facts, Figures & The Future, just go to:

    F3 is published by the Food Marketing Institute, ACNielsen, and Phil Lempert.

    Other stories covered this month include:

    • Key insights into marketing to aging Baby Boomers.

    • The complexities of wine marketing.

    • The impact of healthier eating trends on ice cream consumption.

    • How even sugared cereals are slimming down.

    And much more.

    (Full disclosure: MNB Content Guy Kevin Coupe is a Contributing Writer to F3.)

    Published on: July 11, 2005

    The Retail Forward monthly ShopperScape study takes a look at membership club penetration revealing that:

    • More than half of all primary household shoppers are members of one or more warehouse clubs.

    • Because of its larger store base, Sam’s Club proves to be the favorite club operator, with 32 percent of all shoppers having a membership to a Sam’s Club. That compares with less than a fifth with a membership for Costco (22 percent) and only 7 percent with a BJ’s membership card.

    • While the majority of Up Market and Middle Market consumers belong to at least one warehouse club, only 29 percent of Down Market consumers belong to a warehouse club.

    • Warehouse clubs are most popular among Up Market shoppers across all three of the major players but Up Market shoppers are more likely to favor Costco compared to other shopper segments.

    • Although warehouse club membership skews heavily toward the Middle and Up Markets, Down Market members spend just about as much as Middle and Up Market members when they shop.

    KC's View:

    Published on: July 11, 2005

    Retail Forward’s monthly Future Spending Index suggests that consumers show good intentions about spending in July, with the index rising to 102.8 in July - up from 99.1 in June and the best showing since April 2005.

    “Down Market and Middle Market shoppers are telling us they plan to kick their spending into higher gear in July,” said Steve Spiwak, an economist with Retail Forward. “Indeed, the near-term spending environment should remain favorable as the pluses—primarily job gains and home buying—continue to outweigh the minuses, particularly elevated gas prices.”

    Up Market Households (incomes greater than $75,000), on the other hand, “are signaling less desire to spend at the rapid pace of the past year,” according to the Retail Forward report.
    KC's View:

    Published on: July 11, 2005

    Cold Stone Creamery, the pricey chain of ice cream franchises, was forced last week to withdraw its popular Cake Batter ice cream flavor from store coolers after there were 14 reported cases of customers stricken with salmonella poisoning.

    The US Food and Drug Administration (FDA) said it was working with the company to determine the source of the contamination.

    Consumers were urged not to eat any of the Cake Batter ice cream and to immediately throw it away.
    KC's View:
    A shame, too – because Cold Stone’s Cake Batter ice cream is a fabulous flavor that we actually were craving after seeing (at the behest of our teenaged son) the awful, awful, awful “Fantastic Four” film on Friday night. We stopped by a Creamery, and were disappointed not to find it.

    Salmonella poisoning might not have been so bad after that cinema experience.

    Published on: July 11, 2005

    • Longs Drug Stores reported that its June sales were $447.6 million, up slightly from $445.1 million a year ago. Same store sales were up 0.3 percent.

    KC's View:

    Published on: July 11, 2005

    • Food Lion announced that it is making some organizational moves, shifting some of its vice presidents from one set of responsibilities to another. These included Ty Burns, who is becoming VP of retail operations - Central Division; Gaelo de la Fuente, the new VP of retail operations - Atlantic Division; Scott Harrison, who is now VP of retail operations - Southern Division; John Mercer, the new VP of meat and seafood merchandising; Mark Messier, VP of retail services; Bob Stapleton, the new VP of retail operations - Western Division; and Geoff Waldau, who is becoming VP of merchandising services.

    KC's View:

    Published on: July 11, 2005

    The Food Marketing Institute’s (FMI) announced that its SuperSafeMark® series won the Award of Excellence in the 2005 Associations Advance America program, a national competition sponsored by the American Society of Association Executives (ASAE), Washington, DC.

    SuperSafeMark® offers comprehensive food safety and sanitation training to all levels of supermarket employees, from management to line workers. The program is designed to help facilitate retailers’ ability to combat foodborne illness.
    KC's View:

    Published on: July 11, 2005

    The government said last week that the number of cell phone subscribers in the United States has reached 181.1 million – exceeding the number of US land lines (177.9 million) for the first time.

    Ten years ago, there were just 25 million cell phone subscribers. This year, the number of expected to pass 200 million.

    And one more statistic worth noting – about six percent of phone customers have decided to drop their land line services and use only cell phones.
    KC's View:

    Published on: July 11, 2005

    You may or may not have noticed that writer Evan Hunter died the other day at age 78.

    You may know him better as Ed McBain, the name he used when writing more than 50 87th Precinct novels.

    Hunter was a terrific writer. Evocative, especially in his police novels, which inspired shows like “Hill Street Blues” and “NYPD Blue.” The kind of writer who inspires other writers to punctuate with words, to create indelible pictures in the mind of the reader.

    Speaking of indelible pictures – he also wrote the screenplay for Alfred Hitchcock’s “The Birds.”

    All of which means Hunter really isn’t dead…because he lives on in works we’ll all have access to forever.

    Which is as much as any writer can hope for.
    KC's View:

    Published on: July 11, 2005

    We got the following email in response to our story about the new talking wine label story we did last week:

    I’m sorry, but there are good uses for technology & bad uses for technology, and this falls into the bad – bordering on ridiculous.

    Did they ever see the after school special for RIF?? Reading Is Fundamental. Has our society become that lazy we can’t read?

    The last thing we need is more noise, especially when the answer could be printed on the back label... with a peel off to a little booklet include the suggested meals & maybe a recipe suggestion. If that is not classy enough, put the information on a laminated storybook card with a gold tassel around the neck of the bottle.

    Sometimes I think evolution is going in reverse.


    We speculated last Friday about a currently slump in box office figures being experienced by Hollywood, which led one MNB user to write:

    I think a big part of the reason Hollywood is in a slump right now is reflected in your "Observations" today - all three of the movies you mentioned were remakes. The Honeymooners, Dukes of Hazzard, The Pink Panther, Dark Water, Bewitched, War of the Worlds, Fun with Dick and Jane... all the "blockbusters" coming out of Hollywood right now are remakes. Heck, I don't even need to go see Mr. & Mrs. Smith - I already saw it years ago, when it was called Prizzi's Honor.

    Hollywood should pay attention to the progressive ideas about food retailing and marketing you support on MNB, because they apply to the film industry as well: don't package old ideas in a new wrapper and expect customers to shell out more for it, and don't mess too much with their tried and true favorites, because they won't go for that either. We love our classics, but we appreciate true innovation at the same time.

    Coincidentally, I read that Michael Bay wants to remake "The Birds". Do you think it's possible to have a filmmaker disbarred?

    We wish.

    Then again, when we read that crap like “Fantastic Four” generates more than $50 million in ticket sales during its opening weekend, we figure that we’ve completely lost touch with reality.

    We have to assume that it was mostly the hard core comic book audience that saw the movie over the weekend – look for its numbers to go way down next weekend. (That’s seems to be what happened to “War of the Worlds,” where ticket sales were down almost 60 percent this weekend because some of the lousy word of mouth caught up with it.)

    This may seem to be about movies. But it also is about marketing in general. And worth paying attention to.

    We wrote glowingly about the Apple Store last week, which prompted one MNB user to respond:

    In response to your Apple Store item today, when we recently visited the Apple Store in Kansas City, my 14-year-old son exclaimed, "This is the coolest store I've ever been in," notable because 1., he's not easily impressed and 2., he quite often complains about our family having a Mac instead of a PC like most of his friends. Apple certainly knows what it's doing with these stores.

    Finally, we got the following note from MNB user Art Turock about our “No Silence” note about the London terrorist attacks last Friday:

    I appreciate your making the war on terror visible in MNB. It's all too easy to compartmentalize our lives to focus on daily routines and forget our responsibility as US citizens. We need to condemn terrorism as well as express support for the troops and policies that contribute to winning this war.

    And there's more than simply speaking out…Parents and teachers are responsible for educating our nation’s youth about America’s rich history of freedom and to insure the responsibilities of citizenship become ingrained. Businesses are the potential training grounds for the practice of entrepreneurial freedom by creating cultural norms that teach ethics/empowering values while pursuing far-fetched visions that nudge the world.

    Our responsible practice of freedom is a powerful way for those of us not in the military or intelligence community to combat terrorism.

    We got a couple of notes on Friday questioning our addressing the terrorist attacks on MNB; some folks thought it was inappropriate.

    To be honest, we debated it with the staff. (Which means we spent time talking to ourselves.) Here’s where we came out on it.

    We all spent a lot of time last Thursday watching television and seeing what happened in London played out in real time. To ignore it – to not even mention it – seemed disingenuous.

    If MNB stands for anything, it is that we can’t live and work in a vacuum, that silos of any kind prevent us from achieving our potential – personally or corporately.

    It’s no way to live. Or work.

    Art Turock is right. Businesses have the ability to nudge the world a bit, to create a sense of entrepreneurial freedom that can empower people.

    To go back to a point we made earlier, this requires leadership, not management.

    Last week’s events remind us that in some sense, our obligations go beyond just making money.
    KC's View:

    Published on: July 11, 2005

    • MNB reported recently that in Yelm, Washington, the city’s mayor, Adam Rivas, has toughened restrictions already in place about mentioning Wal-Mart during city council meetings. The original restrictions were put in place after Rivas and the council got tired of local citizens expressing their displeasure about the retailer’s application for a building permit and asking that a moratorium be placed on the building of all big box stores.

      The city’s attorney said that keeping the rhetoric to a minimum would allow the council to seem unbiased when it finally has to make a decision. But some residents, at least, question whether in a democracy it is appropriate to shut down discussion about an issue of such importance.

      Now, the American Civil Liberties Union (ACLU) has accused the town of unconstitutional behavior in banning the use of the words “Wal-Mart,” “big-box stores,” and “moratorium” during city council meetings.

      However, while the ACLU says it wants to turn the public spotlight on the town, it also says it has no intention of suing the city council.

    • The Washington Post reported yesterday that Wal-Mart has hired the former chief lawyer at the US Department of Labor to defend it against charges that it retaliated against purported whistleblowers.

      What makes this case interesting isn’t just that its new legal eagle has an impressive pedigree – he is Eugene Scalia, son of US Supreme Court Justice Antonin Scalia. It also is because Wal-Mart CEO Lee Scott has made a point of emphasizing that the company has an open door policy – anyone can complain about anything without fear of retribution. This has been an important part of Wal-Mart defense as it deals with external and internal public relations difficulties. That guarantee, the Post notes, “could be seriously undermined if the employees win their cases.”

      There are three specific related cases high on Wal-Mart’s radar screen at the moment. One has to do with Jared Bowen, who claims to have been fired after he blew the whistle on former vice chairman Tom Coughlin’s alleged misuse of corporate funds (the company says that Bowen was complicit in Coughlin’s misdeeds, and now also accuses Bowen of lying about his college grades when applying for his job there); another has to do with a manager who claims to have been fired for having reported “abysmal” working conditions at factories in Central and South America that supplied goods to Wal-Mart (the company says that he was fired for inappropriate fraternization with an employee that reported to him); and the third is related to an executive who says he was fired for reporting misuse of company resources by superiors (the company says that he threatened other employees and concealed a felony conviction on his job application).

      One Wal-Mart critic, Chris Kofinis – a former Democratic political operative now working for an organization called Wake Up Wal-Mart – specifically criticized the hiring of Scalia. “Only in Wal-Mart's America can they think it's right to hire Eugene Scalia to defend them against the same whistle-blower law he was supposed to help enforce at the Department of Labor,” he said.

      Scalia, however, told the Post, “I don't see anything unusual in a company seeking out the expertise of somebody who became familiar with the requirements of a new law, while serving as a federal law enforcement official.”

    KC's View:
    We don’t know what to make of any of this. Except that Oscar Wilde had it right: “The pure and simple truth is rarely pure and never simple.”