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    Published on: August 19, 2009

    Published reports say that a proposed 20-cent fee on all plastic and paper bags handed out by retail stores in the city of Seattle has been defeated in a referendum.

    The city’s council had approved the fee about a year ago, but a petition drive forced a mail referendum; there are reports that in recent weeks the plastic bag industry spent upwards of $1.4 million in advertising to defeat the proposed fee.

    Rob Gala, a city council staff member who supported the proposed fee, tells the New York Times that the defeat comes “because more people are concerned about their cost of living than what they take their groceries home in.”

    “We see this is a disappointing setback,” he says, “but by no means the end of the larger effort to clean up consumer choices.”
    KC's View:
    Ultimately, consumer choices will be “cleaned up” when consumers choose to do so.

    There’s no question that there is a grass roots movement toward the use of canvas and other kinds of reusable bags…I see it every day when I’m in stores. In the end, this is the best way to move in a direction that will be good for the planet and, ultimately, good for retailers’ bottom line.

    Published on: August 19, 2009

    Walmart said this week that it plans to expand its prescription delivery program nationwide, after having piloted the effort in Michigan by offering a 90-day supply of some 300 generic prescriptions for $10 via free by-mail delivery.

    According to the announcement released by the retailer, “From rural communities like Aroostook County, Maine, and Devils Lake, North Dakota, to metro cities such as New York City and Washington, D.C., residents in 22 states and the District will be able to take advantage of this affordable pharmacy program from Walmart by calling1-800-2REFILL. Additionally, Walmart's free mail delivery program has no gimmicks, no memberships and no enrollment fees. This announcement signals Walmart's commitment to help customers save money on prescriptions regardless of whether or not they live close to a Walmart pharmacy location.”
    KC's View:
    It has long been the contention here on MNB that retailers have to act like they are competing with Walmart even if there is no Bentonville Behemoth anywhere nearby…because Walmart’s reach defies geography. That’s been clear as the company invests more and more in online retailing, and now it becomes clearer with the expansion of this program. Note that Walmart is making it available to residents of New York City…even though there are no Walmarts in any of the five boroughs of the city.

    It will be interesting to see how fast and how completely other retailers jump into direction competition with this Walmart program, hoping to blunt the impact.

    Published on: August 19, 2009

    CNN reports on the firestorm created by Whole Foods CEO John Mackey last week when he wrote an op-ed piece for the Wall Street Journal criticizing the Obama administration’s health care initiatives and suggesting that the government should not get involved.

    Mackey, who is said to hold libertarian political views, managed to upset the liberal customer base that his company to some extent depends upon; there have been calls for boycotts of the company’s stores, with some activists saying that this is the only way to punish the CEO for what they view as unacceptable thinking.

    The problem has gotten serious enough that Libba Letton, a spokesman for the company, has been working to distance Whole Foods from its founder’s opinions, saying that they were personal and did not reflect the official positions of the company. “Certainly when our customers tell us they are unhappy to extent that they are boycotting our stores, we are concerned," Letton tells CNN. "We don't want them to leave us."

    "Whole Foods has a particularly large segment of consumers who have a politically liberal tendency,” says Robert Passikoff, branding expert and founder of Brand Keys Consulting. “That group looks at Whole Foods as a liberal brand. For them, this is now an issue of brand dissonance.”

    "A lot of people have been paying a premium for the Whole Foods brand for years," Mark Rosenthal, a playwright living in Massachusetts who founded the Boycott Whole Foods group a few days ago, tells the Washington Post. "A lot of people are sad to look at this corporation and see that it is just like any other, if not worse."

    The Post also writes that liberal Whole Foods customers may have to “rethink shopping at Wal-Mart. Unions once attacked the retailer's labor and benefits policies, but Wal-Mart has become the nation's largest purveyor of organic products and recently espoused a position on health-care reform that is widely considered progressive. What's wrong with this picture?”

    The Post notes that on the Boycott Whole Foods Facebook page, one consumer wrote, "The 30 risotto cakes that I purchased from Jenkintown Whole Foods, last Friday, were scrumptious. But today they are giving me indigestion of the soul as I realize that my money may have funded the demise of the public option in the nation's health care reform legislative debate."
    KC's View:
    Whether liberal or conservative, it would be my perception that Whole Foods customers probably tend to be an educated lot…and so I find it ironic in some ways that they would find any sort of open sharing of opinion to be unacceptable. Mackey wasn't condoning racism or pedophilia – he was expressing an educated opinion about a subject, health care, with which he has a high degree of familiarity as a businessman. Since when do people get “punished” for expressing such opinions? (As I said last week when the Mackey piece was first published, I’m so confused by the health care debate that I have no idea what makes sense…but that reasoned debate and discussion seems a lot smarter than ranting about death panels.)

    It also seems ironic that in this discussion, Walmart appears to be on the side of the Obama administration, and Whole Foods is in the opposition. Go figure. Strange bedfellows, indeed.

    (By the way, speaking of strange bedfellows, there’s a terrific piece in the New York Times this morning about Theodore B. Olsson, the conservative lawyer who worked in the administrations of both Ronald Reagan and George W. Bush, who now is arguing in favor of the constitutionality of same-sex marriage, gaining the suspicion and enmity of conservatives everywhere. This has nothing to do with the Mackey story, but it is worth reading nonetheless.)

    However…I’m not buying for a moment the argument that Mackey’s views can be separated from those of his company. He’s the CEO…and his piece was bylined as such, with constant references in the body of the piece to approaches that worked at his company. (Let’s face it. John Mackey the private citizen has no more credibility on this issue than anyone else. John Mackey the CEO has lots of credibility.) He has a responsibility to the brand, to his customers, to his employees and to his shareholders.

    What’s interesting about this case is that it seems that Mackey and Whole Foods seem yet again surprised by the fact that CEOs have some responsibility for representing their companies. Let’s not forget that it wasn't that long ago that Mackey got into some trouble for anonymous Internet postings that criticized then-rival Wild Oats, which some saw as a way of driving down the stock previous to Whole Foods buying the company.

    Is this enough to dislodge Mackey from the Whole Foods’ CEO office? I doubt it. But does he have two strikes against him? Yes.

    I wish we lived in a country where reasoned and rational political discourse could take place, but we don't. In such a country, a CEO such as Mackey could write an opinion piece in the Wall Street Journal without fear of boycotts. But until we live in such a country – which will happen about the same time that pigs fly – CEOs such as Mackey have to understand what their responsibilities are.

    Published on: August 19, 2009

    There is an interesting piece in the Wall Street Journal this morning in the “Numbers Guy” column that looks at the mysteries of the supermarket checkout line, concluding that while the average wait at the grocery store may in fact be shorter than at other venues, it is one of the most vexing to shoppers.

    Part of this may simply be because people do it more often, but there also may be an implicit unfairness to how such lines work. Some cashiers are faster than others, which leads inevitably to people thinking that they once again have chosen the wrong line to wait on. And, there is the unfairness of the so-called express lane, which rewards people with the fewest items and does not give any sort of preference to best shoppers making the biggest purchases.

    As the Journal writes, “To combat this, some retailers and fast-food restaurants have gone the way of banks and airports, shuttling customers into a single line where the person in front goes to the next open cash register. Other retailers are dabbling in technological upgrades to improve the waiting experience with updates on wait times or pleasant distractions.

    “But the primary goal often isn't a reduction in wait time. The simplest way to reduce wait time is also the most expensive: adding more employees. And people have inaccurate internal clocks, as research shows, so there's little benefit in shortening the lines, the thinking goes. Instead, retailers are appealing to consumers' sense of justice by ensuring no one is served after another customer who arrives later. And, in the hierarchy of unpleasant activities, they're seeking to elevate waiting above watching paint dry.”
    KC's View:
    I’m a big fan of a system that Hannaford has been implementing in select stores – using a single line system similar to that found in a bank or at an airport, but also having enough associates available to handle checkout duties for people with big baskets. They take the basket from the customer and handle the checkout and bagging process while the shopper goes out to the car and pulls up to a loading sock where the bags and boxes are placed in the back of the car; the transaction is processed via a portable credit card terminal, and the consumer is quickly on his or her way.

    This strikes me as a game changer for shoppers, the kind of differential advantage that could get people to change stores and shopping patterns.

    The folks at Publix point out to the Journal that there is a downside to a single line system – that some people like particular checkout people and are happy to wait on a longer line to get that person. But I have to imagine that this is the rare exception, not the rule.

    Published on: August 19, 2009

    The Oregonian reports that the state’s Department of Agriculture has begun a public awareness campaign to remind both retailers and shoppers that there is a law against people bringing their dogs into the supermarket.

    According to the story, there has been a growing trend toward people bringing their dogs to previously off-limits places – ranging from hotels to brewpubs – as pets are perceived by some as being members of the family rather than as, well, pets.

    According to the story, “Dogs stand accused of urinating in aisles, licking meat packages, sniffing food items. Every once in a while, a complaint involves a snake around someone's neck or a rabbit carried in a purse, but canines are the primary offenders.”

    Vance Bybee of the state Department of Agriculture says that “interestingly enough, we get more complaints in Bend and in the Pearl District of Portland where people are more affluent and have the opportunity to pamper their pets and feel this pet is a part of my family so I am entitled to do with it what I like."
    KC's View:
    This is the whole “pet parents” vs. “pet owners” debate. I fall firmly into the latter category – though I love my yellow lab, Buffett (natch!), there simply are places she should not go. So I’m sympathetic to the regulators up in Oregon who want to keep certain boundaries in place.

    Published on: August 19, 2009 reports that Wegmans Food Markets has gotten a $1 million grant from the Pennsylvania Energy Development Authority (PEDA) “to help offset the cost of implementing hydrogen fuel cell-powered material handling equipment at its Retail Service Center in Pottsville, Pennsylvania. The supermarket estimates that by converting the lead-acid-battery powered pallet jacks and reach trucks in just the produce area of its facility to hydrogen fuel cells, it will cut carbon emissions that are equivalent to removing 134 cars off the road per year.”

    • The Wall Street Journal reports that the Hardee’s and Carl’s Jr. fast food chains “will offer mail-in refunds to customers who claim to like a McDonald's Angus burger better than a Carl's Jr. Six Dollar Angus Burger (which actually costs $3.99) or a $3.49 Hardee's Angus Thickburger.” The offer ramps up the competition among the chains in the premium fast food burger category, which has seen some lift as customers look for affordable luxuries in a recessionary environment.
    KC's View:

    Published on: August 19, 2009

    • Target Corp. reports that its second quarter profit was down 6.4 percent to $594 million, from $634 million during the same period a year ago. Q2 retail revenue was down fell 2.7 percent to $14.57 billion, on same-store sales that were off 6.2 percent.

    • Unified Grocers reports that its third quarter net sales declined 2.4 percent to $992.5 million, compared to $1 billion during the same period a year ago. Q3 net earnings were $3.9 million, compared to net earnings of $4.8 million a year ago.
    KC's View:

    Published on: August 19, 2009

    We had a fair amount of debate yesterday on MNB about the case of Dr. Jason Newsom, the Florida doctor who lost his job as head of the Bay County Health Department in Panama City because he used an electric sign outside his offices to criticize – sometimes by name and brand – foods that he said contribute to the nation’s obesity problem. Because he targeted doughnuts and Dunkin’ Donuts in particular, he got fired because of threatened lawsuits by a county commissioner who owned a doughnut shop, and a couple of local lawyers who owned a local Dunkin’ Donuts franchise.

    Newsom said that he doesn’t regret his actions, that railing against the causes of obesity was as much his job as educating the public about flu shots.

    While I conceded that the doctor could have been diplomatic, I agreed with him on principle…which generated a lot of email from people who disagreed with both of us, some of whom seemed to feel that overweight people were being personally and specifically attacked.

    All of which led to some more email…

    One MNB user wrote:

    I do not understand people who report that they are overweight or obese and further believe others in the US are unfairly or maliciously targeting them as a big cause of obesity-related health problems. I agree with those that say the Florida doctor was out of line. He can do that as a private person, but not unprofessionally from his professional office.

    Being concerned about increasing rates of obesity (particularly for children) is not "unfairly targeting overweight adults." Any more than being concerned about smoking, driving too fast in a car, etc. is unfairly targeting smokers and people who drive too fast or while intoxicated. Not everyone that smokes or drives a car irresponsibly dies from lung cancer or in a car accident, either. For a large percentage of people, however, smoking or driving too fast or while intoxicated can do damage to them and others. And is costly to them and to others as well, with their healthcare being a very significant cost.

    I am genuinely sorry if some overweight people feel unfairly targeted. The statistics tell the story, however, and it is not one that says most people can be overweight or obese and not suffer some related health problem(s). The opposite is the case.

    One of the most important groups at risk are children who are developing eating and exercising habits for a lifetime. This group cannot write letters to MorningNewsBeat, nor does it control its own healthcare environment to any significant degree. Childhood obesity problems and their causes deserve the attention of adults to create better opportunities to form good exercise and eating habits. Also to be considered are the overweight and obese adults that want help in reducing a proven health risk factor in their lives.

    Responsibly addressing (not easy, but possible) the aspects in the lives of US citizens that encourage too little exercise and poor food habits makes sense for most of the population. That is trying to help most people, not unfairly targeting a few people.

    Another MNB user chimed in:

    We all wonder why health care will never get passed.... I've just lost 30 pounds medically and I'm no longer a diabetic II, fixed my fatty liver. All the medical care in the world wont help till people eat right. This includes eating good food, less food, less often. Trust me you really don't know how much of your life is hooked on food. As well as how much were being marketed to eat more and larger sizes. Fact is you eat more when you watch TV. True, not all over weight people are that way … but if you have a "roll" around you stomach and pretend you’re not eating too much you are just kidding, no, killing yourself...

    MNB user Bob Hodgin wrote:

    In reading the comments on Dr. Newsom’s firing; his point may have been lost by focusing too much on donuts and Dunkin Donuts. It is true that moderation is the key and an occasional donut is ok and people of all shapes and sizes eat donuts. However, the fact remains that most (not all) overweight people are unhealthy. With 2/3 of our adult population and 1/3 of children overweight or obese we are suffering from a myriad of obesity related illnesses that go from bad joints from carrying to much weight to heart disease and cancer.

    Perhaps not using the best approach, Dr. Newsom was bothered by the fact that adults set the examples for children and according to the CDC, one in three children born in the year 2000 will become diabetic and this current generation of children will be the first generation to live shorter lives than their parents – all because of how much and what types of foods they eat. Also, for the first time we are seeing the onset of heart disease in 10 year old children and the toll it takes on a child’s self-esteem is steep.

    Speaking from experience, there is nothing good about being overweight as a child. The best thing we all can do is adopt good eating habits and be an example…you might be surprised how others, especially children, catch on.

    Still another MNB user wrote:

    Love him or hate him…he did get us talking…it got some very personal issues on the discussion table, and perhaps some understanding for other perspectives…and that’s a good thing…too bad he’s not around to keep the conversation going.


    Reader’s Digest is filing for Chapter 11 bankruptcy protection, with CEO Mary Berner saying that despite the filing, it would be “business as usual,” with no layoffs, no salary cuts and virtually no impact on day-to-day operations. She said that the move was strictly a “balance sheet issue.”

    I commented:

    The idea that Reader’s Digest thinks it can do business as usual and survive in the long term strikes me as a joke at best, and delusional at worst. My guess is that you would have to hunt very hard to find anyone under the age of 30 who reads Reader’s Digest on a regular basis or find it relevant to their daily lives – and it is almost impossible to imagine that they don't need to make major changes to their business model in order to have an extended and healthy life span.

    They may have convinced themselves at Digest headquarters that this is just a balance sheet issue, but anyone with a computer knows that the world has passed Reader’s Digest by.

    “Business as usual?” In 2009, any executive who utters those words ought to be shown the door. Because those words are a recipe for complacency, disaster and irrelevance.

    MNB user Richard Sokolnicki disagreed, to put it mildly:

    Congratulations! You’ve done it again Kevin. You have somehow managed to criticize and characterize a company with a seemingly scant knowledge of its business. Your reaction to the Reader’s Digest bankruptcy uses the words “joke” and “delusional” and states that “business as usual” is a recipe for complacency. I’ve never read an issue myself, and they may very well have some strategic problems, but I probably have a better take on their businesses than you. (Note: I may have you in age by a few years.)

    Reader’s Digest, even with a planned reduction in newsstand issues, is still the best selling magazine in the US. They also have published it in audio, large print, Braille – and digitally. (For those of you with computers!) I have also heard that they reach a sizeable upper middle income demographic. (Go figure!) In addition they are an extremely successful direct marketer that now includes Time-Life under their umbrella. Wouldn’t anyone love to have that mailing list?

    As for magazines, they also publish “Every Day with Rachel Ray,” “Taste of Home,” etc. Magazines are a tough business these days, but I’m sure they don’t need your advice on that subject.

    And then my favorite – “Weekly Reader.” You’ve heard of that, haven’t you? Out of touch - old fashioned approach you say. Well – they also publish “READ” magazine which has a very cool blog for the younger set. It speaks to their age group and has many engaging, interactive features. It has made creative connections directly to authors like R. L. Stine and Stephen King. (You’ve heard of him…?) You should check it out.

    “Business as usual” for many things that RDA does may be the right thing. It’s hard to judge. Your issue may be that you perceive their (RD’s) content as old-fashioned. I guess that do-it-yourself, self-help, health, and cooking are old fashioned. (?)

    One thing I can say is that they certainly have welcomed “anyone with a computer.”

    Point taken. But I would point out two things.

    One, they filed for bankruptcy. From where I sit, that suggests a problem. If their business is as robust and well-managed as you suggest, then bankruptcy protection wouldn’t be necessary.

    Two, find me someone under the age of 30 who reads or even knows the name Reader’s Digest. (Okay, that is a bit of hyperbole. A lot of people under 30 may know the magazine because it is bathroom reading in their parents’ homes. But that isn’t my idea of a business model.)

    I still think that any executive who utters the words “business as usual” is making a serious mistake. There is no such thing, not these days.

    But your objections to my reasoning are noted.

    Another MNB user wrote:

    Sorry to hear, but not surprised. The only time I read this magazine is in my eye doctor’s waiting room. And rarely is it compelling enough to keep me interested past the door, AND I am well past the age of 30. In fact, I believe if there is anything else available I will reach for that first. Instead of business as usual, management should start looking for some way to become relevant today and tomorrow, if I had stock of this company “business as usual” would scare me enough to divest myself of any remaining stock.

    MNB user Gary A. Narberes wrote:

    Your comment today on Reader's Digest about "doing business as usual and a joke" may be close to the truth, however, isn't that what was said of radio after TV became the popular medium and Network TV when Satellite was on the forefront. The fact of the matter is, that many things we (individually) find insignificant in our own personal lives is significant in many others.

    Sure…except that radio changed to respond to other media. And network television changed to respond to cable. And all of these media are changing to responds to and take advantage of the Internet.

    Which really was my point in saying that “business as usual” is a dangerous statement to make.

    Michael Sansolo yesterday used comedian Jackie Mason to make a point about clarity of information, which led one MNB user to write:

    Sorry to focus on semantics, but I was confused by the last statement in Michael’s column: “Great comedians get rich mocking the complicated. Good businesses do the opposite.”

    What exactly is the opposite of “mocking the complicated”? Praising the complicated? Mocking the uncomplicated?

    I asked Michael and he responded:

    Good columnists are supposed to be clear and I guess I wasn't. The line should have read: “Simplify the complicated.”

    Michael actually is ignoring the first rule of any good columnist.

    When things aren’t clear, always blame the editor.
    KC's View: