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    Published on: December 1, 2008

    by Kevin Coupe

    Peace on Earth. Good will to men.

    Sure.


    There was enormous concern, going into the Thanksgiving weekend, whether retailers around the US would have much to be thankful about when it was over. After all, the headlines and news stories of late have focused, with plenty of reason, on the economic difficulties facing the US and much of the world. There are mounting concerns about the stock market and the so-called “real economy,” and it is a fair bet that over traditional turkey dinners on Thursday, in addition to prayers of thanks, there were conversations that used words such as “bailout,” “recession,” and “layoffs.”

    And so it is probably something of a relief to many businesses and analysts that the National Retail Federation (NRF) is reporting that 172 million shoppers visited stores and websites over Black Friday weekend, up from 147 million shoppers last year, and that they spent an average of $372.57 over the weekend, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion.

    In other words, while the day after Thanksgiving – the traditional beginning of the end-of-year holiday shopping season – may have been a “Black Friday” because so many prices had to be discounted to get shoppers into the stores, things seemed brighter than expected because at least there were shoppers actually going into the stores.

    Except that this year, the “Black Friday” headlines were dominated not by sales and profits and consumer traffic, but by an event that occurred at a Walmart store in Valley Stream, New York, where a temporary worker was killed when he was trampled by a stampeding herd of shoppers.

    Here’s how the New York Times described the scene:

    “The throng of Walmart shoppers had been building all night, filling sidewalks and stretching across a vast parking lot at the Green Acres Mall in Valley Stream, N.Y. At 3:30 a.m., the Nassau County police had to be called in for crowd control, and an officer with a bullhorn pleaded for order.

    “Tension grew as the 5 a.m. opening neared. Someone taped up a crude poster: ‘Blitz Line Starts Here’.

    “By 4:55, with no police officers in sight, the crowd of more than 2,000 had become a rabble, and could be held back no longer. Fists banged and shoulders pressed on the sliding-glass double doors, which bowed in with the weight of the assault. Six to 10 workers inside tried to push back, but it was hopeless.

    “Suddenly, witnesses and the police said, the doors shattered, and the shrieking mob surged through in a blind rush for holiday bargains. One worker, Jdimytai Damour, 34, was thrown back onto the black linoleum tiles and trampled in the stampede that streamed over and around him. Others who had stood alongside Mr. Damour trying to hold the doors were also hurled back and run over, witnesses said.

    “Some workers who saw what was happening fought their way through the surge to get to Mr. Damour, but he had been fatally injured, the police said. Emergency workers tried to revive Mr. Damour, a temporary worker hired for the holiday season, at the scene, but he was pronounced dead an hour later at Franklin Hospital Medical Center in Valley Stream.

    “Four other people, including a 28-year-old woman who was described as eight months pregnant, were treated at the hospital for minor injuries.”

    Peace on Earth. Good will to men.

    Sure.


    According to news reports, local police are looking through videotapes to see if they can identify the people who did the actual trampling, with the intention of filing charges against these customers. There are questions being raised in some quarters about Walmart’s culpability, with some people wondering if there should have been more security, more employees, and better use of safety barriers to prevent such an occurrence.

    To be sure, Walmart management has decried the event and expressed its sympathy to the family of the killed and injured people. As it should.

    But police reports and legal proceedings and corporate positioning cannot and do not deal with the real issue here.

    Which is that somehow our culture has completely lost touch with what is supposed to be important about this holiday, and has gotten to the point where we encourage even the worst kind of behavior, though we then act surprised when it occurs.

    Peace on Earth. Good will to men.

    Sure.


    NRF pointed out in its press release issued over the weekend that the holiday shopping season had gotten off to an “energetic start” and that “those who shopped on Friday lived by the adage that the early bird catches the worm. The survey found that 23.3 percent of shoppers were at stores by 5 a.m. while more than half (57.6%) were at stores by 9 a.m.”

    It seems likely that Jdimytai Damour’s survivors will not feel assuaged by the fact that so many people managed to find bargains early Friday morning. And I can only hope that the people who, like animals hunting for raw meat, created that stampede at a Long Island Walmart are staring at the bottoms of their shoes and considering whether there is any blood to be found there – both literally and metaphorically.

    I understand that the end of the year is an important time for retailers and other businesses, and that – especially in toughening economic circumstances – they need to do what they can to create buzz and generate sales. And I understand that shoppers – challenged by diminished bank accounts and uncertain futures – are looking for ways in which they can demonstrate affection for loved ones.

    That is, of course, the irony of the situation. Nobody meant for this to happen. It was almost like a perfect storm of circumstances that led to tragedy.

    But it is entirely within retailers’ capabilities to lessen the pressure that built up and exploded last Friday morning. Perhaps it is with less emphasis on limited supplies and hours during which certain bargains can be obtained. Perhaps is it by considering ways in which retailers as an industry can come together to consider a code of conduct that will prevent such a tragedy from happening again.

    (Retailers might want to consider acting preemptively if for no other reason than the likelihood that somebody somewhere is going to try to craft a legislative response to Valley Stream events. Furthermore, a code of conduct might help to prevent future lawsuits…and one can bet that there will be plenty of lawsuits resulting from the Walmart stampede, lawsuits that may make the cost of more security look far less onerous.)

    It is time to stop acting like animals. It is time to stop dangling hunks of raw meat in front of the animals. It is time to keep this holiday in some sort of context, to maintain a level of perspective. Even in tough times.

    The “Black Friday” Walmart stampede was and is a tragedy. But it also can be an opportunity for retailers to address a tendency that only is getting worse with every passing year, and that probably made such a tragedy inevitable.

    They need to do the right thing. Now.

    Peace on Earth. Good will to men.

    Better late than never.


    KC's View:

    Published on: December 1, 2008

    The Wall Street Journal reports that the battle between management and organized labor in the US is about to get ramped up, with the US Chamber of Commerce announcement that it will spend $10 million to fight an expected legislative proposal that would allow employees to unionize without a secret ballot.

    It is widely expected that such legislation will be proposed by the Democrat-controlled US Congress and could well be signed by President-elect Barack Obama once he takes office; putting such a proposal into the legislative hopper seems to be a major priority of US union leaders, who feel that the end of Republican rule in the White House gives it the best shot at success in almost a decade. Television commercials supporting so-called “card check” legislation already are appearing with some frequency on cable television.

    However, the Chamber of Commerce said it is prepared for a drawn-out and bloody battle – and seems to be counting on the possibility that public opinion may be anti-organized labor despite the Obama win during the recent presidential elections. The reason: many Americans seem at best ambivalent about a government bailout of the US automobile industry, which seems uncompetitive at least in part because of costs related to contracts won by organized labor.

    The Journal writes, “The auto-industry bailout, card check and other items on labor's agenda cut to a signature Obama issue: how to produce more gains for middle-class Americans, whose wages have largely stagnated during the past decade. The coming debate of worker-employer issues also will turn on questions about whether companies can be adaptable enough to compete in a global economy if they also have strong unions.”
    KC's View:
    I’m not sure that it necessarily is a done deal that Obama will support “card check” legislation. The theory, expressed in both editorials and on Sunday morning television shows, is that the new administration won’t want to add to the cost burdens of businesses at this point in time, even if convinced that it would help the working class. In addition, these seems to be a sense that it will be critical for Obama to gain some “street cred” with conservatives and Republicans, and that backing off this legislation – especially at the current time – would be a good way to gain cooperation that will be more helpful in the long run.

    I hope that this reasoning plays out. Taking away the secret ballot would be a significant mistake and upset whatever balance of power there is between management and labor.

    Published on: December 1, 2008

    The New York Times this morning reports that the US Food and Drug Administration (FDA) plans to release a report today that will suggest “a ‘hugely ambitious’ campaign to reshape its food inspection arm to root out safety hazards through things like sophisticated software and certifiers from the private sector.

    According to the story, “Given the cost and logistics of inspecting each company, the agency is shifting toward a more risk-based approach that would use vast quantities of data to pinpoint areas of risk and deploy resources accordingly. The offices overseas will try to build relationships with foreign regulators and develop information on foreign manufacturers.

    “For instance, the agency hopes that companies will hire reliable third-party auditors to inspect facilities because it does not have the personnel to do so. In exchange, companies would be cleared to import their products to the United States with less chance of inspection or bureaucratic roadblocks. In addition, the agency is hoping to deploy a sophisticated screening program, used successfully on seafood, to better identify high-risk foods at the border.”

    Dr. David Acheson, the agency’s associate commissioner for foods, tells the Times that the overhaul is already underway, but concedes that FDA does not have the budget at present to put all of its plans to effect.

    KC's View:
    The FDA’s biggest problem at present is a singular lack of credibility and an apparent unwillingness to be as transparent as it needs to be. Which will undermine all of its goals and plans far more than lack of money.

    Published on: December 1, 2008

    Be prepared for the GMO debate to be reignited, if the Associated Press is correct. The AP reports that “surging costs, population growth, and drought and other setbacks linked to global climate change are pressuring world food supplies, while soaring prices on the street have triggered riots and raised the number of people going hungry to more than 923 million, according to U.N. estimates.

    “With food demand forecast to increase by half by 2030, the incentive to use genetic engineering to boost harvests and protect precious crops from insects and other damage has never been greater.

    “In Europe, Africa and Asia, governments that have resisted imports of genetically modified foods and banned growing such crops are loosening those restrictions. Meanwhile, they are pushing ahead faster with their own research, despite lingering questions over the safety of such technology.”

    KC's View:

    Published on: December 1, 2008

    The San Diego Union-Tribune has a story noting that with the increase in food prices in the US has come an greater interest in waste, as supermarkets, restaurants and other institutions look to compensate for rising costs by doing a better job of managing and reducing shrink.

    It isn’t a small problem. According to the story, “About 30 percent of food in the United States goes to waste, costing about $48 billion annually, according to a Stockholm Water Institute study released this summer. A 2004 University of Arizona study put the total higher, estimating that 40 percent to 50 percent of U.S. food is wasted.”

    The waste takes place at both ends of the process. At the beginning of the food chain, “millions of tons (are) being lost along the way as crops are hauled hundreds of miles, stored for weeks in refrigerators and prepared on hectic restaurant assembly lines.” At the retail end, “some are tracking their trash with software systems, making food in smaller batches or trying to compost and cut down on trash-hauling costs.”

    In a related story, the Boston Globe this morning reports that a Massachusetts Whole Foods commissary soon will use “the same canola oil that's being used to fry Asian shrimp balls and popcorn chicken (to ) help power the walk-in freezer and the overhead lights” … By next year, a generator that's powered by the used cooking oil will provide all the electricity needed here - about 2 million kilowatt hours a year.”

    According to the story, “the cooking-oil generator, which will hook into the plant's electricity distribution system and operate in tandem with National Grid's utility lines, is expected to save Whole Foods at least 20 percent of the commissary's energy and waste costs.”

    KC's View:
    Reduce. Reuse. Recycle.

    It is called looking everywhere for every possible competitive advantage. Which makes sense.

    Published on: December 1, 2008

    More evidence that the Celtic Tiger – the colloquial name given to the boom economy being enjoyed in Ireland – is slowing down a bit these days, as Superquinn CEO Simon Burke has been quoted in numerous newspapers there as saying that he expects the entire retail sector to suffer significant job losses after the first of the year because of an economic slowdown.
    KC's View:
    The actual quote from Simon Burke was that he would be “gobsmacked” if there were not big job cuts across the sector.

    And I just want to go on record here that “gobsmacked” is one of the great words, and I am going to do my best to start working it into conversation whenever possible.

    Published on: December 1, 2008

    Consumers Union has called on the US Food and Drug Administration (FDA) to “immediately make public all of the results of its tests for melamine contamination,” which has been found in baby formula manufactured by the three major US formula suppliers - Abbott Laboratories, Nestle and Mead Johnson.

    In China, it has been reported that the melamine was used deliberately in baby formula to artificially inflate the product’s protein levels. Melamine contamination reportedly has been responsible for three deaths and the sickening of more than 50,000 infants. In the US, reports to this point suggest that the melamine contamination occurred during the manufacturing process, and was not put in the product intentionally.

    The US Food and Drug Administration (FDA) has responded to the revelations by saying that while there is no safe level of melamine exposure for infants, it would be a mistake for parents to stop giving formula to infants that need it for proper nutrition. FDA describes the levels of melamine as being at “trace” levels.

    “Consumers Union calls on the FDA to immediately make public all of the results of its tests for melamine contamination in food, even if the only contamination detected was below the agency’s action level of 2.5 parts per million,” said Jean Halloran, director of Food Policy Initiatives for Consumers Union. “We understand that the FDA has tested hundreds of samples for melamine. This information should be made available to consumers, who are no doubt concerned for themselves and their families.”

    KC's View:
    Complete transparency should be the only policy here, because any other approach undermines consumer confidence almost as much as the actual contamination.

    Published on: December 1, 2008

    A viral e-mail spreading quickly across the United States is creating consumer confusion and potentially harming American businesses, according to GS1 US, a not-for-profit standards organization.

    The e-mail erroneously states “the first 3 digits” of a product’s barcode always indicate the product’s country of origin, and encourages consumers to make their buying decisions based on these numbers.

    GS1 US, as the administrator and sole source of Universal Product Code (U.P.C.) barcode prefixes in the United States, warns that consumers heeding this faulty advice are being misled and could unintentionally “boycott” businesses or products they would otherwise choose to support.

    “Although the first few digits of a barcode – what we call a company prefix – can indicate the country in which a barcode was issued, it tells you nothing about where the product was made,” said Bob Noe, chief customer officer for GS1 US. “The claim is somewhat grounded in reality, but just enough to be dangerous, even if you’re reading it correctly, which is not a safe assumption.”

    KC's View:

    Published on: December 1, 2008

    • Pennsylvania-based Weis Markets has announced that it has expanded its Internet operations, using the MyWebGrocer advertising network as well as recipe, circular and shopping list capabilities. The new functionality will also fully integrate with Weis’ e-commerce offering, with shoppers now able to browse the retailer’s weekly circular online and buy the products directly via online shopping.

    • Today is “Cyber Monday,” which essentially is the online equivalent of “Black Friday,” the traditionally briskest e-shopping day of the end-of-year holiday season. A new Shop.org survey suggests that “84.6 million consumers plan to shop online from home or at work tomorrow, up from 72.0 million in 2007 and 60.7 million in 2006. The survey found that 37.2 percent of adults will shop on Cyber Monday, up 16.6 percent over last year (31.9%).”
    KC's View:

    Published on: December 1, 2008

    There has been a lot of debate on MNB in recent days about food pricing, and this morning it continues…

    One MNB user wrote:

    As a Retail Grocer, admittedly the margin is very important. It pays our bills, but keep in mind that in the Retail Food Industry we have always had very low margins to work with. Most consumers don’t know, and would be very surprised to find out that our business runs our weekly AD’s below cost! On produce and dry grocery items like canned vegetables we are as low as a negative -50% gross margin in any given AD period! It is a very difficult balancing act to keep a company profitable with this type of marketing strategy. I personally don’t know how or why it has evolved this way, but is has. We now live with that standard and battle our competitors for customers based on below cost margins. In our current economic climate customers run from store to store purchasing only the “on AD” items. This ultimately causes the Retailer to lose a lot more money as we don’t make it up with the remainder of the basket purchases.

    Can you imagine if the Auto Industry worked this way? Corporate jets would certainly be out of the question!

    Everyone wants to make a decent wage and eventually retire to a life of leisure. So do we…


    Another MNB user chimed in:

    Commodity prices have fallen faster than the coverage that manufacturer's purchased on commodities for the 4th Quarter. With the pain suffered by the dramatic increase most manufacturers had to buy out in September to protect against a bad harvest of crops and cover through December. The drop in commodity prices had more to do with the collapse in hedge funds that had to liquidate their positions when they had fund redemptions, no one could have seen that coming.

    We have to cover commodities for 90 days out to protect our business until a price increase could be implemented. Remember most retailers delay price increases for 60 to 90 days but they now want prices to drop immediately.

    We have seen retailers margin up to cover their increased costs over the past 12 months, but we have not seen retailers except Wegmans lower retails since the fuel costs have declined. It will be interesting to see what happens in 2009 when prices start to decline. Will retailers drop their prices as well?





    On the subject of the much-debated proposed bailout of the Big Three US automobile companies, one MNB user wrote:

    Do you remember Pierce-Arrow, Mack Trucks, Packard, Studebaker? No one helped them when they were not making any money.

    There are plenty of manufactures of automobile in the southeast in our nation. Their names are Nissan, Toyota, Kia, Mercedes etc... They are our new immigrants who have brought and created jobs in the U.S.A. These people are manufacturing what is in demand. If the Big (?) Three could not figure out in the past 20 years what was happening, then it's too bad.

    I understand that many people will be affected if the Big Three fail. What about the whole country being taxed into the future to help them. These are not the first dinosaurs to become extinct.

    All manufactures, and their shareholders, should learn from this and think twice about the "crazy money" they pay the people who run these large companies.


    Another MNB user wrote:

    You made a quick reference Wednesday to the 3 auto company CEOs who each flew to Washington in separate private jets last week, and since then, have been deservedly suffering a PR backlash of "they just don't get it-ism." I came across the weekly Joe Klein opinion piece from Time magazine this morning wherein Joe is putting a final nail in the coffin of the Bush presidency, and among other things, talks a little about various good things Mr. Bush could have done, but failed to. In regards to the fate of the car companies, Klein says Bush could (still) strike a significant symbolic pose by making the executive decision to do away with the entire current Federal fleet of vehicles, and replace them all with hybrids, made by the US Big 3. What a statement of support for US manufacturing, and all causes green, Klein effervesces.

    Now there's an idea we can all get behind. Junking how many thousands of Federal vehicles -- most or all with presumably substantial remaining economic, not to mention, book, value -- incurring the considerable costs to replace them all, way before their usefulness is gone, mainly so as to make a symbolic gesture of arguable real-life impact. Yes, Joe Klein of Time magazine, yours is truly an idea we can all get behind. Get behind, and push it off a cliff!

    Comments here submitted merely to indicate that neither side of the political spectrum is immune from they-don't-get-it-ism. (And for the record, from my personal "flaming centrist" position, I would condemn both the auto company CEOs and Joe Klein as perhaps hopelessly out of touch with what matters and what doesn't in these sorts of issues.)


    The specifics of Joe Klein’s suggestion may not make sense, but I think the essential notion is a good one – that if the US government is going to demand that US automakers manufacture more environmentally friendly cars, it ought to walk the walk by actually buying them for the government fleet. That makes sense to me, though clearly it ought to be phased in over a period of time.




    And, we have some emails about our discussion last week about obsolete habits that indicate how consumers of the future are changing…

    MNB user Mark Morton wrote:

    I couldn't agree with you more. Even I, and I am older than you, are moving past some of those past habits and stereotypes. The advertisers in the Yellow Pages would have cringed yesterday if they had seen me come home, pick up the new Yellow Pages on the patio, walk straight through the house into the garage and throw it in the garbage. You have to know what is relevant to your consumer, and get to that person and you have to pinpoint your ability to get there. That requires communication. The days of opening your doors and they will come are over. You have to engage that consumer and be part of their life. If you do that, you'll always have a strong consumer base.

    And MNB user Dan Wallace wrote:

    Utilitarian paper calendars certainly will decline, although they won't go away entirely. The future of paper calendars used for decorative purposes is a different matter entirely. My annual Far Side wall calendar is always good for a laugh. My daughter, age 13, loves her Cairn Terrier calendar because it reminds her of our lovable pooch. Having a Cairn Terrier screen saver wouldn't diminish that appeal. It might even enhance it. The value here is not the calendar, it's the artwork.

    Secondly, about 10 years ago I did a consulting study on the future of the printed book. Based on that experience, I would say that it is a big mistake to bet against them. Digital delivery works really well in situations where information changes constantly – basically the reference markets. In those markets, digital replace print incredibly quickly. Where the content is static, however, the printed book is a formidable competitor. It is inexpensive to produce in quantity, permanent, portable, rugged, never needs recharging, can be dog-eared, and is physically easier on the eyes than a screen. Kids still read them, and they are going to be with us for a long time.

    I do find the wristwatch thing completely disconcerting, though. For me it was a major milestone on the path to adulthood. My kids just look at their phones.


    KC's View:

    Published on: December 1, 2008

    In Week 13 of the National Football League…

    Indianapolis 10
    Cleveland 6

    Miami 16
    St. Louis 12

    Carolina 35
    Green Bay 31

    NY Giants 23
    Washington 7

    Baltimore 34
    Cincinnati 3

    San Francisco 10
    Buffalo 3

    New Orleans 20
    Tampa Bay 23

    Atlanta 22
    San Diego 16

    Denver 34
    NY Jets 17

    Pittsburgh 33
    New England 10

    Kansas City 20
    Oakland 13

    Chicago 14
    Minnesota 34

    Tennessee 47
    Detroit 10

    Arizona 20
    Philadelphia 48

    Seattle 9
    Dallas 34

    KC's View: