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    Published on: August 14, 2009

    Good column by Luke Johnson in the Financial Times in which he argues the following:

    “The statistics say the economy is down just 5 per cent from its peak. From where I sit it feels a lot worse. Most companies I know have seen revenues fall by anything up to 20 per cent – and for a few the decline has been even more savage. No one I talk to can remember a tougher time to be in business.

    “So what can you do when your top line gets eviscerated? First of all, you cut costs like a dervish – just to stay solvent. But you cannot maintain that survival mentality forever. At some point every organisation has to progress or disintegrate. And in shrinking industries, for most businesses there is only one way to expand: you have to take market share.”

    The logic is simple. You can’t save your way to prosperity. While you have to get more efficient during an economic downturn, increased market share can more than make up for increased costs…and can actually rationalize those costs so they represent a higher ROI.

    Johnson writes:

    “It takes bold vision to assume the additional risk of such manoeuvres in this ferocious storm. We may be too early: the downturn could get even bloodier. And there are plenty of us who have been battered and worry that we might have lost our nerve. But I believe now is the time to consider recharging the entrepreneurial batteries, and take the chance to consolidate – if you have the confidence, the cash and the people.”
    KC's View:
    Johnson doesn’t use this example, but I would argue that this is precisely the game that Walmart is playing right now, as it makes market share a primary recessionary goal.

    This column is spot-on. If a business isn’t looking for new opportunities and raising the bar on its own operations, even in a recession, then it is accepting the possibility or even the likelihood that the competition will do so and leave it behind.

    Published on: August 14, 2009

    The New York Times, while conceding that the recession has to a great extent has been a “mancession” because it has hit men a lot harder than women, says that previous estimates that women could overtake men in the workforce may have been overstated…but only because the recession may be coming to an end.

    “Will women eventually edge into the majority? It’s hard to say,” the Times writes. “If the recession is nearing a close, as some economists argue, women may have lost the opportunity of taking over a majority of the labor force for at least the time being. After all, women’s job force share may not continue growing once the economy recovers and the job market improves.:”

    There are several reasons that women have not been as hard-hit by the recession as men. For one thing, there are more men in the workforce who can lose their jobs. Men make more, so cutting them saves more money. And, women tend to be “overrepresented in more downturn-resistant sectors like education and health care,” the Times writes.

    Still, the numbers are extremely close, with men representing 50.17 of the non-farm workforce, and women at 49.83 percent.
    KC's View:
    Retailers and manufacturers ought to be examining this trend both actively and continuously, working to figure out how it is going to affect the shoppers who come in the store and the employees who take care of those customers.

    Of course, there’s something else about gender roles to consider here…

    There was a piece in the Chicago Sun Times> the other day saying that American men rank fourth in the world as being helpful spouses – behind husbands in Norway, Sweden (damn Scandinavians!) and the UK, but ay ahead of husbands in Australia, where men apparently are more interested in beer and sports than they are in being helpful around the house.

    Wonder how Mrs. Content Guy would weigh in on this one? (She’d probably say something like, “I didn’t know he was Australian!”)

    Published on: August 14, 2009

    Here’s a story that has two implications for US marketers.

    The New York Times reports that “technology has shaken up plenty of life’s routines, but for many people it has completely altered the once predictable rituals at the start of the day.

    “This is morning in America in the Internet age. After six to eight hours of network deprivation — also known as sleep — people are increasingly waking up and lunging for cellphones and laptops, sometimes even before swinging their legs to the floor and tending to more biologically urgent activities.”

    So here are the issues that marketers – especially food marketers - have to face:

    1. If consumers are turning to the Internet instead of newspapers first thing in the morning, how does that affect marketing programs that previously have been effective at reaching that shopper? If they’re not reading the paper, they’re not seeing FSIs or full page price ads. Which means that these kind of expenditures may increasingly be a waste of money.

    2. How is this change of habit affecting how and what they eat for breakfast?
    KC's View:
    Take it from someone who, while he loves newspapers and still gets the New York Times delivered each morning and reads it cover to cover, goes online way before he opens the paper…both of these concerns are valid ones.

    I simply don't see newspaper ads. (By the time I open the times, I’ve scanned the business sections – and a lot of other sections – of some two dozen papers…so the ads rarely capture my attention.)

    And breakfast has to be something that doesn’t drip on the keyboard.

    I may be a radical case, but I don't think so.

    Published on: August 14, 2009

    One of the constant mantras here at MNB is the need for retailers to be resources for information, not just sources of product.

