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    Published on: September 18, 2008

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    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, brought to you by Webstop, your first stop for retail website design services.

    There was a piece in the Washington Post the other day worth revisiting, about companies that consumers actually care about. The story suggests that there are actually very few such companies, but that they “represent a distinctive and distinctively American contribution to 21st-century capitalism.”

    The four companies, at least according to the Post are these: Starbucks, Apple, Google and Amazon. The SAGA companies, in the words of the columnists, James Ledbetter and Jacob Weisberg.

    What makes a SAGA company?

    Well, it isn’t size – because these are organizations with vastly different market capitalizations, ranging from Starbucks’ $12 billion to Google’s $158 billion. But Ledbetter and Weisberg argue that each of these companies “has transformed not only a specific commercial marketplace but also some important aspect of contemporary life -- computing and music for Apple, information and advertising for Google, coffee for Starbucks, books for Amazon. In doing so, each has had an appreciable impact on our daily routines, taken on a looming presence in popular culture, and often engendered an intensity of feeling more often associated with tastes in entertainment or political views. Together, they have created a new model of business innovation, culture and values.”

    What else do they have in common? There are three areas cited by the authors, two of which I think need to be taken seriously by retailers in almost every venue.

    Ubiquity, for one thing. It is hard to find a teenager who does not have an iPod, just as turning to Google is almost second nature when you go online. Amazon certainly dominates the online marketplace, and Starbucks sometimes is on every street corner in America…though it can be argued that, at the moment at least, circumstances and maybe even a little arrogance have conspired to make that ubiquity less of an advantage than it was a few years ago.

    How does this relate to other retailers? Well, I’ll go back to the statement I keep making ad nauseum here on MorningNewsBeat – that modern consumers, and certainly the consumers of the future, wants products to be available where they want them, how they want them, when they want them, and at a price they believe is appropriate. That, my friends, is a kind of ubiquity that the 21st century retailer needs to embrace.

    Another common trait, according to the authors, is the ability to “engage consumers on an almost spiritual level.” I ordinarily would be inclined to dismiss this as sort of new-age nonsense … but the fact is that I am one of those consumers, especially when it comes to Starbucks, Apple and Amazon. (Google not so much…though I get the point.)

    The authors describe it this way: “Think of the reaction this summer when Starbucks announced it would close 600 outlets: There were protests and petition campaigns throughout the country. Americans reacted as if they had a legal right to lattes within short reach of their homes and offices. In large part, this is because the companies inspire both a sense of community and the ability to create personal brands -- I am my iPod -- which is a powerful combination.”

    This ties into what the folks at Management Ventures call “The New Premium” – the ability of a brand to transcend the value of a product, and communicate the values of a company. And it is becoming increasingly important to consumers. The current economic straits in which many of us find ourselves may slow down this trend a bit in the immediate future, but it is likely to be a trend that will outlive today’s recessionary climate.

    Finally, and I think this is very important, the authors argue that all of these companies are iconic American brands…and yet, they have global appeal. The SAGA companies reflect an essential kind of American innovation. According to the Washington Post column, the SAGA companies “represent the dramatic shift away from domestic manufacturing and toward an idea-driven, consumer-focused, value-added economy. It is also not coincidental that all four companies are based on the West Coast, reflecting the shift in America's demographics and centers of innovation.”

    Ubiquitous, engaging to consumers in an almost spiritual way, and reflecting companies that are idea-driven, consumer-focused, and value-added.

    Sound like ingredients for success in my book. Ingredients that more companies need to put a premium on as they define their cultures and their strategies.

    And accept nothing less.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: September 18, 2008

    Walmart announced this week that its Sam’s Club membership warehouse stores will begin offering its shoppers polypropylene reusable shopping totes that are capable of holding $50 worth of product; selling them for two-for-$2.74.

    According to the company, “the reusable tote bags come in black and white and both display the water and leaf icon and tag line ‘simple steps to saving green.’ This symbol also appears on eco-friendly products and displays in Sam's Club to designate items that take steps to be more environmentally sustainable.” Sam's Club estimates it will be able to remove 1.9 million pounds of cardboard and package waste or more than 3,200 pounds per club, per year, by offering the totes.

    "These new reusable bags will give our members an alternative to using the boxes we provide, and help us reach our goal of zero waste," said Greg Johnston, executive vice president, Operations, Sam's Club. "We will continue to offer boxes, but believe we can increase the amount of material we recycle and further ensure we are closing that loop."

    KC's View:
    You have to admire Walmart’s consistency on the environmental issue…and how it makes the issue dovetail with its business and profit imperatives.

    Published on: September 18, 2008

    Here’s the bad news. TNS Retail Forward is forecasting that the coming end-of-year holiday season will be the weakest in 17 years, projecting that sales growth will be just 1.5 percent, compared to 1.2 percent in 1991.

    Here’s the worse news. The forecast apparently was formulated before the stock market tanked this week and before a series of business collapses and near-collapses that eroded consumer confidence in the US economy.

    The weakness is projected to sweep through a broad variety of sectors – “general merchandise stores such as conventional and discount department stores, supercenters, warehouse clubs, apparel stores, furniture, home furnishings, consumer electronics and other specialty stores, as well as home improvement stores, catalogs and online sales,” according to the forecast.

    As a matter of comparison, Q4 sales growth in recent years has been more robust – 2.7 percent last year, 3.8 percent in 2006, 7.0 percent in 2005, 6.5 percent in 2004 and 6.0 percent in 2003.

    KC's View:
    Which means, I suppose, that we’re going to start seeing Christmas sales circulars hitting the street sometime in the next 10 days or so.

    Published on: September 18, 2008

    California-based Save Mart announced yesterday that it is raising the bar for pharmacy services by guaranteeing customers that they can get up to three prescriptions filled in 19 minutes – and if the chain does not deliver on that promise, shoppers will get a $10 gift certificate and a free one-night movie rental.

    “Every pharmacy needs to fill every prescription accurately. Our pharmacies already provide excellent customer service, and now our 19-Minute Promise will ensure that we also deliver prescriptions quickly,” said Michele Snider, Senior Director of Pharmacy at Save Mart Supermarkets, owner and operator of Save Mart and Lucky stores and pharmacies. “We understand that our customers are busy and, at times, under the weather. We aim to make their visits to our pharmacies as quick and convenient as possible.”

    KC's View:
    I think it always impresses customers when a store puts its money where its mouth is.

    Published on: September 18, 2008

    The Washington Post reports that “China has agreed to lift a bird flu-related ban on U.S. imports of poultry products from six states but remains closed to all imports of U.S. beef … China also agreed to adhere to a more streamlined process by which U.S. makers of medical devices obtain approval for imports of their products to China and to step up efforts to prevent contamination of its own pharmaceutical exports … The two sides further pledged closer cooperation on steps to combat piracy of intellectual property and the sale counterfeit goods in China.”

    According to the story, China first closed its borders to US beef in 2003 when a case of mad cow disease was identified in the US; while it said in 2006 that it would lift the ban on US beef, it has not actually happened yet.

    Poultry from six states - New York, Pennsylvania, Connecticut, West Virginia, Rhode Island and Nebraska – was banned from China because of concerns about bird flu. Poultry from two other states, Arkansas and Virginia, remains banned from Chinese shores.

    KC's View:

    Published on: September 18, 2008

    Reuters reports that a monthly associates meeting at Walmart headquarters in Bentonville, Arkansas, recently featured an appearance by T. Boone Pickens, the Texas oil tycoon who currently is engaged in an enormous public relations effort to get Americans to consider various forms of alternative energy sources.

    During that meeting, Pickens reportedly urged Walmart CEO Lee Scott, who was in attendance, to switch the company’s fleet of trucks to compressed natural gas … and according to Pickens, Scott has ordered a study of what it would take to make such a conversion.

    Walmart spokesman Greg Rossiter tells Reuters that a possible conversion to natural gas is one of many options being actively studied by the company.

    • More details have been released about the settlement reached between Walmart and its former vice chairman, Thomas Coughlin, who has been convicted of wire fraud and tax evasion. Because Coughlin’s illegal activities took place during his employment at Walmart, the company sought to void his multi-million dollar retirement package, an effort that Coughlin sought to derail.

    It already has been reported that the settlement reduced Coughlin’s original $17 million retirement package to about $6.75 million. In addition, Walmart agreed to pay all of Coughlin’s medical bills as of August 21, 2008; and put $250,000 into a trust account pending the outcome of two civil suits brought against Coughlin. Both sides also agreed not to make disparaging comments about the other.

    KC's View:

    Published on: September 18, 2008

    The Washington Post this morning reports that the US Food and Drug Administration (FDA) is scheduled to release guidelines today that will cover the genetic engineering of animals for food and drugs.

    According to the story, “biotech firms will be asked to provide the molecular identity of snippets of DNA inserted in an animal's genome, as well as where the genetic message lands and whether it descends unaltered through subsequent generations. The FDA also wants to be told how the genetic alterations might change an animal's health, behavior and nutritional value. The companies also should inform the agency how they will keep track of animals, prevent them from mingling with their non-engineered cousins and dispose of them when they die.”

    The Post also reports that “food that is produced from genetically engineered animals will not have to be labeled as such. However, if the genetic manipulation changes the nutritional content -- for example, by increasing a beneficial form of fat -- that must be declared on the label. The specific requests in the guidelines are not mandatory. However, biotech companies seeking FDA approval to commercialize genetically engineered animals must follow federal drug laws.”

    KC's View:

    Published on: September 18, 2008

    • Walgreen said yesterday that it will continue to pursue a possible acquisition of Longs Drug Stores – despite the fact that Longs has spurned its proposal in favor of an earlier bid made by CVS Caremark.

    • Tesco said yesterday that it has received conditional approval for a $1.74 billion (US) acquisition of South Korea’s Homever discount chain. The company said that the takeover will double the company’s presence in South Korea.

    • The Los Angeles Times reports that 25 states have “asked beverage maker MillerCoors on Wednesday to abandon plans for a new caffeine-infused alcoholic energy drink,” saying that that the Sparks Red drink was a “recipe for disaster" because “adding caffeine to alcoholic beverages reduces drinkers' sense of intoxication.”

    MillerCoors has said it plans to go ahead with an October 1 rollout of the drink. The attorneys general for the 25 states have hinted that they could file a lawsuit to prevent the release of Sparks Red.

    • Safeway yesterday announced that it is offering flu vaccines in all their U.S stores, while supplies last. Most stores will give vaccines on a walk-in basis at in-store pharmacies, while others will conduct scheduled flu vaccine clinics.

    Safeway also offers full-service adult and adolescent immunization services for the prevention of such ailments as shingles, tetanus, hepatitis, pneumococcal, meningococcal and more.

    KC's View:

    Published on: September 18, 2008

    The Food Marketing Institute (FMI) announced yesterday that more than 1,300 executives from a wide range but unspecified number of companies already have registered to attend the 2009 Future Connect conference, the educational event that replace the annual FMI convention this year and in alternate years.

    Future Connect is scheduled for May 4-6, 2009, in Dallas, Texas.

    According to the statement released by FMI, “Future Connect will educate high potential associates from all levels of retailer, wholesaler and supplier companies to direct teams, focus skills and talents and achieve high-profit sales. Interactive education sessions and group roundtables will help associates understand the landscape of issues facing the industry, including current business and consumer trends, developments in global food sourcing and managing an increasingly diverse workforce.”

    KC's View:
    These are strong numbers for a conference that is still eight months away…and I hope it continues, since one of the first things that companies eliminate in tough economic times is conference attendance. But the issues that Future Connect will address will be even more important in a recessionary environment…

    I’m personally thrilled that Future Connect is being so well received, since my partner-in-crime, Michael Sansolo, has had a leading role in designing and promoting the conference.

    Published on: September 18, 2008

    • General Mills said yesterday that its Q1 revenue rose to $3.5 billion from $3.07 billion during the same period a year ago. Earnings for the quarter ended Aug. 24 fell four percent to $278.5 million, from $288.9 million in the same quarter last year.
    KC's View:

    Published on: September 18, 2008

    MNB took note yesterday of a New York Times story reporting that there seems to be a cultural shift toward what is being called “positive eating,” which is defined as “shunning deprivation diets and instead focusing on adding seasonal vegetables, nuts, berries and other healthful foods to their plates.”

    My comment: There’s no way that this trend will be fast-moving. There simply isn’t the same kind of marketing muscle and money behind it as propels diet books and diet foods into the national consciousness.

    But it seems to me that “positive eating” is the kind of message that retailers, in particular, ought to be adopting and marketing. It’d be good for their customers and it’d be good for their bottom lines. They’d sell more interesting products, they’d be serving as a resource for shoppers, and they’d be creating more lasting relationships with the consumers who walk in the front door.

    One MNB user responded:

    Your comments to a slow movement to healthy eating article; this one sentence caught my eye. “There simply isn’t the same kind of marketing muscle and money behind it as propels diet books and diet foods into the national consciousness.” You are absolutely correct…the marketing muscle is still behind processed food with value added additives. However, do not underestimate the power of the Internet to propel the healthy eating movements to national awareness, e.g., newsletters from nutritionist such as Dr. Mercola and Dr. Weils, NGOs advocating against toxic foods, blogs and the value of viral marketing.

    MNB user Richard Lewis wrote:

    Success depends on the way it's done. A good example, noted on the CIES Store Visit programme in London last year, is the reappearance of nuts as snack food. One very well-known retailer had simply moved its range of nuts, seeds and raisins out from the back aisles and into the entrance, with new signage saying something along the lines of "healthy snacks". It had a gaggle of 20something customers around it. A smart move that improves stock turn, makes customers feel better about themselves (forging a strong brand connection) and best of all costs nothing.

    We also had a story the other day about a study suggesting that elementary school bans on soft drinks are of limited effectiveness, and I commented that this isn’t too surprising since in a lot of households parents talk the talk but don't walk the walk.

    MNB user Brian Steffy wrote:

    In response to the ban of soft drinks at schools, it doesn’t surprise me that the results were limited and overall not that successful. You are right about the role of parents setting examples and not having soft drinks in the house if they don’t want them consumed. What many people fail to realize is that it is a multifaceted problem that is not going to be solved by banning soft drinks as they are a small piece of the problem.

    The whole issue involves lifestyle changes, including more exercise, better diets and a commitment to change. Soft drinks alone will not change the shape our youth are in.

    Maybe we should consider banning video games so kids get up and go outside to play !! What do you think the chances are of something that revolutionary happening?

    Good luck with that.

    MNB user Bradley DuLong wrote:

    It amazes me how all these schools have banned soft drinks so that kids will not have obesity issues BUT nothing is said when a major soft drink company is sponsoring each and every kids play area in the Dallas Fort Worth Airport…wouldn’t you think targeting such an even younger kid would have more potential damage? These play areas and the advertising for the play areas are very well branded with this soft drink maker.

    There is an ongoing debate here on the site about the disposable bag vs. reusable bag issue, and it got a little more pointed this week with the announcement that one US plastic bag company was closing down a factory and putting 160 people out of work because of the shift to canvas bags.

    One MNB user wrote:

    I am supposed to feel good and pat myself on the back because I helping to save the planet by using a canvas bag produced in China? Last time I looked China was one of the worst polluters of the environment in the entire world?

    Am I missing something or did we just move the jobs and the pollution across the bay?

    Another MNB user wrote:

    The plastic bag manufacturer is a classic example of what has happened on a much larger scale with many businesses including the automotive industry. Business owners who fail to anticipate or ignore the obvious trends in their industries and not react and innovate will simply perish. Clearly the now ominous news from Wall Street is also a reflection of this same status quo mindset. Inherent in successful risk management is the ability to identify changing trends and to rapidly adapt to them.

    Having been one of the laid off victim of the last big recession in the early 80's, I have a lot of compassion for the 160 employees, not to mention the hundreds of thousands, who will face the daunting task of getting on with their lives.

    This whole experience has a multitude of lessons attached to it. If we, as a nation, pay attention, this dark period of our history will make us stronger.

    And still another MNB user wrote:

    I think you’re right in questioning whether the plastic bag manufacturer should have been looking ahead to see what was coming next. While Fuji is making film in Carolina and Toyota and Honda are making cars all over the US, Kodak and the Big Three are reeling and wondering, “What happened?” I’m thinking it’s not the fault of cheap labor and unfair trade agreements, but a lack of vision and awareness of how the market was and is changing. If companies can’t figure out how to make their products with higher quality and less cost and always responding to the needs of their customers, bailouts won’t help. And in the long run they won’t solve the deeper problems in our economy.

    It’s going to get a bit more Darwinian for all companies as the times get tougher, but if in the end the companies that are left are the ones with the healthiest cultures, the most connected to their customers and their employees, and the ones who constantly seek to improve what they do everyday, it could be a brave new world for all of us. Who knows, it may even look like an intelligent design…

    I’ll stand by my comment of the other day – that while my heart goes out to the 160 people losing their jobs, the company for which they worked bears the responsibility for the closing of the plant, not those of us who use canvas bags. That company should have been able to see the change taking place, and adapted to it. In this environment, you don't get rewarded for being negligent about how a changing world affects your business.

    The concerns about Chinese bag manufacturers certainly is a legitimate one. So I checked with the folks at Eco-Bags, and they told me that their bags, at least, are manufactured in India. Eco-Bags has a 12-year relationship
    with a manufacturer there that runs a fair wage & labor facility, and the company has a 20 year commitment to fair wage & labor standards.

    I should note here that Eco-Bags is about to become an MNB sponsor…and that it also is coming out with a special, limited edition MNB canvas bag…which is very, very cool.

    KC's View: