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    Published on: June 7, 2010

    Some highlights, culled from various news reports, from Walmart’s annual meeting in Fayetteville, Arkansas, on the campus of the University of Arkansas, late last week:

    • The company announced that over the next five years, it expects to grow at such a pace that it will create 500,000 jobs. The company also expects that it will go from serving 200 million customers a week today to serving one billion customers a week in the next 20 years, growth that CEO Mike Duke called an “achievable goal.”

    • Duke said that the company has four priorities: become a truly global company, understand the business challenges that retailers will face and solve them, play an even bigger leadership role on social issue that matter to customers, and keep the company’s culture strong.

    • Quoting the Bible, Duke said, “ "To whom much is given, much more is expected. I think that applies to Walmart. If we want the freedom to pursue our business goals around the world we must play an even bigger role in solving the social challenges around the world."

    • "Future success is never guaranteed. Leadership is not an entitlement, especially in our business," Duke said.

    • Duke also said that that the company’s US stores need to improve same-store sales, while Sam’s Club need to generate greater membership growth; while the global divisions also continue to grow.

    • The company emphasized that it will be developing smaller store formats that will allow it to enter markets that previously have been closed to it, and that it needs to get better at creating a mobile shopping experience that translates its brick and mortar strengths to computers and smart phones.

    • "We will win on price leadership and we will win big," Duke said, pledging to widen the price gap with the competition and to embark on a new era of “price transparency.”

    The annual meeting was hosted by actor Jamie Foxx, with performances by Enrique Iglesias, Mariah Carey and "American Idol" winner Lee DeWyze.
    KC's View:
    The thing about Walmart that makes it confusing, at least to me, is that sometimes it seems so utterly capable of getting different things right and wrong all at the same time. For example, it appears to have the environmental issue nailed - both saying and doing all the right things. (BTW...could we put someone from Walmart logistics in charge of the Gulf Coast oil spill cleanup? Please?) And then it seems to get all the gender discrimination stuff wrong...or at least seems to be tone-deaf when it comes to appearances.

    All of which probably means that just like every other organization, Walmart is both conflicted and imperfect. Go figure.

    Still, if you had to lay odds, it’d be hard to bet against Walmart. I think that some of the most interesting stuff that Walmart is doing is on the hiring front, bringing in people like Brian Cornell and Shelley Broader, who have outside experience and, while respecting the culture, can give the place fresh energy and are unlikely to become drones.

    If nothing else, Walmart remains a complex and fascinating behemoth, a company with enormous potential that is an unending source of drama and stories. Which is great for people like me.

    The part of all this that I find most interesting is the reference to mobile and internet marketing. I remain steadfast in my belief that sooner rather than later, Walmart will offer online grocery shopping (almost certainly with store pickup), and that it will develop a robust mobile offering that could have great appeal to the next generation of consumers. This could end up being the big game-changer, over the long run...and retailers that do not develop long-term strategic plans capable of meeting such a challenge are playing a very dangerous game in which the ultimate penalty is obsolescence. Mark my words.

    BTW...I would’ve paid real money to see Mike Duke make the following statement: “Walmart intends to create 500,000 jobs over the next five years...none of them, apparently, in the city of Chicago.”

    Not that I’m on Walmart’s side in this fight, but it would have been fun to see him throw down the gauntlet in such an in-your-face way.

    Published on: June 7, 2010

    The Wall Street Journal reports that in numerous markets where Walmart has faced local resistance to its expansion from residents and union groups, it also has been dealing with anti-development campaigns run by an organization called Saint Consulting Group and funded by some of its biggest competitors.

    “In scores of cases, large supermarket chains including Supervalu Inc., Safeway Inc. and Ahold NV have retained Saint Consulting to block Wal-Mart, according to hundreds of pages of Saint documents reviewed by The Wall Street Journal and interviews with former employees,” the paper writes.

    “Saint has jokingly called its staff the ‘Wal-Mart killers.’ P. Michael Saint, the company's founder, declines to discuss specific clients or campaigns. When read a partial list of the company's supermarket clients, he responds that ‘if those names are true, I would say I was proud that some of the largest, most sophisticated companies were so pleased with our success and discretion that they hired us over the years’.”

    Here’s how the Journal describes Saint’s way of doing business:

    “Saint, a former newspaper reporter and political press secretary, founded his firm 26 years ago. It specializes in using political-campaign tactics—petition drives, phone banks, websites—to build support for or against controversial projects, from oil refineries and shopping centers to quarries and landfills. Over the years, it has conducted about 1,500 campaigns in 44 states. Mr. Saint says about 500 have involved trying to block a development, and most of those have been clandestine.

    “For the typical anti-Wal-Mart assignment, a Saint manager will drop into town using an assumed name to create or take control of local opposition, according to former Saint employees. They flood local politicians with calls, using multiple phones to make it appear that the calls are coming from different people, the former employees say.

    “They hire lawyers and traffic experts to help derail the project or stall it as long as possible, in hopes that the developer will pull the plug or Wal-Mart will find another location.”

    The paper notes that to call Saint a “Walmart killer” might be a bit of hyperbole, considering the extent to which Walmart has grown over the past quarter-century. However, it does seem to be fair to say that Walmart’s efforts have been impeded in a number of cases, and its costs increased, because of all this subterfuge.
    KC's View:
    All’s fair in love and war.

    However...what bothers me about stories like this one is that decisions are being made not on the merits, but on who has the loudest voice and the most muscle. Communities actually end up making decisions based on which side is most effective tactically, rather than on a contextual and strategic long-term plan.

    On a larger scale...Somebody said today on “Morning Joe” that the problem with government - on both sides of the aisle - is that everybody is improvising based on short-term political calculations, and nobody is laying out long-term plans that, while they will call for short-term sacrifices that may be considerable, will put the country on a more solid footing in the future.

    Published on: June 7, 2010

    Target Corp. announced last week that starting this fall, its customers “will receive 5 percent off at check-out every day when they use a REDcard at any Target store or on Target.com. Target’s REDcards include the Target Credit Card, Target Visa Credit Card and Target Check Card debit product.”

    In addition, the company said, shoppers “will receive a coupon good for 5 percent off a future day of shopping every time they fill five prescriptions at a Target pharmacy with a Target REDcard. Guests in the program currently receive a coupon good for 10 percent off a future day of shopping every time they fill 10 prescriptions at a Target pharmacy with a Target REDcard.”

    “We’re excited to offer this outstanding value to our REDcard holders across the country,” said Gregg Steinhafel, Target’s CEO. “We believe guests will appreciate the simplicity and compelling value of this program, which will lead them to choose to shop more often at Target. As a result, we expect this new program to drive profitable incremental sales, which will more than offset the cost of providing this everyday discount to our cardholders.”
    KC's View:
    I’m not taking sides here, but...

    One of the things that Walmart’s Mike Duke talked about in that company’s annual meeting is “price transparency.”

    Maybe I’m wrong, but it sounds like what Target is saying is that if you pay cash, or use another credit/debit card, you are going to pay five percent more for products bought there.

    If I’m Walmart, it seems to me that the response to this strategy is pretty simple. The ads go something like this: “Pay any way you want. We’re still cheaper.”

    Published on: June 7, 2010

    The Boston Globe reports that CVS Caremark CEO Tom Ryan has said that his company plans to purchase as many as 200 independent pharmacies a year as a way of building market share.

    CVS currently is the nation’s second biggest drugstore chain.
    KC's View:

    Published on: June 7, 2010

    The New York Times reports that Carrefour CEO Lars Olofsson has decided that the best way to guarantee the future of the world’s second biggest retailer is to follow “a simple strategy: strengthen at home, then either dominate or withdraw abroad ... If you cannot become leader, sooner or later you will have a competitive problem. If ever I have an offer in markets where I don’t believe we can become leader, I’m prepared to have a look at it.”

    However, Olofsson says he plans to continue investing in countries such as China, Brazil and India, believing that Carrefour can dominate there.

    A year and a half ago, when he joined the company, “Carrefour had lost track of being client and consumer focused and lost a certain track of price competitiveness,” Olofsson tells the Times. Since then, the company has been “focusing on re-branding and refurbishing stores, automating checkout lanes at hypermarkets, introducing recession-friendly value brands, overhauling the information technology systems and better leveraging its huge buying power to improve price competitiveness.”

    “In 2010 we should see the fruits of that work coming through — in sales and profitability,” Olofsson says. “All this puts us in a better position for the future.”
    KC's View:
    Taken to the logical extreme, I suppose this means that Carrefour is willing to drop down the list of world’s biggest retailers if it means being more profitable in the long run...though I expect that this isn’t an eventuality that leadership there thinks will happen.

    It sounds very much like the GE philosophy - if you can’t be number one or two, get out of the business segment.

    Published on: June 7, 2010

    The Associated Press had a story the other day about restaurant-style offerings in supermarkets - it talked about the success that Wegmans is having with its “The Pub at Wegmans” offering in Collegeville, Pennsylvania - that actually pointed to a new battle shaping up between supermarkets and restaurants.

    “The grocer-as-quick-serve-restaurant model has done well in the recession, in part because the convenience is good and cost is low,” the AP writes. “But even as the economy upticks slightly, ready-to-eat food continues to drive more traffic to grocery stores, increasingly blurring the traditional boundaries between supermarkets and restaurants.”

    However, that line gets blurred even more as restaurants open up their own retailing areas, offering fresh and prepared foods that are able to better extend their brand into the home. One chain example: Bob Evans.

    “In December, Bob Evans opened a ‘Taste of the Farm’ retail area connected to its restaurant in Westerville, Ohio, where customers can pick up a hot spaghetti dinner, a salad or — talk about blurring boundaries — Bob Evans-brand grocery products,” the AP writes. “Company president and chief concept officer Randy Hicks says the retail centers fit customers' busy lifestyles. More are planned.”
    KC's View:
    Another example, on a much smaller scale...Mario Batali, who has a wonderful restaurant in Port Chester, NY, called the Tarry Lodge (try the black squid ink pasta!), reportedly is readying an Italian market next door as a way of extending his franchise.

    Here’s the deal. If this battle means that people have greater access to more and better food, then it is a good thing. If the battle is over who can produce the most lowest common denominator products, then not so much.

    Published on: June 7, 2010

    The Seattle Times reports that Coinstar’s Redbox DVD vending machine business continues to grow. Here’s how the paper reports it:

    “Increasingly, Redbox is the go-to place for cheap movie rentals on a Friday or Saturday night.

    “While Movie Gallery, the bankrupt parent of Hollywood Video, closes all of its remaining U.S. locations, and Blockbuster plans to shutter at least 500 stores, Redbox adds nearly 22 new machines daily, bringing its projected year-end total to about 30,000.

    “Coinstar-owned Redbox accounted for 23 percent of U.S. video rentals in the first three months of 2010, up about 7 percentage points from a year ago, as 24,000-plus machines dispensed 9 million DVDs weekly, according to data released by its Bellevue-based corporate parent.

    “The data, which Coinstar attributes to NPD VideoWatch, put Redbox ahead of Blockbuster for DVDs and Blu-ray discs rented in the first quarter. Subscription service Netflix, with nearly a third of the rental-unit market, grabbed the No. 1 spot.”
    KC's View:
    This is one of my favorite cautionary examples of a business model (Blockbuster) that no doubt thought it had a viable long term business plan...until two other models came along that made it virtually obsolete. Sure, Blockbuster is trying to catch up. But I think that train has left the station.

    Here’s the big question. What are the folks at Netflix and Redbox doing today to insure that the same thing does not happen to them tomorrow? Because change is inevitable.

    Published on: June 7, 2010

    • The Jacksonville Business Journal reports that as the hurricane season begins, Winn Dixie “is offering discounts on portable weather radios at all of its 515 stores in Alabama, Florida, Georgia, Louisiana and Mississippi. The bright yellow radios receive local weather warnings issued by the National Weather Service and are powered by normal house current with a battery back-up.
    KC's View:

    Published on: June 7, 2010

    Last week, MNB featured an interview with Jean-Marc Saubade, the new managing director of the Consumer Goods Forum (CGF), which is the new organization created by the merger of CIES, the Global CEO Forum and the Global Commerce Initiative (GCI).

    Unfortunately, in a couple of places, due to an editing error, he was referred to as “Jean-Paul Saubade.” For which MNB abjectly apologizes...we fixed the mistake as soon as we became aware of it.

    (Of course, those of you in the know realize that calling this an “editing error” is just a way of trying to shift the blame...since in this case, the editor and the writer are the same person. Me.

    Mea culpa, mea culpa, mea maxima culpa.)
    KC's View:
    I have no idea where “Jean-Paul” came from. Now, if I’d written “Jean-Luc”...I’d know exactly how that happened...

    Published on: June 7, 2010

    John Wooden, the legendary UCLA basketball coach whose teams won 10 championships in 12 years between, died over the weekend at age 99.
    KC's View:
    Much has been and still will be written about Coach Wooden’s personality, achievements and legacy, and all of it will be better and more than I can contribute here.

    However, I was going through some of Coach Wooden’s best-known quotes over the weekend, and came away with these favorites, which seem to speak volumes about him and also seem particularly appropriate:

    ”Be more concerned with your character than your reputation, because your character is what you really are, while your reputation is merely what others think you are.”

    “Failure is not fatal, but failure to change might be.”

    “If you're not making mistakes, then you're not doing anything. I'm positive that a doer makes mistakes.”

    “It's the little details that are vital. Little things make big things happen.”

    Published on: June 7, 2010

    On the subject of accused gender discrimination at Walmart, one MNB user wrote:

    A friend of mine is a pharmacy technician at Walmart. They recently were forced to hire a female Pharmacist to replace the previous male pharmacist who retired. Unfortunately, the new Pharmacist, even though she has worked for Walmart for over 15 years has had no managerial training and her staff is suffering for it. I think Walmart has failed in more than one way in this instance, by promoting a woman with no experience dealing with employees, and failing to train her to deal with employees and management practices. I’m not sure if this is just a practice previously applied only to women in Walmart, but it’s pretty telling. Good move, guys……

    And MNB user David Livingston wrote:

    There is no such thing as gender discrimination.  We are all free to pick and choose our compensation and career path.  If the women at Wal-Mart earn less, its because they choose to earn less.  Men or women do not have to accept the wages offered and can opt into other employment.  It appears that at Wal-Mart, women opt to earn less, with is pretty much like all other businesses.

    The best gauge for earnings is self employment.  Do men self-employed attorneys, brokers, real estate agents, doctors, accountants, pro golfers, actors, etc earn more than women in the same profession?  Probably.  I pretty much hire all women for these jobs because they not only do an outstanding job, they do it for less money.  They opt to do it for less.  Why?  Don't know, they just do.


    There are two different things at work here.

    In the first email, it seems to me, you may two different problems at work.

    One problem may be that Walmart could be reacting to discrimination accusations by promoting people who should not be promoted. The other is that Walmart’s training protocols are not what they should be (and this could affect both men and women). Both are problems, but only one of them has anything to do with gender discrimination.

    Of course, there’s another possibility - that this is an isolated case of a screw-up. This stuff happens. Remember the Peter Principle?

    The second email, however, is evidence of something else. I hope that it is evidence that in an industry that markets primarily to women, that is made up of some of the smartest and most talented women that I have ever met, there remain pockets of dinosaur-like thinking that reflects the very worst of male chauvinism. (To say there is no such thing as gender discrimination seems like the kind of thing that only a guy - and not that many guys - would say. I am not saying here that women don’t have choices, or that they should play the victim when not treated fairly. But that is not the same thing as suggesting that sometimes they do not have choices, and that sometimes they are treated unfairly, and that they have the right to equitable treatment. Next thing you know, he’ll be saying that there is no such thing as racial discrimination, just African-Americans who don’t choose better circumstances.)

    I’ll be honest here. I debated with myself long and hard about whether to use David Livingston’s name here...because I cannot imagine circumstances under which any woman in this industry would read these comments and then want to hire him for his marketing and/or consumer knowledge.

    But on the other hand...at some level, one has to be responsible for the comments one makes and the positions one holds. To not attribute these comments - and he did not ask for anonymity - also did not seem right.

    Let the chips fall where they may.
    KC's View:

    Published on: June 7, 2010

    • At the French Open, Rafael Nadal defeated Robin Soderling 6-4, 6-2, 6-4 in the Men’s Singles Finals to win the championship and regain the number one male player in the world.

    • In the NBA finals, the Boston Celtics defeated the Los Angeles Lakers 103-94 to tie the best-of-seven series at one apiece.

    • And in the fifth game of the NHL Stanley Cup finals, the Chicago Blackhawks defeated the Philadelphia Flyers 7-4, to take a 3-2 lead in the best of seven series.
    KC's View: