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    Published on: April 12, 2007

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Or, to simply read the commentary in text form, continue below…

    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, brought to you by Webstop, your first stop for retail website design services.

    Last week on MorningNewsBeat Radio, I was talking about various kinds of technological breakthroughs – such as Wi-Fi and cell phone service on airplanes – and noting the upside and downside of these sorts of advances. And, I commented that, hard as it is to believe, not everyone lives and dies based on Wi-Fi and constant and state-of-the-art contact with the outside world. Proof of this, I said, is one of my neighbors, who doesn’t have cable television and still uses dial-up AOL for her Internet. I believe I said something glib like, I didn’t know any of my neighbors was Amish.

    To which MorningNewsBeat user Dave Tuchler responded:

    “You seem to infer that your neighbors are less technologically capable because they don't have cable TV. My household also doesn't have cable -- we get our TV the old-fashioned way - thru an aerial antenna. But it's not because we're afraid of technology -- it's a conscious decision to limit unwelcome content coming thru the tube, as well as avoiding the 'attractive nuisance' of 50 additional channels to distract us from doing something productive. This has probably not helped our popularity with our daughters, but they've gotten used to it and seem to be surviving.

    “In this case, if cable companies were really interested in getting my business, they would offer more flexibility to customize programming and manage pricing accordingly.”

    This point about the cable companies actually is a good one. In the scheme of things, it seems to me that the circle of hell reserved for, say, tobacco company executives also should have a special section for cable company executives and the people who make up the rules for cellular phone contracts. There are probably a few other folks that I’d group in there, but I can’t think of them right now.

    That said, I have to admit that while Bruce Springsteen was actually understating the issue when he sang about “57 Channels & Nothing On,” I also am glad they’re there and I don’t want to live without any of them. I don’t want to live without SportsCenter or Baseball Tonight or even the women’s beach volleyball you can find on ESPN in the middle of the night. I don’t want to live without “Hardball” on MSNBC or C-Span or “The Daily Show” or “The Colbert Report” on Comedy Central. And I definitely don’t want to live without “The Sopranos,” though I guess I’ll have to get used to that pretty soon. I like knowing that the whole world is there for the viewing, even if I don’t want to watch it.

    Now, I’m aware that this makes me sound a little shallow. Actually, Mrs. Content Guy is sitting across from me, and she says it makes me sound incredibly shallow and like a spoiled Yuppie. I disagree with her on this, mostly because I’m too old to be a Yuppie. (What do you call an aging Yuppie anyway? Is there a new catch phrase or acronym that I’m not aware of? Write in and let me know – and if someone comes up with something unique and preferably funny, they’ll win a special limited edition MorningNewsBeat t-shirt.)

    Maybe it is a sad commentary on my life, but this is the world I live in. This is not to denigrate people who don’t have cable or high-speed Internet, though from where I’m sitting, they might as well be living in a cabin in the woods, typing on a manual typewriter, using a fireplace for heat and, when they talk about the horsepower of their vehicle, they’re really talking about the power of their horse.

    I’m not denigrating them. I just don’t understand them. I can’t help it. I’m just a 52-year-old, possibly incredibly shallow man who is in love with his iPod, his Wi-Fi, his cable television and his laptop - because they give me access to so much that I might not have access to otherwise.

    If I’m addicted to anything, I’m addicted to access.

    But here’s the lesson. When it comes to being addicted to access, I’m strictly minor leagues. This younger generation is generally far more savvy than I am about how and where and when to gain access to all that the world has to offer. Remember the younger generation that will be your core customer in just a few years. Research shows that they operate according to the three second rule – they give a web page three seconds to load. If it doesn’t do it in those three seconds – one, two, three – they move on.

    In the future, that’s the center of the marketing bullseye.

    Aim well, aim carefully, and above all, aim frequently.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: April 12, 2007 carries an interview with Safeway CEO Steve Burd, in which he addresses the nation’s health care crisis. Excerpts:

    • “Many Americans are looking for a quick fix. If I can take a pill or have a stent rather than change my lifestyle, that sounds easier. As I talk with policy makers, only a few seem to really understand the role of behavior in health-care costs. Most policy makers believe that solving the coverage problem is going to cost an enormous amount of money and that’s why it hasn’t been dealt with. Even people who thought behavior mattered believed that you had to make a big investment today and wait five to 10 years to begin experiencing the savings. The big surprise is that’s not the case.

    “When we redesigned our health plan to reward people for healthful behaviors and prevention—such as an annual physical, a colonoscopy, regular mammograms, to name just a few, if you’re diabetic you control your blood sugar, if you’re overweight, you make a commitment to lose those extra pounds—those behavioral changes will clearly affect your health, clearly affect your longevity, and lower your costs and our costs.”

    • “We saved 15 percent of our health-care costs the first year, flattened our costs the second year and rewarded our employees with a premium reduction of 25-34 percent. We’ve been paying for 100 percent of preventive care. But if you’re not getting annual physicals, then you’re not going to gain a financial incentive, so effectively your insurance premium with us will go up. It’s not just that we suggest you do this; there’s a strong financial incentive for you to behave in your own best interests. And, we continue adding incentives in our health-care plan. As a result, we believe that we can continue to improve the quality of care for our employees, make them healthier with some of our wellness programs, and in fact, continue to drive costs down.”

    • “I think there’s a natural alliance between business and labor on this issue, and there’s been a sea change. This is clearly a nonpartisan issue. The reason business is getting engaged is that costs are rising and it’s affecting global competitiveness. Labor leaders are engaged in this issue because health-care cost increases are eating away at their ability to get wage increases. Last year alone, health-care cost increases explained 50 percent of the rise in the consumer price index.

    “While we must always be competitive, I’m now advocating, along with union leaders, that we fundamentally change the rules of the game. That will not only drive health-care costs down and get everyone covered, but it will also improve the competitive landscape. When I talk to business leaders, I have yet to find a CEO who doesn’t agree with the notion that everyone should be insured. That was not true 10 years ago.”

    • “Besides helping our employees to stay healthy, we’re helping our customers identify foods that are particularly healthy for them to eat. Some of the healthiest foods are unbranded fruits and vegetables, so we’ve put signs in our produce section with notes from you, such as, ‘Did you know that these tomatoes are high in lycopene, which may reduce your risk of breast cancer and prostate cancer?’ ‘Did you know that these blueberries may improve your memory?’ You’re our field guide. I envision a day when insurance companies give families discounts on their insurance for eating healthier foods.

    “There’s no question that this problem is going to get solved if we address the root causes. Rarely in a lifetime does a problem this big, this complex, surface that you can sit around a water cooler and say: you know, we can solve this one. Prevention and behavior matter. They are the Holy Grail of a health-care solution.”
    KC's View:
    We’d like to believe that organized labor shares Burd’s commitment to changing the health care equation, but we suppose that the ongoing negotiations in Southern California will tell us all more about that.

    While we’re open-minded about the route, it seems to us that the destination is inevitable – that prevention and behavior and accountability must be a part of any successful approach to health care.

    Published on: April 12, 2007

    The Los Angeles Times reports this morning that there has been a change that has affected the negotiating position taken by Southern California’s three top grocery chains – Albertsons, Ralphs and Vons – since the last time they had to hammer out a contract with the United Food and Commercial Workers (UFCW).

    Back in 2003, they argued that they needed wage and benefits concessions because non-union Wal-Mart was seen as a looming threat, about to enter the market with dozens of supercenters. But since Wal-Mart never had the expected impact on the marketplace, the Times notes, the grocery chains are at a bit of a disadvantage this time around: “As promised, Wal-Mart in recent years opened some Supercenters, built distribution facilities and fought neighborhood and labor activists for the right open more. But it hardly stirred the Southland grocery scene. In all, Wal-Mart has garnered less than 1% of the grocery dollars spent in Southern California and 3% across the state.”

    Of course, that doesn’t mean that competition has gone away – in part because Wal-Mart hasn’t given up on its hopes for the Southern California market, and there remains another looming nonunion threat – Tesco, which expects to start opening stores there before the end of the year.
    KC's View:
    If anyone at the UFCW really thinks that Wal-Mart is a lesser threat to the supermarket chains than it was four years ago, then they simply aren’t paying attention.

    Published on: April 12, 2007

    The Sacramento Bee reports that the US Department of Agriculture (USDA) has said that a cow imported into the United States from Canada in 2002 was born in the same herd as another animal that was diagnosed two months ago as having bovine spongiform encephalopathy (BSE), better known as mad cow disease.

    The USDA says that the imported cow was slaughtered before it was 30 months old, and showed no sign of having BSE. It is believed that meat from the cow did enter the US food supply, though USDA also said that the chance of it posing any threat to human or animal health was “negligible.”

    Canada has had nine cases of confirmed mad cow disease since 2003, while the US has had three.
    KC's View:
    We suspect that there will be some folks who may find the word “negligible” to be something less than reassuring.

    We are inclined to believe the USDA on this one, though we just think that there are too many holes in the system.

    Published on: April 12, 2007

    In Canada, the Globe and Mail reports that while Wal-Mart has enjoyed strong success north of the border, one exception has been its Sam’s Club membership warehouse format – there are just six in Canada, with no plans for any more.

    To a great extent, the Sam’s problems can be traced to the enormous popularity of Costco in Canada, which has 71 stores there, which is perceived as “owning the space,” according to one analyst. Not only does Costco seem to have a strong connection to what Canadian shoppers want, but its personnel policies – Costco is perceived as paying its employees more and offering more benefits than Wal-Mart – are seen as more politically and culturally correct by many shoppers.

    Mario Pilozzi, CEO of Wal-Mart Canada, has tried to put a happy face on the Sam’s problems. "At this point, frankly, the Sam's business is not what we would like it to be," he recently said at an analysts’ meeting. "However, there have been some very, very encouraging signs." For the moment, however, the company seems to be more focused on building supercenters than membership clubs.
    KC's View:
    We find the observations about political and cultural correctness to be particularly interesting, because it seems like this may be more of a prerequisite for retailers in the future.

    Published on: April 12, 2007

    Weis Markets Vice Chairman Jonathan Weis announced that the company would invest $72.5 million in its growth program over the next twelve months, with two-third of the funds to be devoted to store construction.

    Weis said the company invested $100 million its capital program in 2006, nearly double its 2005 investment.
    KC's View:

    Published on: April 12, 2007

    Former New York City Mayor Rudy Giuliani, campaigning for the Republic presidential nomination, reportedly had a moment that recalled the time 15 years ago that then-President George H.W. Bush expressed amazement at scanning technology long after it became commonplace in supermarkets.

    In Alabama, Giuliani was asked if he knew how much a gallon of milk and a loaf of white bread cost. “A gallon of milk is probably about a $1.50, a loaf of bread about a $1.25, $1.30,” he replied.

    The Associated Press reports that “a check of the Web site for D'Agostino supermarket on Manhattan's Upper East Side showed a gallon of milk priced at $4.19 and a loaf of white bread at $2.99 to $3.39. In Montgomery, Ala., a gallon of milk goes for about $3.39 and bread is about $2.”

    Giuliani did better when asked how it cost for a gallon of gasoline. "Gas, I think, is $2.89," he said.
    KC's View:
    All the men and women campaigning for the presidency can probably be excused for not knowing how much it costs for milk and bread, though at this point you’d think that before one hits the campaign trail, the candidates would be briefed on such things.

    Published on: April 12, 2007

    The annual report issued by NACS, the association for convenience and petroleum retailing, says that “convenience store industry sales surged 15.0 percent to reach $569.4 billion in 2006, continuing a four-year run of extraordinary growth, with industry sales almost double the 2002 total of $290.6 billion.”

    However, “despite sales topping the half-trillion-dollar mark for the first time in history, industry profits in 2006 decreased 23.5 percent, falling to $4.8 billion. This decrease was largely attributable to a drop in motor fuels margins and the continuing escalation of credit card fees, which now surpass industry profits.”

    Other statistics from the report:

    • The $74.1 billion increase in industry sales was the largest yearly increase ever recorded, fueled by a 17.9 percent surge in motor fuels sales, which rose to $405.8 billion.

    • In-store sales also showed strong growth, rising 8.3 percent in 2006, surpassing the overall sales growth of virtually all other competing retail channels and surpassing the overall retail sales growth of 5.0 percent in 2006 reported by the U.S. Department of Commerce. Industry merchandise sales rose 8.7 percent, while foodservice sales rose 5.0 percent.
    KC's View:

    Published on: April 12, 2007

    • Good story in Promo about how Coors Brewing Co. “is revamping its marketing strategy to target African-Americans and Hispanics in an effort to boost beer sales,” which it says is a simple recognition that “African-Americans and Hispanics make up about one-third of the U.S. population.”

    • Meijer reportedly has decided to start selling reusable, nonwoven, plastic bags in June. The company says that the company currently hands out 30 million bags every month.

    Interestingly, published reports say that Canada’s Metro introduced reusable plastic bags in January 2006 – and since then, has sold more than 1.7 million of them.

    • Famima, the Japanese-owned convenience store chain operating in Southern California, reportedly has opened a new store in Long Beach, California, while simultaneously closing its Westwood location.

    • Nestle SA reportedly has agreed to buy the Gerber baby-food brand from Swiss drugmaker Novartis AG for $5.5 billion in cash.
    KC's View:

    Published on: April 12, 2007

    • Costco Wholesale said that its total sales in the five weeks ending April 8 rose 11 percent to $5.94 billion, with same-store sales up six percent.

    • Target Corp. reports that its five-week same-store sales, ending April 7, were up 12 percent.

    • Carrefour, the world's second biggest retailer, reports that its first quarter sales were up 5.2 percent to the equivalent of $28.8 billion.
    KC's View:

    Published on: April 12, 2007

    • Family Dollar Stores has named Kenneth T. Smith, currently its vice president for finance, to be its CFO. He succeeds R. James Kelly, who has been named the company’s president/COO.
    KC's View:

    Published on: April 12, 2007

    Kurt Vonnegut, author of such American classics as "Slaughterhouse-Five,” "Cat's Cradle," and "Breakfast of Champions," died Wednesday night in New York City. He was 84.
    KC's View:

    Published on: April 12, 2007

    We’ve had a lot of stories and emails about Wal-Mart’s surveillance activities and reaction to them. One MNB user wrote:

    If there is a Federal probe of Wal-Mart’s security activities, there’s going to need to be a probe of all large companies with security departments as what Wal-Mart is doing is not unusual in the corporate world. The company I worked for worked in much the same way. Since Enron, the government requires all electronic correspondence and business information to be retained the same as any paper. As employees can (and do) send confidential information to friends and competitors (sometimes inadvertently, but not usually), any company would be foolish not to have rigid security requirements. All companies need to be very paranoid about their security and keep a very tight reign on their proprietary information. Any company as large as Wal-Mart would be very foolish indeed if they didn’t have a very sophisticated security department. I’m not a lover of Wal-Mart (in fact I hesitate to enter their stores), but I applaud their security.

    Another member of the MNB community wrote:

    This seems to be so overblown just because it's Wal-Mart. I remember one time I was sitting next to a guy on a flight to Cincinnati and he told me he was the ESOP consultant for a small regional grocery chain. And that was it. I assumed he was going to Cincinnati to meet with Kroger. Just a wild guess. About a week later I mentioned to a Kroger exec at a conference I heard a rumor that Kroger was buying out the "X" company that the plane passenger said he worked for. The look on his face told me it was true. Two days later I get a call from Kroger security asking how I got this information. I didn't get it, I just make a guess. Was Kroger overreacting?

    One time I sat next to an HR manager from A&P and she blabbed all kinds of stuff to me. I posted it on a blog and the next thing I know is A&P lawyers wrote a letter to my former employer asking me to stop and disclose how I got the info. Was A&P overreacting?

    Tail numbers of private aircraft can be tracked unless they put on a block. You would be surprised how many companies overlook this. When a grocery company's corporate plane is flying to a small airfield near the headquarters of another grocery company and they currently have not business in the area, it’s easy to conclude who they are visiting. We got this idea 20 years ago from a movie.

    A warning to execs who are negotiating deals on the road. If you think it’s too good to be true that the pretty girl in the hotel lounge is so interested in you, it probably is too good to be true. Who does she really work for and why is she pouring drinks down your throat? When millions or billions of dollars are at stake, personal fortunes about to be won or lost, there is no limit to what can be done to get information.

    Think about how difficult it is for a company of Wal-Mart's size to keep a secret. Anybody can put on a blue vest…walk into a Saturday morning meeting, and do you think a store with 400 employees that one person will look out of place? Now, of course, I don't know anyone who actually did this…

    Maybe we’re wrong. Maybe we’re naïve. But we think that this is no way to conduct commerce.

    MNB reported yesterday that Wal-Mart may be the target of a federal probe into its surveillance activities, which prompted one MNB user to write:

    As most of us over 50 can attest most probes can be very uncomfortable. Let's hope it's the same for Wal-Mart.

    Talk about priceless imagery…

    We’re always writing about differentiation, and one MNB user wrote:

    I think that sometimes executives in the Retail Food and Drug sector get too secure in their decision making process and the decisions they make. They will spend a lot of energy devising marketing plans and after executing them they put the planning process away feeling good that they made the right decisions. Kenneth Cole spoke at a keynote address at NRF this year and had one thought that I took away and intend use.

    Paraphrasing what he said “every morning when you start your day you need to ask yourself who is your customer, are you delivering what they want and what will they need next.

    On the subject of family dinners and their importance, MNB user Jim Hrovat wrote:

    You're right about the move away from family dinners possibly being one of the most destructive things of the past few decades. However even more than that has been the number of mothers working outside the home.

    Say all you want about women's rights, there is no doubt that that has led to the breakdown in the family.

    We would agree that it often is easier for families when one of the parents – not necessarily the mom – is able to stay home.

    But that isn’t always possible. And we know that there are plenty of families where both parents work in which the adults have not abdicated their responsibility for being parents, and their kids have turned out wonderfully.

    We work. Mrs. Content Guy works. And we still have dinner with the kids almost every night.

    MNB user Donna Osburn wrote:

    I grew up in a farming family. There are times of the year when you are very, very busy in the fields working sometimes 20 hour days. No matter what, my father would show up at the house around 6 pm and we would eat a family dinner. And you are right, that is how we learned things and knew what was going on in our family. It kept our family close.

    In our current family today, we eat in front of the television one time per year (to watch the super bowl). Other than that, we always eat a family meal at the table with usually the radio playing in the background. And usually end up spending a minimum of an hour at the table (we all like to talk!) That is what makes our family close and keeps our family close. When company comes, we all spend all our time in the kitchen area because we love to cook and to eat with them. We really should get more comfortable chairs for our table.

    On the subject on plastic bags, and the debate over legislation and regulations in California, MNB user Bob Vereen wrote:

    Wal-Mart is catching heat on many fronts lately, but to my knowledge, it is the only retailer (certainly the only major retailer) concerned with the problem inasmuch as it has multiple collection boxes for plastic bags to be recycled.

    Good point, Stew Leonard’s, by the way, has been doing the same thing for as long as we can remember.

    MNB user Craig Nelson wrote in with a response to our observation that change in this area is inevitable:

    Change is coming, but they need to take it to the home....Example- As you know, most cities offer recycling our city, a big blue box. The service is free. All one has to do is throw their plastics in this box and place it next to the rest of their trash. It appalls me to see about half the homes that never place the blue container out there, never recycling. I am by no means a tree hugger, but such a simple act saves untold tons of landfill space. At some point, cities ought to just levy an extra "landfill" fee for the lazy among us who don't recycle.

    Regarding US Congressional hearings into the pet food contamination case, one MNB user wrote:

    That's just what we need, more time and money wasted on pet food recall. Wait a minute, there are about 60 million pet owners and only 40 million uninsured people. Let the senators posture and pontificate and the sad state of pet food, plus they can beat up on a foreign company. Can't take a chance of losing campaign contributions!

    It appears that the about 200 pets got sick and less than 20 died, sounds like the spinach scare last year, without the death toll. So we wreck two categories of products at the untold cost of probably hundreds of millions of dollars. And yet, we can't do anything on healthcare, that directly or indirectly effects all 300 million of us.

    Finally, we got the following email from MNB user Dale Tillotson:

    Hey, Coupe, here's the scoop on Imus.

    Your omission of the women's final four was far less harmful than Imus's acknowledgment.


    Once again, in response to reader email, we’ll write about Imus tomorrow…and we’ve delayed because we want to think this through. Carefully.
    KC's View: