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    Published on: April 13, 2010

    by Michael Sansolo

    This is a column about the future of our workforce, not politics. Please re read that line again if you get spun into a frenzy by the next two paragraphs.

    It doesn’t happen often, but occasionally someone in Washington speaks the truth. It happened last week when Federal Reserve Chairman Ben Bernanke issued an unusually blunt warning about the nation coming to grips with the rising storms of debt and the aging population.

    One line said it all. The US, Bernanke said, “must begin now to prepare for this coming demographic transition.”

    It’s hard to argue the point. And again, this column isn’t about politics or fiscal policy; it’s about the coming storm for employers everywhere, especially in the supermarket industry. Because while no one would consider the current economic climate a cause for celebration, the truth is that it has masked our manpower issue.

    With unemployment running high and long-term savings plans like 401Ks running low, industry in general finds a glut of workers looking to start or stay in work. In many ways, that’s good. But it won’t last forever. In fact, it won’t even last a decade.

    The harsh reality is that the children of the Post-War Baby Boom will soon start passing age 65 daily and that migration will continue for the next 18 years. Just as Boomers crowded maternity wards and classrooms in their younger lives, their aging will have powerful implications for the nation beyond swelling the ranks of AARP.

    Look inside your own company and calculate the number of Boomers currently holding jobs in top, middle and lower management. Because of simple demographics, the Boomers are everywhere. And like it or not we Boomers at some point are going to want to, or have to, move on.

    When we do we’ll leave an enormous management vacuum that virtually every company will have to fill. I became acutely aware of this problem while doing research for FMI’s Future Connect event last year. It took little effort to find that the Boomer drain problem was already causing concern for the US military, the nation’s airline industry and virtually every other part of the US economy.

    This problem is even worse in other parts of the world, where the population is aging faster and the influx of immigrants doesn’t fill in the gap. Kevin summarized some of these important points in his radio commentary last week. As his article pointed out, there are many reasons why the United States is uniquely positioned for even more economic growth as these demographic changes take place worldwide.

    But those macro benefits could produce problems inside many companies in this industry because a growing shortage of labor means enhanced competition for the best workers. Many times that’s a competition the food industry loses. So the challenge for companies is to heed Bernanke’s words in a personal way and prepare now for the coming demographic transition. That means a tough examination of hiring and retention policies now to make certain the best people stay. That means management training programs now to ensure the right people are ready to lead when their time comes.

    Yes, it seems strange do raise these issues at a time when unemployment is high and workers are readily available, but that’s really the perfect time for action. Consider for one moment that in the depths of the current economic crisis, Intel announced a $3 billion investment in its Arizona campus. The reason, according to one Intel executive, was to have the chip-maker fully ready for growth when economies started growing again.

    An ounce of prevention is always worth a pound of cure. Especially when it translates into opportunity.

    Michael Sansolo can be reached via email at . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: April 13, 2010

    Raley’s announced yesterday that it is cutting five executive positions, a move that will impact COO Dave Clark, Senior VP for organizational effectiveness Joan Miszak, Chief Marketing Officer Michelle Cervantez, Chief Legal Counsel Todd McHenry, and Senior VP of Sales and Merchandising Joel Barton.

    CEO Michael Teel said that the positions are being eliminated not because of performance issues, but just because the company “can't afford that kind of structure in today's competitive marketplace” and that there were too many bureaucratic layers for a small retailer.

    No store level positions are said to be vulnerable.
    KC's View:
    While I generally think that most companies would be better off with less bureaucracy and - using the philosophy espoused by Feargal Quinn - turning “headquarters” into a “support office,” this is just a little bit stunning. After all, if I’m not mistaken, Clark was interim president before Teel returned to the job, and in most companies the chief marketing officer job would be a critical one.

    Published on: April 13, 2010

    Bloomberg reports that Andy Bond, president/CEO of Walmart-owned Asda Group in the UK, will step down from that role and become part-time chairman of Asda’s executive committee.

    Bond reportedly will remain in charge of day-to-day operations until a successor is named.

    The Bloomberg story makes two interesting observations about the Asda change:

    “Bond may be replaced by Andy Clarke, Asda’s chief operating officer, according to Natalie Berg, an analyst at Planet Retail in London. John Fleming, the chief merchandising officer of U.S. stores, or Stephen Quinn, the U.S. stores marketing chief, are also potential replacements, Berg said.”

    “Bond, who joined the retailer 16 years ago, is the third executive in charge of one of Wal-Mart’s international businesses to step aside in less than a year. Vicente Trius departed as CEO of Latin American operations in November after less than five months in the job. He has been replaced by Eduardo Solorzano. Stephan Fanderl, the head of Wal-Mart’s Moscow office, also left in November. He hasn’t been replaced.”
    KC's View:

    Published on: April 13, 2010

    The Triangle Business Journal reports that Harris Teeter is tweaking a two-month old, two-story story that it opened in the Raleigh-Durham area, moving departments around in response to consumer requests.

    According to the story, “the work will begin the evening of April 12 and will be completed the week of May 10. The wine set and floral gallery will be moved upstairs, while the cereal, juice and baking aisle will be moved downstairs.”
    KC's View:
    One of the things about the current retail environment is that it makes getting feedback and tracking behavior a lot easier. But once you have the information, you have to actually act on it. What Harris Teeter is doing is paying attention and demonstrating both flexibility and sensitivity - which is exactly right.

    BTW...I keep hearing nothing but good things about Harris Teeter’s new stores - that they are first class all the way, both in terms of products and presentation.

    Published on: April 13, 2010

    • In Chicago, Fox News reports that a study done by Loyola University and the University of Illinois at Chicago (UIC) says that a new Walmart store will not necessarily bring new jobs to the city.

    The researchers say that after a Walmart opened in the Austin neighborhood of the city in 2006, 82 of 306 businesses there have actually gone out of business, and that the area lost as many jobs as it gained when the Walmart opened.

    According to the story, “Walmart said the researchers’ methods and conclusions are flawed. Walmart admits that while the area did lose jobs, the new store actually led to the creation of 400 new jobs outside the store.”

    • There are published reports saying that Walmart is negotiating to acquire a 25 percent stake in Lenta, the Russian hypermarket chain. This is the latest in a series of rumors about Walmart and Lenta that have persisted in recent years, with this one saying that a deal in principal has been reached with just the details needing to be worked out.
    KC's View:

    Published on: April 13, 2010

    Reuters Health reports on a study, published in the American Journal of Clinical Nutrition, saying that sleep-deprived people have a harder time keeping their weight down than people who get a good eight hours.

    According to the story, “researchers found that normal-weight young men ate a Big Mac's-worth of extra calories when they'd gotten four hours of sleep the night before compared to when they slept for eight hours.” This is said to be the first study directly connecting lack of sleep to weight issues, and it could point to a broad environmental reason why the nation is dealing with an obesity epidemic.
    KC's View:
    Well, speaking as someone who gets about five hours of sleep a night - and desperately yearns for eight - this explains a lot.

    Published on: April 13, 2010

    Crain’s Chicago Business reports that the world’s fast food hamburger giant wants to go for that chic coffee house look.

    According to the story, “In the next five years, McDonald's plans to spend billions of dollars to remodel thousands of U.S. restaurants with new features such as plasma TVs, lounge chairs and electric fireplaces. In addition, the chain is replacing its signature mansard roof and brick exteriors with stone facades and contemporary, eyebrow-shaped arches on the sides of the roofs.”

    The challenge: “McDonald's CEO James Skinner still must persuade franchisees to shoulder more than half of the cost of restaurant remodeling - an effort that could total as much as $1 million per store - only a year after asking them to shell out up to $100,000 per restaurant for improvements needed to launch specialty coffee.”

    Analysts seem to feel that this shift matches McDonald’s desire to sell more premium products and therefore raise its average transaction, moving in the direction of such chains as Potbelly and Starbucks.
    KC's View:

    Published on: April 13, 2010

    • In West Virginia, the Charleston Gazette reports that Kroger has set up a system that allows its customers to “donate to the families of the fallen Upper Big Branch miners at each of the 128 stores in the company's Mid-Atlantic Region, which includes West Virginia, Virginia North Carolina and eastern Kentucky, Ohio and Tennessee. Donations can be deposited in coin collection boxes at each register in all Mid-Atlantic Kroger stores. All money collected will be donated to the Salvation Army to help the families.”

    Advertising Age has a story saying that Procter & Gamble increasingly is putting an emphasis on product design, making it a critical part of its brand-building functionalist, and forcing marketers to prove out how product designs work when on store shelves.

    Convenience Store News reports that Casey’s General Stores, having just rejected an unsolicited takeover bid by Alimentation Couche-Tard as significantly undervaluing its assets, is itself acquiring 10 Holiday Stationstore c-store locations in Nebraska and Iowa. Bill Walljasper, senior vice president and CFO of Casey's, describes the move as a “very good tuck-in acquisition” that expands the company’s existing presence in those markets.

    Casey’s already operates more than 1,500 c-stores in the US Midwest.
    KC's View:

    Published on: April 13, 2010

    I mentioned recently that I am going to be in San Antonio this week at the Fresh Forum, where I’m doing the opening keynote at a barbecue - which sounds like my kind of gig.

    After I wrote about San Antonio, I got email from a number of folks there who are MNB readers, who asked if there would be an opportunity to get together during my visit. I love this idea, so I asked for some recommendations, and here’s what was suggested.

    This Thursday evening, April 15, I’ll be at Beto’s Comida Latina, located at 8142 Broadway Street in San Antonio, from 5:30 pm to 7 pm...and maybe longer. Come by, have a beer, buy me one...and we can chat about the business, baseball, movies, whatever...

    The nice folks at Beto’s have said that they’ll supply some nachos on the patio if I can give them some idea of how many people might be there. So if you can send me an email to let me know you’ll be stopping by, that’d be great...though hardly required.

    See you Thursday.
    KC's View:

    Published on: April 13, 2010

    USA Today this morning reports that the decision by Spirit Airlines to begin charging for carry-on luggage that has to go in the overhead bins is getting a lot of negative reaction. Both US Transportation Secretary Ray LaHood and Sen. Charles Schumer (D-New York) are looking for ways to force the airline to reverse the new policy, and certainly the airline seems to be losing the public relations battle.

    We reported on the overhead policy on MNB the other day, commenting that it seems to be a classic case of a company looking for short-term financial gain without thinking about long-term strategic implications. Not surprisingly, we got a lot of email on the issue...

    One MNB user wrote:

    What is missing from all the reports on this is what Spirit charges for checked luggage. If the goal is more efficient boarding, then checked luggage should cost less. Let’s be honest - paying to check your luggage encourages people to do more carry-ons, which in my opinion creates more hassles and safety risks during boarding and departing the plane as people stuff more in the overhead bins. So is their goal more efficiency or just plain greed?

    I checked. If you do it online, the first checked bag costs $19, the second costs $25, and third through fifth bags cost $100 apiece. If you do it at the airport, the first and second bags cost $25 apiece, and the third through fifth are $100 apiece.

    Another MNB user wrote:

    I will bet Southwest Airlines will love this announcement and they hope all airlines continue to try and make their bottom line by raising prices and adding fees! Are airlines becoming just like banks and think the only way to make money is to charge more fees?

    Southwest Airlines over the last decade has been the most profitable airline around by giving great customer service and avoiding extra fees and charging a fair rate in order to have full flights!

    If you want to be successful in today’s business environment you need to have low prices and give great customer service!

    Another MNB user wrote:

    Just wanted to chime in on the luggage charges.  First of all, I wish they’d just hide it in the airline ticket price and get it over with.  Secondly, it’s very irritating when at least half of the people decide they don’t want to pay the $20 or $25 bucks to check their bag knowing full-well that it is bigger than a carry-on bag.  It’s hard enough to make a connecting flight without these folks trying to stuff an oversized bag into the compartments, people snarking at each other about overhead space, then (big surprise) taking them back up front so the staff can put the orange tags on, etc. (no charge-and they get away with it).  It’s happened on every flight I’ve been on in the past year. Money-maker for the airline (but poor enforcement) and rude/inconsiderate of the passengers to fellow passengers.

    Still another MNB user wrote:

    You must be one of those flyers who don't check luggage and take it all with you in the cabin.  Now I haven't flown much in the last few years but did a reasonable amount in the past.  Did I lose checked luggage? Yes. Did it cause great problems?  Yes.  Did I then take it all with me in the cabin? Yes.  Did my finding a place for my stuff present a problem if I didn't board in the first third?  Yes. 

    I think that Spirit Airlines has a point.  Will I fork over $45 more to be able to put something (computer) under my seat and then my bag in the overhead plus seat first?  Yes.  Spirit says it will speed up boarding and deplaning and I can see their point,  I would be interested because my fare will be going down and I get to take it all with me vs the lost luggage (or delayed) routine.  I don't know what their fares are currently or will be but I would probably do it if I was flying a lot more.

    Another MNB user chimed in:

    Charging for checked bags, charging for carry-on bags, having to get to the airport an hour early at a minimum to clear security, gouging taxes on rental cars art airport locations,  etc.

    All of this has altered my personal "consumption" of airline services.  I now drive to places that I would formerly have flown especially for personal trips.  When there are two of us the economics are favorable even if an overnight stay on the way might be required (especially using Priceline).   I am sure I am not alone.  Just as other grocery stores are not the only competition for grocery stores, other airlines are not the only competition for airlines.

    MNB user Keith Smith wrote:

    On your article “Unfriendly Skies”, I must disagree.  With airlines charging for checked-through baggage, but not carry-ons, passengers have started carrying on bags they would otherwise check.  These are large bags that often go past the maximum for carry-on size.  Along with attempts to put more passengers on per plane and (at times) changing legroom capacity (by rearranging seat lay-outs), air travel has become crowded compared to previous years.

    If Spirit Airlines does drop the ticket price accordingly, I would find myself MORE likely to grace that airline.  In no way, do I find “retailers should use this as a model for what not to do.”  On the last several flights were passengers dragged on these supposed carry-on behemoths, I found myself wishing an airline would do exactly what Spirit Airlines has done.

    Another MNB user offered:

    Kevin, this is totally ridiculous, $45 to carry on a small 22 inch bag for overhead storage. What’s next? Putting a 0.25 cent coin machine to use the bathrooms? What is business coming to? Why doesn’t Spirit raise their prices for a normal airline ticket instead of charging an “A La Carte” up charge on carry ons. As a consumer I would make a decisions to either pay a little extra for an airline ticket on Spirit Airlines or never fly them again because of this silly up charge on carry on baggage. Who is Spirit’s marketing or PR advisors? They should be fired, then tortured (by flying their own airline).

    Well, let’s not go there. Torture is against the Geneva Conventions.

    And BTW...RyanAir in Europe reportedly continues to consider turning its on-board bathrooms into pay toilets.

    MNB user Deborah J. Maestu wrote:

    We could all use FedEx or UPS to send our overnight bags to our destination hotel. Let's face - there's almost no such thing as a business day trip anymore.

    Send everything express if we're going to be paying for it anyway, and that way we have nothing to carry, nothing for the airlines to loose or damage and no waiting time for luggage to wait for.

    I disagree with your suggestion that there are no business trips anymore. I take almost nothing other than business trips, as does Michael Sansolo. Between us we give 40-50 speeches a year...which means we are on the road constantly.

    MNB user Geoff Harper wrote:

    Although I agree that the carry-on fee is a big mistake, the idea of reducing carry-ons is laudable.  I don’t fly as much as you do, but when I do, the hassle over some passengers’ carry-ons is very annoying.

    MNB user Gerry Buckles wrote:

    I love numbers!

    I weigh 188 pounds and I bring a 20 carry-on so my total weight to be lifted into the air and moved from point A to point B is 208 pounds and I would pay for the carry-on.

    The guy flying next to me weighs 250 pounds but did not bring a carry-on bag so he only pays for his ticket.

    Hmmmm. I’m pretty sure it is weight that is the concern and not cubes – although his total cube is probably bigger than me and my carry-on.

    I get the whole speed and efficiency theory but can’t help thinking the girl that is a 100 pound health enthusiast is getting a raw deal.

    Hey Sprit Airlines, say hello to Braniff Airways in your afterlife.

    Listen, I understand that airlines have to find ways to get profitable, which is hard in the current economic environment. But I still think that the carry-on baggage fee is a bad idea.

    I’d be a lot happier if airlines were a lot more diligent about enforcing the limits on how big a carry-on can be. So many of the bags that get carried on have no business being in the overhead, and somehow people just cram them in, crushing everything nearby and taking up so much space that people with smaller bags get screwed.

    (I am religious about checking bags that are oversized, BTW. And while my bags rarely have been lost, I’m careful in such cases to have a small carry-on bag with a few necessities in the event that a bag is lost. It seems ironic that an airlines wants to charge me for bringing a bag that is meant to protect against their own incompetence.)

    And while I’m ranting...y’know what really annoys me? It’s these clowns that are seated in row 27, but come on the plane and stick their bags above row eight or nine, leaving no room for people actually sitting in those rows. Heads on pikes - that’s my solution to solving this problem.
    KC's View: