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    Published on: August 26, 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.


    As any parent raising kids in today’s cyber-era will tell you, the first time an 11-year-old boy sends out an offensive or idiotic email he gets a reprimand. The second time, you take his laptop away.

    Perhaps Whole Foods should consider revoking laptop privileges for CEO John Mackey, who ignited a firestorm of controversy with an op-ed piece on health care reform he wrote for the Wall Street Journal on August 11th.

    Since then, a movement to boycott Whole Foods has lit up the blogosphere, with more than 20,000 postings on Whole Foods’ own website alone and thousands more on countless other forums debating health care, free speech, and pitting liberals vs. conservatives on topics ranging from organics to obesity.

    Mackey is no stranger to Internet controversy, having already been reprimanded for posting anonymous web comments that criticized then-rival Wild Oats before Whole Foods purchased the company.

    Which begs the question: What was he thinking? Particularly when he had to know what the consequences would be?

    There’s no shortage of irony here. For starters, Whole Foods is favored by well-educated progressives, just the group Mackey infuriated. One blogger compared his piece to “the CEO of John Deere coming out with an op-ed supporting gay marriage.”

    And Whole Foods is without doubt one of the nation’s most innovative leaders in utilizing social networking to connect with its customers. The company’s main Twitter account has about 1.2 million followers, and it has 150 more Twitter accounts for local stores and departments. It also has more than 123,000 followers on Facebook, multiple forums on its website and a presence on Flickr.

    Here’s the top line on the internet reaction to Mackey’s piece:

    • A Facebook page entitled Boycott Whole Foods now boasts 28,392 members, adding about 1,000 members a day this past week.

    • A counter offensive on Facebook, Support Whole Foods and Free Speech, lists 3,380 members. (Full disclosure: As your MNB blog correspondent, I follow both groups.)

    • A “buzz chart” from the YouGov Brand Index, which tracks daily consumer perception of brands, showed consumer opinion toward Whole Foods has taken a major hit since the controversy erupted. The company’s stock price, however, was up yesterday to close at $29.22.

    • The health care reform forum on the Whole Foods company website includes a whopping 18,134 posts on 118 “pages” on the subject.

    • The official Whole Foods website response delicately distancing the company from Mackey’s “personal” opinion has 1,929 comments.

    • Mackey’s response to the backlash on his “CEO blog” elicited 3,087 comments.

    Yes, there is some intelligent discourse on health care policy in the blogs. But much of it has deteriorated into stereo-typical liberal/conservative bashing, with snotty asides spread equally between the “champagne socialists” and “right-wing teabaggers.” And as is always the case with the internet, it is largely uncensored.

    Some may think that this is ample reason for why their companies should stay away from social networking, but that’s not the lesson that should be learned. Social networking goes on with you or without you, if not on your site then on a blog. What you have to do is know precisely what you are doing when you engage in these kinds of discussions...know your customer, know the potential repercussions of staking out a position, and know that in today’s world, the dialogue is constant, sometimes inflammatory, and always able to both reveal and reinforce the connections between shoppers and retailers.

    Whole Foods has excelled at that connection up until this misstep by Mackey, and the company appears to be working its way through the backlash, without censoring the dialogue.

    But since 11-year-old boys and some corporate CEOs can be rather dense, can someone please take John Mackey’s laptop away, at least for a week?

    (BTW: Thanks to all of the MNB readers who sent me their favorite food blogs. I’m compiling a Best of the Blogs list. If you have one to share, please shoot me an email at kate@morningnewsbeat.com).
    KC's View:

    Published on: August 26, 2009

    Information Resources, Inc. (IRI) and The Nielsen Company (Nielsen) have formed a U.S. production joint venture to recruit, maintain and process data from a common set of households to support the IRI Consumer Network and Nielsen Homescan panels, which will continue to be operated by their respective companies. The pool of households will be owned by the joint venture, but the techniques used for projecting, analyzing and delivering insights will remain proprietary to each company.

    The joint panel is designed to provide a more efficient organization focused on gathering high quality behavioral and attitudinal information from consumer households, and foster a competitive environment where each company focuses on meeting clients’ specific insight and analytical needs.

    According to the announcement, “The joint venture, owned 50-50, will be established using the existing Nielsen household sample and data acquisition infrastructure and will begin operation during the first quarter of 2010. The joint venture will draw from a subset of existing IRI households to replace panelists as they naturally drop from the original sample. A complete history of data (five years of back data) will be available to both Nielsen and IRI, and each company will use its own unique intellectual property (data reference, projections, technology, etc.) to produce delivery of its respective consumer panel. Under the joint venture agreement, Nielsen receives 100 percent of the targeted 100,000-plus households and IRI has access to 86 percent, with the right to acquire up to 100 percent after two years. The joint venture will be governed by a Board, equally represented by IRI and Nielsen officers and an independent chief executive officer to be recruited from outside both companies.”

    The companies say that by consolidating panelist management and data collection, IRI and Nielsen will intensify focus on providing the unique and actionable consumer and shopper insights that drive success in the highly competitive consumer packaged goods (CPG) marketplace. The similarity of the data collected between the two companies and the increasing complexity of maintaining a longitudinal sample size, all create an opportunity to consolidate household panelist acquisition and retention operations.
    KC's View:
    Sensible move, and it will be interesting to see how both companies make moves to differentiate their offerings and perspectives despite swimming in the same pool of data.

    Published on: August 26, 2009

    The Tampa Bay Business Journal reports that Cerberus-owned Albertsons plans to close four Florida stores that are described as being unprofitable, which will leave the Boise-based company with just 31 locations in the state.

    In addition, Albertsons announced that it is closing five unprofitable Denver stores, as well as a distribution center in Aurora, Colorado. The company’s remaining 26 Colorado stores will now be serviced by an Arizona warehouse.
    KC's View:

    Published on: August 26, 2009

    Kraft CEO Irene Rosenfeld is interviewed by Forbes about the leadership strategies that have gotten the company through the recession. Excerpts:

    • “Rewiring the organization--it has been the underpinning of everything else we've done. It started with getting the right people. In the course of my first year, I changed over half of the top two levels of management. Some of them were new to Kraft; some of them were new to their positions. It was necessary to do this in an effort to jump start the organization and put the employees on a new growth trajectory.

    “The second part was ensuring we had the right structure. We had been a highly centralized organization, which led us to be slower than we needed and, more importantly, not responsive enough to local market conditions.

    “And the third piece was getting a simplified set of metrics in place that are well-aligned to shareholder value: organic revenue growth, operating income growth and cash flow. As a consequence, we had a tremendous increase in our performance overall. I am particularly pleased in terms of cash-flow improvement.”

    • "’Servant leadership’ is the most important aspect of a successful leader – the recognition that I am here to help the organization accomplish its objectives rather than they are here to meet my needs. Once you recognize that, you are able to engage the hearts and minds of your followers, and they are able to just deliver the kind of results that you are looking for.”

    Meanwhile, ArkansasBusiness.com reports on a “40 Under 40” celebration in Rogers, Arkansas, at which former Walmart CEO Lee Scott offered 10 “points of leadership”:

    1. Hiring people better than yourself is an effective way to build a career.
    2. Ego is the biggest enemy of leadership.
    3. When people know what you want, they will often give it to you.
    4. The ability to give honest constructive feedback is essential.
    5. Very few people ever feel like they are on top of things.
    6. What you say and how you say it is not nearly as important as what is heard and how it is heard.
    7. Even if you feel very strongly about something, there is a possibility you could be wrong.
    8. Your harshest critics may be the most helpful voices you hear.
    9. Sharing praise is a compromise; give it all away.
    10. Integrity is the single most important characteristic.
    KC's View:
    Both the comments by Scott and Rosenfeld remind me of something often said by former Starbucks CEO Jim Donald, who always says that it is critical to remember in any organization that the CEO is only as successful as the people on the front lines…who end up being the most important people in any business.

    Whether practicing “servant leadership” or giving away all praise, it strikes me that these are enlightened and enlightening lessons.

    Published on: August 26, 2009

    The Chicago Sun Times reports that a new study by Grant Thornton LLP suggests that “as many as 10,000 retail stores will close nationwide this year, led by clothing stores, electronics and food-and-beverage stores, and department stores, in that order,” a number that would be double the number of closings during 2008.
    KC's View:

    Published on: August 26, 2009

    • The Washington Post reports that while the Orange County Board of Supervisors in Virginia has approved the building of a Walmart Supercenter near to the National Park Service's Wilderness Battlefield, opponents have pledged to continue their battle against the retailer.

    Jim Lighthizer, president of the Civil War Preservation Trust, released a statement acknowledging that the vote was a setback but saying that “the battle is not over yet.”

    "The ball is now in Walmart's court," he said. "It's in the corporation's best interest to work with the preservation community to find an alternative site. ...We are optimistic that company officials will see the wisdom of moving somewhere else."

    Litigation to stop Walmart from building on the site is considered possible, and analysts expect that the retailer is unlikely to back away from a battle with preservationists.

    • The Denver Business Journal reports that Walmart is rolling out a bill-paying service in all of its stores around the country. “Customers are now able to pay bills for credit cards, utilities, phones, cable and satellite TV and auto loans, among other bills, at Walmart MoneyCenters and customer service desks,” the story says.

    “We're introducing Walk-in Bill Pay nationwide to provide another affordable money service option that will help families manage their monthly budgets so that they can save money and live better in these tough economic times,” Jane Thompson, president of Walmart Financial Services, said in a statement.
    KC's View:

    Published on: August 26, 2009

    The Conference Board reports that its consumer confidence index increased to 54.1 in August from a revised 47.4 in July, which was above analysts’ expectations. In addition, consumer expectations for he next six months of economic activity increased to 73.5 from July's 63.4.

    In addition, the percentage of consumers expecting more jobs in the months ahead increased to 18.4 percent from 15.5 percent while those expecting fewer jobs fell to 23.3 percent in August from 26.1 percent in July.
    KC's View:
    The recession may be technically over, but recession-minded consumers aren’t going to vanish anytime soon. This much seems obvious.

    Published on: August 26, 2009

    The CtW Investment Group, which advocates on behalf of union investments in pension funds, has called for the Whole Foods board of directors to remove John Mackey as the company’s CEO, citing Mackey’s op-ed piece in the Wall Street Journal that opposed health care reforms being championed by the Obama administration. As has been well chronicled, the op-ed piece has inflamed many Whole Foods shoppers with more progressive/liberal political views.

    "Mr. Mackey attempted to capitalize on the brand reputation of Whole Foods to champion his personal political views, but has instead deeply offended a key segment of Whole Foods consumer base," said CtW Investment Group Executive Director Bill Patterson.
    KC's View:
    Somehow, I have a feeling that a union-backed investment group doesn’t have a lot of sway at Whole Foods HQ.

    Published on: August 26, 2009

    Crain’s Chicago Business reports that in the Windy City, McDonald’s plans to create a Dollar Menu for the breakfast segment, which it hopes will “revive slowing morning sales.” And, the paper says, “the move is a sign that the chain’s new specialty coffees have failed to stem the breakfast slowdown,” and perhaps have not been as successful as some of the hype has suggested.

    McDonald’s has recently rolled out a gourmet coffee McCafé program that has been heralded as a way of competing with Starbucks. Crain’s writes that “McDonald’s executives have said the specialty coffees - the biggest menu expansion in three decades - have exceeded expectations, but the heavily promoted new drinks have not generated large sales increases.”
    KC's View:
    I hesitate to mention this because I’ll be called a coffee snob, but I recently went to a McCafé and ordered a latte. It tasted awful, and I was quite literally nauseous until I found a Starbucks and got my usual venti skim latte and got the taste out of my mouth.

    Now, maybe this is an isolated incident. Maybe I just got a bad pot. And maybe it is unfair to mention this. (Some will argue that this means I have lousy taste in coffee, but I’ll disagree.)

    But I won’t be getting coffee again at McDonald’s anytime soon.

    Published on: August 26, 2009

    • The New York Times this morning reports that a new report by the Economic Research Service of the US Department of Agriculture (USDA) suggests that while food prices have dropped in recent months, it is expected that they could start rising again as the economy recovers. “Over all,” the Times writes, “the Agriculture Department forecast that prices for what it calls ‘food at home,’ a category that includes purchases at grocery stores, convenience stores and farmers’ markets, will rise 2 to 3 percent this year.

    • VeriFone Holdings announced that RBS WorldPay has agreed to work jointly and expeditiously towards marketing VeriFone’s VeriShield Protect end-to-end solution for encrypting payment card data. RBS WorldPay is the first merchant acquirer to endorse a commercial end-to-end encryption solution. By encrypting the card number on swipe, right at the point of sale, RBS WorldPay merchants who choose the VeriShield Protect solution will be able to dramatically reduce both their own risk and that of their customers as well.

    • In Australia, The Age reports that Woolworths’ is getting into the hardware sector via a takeover bid for Danks Holdings, which owns or supplies more than a thousand hardware stores, that it is making in concert with the US-based Lowe’s home improvement chain. The move would put Woolworths’ into even greater competition with Wesfarmers, with which it competes in the supermarket business and also owns the Bunnings hardware chain.

    Reuters reports that the UK’s J. Sainsbury supermarket group plans to hire as many as 20,000 people for seasonal jobs during the end-of-year holiday season – almost twice as many as it hired last year during the same period. The job creation is in contrast with rising unemployment rates in the UK, as a number of supermarket chains in the country are able to bring on staff.
    KC's View:

    Published on: August 26, 2009

    • Haggen Inc. announced that John Boyle has been promoted to Group Vice President of Sales and Marketing. He will oversee merchandising and marketing. Boyle joined Haggen, Inc. in 2007 as Vice President of Corporate Brands.

    In addition, Becky Skaggs has been appointed Vice President of Marketing and Strategy. She is directing the marketing and advertising departments while maintaining previous responsibilities related to strategic projects, consumer research and public relations.
    KC's View:

    Published on: August 26, 2009

    Senator Edward M. Kennedy, described variously as the “liberal lion of the Senate” and perhaps the most effective Senator in the history of the Republic, and who transcended what often was referred to as a sometimes stormy personal life to create an extraordinary legislative legacy, died late last night of brain cancer. He was 77.
    KC's View:

    Published on: August 26, 2009

    Got the following email regarding yesterday’s column by Michael Sansolo:

    Thought your short essay, titled "Summer of Opportunity", was a great read and had major application to me and my line of work.

    While I understand the point of the article might have been competition among industry leaders might require cooperation among those same folks to move forward, technologically speaking at least, I found the article enlightening even in a Corporate Culture sense. I've worked for only a few companies, but one theme remains constant, competition among different internal units. Sometimes, I feel that corporate progress declines, as internal competitive measures increase. While one unit might feel like a 'winner' in a certain scenario, it's often both units, that don't win. It's because they didn't come together and cooperate for whatever political or territorial reasons. Though I might not know the answer yet, as to how to solve these types of ongoing problems, I think you're article helps guide me in the right direction.

    Btw- I live in Sydney now, after living most of my life in the Philadelphia area...my pop came over recently and we did the bridge climb. Though a bit expensive (when making aussie dollars!), it was definitely one of the coolest tourist experiences, that both of us have ever had. The analogy about team work was spot on. The climb leaders do a great job of ensuring that occurs, though the incredible height and potentially ensuing fall that you stand above, might also have a bit to do people staying on the same page!


    Another MNB user chimes in:

    Michael Sansolo wrote, "The world they enter as college freshmen or high school graduates is the only world they know.”

    As a marketing professor at a small college located in the Upper Midwest, I am stunned by students' lack of history. If you took a circle of students who do not know history in context (e.g., discuss causes and consequences of the US Civil War) and another circle of students who do not know history in fact (e.g., the US Civil War started in 1861 and ended in 1865) to create a Venn diagram, then you would have one circle laying almost on top of the other circle.

    When Meghan McCain, daughter of US Senator John McCain, flippantly told Paul Begala that she did not know about a specific period of time because she was not born then, Begala retorted that he was not born during the French Revolution but he had read about it.

    I mention it as a faculty member because I see parallels of history between today's America and the America that existed in the 1870s. In 1863, Abraham Lincoln authorized the construction of the Transcontinental railroad. In the midst of a war that some were not sure if the Union would prevail as well as soaring inflation in an attempt to pay for the war, the President under took one of the largest engineering feats in the history of this country. Compare Lincoln's decision to build this vital railroad to Obama's push for near universal health care. How can we afford to pay for such a program in the midst of an economic downturn and two wars that some are not sure if we will prevail?

    The construction of the Transcontinental railroad ushered in a boom of rail projects around the country. In turn, prices dropped as merchants faced competition from far away places like Chicago and New York that were now accessible thanks to railroad. Retailers like Montgomery Ward's and Sears Roebuck, two of the earliest catalog merchants, got their start thanks to the railroad. Compare that competitive market to
    today's retailers who face competition that exist because of (1) large container ships that bring goods from far away places like China and Brazil, (2) internet merchants that have replaced catalog merchants, and (3) drop shipping service.

    All these lessons and their attending opportunities and solutions are lost when they only world you know is the world you live.





    MNB reported yesterday that the President’s Council of Advisors on Science and Technology sent a report to the White House in which a “plausible scenario” was painted in which between 20 and 40 percent of the US population – or as many as 120 million Americans – could contract the h1n1 swine flu virus this fall and winter. As many as 30,000 to 90,000 people – mostly children and young adults - could die from the flu, the report postulates, emphasizing that this was not a prediction but rather just a worst-case scenario necessary for the government to properly plan.

    It is also possible that half the US population could catch this flu, though the vast majority would not show symptoms nor become seriously ill.

    My comment: This could have enormous impact on the food business, in terms of how it affects employees as well as shopping patterns. It could make it hard for a lot of people to come to work, and it could give the advantage to retailers that offer online ordering and delivery options to shoppers.

    Interesting range of responses to this piece…

    One MNB user wrote:

    Just a passing question. Given the dire scenario that could be created by Swine Flu, coupled with your observation of what it could do to an employee’s ability to show up for work. Do you think our culture would accept the use of gloves by employees especially for those cashiers handling money/credit cards all day?

    I have no idea. But it is an interesting point.

    Another MNB user wrote:

    A friend of mine from Portland OR attended a conference in northern CA a few weeks ago. 24 people got ill, about 10% of the attendees, and she passed on…from swine flu. I am still in shock.

    Frankly, I hadn’t paid much attention to it prior to this, I am not in favor of vaccines, I never understood how putting contaminated cells into a healthy body was helpful. I am not in favor of “government forced vaccinations” either, and this has been discussed.


    Nobody is going to have to force me to get a vaccination. I’ll be on line the first day.

    But another MNB user wrote:

    And the sky falling could seriously impact the remaining few of us. Seriously Kevin, how could you put this in your blog???

    Forgive me. I thought – and continue to believe – that this is important.
    KC's View: