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    Published on: March 4, 2008

    by Michael Sansolo

    Many years ago, my mother taught me the meaning of the exquisite Yiddish word chutzpah. Chutzpah, she said, describes a man who kills both his parents and then begs a judge for mercy because he’s an orphan.

    Had my mom known about Visa, she might have had an even better story.

    The audacity of the credit/debit giant should be well known to everyone in the industry by now, but sometimes it gets forgotten and that’s a shame. What happens with the credit card industry should be questioned on a daily basis. Three recent articles about credit cards, particularly Visa, made me remember just how aggravating they can be.

    The first was from Michelle Singletary, the Washington Post consumer columnist who cast a stone in the right direction this past weekend when writing about strategies economically stressed people need to use to get their financial house in order. Singletary referenced the amazing Visa ads where customers and store clerks go dancing through their day, completing transaction after transaction with plastic cards until the pattern is broker by, horrors, a person using cash.

    Singletary, who writes extensively about personal finances, made the point that using cash more often might get consumers to think a little longer about some of their purchases. Visa, she explains, has no interest in that.

    Sadly, her newspaper completely missed an opportunity to ask questions about Visa’s market power just a few days earlier. Reporting on Visa’s planned initial public offering of stock, the usually inquisitive Washington Post went soft, failing even to comment on Visa’s 65 percent share of market. Can you imagine the questions that would be asked if Wal-Mart, suddenly announced it had a 65 percent share of any market?

    The problem isn’t the 65 percent market share, it’s how it has been used. Anyone out there conducting commerce better have a firm grip on the fees and rules Visa and, to a lesser extent, MasterCard (23 percent market share) have used. Just as their commercials suggest, cash is a disruption to be avoid. Use the cards, rack up the fees and everyone’s happy.

    NOT!

    Retailers especially might want to consider handing every shopper an article that also appeared last week on TheStreet.com. TheStreet gave a wonderful explanation why paying taxes with a credit card is a bad idea. The key line was this:

    “Many people see paying by credit card as convenient, but it costs money. Unlike retailers that absorb the credit card charges levied by the bank when you pay by credit card, the IRS has an exemption from this policy.

    “So guess what? You end up paying the fees.”


    It’s a not-too-subtle reminder we should give shoppers regularly that every time they use plastic - that there are fees to be paid. And paid, and paid. (On taxes, the fee is 2.49 percent.)

    Maybe that will get shoppers thinking twice about just how free those cards really are. If nothing else, it should remind retailers how badly they are being taken. And get them good and angry to keep fighting this fight. It doesn’t require chutzpah, just endurance. These changes won’t come easily or without a cost. (Check your trade association for details on the battle with the credit card giants and get involved.)

    Sometimes the best strategy for moments like this come from the great movie “Network.” It starts by getting yelling that you are mad as hell and aren’t going to take it anymore.

    Then start doing something.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .

    KC's View:

    Published on: March 4, 2008

    A group of religious investors are calling for more than 60 leading food, beverage, restaurant and other companies “to protect their brand, reputation and consumer confidence by opposing the spring 2008 planting of genetically modified sugarbeets. The genetically modified sugarbeet crop would be used to make the sugar consumed in thousands of the most widely consumed food products in the US,” according to the statement released by the group.

    The statement goes on: “The campaign will focus on such major companies as McDonald’s, Campbell Soup, Kellogg, Kraft Foods, Sara Lee, PepsiCo, Wendy’s and Hershey’s.

    “Sugarbeets have been modified to insert a gene that makes the plant resistant to the glyphosate, a toxic herbicide, sold under the trade name Roundup. At the request of Roundup pesticide maker Monsanto, the U.S. Environmental Protection Agency recently increased the allowable amount of glyphosate residues on sugarbeet roots by a whopping 5,000 percent. (Sugar is extracted from the beet’s root.) More than 50 percent of Americans have said they would reject genetically modified foods if given a choice. If planted, genetically modified sugar will enter the food supply in early 2009. If the U.S. companies targeted in the new ICCR campaign use genetically modified sugar, their exports to the European Union will require documentation and testing, an additional cost and inconvenience.

    “ICCR is on record as expressing concerns about genetically modified crops and food because of the weak governmental review and oversight, and lack of long-term, independent and peer-reviewed safety studies.”

    The statement also notes that ICCR “is a coalition of nearly 300 faith-based institutional investors, representing over $100 billion in invested capital. ICCR members bridge the divide between morality and markets by envisioning a civic economy that integrates ethical, environmental and social values. Inspired by faith, committed to action, ICCR members work to build a just and sustainable global community.”

    KC's View:
    On first reading, this story might just sound like it is about a small segment of the lunatic fringe, but I’m not sure that this would be accurate. These kinds of groups, and these kinds of opinions, seem to be getting some traction…and the food industry had better figure out how to deal with them.

    Published on: March 4, 2008

    • The Detroit Free Press reports this morning about how Wal-Mart is customizing a new 194,000 square foot supercenter in Dearborn, Michigan, so that it appeals to the large Arab-American population that lives in the area.

    The store, according to the store, will have the largest selection of Middle eastern food of any Wal-Mart in the country. “Arabic, Spanish and English will be spoken at the Dearborn store,” the Free Press writes. “Employees will wear special name tags that indicate if they speak languages other than English. Signage comes in all three languages. The store has almost an equal amount of space devoted to Hispanic and Middle Eastern pantry items on aisle 3 … The range of products from the Middle East and other areas includes a large variety of olives, halal meats, Lebanese spices, Greek olive oil, date-filled cookies from Saudi Arabia, chewing gum from Jordan, Turkish candies, frozen okra, Lebanese-style yogurt and Bulgarian feta cheese … The diverse feeling in the store carries over into the non-grocery items as well. The store will sell Hispanic movies and music, Middle Eastern music and greeting cards to appeal to African Americans and Hispanics. It is now developing a line of Islamic cards.”

    • The Financial Times this morning reports that Wal-Mart is making a strategic shift in how it disburses funds to various charities, as the retailer looks “to ensure philanthropic efforts are more closely linked to its brand positioning.” According to the story, Wal-Mart – which gave away close to $300 million last year – will be moving away from its traditional approach, which has been to give small grants to local schools and organizations.

    “Now the foundation has set up state-level funding pools to make gifts of $25,000 or more,” FT writes. “It has also hired programme officers to assess opportunities and the effectiveness of its grants. They will set three funding priorities: healthcare, environmental sustainability, and education and training for 12 to 30-year-olds … Internationally, the retailer is about to launch a partnership with Unicef, reflecting its pledge to support the United Nation's millennium development goals, a joint public private initiative.”

    The goal, said Margaret McKenna, president of the Wal-Mart foundation, is to make sure that the organization’s philanthropic efforts are in synch with its corporate social responsibility mandates.

    One other interesting note from the FT story – that Wal-Mart’s level of corporate giving is “approached only by Bank of America, the largest US retail bank, and about double the gifts made by GE, JPMorgan Chase and Ford.”

    KC's View:
    Seems to me that both these stories are about how Wal-Mart sees itself in the world, and that its vision of what citizenship means is evolving in some profound and, I think, positive, ways.

    Published on: March 4, 2008

    The Chicago Tribune reports that a new study conducted at Northwestern University suggests that too much caffeine can be dangerous to people who ingest it too often and too liberally.

    According to the story, the study shows that “excessive doses can cause rapid heard rate, jitteriness and elevated blood pressure, which can lead to seizures and cardiac problems. Even young, healthy people have died from caffeine overdose, although it's usually intentional, such as taking a large amount of caffeine pills. ”

    The problem, of course, is that regular consumption of excessive amounts of caffeine can result in the consumer getting sort of used to it, which means that he or she ends up drinking more or finding other ways of getting a jolt, such as energy drinks … and the cycle can end up with the person having some severe medical problems.

    KC's View:
    Great.

    Yesterday, the medical study was warning that too little sleep is dangerous. Today, the study says that too much caffeine can be dangerous.

    To repeat my pithy commentary from yesterday:

    Uh-oh.

    Published on: March 4, 2008

    The East Bay Business Times reports that Raley’s has signed a deal with Peet’s Coffee & Tea that will lead to 100 kiosk-style coffee shops operating in Raley supermarkets over the next three years.

    "We are thrilled to join forces with Raley's," Peter Keim, director of foodservice for Peet's, said in a statement. "Our partnership provides a significant avenue for our loyal customers to purchase Peet's coffee."

    KC's View:

    Published on: March 4, 2008

    Dow Jones reports that members of the United Food and Commercial Workers (UFCW) local in Memphis have ratified a four-year contract with Kroger that covers more than 7,500 employees in 72 stores.

    Terms of the deal were not disclosed.

    • Interesting piece in Advertising Age about how Procter & Gamble and Unilever are battling to see which company will be best at saving the world…or at least, being seen as being better at saving the world.

    “Nothing indicates the growing hold ‘ethical marketing’ has on the industry better than the concept's growing embrace by the world's two biggest spenders,” Ad Age writes. “While both have been engaged in such efforts for years, they're talking about them, and particularly advertising them, like never before…”

    KC's View:

    Published on: March 4, 2008

    • Don Fitzgerald, the former vice president of sales and merchandising at Meijer and a former Dominick’s executive, is joining Roundy’s as group vice president of merchandising and procurement.

    • The Wall Street Journal reports that Starbucks has appointed Cliff Burrows, who runs the company’s Europe, Middle East and Africa businesses, to take over as president of its US division. He succeeds Launi Skinner, who resigned from the company, and is part of broad management shakeup being engineered by CEO Howard Schultz to respond to a weakening business climate.

    KC's View:

    Published on: March 4, 2008

    • Publix announced that its fourth quarter sales were $5.9 billion, a 6.1 percent increase from last year’s $5.6 billion, on same-store sales that were up 3.6 percent. Q4 net earnings were $311 million, up 6.5 percent from $291.9 million during the same period a year ago.

    Publix’s sales for the fiscal year were $23 billion, a 6.3 percent increase from last year’s $21.7 billion, on same-store sales that were up 4.3 percent. Net earnings for 2007 were $1.2 billion, compared to $1.1 billion for 2006, an increase of 7.9 percent.

    KC's View:

    Published on: March 4, 2008

    Lots more email on the subject of whether savings bonds are an appropriate and desirable prize in a contest designed to get kids to cook more. Stop & Shop said yes, but I said no, that maybe an iTunes gift certificate might have proved a better motivational tool.

    One MNB user wrote:

    I agree with you about the savings bonds as investments for a young person. They are boring as they are put away and generally forgotten. Interest payments are irregular as to be forgotten.

    I generally place the money in a mutual fund investment that the kid can track over many years. It gives superior growth and is a lot more interesting. Also, most kids cannot easily redeem shares in the mutual fund.

    I don't want my kids getting a prize that is quickly squandered and forgotten.


    MNB user Gary Harris wrote:

    OK, so how about a prize for the kids, and $10k to seed a 529 Savings Plan? Throw in some bonus Upromise points and now we’re smack dab into the 21st century. By the way, using the old payroll savings plan to purchase US Savings Bonds helped us buy our first house, so I’ll always have a soft spot for them, but hopefully in my heart and not my head.

    MNB user Lee W. Emdur wrote:

    To me, this debate is not simply about the merits of a savings bond. I myself don't give them out as gifts and I don't necessarily like receiving them for my kids because then I need to file them safely away. And as you point out, many of them don't get redeemed.

    However, I see this as a spending vs. savings debate and Stop & Shop doing the right thing for customers' families. If you had slammed savings bonds but then recommended a suitable prize being a $10,000 college scholarship or the setting up of a 529 college savings plan, then I would have been on board with that. But if I were a grocery chain executive, and I could only pick whether to award a kid a $10,000 savings bond or $10,000 for Apple merchandise and music downloads, I'd choose the savings bond every time. It's the socially responsible thing to do.


    Another MNB user wrote:

    As part of the aging baby boomer lot......

    I've often lamented that our education system doesn't teach what we really need to know in life, as adults, such as:

    How to balance a checkbook
    How to buy a car
    How to buy a house
    How to buy furniture
    How to save, invest strategically
    What a 401K is
    The importance of saving for retirement, and the immense value of starting EARLY in life!
    How to keep those dang packing puffs from flying all over the room when you unpack a box...(OK this one's tongue in cheek but the rest of the list is for real!)

    If we taught the above, we wouldn't be having the economic "woes" being sensationalized all over the news, the ARMs ballooning mortgages into foreclosure, for those who bought more house than they could really afford, the abuse of credit, the silly "economic stimulus packages" giving our hard earned money back to us that shouldn't have been taken in the first place, and the unbelievably silly premise that this "$600-$1200" given to each American family is going to stimulate the economy! Don't get me wrong - I'll be glad to get the money back, and happily take it - but I'm going to save it! It will either go into my 401K or other investment.

    There might be some, who think parents should teach the above list, and that's true - but it's obviously not happening in the majority of families based on results.


    MNB user Liz Schlegel wrote:

    Just one more thing to add... the iTunes rules state iTunes is only open to persons above the age of 13 in the US. Might be pretty hard to get around those rules for Stop & Shop!

    A bigger question is how do you structure a promotion that appeals to children aged 7 -14? The gaps are getting too big between the two ends of this age spectrum. The tweens are being relentlessly pushed into the teens, so kids over 10 are now considered "almost teenagers" - they are supposed to want iPods, cell phones, Wiis, and Nintendo DS. For a parent who is trying to let her kids have a "normal" childhood (you know, going outside, riding bikes, playing Legos, etc. until the interest in toys wanes naturally) it can be very hard to go against the national marketing effort to reach down the age scale and grab the younger kids.

    If I worked at Stop & Shop, and I were tasked with figuring out a prize that appealed to that age range, for a recipe competition, I would make it food-related - a year's supply of food for the family or a family vacation at a culinary resort. Maybe with iPods for all loaded with some great tunes and some food shows (does Emeril podcast?).


    If I worked at a chain and my job were to get kids interested in cooking, I would try to pick a prize with maximum kid appeal. That doesn’t seem so outrageous to me.

    Another MNB user wrote:

    Commenting on the Stop & Shop contest whose prize for winning kids is a savings bond: the gist of your position, if I understand it right, is that this incentive simply will fail to connect with "today's kids" and that, instead, maybe something more in their sweet spot like an ITunes giftcard is more on the mark. Now, "buzz" aside, I would still be hopeful that your opposition to the savings bond idea isn't based on any aversion to teaching kids a valuable life lesson about savings, but rather, the more practical fact that a savings bond would simply miss the mark as far as connecting to them is concerned.

    On the other hand, this position of yours seems rather contradictory to your position a month or two ago about the Florida school district that sought to encourage academic achievement (or perfect attendance; I forget exactly what the reward was for) by passing out McDonald's gift certificates. In that case, you expressed your horror that an organization like the school district would offer kids a prize that, admittedly, would likely hold great appeal to elementary age kids, but which also was arguably encouraging an unhealthy lifestyle.

    So to recap: In the school district case, KC says kill the unhealthy but appealing McDonald's rewards because it sends kids an inappropriate message about food-choice in a healthy lifestyle, whereas in the Stop & Shop case, KC says kill the savings bond reward, despite it presenting kids with an appropriate life lesson about saving, and instead, offer them an arguably appealing reward like ITunes, despite its having no real socially redeeming value (my term) as far as encouraging healthy life habits is concerned.

    Could you reconcile these positions for me, please?


    Oh, so now you want me to be consistent?

    Actually, I’m not sure this is as inconsistent as you might think.

    First of all, of course I’m not averse to teaching kids broader lessons, which is why I said that some sort of combination prize makes more sense – it would have long-term implications as well as short-term appeal. (You can teach them all the lessons you want, but first you have to get their attention.)

    My objection to the Florida program had to do with the fact that 1) schools are taking action against the obesity crisis and so handing out fast food coupons seemed, yes, inconsistent, and 2) fast food is not very good for you.

    In the case of an Apple Store or iTunes gift certificate, my argument would be that computers are actually very, very good for you…not at all a meaningless indulgence. And iTunes cards can give kids access to music and other elements of culture – some high-brow, some low-brow, but music nonetheless. For me…and you are welcome to disagree…music has tremendous socially redeeming value, and listening to it is a very healthy habit.




    In a story yesterday about how Krispy Kreme, looking to try and revive its fortunes by paying attention to American nutritional and dietary concerns, is “offering a Lightly Glazed Doughnut--a hint of sweetness on top of Krispy Kreme's signature golden doughnut,” I commented:

    Gimme a break. I don't care how “light” these doughnuts are, they’re awful for you, and they’re always going to be awful for you.

    “Light doughnut” is an oxymoron. And people who believe it….well, just get rid of the “oxy.”


    To which one MNB user responded:

    I couldn’t agree more about your comment that basically a doughnut is a doughnut and cannot be disguised as anything healthy or even healthier but…..as I recall you thought Top Pot in Seattle was quite the place. Just doughnuts with an upscale aura which leads me to the realization that taste, ingredients and nutrition are often secondary to great packaging and marketing.

    I said doughnuts are awful for you…I never said that I didn’t love them.

    Here’s the deal I made with myself. I’ve decided that the only time I am going to eat a doughnut is when I am in Seattle – and that I will allow myself one Top Pot doughnut per trip….probably, but not necessarily, the apple sauce kind. So I end up eating two, maybe three doughnuts a year. (If I ever get my wish and move to Seattle, this could end up being a problem…but I’ll deal with that issue when the time comes.)

    Another MNB user sent me the following quiz:

    What is worse than a donut?

    a. soft drinks
    b. french fries
    c. potato chips
    d. all the above


    I suspect the answer is D. Which is why I have to limit my consumption of all of them.




    Finally, in the spirit of a day on which I seem to being accused of being inconsistent, another MNB user wrote with a note about last week’s OffBeat:

    Last week you correctly bemoaned the trend toward naming sports facilities after corporations. There were four ballparks you said that should never suffer that fate: Yankee Stadium, Fenway Park, Wrigley Field and Busch Stadium.

    Uh, Kevin: Busch and Wrigley were the originators of naming stadiums after products. Let enough time past and we may yet learn to love “Monster” Park or AT&T Field…. but I doubt it.


    True, but they get grandfathered in because of time.

    (By the way, I have much less of a problem with new stadiums being named after corporations. It is the icons of the sport – the shrines, if you will – that need to retain a certain historical purity. Though as you point out, historical purity isn’t always what I would like it to be…)

    KC's View: