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    Published on: August 14, 2008

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


    There was an interesting piece in Business Week the other day about health care reform, and how companies are playing a more active role in the delivery of health care services to their employees. One example: Toyota, which spent $9 million to open a health care facility to serve its workers in San Antonio, Texas. The clinic is run by Take Care Health Systems – which happens to be owned by Walgreen – and the article said that “the program has helped Toyota slash big-ticket medical items including referrals to highly paid specialists, emergency room visits, and the use of costly brand-name drugs. Plus, there are big productivity gains because workers don't have to leave the plant and drive to a doctor's office for routine medical matters.”

    One estimate – admittedly made by Take Care Health, which certainly has a vested interest in the numbers looking good – says that “every dollar invested in setting up a clinic will return $3 to $5, even though on-site doctors spend an average of 20 minutes with each patient—more than double the national average for primary-care physicians.”

    Toyota isn’t alone in pursuing this strategy. Other companies that pursuing similar strategies include Disney and Harrah’s. The other good news is this: at a time when the rising cost of health care benefits often is a bone of contention during labor negotiations, both employees and the unions that represent them seem pretty happy with this corporate foray into the health care business.

    All this made me think about how these tactics could be adapted in the retailing business. One of the downsides of opening a clinic is that the general consensus is that you have to have at least a thousand people working in a location to make the numbers work, and not many stores have many employees in one spot.

    But maybe there is a way to approach this differently. Is there any reason (other than antitrust, though I’m not sure that this would play a role here) that retailers couldn’t work together to create a centralized health care facility that would take care of their employees? There might be concerns about big retailers in big markets doing so, but certainly small chains and independents – always looking to find any sort of advantage – could band together to create a health care clinic that could take care of their employees and even lower their costs. By doing so, they could become a preferred employer, which in itself would be a differential advantage.

    I’ve always thought that big companies ought to employ what I call the ‘Northern Exposure” solution – they ought to offer to put young people through medical school if they will sign a contract that commits them to working for them over a specific period of years. These employers could have them going from store to store, or working in a single facility. They could spend some time working in in-store health clinics, even, and seeing consumers with questions or simple maladies.

    This idea isn’t fully formed yet. It’s really still marinating. But it seems to me that if we’re going to attack these kinds of issues with any sort of effectiveness, w have to try new and innovative solutions.

    It was, in many ways, the last line of the Business Week article that grabbed my attention and got me thinking. It quotes Tracy Swanson, who runs Disney’s health care program:

    “We can't afford to wait for the government to solve this,” she said.

    Damn right. Let the politicians debate and negotiate these issues. Retailers need to get ahead of the game and find their own solutions, because in the end, government probably will only provide a band-aid. Business, if it does this right, can provide a cure.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: August 14, 2008

    Tesco said yesterday that its efforts to encourage UK shoppers to refrain from using disposable plastic shopping bags seems to have paid off – since August 2006, when the company started giving shoppers ClubCard points for bringing in reusable bags, plastic bag usage has dropped 40 percent.

    According to a statement released by Lucy Neville-Rolfe, corporate and legal affairs director at Tesco, "It took more than 14 months to save the first billion bags but the second billion was achieved in less than nine months, showing that the trend is rapidly gaining support.”

    There is something of a competition in the UK to see which company can eliminate the use of disposable bags the fastest. Marks & Spencer, which imposed a small per-bag fee on shoppers needing disposable bags, recently said that it had seen an 80 percent decline in the use of such bags.

    KC's View:
    Proving, I think, that eliminating disposable bags is more a matter of will than anything else.

    Yesterday I was in my local Trader Joe’s, as always carrying a few canvas shopping bags. I noticed that the woman in line in front of me had canvas bags. The woman on line behind me had canvas bags. And at least two or three people at other checkouts had canvas bags.

    People who argue that it isn’t possible to change the way shoppers behave simply don’t have sufficient faith in their fellow human beings. People who argue that such a shift isn’t necessary, I would argue, simply aren’t paying attention.

    Published on: August 14, 2008

    BrandWeek reports on a new consumer trend – “precycling.”

    This trend has been identified by a market research organization called The Intelligence Group, and it refers to the growing desire on the part of some consumers not just to recycle appropriate products, but to not buy items with superfluous or environmentally unfriendly packaging.

    An example: The Intelligence Group recently “found that 45% of trendsetters and 14% of mainstream consumers have ‘cut down on bottled water purchases’ in the past six months, while 49% and 16% respectively have ‘cut down on use of plastic bags’ during the same period.”

    KC's View:
    The industry consistently has to deal with smarter consumers with evolving need sets. This is part of what John Rand of Management Ventures refers to as “the new premium” – consumers looking for products with value and values that extend beyond how they taste and what they do.

    Published on: August 14, 2008

    Business First of Columbus reports that Kroger has come to a tentative agreement with the United Food and Commercial Workers (UFCW) on a new contract that will cover 10,000 of the chain’s employees in the Columbus, Ohio, region.

    Terms of the deal were not disclosed; a ratification vote is scheduled for tomorrow.

    This is not a negotiation that came down to the wire. The existing contract does not expire until November 9, 2008, but both sides got a head start on the negotiations in order to minimize any possibility of a labor action.

    KC's View:
    Saner heads prevailed. Go figure.

    Published on: August 14, 2008

    The Washington Post this morning reports that labor groups are requesting a federal investigation into allegations that Walmart held a series of meetings with store and department managers around the country, during which it was explained that the election of a Democratic administration and Congress this fall could result in the passage of pro-union legislation that could hurt the company.

    Walmart has denied that it was telling its employees how to vote, though at least some of the managers were quoted in the press as saying that’s how they interpreted the sessions.

    Walmart said that it welcomed an investigation by the Federal Election Commission (FEC).

    KC's View:

    Published on: August 14, 2008

    Reuters reports that Ed Schafer, Secretary of Agriculture in the Bush White House, says that new federal regulations will not solve what many see as a food safety crisis in the US.

    "I don't believe that, from a USDA standpoint, we need to increase the number of inspectors or change the testing requirements," Schafer told , noting that he wanted to see greater innovation in the private sector. “I'd like to see them experimenting with new and better equipment and ideas,” he said. “You start mandating things, and that incentive to improve goes away.”

    KC's View:
    No word on whether Schafer also believe sin Santa Claus and the Tooth Fairy.

    I’m not sure that new regulations are needed so much as a whole new approach to transparency and traceability. Seems to me that to add new regulations onto the old regulations could just compound the problem. It may be almost impossible to achieve, but FMI CEO Tim Hammonds has forever been talking about a single food safety agency that would consolidate all these functions and make them work more smoothly and effectively. It increasingly sounds like this is the kind of revolution that really is required.

    (Maybe Hammonds would like to tackle such a job after his retirement from FMI?)

    Published on: August 14, 2008

    The Austin Business Journal reports that Whole Foods, concerned about the current economic climate and declining sales and profit numbers, is eliminating 49 of 650 headquarters jobs. The company did not provide details about what kinds of positions are being cut.

    In addition to having a tough time on the sales front, Whole Foods also has been dealing with the repercussions of a recall of much of its ground beef, which was feared to be contaminated with E. coli. And, a year after it acquired Wild Oats, Whole Foods continues to grapple with Federal Trade Commission (FTC) opposition to that deal.

    KC's View:

    Published on: August 14, 2008

    • Walmart announced yesterday that it plans to invest a minimum of $1 billion (US) in its Brazilian operations to expand its store count there by between 80 and 90, beginning next year. Walmart first came to Brazil in 1995, and currently operates 318 units there.

    KC's View:

    Published on: August 14, 2008

    The Los Angeles Times this morning reports that “a senior food-safety official in Beijing killed himself amid a government probe into suspected corruption, Chinese media reported Wednesday.

    Wu Jianping, 42, was in charge of licensing food-production companies at the General Administration of Quality Supervision, Inspection and Quarantine. He committed suicide Aug. 2 by jumping from a building in Beijing after being questioned a day earlier about his personal finances, according to Caijing magazine.”

    However, official Chinese spokespersons described the event as a “sudden accident.”

    KC's View:

    Published on: August 14, 2008

    • Tesco announced that its US Fresh & Easy Neighborhood Markets division has identified five new locations in San Diego where it will open stores. The company already has seven in San Diego, and is operating a total of 71 stores in Southern California, Nevada and Arizona.

    KC's View:

    Published on: August 14, 2008

    • Parents needing physicals for children going back to school and/or participating in sports leagues will find that Walgreen’s Take Care Health Systems clinics are offering $25 physicals at 29 Chicago locations as well as in some 200 other facilities around the country, according to a report in the Chicago Sun-Times.

    • The Canadian Press reports that Canada Safeway employees will vote next week on a tentative contract agreement reached between the chain and the United Food and Commercial Workers (UFCW). Terms of the deal were not disclosed.

    KC's View:

    Published on: August 14, 2008

    • Walmart announced this morning that its second quarter net sales were up 10 percent to $101.6 billion, on same-store sales that were up 4.5 percent in the US (excluding fuel). Q2 net income was $3.45 billion, up 17 percent from $2.95 billion during the same period a year ago.

    • Unified Grocers reports that its third quarter net sales were $1,017.1
    million, compared to $790.6 million for the 2007 period, a 28.6 percent increase that it attributed largely to its acquisition of Seattle-based Associated Grocers. Q3 net earnings were $12.2 million compared to $11.3 million in the same period a year ago.

    • Stater Bros. reports that its third quarter earnings were down 41 percent to $9.2 million, from $15.6 million during the same period a year ago. Q3 sales were $932.7 million in sales, up 2.5 percent from a year ago.

    CEO Jack Brown conceded that the tough economy had an impact on the company’s profits, but noted that its stores actually saw an increased customer count during the quarter. “This means that when our customers have more to spend, we'll get our share and unlike some retailers, we won't have to go looking for our customers," Brown said. "A lost customer is very hard to locate and win back."

    KC's View:

    Published on: August 14, 2008

    In a commentary yesterday about a survey saying that an enormous number of people think that Starbucks is overpriced, I questioned the accuracy of the results, saying that it has been a long time since I’d been to a Starbucks that wasn’t crowded.

    MNB user Jessica Hui responded:

    While it's an apt observation that the results of surveys and polls may not necessarily be accurate representations of population at large, your comment on the sample size of the Rasmussen survey is, as stated, misguided. Basic statistics shows that the sample size of the survey (1000 people, as you pointed out) has little to no bearing on the accuracy of the survey's representation. It's the methodology behind the selection of these 1000 people that affects the margin of error and, in turn, the accuracy with which the survey mirrors the views of a larger population. A sample size of a few thousand people could conceivably provide a reliable, accurate representation of the views of the entire U.S. population. The more random the selection, the better -- if the folks at Rasmussen were to actually go and seek out 760 respondents who rarely or never visit Starbucks as you suggested (which is rather unlikely), then this lack of randomness would certainly create a big hole in the survey results. But, again, it would be this deliberate (vs. random) selection of the sample that would tarnish the results, NOT the sample size itself.

    Fair enough. I certainly didn’t mean to suggest that the folks at Rasmussen were deliberately skewing the results…just that maybe the numbers don't match the reality. The older I get, the more I distrust polls – whether they be about presidential politics or coffee shops.

    In fact, maybe there is a connection here.

    One of the things I keep hearing is that you can't trust the political polls this year because they are only calling people with landlines, and an enormous number of people (20 percent of the electorate?) only have cell phones, and therefore are not being counted.

    I wonder if an unusually high percentage of Starbucks aficionados also only use cell phones, and therefore are not being counted in such surveys.

    Just a question, really.




    Writing about a government study that essentially said that if you eat right and exercise more, you reduce the likelihood of having a stroke, I commented that next week we’ll be seeing “a multi-million dollar study funded by our tax dollars that will reveal that if you smoke, eat and drink too much, never exercise and let yourself go, the odds will improve that you are going to die sooner rather than later.”

    MNB user Richard Thorpe wrote:

    Not to be harsh but some of us feel this way about the way you repeat yourself in regards to Starbucks. Humans need repetition in word and action. When it comes to health – Repeat – Repeat – Someone who didn’t get it last time may get it this time, someone who missed the last obvious report may read this one. Perhaps the entire study covered other health issues and Reuters only reported the part that you commented on. Who knows? Plain soy latte for me.

    Again, fair enough.

    Maybe I was a little tough on this one. I always struggle with the issue of repetition…the problem here is that with 75-100 new subscribers a week, there are always people out there who aren’t familiar with my biases, haven't read my commentaries, and haven't heard the jokes.

    Thank goodness.

    MNB user Bob Bartels had an interesting take on the repetition:

    Another example of the scratched dog syndrome. A dog continues to scratch an open wound on its ribs not because the wound still itches but because it is the only place it can scratch.




    On the subject of Starbucks’ strategic imperatives (a subject that, I confess, I cannot get enough of), one MNB user wrote:

    We both know…the growth and success of a brand is not always linear. In the late 80’s, Nike had just surpassed adidas in the US with a 30% market share…Reebok came along in the late 80’s and redefined the fitness segment of the market and in a few short years came from virtually no market share to move past NIKE with 33% market share while NIKE market share shrunk to 20%...NIKE responded and recaptured the lead from Reebok and never looked back (today adidas owns Reebok and together adidas and Reebok markets share don’t even come close to NIKE’s dominance)…and NIKE has gone on to also dominate world markets…Lesson…great brands know how to respond…and it probably is not wise to listen to irrelevant research or a newspaper guy from the Denver Post guess at what a brand is doing. Let’s watch Starbucks work their branding magic and learn some lessons.

    Absolutely.

    I guess that the corollary to that is that some brands are going to be Nike, some brands are going to be Reebok, and some brands are going to be New Balance. Not only am I okay with the idea of being New Balance, I’d actually prefer it if I had that kind of brand. But it is up to companies to decide where and what they want to be, and then develop strategies and tactics to support that decision.

    BTW…I noted that a Denver Post story on the subject quoted a pundit that I described as having “a clearly overdeveloped ego.” And I got a couple of emails yesterday asking me if that kind of personal attack was going a little over the line.

    Normally, I’d agree with you. But in this case, no. The pundit that I criticized was, in fact, me.




    On the general subject of educating employees, one MNB user wrote:

    There was a thread about a week back about today’s store managers lacking skills or something to that effect. The one thing that I would point out is that there is a complete generation of store managers that have never had to manage in inflationary times and we have had to educate them on the fact that if your up 2% in sale but inflation is 3% you’re falling behind. Sorry to be so cryptic and didn’t necessarily the preceding for publication but, thought it was a point worth bringing out in this slim margin business.

    Excellent point.




    And, on the subject of what I guess you could call the gourmet ice craze, MNB user Kevin McCaffery wrote:

    I am sure the same thing was said about bottled H2O, and we know what happened to that little idea. Also I was in Fresh and Easy last week in CA and in the freezer they where selling bags of flavored ice, Orange, Lemon and Lime….

    Oy…

    KC's View: