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    Published on: November 25, 2009

    by Kevin Coupe

    There are few things that retailers should be more thankful for than the passion of the people who work on the front lines in the retail environment.

    It isn’t always easy. Just a couple of weeks ago, there was a survey out pointing to a general discontent and dissatisfaction among retail employees. But this isn’t universal, and worth noting when passion and commitment are demonstrated.

    Let me offer two examples as we head into the holiday weekend.

    Earlier this week, MNB had a story about how Wegmans plans to close its well-known Tastings restaurant that is adjacent to its Pittsford, NY, store, and will replace it with a new restaurant across the street called the Next Door Bar & Grill. In my commentary, I wrote that “one of my nicest memories from the past few years was a wonderful dinner that I had at Tastings with some folks from Wegmans - it always is a great evening when there is a combination of great conversation, terrific food and excellent wine.”

    It wasn’t long before I got an email from a Wegmans employee that read, in part:

    I am glad to hear you really enjoyed the Tastings Restaurant and I hope that you will join Wegmans again when Next Door is opened. I have only been a member of the Wegmans ... team for a year and a half ... but I can say only the best about the character and innovation of this company ... Thank you again & please let me know if there is anything I can do to ensure you have the "Next Door" experience.

    I think that this email says a lot about the character not just of the company, but the employee who sent the note.

    Think about it. This person has been working for Wegmans for just 18 months or so, but feels so committed and connected to the culture of the company that it was second nature to reach out on behalf of the company and to represent its brand so forcefully.

    That’s extraordinary. Then again, it’s Wegmans, where the extraordinary often is commonplace.

    Nevertheless, the email was worth noting.

    The second example also is in the form of an email, this one responding to a story we noted from the Chicago Tribune, which reported about how the Simon Property Group, the nation’s largest mall owner and operator, will give away millions of chocolate chip cookies during the upcoming holiday season, in what the organization refers to as “retail aromatherapy.”

    I commented: “How many food retailers engage in retail aromatherapy - whether with cookies or some other product - not just during the holidays, but year round? My answer would be, not nearly as many as you’d think. Which means that too many food retailers are essentially giving away what should be their built-in advantage.”

    Which led to the following email:

    In Albertson’s stores here in Boise, Idaho, every day at 4 p.m. the smell of fresh, hot baked French bread pours through the stores.  The bakery team bakes fresh from 4 to 6 every afternoon and wheels the carts of hot loaves right up to the cash registers.  The smell is heavenly!  I’m not sure if anyone else has a problem getting the whole loaf home without a nibble out of one end, but mine has never made it!

    That’s retail passion showing ... and it comes from a Supervalu-owned Albertsons employee. Not to disparage the company, but you don’t expect to get the same kinds of emails from Albertsons as you do from Wegmans. But there it was.

    I cannot help but think that as Supervalu CEO Craig Herkert looks to remake the company, apparently moving it in a value-driven, low-price direction, he should be careful that this kind of pride and passion in not just left alone, but nurtured. This is what makes a retailer different; this is what makes a shopping experience magical. It isn’t just low prices or unique products, but passionate people who feel great pride in where they work and what they do.

    Something, in other words, to be thankful for.
    KC's View:

    Published on: November 25, 2009

    The Charlotte Business Journal reports that Bi-Lo has filed a reorganization plan that will allow it to emerge from bankruptcy without having of its assets being acquired by Food Lion.

    However, Food Lion says it is still interested “in acquiring certain Bi-Lo assets if an opportunity.” Its original bid for Bi-Lo assets was valued at about $425 million.

    “Food Lion is not part of the reorganization plans filed with the court,” Food Lion says in a written statement. “We had a non-binding agreement with the debtor to acquire certain assets of Bi-Lo, but this agreement is no longer valid.”

    According to the story, Bi-Lo - which filed for Chapter 11 protection last March - “includes a $350 million cash infusion funded by a $150 million equity investment and $200 million in term-loan financing.”
    KC's View:

    Published on: November 25, 2009 both report that Ukrops suffered a Q3 loss of $1.4 million, its first loss of the year, on revenue of $140 million.

