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    Published on: June 6, 2008

    MarketWatch reports this morning that in advance of its annual meeting today, Wal-Mart has signaled its interest in “expanding into installation and repair services in its fast-growing electronics segment.”

    “We are looking at different options,” said Gary Severson, a Wal-Mart senior vice president.

    According to the story, “Analysts have singled out installation and repair services – via Best Buy's Geek Squad operation -- as key differentiators for the Minneapolis consumer electronics retailer vis-à-vis Wal-Mart. Wal-Mart has bolstered sales in the segment by carrying more brands such as Samsung and Sony. It's also adding more social-gaming products such as Guitar Hero to lift its videogame sales.”

    The company also identified Southeast Asia as a likely place where the company could develop a presence and thus expand its global footprint. Wal-Mart currently operates in China, Japan and India.

    Wal-Mart also said yesterday that it will test a new format – called Sam’s Club Business Center – that will cater specifically to small business customers and will not carry apparel and seasonal merchandise. It will, however, have a copy, print and ship center, and will offer delivery services.

    KC's View:
    Seems pretty clear to me that Wal-Mart moving into what is likely to be a pretty fertile period – lots of new stores, new formats, and new businesses. The rest of us may be suffering from this transformational economy, but Wal-Mart probably will use it as a springboard to new profitability and productivity.

    Published on: June 6, 2008

    A new bill has been introduced in the US Senate that would allow retailers large and small to negotiate transaction fees with credit card companies such as MasterCard and Visa. The legislation was introduced by Sen. Richard Durbin (D-Illinois), who said, “There is no meaningful competition or negotiation involved in the setting of interchange fees.”

    A similar bill already has been introduced in the House of Representatives.

    Visa released a statement in which it described the legislation as “unnecessary government intrusion” that would “suppress competition and innovation, and would harm consumers and small financial institutions in particular.”

    The Food Marketing Institute (FMI) lauded the bill, saying that it would “create a truly competitive and transparent market for setting credit card transaction fees, especially the hidden interchange fees, which alone are projected to cost retailers and ultimately consumers nearly $50 billion this year.”

    “This law gives retailers a seat at the table to negotiate fair and reasonable transaction fees with credit card companies,” said John J. Motley, III, FMI’s senior vice present of government and public affairs. “It would put an end to the anti-competitive and anti-consumer system in which the credit card company networks fix these fees in secret with impunity.

    The National Retail Federation (NRF) released a similar statement of support: “The introduction of this bill shows momentum is building in Congress and that both the House and Senate are ready to bring the credit card companies’ greed under control,” said NRF Senior Vice President and General Counsel Mallory Duncan. “This is a fee most consumers don’t even know about, but it’s the equivalent to half a dozen tanks of gas or a month’s worth of groceries. If consumers knew how much they were paying for credit cards, most would say it isn’t worth the price, particularly in today’s economy.”

    KC's View:
    I think that anything the government can do to bring transparency to the credit card business is a good thing.

    However, I can't help but chuckle. “Unnecessary government intrusion.” It is amazing how fluid a term that is, to be used when the government acts against our interests but never to be uttered when politicians actually come down on our side of the issue.

    Published on: June 6, 2008

    Advertising Age reports that Wal-Mart has launched a new alliance with Yahoo!, announcing that it will now “have Yahoo sell advertising on, another sign that companies which previously never considered themselves media companies are today, in effect, media companies. Wal-Mart also recently launched a free classified service.”
    KC's View:

    Published on: June 6, 2008

    • In Kentucky, the Courier Press reports that Houchens Industries has completed its acquisition of Buehlers Foods. According to the story, “Buehler’s Buy-Low stores will continue to operate under that name, and store associates remain employed by the company … Buehler’s Buy-Low day-to-day operations will continue to be headquartered from Jasper, Ind. However, former Buehler Foods president Kris Buehler Massat is no longer involved in the management of the company.”

    • The Seattle Times this morning reports that Starbucks has laid off 100 people, including 25 headquarters employees, as it continues to cut costs in search of greater profitability. The company emphasized that no store employees have been laid off.

    Starbucks had announced 600 layoffs, many of them at headquarters, back in February.

    KC's View:

    Published on: June 6, 2008

    • Royal Ahold said this morning that its overall first quarter profit was up 8.9 percent to the equivalent of $402 million (US). In the US, the company said that Q1 profits were down 11 percent to $202 million at Stop & Shop/Giant of Landover, while they were up 16 percent to $72 million at Giant of Carlisle.

    • Target Corp. said that its May sales were up 5.5 percent to $4.6 billion, on same-store sales that were off 0.7 percent.

    • Rite Aid Stores posted May sales that were up 47.9 percent to $2.5 billion, from $1.7 billion during the same period a year ago. Same-store sales for the month were up 1.3 percent.

    For the first quarter, Rite Aid said that sales were up 48.5 percent to $6.6 billion, on same-store sales that were up 1.5 percent.

    The overall sales increases were robust because of the company’s acquisition of Brooks Eckerd.

    • Longs Drug Stores said that its May sales rose 0.2 percent to $374 million, on same-store sales that were down 1.4 percent.

    • Smithfield Foods reported that its fourth quarter net income was down 93 percent, to $2.4 million from $37.1 million during the same period a year ago. The company blamed the plummeting profits on the increased consumption of corn for ethanol, which is driving up the cost of feeding pigs.

    KC's View:

    Published on: June 6, 2008

    Yesterday in “Your Views,” an MNB user waxed nostalgic about the good old days, saying: “I grew up in a much simpler time. We did not have to lock our doors, we had to be home when the street lamps came on, our parents did not seem to worry as much about us, as we worry about our children today and where they are at all times. There was an understanding of right and wrong, and parents did spank their children, fathers were feared, respect of our fellow neighbor prevailed and manners were demanded or else.”

    I responded that while I agreed with much of what he said, I disagreed with the “feathers were feared” comment: My kids don't fear me, and I think that’s a good thing. Not that I behave as if parenting is a popularity contest, which I’ve always thought is the worst mistake parents can make. But fear? Can't go there, and don’t want to.

    To which one MNB user responded:

    Chill Out!! I think that you may have reacted a bit too much re: the "kids feared their fathers" comment by one of your subscribers. This is a reference to a respectful reverence of one's father knowing that you would be held accountable and suffer consequences for your actions. A parenting skill that we could use more of from today's parents!

    Maybe. But I think there’s a big difference between fear and respect.

    Responding to yesterday’s stories about how Wal-Mart seems to have achieved a level of détente with the unions, even as Tesco continues to run into strident union opposition to its west coast Fresh & Easy stores.

    MNB user Geoff Harper wrote:

    I also think it will be a while before Tesco sits down with the union...and I'm not sure where the Wal-Mart initiatives are headed. The union has been temporarily defanged by Wal-Mart, but their goal with both companies is not to improve the employees wages and benefits... it is to get members, period. It is hard to see how any amount of sitting down and talking is going to bridge that divide.

    Another MNB user wrote:

    With the economy doing so poor, unions loose a lot of its punch as it member just hope they have a job. Wal-Mart wins as these union members and other customers turn to them to help them save money. Again capitalism wins.

    Reactions to our story about the “ethical companies” list that came out yesterday…

    One MNB user wrote:

    Kudos to those companies that made the list…perhaps in a few years, to make the ethical list, your product has to be ethical as well…a couple of those companies produce products that may not be as healthy for people as they could be or contain ingredients that are not in the consumer’s best interest…

    MNB user Mona Doyle wrote:

    The list would be more interesting if I knew why Whole Foods isn’t on it.

    I’m guessing that the John Mackey blogging controversy and the SEC investigation might have something to do with it.

    MNB user Jan Owens wrote:

    My husband works for one of the companies on the "high ethics" list. They work VERY hard at trying to find the "good business" perspective as well as being good citizens of the community, the world, etc. It is a company that people are proud to work for, and inspires loyalty.

    I got several emails yesterday admonishing me for missing a story yesterday and not having a “Sports Desk” section.

    MNB user Eli Prica wrote:

    You always have scores of major sporting events the day after. Today no mention of the Detroit Red Wings winning the Stanley Cup?

    I guess no one is a hockey fan.

    And MNB user Rob Allison chimed in:

    KC, I always notice that you update all your readers on the major happenings in the sports world. Today’s column left something out that happened last night.

    As much as it pains me to say this (I am by no means a Detroit fan), the Detroit Red Wings beat the Pittsburgh Penguins 3-2 in Game 6 of the Stanley Cup Finals. This gave Detroit its fourth Stanley Cup in the last 11 years. Quite an accomplishment in a day and age where no team can dominate one sport, unless you are filming the oppositions practice.

    You’re right and I was wrong.

    Blame it on my lack of interest in hockey. I thought the Stanley Cup was months ago.

    (When either the Celtics or the Lakers win the NBA championship, will someone shoot me an email? I’m afraid that basketball isn’t on my radar either…I’m a baseball major, with a minor in football.)

    KC's View:

    Published on: June 6, 2008

    Yesterday marked the 40th anniversary of the assassination of Robert F. Kennedy, which took place during a year of such enormous political and cultural tumult that it makes the current campaign season look like child’s play. I’m old enough to remember that year. I remember reading about and watching the coverage of Kennedy’s assassination, and Martin Luther King’s. I remember watching television the night that Lyndon Johnson announced that he would not run for re-election.

    And I remember the confusion that I felt, and the uncertainty about the world around me. I was growing up in a comfortable New York suburb, going to parochial school, and was being reassured at every juncture that life was fair and that the world was a good and decent place where justice could be relied upon.

    I wasn't old enough to be radicalized, but even then I remember having the sense that I was being sold a bill of goods, that all was not as it was being described to me by the institutions that were supposed to matter. It probably was then that I began to realize – though the notion didn’t formalize itself until much later – that optimism should be cleaved by cynicism, and that cynicism must be leavened by optimism.

    I’ve been thinking about this over the past few days, especially because I just read the introduction written by Pete Hamill to a new book entitled “A Time It Was: Bobby Kennedy In The Sixties.” Hamill once again proves he has one of the most elegant and eloquent voices in modern journalism with his memories of June 5, 1968. He was in the Ambassador Hotel in Los Angeles that night, covering the Kennedy campaign, and he was just feet away from Kennedy when he was gunned down by Sirhan Sirhan, who he describes as a “cruel messenger” for a moment that sadly may have been inevitable.

    Excellent piece of writing. I recommend it to you.

    Sometimes a retailer announces a move that just seems to make sense. Just such a moment occurred this week when Apple confirmed that it will be occupying a two-floor, seven thousand square foot retail space in the Carrousel du Louvre, the shopping center in the basement of the Louvre Palace next to the famous museum and glass pyramid.

    And the moment this deal became public, it just seemed the perfect location for Apple, which has made design and aesthetics such important components in its recent success. (Though it is hard to imagine that the Parisians will allow Apple to have a cube like it has in New York to complement the glass pyramid.)

    Too bad it wasn't there during the period of time that the events in “The Da Vinci Code” took place…because having an Apple store so close by might have saved Robert Langdon a lot of time…

    Have you seen the new commercial for State Farm insurance that stars Joe Torre? I think it is just about perfect…it uses his move from the Yankees to the Dodgers as a fulcrum on which the pitch depends – that during a life change, you can count on State Farm.

    Very smart.

    Here’s what I want to know, though. State Farm has this commercial. Allstate has those great commercials starring Dennis Haysbert. And Geico has the lizard and the cavemen.

    What is it about the insurance biz that generates such great commercials?

    Thanks to the Stamford Advocate which did a nice piece about our new FoodWireTV venture this week. You can check it out at:

    I've just finished the new James Bond novel, “Devil May Care,” which is by acclaimed British novelist Sebastian Faulks “writing as” Ian Fleming. The thriller picks up where Fleming left off at his death, in the late sixties as James Bond actually is feeling vulnerable and is contemplating his own mortality. I was a huge fan of the original Fleming books when I was growing up (and still have some of those aged paperbacks that sold for the whopping cost of 75 cents!), though I haven't read any of the other Bond books that have updated the character into modern circumstances.

    While I can't say I loved “Devil May Care,” I will say that I enjoyed it. The book is a good ride; while sometimes it just seemed dated, it did have a sense of nostalgia for simpler times (remember when the Cold War seemed like the worst kind of threat?) that was charming. It did make me even more anxious for the next James Bond film starring Daniel Craig, “Quantum of Solace,” due out this November.

    If you are looking for a book to give as a gift this Father’s Day, I will once again recommend “Death to All Sacred Cows: How Successful Business People Put the Old Rules Out to Pasture,” by David Bernstein, Beau Fraser and Bill Schwab. It is both funny and specific about business foibles and opportunities…and I can't say enough good things about it. Check it out.

    Two wines this week:

    • the 2004 Yves Breussin Vouvray Demi-Sec, which is a wonderfully refreshing white wine perfect for warm spring or summer nights.

    • the Solane 2003 Valpolicella Ripasso, great with a pizza or any tomato-based dish.


    That’s it. Have a great weekend, and I’ll see you Monday.


    KC's View:

    Published on: June 6, 2008

    MNB has learned that Shelley Broader, who recently announced her resignation as CEO of Delhaize-owned Sweetbay Supermarkets in Florida, will become the next president/COO of Dallas-based Michaels Stores, which operates more than 900 arts and crafts units in the US and Canada and generates close to $4 billion in annual sales.

    In going to Michaels, Broader follows another supermarket industry executive – it was a year ago this week that Brian C. Cornell, Safeway’s executive vice president/chief marketing officer, moved to the chain as its CEO.

    KC's View:
    Sounds like Michaels is building one hell of an executive team. It is lucky to have people like Cornell and Broader…though I have to admit that I hope that someday they find their way back to the food business, which is diminished for their departure.