retail news in context, analysis with attitude

Yesterday, in my MNB Radio commentary, I wrote about the current travails being suffered by Apple, which has not been responding well to questions raised about the new iPhone. I wrote, in part:

The problem is that Apple doesn’t seem to be taking the complaints seriously ... even when Consumer Reports says that the reception problems are serious enough that it cannot recommend the new iPhone. It doesn’t look to me like the complaints are coming from Apple haters, but rather largely from people who love this company and want to love its products ... It seems to me that the core problem is whether the folks at Apple, justifiably proud for having created so many new and exceptional products, ignited so many people’s imaginations, and prompted so many sales of both hardware and software, began to get a little arrogant, began to think that the company’s needs were the most important thing.

I said that I was worried, but added:

It isn’t too late for Apple. I’m still rooting for them, still an enormous fan, still willing to give them the benefit of the doubt - just like millions of other people. But don’t take me for granted. Don’t think your needs are more important than mine. And don’t make the same mistake as the other companies I’ve mentioned - because I can’t imagine any circumstances under which I will ever buy a Toyota, I drive past BP gas stations just on principle, and there are a lot of other pain relievers I can take that are not made by Johnson & Johnson.

One MNB user thought I was being hyperbolic:

Kevin, I can sympathize with your frustration, but simply don't find the comparison to BP's oil spill (horrific & tragic) or Toyota accelerator problem (reckless disregard) equitable. Guess I'll hang on to my Blackberry & Kindle and be ever so thankful that my Toyota is still rolling reliably with 313,000 miles on it. I am an Apple fan from way, way back to the 512k days and won't turn my back because of a glitch on a newly released phone model.

I’m not turning my back either, and I certainly did not mean to equate what may be crimes committed by BP and a level of negligence committed by Toyota with a marketing misstep by Apple. I was talking about the importance of brand equity - and how easy it is to lose all that equity if one is not careful.

Another MNB user thought I was being naive:

Oh, please. Apple's product have carried design flaws. Has everyone forgotten the Quadra line? The simply awful AlBook and TiBook line of laptops from the late 1990s and early 2000s?

Since 2005, I have owned three white MacBooks. All three develop cracks on the palm rest on the bottom case. It is like clockwork. About every 9 months, I return my MacBook to get a new keyboard and bottom case.

Search for a blog called Apple Defects. You will find a slew of flaws associated with Apple products.

As to Apple's response with the iPhone, why is anyone surprised? They are not customer oriented, instead they are product oriented. Apple drives the market. They are not market driven. Why does the iPhone succeed and the Kin get killed in less than 60 days? Because one company drives the market and the other company gets driven. Because one company does not suffer from the tyranny of the served customer and the other  company does.

Apple gave a hearty extended middle finger to its customers base with the introduction of the Macintosh OS and that view has been with the company ever since. I find it shocking that anyone expects a different behavior from Apple. They don't care about the customer. They care about the product.

Interesting. For the record, I have been an Apple customer for two decades. I cannot even count the number of computers, iPods and other gadgets that we’ve owned over the years that were made by Apple. And I have trouble thinking of even one that suffered from a design flaw.

And, unlike you, I have always felt cared for as a customer. I’ve always felt that customer service was accessible and expert.

You say “Apple drives the market” like that’s a bad thing. I read those words, and I think that what Apple has shown is leadership and vision. I thought that was a good thing.

This isn’t to say that Apple is perfect. It isn’t. My piece yesterday was intended not just to point out Apple’s current problems, but to make a larger point - that no company, no matter now iconic or successful, is so big that it cannot make mistakes and lose much of its brand equity.

Another MMNB user wrote:

After saying I wouldn’t be an early adopter, I went out and bought the iPhone 4G. The reception problems are real. Like you, I love my Apple products. And like you, I have to wonder wtPhone?

It offends me to be told there is no hardware problem. Whether their formula for calculating bars was right or wrong, that doesn’t explain why the bars change only when gripping the phone across the bottom. It’s an insult to think we’re going to buy that.

It irritates me to be told to just use my phone the “right way.” I don’t think I use “the grip of death” on my phone. I think I hold it in a normal fashion, which for me is a grip on the bottom of the phone. I’d love to be able to retrain myself to hold the phone “the right way,” but let’s think about the message that sends.

It exasperates me to see Apple’s FaceTime commercials. In the original commercial, all of the people enjoying FaceTime were holding the phone in the “wrong way,” which was really the height of irony. I could be wrong, but I swear Apple has since edited it, and now there are snippets thrown in of a hand holding the phone by the top.

It’s the final straw that the 4OS killed the Sync My Ride in my Escape (which if you aren’t familiar with it, allows me to use my phone and access music through the stereo hands free). Now, this obviously isn’t a hardware problem and I’m guessing Ford/Sync may be more vested in figuring out a way to fix this than Apple. Without all the hardware issues, I probably would have just waited it out. But all combined, I’ll probably be shipping my 4G back soon (I’m in the 30 day window for returns), assuming they don’t announce a recall Friday.

Yet another MNB user wrote:

I hope Apple doesn’t go the way Dell did and forget about customer service, quality, reliability and future loyalty.  How sad that would be.  I’ll never buy another thing from Dell or Gateway (is Gateway still around?).  I have 3 junkers sitting in the basement and have already recycled two others.

Inevitably, one MNB user wrote:

After reading your radio commentary yesterday, I was wondering if you would still buy an iTurd if Apple made one.

I knew this one would come back and bite me on the rear end.

What the reader is referring to is a comment that I attributed to my brother, Brendan Coupe, about a year ago, when he said that I was so enamored with Apple that I would buy an iTurd if the company put one on the market.

What I said then was this: I’m not sure he’s right about that, but I do know one thing – if Apple did make an iTurd, it would look better and smell better than any other turds on the market.

I’ll stand by that.

MNB user Jim Swoboda wrote:

I, like you, admire greatly Apple and the way they have relentlessly pursued the art of creating highly coveted devices.  I like you, share in the worry.  The biggest mystery to me how great company's can continue to get it wrong when something unplanned occurs. When creating highly complex products which are created by human beings, who by definition, are all flawed, unforeseen things will occur.

Denying that is what gets one in trouble.  Admitting and working to correct is what separates the mediocre from the best.  Apple is deciding right now which they will be. Looks like we will learn that answer on Friday.

MNB user Ann Boyles wrote:

Loved your commentary this week! 

Particularly I liked how you tied it to other industries/companies BP, J&J, Toyota.  I would love to hear your perspective on how the problems these companies are facing impact the overall category and industry in which they compete.  I get that it’s complicated situation. It seems to me that consumers and customers start losing faith and confidence in the overall category or industry.   What can be done to maintain confidence?  Are they historical examples?
Thanks and keep up the great work, love reading you every morning.

I think it probably depends. In the case of BP, for example, I think they’ve done enormous damage to the entire oil industry’s credibility...but I’m not sure Toyota’s problems have hurt Nissan or Mazda. On the other hand, I’ve always believed that food safety problems at one company can erode consumer confidence in the safety of the entire food chain.

And, from another MNB user:

Spot on with your comments…a problem becomes a crisis when initial comments are ignored. The customer may not always be right…but they always deserve a great brand experience.

As noted above...Today is a big day for Apple, as it is scheduled to hold a press conference to address the iPhone issues.

In my view, it is very easy. Steve Jobs has to stand up and say that clearly there are unexpected problems with the iPhone, and that the company is working to solve them. He should say that anyone who has bought the new iPhone can bring it back to the company for a full refund, or exchange it for an older version, or get a voucher for the next version that won;t have these problems. He should say that a band that wraps around the iPhone, eliminating the dropped call problem, will be given free of charge to anyone who has the new iPhone. And he should say he’s sorry...that they screwed up, and that Apple’s primary job right now is to make things right with its customers and fans, and to make sure that this kind of misstep never happens again.

He does all that, and I think Apple customers fall in line. The stock may drop some, but it’ll go back up ... and Apple will be a better company for it.

Onto another subject...

Yesterday, MNB took note of a USA Today report that “two university labs found that over 60% of olive oil tested labeled as 'extra virgin' was in fact cheaper, lower-quality olive oils.

“The study ... was conducted by the University of California, Davis Olive Oil Chemistry Laboratory and the Australian Oils Research Laboratory. They collected 14 brands of imported olive oil and five California brands in March, and shipped 62 samples to an Australian lab for analysis ... Sixty-nine percent of the imported oils and 10% of the California oils labeled as extra virgin did not meet the International Olive Council and U.S. Dept. of Agriculture taste, smell and chemical standards for extra virgin olive oil.

“As reported here on MNB several weeks ago, the US Department of Agriculture is preparing to establish new standards to make it more likely that products labeled as ‘100 percent extra virgin olive oil’ is, in fact, 100 percent extra virgin olive oil. However, the standards will be voluntary, not mandatory.

MNB user Carla Baughman wrote:

I agree that the standards should be mandatory, not voluntary. I also think they should take it further and name names in the study or as analysis is done. Consumer have a right to know what they are buying.

FYI...the study does name names.

Another MNB user wrote:

You don't understand the system.

The USDA grading standards are voluntary.  They do not have the authority to make them mandatory.  FDA has the primary jurisdiction over olive oils.  FDA could establish mandatory standards of identity for various olive oils.  Also, the law that FDA administers states that a food is deemed to be misbranded if its labeling is false or misleading in any particular.  FDA could use that to go after mislabeled olive oil even without standards.  But FDA continuously pleads that it does not have sufficient resources to do this.

I continue to believe that the only way we are going to get adequate  and efficient food regulation is to strip out the food regulatory functions from both USDA and FDA and combine them into a separate federal Food Regulatory Authority.  I also strongly believe that the current system that allows states to have differing requirements is an unconstitutional undue burden on interstate commerce and that there should be as single set of federal rules.  I have no problem with letting the states enforce those uniform federal rules rules, so the state food regulatory employees need not fear losing their jobs.  Most of the FDA and USDA food regulatory employees would probably be employed by the new Federal Food Agency so their jobs would also be relatively secure as well.  Unfortunately, nearly everybody resists change.

Not me. I’ve always thought that a single food safety agency makes a lot of sense.

Yet another MNB user chimed in:
The news about EVOO is very discouraging…what else lurks on other labels?????????? If I can’t trust labels sold in “RESPONSIBLE GROCERY STORES”…do I move completely to Farmers’ Markets?

It certainly is critical to know who you are doing business with.

One other point. While the study looked at both imports and US brands, it seems to me that this is a great moment for retailers to do a similar analysis of their private brand olive oils to see if they stand up to examination. If they don’t, then retailers ought to toss them out of the store and explain why to is a great way to establish credibility in the eyes of the shopper.

Finally, asked by an MNB user whether the late George Steinbrenner should go into the Baseball Hall of Fame, I wrote:

I’m conflicted on this one.

A lot of writers here have been arguing that Steinbrenner was the second most influential person in NY sports history, with only Babe Ruth having a greater impact on the city’s sports scene.

My reflexive response is that owners probably don’t belong there. Then again, Walter O’Malley is in the Hall of Fame, and deserves it because he owned the Brooklyn Dodgers when the team broke the color barrier by signing Jackie Robinson.

This, by the way, would be my response to the sports writers trumpeting Steinbrenner’s contributions. Jackie Robinson’s contributions were greater; indeed, in my view, he was one of the most important Americans of the 20th century. And both O’Malley and Branch Rickey, the Dodgers’ general manager who signed Robinson, had greater long term impact not just on sports, but the country.

And I think it is hard to name to the Hall of Fame a man who was banned from the sport - twice.

So I think my answer is no.

MNB user Gary Harris reacted:

Hmmm, spoken like a true Mets fan…

Not at all.  I don't harbor that kind of hostility toward the Yankees.  (Not like my son, who, if he had to make a choice between the antichrist and Derek Jeter, probably would choose the antichrist.)

I was actually trying to be reasonable and rational.   Believe it or not.

I probably wouldn’t be upset of Steinbrenner makes the Hall of Fame ... not as upset as I would be if the steroid users like Barry Bonds get in. That’d tick me off.

Another MNB user wrote:

I think it is an inequity that George Steinbrenner can be considered for the Hall of Fame, while Pete Rose, banned from Baseball for a less heinous violation of gambling rules, cannot.

Disagree with you on this one. Rose broke perhaps the most important rule in baseball, undercut the integrity of the sport, and consistently lied about it. He gets no sympathy here. (Nor do the players tainted by the steroids era, in my view.)

BTW...I was wrong on one thing I wrote yesterday.

Walter O'Malley was chief counsel to the Dodgers in 1947, when Jackie Robinson broke in, but only became an owner of the team later, in 1950.


In an email posted yesterday about the likely obsolescence of post offices, MNB user Jeff Folloder

MNB user Jeff Folloder suggested: “Why don't we take all those conveniently located post offices and make them truly useful?  Wire 'em all up with Internet, staff them with cheerful staff, give 'em a fresh coat of paint (buildings, not staff), offer a full range of connected services from DMV, Social Security, municipal services... to a variety of courier services.  And raise the price of bulk direct mail anyway.  To put it in CPG terms, make the PO the destination and let the experience underline the value.”

Which led MNB user Ken Hillman to write:

Brilliant...and add to it my pet opportunity of using unused space for local "virtual officing" , conference rooms, presentation print etc.

“Your Views” are becoming a favorite destination because of letters like Mr. Folloder...

Mine, too.

Thanks to all of you.
KC's View: