retail news in context, analysis with attitude

Published on: December 2, 2009

by Kevin Coupe

Content Guy’s Note: This column is the second of two to be featured on MNB this week that are taken from our new book, The Big Picture: Essential Business Lessons From The Movies. To learn more about the book - which is exclusively available to MNB readers in time for the holidays - click here


Jawsis one of the best thrillers ever made, but it also serves up an example of business behavior that is egregiously bad and almost inevitably fatal: denial.

“I don’t think either one of you are aware of our problems,” Mayor Vaughn (Murray Hamilton) says to Chief of Police Martin Brody (Roy Scheider) and Matt Hooper (Richard Dreyfuss) at one point in the movie. “I’m only trying to say that Amity is a summer town. We need summer dollars. Now, if the people can't swim here, they'll be glad to swim at the beaches of Cape Cod, the Hamptons, Long Island...”

Sure, Amity needed summer dollars. But what Vaughn ignored was the fact that the town also needed tourists that weren't worried about being torn limb from limb.

Vaughn’s reluctance to close the beach is an example of the type of short-term thinking that should be avoided in the business world. Vaughn is working under the premise that if the town of Amity closes the beaches because of concerns about shark attacks, it will scare away the tourists on which the town depends. Which is true. But Vaughn ignores the cold reality that if tourists find out that there is a shark in the water and the town allowed people to go swimming, not only will they stay away in droves, they’ll also lose trust in the town’s management and never come back.

Businesses have to engender trust in their customers. Violate that sense of trust by ignoring the obvious facts – or even just the likely trends – and the repercussions can be both serious and long lasting.

Mayor Vaughn obviously never learned from the management at Johnson & Johnson, who, when faced with evidence that Tylenol had been tampered with in 1982, immediately pulled the product off the shelves. The Tylenol executives figured that they could survive the short-term hit, but would never survive the backlash if they denied the seriousness of the problem. When a new tamper-proof version of Tylenol came back to store shelves, there remained a sense of trust on the part of the consumers because Johnson & Johnson played it straight.

To be fair, although Mayor Vaughn generally is painted as the bad guy in Jaws because he ignores the sharp-toothed reality swimming just off shore, almost everybody is in some sort of denial. While this denial drives the plot forward, it also offers a primer on how to not deal with serious or even not-so-serious business situations.

Think about it. Quint, the great shark hunter played to crusty perfection by Robert Shaw, continues to chase the enormous great white shark with a small boat and just two crewmen. That’s world-class denial.

Hooper, the oceanic expert with a passion for sharks, shows a sense of denial several times when he gets into the water with the shark. Sure, he’s getting into an anti-shark cage, but the evidence is pretty strong that it isn’t going to be nearly “anti” enough.

About the only main character who doesn’t seem to be in denial is Chief Brody, and even he has a moment of self-delusion when he’s asked why, if he is scared of the water, he lives on an island. “It’s only an island when you look at it from the water,” he says.

Yeah, right.

But it also is Brody who has the movie’s primal moment of clarity. It’s when he’s shoveling bait into the water and gets his first close-up look at the shark’s massive body, black eyes, and very, very sharp teeth.

“I think we’re going to need a bigger boat,” he says.

Truer words never have been spoken.

In business, as in Jaws, denial can get you eaten for lunch.

Published on: December 2, 2009

Safeway announced yesterday a broad price reduction program in its 119-store Colorado division.

“By offering thousands of new everyday low prices throughout the store, Safeway furthers its commitment to providing customers with a more affordable and convenient one-stop shopping experience,” the announcement says, adding , “Shoppers can easily find items in store with the new everyday low prices through Safeway’s redesigned yellow shelf ‘Tags’ which show customers the old price crossed out and the new everyday low price. The new yellow tags also display the Club Card price.

“To promote Safeway’s in-store price reduction program, the company is launching an integrated advertising campaign that features television, radio, online, outdoor and print throughout the area.”

The announcement also says that “Safeway will continue to offer customers the added values they’ve come to trust such as great weekly Club Card savings and the finest quality perishables. Safeway is so confident in the quality of their fresh produce and tender Rancher’s Reserve beef that it will refund a customer’s money and replace the item for free if the customer is not completely satisfied.”

Published on: December 2, 2009

by Kate McMahon

“Went to Walmart and they were out of something I wanted so while I waited to check out I bought the rest on Amazon with my iPhone. Woo-hoo. One more thing, Amazon … you will get all my business next year if you can get more competitive with some of Walmart’s toy deals :)”

Welcome to cyber retailing in the 2009 holiday season.

The web post above, complete with smiley face, is exactly as it appeared online last weekend - and it captures more than just the current Walmart-Amazon slugfest for market share.

Shoppers across American were out in force - both in stores and online - before Black Friday and after Cyber Monday, and they were doing more than just comparing prices. This year they were also sharing their finds via Twitter, Facebook and e-mail and a burgeoning number of internet coupon/bargain sites. And if consumers had complaints or questions, they used the web to engage in an instant two-way conversation with the store.

Retailers exhaled after encouraging Black Friday numbers for the brick-and-mortar stores. On Cyber Monday 2009, online sales were up 14% above 2008, according to the website sales tracking firm Coremetrics, which represents 500 major retailers. Buy.com had a record number of orders from 1 to 2 p.m. ET, and eBags.com posted a whopping 53% increase in sales Monday.

The internet was buzzing with minute-by-minute updates on prices and availability, particularly for consumer electronics and coupons. While traditional shoppers were pushing and shoving their way to that “doorbuster” special at midnight Friday, internet shoppers were enthusiastically comparing notes.

Wrote one Monday shopper: “I spent the better part of my working day (shh, don't tell the boss!) trolling the different Cyber Monday sites and found two to be the best: www.SuperCyberMonday.com and www.CyberMonday.com. A few hours left for great deals...happy shopping.”

And then there’s the Twitter factor, and the role of those 140-character short message bursts in what is being called America’s first “Twitter Christmas.” Best Buy was clearly out front in this, with its “Twelpforce” (a Twitter-styled help force) of some 2,500 employees on deck to field consumer queries and complaints in real time. Having just spent hours on hold with Dell on a computer accessory order, still unresolved, I followed the instant responses and resolutions on the Best Buy Twitter site with great envy.

But this was not just an on-line phenomenon. Some Best Buy customers were twittering employees from within the actual store, or from home before they came in to buy their purchase or afterwards to make the darn thing they just bought actually work.

And what it reflects is a significant change in consumer behavior and expectations. They are looking for quality and value, and increasingly have it at their fingertips or iPhone application. Whether they are pricing a new HDTV or computer, or a Porterhouse steak or low-fat organic milk, they want to get their money’s worth. And retailers such as Best Buy are engaging in a relationship with their customer that should yield dividends when the holiday price wars have ceased, and that’s smart retailing.

The question is, how are you going to follow the lead of companies like Best Buy? Are you prepared to engage in a different kind of relationship with your shopper, one that is built on transparency and information and customer service that are relevant to a 21st century shopper?

Another question, if I may.

I was intrigued by the “don’t tell the boss” comment made by one Cyber Monday shopper, especially in view of the ongoing discussion of the same issue that’s been taking place here on MNB.

So what’s your company policy on shopping while at work? Is it something you ever have done, or will do again? What should the rules be, if indeed there should be rules governing this at all?

You can reach me via email at kate@morningnewsbeat.com .

Published on: December 2, 2009

The Idaho Department of Agriculture said yesterday that a beef cow in the eastern part of the state has been identified as having brucellosis, an infectious bacterial disease that can cause decreased milk production, spontaneous abortion and infertility in cattle. The infection is rarely passed on to humans.

According to the announcement, the herd has been quarantined and no animals from the herd have been sold. The agency is trying to find out where the infection came from, and if it is possible that it has spread to other herds.

Published on: December 2, 2009

Interesting piece in the Cincinnati Enquirer about how Procter & Gamble is using an anthropologist to evaluate and make recommendations about how to create products matched to human behavior.

According to the story, Andrew Manning has worked for the company in places as far away as china and as nearby as Ohio, figuring out how different cultures feel about cleanliness and how P&G’s products and messages can be fine-tuned to those attitudes.

This isn’t just feel-good stuff. The Enquirer reports that P&G has been able to track rises in market share and sales to Manning’s work.

Published on: December 2, 2009

The Nielsen Company is out with research suggesting that “42% of U.S. consumers plan to spend less on holiday gifts in 2009—up from 35% last year. In consumable categories, Nielsen projects that holiday sales will be flat with a dollar sales gain of 0.03% and a unit sales decline of -0.11%.”

In addition, “Those determined to shop online expect to spend significantly less this holiday season.  In 2008, 42% of shoppers planned to spend more than $300 on their online holiday purchases, but this year only 31% intend to spend that amount. Not only are consumers spending less money online, but they are planning to spend a smaller amount of their total holiday budget online compared to brick and mortar stores.”

There is, however, a sea change in why online shoppers are approaching their computers this year. “The Internet may have lost its cache as a value channel,” the report says. “While consumers still shop online for money-saving reasons, the top two motivations for shopping online focus on convenience. Almost 70% of consumers enjoy the all day/all night benefit of shopping, whenever they like and 57% shop online to avoid holiday crowds in stores.”

The study says that “consumers plan to use a wide array of tactics to save money this year,” including:

• 53% of consumers will wait for sales
• 46% will buy lower priced gifts
• 42% will bargain hunt more extensively this year
• 39% plan to use coupons
• 37% plan to shop at less expensive retailers and more online
• 23% will give homemade gifts
• 22% will make fewer shopping trips

Published on: December 2, 2009

The Walmart.com vs. Amazon.com price war has been sucking up a lot of the oxygen in the retailing universe over the past few weeks, so it is worth looking at how the two websites fared over the holiday weekend...at least as can be measured by site visits.

On Black Friday, Amazon.com was the most visited e-commerce site in the nation, with 13.55 percent of the traffic. Walmart.com was number two, with 11.18 percent of the traffic. (In both cases, the traffic was up two percentage points from the traffic registered on the same day a year ago.)

On Cyber Monday, Walmart once again found itself in the unaccustomed position of being number two, with 9.54 percent of the traffic, while Amazon was on top of the list with 15.53 percent - up 44 percent over the same day a year ago.

The statistics were compiled by Experian Hitwise.

Published on: December 2, 2009

The Wall Street Journal reports that NCR Corp. plans to install 200 of its Blockbuster DVD rental kiosks in Duane Reade drug stores throughout New York City, a move that the paper suggests means that CR is making inroads against the Redbox DVD rental machines.

Redbox, which is owned by Coinstar, has more than 20,000 locations around the country, while it looks like NCR will have just 2,500 by the end of the year - and executives there believe that the Blockbuster branding gives it an advantage as it tries to play catch up.

The Journal notes that the growth in the DVD kiosk business has broader business implications: “For physical DVDs, the Blockbuster kiosks match Redbox's $1-a-night rental price, which many studios say devalues their product and may deter consumers from purchasing DVDs. It also is likely costing Blockbuster stores customers, where rentals can run $4.99 for a week's rental of a new movie. Studios get a cut of rental revenue from stores, but not from kiosks. News Corp.'s Twentieth-Century Fox, Time Warner Inc.'s Warner Bros. and General Electric Co.'s Universal Pictures have tried to block Redbox's access to new movies, landing them in litigation with the retailer.”

Published on: December 2, 2009

Business First of Louisville reports that KFC has a new approach to marketing, creating a value meal that is priced at one penny per calorie.

The Kentucky Grilled Chicken combo meal has a grilled chicken drumstick and thigh, green beans, and mashed potatoes and gravy, has 395 calories and is priced at $3.95.

At the same time, according to the story, KFC is embarking on an ad campaign designed to compare its calorie counts to those of fast food competitors, believing that the comparisons will work in its favor.

Published on: December 2, 2009

• The Bangor Daily News reports that the Maine Supreme Court is expected to decide whether consumers who are affected by a data breach at Hannaford Supermarkets two years ago are entitled to damages related to the case.

A class action suit against the company already has been dismissed, despite the fact that millions of credit card numbers were compromised, resulting in almost 2,000 fraudulent charges.

While Hannaford has been arguing that consumer protection laws are adequate, plaintiffs in the case believe that they are entitled to damages because of the time and effort expended in straightening out their accounts.

• Anheuser-Busch InBev said yesterday that it no longer plans to sell its Beck’s Beer brand, which reportedly was going to be sold for $2.5 billion to Bain Capital. According to the company, the expected sale of some if its European breweries will ease its debt burden to the point where a sale of Beck’s no longer was necessary.

Kraft Foods reportedly has sold its Balance Bar brand to Brynwood Partners, a private equity firm. Terms of the deal were not disclosed.

• Boston Beer Co., the maker of Samuel Adams beer, announced that it has an updated version of its Utopias beer - which is 27 percent alcohol and costs $150 a bottle.

The only downside? There are 13 states - Alabama, Arkansas, Georgia, Idaho, Mississippi, Montana, New Hampshire, North Carolina, Ohio, South Carolina, Tennessee, Vermont and Washington - where the beer cannot be sold because of laws against selling beer with alcohol content that is so high.

"Just part of trying to push the envelope," says Boston Beer CEO Jim Koch. "I'm pushing it beyond what the laws of these 13 states ever contemplated when they passed those laws decades ago."

Published on: December 2, 2009

• Starbucks announced yesterday that John Culver, the company’s president of global consumer products and foodservice, has been named president of Starbucks Coffee International.

He succeeds Martin Coles, who resigned to, as the company put it, “pursue new opportunities.”

CEO Howard Schultz explained the move, saying, "With our U.S. business moving in the right direction, now is the time to re-accelerate growth of our international business ... I am excited to work closely with John as I expand the focus of my activities to include aggressive pursuit and development of our global business opportunities."

• McDonald’s announced yesterday that Ralph Alvarez, its president/COO, will retire at the end of the year because of health issues.

Published on: December 2, 2009

MNB reported yesterday that Luxist, a luxury goods and lifestyle website operated by AOL, recently ran a contest asking readers to choose the world’s best gourmet grocer from the following contenders: Harrod’s in London, Zabar’s and Dean & Deluca, both in New York City, Whole Foods, and Dorothy Lane Markets, the three-store, family owned company based in Dayton.

And Dorothy Lane won.

MNB user Jim Lampe wasn’t surprised:

Great place to shop!

I live a couple of miles from their newest store in Springboro and find myself looking for reasons to go there.  I don’t have to look too hard.

Great produce, the best deli with prepared foods you will find, a cheese department with enough variety that you will never have to eat the same cheese twice.  The seafood department has the freshest seafood in this part of the country and the meat department is absolutely the best place to buy meat I’ve ever seen.  The wine department is always fully stocked with great wines and the floral department would make FTD jealous.  With all that being said the best thing about DLM is the employees and their commitment to customer service.  Roll it all up and you have a great shopping experience.

And another MNB user wrote:

One of its best features is that we can walk to DLM.  I love the neighborhood feel and the quality is exceptional.  We are lucky to have DLM in Dayton.

Mark it on your maps. Dayton, Ohio - the center of the gourmet food universe.

BTW, here’s my little secret.While DLM gets the most attention for its Killer Brownies and Heavenly Ham, one of my favorite DLM products is the prime rib rub...which I use on everything from steak to hamburgers. Fantastic!