    In addition, it is reported that Ukrop’s “showed a net cash flow of $2.9 million and a debt maturing in more than 12 months of $81.7 million.”

    Ukrop’s, a privately held company, traditionally has not released financial information, but “has to file now because of increased oversight from federal regulators,” according to the site.

    The Richmond Times Dispatch reports that Ukrop’s management released the following statement: “Ukrop's balance sheet and income statement is impacted by a variety of investments unrelated to the operation of the supermarket ... From time to time, when there is a downturn in the economy, it is reasonable to expect that our balance sheet and income statement would be impacted."
    KC's View:
    Ukrop’s, of course, is rumored to be trying to sell the company, though the speculation is that the family is having trouble getting the price it wants under the conditions it is demanding. These numbers won’t help...though they could ratchet up the pressure to sell before things get worse. (Which they almost certainly will, in part because Ukrop’s is facing more and better competition than ever before.)

    Published on: November 25, 2009

    Fast Company has a long piece about Whole Foods CEO John Mackey and his “gospel” of Conscious Capitalism.

    An excerpt:

    "’You see, Conscious Capitalism is a fairly new idea, but it's going to have a huge impact,’ he begins, describing the philosophy he developed as he built his tiny natural-foods store into an $8 billion retail beast. ‘I do believe it will become the dominant paradigm of business in the 21st century.’ Conscious Capitalism, Mackey insists, moves corporations to refocus on purpose instead of profit. In theory, it underscores the importance of all of a company's interdependent ‘stakeholders’: employees, customers, shareholders, suppliers, community, and the environment. When all of those constituencies' interests are factored into the company's decisions and aligned, his thinking goes, all -- including, not incidentally, the bottom line -- will flourish.”

    Mackey tells Fast Company: “Businesses that are more conscious of making a positive difference in the world make the world a better place from just being there. That all results in higher profit and higher return on capital. There are no losers.”

    While Mackey concedes that he is a long way from the “huge impact” that he sees his idea having, he takes some personal satisfaction in the journey. "If I get run over by a truck later today, I will have already in my life made a difference in helping many people," he says. "Customers are better off because millions of people are eating in a way they never would have had we never existed. Our team members are better off because we've created a company that's a great place to work. Our suppliers have flourished along with Whole Foods and have made a lot of money from their association with us. And our investors have made a ton of money."

    However, Fast Company suggests that Whole Foods can be a study in compromise:

    “In Mackey's eyes, Whole Foods itself pursues both the good and the heroic. And the nation's largest seller of natural and organic foods does boast many noble practices: Nonexecutive employees hold 96% of the company's stock options; 5% of the company's after-tax profits are given to charity every year; no executive can make more than 19 times the employee average ... In fact, Whole Foods' own astronomical growth -- virtually doubling in size every four years through aggressive acquisitions of 19 of its competitors -- has entailed social and environmental trade-offs. Most of its produce is purchased from agribusiness giants instead of local producers, often flown in from other continents. Its 40,000-square-foot stores -- all of which are nonunion, thanks in part to Mackey's personal efforts -- are the Hummers of retail. Last year, Ceres, a green-investment watchdog, ranked the chain's environmental record among the lowest of all corporations. As Michael Pollan explains in The Omnivore's Dilemma, Mackey's paradox is similar to Wal-Mart's: In order to heal the planet without sacrificing profit, he'll need to continue to tax it with more, still-bigger stores.”
    KC's View:
    I’m always a little suspicious of gospels (and I know this statement is going to get me in trouble with a segment of the MNB community), but never more so then when applied to business. Not that Mackey’s approach - which is shared by some remarkable companies - is to be scoffed at. I believe in working for the greater good, and that business conducted solely for profit can be an empty exercise.

    But gospel? That seems a little pretentious to me.

    Published on: November 25, 2009

    The New York Times this morning has an interesting story about how US legislators looking to rein in high interchange fees on credit and debit card purchases may want to look to Australia for some lessons.

    For example, laws were passed in Australia six years ago aimed at reducing the fees, but loopholes were left open that allowed merchants and banks to levy other fees on consumers. Some examples of the changes that have occurred, according to the Times:

    “Since the government policies went into effect, Australian banks have cut credit card perks and shrunk rewards programs, like frequent-flier miles. While it used to take 12,400 Australian dollars of spending on Visa or MasterCard from one of the country’s four biggest banks to earn a 100 dollar shopping voucher, for instance, now it takes 17,000 dollars.

    “Banks now also require customers to pay their bills faster. Interest starts accumulating on many cards 33 or 44 days after the start of a billing period, instead of the previous 55 days.

    “Annual fees have also climbed for credit cards with reward programs, to 140 Australian dollars a year for gold cards that carry rewards, up from 98 dollars before regulation of interchange fees.

    “Basic cards without rewards still carry on average an annual fee of 29 Australian dollars. Perhaps more vexing, Australian merchants, including retailers, restaurants and airlines, are imposing surcharges for each credit card transaction, even though fees the merchants pay card companies have fallen.”
    KC's View:
    To be honest, while I support the idea of legislative reform in this area, in my darker moments I actually believe that the financial and political systems have become so dysfunctional that whatever they do will be part band-aid and part illusion...and that consumers/taxpayers will end up getting screwed in an entirely different way.

    Published on: November 25, 2009

    The Boston Herald reports this morning that has Ahold moves forward to split its Stop & Shop division into two parts, there also appears to be a planned “restructuring that could trim corporate jobs and operations in Massachusetts ... A letter sent earlier this month by Stop & Shop to its vendors is causing concerns the changes could be more far-reaching.

    “‘The implementation of these organizational changes will require migrations of responsibilities over time,’ Stop & Shop told its nervous vendors in the letter obtained by the Herald, adding it plans to consolidate various support functions as well.”
    KC's View:
    One of the major complaints about Ahold’s recent US behavior has been too much while this may not bode well for the folks in Quincy, Massachusetts, it may be better for the company as a whole.

    Published on: November 25, 2009

    The New Jersey Senate Health Committee has approved and sent on to the full state Senate a bill that would require restaurant chains with 20 locations or more to post calorie counts on their menus.

    The bill is similar to one enacted in New York City.
    KC's View:

    Published on: November 25, 2009

    The Washington Business Journal reports that only 21 percent of employees surveyed by Accountemps say that they will shop online for holiday gifts while at work.

    The story says that even those who do shop online during company time will spend less time doing so - surfing the web for presents for 1.9 hours per week on average, compared to 2.7 hours in 2007.
    KC's View:
    Not only do I not believe this stat, but if I were an employer I’m not even sure I’d mind if people wanted to do a little online Christmas shopping at work. Hitting the stores can be stressful, and if my employees wanted to engage in some stress-reduction techniques, I’m not sure I’d object. Sure, there are limits...and the work has to get done...but the lines between work life and personal life have become blurred, and the rules have changed to a great degree.

    Published on: November 25, 2009

    • Dollar Tree said that its third quarter net profit rose to $68.2 million, compared with $43.1 million during the same period a year ago. Q3 sales rose more than 12 percent to $1.25 billion, on same-store sales that were up 6.5 percent.

    • HJ Heinz reports that its Q2 profit was $231.4 million, down 16 percent from $276.7 million during the same period a year ago. Sales for the period were up two percent to $2.67 billion from $2.61 billion.

    • Hormel Foods said that its fourth quarter profit was $103.9 million, down more than 50 percent from the same period a year ago, on Q4 sales that were down 10 percent to $1.68 billion.
    KC's View:

    Published on: November 25, 2009

    MNB user Frederic Arnal had a thought about a previous exchange:

    In response to the MNB reader who suggested on Monday:

    Let the card companies charge what they what and let the retailers offer appropriate pricing accordingly to the consumer. Lets bring out transparency! Have a two tier pricing strategy to show the consumer what it is costing them to use credit. I'm all for it and will cut up my CC's to save accordingly.

    It's a nice thought but the credit card companies do not permit merchants to give discounts for cash.  That's part of the agreement.  Merchants must either absorb the increased fees or raise the prices for all purchases, cash or credit.

    As Roseanne Roseannadanna used to say, “It’s always something.”

    And if you are too young to know who Roseanne Roseannadanna is...

    Keep it to yourself.

    Commenting on a story the other day about the execution of two Chinese citizens who were implicated in a food safety scandal there, I wrote:

    The clowns down at Peanut Corp. of America should be grateful that they were born in America.

    Which led one MNB user to write:

    Tell us how you REALLY feel, Kevin.

    If I’d done that, I would have used a word other than “clowns.”

    We had a story yesterday about the ongoing battle between and Amazon, and I referred to my ongoing commitment to Amazon...which led one MNB user to write:

    And then there are those of us who don’t shop either place.

    We expect our ambulances to arrive, our roads to be maintained, law enforcement to respond - and we realize that our local tax base needs to be supported in order for those services we expect to be delivered to us.

    This is, in fact, an entirely rational and reasonable criticism of my position. I can’t even disagree with it.

    My only excuse is that I live a busy life - my wife works, I travel a lot, and shopping has to be convenient - and online shopping whenever possible meets my needs.

    However, now that Michael Sansolo and I have a book coming out, I’m going to be a constant denizen of local and independent well as chains. Frankly, I’ll go anywhere and support anyone who sells the book.

    (In case you haven’t heard of it, our new book THE BIG PICTURE: Essential Business Lessons From The Movies, is available exclusively to the MNB community in time for the holiday season: Click Here.

    BTW...Michael wants me to tell you that this is the perfect Christmas, Hanukkah or Kwanzaa present. None better.)

    Yesterday, Michael Sansolo wrote a column that focused on the importance of seeing both the forest and the trees, and used as his metaphor a program in New York City that teaches police officers the art of observation by taking them through local art museums; they are taught to look beyond the obvious and to be specific...skills that serve them well in their work.

    And, he wrote:

    For instance, think about Sarah Palin. At the mere reading of her name, some of you have lost sight of this column through involuntary eye-rolling, while others are waiting to see if I dare take a cheap shot at her. Instead, I want to propose looking at the picture a different way and how that might help us view customers and (at times) politicians.

    It was interesting that we got a range of reactions to this column...which sort of proves Michael’s point.

    One MNB user wrote:

    Wow, Michael! That explains Glenn Beck. He has helped us see the trees. Thank Heaven! Now, where did I put my ax. There are some trees to fall.

    Another MNB user wrote:

    Thanks for the fair and balanced approach to Sarah. Neither those who like her and those who don’t, can take an issue with the way you used her as lesson material. Well done, as usual.

    But another MNB user chimed in:

    While I really like the reference to the value of the study of art to enhancing one's observational and perceptual skills, it's still difficult to disassociate Sarah Palin from superficiality. I guess I'm just too distracted by what she says and how she expresses it.

    I know this ignores Michael Sansolo's perspective, and of course he's correct, but it also just felt good to voice a political comment. After all, MorningNewsBeat encourages political expression, especially with a sarcastic undertone (or is it overtone). It's one of its real-everyday-life attributes that distinguishes it from other more narrowly focused business blogs.

    We like to think we have a big-tent policy here at MNB. The only thing required is the ability to laugh at everything...especially yourself.
    KC's View:

    Published on: November 25, 2009

    Tomorrow is Thanksgiving here in the US, which is the best holiday of the year because it brings families together without the pressure of presents and expectations. There’s just food and football and fellowship - all good things.

    In keeping with tradition, MNB will be on hiatus for a four-day weekend. The archives, of course, are always open...and we’ll be back Monday, November 30.

    Have a great weekend...and a wonderful holiday.

    KC's View: