retail news in context, analysis with attitude

Published on: April 27, 2010

by Michael Sansolo

When we look back on the maelstrom of 2010, what will we remember as the lasting change? We might talk about the change in shopping patterns or the growth of private label, but I’m betting it’s a piece of technology that becomes this year’s lasting legacy.

By that, I mean the iPad. And I’m not alone.

Two weeks ago, Martha White, a business writer in the Washington Post, speculated on the flash of genius that might have pushed Steve Jobs of Apple to create the iPad. White speculates that when Jobs was hospitalized for his liver transplant he was likely stunned at the poor use of technology in the medical community. He watched doctors and nurses seemingly handicapped by their assorted ways of passing messages and taking notes and realized that there must be a better way.

I find that a completely credible idea. In recent years I have twice complained to my physician about this very issue as he now seems to spend far more time looking his computer and not me, which I really don’t like. Sadly, I’m not Steve Jobs and I have no ability to solve that problem. Jobs has the ability. White reports that parts of the medical community are falling over themselves to get iPads in massive numbers.

The same thought could hold for retail. Advertising Age last week predicted this very change as applications for retail come on line. Ad Age suggests the first uses will be simple, like e-commerce and interactive catalogs; subsequent changes come in huge doses.

“In time, the iPad could be used as a virtual sales assistant, allowing sales staff in the dress department to pull up coordinating accessories from the jewelry or shoe department. Car dealers could customize a vehicle, showing customers colors and finishes, all while standing in the parking lot. Transactions could be completed without visiting a register and special orders could be placed on the spot. Cumbersome, expensive kiosks could also be replaced,” Ad Age writes.

Can it that apply to food? Skye Lininger, the chairman of Aisle 7 says it is a certainty. (Full disclosure: I work with Skye on the Aisle 7 board and we are in complete agreement on the potential of the iPad.) The reason is simple: the iPad can easily enable a greater level of customer interaction than any device in use before.

“Customer engagement is expensive and training is costly. Mobile technology may ultimately create opportunities for retailers to engage with customers in a cost-effective way that shoppers will welcome. The iPad is the best device ever for this. It is cheap, it is attractive and it is engaging,” Skye says.

I think he’s right. Imagine managers freed from their offices because paperwork and communications follow them anywhere and in useful form. Imagine service departments able to access information on health, nutrition, pricing or recipes any where in the store with minimal effort. Imagine real time communication on ordering, plan-o-grams, specials—you name it. In short, imagine the entire store enabled to interact with the shopper in any way, any where and any time. Just like that, technology does what it does best: enabling better business practices and improved customer service.

If the iPad lives up to its hype it could mean a revolution in retail. Let’s be honest, technology keeps bringing these kinds of possibilities. If you use a cell phone, an iPod or Facebook you know that some devices and applications actually deliver on the promise.

Here’s what we have to ask: Could retail be on the cusp of a new age of communication that provides instant linkage at every moment of the day to every shopper and associate? More importantly, can we avoid being impacted by this communication revolution?

I’m thinking the answer to both is “no.” And that means, we better start preparing.

For more discussion of the impact of social media and mobile devices, join Michael Sansolo and Kevin Coupe at the MyWebGrocer booth (#2243) during the upcoming FMI show. Kevin will be there Tuesday, May 11, at 2:30 p.m.; Michael at 2:30 p.m. on Wednesday, May 12. Kevin and Michael are the co-authors of The Big Picture: Essential Business Lessons from the Movies, is available by clicking here .

Published on: April 27, 2010

The New York Times this morning reports that the United States Court of Appeals for the Ninth Circuit, in San Francisco, ruled 6-5 yesterday that “a sex discrimination lawsuit against Wal-Mart could proceed as a class action for more than a million women. The suit is the biggest employment discrimination case in the nation’s history ... It hastens an eventual trial for the women,, who are seeking billions of dollars from Wal-Mart, the world’s largest retailer ... The lawsuit, brought in 2001, accuses the retailer of systematically paying women less than men, giving them smaller raises and offering women fewer opportunities for promotion. The plaintiffs stressed that while 65 percent of Wal-Mart’s hourly employees were women, only 33 percent of the company’s managers were.”

Walmart has promised to appeal the ruling to the US Supreme Court.

“We do not believe the claims alleged by the six individuals who brought this suit are representative of the experiences of our female associates,” Jeff Gearhart, general counsel for Wal-Mart, tells the paper. “Wal-Mart is an excellent place for women to work and fosters female leadership among our associates and in the larger business world.”

Published on: April 27, 2010

The Washington Post reports that “food industry and major business groups, including the U.S. Chamber of Commerce, are threatening to withdraw support for a long pending bill to improve food safety, saying they are upset by a proposed amendment that would ban bisphenol-A, a controversial chemical, from food and beverage containers.”

The food safety bill seems to have broad bipartisan support, but the amendment - introduced by Sen. Dianne Feinstein (D-California) - appears to threaten its passage.

"We will not support food safety legislation that bans or phases out BPA from any food and beverage container," said Scott Faber, vice president for federal affairs for the Grocery Manufacturers Association, which represents food companies and retailers.

As previously reported on MNB, the US Environmental Protection Agency (EPA) plans to conduct a probe into the impact of bisphenol-A (BPA), a compound used in plastic bottles and food packaging, on the growth and development of wildlife. This is the second federal agency looking into the impact of BPA. Earlier this year, after having previously drafted a report saying that BPA was safe - a conclusion challenged by the National Institutes of Health (NIH) - the US Food and Drug Administration (FDA) said it had some concerns about the effects of BPA “on the brain, behavior and prostate gland of fetuses, infants and children,” and would conduct further studies.

Among those saying that BPA is safe when consumed in small amounts include the European Food Safety Authority (EFSA) Authority, Health Canada, the World Health Organization, Health and Consumer Protection Directorate of the European Commission; the European Chemical Bureau of the European Union; the European Scientific Panel on Food Additives, Flavorings, Processing Aids, and Materials in Contact with Food; and the Japanese National Institute of Advanced Industrial Science and Technology, as well as the Grocery Manufacturers Association (GMA) and the American Chemistry Council. Opposing the use of BPA have been the states of Connecticut and Minnesota, the Canadian government, Consumers Union (CU), the Consumer Federation of America (CFA) and Walmart, which said that it would not sell children’s products containing BPA. In New York State, Suffolk County has banned the use of bisphenol A (BPA) in empty beverage containers for children under the age of three.

Published on: April 27, 2010

The Portland Press Herald reports that Hannaford Supermarkets “has taken trans fats out of its store-brand foods, joining a global effort to eliminate the artificial ingredient from modern diets. The Scarborough-based grocery chain modified the recipes of 295 products over the past year to remove the fats, which help in the production and preservation of processed foods but clog the arteries of people who eat them.”

Julie Greene, director of Hannaford's healthy living program, tells the Globe that “the effort didn't increase Hannaford's costs, and that the company has not received a single comment from a consumer who noticed the change.”

Published on: April 27, 2010

The Los Angeles Times reports that the Santa Clara, California, Board of Supervisors representing Silicon Valley will consider this week a proposal that would outlaw the inclusion of toys in kids’ meals with “more than 485 calories, more than 600 mg of salt or high amounts of sugar or fat. In the case of McDonald's, the limits would include all of the chain's Happy Meals — even those that include apple sticks instead of French fries.”

According to the story, “The proposed ban is the latest in a growing string of efforts to change the types of foods aimed at youngsters and the way they are cooked and sold. Across the nation, cities, states and school boards have taken aim at excessive sugar, salt and certain types of fats.”

The proposed ban is said to be the first of its kind.”

Published on: April 27, 2010

The United Food and Commercial Workers (UFCW) said yesterday that it is mobilizing employees at Supervalu-owned Acme Markets in Philadelphia and New Jersey, and Shoppers Food & Drug in Maryland and Virginia, to support the two-month-long strike at the Supervalu-owned Shaw's warehouse in Methuen, Massachusetts.

According to the story, “members of UFCW Locals 1776 and 400 will wear stickers in their workplaces that call on their parent company, Supervalu, to get back to the table and negotiate with the 300 Shaw's workers for a quick and fair resolution. As the strike nears the two-month mark, Shaw's has terminated the workers' health benefits, ignoring the fact that many of these workers have young children with serious medical conditions, and some workers have spouses with serious issues such as risky advanced pregnancy. Further, the company is advertising for and hiring permanent striker replacements.”

Published on: April 27, 2010

Reuters reports that “Starbucks and Heinz were among 16 U.S. food companies who pledged on Monday to cut salt levels in their products as part of a national campaign started by New York City Mayor Michael Bloomberg. The pledges are part of Bloomberg's National Salt Reduction Initiative, a coalition of cities and health organizations that aim to reduce salt in restaurant and packaged foods by 25 percent over five years.”

The other companies making the pledge are Au Bon Pain, FreshDirect, Goya, Hain Celestial Group, Kraft, LiDestri, Mars Food US, McCain Foods, Red Gold,Inc., Subway, Unilever, Uno Chicago Grill and White Rose.

According to the story, “Bloomberg, in his third term as mayor, has become a crusader for healthy living by banning smoking and trans fat, requiring chain restaurants to post calorie counts of their menu items and campaigning against sugary drinks.”

Published on: April 27, 2010

BrandWeek reports that Procter & Gamble has created a new, free iPad application that “is essentially a pregnancy calendar, where users can track weekly progress from weeks four to 40 by entering the baby's due date. The story notes that the application is part of P&G’s “push to position its brands at the forefront of new and emerging technologies, especially as the packaged-goods titan shuffles more marketing dollars into digital, mobile and social media.”

Published on: April 27, 2010

• Amazon.com announced yesterday that it has opened a new online educational site called “Amazon 3D 101,” which is designed to be “a one stop information and shopping destination for all things 3D. Amazon 3D 101 provides customers with centralized, easy-to-understand information and offers a lineup of 3D-related products, including 3D capable HDTVs, projectors, monitors, Blu-ray players and movies, gaming consoles and games, laptops and accessories.”

Published on: April 27, 2010

The Associated Press reports on the efforts of William Muir, a Purdue University scientist, to breed “congenial” chickens that are less likely to fight with each other in cages at they quite literally look to get to the top of the pecking order.

The problem is that the white leghorn hens that have been bred to produce 300 ore more eggs a year also tend to be extremely territorial. When kept in cramped cages, they often turn to pecking attacks that some describe as akin to poultry cannibalism, and that is partially responsible for five percent of the nation’s chickens dying each year from injuries or disease.

Animal rights groups have been pushing for laws that would ban the use of these “battery cages,” and seven states have passed laws that eventually will ban or limit them.

Muir says that not only will the breeding of these gentler chickens stop the fighting, but it also could lead to a kind of hen that lives longer and ultimately is more productive.

Published on: April 27, 2010

• The Philadelphia Inquirer reports that “Wegman's, the Rochester, N.Y.-based supermarket chain, is using 50 hydrogen-fuel-cell-powered forklifts to move pallets of fresh produce daily onto trucks that travel from its Pottsville warehouse to stores in five states. ... The project received partial federal and state funding.”

• The Boston Globe reports that “Dunkin’ Donuts is returning to Russia after an 11-year absence, opening the first of 20 stores in Moscow ... The chain closed its two Russian locations in 1999 because of lagging sales and poor relations with a franchisee who was also selling liquor and meat pies.”

Published on: April 27, 2010

The press release went out yesterday, saying that “the trailblazing company whose Smart for Life Cookie Diet products have become the fastest-growing weight management company in North America, now introduces underWAY - a scientifically formulated, appetite-suppressing line of great-tasting healthy beverages. Better Health Beverage is proud to announce that underWAY in 2 delicious flavors, is now available at 741 Publix Super Market locations from Atlanta, Georgia and throughout the entire state of Florida.”

Published on: April 27, 2010

We’ve been featuring a lot of discussion of the new Arizona immigration law, which allows police to stop people they suspect of being illegal aliens and demand their citizenship papers. The story has an industry connection; it was just last week that six Pro’s Ranch Market stores in the Phoenix area had to let go some 300 employees this week after they were found by the US Immigration and Customs Enforcement agency to be working illegally in the US.

It seems to me that the federal government did exactly what it is supposed to do in the Pro’s Ranch case...but here’s what I wrote about the Arizona law:

I’m not sure that anyone would argue that the federal government has done a good job of dealing with immigration issues. But I’m also reasonable sure that the Arizona response does not make sense - just as any local response to a national issue is bound to create problems. With any luck, the federal government will be prompted by the Arizona bill to act on immigration reform...though the problem is that the responses by the two parties will no doubt be calibrated to appeal to their different political constituencies rather than craft a reasoned, reasonable solution.

I remain troubled by the idea that individual police officers in Arizona are now empowered to stop people and ask for proof of citizenship. Last time I was in Arizona, I didn’t carry any with me. I know someone who has a swarthy complexion who is going there this week...and I’m betting that he won’t have proof of citizenship with him.

“Do you have your papers?” is a question that they asked in a different time, in a different place. Today it is an effort in Arizona to identify Mexicans who have illegally crossed the border, but I am a firm believer in the slippery slope. I fear we’re on one now.

One MNB user responded:

That slippery slope you’re referring to is the flood water of illegal’s entering this country.  People who look the other way in the name of money are just as culpable as the illegals.  They need to be forewarned, prosecuted, fined, jailed, or a combination thereof.

Whatever happened to states rights in this country?  Arizona has every right to combat this ever-growing problem.  If the federal government won’t shore up our borders, the states are forced into dealing with the problem.  Tying the hands of law enforcement by not allowing them to even ask the question, like they do in California, won’t work.  Arizona should also be looking at going after anyone who houses illegals, primarily landlords.  If they can’t find work, or find shelter they’ll go home or another state.

Furthermore, I’m tired of people opposed to our current immigration situation being accused of racism.  I frankly admire the culture, and work ethic of our southern neighbors but allowing illegals to enter as freely as they do is a disservice to all those who have come here legally.  Plus there are the Terrorism, Economic, Gang, Health Care and Drug Enforcement benefits to a tighter border.  Its too bad it took an economic meltdown for this issue to get some traction.

MNB user Louie Yan wrote:

I think the federal gov't was on a slippery slope to negating our immigration laws when they stopped enforcing them to their full extent. So to call Arizona on a slippery slope is a fallacy -- it's trying to correct what the federal gov't isn't doing. I am a LEGAL immigrant, and resent that so many are allowed to strain our health and welfare systems without contributing to them like I do. Let's call a spade, a spade: they're not illegal immigrants, since the word "immigrant" connotes and denotes legitimacy; they are ILLEGAL ALIENS. They have every right to be treated humanely and with respect, but they likewise need to respect American laws. The rights of immigrants and citizens should not be compromised in the process.

Another MNB user wrote:

When you leave your house, do you lock the front door? Do you have a fence around your yard?

Or do you allow a random family to walk in and make themselves at home, eat you food, use your phone, sleep in your guest room?  Will you educate and clothe them ? Would it be Ok if they mowed your law and cleaned your house? I mean after all, they are working and contributing to your homestead. That makes it OK, right?

If you do not have borders, you have no country.  Illegal means illegal

Another MNB user wrote:

I'm on the "Enforce the federal immigration laws" side of the argument. I do understand the slippery slope argument of profiling and stopping someone purely on suspicion but I've been stopped and asked for an ID here in Massachusetts just because someone called the police to report that I looked suspicious. Nothing that a license and an explanation as to what I was doing needed to send the cop on his way. You state, "I remain troubled by the idea that individual police officers in Arizona are now empowered to stop people and ask for proof of citizenship. Last time I was in Arizona, I didn’t carry any with me. I know someone who has a swarthy complexion who is going there this week...and I’m betting that he won’t have proof of citizenship with him." Of course you carried proof of citizenship, it's called your driver's license. Where I live and I assume in CT as well, one can't get a license without a birth certificate. That might have been forty years ago and you don't remember but you proved citizenship then. I'm sure your friend will be able to, as well.

Still another MNB user wrote:

The last time you were in Arizona you said that you did not have "papers" with you.  The required "papers' is a driver's license or state issued identification card.  To date, all 50 states require citizenship or legal residence to obtain such a document. I don't know how you made it to or around Arizona without a drivers license unless of course your lifestyle is closer to Donald Trumps than Mike Sansolo's, private jet, chauffeur, send the invoice to MNB, etc.

Oh, yeah...that’s exactly the sort of life I lead.

Here’s my question.

What if I forget my wallet?

Last time I checked, there was no law saying that I have to have a driver’s license, and no law saying that I have to carry identification with me when I venture from my home. Sure, there are limits to where I can go and what I can do if I do not have some sort of identification, but the fact remains that I am not required to have it with me.

And, from another MNB user:

It seems likely the border states are frustrated with the lack of enforcement by Washington and are tired of expending a lot of resources to apprehend criminals, provide them with attorneys, and all that entails when if you have no papers, they deport you.
 
Obviously not all or probably even many are criminals but the few ruin it for the many…like everyone having to remove their shoes at airports.
 
Likely the states(s) are trying to prod Washington to carry through on their threats to do reform.

There is no question that this law will likely spur federal immigration reform. And that’s a good thing.

But I remain uncomfortable that we could potentially have 50 states with 50 different immigration laws, a situation that could create chaos for a lot of people.

The first step, if we’re serious, perhaps ought to be the aggressive prosecution and fining of people who hire illegal aliens. Cut off the source of jobs, and the flow of illegal aliens is almost certain to dry up as well.

Such a proposal, however, is likely to meet a lot of resistance...much of it from businesses that depend on such labor to be profitable.




On another subject...the decision by the California Supreme Court to decide whether a city can ban plastic bags at retail stores without studying the environmental effects of the increased use of paper...we got a number of emails. One MNB user wrote:

MNB user Derek Helderman wrote:

A very similar slippery slope to the one being traversed regarding illegal immigration is being tread upon with the debate over banning plastic bags.  A large part of the green movement is based upon unfounded (i.e. the blatant doctoring of global warming data, or "climategate"), or in the very least, debatable science (i.e. recycling--a good bit of research suggests that recycling may be more harmful to the environment than traditional methods of dealing with waste).  Instead of viewing such issues critically, we jump on the bandwagon, herald them as the next best thing and buy in wholeheartedly.  Obviously, there is another form of green in mind when business leaders think of the green movement...

I'm all for any sort of measure that provides a rational, sensible solution to any sort of public issue.  Banning specific types of bags at retail outlets seems just a little too drastic for me.  In addition to being scant on scientific evidence, this issue raises the question of exactly who would stand to benefit from the banning of plastic bags.

MNB user Kevin Nolan chimed in:


I have no beef with the plastic ban ordinance.  I think it send a clear and important message to the retail companies, as well as the consumers, that they mean business when it comes to protecting the environment.  The part I don’t understand and don’t necessarily agree with is why it is focused solely the big supermarkets and not all retailers in the city. 

Currently the ordinance only pertains to “supermarkets” with a gross sales of over $2mil annual which sell “a line of dry grocery, canned goods, or nonfood items and some perishable items.”  It also goes on to state “…for purposes of determining which retail establishments are supermarkets, the City shall use the annual updates of the Progressive Grocer Marketing Guidebook and any computer printouts developed in conjunction with the guidebook…”  they also squeezed in some wording to include Pharmacies with at least 5 locations or more under the same ownership (i.e.- Walgreens, CVS, Rite-Aid).  Well I think it’s safe to say you’re not going to find the Gap listed PG’s guidebook.…or Best Buy, Home Depot, Sports Authority, Levi’s, Nike, Ross, Abercrombie, Banana Republic, any other clothing store or any of the 1000’s of small Mom & Pop food and apparel shops throughout the city.  Do they’re bag not end up in the bay or landfill?

Why just supermarkets (and Drug Stores), why not apparel retailers?  Why not ALL retailers, Big and SMALL?  I think I know what you’re going to say to that…..”You gotta start somewhere……” but isn't that always the case, especially with San Francisco, that they take out their frustrations on Big Business and give the little guy’s a hall pass.

Like I stated earlier, I really have no problem with the idea of “banning the bag” just the inequitable approach the City is taking.

I agree. It ought to be applied to everybody, if the ban is passed.

MNB user Art Ames wrote:

This entire paper or plastic bag and move to ban things is driving me crazy. Banning products is not sustainable nor consumer friendly.  In fact, it’s lazy retailing in an already over regulated industry as we let government dictate their concept of best practices instead of being proactive. There are a number of small store and cooperatives across the country who approach the issue very differently.  Our location charges a dime a bag, donates the proceeds to non-profit environmental focused agencies every quarter, and in conjunction we offer low cost canvas bags, empty boxes and recycled paper bags for reuse by our consumers. We don’t offer plastic at all.   We also took 3 months to market the concept and the reasons behind it before initiating the program. 2 years after initiation, our new bag purchases are down 70%, our waste cardboard pick up fees are way down, and consumers have embraced that concept as a value (not values) added identity…and it’s sustainable because it is the consumer who is changing a habit. We win all around.  Now imagine if a large chain would embrace a similar program as a “we care” approach.  Perhaps other chains would follow suit and we could then move on to bigger and more pressing issues.

MNB user Jim DeLuca wrote:

Last week we celebrated Earth Day at our Co-Op by instituting an extra nudge to encourage use of reusable shopping bags.  We have for some time given a nickel back for each reusable bag the shopper needs and now we are charging a nickel for a plastic bag and a dime for paper.  We spent over a month promoting the change and on that day the most common reaction to the fee for bag was, "oh, I'll just run out to my car and get my bags."

We are hoping that the dual reward/punishment model will be just the nudge needed.

My research on the environmental issues surrounding paper versus plastic is that it is a wash.  Different plusses and minuses, but overall neither is sustainable in the long term.

We charge more for the paper because it costs us more; in fact, each paper bag costs us 11.6 cents and the price is going up.

And lastly, we will be donating half of the income from the sales of the bags to local non profits.  We are not trying to make money at this, we want to raise consciousness.

My opinion on this is simple. The planet would be better off if we eliminated much of the trash we generate. If we could replace the majority of disposable shopping bags with reusable bags, it would be an important step in the right direction. It also would be better to do this through enlightened approaches by retailers who educate their shoppers and appeal to their better natures, rather than through legislation.

But since some folks are in denial about the notion that climate change can be influenced by how we treat our environment - in much the same way that a lot of these same folks kept saying that smoking didn’t cause lung cancer (which is a good metaphor, in my view) - some legislative bodies, prompted by activist outcries, feel the need to step up.




And we got this email, responding to yesterday’s piece about a Bloomberg Business Week article by Harvard’s Richard Tedlow about how denial was a central factor in Toyota’s problems:

Without defending Toyota, Professor Tedlow, and his fellow jokers at Harvard need to recognize the damage they have done to main street, since thousands of Harvard Business School grads have blown up Wall Street due to their incapability to understand risk and follow ethical behavior. The first institution that should adopt a classroom for not being in DENIAL is Harvard Business School. Prof. Tedlow points the finger at Toyota and forgets that at the peak of the recession Harvard University had lost over $11 billion in endowment.  What does Professor Tedlow and his Harvard graduates say when the Virginia Mine that killed innocent miners, what do they say when the CEOs of Goldman Sachs, JP Morgan, Citi, Morgan Stanley, Bear Stearns, Merrill Lynch, Lehman Brothers committed bets on sub prime loans that resulted in eroding over $1.4 trillion wealth, which they can't recall and fix.

Yes, I am a loyal Toyota customer. I hope Toyota gets their mess fixed. This month I purchased my fifth Toyota.  I buy at one-hundred thousand miles and sell at two-hundred thousand miles and have been lucky to only have to perform normal maintenance during my ownership of five vehicles.  I only have the cars in my garage to judge against my 410K statement in the mail and the assessor’s valuation of my home value to tell me who is shining a spot light away from the stench.

One question:

Do you get a sore arm wielding that broad brush?

Because there are an awful lot of generalities in that email, among them the implication that the Harvard Business School is the root of all evil. (Do I sense an anti-elitist philosophy here?)

There is plenty of blame to go around for the nation’s recent economic travails. Sure, a mindset that was created by a lot of business schools deserves a percentage of it. But not all of it.

"The fault, dear Brutus, is not in our stars,
But in ourselves...