retail news in context, analysis with attitude

MNB had a piece yesterday noting that Whole Foods CEO John Mackey gave a speech talking about his notion that capitalism needs a brand makeover, with companies and executives doing a better and more responsible job to represent the positive facets of capitalism.

One MNB user wrote:

So who are the good guys and who are the bad guys?

We cannot continue to ship jobs to foreign countries, reduce insurance benefits, lower salaries, increase the pay and benefits of executives, pay off lobbyist and politicians and expect to have a thriving consumer driven economy when we have continued to drive the consumer into the ground for the benefit of the rich.

Walmart changed the capitalist equation by trying to be a cheap as possible in every way shape and form. They have put thousands of businesses under, pay low wages, low benefits, and buy from the cheapest source possible. Knock off name brands the took decades the evolve.

We are not thinking right to pay executives millions and workers peanuts. “60 Minutes” last evening had a great story about a bred company in CA where everybody gets the same pay. Hows that for a new philosophy? Or another company owned by the employees and run as a democracy!


I’m not sure that paying everybody in a company exactly the same is the best definition of capitalism, nor that companies should be run as democratic entities. But certainly there is a major disconnect in a lot of companies between management and labor, and it may be untenable.

MNB user Jerry M. Lawson wrote:

John Mackey just continues to make good sense. It is becoming more and more obvious why they are succeeding as a company. I hope he continues to share his thoughts with everyone.

Another MNB user wrote:

If folks are skewed negatively on the topic of capitalism, it is perhaps because the bad dudes and their greedy actions have touched us all of our lives and operations and commerce SO very  impactfully and on such a scale that the restrained good citizens of capitalism seem more the exception rather than the rule.  The behavior of the unfettered illustrates the need for controls, regulation, fettering.  They are protections for safety and order much like the rules of the road protect and order us all and keep commerce humming.

And still another MNB user chimed in:

The problem with Capitalism is that it is really Crony Capitalism as practiced today. Via lobbying (legalized bribery) corporations are given enormous tax breaks and they make government agencies create regulations that allow them to break or go around the rules. When workers want fair wages its called socialism. When the upper management pays themselves huge salaries --even when they are running the company into the ground-- its supposed to be acceptable because its "capitalism". John Mackey is correct that profits are the by product of focusing on service. This is a basic human trait that is missed in many of today's corporate cultures. I wish there were more leaders like him in business. Wall Street would rather embrace a cactus than John Mackey's ethics because they do not believe they would be so wildly wealthy without their current practices! They caused this severe economic downturn with credit default swaps, etc. and we the people bailed them out last year for their greed. Notice the disconnect between what the voters ask of their elected officials and what the corporations request. Why do the corporations get what they want? They have the money to give the politicians either through lobbying or campaign contributions to influence policy. Given this, what reasons do we have to like capitalism as it is currently branded? Let John Mackey's successful formula be applied to other corporations and then some day we will be able to take the can of Capitalism off the shelf and find a healthy alternative inside!

And, from another MNB user:

I really think people may be confusing corporatism and capitalism. Capitalism is good. Corporatism when not serving the people is bad.  Companies are currently  given more rights than people. For example, if a person kills someone…then they are subjected to a death penalty or life in prison…if a company kills someone, with knowingly tainted products, they just pay a fine or file bankruptcy.




Regarding the new battle over book prices between Walmart and Amazon, MNB fave Glen Terbeek wrote:

As is happening with books and other categories, the internet will push (is pushing) prices on nationally branded products to the lowest common denominator.  This should be considered a real threat by all supermarket operators.  It will be harder and harder for traditional retailers to compete successfully on these well respected items alone.   In fact if they don't differentiate in other ways, they will probably go the way of Crown Books.

This lowest common denominator pricing by retailers will put so much cost pressure on the manufacturers that they will start to use their current trade dollar expenditures to go around their current retailers to reach their targeted end consumers directly.  They will do this using a "consolidating shopper's agent" that connects the shopper with the products they want.  The agents will charge the manufacturers a "connection fee" just like Fed Ex or UPS do; the agents won't  make money by buying and reselling nationally branded items, or getting more trade money from the manufacturers.  

After all, this only makes sense.  First, the manufacturer will then take all of the risk/rewards of marketing an item, including its price and availability; while the agent will connect their customers to any item the manufacturer creates demand for.  And second, the manufacturers will be able to divert trade marketing dollars to consumer marketing dollars.  These joint marketing dollars will become much more efficient and effective for the manufacturer as a result.  After all, the finished manufactured cost of most nationally branded products is approximately 20% of the retail price; in other words, 80% of the retail price currently goes to marketing, logistics,  administration, and profits for both the retailer and the manufacturer.  There is quite a bit of redundancy and mass vs. focussed marketing waste in the current model.   This  hugh amount of money will be rationalized by the manufacturers,  shoppers and their agents in the future, as lowest denominator pricing created by the internet continues to develop.





Regarding Amazon Fresh, which was described on MNB yesterday, one MNB user wrote:

I immediately went to their website. This is amazing! If they had it in my area, I’d try it in a heartbeat. I love the blog area – the writer is honest and doesn’t use retailer-lingo – explains things simply & in a way you would want them to be explained if you were a customer, like ‘We’re charging a $5 fee for orders under $30 because realistically we lose money on shipping those orders. It doesn’t cover all the cost, but it helps…’ I so appreciate the honesty and transparency. If they follow it up with high quality products as their “foodies” advertise hand-selecting… wow.

They have personalized the shopping experience like I have never seen done by a retailer before – like a blog mixed in with the product selection. Example -- there were some mushrooms available with this in the description beside it: “I recently had a simple but delicious preparation where a variety of mushrooms were sliced, coated lightly with olive oil roasted on a cedar plank until just tender and topped with a seasoned salt - just delicious.” Makes me want to try some… great way to get impulse orders of not just that product but the supplies you don’t have (though in the Northwest those are kind of staples for Salmon) by adding that personal touch and simple preparation recommendation.

Looks like they need to expand their personnel – it doesn’t look like the blog area is able to be maintained quite regularly yet. I’m excited to watch this develop, though.


Music to their ears, I’m sure.




One other note.

I got a half dozen emails yesterday from people who have shopped in or have relatives who live near the Marketplace store in Wisconsin where a bear walked in and went straight to the beer cooler.

Apparently it is quite a store. And nobody seemed surprised by the idea that a bear was walking the aisles.
KC's View: