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    Published on: April 3, 2008

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    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:

    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, brought to you by Webstop, experts in the art of retail website design.

    One of the points that seemed painfully obvious as the credit/debit card security breach at Hannaford Bros. unfolded, with experts saying that the retailer did everything it was supposed to do but still was outwitted by criminals, is that we’re all guilty sometimes of not having sufficient imagination.

    In retrospect, it isn’t entirely surprising that the bad guys see opportunity where most people would see a foolproof system. Bad guys actually have to be more entrepreneurial about such things…it is how they commit crimes, not to mention stay ahead of the law. (The good news, of course, is that the bad guys often make mistakes, which is what allows the good guys to track them down.)

    It sort of reminded me about what a lot of people say about technology and communications – if you want to see where things are going, just watch the pornographers, because they seem to have a better sense of future opportunities, and how to monetize them, than a lot of other people. After all, the porn industry was ahead of everybody when it came to the home video business, and it is my understanding that it also has figured out how to make money off the Internet as well.

    But I don't really want to talk about bad guys this morning. I’m more interested in drawing your attention to a couple of stories that caught me by surprise, mostly because they illustrated companies doing the unexpected. And now, more than ever, it is critical to respect the unexpected.

    For example, there was the news that the folks at Clorox have actually put out a music album with seven songs – five of which were created for the company’s new advertising campaign, and that are described as “ethereal orchestral music and pop tunes to sell the company's line of bleaches, disinfectants and other home-cleaning products.” According to the Wall Street Journal, “half of the proceeds from album sales will go toward covering the production costs of the project, with the other half going to a charity called Music in Schools Today, which promotes music education for youth.”

    What’s interesting about this is that Clorox – and a bunch of other companies, including Allstate and Procter & Gamble – have begun thinking about their advertising in different ways, and they are investing in original music that is really original. It is a new way of differentiating their brands, and while it might not strike a chord with everybody, these companies are thinking different. And thinking different is always the first step toward acting different.

    Another company that is thinking different, and in doing so has created an entirely new business model, is a company called Zipcar, which has actually been around for almost a decade but that I only became aware of recently when I read a piece about the company in the Boston Globe.

    In case you are equally unaware of Zipcar, the company has completely reimagined the car rental business. As the Globe writes, “Cars are sprinkled throughout city neighborhoods. And there's never any paperwork or standing in line required to borrow one: just wave a membership card over the windshield, and the doors pop open. Seconds later, you drive off in a Mini Cooper, Ford Escape, or BMW sedan. Gas and insurance are included in the hourly rate, which hovers around $10.” The company has a presence in cities such as London, San Francisco, Boston and Washington, DC, and currently has a fleet of more than 5,000 cars and 180,000 members.

    Now, the Zipcar business has been so successful that the business model has attracted the interest of companies like Hertz and Enterprise Rent A Car, which illustrates a truism of the “think different” model – you can't stop, because there always will be imitators trying to take away your advantage. (This reminds me of what happened when Netflix introduced its online model for renting DVDs, only to be copied almost immediately by Blockbuster, which I still think is inferior…)

    Here’s the moral to the story. A lot of people never would have thought that a seemingly secure credit/debit card infrastructure could be violated, but it was. I never would have thought that a bleach company could sell music albums – or would want to – but it does. And few people could have come up with the Zipcar concept, but somebody did, and now there are imitators.

    Go figure.

    It seems to me that every company, no matter how big or small, no matter what business it happens to be in, ought to have somebody in charge of imagination, of thinking different. Such a person could end up being the most important player in the company.

    I have hanging over my desk some of the original “Think Different” ads created for Apple Computer more than a decade ago. I look at them constantly, and believe them worth quoting…

    “Here’s to the Crazy Ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently.

    “They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, disbelieve them, glorify or vilify them. About the only thing that you can’t do, is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.

    “While some may see them as the crazy ones, we see genius. Because the ones who are crazy enough to think that they can change the world, are the ones who do.”

    Respect the unexpected.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: April 3, 2008

    Seattle is considering a 20-cent “green fee” on all disposable shopping bags handed out at the city’s supermarkets, drug stores and convenience stores. The proposal was made yesterday by Mayor Greg Nickels and City Council President Richard Conlin, and also calls for a ban on foam containers in the food service industry. If adopted by the City Council, the waste prevention measures would take effect Jan. 1, 2009.

    Nickels and Conlin said the bag fee and foam ban will cut down on waste, reduce the use of environmentally harmful plastics and cut the production of greenhouse gases, and is a response to a recent city-sponsored report determining that both paper and plastic are harmful to the environment.

    “The answer to the question ‘paper or plastic’ is neither - both harm the environment. Every piece of plastic ever made is still with us. The best way to handle a ton of waste is not to create it,” said Nickels. “This proposal is all about forming new habits. Taking a reusable bag to grocery stores and pharmacies is a simple thing that has an enormous impact.”

    According to a statement released by the city, “Seattle Public Utilities (SPU) estimates 360 million disposable bags are used in the city every year, most made of plastic. Almost 75 percent of these come from the city’s 575 grocery, drug and convenience stores (out of a total 3,600 retail and restaurant businesses). While Seattleites have a good record of recycling paper bags, most plastic ends up in landfills. But paper bags will also be subject to the fee because, taking into account the environmental costs of logging and shipping, they are actually worse for the planet.

    “The green fee is intended to encourage and promote the use of reusable shopping bags. The city will set aside $1 million to distribute these bags and promote their advantages. Retailers will keep 5-cents of every bag to cover administrative costs. Retailers grossing less than $1 million annually will keep the entire 20-cent fee … SPU expects to collect about $10 million annually from the green fee. About $2 million will be spent to promote the switch to reusable bags, including the distribution of free bags to low income families and those on fixed incomes. The rest of the money, about $8 million, will go toward waste prevention and recycling programs and environmental education programs.”

    Within hours of the proposal being made, PCC Natural Markets issued a statement endorsing the measures. The company noted that it “eliminated plastic shopping bags from its eight stores in October 2007 and reduced the price on reusable totes — selling them at cost — to encourage shoppers to shift to reusable totes and bring their own bags for shopping. PCC also launched a ‘Think Reuse’ campaign.

    “The response from PCC shoppers has been overwhelmingly positive. Within a month of the elimination of plastic bags, use of reusable totes increased 48 percent. More than half of PCC shoppers now routinely reuse their own bags. PCC also has been seeking an alternative to replace plastic foam meat trays and is considering several options.”

    PCC CEO Tracy Wolpert said: “Most people can understand that disposable shopping bags — whether paper or plastic — are not free for us as a business nor are they free to us as a society. Their very manufacture consumes resources and creates toxic pollutants that are unhealthy for people and the environment as a whole. Seattle’s proposed policy reflects the growing awareness about the impacts of single-use bags and will help to enable shoppers to act on their good intentions.”

    KC's View:
    There almost certainly will be a lot of debate about this issue, with some folks saying it cannot be done, or should not be done.

    But I disagree. No waste is better than some waste, and reduced waste is better than nothing. And that’s what this is all about.

    It is yet another illustration of why Seattle is one of America’s great cities.

    And I would remind naysayers that the Irish government imposed a 33-cent tax on plastic bags back in 2002, and not only have consumers accepted and embraced the change, but even retailers have turned around. “I spent many months arguing against this tax with the minister; I thought customers wouldn’t accept it,” said Feargal Quinn, founder of Superquinn and a member of the Irish Senate. “But I have become a big, big enthusiast.”

    Ability isn’t the issue here. Will is.

    Published on: April 3, 2008

    The Boston Herald reports that Hannaford Bros. CEO Ron Hodge has crafted a note to consumers in which he apologies for the recent credit/debit card security breach, in which it appears that 4.2 million cards were compromised by a highly sophisticated software program.

    The notes are being distributed to customers in their shopping bags, as well as being posted on the company’s Internet site. It reads, in part:

    “Recently, Hannaford announced what security experts tell us was a novel and sophisticated attack on our computer network that resulted in the theft of certain credit and debit card numbers. I want to apologize for the concern and inconvenience this has caused you.

    “We have stopped this theft and brought in top security experts to help us guard against any further attacks. Meanwhile, we want to remind customers:

    • “If you used a debit or credit card at Hannaford between December 7, 2007 and March 10, 2008, your card number may have been exposed. No personal data such as names or addresses were accessed or obtained.

    • “Though policies and practices of financial institutions vary, consumers in general are protected against unauthorized transactions as long as the charges can be verified as fraudulent and are reported within the required time period. Some customers may experience extraordinary out-of-pocket expenses associated with card replacement, which we will evaluate on a case-by-case basis … Financial institutions will make their own decisions about appropriate actions, which may include reissuing new cards or putting the card numbers on alert for fraud.

    “It is important to know that no one from Hannaford or from any financial institution will ever contact a customer to verify personal or account information over the phone or Internet …

    “Hannaford works every day to deliver value and offer a reliable, convenient shopping experience. We are profoundly sorry the system attack worked against this mission. We want you to know that this event only serves to strengthen our commitment to you.”

    KC's View:
    The bad news is that probably will still be some litigation to defend, because we live in a litigious country that just seems to be the way things go. The good news, if there can be said to be good news associated with a security breach of this magnitude, is that it looks like Hannaford 1) wasn’t at fault, and 2) seems to be making all the right moves now.

    Published on: April 3, 2008

    Echoing another study that came out a little over a week ago, a marketing company called ICOM Information Communications has released a survey suggesting that 45 percent of respondents are “much more likely” to use coupons during a coming recession, while 22 percent are “somewhat more likely.”

    According to a statement released by the company, “Broken down by age, 71% of consumers in the 18-34 year-old age bracket said they are much more likely or somewhat more likely to use coupons in a recession. That compares to 68% in the 35-54 year-old bracket and 63% among those 55 years and above.

    “Geographically, 70% of Midwesterners said they are much more likely or somewhat more likely to use coupons in a recession, versus 69% of Westerners, 64% of Northeasterners and 62% of Southerners.

    “Income didn’t make a significant difference to respondents, with 68% of those earning less than $50,000 a year saying they are much more likely or somewhat more likely to use coupons in a recession, compared to 67% for those earning more than $50,000.”

    In addition, 58 percent of those surveyed said they could “see their coupon use increasing if they could download a coupon from the Internet and have it automatically connected to an electronically swiped frequent shopper card.”

    ICOM notes that “over the past ten years, the average coupon redemption rate has declined to less than 1.0 percent from a level of 1.6 percent across all U.S. coupons distributed.”

    It should be noted that in the study recently conducted by coupon processor CMS, it was reported that consumers redeemed 2.6 billion coupons in 2007 – the same number that were redeemed in 2006, and the first time in 16 years that coupon redemption has not dropped.

    KC's View:
    Clearly, the intent of all these studies is to suggest to marketers that consumer attitudes and economic trends are combining to create an environment in which coupons are a better choice.

    Hate to be contrarian, but I continue to believe that too many coupons are completely untargeted, and therefore pretty much wasted.

    Published on: April 3, 2008

    Published reports say that the US Food and Drug Administration (FDA) has confirmed that 50 illness in 16 states between mid-January and early March were linked to the consumption of cantaloupes imported from Honduras that have tested positive for salmonella.

    The Honduran government previously protested a suspension of melon imports from that nation by the US, saying there was no evidence of any contamination. Now, apparently, there is, and the grower-shipper at fault as been identified as Agropecuaria Montelibano. FDA inspectors reportedly are in Honduras trying to trace the source of the problem.

    KC's View:

    Published on: April 3, 2008

    A new report by TNS Worldpanel says that UK market leader Tesco saw a slight decline in market share during the past quarter, from 31.2 percent to 31 percent. At the same time, Sainsbury saw its market share drop from 16.4 percent to 16.2 percent, while third place Asda Group, owned by Wal-Mart, was up from 16.9 percent to 17.1 percent.

    Also seeing an increase – William Morrison Supermarkets, up from 11.1 percent to 11.6 percent.

    KC's View:

    Published on: April 3, 2008

    Reuters reports that Kraft Foods is following the lead of companies such as Procter & Gamble and Massimo Zanetti Beverage Group, lowering prices on ground coffee by about 6.5 percent, a response to a decrease in the cost of green coffee. The move is a reversal for all the companies, which were raising prices earlier this year as their costs went up.
    KC's View:

    Published on: April 3, 2008

    • Kevin Darrington, former senior VP and chief accounting officer for Pathmark, reportedly has been named senior VP/CFO at Tops Markets.

    KC's View:

    Published on: April 3, 2008

    MNB took note yesterday of a New York Times report saying that Michael Pollan, described as “the author and de facto leader of the food intellectuals,” thinks that rising food prices can be a good thing. “If American staples like soda, fast-food hamburgers and frozen dinners don’t seem like such a bargain anymore, the American eating public might turn its attention to ingredients like local fruits and vegetables, and milk and meat from animals that eat grass,” the Times wrote. “It turns out that those foods, already favorites of the critics of industrial food, have also dodged recent price increases.”

    The argument, essentially, is that high prices on mainstream foods could be the thing that pushed local/natural/organic/sustainable foods out of the niche category.

    Not a lot of MNB users were buying.

    MNB user Justine Raphael wrote:

    Cheap food is commodity food. The true costs are shouldered by our whole economy through government subsidies (from our tax money), increased health care costs (due to emphasis on refined grain foods and sugars), loss of farming work (through the shift of farming from family farms to large corporate entities), environmental degradation (through monocropping, increased packaging, dependency on transportation to access commercial foods), loss of local food diversity (putting us all at risk of widespread famine if/when monocrops fail) and so on.

    Real food is expensive. For now. If the above mentioned costs ultimately are included in the cost of the food that engenders them, then maybe the playing field will be leveled and consumers will be able to make real choices about the food they eat, based on factors other than affordability.

    MNB user Bill Bodine wrote:

    Your feelings on food prices seemed to have changed quite quickly. Today higher prices are not necessarily a bad thing. Two days ago farmers’ planting choices were soaking the consumer and the higher price situation could be summed up with “we’re screwed.”

    People like Michael Pollan have blamed low corn prices on everything from the obesity crisis to environmental issues to ruining opportunities for third world farmers because they can’t compete at low prices. Now corn prices are high and farmers are getting blamed for food price inflation and potential third world hunger because people there can’t afford food and their farmers can’t produce enough. The “experts” seem to blame farmers and the price of corn, not matter what the situation.

    My feelings about food prices haven't changed. I was just reporting what I was reading.

    Another MNB user wrote:

    The author from the New York Times must not have done his homework before coming up with such a simplistic analysis that high food prices are only related to products containing corn syrup. Dairy products prices have risen 80% from 2006 to 2007 and grains are up 42% according to the U.N. Food and Agricultural Organization. Cereal prices were up 41%. The global food system is directly impacted by the cost of petroleum-not only to ship the raw materials and finished goods, but also to process, manufacture and package items we consume. The $100 a barrel crude oil cost is not expected to come down, and is forecast to climb in 2008. The cost of planting, harvesting and delivering food will rise also. An alternative to petroleum is biofuels, but the development and utilization of these products as energy sources further drive up the cost of corn and sugar (used to make ethanol). When corn is used for fuel there is less available for food production, not only in the US but globally. We export 40% of the world’s total corn exports today. Less supply drives up the cost to everyone. Anyone who thinks that soda and convenience products are the only items that are increasing in cost must not purchase milk, cheese, whole grain cereals, bread or anything else that requires a truck to haul it-plastic to package it-or a farmer to grow it. This person must also walk or ride a bike wherever they need to go-when they need to replace their shoes or tires on their bike it may hit home that prices are rising……

    Another MNB user wrote:

    That article was 100% off base. Here is the truth!! Research not opinion!

    Researchers found the price of calorie-dense food was less likely to rise as a result of inflation. During the 2-year study, the price of high-calorie food decreased by 1.8 percent, whereas the price of low-calorie foods increased by 19.5 percent.

    Michael Sansolo wrote in his column yesterday: “The bottom line is that we really don’t know anything for certain about the future, but we see signs all around us. We look at Generation Y and see how they interact globally in ways previously unimaginable and we have to ask ourselves what they will be like when they are our customers and employees. I’ve heard people question whether their environmental fervor will continue in a softening economy, but I wonder if that’s applying our generational thinking to a new generational group.”

    Which prompted MNB user Bob Gatty to write:

    You make excellent points, Michael. Last week we went for a walk in the woods with my step-granddaughters, ages 6 and 8. All along the path, the 8 year-old picked up every can, bottle, piece of scrap that she could and put them in an old broken bucket she also found. Finally, we came upon several pieces of broken Styrofoam, and she tried to gather them up in her little hands as well. Of course, we helped, but still couldn’t get it all.

    We told her we’d come back and get the rest later.

    “I really hate to leave that there,” she said. “Promise we’ll come back.”

    OK, her mom is very environmentally-conscious. But if this little girl is any indication of what is in store, that is a very, very positive sign for our world.

    And retailers should pay attention because one day soon she will be buying the groceries – and I guarantee you she’ll be looking for everything “Green.” Everything.

    MNB reported yesterday that “more than a third of food retailers are incorporating sustainability concerns into their current store development plans, and 40 percent plan to do so in the next five years, according to the annual ‘Facts about Store Development’ report released by the Food Marketing Institute (FMI).”

    Which led me to ask:

    What possesses a retailer to say that he or she wants to take a sustainable approach to new store development…and plans to do so sometime in the next five years.

    Five years?

    There probably are all sorts of good reasons to say that it takes five years to bring such plans to fruition, but it also strikes me that there are all sorts of good reasons – environmental, cultural and from a public relations point of view – to be a lot more motivated than that.

    Some of the real winners five years from now will be the ones who did not wait, who did not procrastinate, who did not say “tomorrow” when faced with issues that affect the world today.

    MNB user Steven Ritchey responded:

    There are all kinds of reason why it might take 5 years. Many of the things needed might require a sizable investment, also, do you jump on new technologies, or do you let others experience the glitches and wait until many of the bugs are worked out. Some things are easy like offering reusable mesh bags, but things like refrigeration take longer, and lets face it, a modern supermarket has a lot of refrigeration. It’s like buying a new car, many of us, myself included don’t buy a new model the first year it’s made, we wait a few years to let the problems be worked out. As much as we might like to jump right on the green bandwagon, some things take time in the real world. As with any kind of real change, there is always more to it than meets the eye.

    Another MNB user chimed in:

    In reality stores being researched and planned today are to open 2 to 3 years from now, with the time for approvals both internally and community taking time to complete and store construction and site work adding to that as well. Sure things can be fast tracked, but at what cost? If plans have been drawn, materials ordered and sub contractors lined up; one small change will add time and money to the store, significant changes and cost increases could make the project go back through the approval process both internally and at the community level. I am guessing that in today’s ever competitive environment for shoppers, there is a point of diminishing returns for sustainability and to go blindly into making changes to sound more sustainable would be irresponsible on their part. Certainly this doesn’t apply to all retailers, but is a more general and generic statement for some of the masses.

    But MNB user Lisa Malmarowski wrote:

    I agree with you, KC. Retailers are continually upgrading and remodeling their locations and a decision to choose greener options could be made today.

    Sure, to develop a new location and integrate a number of ground up green features takes time, but choosing a low VOC paint doesn't... or how about choosing to replace incandescent bulbs with compact fluorescent bulbs? Or stopping pesticide use on plantings?

    KC's View: