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    Published on: October 22, 2007

    Wal-Mart announced this morning that it is making a tender offer for the equivalent of $862 million (US) for the approximately 49 percent of Seiyu that it does not already own. The offer has been made with the endorsement of Seiyu’s board of directors.

    Wal-Mart first bought into Seiyu in May 2002, and became the majority owner of Seiyu at the end of 2005,

    "Today's announcement is a reaffirmation of our commitment to Japan, the second largest economy in the world," said Mike Duke, Wal-Mart’s vice chairman, in a prepared statement. "The Japanese retail market is of major strategic importance to Wal-Mart, and our goal is to achieve long-term success and growth in Japan. Full ownership by Wal-Mart is the best way for Seiyu and Wal-Mart to accelerate the delivery of long-term benefits to our customers, the communities we serve, our associates and our business partners.”
    KC's View:
    Was it Bret Maverick who once said, “In for a penny, in for a pound”?

    No matter.

    That’s exactly what Wal-Mart is doing in Japan. The company already has invested more than a billion dollars in Japan – before this new expenditure – and has continued to struggle there. It has encountered cultural resistance because of its decisions to lay off 25 percent of the headquarters staff there, to keep some stores open 24 hours, to import products from outside the country that some say do not meet Japanese quality standards, and to cut out distribution middlemen as a way of eliminating costs. It seems likely that some of the flames of discontent are being fanned by the competition, but the fact remains that company has not been as successful there as it hoped to be.

    At this point, Wal-Mart probably had two choices. Bail out or double down. I predicted back in July that there was almost no way that Wal-Mart was pulling out of Japan, and for once in my life I was right. (As Dizzy Dean once said, “I’d rather be lucky than good.”)

    Here’s the next question that needs to be answered: Will the increased investment mean that Wal-Mart will change the management structure over in Japan, or will the retailer leave things the way they are? I’m not sure what the timing is, but I’d have to guess that Ed Kolodzieski, who is running Seiyu for Wal-Mart these days, probably is on a short leash.

    Published on: October 22, 2007

    There was an interesting piece on the wires over the weekend from Reuters that looked at whether “food miles - the distance edibles travel from farm to plate - give an accurate gauge of environmental impact, especially where greenhouse gas emissions are concerned.” And while food miles have become part of the “local food” movement in the US, which is gaining strength among consumers to the point where it is flirting with mainstream status, at least one expert says that they are not an accurate way to evaluate economic impact.

    "Food-miles are a great metaphor for looking at the localness of food, the contrast between local and global food, a way people can get an idea of where their food is coming from," Rich Pirog, associate director of the Leopold Center for Sustainable Agriculture at Iowa State University, tells Reuters. But, he says, it is important to take a broader, more contextual look at the entire food supply chain.

    One example cited by Reuters: “The problem with food-miles is that they don't take into account the mode of transport, methods of production or the way things are packaged, and all of these have their own distinct impact on emissions of carbon dioxide, a climate-warming gas.

    “Take the case of the well-traveled Idaho potato and its closer-to-home cousin from Maine. For a consumer on the U.S. East Coast, the Maine potato seems the winner in the local food derby.

    “But Maine potatoes get to market by long-haul truck while Idahos go by train, a more energy-efficient mode of transportation, so they have a smaller carbon footprint even with a larger number of food-miles.”

    Another problem with food miles as an environmental barometer is that “the most accurate versions of this calculation deal only with produce, not with prepared foods that contain many ingredients from many sources.”
    KC's View:
    It’s an interesting construct, but while food miles may not be the most accurate measurement of environmental impact, it is important for the industry to realize that one of the reasons consumers embrace it as an idea is that it is something they can do themselves. It is sort of like canvas bags – people who use them do so it part because it is a place where they feel they can have an impact, where one person’s actions can make a difference.

    It seems to me that it is critical to both educate consumers about the realities of environmentalism while being careful not to disabuse them of their desires to do the right thing. In this case, eating local can have an impact beyond simple carbon footprints. It can keep local farmers and producers in business, it can lead to tastier foods, and it can actually develop consumers’ interest in regional cuisines in a way that could diminish their desire to buy lowest-common-denominator fast foods.

    All of which works for me.

    Published on: October 22, 2007 reports on a new study that essentially asks whether it actually pays for companies to demonstrate social responsibility.

    The study, done by a pair of Harvard researchers, Michael Hiscox and Nick Smyth, “set out to discover whether customers prefer to buy from do-gooder companies. In their research at Manhattan's ABC Carpet and Home, they found that shoppers care a lot. When an item was labeled as being produced under ‘fair labor’ practices, sales jumped. And when Hiscox and Smyth raised the prices of ‘fair labor’ products, people bought even more than before. So, at least for ABC Carpet, being nice is good business.”

    And here’s what’s really interesting. When the researchers marked up the prices on products designated with these labels, sales went up. The more prices went up, the better sales did – perhaps “because the higher prices made the products' fair-labor claims more credible.”

    However, it is critical to the discussion to note that “ABC customers are wealthy, liberal New Yorkers who can afford to pay $15 for a candle or $40 for a single towel. So, what we've really learned is that socially minded rich folk can afford to let conscience dictate their purchasing decisions, whatever the markup. ABC shoppers, however, represent only the tiniest sliver of American consumers, and their buying preferences alone aren't enough to make American businesses kinder, gentler, and cleaner.”

    The big question – and one that both Hiscox and Smyth concede remains unanswered – is whether this trend will translate to mainstream retailing experiences: Will Wal-Mart customers pay more for products that are said to be produced in a socially responsible or environmental way?
    KC's View:
    Remember something that Michael Sansolo reported on about a month ago? He said that during a recent trip to Australia, he found out that about eight percent of Australians were willingly spending more money to sign up for environmentally friendlier energy. The cost for an Australian family opting into this new program ranges from $50 to $400 per year. And I firmly believe that plenty of Americans would make the same kinds of choices.

    I also can’t imagine that it is only liberals who use their purchasing power to do the right thing. After all, there are plenty of examples of companies that have positioned themselves as being socially responsible – Ben & Jerry’s, Newman’s Own, and Starbucks immediately come to mind – and they aren’t successful just because liberals consumer their products.

    Certainly there are people who are unable to make so-called “right choices” because they simply cannot afford the luxury. But I think that more and more people are conscious of the fragile nature of the world we live in – not just environmentally, but also socially and culturally, as we see issues like terrorism and poverty and hunger all around us. (“All around us” means something different these days, since computers put events that take place thousands of miles away on our front steps…and harder to ignore.) And most want to do the right thing.

    Published on: October 22, 2007

    • The New York Times reports that Andrew Ruben, who has been running Wal-Mart’s environmental initiatives, is changing jobs and will become head of private label strategy, in charge of in-house brands like Sam’s Choice and Great Value.

    According to the Times, he will be succeeded by Matthew Kistler, “who oversaw Wal-Mart’s effort to reduce unnecessary product packaging at Sam’s Club, the chain’s warehouse division, where he has been senior vice president for marketing.”

    The Times suggests that the move was unexpected, seeing as how Ruben “became a fixture at company shareholder and media conferences, an executive-cum diplomat who argued that Wal-Mart — because of its size — had the power to significantly affect the global effort to reduce carbon emissions and manmade waste.” Ruben has been “the public face of Wal-Mart’s sustainability campaign, cultivating relationships with unlikely allies of the world’s largest retailer. At his prodding, Wal-Mart executives visited organic cotton fields in Turkey and invited Al Gore to the company’s Arkansas headquarters to talk about global warming.”

    Business Week reports that Wal-Mart will hold its annual two-day conference for investors and financial analysts this week, and some observers believe it will use the occasion to talk about new and smaller store formats that the company hopes will jump-start its sales growth – and stock price. Such stores might position Wal-Mart to better compete in urban markets where there has been resistance to its traditional big box models, as well as allowing it to adapt to challenges from retailers such as Tesco, the UK-based retailer that is scheduled to start opening stores in the western US in just a few weeks.
    KC's View:
    I’m not saying that creating smaller formats is a bad idea, but I do think that Wal-Mart has to worry a little less about Wall Street … though I’ll concede that it is tough to do when you’re a public company.

    Published on: October 22, 2007

    A new TNS Worldpanel study of the UK grocery market shows that Tesco continues to expand its domination there, with a market share of 31.8 percent during the most recent quarter, up from 31.4 percent during the same period a year ago. The growth was part of an overall grocery industry sales growth during the quarter was up five percent over the same period a year ago.

    The number two retailer in the UK, Wal-Mart-owned Asda, grew its market share during the period, from 16.6 percent to 16.8 percent, as did Sainsbury, from 15.7 percent to 15.8 percent.
    KC's View:

    Published on: October 22, 2007

    The Kroger Co. has been honored as "Retailer of the Year" by America's Second Harvest, the largest hunger relief organization in the United States, the honor coming for Kroger’s donation of more than 30 million pounds of food and other needed products last year. In addition, the organization noted Kroger's "Bringing Hope to the Table" campaign, a nationwide promotion that encourages customers to purchase items from participating suppliers to support local food banks, raised more than $6 million in the last two years.

    This marks the fifth time in seven years Kroger has won this honor.
    KC's View:

    Published on: October 22, 2007

    • The Bellingham Herald reports that bankrupt Brown & Cole, the Washington State-based retailer, has agreed to sell a controlling interest in the company to private equity firm Hancock Park Associates for $43 million.

    If approved by the court overseeing Brown & Cole’s financial affairs, the deal will allow the company to emerge from bankruptcy with its 20 stores intact, and the company says that no layoffs or closures are foreseen. (The company closed seven units at the time of its bankruptcy fling.)

    “Filing for bankruptcy was a crummy and very stressful experience, but we entered into it with the idea of achieving the best outcome for the company, the employees and customers,” CEO Craig Cole tells the paper. “We are very happy with this agreement. Hancock’s main role in this is infusing capital to keep this company intact and improve it; we were impressed with their values. I believe these folks invest in companies to hold them, not flip them, and that’s a breath of fresh air today.”

    Crain’s Chicago Business reports that Milwaukee-based Roundy’s is eyeing a 60,000 square foot location at Madison & Halsted in Chicago for a new store that would be operated under a new banner still-to-be disclosed banner. Roundy’s has said that it would like to open 10 to 12 stores in Chicago, and already has pick a site on the North Side for one of those stores.
    KC's View:

    Published on: October 22, 2007

    • McDonald’s reported that its third-quarter profit rose to $1.07 billion, from $843.3 million a year earlier. Q3 revenue rose 7 percent to $5.90 billion.

    Same-store sales rose 11.4 percent in the quarter in the Asia/Pacific, Middle East and Africa business, compared to a 5.1 percent increase in the United States and 6.5 percent in Europe.
    KC's View:

    Published on: October 22, 2007

    • Spartan Stores said Friday that Dennis Eidson has been named the company’s new president/COO, reporting to Craig Sturken, who continues as chairman/CEO. Eidson joined Spartan in March 2003 as executive vice president of Marketing and Merchandising, and in February 2007 he was appointed to the newly created position of executive vice president/COO.
    KC's View:

    Published on: October 22, 2007

    MNB had a story last week about how Wal-Mart is threatening legal action against consumer websites that post in advance the retailer’s planned discounts for “Black Friday,” the day after Thanksgiving that is the traditional start of the holiday shopping season. The letters being sent to the sites by Wal-Mart’s attorneys say that the circulars are copyrighted, and that unauthorized distribution or publication of the information could result in legal action or even criminal prosecution.

    In my commentary, I conceded that I have no legal expertise, but…

    I’m not sure that Wal-Mart is right, nor that its moves make sense.

    First of all, we live in a world where everything is leaked, and where virtually everything is available over the Internet. By threatening legal action, it almost is like Wal-Mart is trying to put the genie back in the bottle. If it were me, I’d instead be trying to figure out how to turn the leaks to my advantage.

    Here’s the other thing. If I found out that Wal-Mart planned to put certain items on sale on Black Friday, I think I could print it as a legitimate news item. I don't see how they could stop me, and I think it would be foolish to try. Advance information is sort of the currency of the realm around here…

    MNB user Dustin Stinett responded:

    While this comment was directed at a specific Wal-Mart issue, there is a bigger picture to consider. I hope you are not an advocate of the notion that "all information should be free." The Internet has spawned a segment of people who ignore copyright laws and have zero respect for intellectual property. I have been plagiarized by people who, had they just asked me, would have been granted permission to use my work. (Trust me, if you've never experienced it, being plagiarized is a very creepy feeling.) The problem with this thievery--and that's what it is; theft--is that eventually, those of us who put in the work will no longer reap the financial benefits from that work, and we will stop producing.

    Imagine if, everyday, someone put the content of MNB up on "Wikipedia." Would your advertisers have any reason to continue supporting you? You might think I'm being extreme, but I'm not: I've seen it happen. A colleague of mine has a lovely site that he worked very hard to put together. It is a free site, but now he requires registration (taking more time out of his life; and is there anything more valuable than time?) because the people at Wikipedia insisted that they had an "absolute right" to duplicate his work on their site!

    In the case of Wal-Mart, it's difficult to argue the "news" aspect of the issue. However, just how was that "news" garnered? It's one thing for a news outlet to report the news; it's quite another for one to obtain it via less than scrupulous means in order to create the news.

    Wal-Mart and their suppliers have worked to put together a sales program that they want to launch their way. They should be afforded that right and no other person or company should be allowed, legally or ethically, to make that determination for them. (Unless, of course, it's all part of the plan...)

    I don’t believe that all information is free, nor am I an advocate of plagiarism. In the latter case, I try to be assiduous in my efforts to source everything I get in my daily research, and I get stuff stolen all the time. C’est la vie…

    I do think that the Internet makes certain realities unavoidable, and one of them is the spread – like wildfire, or bad jokes – of information. Sure, there are methods of trying to retain control and ownership. But the Internet is sort of like the old-fashioned back fence, with an unlimited number of neighbors sharing information, opinions, recipes, gossip, whatever. I just think that in cases like the Black Friday ads, Wal-Mart would be better off trying to find new strategies to break ads rather than paying the attorneys to send letters. (I’d actually question Wal-Mart’s whole Black Friday approach, but that’s another issue.)

    MNB user Clay Dockery chimed in on the same issue:

    Your commentary is certainly reflective of a legitimate perspective with respect to consumers. However, I would believe that Wal-Mart is far more concerned about getting a jump on their competitors who can make quick pricing decisions if they get an early view of Wal-Mart's pricing strategy for the important holiday season. While the threat of a lawsuit for leaking information may seem extreme, I am reminded of a book by the former CEO of Intel, Andy Grove; "Only the Paranoid Survive". In this context, Wal-Mart's position certainly seems to be a well measured plan.


    But with all due respect to Andy Grove, who is certainly a lot smarter than I am, I don't believe in paranoia, which requires looking over my shoulder.

    I’d rather look ahead.

    As one of America’s greatest troubadours once sang…

    Yesterday's over my shoulder
    So I can't look back for too long
    There's just too much to see waiting in front of me
    And I know that I just can't go wrong…

    MNB wrote on Friday about a Baltimore Sun report saying that the Bush administration and the US Congress “are moving toward the creation of a new system for screening imported foods that would require companies to certify that their foreign suppliers meet U.S. standards. The new system would place a much heavier burden for consumer safety on the American firms that import goods from China, Mexico and elsewhere.”

    My comment:

    As sure as I am that the government is not up to this task, I’m also not sure that it makes sense for the federal government to just shift some of these responsibilities to private enterprise. This may come as a surprise, but not all companies are reputable and responsible – some actually will cut corners in pursuit of a buck, and I’m not sure that the US consumer is equipped to know the difference between the good importers and the bad ones.

    The reality is that when imported products do harm to the consumer, everybody in the chain suffers – consumers, retailers and suppliers. There’s no question that the current system is inadequate. But the way the changes are described, I can’t shake the feeling that all these guys are doing is moving around the deck chairs on the Titanic.

    One MNB user wrote:

    In your comment on this article, you noted your distrust of requiring private enterprise to certify safety.

    Since it may be likely that more than one US company would be buying from the same foreign supplier, how about having the Food and Drug Administration certifying inspection organizations overseas, and requiring that the US companies subscribe to their services? Something like corporations using the Big X Auditing firms to audit their books.

    Nothing is guaranteed, of course.

    Another MNB user agreed:

    Some reliability to the system could be achieved by requiring the government to create a list of approved certifiers and then requiring the importers to use one of the approved certifiers much as is done in the organics trade. Part of the system would be a requirement to re-certify annually. Labeling for the certification is another discussion.

    Another MNB user wrote:

    The responsibility ultimately lies with the buyer…the consumer. It all comes down to personal responsibility. You have the choice of buying an imported item of questionable quality or not. You have the choice of purchasing only USA made products or not. You have the choice of purchasing only from companies you feel are reputable or not. You have the choice of not purchasing. Companies that lose our trust, by importing inferior products should be taken off the "buy list." That's consumerism. But, for consumerism to work, you need information and the desire to use the information.

    But, in order for buyers to make a responsible choice they need true "COOL" (country of origin labeling). AND explicit ingredient labeling. Has it really come down to...nobody can trust sad.

    I would agree that he consumer has to make the ultimate decision, but under the current system, it is almost impossible for he consumer to make an informed decision. So I wouldn’t say, at this point, that the responsibility ultimately lies with the buyer.

    There was a piece on MNB last week that referenced a site where one can determine one’s personal and professional carbon footprint…which prompted MNB user Karen Shunk to write:

    As someone who tries to limit her impact on this planet as much as I can (I ride my bike to work, don't have a driver's license, eat organic/local produce, etc. etc.), I decided to check out this out and see how I was doing.

    However, the part of me that loves statistical analysis took over once I'd been through the site. First of all, I couldn't believe that, despite the fact that I don't drive, I commute mostly by bike or occasionally metro and pretty much only catch the weekly ride to the supermarket with my husband, that my carbon footprint is significantly larger than that of the average Canadian and/or inhabitant of Toronto, even though my sister-in-law commutes into Calgary an hour each way every day in a car by herself.

    This made me wonder about how they arrive at these comparisons. Are they comparing me only to Canadian Vegans living in Toronto who may have flocked to the site in droves or have they actually come up with an average Canadian's carbon footprint? And how about my occasional flight? Are they charging the entire carbon emissions of a flight to me, or just an average portion?

    I realize that you were in no way endorsing the site, just thought you might like a little feedback…

    All excellent questions.

    Regarding Costco’s environmental initiatives, one MNB user wrote:

    Kudos to Costco for having the courage to embrace a long-term energy plan. Their ability to impact the bottom line provides a compelling example for others to follow. That makes me hopeful.

    Unfortunately these sorts of environmental initiatives can take large amounts of capital. It takes a CEO with a backbone to stand up to the constant pressure to produce quarterly results. Now, I don’t think corporations will ever abandon Return on Investment for the environment, but any initiative that produces a positive ROI should be explored regardless of the payback period. Not only do these initiatives create positive PR, the increased efficiencies lead to competitive advantage. Wal-Mart is the perfect example of a company using efficiencies as a competitive weapon. These things take time and I think Al Gore deserves a lot of the credit.

    Finally, MNB mentioned on Friday the passing of Joey Bishop, the last surviving member of the Rat Pack. But there was another death we didn’t note…as MNB user Donna Burns pointed out:

    Don’t forget Deborah Kerr. The best kiss of all times…

    That kiss, of course, was in “From Here To Eternity,” and it took place on a beach in Hawaii with Burt Lancaster. (Remind me sometime to tell you about the time I met Lancaster…)

    You’re right about that, Donna. I should have mentioned it. Kerr died last week at age 86, and had a career that included such gems as “The King & I” and “Eternity,” and was nominated for an Academy Award six times.

    However, I have to note that she also starred in one of the soppiest, treacly movies of all time: “An Affair To Remember,’ with Cary Grant.

    The best thing to come out of “An Affair To Remember,” I think, is that great scene in ‘Sleepless in Seattle,” where Tom Hanks and Victor Garber compare it to “The Dirty Dozen” – and decide that the latter movie was far more heartbreaking and emotional.

    I would concur.
    KC's View:

    Published on: October 22, 2007

    In Game Seven of the American League Championship Series, the Boston Red Sox defeated the Cleveland Indians 11-2 to win the AL pennant and the right to face the Colorado Rockies in the World Series, which begins Wednesday.

    And in Week Seven of National Football League action:

    Baltimore 14
    Buffalo 19

    Tennessee 38
    Houston 36

    San Francisco 15
    NY Giants 33

    Arizona 19
    Washington 21

    Kansas City 12
    Oakland 10

    Chicago 19
    Philadelphia 16

    Tampa Bay 16
    Detroit 23

    New England 49
    Miami 28

    Atlanta 16
    New Orleans 22

    NY Jets 31
    Cincinnati 38

    Minnesota 14
    Dallas 24

    St. Louis 6
    Seattle 33

    Pittsburgh 28
    Denver 31
    KC's View: