retail news in context, analysis with attitude

Published on: June 3, 2009

by Kate McMahon

Content Guy’s Note: Kate’s BlogBeat is a new ingredient in the MorningNewsBeat stew – a regular look at what people are talking about on the Internet, and how it impacts the conduct of business by retailers and manufacturers.

The “American Idol” viewing public is ripping mad at AT&T and Fox TV, and their online outrage has little to do with clean-cut Kris Allen’s upset victory over edgy Adam Lambert.

This may not seem important, but there are lessons to be learned…

It has everything to do with the integrity of the voting for this 8th “American Idol” season. Americans want the truth, straight up, and have zero tolerance for corporate obfuscation of any kind, particularly during a recession. That was clearly the message that lit up the blogosphere this past week and kept the debate alive in on-line chat rooms long after the finale. The takeaway is this: Integrity matters, whether you are selling pop singers or consumer products. And the people who populate the blogosphere have the ability, the desire and the skills to focus attention on issues of integrity that can be bad news for companies that even have the appearance of taking shortcuts.

Some background…

As all of America knows, Kris Allen, a wholesome crooner from Arkansas, was crowned the “Idol” winner over Adam Lambert, a Californian known for his sultry singing style, black eye-liner and sexual ambiguity.

What America didn’t know was the final vote tally, withheld this season by the show producers, or that AT&T employees provided free cell phones and taught “power texting” at two pro-Kris finale parties in his home state. The texting story broke nationally last week and reignited on-line the long-running controversy about the “Idol” voting process.

“American Idol Defends Voting Amid Mass-Texting Brouhaha” trumpeted the USAToday.com blog. Other blog headlines shouted: “Did AT&T Help Kris Win?” and “Idol Finale Rigged.”

AT&T, of course, is a major corporate sponsor of “Idol.” Only AT&T subscribers can vote by text, leaving others to try (often in vain, for hours) to dial in their votes. The company insisted the actions of a few local employees “caught up in the enthusiasm” in Kris’ home state did not influence the vote.

Fox defended the results as “fair, accurate and verified” but still refused to release the final tally of the 100 million votes cast in the finale, even though last year’s numbers were made public.

The bloggers didn’t buy either corporate response. Said one: “Vote rigging is illegal, and ‘Idol’ should not get away with this clear conspiracy to defraud the viewers.” Others called for boycotts of “Idol” and AT&T and urged fans to file a fraud complaint with the Federal Communications Commission. In short, they watched, they voted, they paid, they blogged, they’ve had it.

Does it matter? Not to everyone, but this blog post spoke for millions of “Idol” fans and nailed the larger issue:

Some will read this and say, ‘Get over it; it's just a television show.’ True, it is just a show, but it's also one that makes bogus claims about its voting process and fails to be transparent in reporting results ... Why should any of us care? Because integrity matters.

Integrity absolutely matters, whether you are a TV show or a retailer, because in the end, your integrity is really what you are selling. People may buy bread or steak or produce, but since they are feeding themselves and their families they ultimately are investing in a retailer’s integrity. And the recent peanut and pistachio contamination cases demonstrated just how fragile trust can be when abused, and how important transparency is.

If you don't live up to expectations, you can count on the blogosphere to let you know it.

Kate McMahon can be reached via email at kate@morningnewsbeat.com .

Published on: June 3, 2009

Brookshire Grocery Co. said that for the next three months the company will randomly select an employee and visit his or her home to see how many of the company’s private label Food Club brands are on hand. For every store brand item found the employee will receive $25 (up to $750). The winner will also receive $25 for displaying their Thank You Card, the company’s frequent shopper card.

This program, called “Partner Food Club Frenzy,” launched in May and is similar to an internal promotion developed by Daymon Associates, the private label brokerage company. (Brookshire’s primary private label provider is Topco.)

Published on: June 3, 2009

Fast Company has an interesting story that speaks volumes about how invested some consumers can get in a product or company … and how some companies create cultures that diminish innovation.

The story reports that Dustin Curtis, a web designer, got so fed up with the American Airlines Internet site that he redesigned it on his own, posted the results and write an open letter to the company saying: “"If I was running a company with the distinction and history of American Airlines, I would be embarrassed--no ashamed--to have a Web site with a customer experience as terrible as the one you have now...Your Web site is abusive to your customers, it is limiting your revenue possibilities, and it is permanently destroying the brand and image of your company in the mind of every visitor."

An American Airlines employee posted the following response:

“The problem with the design of AA.com, however, lies less in our competency (or lack thereof, as you pointed out in your post) and more with the culture and processes employed here at American Airlines … The group running AA.com consists of at least 200 people spread out amongst many different groups, including, for example, QA, product planning, business analysis, code development, site operations, project planning, and user experience. ...Anyway, I guess what I'm saying is that AA.com is a huge corporate undertaking with a lot of tentacles that reach into a lot of interests. It's not small, by any means.”

If it were small, the American Airlines employee continued, “we could cut out a lot of the friction created when so many organizations interact with each other. We could even redesign the AA.com home page without having to slog through endless review and approval cycles with their requisite revisions and re-reviews. But - and I guess here's the thing I most wanted to get across - simply doing a home page redesign is a piece of cake.”

And here’s the conclusion reached by Fast Company: “The biggest challenge to better design isn't getting better designers. The problem is organizational, and the hub-and-spoke decision-making process that was originally created to slash bureaucracy--that is, to create more decentralized decisions and less hierarchy. But the overriding weakness, which design thinking makes manifest, is that good design is necessarily the product of a heavily centralized structure. Great design at places such as Apple isn't about ‘empowering decision makers’ or whatever that lame B-school buzzword is. It's about awarding massive power and self-determination to those with the most cohesive vision--that is, the designers.”

Published on: June 3, 2009

Reuters Health reports that a new study by the Medical University of South Carolina suggests that during the past 20 years, older and middle aged Americans are not eating as well nor exercising as much as they used to.

More than 25 percent of Americans between the ages of 40 and 74 said that they ate five servings or more of fruits and vegetables each day, down from 42 percent in 1988. At the same time only 43 percent said that they exercise at least 12 times a month, compared to 53 percent in 1988.

The impact of this shift: in 1988, 28 percent of Americans were classified as obese, compared to 36 percent in 2006.

Despite all the publicity about the dangers of smoking, 26 percent of Americans in this age range continue to use tobacco products – the same as 20 years ago.

Published on: June 3, 2009

• The Washington Post reports that the United Food and Commercial Workers (UFCW) says that it is holding numerous organizing meetings at various Walmart stores this week, which it claims is a response to requests from store employees.

"They see their company actually being a rare success story in this tight economy, and they rightfully are asking where do they fit in to all that," UFCW Local 400 spokesman Mark Federici tells the Post.

The organization efforts also come as Walmart holds its annual shareholders meeting in Bentonville, Arkansas, this week.

Published on: June 3, 2009

The Boston Globe reports that the US Food and Drug Administration (FDA) plans to review its decision that bisphenol-A (BPA) is safe to use in baby bottles and plastic food containers. The decision is expected to be made in a matter of weeks, and is part of what the agency has said is an effort to make science the most important factor in its decision-making process.

BPA has been the subject of controversy, with a series of studies linking BPA with health problems that include diabetes and heart disease. However, the FDA published a draft assessment saying that BPA does not pose a health hazard when people are exposed to small amounts, and that conclusion has been confirmed by European Food Safety Authority (EFSA) Authority, Health Canada, the World Health Organization, Health and Consumer Protection Directorate of the European Commission; the European Chemical Bureau of the European Union; the European Scientific Panel on Food Additives, Flavorings, Processing Aids, and Materials in Contact with Food; and the Japanese National Institute of Advanced Industrial Science and Technology, as well as the Grocery Manufacturers Association (GMA) and the American Chemistry Council.

However, that hasn’t stopped the Connecticut, Minnesota, the Canadian government, Consumers Union (CU), the Consumer Federation of America (CFA) and Walmart from disagreeing with the FDA decision; in Walmart’s case, it is not selling children’s products containing BPA. In New York State, Suffolk County has banned the use of bisphenol A (BPA) in empty beverage containers for children under the age of three.

Published on: June 3, 2009

• Reports out of the UK say that Tesco plans to build what is being called “the world’s first zero-carbon store in the town of Ramsey. While details about the store – scheduled to be opened by the end of the year – are sketchy, it reportedly will have its own energy source, some sort of eco-center that will serve to educate consumers, will have lots of glass that will maximize the use of natural light, and even will emphasize sidewalks and bicycle paths that will encourage shoppers to leave their cars at home.

Published on: June 3, 2009

• Published reports from Australia say that Costco is going to postpone the opening of its first warehouse club store there by a few weeks because the building just isn’t ready yet. However, it needs to be noted that construction of the facility was actually five months ahead of schedule - a situation that must be unique to the Australian construction business. Originally the Melbourne store was going to open in December, and then was on track to open in July…but now it looks like it won’t be until August.

Costco reportedly plans to open as many as 30 stores Down Under; the next one is slated to be built in Sydney.

• Starbucks reportedly won’t have to pay $86 million in restitution to make up for store supervisors who had been sharing in tips.

The California Court of Appeals said this week that when the trial court said that the sharing in tips by store managers violated state law, it was mistaken. However, the attorneys representing the plaintiffs in the case say they will appeal to the California Supreme Court.

Published on: June 3, 2009

• Dollar General said that its first quarter net income was $83 million, up considerably from the $5.9 million in profits during the same period a year ago. Q1 sales were up 15.7 percent to $2.78 billion, on same-store sales that were up 13.3 percent.

• Walgreen Co. said that its May sales were up 6.1 percent to $5.37 billion, on same-store sales that were up one percent.

• HJ Heinz says that it earned $175.1 million during the just-completed fourth quarter, down from $194.1 million during the same period a year ago. Q4 revenue fell six percent to $2.54 billion from $2.69 billion.

Published on: June 3, 2009

A couple of days ago, I mentioned that I will be in Bentonville, Arkansas, later this week for Walmart’s annual shareholders meeting and media days.

Since then, I’ve received a number of emails from MNB users who live and work in the Bentonville area who asked if there would be an opportunity to get together during my visit.

And so…Thursday night, from 7-8 pm, I’ll be hanging out at the Bonefish Grill, 3201 Market Street, Rogers, Arkansas. Come by, say hello, chat for a bit. It’ll be fun to put faces and voices to the names and words that appear on MorningNewsBeat.

See you then.

Published on: June 3, 2009

I got a number of emails yesterday wondering how come so much of MorningNewsBeat was posted in italics, which apparently made it tough for a bunch of you to read.

I apologize. It was a simple coding error on my part…miss one little symbol, and chaos breaks loose. But there’s nobody to blame but myself.

The interesting thing is that because I work on a MacBook, I couldn’t see the problem – for some reason, the Mac fixed it so all the right stuff was in italics and rest of the fonts were correct.

Now, I have no explanation for why a Mac would do this and a PC wouldn’t. But I have to say that I’m happy to be a Mac guy.

Published on: June 3, 2009

...will return.