    So it was with some interest that we received a note from the folks at Aisle 7 – the company formerly known as HealthNotes – talking about a new kiosk application that it will release next week that will, among other things, offer H1N1/swine flu information for the coming flu season.

    At the same time, we got an press release from Respario Digital Advertising Group and Real Digital Media, saying that they are teaming up to launch something called the Pharmacy Health Network (PHN), which will be presented by Cardinal Health. The network is designed to be shown in-store, and “provide health-oriented programming designed to educate, inform and entertain customers, interspersed with sponsor and location-specific messages.”
    KC's View:
    The swine flu information won’t be the only interesting part of the new Aisle 7 edition, which should appear on more than 2,000 kiosks around the country – there also will be budget-friendly recipes, and recipe information specifically designed for people who are diabetics or require a gluten-free diet.

    But the swine flu part if particularly interesting, since it comes at a time when it seems likely that there could be yet another panic – and certainly a lot of concern – over spread of the disease.

    Worries about swine flu and how to cope with it at home and in the workplace also is likely to be a great source of content for the PHN.

    It is all about being a resource. These are good examples of how it can be done, I think.

    Published on: August 14, 2009

    Fast food chain Chipotle reportedly is partnering with the producers of “Food, Inc.,” a documentary that is highly critical on America’s industrialized food chain, to sponsor free screenings and promote the movie with brochures handed out in-store.

    The issues raised by the film Food Inc. are important and complex, and everything we do at Chipotle strives to address them," said Steve Ells, chairman/co-CEO of Chipotle. “Food With Integrity is a philosophy solidly based on a foundation of not exploiting animals."
    KC's View:
    Chipotle enjoys a unique position in the fast food business since it makes quality and sustainability central to its business value proposition, so this sort of move works for it. But I was intrigued by one commentary about the move that suggested that Chipotle is willing to concede its own imperfections and admit that it is on a journey…

    That’s an interesting point. Sometimes I think that a lot of chains are afraid of admitting that they’re not perfect but are trying to be…but that may not be the best approach. Sometimes being upfront about where one is in the journey can be an effective way of making the consumer part of the journey. If the business says, in essence, “we’re all in this together,” it can create a very different sense of loyalty that could cut both ways. And be far more enduring.

    Published on: August 14, 2009

    Value is a top priority when purchasing consumer packaged goods products, according to a new study conducted by Ipsos Marketing.

    When asked what thoughts crossed their minds when making decisions to purchase food, household and personal products on their most recent grocery shopping trip, almost two-thirds (64%) of global consumers indicated value for the money. For food product purchasing decisions, global consumers were most likely to consider value and taste, with nearly two-thirds of them citing these as decision-making factors. Following value and taste, consumers were most likely to consider the quality (55%) and expensiveness (50%) of the food product and then healthy ingredients (44%).

    The factors considered when making decisions to purchase household and personal products were nearly identical to those for food: nearly two-thirds of consumers considered value when making the decision to buy a household or personal product, followed by quality (54%) and expensiveness (49%). Convenience was a more important factor in household and personal product purchase decisions than in food purchase decisions (48% vs. 34%).
    KC's View:

    Published on: August 14, 2009

    • The Wall Street Journal reports that Walmart has learned some valuable lessons in its Brazil operations, including a) the importance of tailoring inventories to local shopping tastes, b) the need to build smaller stores that do not conform to its cookie-cutter traditions because of traffic issues that make large stores impractical, and c) how and why the acquisition of two local chains in Brazil made it easier for the company, which had struggled when operating only under its own banner.

    The Journal also notes that these lessons have been so well learned that the retailer is looking for ways to apply them in other markets – including the US.
    KC's View:
    To my recollection, Walmart has never made a significant retail acquisition in the US. Wonder if there could be a change coming in this policy…?

    Published on: August 14, 2009

    • Kroger Co. announced that its Dayton, Ohio-area employees have ratified a new agreement that covers 4,000 workers in 30 stores.

    “This agreement provides good, stable jobs for our associates, increases take-home pay, and provides high-quality, affordable health care. At the same time, it enables our company to remain competitive in a difficult economy with intense competition," said Geoff Covert, President of Kroger's Cincinnati/Dayton Division.

    • TNS Worldpanel reports that in the most recent quarter, Tesco saw its UK market share fall from 30.9 percent to 30.8 percent, as Walmart-owned Asda Group saw its share increase to 17 percent from 16.7 percent.

    HealthDay News reports that the Mediterranean Diet - which consists primarily of olive oil, fruits, vegetables and legumes – can help reduce the risk of contracting Alzheimer’s disease - more evidence, the study says, that “healthy living can help ward off cognitive decline.”
    KC's View:

    Published on: August 14, 2009

    MNB reported yesterday on Whole Foods CEO John Mackey’s piece in the Wall Street Journal, in which he addressed the ongoing health care debate, writing that “while we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment.”

    This generated a number of responses.

    One MNB user wrote:

    Mackey is right on for those who are working FOR Whole Foods. My company has a great plan much like Whole foods and I am fully covered. However, several people I know are out of work and out of luck for medical insurance. Yes they can get care, and ruin their lives and their credit. It is my understanding that medical bills are 50% of all bankruptcies (not sure). Then we have the under insured who get to do the same thing.

    Then we have many insurance companies who waste time and money on paperwork and must make their 30% profit. One wishes that one was an economics whiz and knew the solution to the health care problem. One problem seems to me that in our capitalist model everyone wants to profit from the medical system. Drug companies push un needed drugs in ad after ad after ad. Doctors over prescribe drugs and order unneeded procedures for fear of lawsuits. Another issue – our medicine cost far more here than it does elsewhere even though most people can NO LONGER afford their medicines because so many more are not insured or are underinsured. I read today in the finance section of my paper that wages are down, unemployment is up and in your commentary today you talked about this and about a biscuit company and you seemed to blame the biscuit company employees who were being asked to take lower wages so they would not lose their jobs. We are a mess in this country because we have lost that sense of caring for each other and caring for our employees, as you noted in your daily commentary. If not allowing medical issues to destroy our country by going to a single payer system is the only way to cure this American illness then why not? I think Christ and Buddha and Mohammed among others would have no problem with everyone having access to the SAME medical care. Rich folks, our politicians and our CEO’s will have enough money to pay for the extra care they want just like they do in Canada, Britain and other single payer countries. Our corporations have successfully outsourced the middle class jobs, the factory jobs and have successfully driven down wages and benefits in most areas of those few industries left through the use of illegal alien workers (construction and meat for two).

    I am blessed and will be able to afford the extra insurance with or without a job that I will need as I have reached Medicare age and if that gets gutted I have saved enough money to pay for whatever I need. I am also one of those who feel that the single payer system which will take the profits out of the insurance industry and only the insurance industry is the only “right” solution for our country – if we really believe our hype about what this country stands for we need to put concern for what is best for our population in front of what is best for our corporations.

    MNB user Bob Vereen wrote:

    I admire John Mackey's calm comments about health care, having read them in WSJ. I've also downloaded the House version of health care and am painstakingly reading its 1,000+ pages.

    Seems to me the first question anyone should ask a member of Congress in any town hall meeting is if the senator or representative has actually read the proposed bill. Some have admitted voting for it without having read it, which is frightening.

    Having waded through a good portion of it, my feeling is that the subject is so complex that it needs to be carefully reviewed, discussed and then, and only then, should it be voted upon. Too dangerous to do it quickly.

    Another MNB user wrote:

    I am employed and widowed. Mackey's plan appeals to me from an employee perspective. However, I am sixty. I am worried about losing my job. I can afford insurance, but should I as a healthy individual have to pay $1000 per month? That assumes that I could get insurance at all. Who knows what the insurance company may approve or deny. I have already been turned down for long term care because I complained to my doctor about a headache...nothing more! There was no problem. It's been four years ago.

    I have a brother 50 who has worked all his life. However, now he is disabled. I fully support him including doctor visits and medicine. That is just money I should be adding to my 401k. He has applied for government's been three years. To get it requires and attorney and a court ruling. In the mean time I continue to deplete my savings. He cannot see to drive because of cataracts and needs a lot of dental work. If he could work, he would be happy to. He can't. If cataract surgery and dental work were financially feasible, I'd pay.

    Most of the people I know, white, retired, well off, are adamantly opposed to reform. They love having their Medicare benefit, but to hell with the rest of the people. I especially resent the women. They never worked, had their husbands insurance and somehow don't get it. Entitled and clueless.

    There has to be a better way.

    I need access if I lose my job. My brother needs basic care.

    That's why I support reform. and I am furious about the backlash.

    One MNB user wrote:

    While I support John Mackey’s statement, “We are all responsible for our own lives and our own health” , it doesn’t appear many other people believe this based on the success of McDonalds.

    And speaking of McDonald’s, we noted yesterday that a piece on nominated Mickey D’s as one of the recession’s clear success stories. Which prompted MNB user Carla Baughman to write:

    I can personally vouch for McDonald's success in this recession... I took the day off Monday and went to the Monterey Bay Aquarium (also showing no signs of a recession) with my mom, girlfriend and her two kids aged 3 and 6. As a treat after, we stopped at McDonald's for ice cream. The dining area was packed, perhaps only 2 empty tables (in a room with 50+ capacity) and the lines were pretty long for 3 PM on a Monday afternoon. I understand it's still summer vacation and I don't frequent McDonald's much (perhaps once every few years), but the time of day and a full McDonald's was quite surprising.

    MNB took note of Redbox’s impressive growth curve yesterday, but I continue to try to rain on that particular parade:

    I continue to believe that in the long run, DVD kiosks will be made obsolete by technologies that allow people to download and store movies on their computers and/or iPods. Not this year, not next year, and probably not even the year after that. (I hasten to say this because I inevitably will get emails pointing out that my elitist nature refuses to allow for the possibility that not everyone in the US has good Internet service, much less broadband. That will change, too. It has to.)

    But the emails keep coming. MNB user Ben Ball wrote:

    Good on ya for acknowledging that the world is not yet 100% digital.

    But what about those cretins who DO have broadband – and yet STILL prefer to hold physical products like books, catalogs and both music and video DVD’s in our furry paws? From all indications there are more than a few of them still living in markets like Chicago. Perhaps you are predicting that this is a generational phenomena that will end with the passing of the last Boomer? Could be – but there is still a lot of money to be made between now and then.

    That’s why I’m not suggesting that irrelevance is imminent. Just inevitable.

    And another MNB user wrote:

    Will Amazon make Macy's or Barnes and Noble obsolete? I should think not….

    Redbox and others will survive because people will always love physical product.

    Perhaps in 5 years, the market is 50/50 (Physical / Digital)….but there will always be a market for Physical.

    I don't know about five years as a timeline, but I think you are way, way off the mark with your 50/50 projections.

    Ask anyone under 25 when the last time was they bought a CD. They’ll generally look at you as if you have three heads.

    Why people think that DVDs will be different is beyond me. The only thing standing between DVDs going the way of CDs is storage space on the average computer and bandwidth.

    That’s it.
    KC's View:

    Published on: August 14, 2009

    It was sobering for both Michael Sansolo and me to read this week in the New York Times that Gannett-owned The Journal News in Westchester County, New York, told all 288 of its employees – editorial and sales – that their jobs are being eliminated. Now, not all of those people are going to be without jobs. They’ve been told that all of their jobs are being “redefined,” and that each person has to reapply and be re-interviewed for new positions.

    In all 70 jobs are expected to be gone, on top of almost 60 people who were laid off just a week ago.

    Michael and I have read this news with a certain amount of empathy, since The Journal News is where we both got our starts back about 30 years ago. (I’m a little older than Michael and got there first, though I worked in Rockland County and he worked in Westchester, first for the Daily Times and then for the Reporter Dispatch, papers that were later folded into the Journal News for efficiency reasons.

    Not efficient enough, apparently. Revenue is down by double digits, and it strikes us that readership is just a fraction of it was three decades ago.

    Much of this can be attributed, I think, to a growing sense of irrelevance. For years, Gannett has specialized in hiring young reporters and paying them peanuts (I made less than $7,000 my first year there), and then doing nothing to keep them engaged as their salaries increased. This meant that the papers were often being written by people who had no sense of what it was like to pay taxes or raise children in a community, which cannot help but lead to coverage that isn’t as good as it should be. (Michael and I often have said that we’d be much better daily newspaper reporters today than we were then, but neither of us can afford to work for $7,000 a year, or whatever they are paying these days.) Eventually, these papers face a kind of editorial irrelevance… which is compounded by the fact that these are paper-and-print products trying to survive in an increasingly digital world.

    Michael and I both have the same reaction to this news: “There but for the grace of god go I…”

    It points to something that every business needs to do, and that every businessperson needs to do, on an ongoing basis. You have to keep being relevant, have to keep challenging yourself, have to keep figuring out what might be around the corner, and then preparing for how to embrace those new challenges and raise the level of your game.

    Or you end up being redefined. Out of work. And irrelevant.

    BTW…I saw a study, released by the Newspaper Association of America, the other day that said that almost six out of 10 adults identify newspapers as the most critical advertising medium they use, with 73 percent saying that they use newspaper inserts, and 82 percent saying that they have acted on something they saw in a newspaper insert in the last month.

    I’m afraid I’m not buying it.

    I’m not doubting the numbers, but this survey strikes me as the worst kind of self-congratulatory news that the newspaper industry can be publicizing. I don't know who they are surveying, but it isn’t the young shoppers (anyone under 30?) who don't even read newspapers and get most of their information from the Internet. Or “The Daily Show.”

    If people in the newspaper industry take these numbers seriously, it prevents them from dealing with the reality of their situation. Which is that they are on the Titanic, and the iceberg is dead ahead.

    And one other point on this subject…

    I just got an email from the New York Times because, in an effort to develop new revenue streams, it is starting a wine club.

    According to the email, the club will offer members a selection of wines at two price levels, $90 or $180 per six-bottle shipment, and customers can choose to have wine delivered every one, two or three months.

    I’m not saying that this is a bad idea. However, I am saying that it says something about the newspaper business.

    Okay, it was weird enough that a bunch of companies decided to keep their television commercials featuring Bill Mays on the air, even though he’d passed away. I guess they felt that his ebullience and high energy couldn’t be easily replaced.

    But now that the autopsy showed that cocaine use may have been linked to his heart problems, all that antic energy seems, well, a little suspect. And the commercials seem a little ill-advised.

    You may remember that sometime last year, the MNB community came up with a list of the nation’s great burger joints. This was particularly pleasing to me, since I have an enormous affection for cheeseburgers…and the list serves as a kind of informal guide as I’m traveling around the country.

    Well, it is with real pleasure that I’d like to report that when the Brooklyn Paper the other day ran a contest for the best burger made by residents of the borough, my nephew, Kyle Huebbe, was the grand prize winner for a burger described as “80-percent ground beef, 20-percent fat patty, seasoned with Kosher salt and pepper and cooked perfectly in a cast-iron pan, topped with a garden tomato (not store-bought!), cheddar and a horseradish sauce, and piled onto a Portuguese muffin.”

    Kyle used to cook at a series of places in New York and New England, but currently is working in real estate…but is looking to once again don an apron and get behind the stove. I don't know about you, but that burger makes my mouth water…and I guess I’m going to have to trek out to Brooklyn one of the days to try one.

    Interesting story over on this week, reporting on a “new study from researchers at the University of Florence, Italy, (that) found that women ages 18 to 50 who drink one or two glasses of wine a day have better sex than those who don’t drink at all. In fact, this is one area where two glasses will give you higher sexual satisfaction than one!

    Cue the music…Bottle of red…bottle of white…

    But wait a minute…there also was a story on the this week saying that “the results of a new national study by a group of scientists at the School of Public Health at the University of North Carolina recently confirmed that young adults who enter a long-term live-in relationship—and especially those who tie the knot—gain weight and significantly increase their risk of a clinical diagnosis of obesity compared to those who remain uncommitted.

    “While men are extremely vulnerable to weight gain in the first 12 months of married life, they do better over time, whereas women just keep getting fatter and fatter. Perhaps not surprisingly, the prognosis is worse for women. Both men and women increase their risk of becoming obese when they move in together, but women seem to be even more susceptible than men. While men, according to the new research, are extremely vulnerable to weight gain in the first 12 months of married life, they do better over time, whereas women just keep getting fatter and fatter.”

    So what’s the lesson here? It seems to be that you’re ultimately better off – and will have more fun – if you avoid commitment.

    Sounds reasonable to me…except that after 26 years of marriage, I’m still having a pretty good time.

    Discovered a new brewpub this week: the Appalachian Brewing Company, in Gettysburg, Pennsylvania…where they make a great Chesapeake Chicken Cake sandwich with chipotle lime mayonnaise…and the Purist Pale Ale can’t be beat.

    What’s playing on my iPod?

    Right now, it is the new album by Mac McAnally, ”Down By The River.”

    My favorite song: “Blame It On New Orleans,” which is just kickin’.

    Two terrific white wines for you this week:

    • 2007 Jezebel Blanc Oregon White Wine, a delightful blend of Pinot Blanc, Pinot Gris, Gewurtztraminer, and Riesling.

    • 2007 Bouchard Père & Fils Bourgogne Blanc 2007 from France, a Chardonnay that’ll knock your socks off.

    Great stuff to enjoy as the last days of summer pass by all too quickly. (Guys, you may want to buy several cases for your wife.)

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

    KC's View: