retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: February 24, 2010

    by Kate McMahon

    While watching some spectacular Olympic skaters stumble, fall and attempt to recover this past week on the ice in Vancouver, my thoughts turned to Toyota and Google.

    Both have stumbled and tumbled down from their respective industry Olympic-like heights in the past month, and are attempting to right themselves. Of the two, Google has thus far shown far superior speed and footwork.

    Toyota’s woes are front-page news across the world – more than 8 million cars and trucks recalled for sticking accelerators and other safety flaws -- essentially an auto-maker’s nightmare.

    Google launched Google Buzz – its version of Facebook and Twitter tied to its Gmail service – on Feb. 9. Within hours, the initial buzz turned into an internet uproar with criticism that the new program publicly exposed users’ privacy. One woman blogged that Google automatically set her up to be followed on-line by an abusive ex-husband. “My privacy concerns are not trite,” she wrote under a pseudonym. Another group filed a class-action suit. Not the buzz Google had anticipated.

    The irony, of course, is that both Toyota and Google seemed bullet-proof prior to these missteps. Toyota, known for safety and quality, has come under intense fire for seemingly dragging its heels on the recalls and doing a lackluster job communicating with confused and worried customers. So much so that the president of Toyota, Akio Toyoda, acquiesced and agreed to appear before a Congressional oversight committee meeting today (Wednesday). As my MNB colleague Michael Sansolo wrote, Toyota’s PR effort is “too little, too late” ... especially since, as was widely reported yesterday, the fix that Toyota has been proposing for the acceleration problem may not actually correct the problem.

    Google clearly misjudged the reaction to Buzz, which automatically created a public network of the people each user most frequently contacted through Google e-mail and chat services. Unlike Facebook, where you join and then “confirm” each friend request, Buzz instantly bared all frequent contacts for anyone on Gmail to see. That would include ex-spouses, co-workers, enemies and perfect strangers.

    The website CIO Today (the MNB for IT execs) summed up the launch by saying Google Buzz “crashed and burned” and “seems yet another example of engineering culture ignoring common sense.”

    To Google’s credit, the Buzz team responded quickly and publicly to the complaints, working around-the-clock, making changes within 48 hours, and replacing the auto-following feature with an auto-suggesting, opt-in feature within four days. The execs in charge of Buzz made it personal, with product manager Todd Jackson posting frequent updates and blog postings. After fixing the privacy issue, he wrote “It’s still early, and we still have a long list of improvements on the way.”

    It was a definite misstep, but the corrections were made early in the program. In utilizing social networking for business, speed is a key element in any recovery. For both Toyota and Google, the consumer will be the ultimate judge.

    Kate McMahon can be reached via email at kate@morningnewsbeat.com .
    KC's View:

    Published on: February 24, 2010

    The Conference Board, the New York City-based research group, said yesterday that its Consumer Confidence Index fell “sharply” in February to 46.0, from 56.5 in January, saying that the index is at “historically low levels and is the lowest since April 2009. “

    An index of 100 would indicate strong growth.

    According to a CNN story, “February's present situation index, which indicates how consumers feel about current economic conditions, hit a 27 year low of 19.4, according to the Conference Board. That means that consumers feel things are worse now than they were during the throes of the financial crisis in the fall of 2008 ... Expectations for the future also took a turn for the worse in February. The expectation index, a measure of consumer outlook over the next few months, fell to 63.8 from an upwardly revised 77.3 in January. Only 16.7% of consumers expect to see an improvement in business conciliations over the next 6 months, down from 20.7%. Some 15.3% of those surveyed expect business conditions to get worse over the next six months.

    “The outlook for the labor market was even more bleak. The percentage of those who expect fewer jobs to become available jumped to 24.6% from 18.9% in January. And only 9.5% of those surveyed anticipated an increase in their incomes, compared to 11.0% in January.”
    KC's View:
    There does seem to a palpable sense of foreboding right now, with a lot of people talking about an expected second dip ... as if it is inevitable. And that wears at consumer confidence. One has to wonder, though, if it might be a self-fulfilling prophesy.

    Published on: February 24, 2010

    After nine months of interior and exterior renovations, Lund Food Holdings is preparing for the grand re-opening of the original Byerly’s store, first opened in 1968 and seen for years as a groundbreaking effort for its in-store restaurant, on-staff economist, and high levels of service and fresh foods.

    The re-opening ceremony is slated for a week from Thursday, in Golden Valley, Minnesota, at which time CEO Tres Lund will unveil a remodeled store that features a new department, Byerly’s Creations, which will “offer a gamut of both self-serve and chef-driven hot and cold offerings for breakfast, lunch, dinner and dessert. Byerly’s Creations will feature seating for about 70 inside and 20 on the outside patio. Among the features of Byerly’s Creations will be a Minute Grill for breakfast and brunch; a wing bar; a Caribou Coffee cafe, and a menu that includes sandwiches and sliders.

    The store also contains environmental enhancements designed to make the unit more energy-friendly as well as more economically efficient.
    KC's View:
    Byerly’s and Lunds continually prove what a very smart retailer once told me - that the most important thing a legendary business can do is understand that legendary is what you were yesterday...you have to prove it every day.

    Published on: February 24, 2010

    Bloomberg Business Week is out with its fourth annual ranking of the nation’s most customer service-oriented businesses, and it has awarded the top spot to LL Bean, the Maine-based apparel and sporting goods catalog company.

    USAA Insurance and Apple garnered the second and third rankings in the survey.

    According to Bloomberg Business Week, LL Bean was cited for “adapting to the way its customers now shop through the design and features of its Web site and its return policies. It also commended the company for keeping its back-office operations in Maine rather than moving them offshore to save money.”
    KC's View:
    As it happens, I do business with all of the top companies. And I concur.

    LL Bean is one of those cases where I might not have chosen them as number one when surveyed, I completely understand the ranking. People who do not do business with the company may not understand it, but Bean is a company that consistently amazes me with its service levels...exceeding its promises in terms of quality, shipping and its guarantees at every turn.

    Published on: February 24, 2010

    The Minneapolis Star Tribune has a story about three Minnesota women who have turned coupon redemption into a fine art; two of them have turned their talents into a website business advising other shoppers, and one of them actually used coupon redemption as a way of saving enough money to retire $50,000 worth of debt.

    “I spent $300 to get $2,000 in groceries for my family of four last month," says Karen Gunter, one of the website advisors. "People hear that and they think I must have OCD: obsessive coupon disorder."

    The story notes that “11 percent of shoppers who always use coupons. Sixty-six percent of Americans use coupons either very often or sometimes and 23 percent rarely or never use coupons, according to a 2009 survey by Illinois-based NCH Marketing Services. Those of us who clip or print coupons are using them in record numbers. More than 311 billion coupons were distributed nationwide last year and consumers redeemed 3.2 billion of them, a 23 percent increase from 2008.”

    The paper also notes that “most coupons are an advertisement for a product we will never buy. Coupon critics complain that most grocery coupons are for highly processed and snack foods. Out of nearly 50 coupons in last week's Red Plum insert, five could be considered meal staples (pasta sauce, bread, vegetable oil, sour cream, and meat entrees). The rest were for fast food, snack food, pet food, vitamins and supplements, hair and makeup products and household cleaning products. Shoppers looking for healthier options have to dig deeper, said Gunter, but they're there.”
    KC's View:

    Published on: February 24, 2010

    Digital Signage Today reports that Andy Johnson, creative director at Walmart, told an audience at the Digital Out-of-Home Advertising Summit this week that the retailer’s new SMART Network, which replaced its old Walmart TV system, has been a rousing success - reaching more customers with more messages and driving more sales from a highly targeted audience.

    Reuters reports that Wal-Mart Japan CEO Toru Noda said this week that his division is “actively” seeking opportunities for mergers and acquisitions as a way to grow.
    KC's View:
    The story also notes that Toru Noda has only taken over leadership of the Japanese division this month. Maybe I’m wrong about this, but perhaps he ought to fix what is usually referred to as the “troubled Japanese division” of Walmart before he plans on spreading out.

    Published on: February 24, 2010

    National Public Radio’s Marketplace program quotes retail consultant Burt Flickinger as saying that Target now wants to be Costco.

    Flickinger tells Marketplace that “Target's trying to lower its price image by adding big bulk warehouse items,” but predicts that “Costco will probably remain the king of 36-pack toilet paper.”
    KC's View:
    Maybe the reason that Target wants to Costco is that its attempt to be Walmart didn’t go all that well?

    Though its fourth quarter earnings would suggest a different story, the general feeling lately has been that Target is in a reactive mode...

    Published on: February 24, 2010

    The Arkansas News reports that John Mills, former CEO of Affiliated Foods Southwest, has pleaded guilty to bank fraud, admitting to having kited $11.5 million worth of checks.

    According to the story, “from 2004 to March 2009, Mills served as CEO, president and chairman of the board of Affiliated, a privately-held wholesale food distribution company headquartered in Little Rock. The release said Mills and ‘and others known and unknown’ defrauded U.S. Bank “by kiting checks between accounts of Affiliated Foods and two subsidiaries.”

    Mills is facing a possible million dollar fine and up to 30 years in prison.
    KC's View:

    Published on: February 24, 2010

    • Sprouts Farmers Markets has announced that it plans to open its seventh Colorado store and 46th store overall when it unveils its newest unit in Centennial later this week. The company, which offers what it calls “natural, organic and favorite indulgence foods at a great value” - has been on something of a growth tear lately and plans to open two more units in Colorado - in Greeley and Lone Tree - later this year.

    • The Wall Street Journal reports that Sears Holdings Chairman Edward Lampert has weighed in on the need for state income taxes on internet purchases: “If state and local governments are going to require retailers like Sears and Kmart to collect sales taxes and not retailers like Amazon.com, they should recognize that over time their sales tax base will erode significantly and that they place companies who have chosen to locate stores locally at a competitive disadvantage."

    Lampert made the comments in a 13-page letter to shareholders released this week.

    • France-based Carrefour said yesterday that it plans to shut 21 of 627 stores in Belgium and eliminate almost 1,700 jobs - a move that it said was inevitable after years of same-store sales decreases. The company also reportedly plans to sell another 20 stores to a local merchant, though there apparently are no plans to exit the country completely.
    KC's View:

    Published on: February 24, 2010

    Got the following email from an MNB user responding to one of yesterday’s stories:

    I have to admit, I really didn't see your waxing philosophical about that "lovely little story" on Compton's Market in Sacramento coming.  For all the world, there you were, seemingly standing up for something from days gone by.  This seemed to be quite at odds with your rather "take no prisoners" comments about The Reader's Digest a few months ago.  There, it seemed to me you were essentially saying "there's no 'there' left in this sort of business, so they might as well just close the doors."  And it seemed as if you were hardly going to "tear up" if and when they folded.  Just another anachronism in today's Draconian 24/7/365 techno-society.  At Compton's Market, on the other hand, it genuinely seemed as if you'd really like for them to be able to continue along, providing that personal touch you cite as lacking so frequently in many businesses today, and would be truly sad if and when they folded.  This seeming juxtaposition of views towards Compton's Market and The Reader's Digest reminded me of a conversation I had with a guy maybe 20 years ago; then, I was similarly asking him to square two positions on unrelated but somewhat similar topics which seemed to be at odds with each other.  He thought about my point for a few seconds, then finally explained, "I'm not sure what to tell you. I guess I just like what I like, and I don't like what I don't like."  Go figure!

    I could spend a lot of time trying to justify and explain what seem to be contradictory positions, but it works just as well to simply agree with your friend.

    I like what I like. I don't like what I don’t like. And I have a soapbox.




    And responding to Michael Sansolo’s column yesterday, one MNB user wrote:

    Using the Yankee’s to bemoan the “El Bulli” decision was a poor choice. El Bulli’s success is achieved by one man, losing money, with no cable TV contract and no Farm system and probably no unlimited supply of funds to stock the shelves with free agents galore.  Also, Shaun White’s run will be over as he ages and his body tires and refuses to learn new tricks that the younger boarders will be able to use. He will have to quit being the best and just enjoying the sport some day and more likely sooner than later. There is nothing wrong with saying it is NOT WORTH it anymore and retiring or even quitting. It would be a greater sin to continue when the heart was gone or body was unable to perform anymore, Michael Jordan et al. If indeed Chef Adria built the best, if even for moment, let’s celebrate that and that alone.  Mr. Sansolo presumes much when he says “In short, it’s hard to get to the top and harder still to stay there. And that is exactly where we all want to be.”

    Everyone doesn’t feel that way.  Lots of people (and companies) are successful who did not want or need to be the best. Many of those who have wanted to be the best did achieve that lofty goal but once there questioned its value and cost.  In business, being the best and losing money certainly isn’t worth the effort needed to “stay on top.”  There is a reason the Yankees could stay on top and that reason is access to money and buying top talent.  When they did not do that they did not stay on top. There can only be one on top, but in business to you do not have to be on top to be profitable, you do need to work hard and one can stay profitable for long time without being the biggest or the best.  Kudos to Chef Adria and his wonderful food.


    There’s a song by Mac McAnally, song most famously by Jimmy Buffett, that goes in part like this:

    It's my job to be different than the rest
    And that's enough reason to go for me
    It's my job to be better than the rest
    And that's a rough break for me...


    I understand the point you are making, but...

    I think that a lot of the mediocrity in the world is due to people who are willing to accept less than the best from themselves. Being at the “top,” in my view (and I think Michael would agree with me on this) is less important than being the best you can be at whatever it is you happen to be doing. Or at least working toward it.
    KC's View:

    Published on: February 24, 2010

    • Target said yesterday that its fourth quarter earnings were up a whopping 53.7 percent to $936 million, on Q4 sales that were up to $20.18 billion tom $19.56 billion during the same period a year earlier. The improved financial performance was attributed to a successful end-of-year holiday shopping season.
    KC's View: