retail news in context, analysis with attitude

Published on: July 22, 2010

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Hi, I’m Kevin Coupe and this is MNB Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.

So, let’s follow up on last week’s rant about how Apple seemed to be behaving in a way that threatened its long-term brand equity. I expressed some concern about what appeared to be a certain arrogance in coping with complaints about the new iPhone’s reception issues.

At the end of the week, Apple CEO Steve Jobs held a press conference to address the iPhone issues.There was lots of speculation about what would happen, ranging from expectations about a possible recall to how much of an apology Jobs would issue. I know what I thought - that Apple needed to do something radical in order to reinforce its consumer credibility.

Well, there is a reason that I’m me and Steve Jobs is Steve Jobs. He had his press conference, all right, and let me see if I can boil down his message to eight simple points.

One. Sure, there’s a problem. (Couldn’t deny it...even Consumer Reports said so.)

Two, the problem has been exaggerated by the media.

Three, Apple has sold three million of the new iPhone, and the return rate has been way below past versions. So there.

Four, the problem has been exaggerated by the media.

Five, the reception problem can be fixed with the use of a simple rubber bumper that prevents the user’s hand from touching the metal antennae. Apple will give the bumpers away free to iPhone purchasers, even as it works to resolve the problem on future phones.

Six, the media exaggerated the problems and blew the whole story out of proportion.

Seven. It isn’t just the iPhone that has such problems. It is other smart phones, too.

Eight. Did I mention that this whole thing is the media’s fault?

Did he apologize? Nope. Institute a recall? Uh-uh.

In short, the whole thing was masterful. He took responsibility for the problem without conceding the enormity of the problem...and in fact managed to convince a lot of people - me included - that we’d all fallen victim to a bit of hysteria. Thought to be honest, I have a feeling that I also may have fallen for a bit of executive sleight of hand...really, really good executive sleight of hand.

I am sure of a few things.

One, I’m pretty sure that this won’t happen again at Apple, at least not for a long time. A lesson has been learned.

Two, it helps the company that so many of us are predisposed to love its products and share what we believe to be its attitude toward the world of technology.

And three, a lot of sins get washed away when just a few days after the press conference, Apple is able to announce a third quarter revenue increase of 61 percent and a profit increase of 78 percent - all due to the popularity of both the new iPhone and the iPad. The stock price is up more than 20 percent for the year ... and these numbers cannot be misinterpreted ... even by a hysterical media.

So how long is the wait for one of those new iPhones?

For MNB Radio, I’m Kevin Coupe.

Published on: July 22, 2010

Something strange happened a few nights ago in the Dodgers/Giants baseball game. In the final inning, with the game on the line, a Dodgers coach - Don Mattingly - went to the pitching mound to discuss strategy. As the discussion ended he started walking away, took a few steps, turned and went back to finish his point.

The Giants’ manager bolted on the field and pointed out the move to the umpires. In baseball, you see, a pitcher must be removed if a coach or manager visits twice in one inning. By walking off the dirt of the mound onto the grass and then returning, Mattingly has technically and unwittingly made two visits. Suddenly, the Dodgers had to remove a star pitcher for a lesser substitute and the Giants won the game.

Imagine the same scenario in business. Suppose a competitor left you a small opening to exploit by making a small mistake or misstep. What would you do? Would you jump on it or would you let it go? Sadly, too many let the moment pass and wonder why they lose or complain about competitors who they feel are far more ruthless.

The Giants didn’t win simply because of the mistake. They played well and put themselves in a position to take the game. Yet they also didn’t let their opponent’s mistake go unnoticed. They saw it and got a key player taken out of the game. That’s playing to win.

A number of sportswriters pointed out that Bruce Bochy, the Giant manager who noticed Mattingly’s mistake, capitalized on the same gaffe when it was made by an opposing manager several years ago when Bochy was managing the San Diego Padres. So he’s obviously good at capitalizing on other people’s mistakes. It also helped that Mattingly was managing the Dodgers at that point - the more experienced Joe Torre having been ejected from the game several innings earlier. But that’s what doing battle is, whether in sports or business - taking advantage of the moment.

Competition is rarely pretty or nice. The rules may not be as clear as baseball, but the intent is just the same. Winning requires preparation, planning and execution. And it also requires the winner’s instinct to seize the opportunity whenever it appears.

“Compete” is still a verb.

- Michael Sansolo

Published on: July 22, 2010

President Barack Obama yesterday signed the landmark Wall Street Reform and Consumer Protection Act, which includes a provision to reform credit and debit card swipe fees by requiring them to be reasonable and proportional to cost and allowing retailers to offer discounts to shoppers who want to use cash instead of credit. Retailers have supported the bill because consumers have been paying more than $50 billion a year in hidden interchange fees to credit card companies and banks, which they maintain lead to higher prices for all consumers. Since these fees are hidden, consumers are unaware of the costs associated with their cards.

Published on: July 22, 2010

Supervalu-owned Save-A-Lot announced yesterday the formation of a new company with Rafael Ortega, a Texas-based operator of Hispanic supermarkets. The new company owns and operates six former Save-A-Lot stores in the Houston and South Texas markets under a co-branded format, "El Ahorro Save-A-Lot."

Ortega currently owns and operates 15 El Ahorro Supermarkets and almost 100 La Michoacana Meat Markets in Texas.

"We are always looking for innovative opportunities to bring the Save-A-Lot brand to local communities, and we think this affiliation best enables us to serve the Hispanic community in this area," said Bill Shaner, Save-A-Lot president and CEO. "This relationship is a new business model for the company. Combining Mr. Ortega's local insights with the power of the Save-A-Lot network of stores and exclusive-label expertise will enhance our ability to provide our Hispanic customers in this part of the country with the products and services they need and want, while positioning the Save-A-Lot brand for growth."

Published on: July 22, 2010

The Oregonian reports that Kroger-owned Fred Meyer has announced that beginning in August, it will no longer offer plastic bags in its 10 Portland-area stores.

According to the story, “The grocer's move came days after Mayor Sam Adams shared a draft ordinance that would ban plastic bags starting January 2012 in large chain grocers and retailers that feature pharmacies in Portland. The ordinance, which the city council will vote on next month, ultimately aims to steer shoppers toward reusable bags such as cloth -- and not simply to divert them to paper. To do that, it would require that grocers charge 5 cents for paper or compostable bags and offer reusable bags for sale.

“While other metro-area grocers have ditched plastic bags -- Whole Foods eliminated them companywide in April 2008 -- Fred Meyer represents the largest chain locally to make such a move. New Seasons Market, which has never offered plastic check-out bags, is looking to offer options beyond paper or reusable bags, such as rentable wagons, at its new Hawthorne store, which should open this fall.”

Published on: July 22, 2010

The Washington Post reports that a landmark food safety bill that already has been passed by the US House of Representatives (in a rare bipartisan show of support) is being held up in the Senate because of a proposed amendment by Sen. Dianne Feinstein (D-California) that would ban bisphenol A or BPA, from food packaging because of emerging health concerns.

"This is the most awesomely frustrating thing I've ever undergone," Rep. John Dingell (D-Michigan) tells the Post. "Seventy-six million people are sickened by bad food in this country every year, 300,000 go to the hospital and 5,000 die. And the Senate sits on this bill like a hen on an egg."

According to the story, “Dingell wrote the House bill, which would grant vast new authorities to the Food and Drug Administration and mark the first serious reform of food safety laws in 70 years.”

In his letter to Feinstein, Dingell wrote: "I implore you to not allow the perfect be the enemy of the good. Time is running out. Our choices are becoming increasingly clear -- we can either find middle ground, or we can become obstinate in our views and fail to meet any of our goals. It would be calamitous if a bill to protect American consumers from unsafe food cannot become law this year because of controversy over a single point."

Feinstein responded in a letter: “"I believe that we need legislation to protect consumers, especially babies and toddlers, from harmful chemicals. BPA is a chemical widely used in the production of certain plastics and has been linked to negative health problems, including brain and behavioral disorders, cancer, diabetes, heart disease and obesity. The Food Safety Bill is the logical place for this legislation, but special interests are fighting to obstruct any legislation to ban BPA from consumer products."

Published on: July 22, 2010

HealthDay News reports on a new study by the US Centers for Disease Control and Prevention (CDC) saying that only half of the nation’s young adults are being tested for elevated cholesterol levels, even though as much as 25 percent of them are suffering from high “bad” cholesterol.

"What's surprising and, quite frankly, rather concerning, is that we are doing such a poor job of identifying young adults in America who have elevated LDL cholesterol," study lead author Dr. Elena Kuklina, a nutritional epidemiologist with the CDC Division for Heart Disease and Stroke Prevention, said in an agency news release, which noted that “high level of LDL cholesterol is a common risk factor for coronary heart disease, but it can be managed with lifestyle changes or treated with medication. Other risk factors include high blood pressure, smoking, family history and obesity.”

Published on: July 22, 2010

Reports out of Greece say that less than two years after first opening stores there, Aldi has decided to pull out of the country, citing an unsustainable business environment. Aldi said that it would sell the 38 locations it managed to open, which was well short of the more than 100 it planned to have open by now.

Observers say that a tough real estate market and tougher competition from Lidl made operating in Greece problematic for Aldi.

Published on: July 22, 2010

• Safeway said yesterday that it concluded its most recent annual prostate cancer campaign with a total of $11.6 million raised to fund research; that makes more than $65 million that Safeway has raised for the cause since it began the annual campaign in 2001.

Published on: July 22, 2010

Yesterday, in my “Eye-Opener” commentary, I took note of a study saying that more than three quarters of Americans don’t understand expiration dates. And I wrote:

I agree. The dates are confusing.

But that’s the industry’s fault, not consumers’.

What, exactly, should consumers do? The dates are on the products, the language is vague, and the impression certainly is left that once a date has passed, consumers should toss the stuff out and buy new stuff. (Of course, that does have its advantages for retailers, who get to sell more stuff.)

Here’s an idea.

Food packaging should mean what it says, and say what it means. Transparency and clarity ought to have the highest priority. When the industry avoids specificity, it doesn’t do shoppers any favors...and doesn’t help itself either.

Trust is best engendered when information is complete, comprehensive, and contextual. And trust ought to be the ultimate goal for marketers ... To paraphrase Shakespeare, the fault is not in our shoppers but in ourselves.

Lots of response to this one.

One MNB user wrote:

I don’t know how many times I’ve explained to people that the sell-by date on eggs is just that -- a sell-by date. Eggs are often still fresh for weeks beyond that date when refrigerated because they are so perfectly sealed in their own little packages – their shells. The way to check if you aren’t sure is to put an egg in a glass half-full of water. If it stays horizontal, it’s fine. If it stands on end, it’s getting a little old and should be used sooner rather than later. If it floats, it’s done…chuck it.

Expecting customers to conduct such a test on old eggs strikes me as silly. Maybe packages should just have “sell by” and “use by” dates? Or maybe just “use by”?

The point is that we need to be clear and concise, and not leave room for tests involving half-glasses of water.
 
Another MNB user wrote:

Really, the fault is that for many, perhaps even most foods, the "expiration date" is both a subjective measure, and also depends on storage conditions.  Even for a relatively perishable food such as refrigerated pasteurized milk, determining the expiration date is difficult.  While pasteurization destroys pathogenic bacteria, it is not sterile.  Bacterial activity gradually sours the milk.  Some people are more sensitive to that taste.  I am not at all sensitive to slightly sour milk and I will drink milk that my wife finds unacceptable.  The souring of milk is highly dependent on temperature.  If the milk was properly refrigerated during transportation, at the retailer, and in the home, it will be acceptable for at least several days past the date on the package.   Unopened cultured dairy products such as yogurt and sour cream are generally fine for a long time after the labeled date.  .As a general rule most foods with any significant water or oil content (foods that usually say "refrigerate after opening") will keep longer when refrigerated.  For example, I do not keep even unopened salad dressings or mayonnaise in the pantry, they go in my basement refrigerator.

Acidic canned foods such as tomato products eventually eat through the can lining and acquire a metallic taste or produce gas that bulges the container.  But many foods, dry pasta being one example, will keep virtually forever.  Some canned goods just get unacceptably mushy after a couple of years.  Perhaps the best practice for many of these foods would be for the manufacturer to follow the lead of Anheuser Busch and label them with a "Born On" date.   

In the meantime I will continue to enjoy bargains such as the just "expired" 10 oz Colby cheese longhorns for $1.29 bought last week.  Bon appetit!

From another MNB user:

There is another aspect to the date code issue that you didn’t address:  liability.  Food manufacturers may create an end date – knowing full well that the product will last longer – in order to allow for consumers who build in their own potentially unsafe leeway (“it expired a year ago, but it must still good because it’s sealed”).  In a perfect world, all manufacturers would use the same system, guidelines, and format, and all consumers would understand and interpret date codes correctly.  But the food industry is hardly the perfect world.  Manufacturers must protect themselves against the litigious consumer who does not employ common sense.  Think a certain fast food chain who began printing “warning: contents may be hot” on coffee cups.

MNB user Liz McMann wrote:

So true that consumers are confused about these dates!  A couple of things to complicate matters and contribute to vagueness about expiration/use by/best-by date safety:

Many people do not make sure their refrigerators are set to a safe temperature range, causing food to spoil BEFORE marked dates.

Most of the dates refer to un-opened packages, but the real vagueness happens after the package is opened (i.e. is it sealed air-tight?  Is it in the fridge door or a meat drawer?)

I’m a trained food safety volunteer and still had to really study the USDA’s guide to these dates to get any sense out of them.  http://www.fsis.usda.gov/factsheets/food_product_dating/index.asp

Many retailers do not train their staff to teach consumers about these date systems.  (We do).

MNB user George J. Denman wrote:

I agree that the industry could do a much better job in standardizing expiration dates. I just opened my cup of Activia yogurt and the expiration date is nothing more than a date printed on the top of the cup. My container of ice cream says “best by …. And my ½ gallon of milk says “Sell by….”
 
No wonder we are all confused...




We also continue to get emails about Michael Sansolo’s column earlier this week about the dubious advantages of “new and improved” products.

MNB user Craig Espelien wrote:

A couple of thoughts on the concept of “new and improved”.

Companies wrestle with two different issues when it comes to growing sales:
 
First – without “new”, consumers – to your point – have little need to upgrade or change.  Product failure or new market entrants do not get you those incremental growth numbers needed to keep your job so everyone tries to get to “next” without really thinking about is next necessary (I mean, seriously, do I really need a clock on my coffee pot?).  Where I think companies miss is the entire concept of how consumers shop and how they segment.  There are only four segments of consumers: Value, Mid-Price, Premium, and Luxury.
 
A new and improved “Good, Better, Best” model – with a lot of blurring between segments today (think Chevy, GM, Oldsmobile, Cadillac and the struggles GM has had with brand differentiation) consumers get confused about their true value desire – which is not a bad thing for the suppliers.  As manufacturers move up-market, they tend to abandon the lower price tiers as they try and get consumers to trade up (read Clayton Christenson’s “The Innovator’s Dilemma” for a great review of this phenomenon) – opening the door for new market entrants who see the value opportunity (sound familiar to the movement to extreme value in retailing today?).

Second, manufacturers have always struggled with how to handle the aging of the consumer – do they create a brand to follow a consumer group through its entire lifecycle or do they continuously reposition a brand or product for the next generation of user?

If you think about it, both Windows XP and razors suffer from both.  Do you really need much more than a good double edge razor?  Not sure I can tell that much difference if I shave daily in terms of comfort – I only use the more than two blade versions if I fail to practice proper grooming (Mr. Lazy in his home office) every day – otherwise, the enhancement in comfort relative to the cost is not a value to me – it has been over-engineered.  If, however, I am a new shaver, I may not know anything but the four or five blade piece – so my expectations are different (case in point, my wife brought some albums to the pre-school where she teaches and the kids asked where she got the giant CD’s).

Same story with XP – if you think about it, the computing power we have today far exceeds what was used to get to the moon and back – so do we really need MORE?  My guess is that most folks would be happy with more stability from their OS – and perhaps some speed.  My mother in law finally wants to start to use email – and thought she wanted a computer.  She did not think about the cost of the computer, what it could do or the access charge – she just wants to use email.  We had to introduce her to two different thought processes – a Netbook or using the library computer (my in-laws live in a senior co-op) for free.  Imagine if she tried to decipher Windows 7 on a new computer – simply way over-engineered for her needs.  For the younger generation with games and media, Windows 7 is not the last stop – there will be something faster and more stable in less than five years.

So – the brands are stuck – who do they cater to and how do they become satisfied with only replacement level consumption???
 
Thanks for the dialog – always enjoy it.

And another MNB user chimed in:

Would have to agree with you on the Mac vs. xp to windows 7.  We have windows 7 at work and I find it confusing when working with documents (pictures vs. plain English).  If I had my choice I would go back to XP.

After having the Mac at home with quick updates, etc., it’s not hard to get spoiled.  I don’t miss having to reload my operating system at least once a year (after having lost ALL my data), fighting with antivirus scans, notices, firewall conflicts **sigh** except for my HP notebook that I purposely ordered with XP before it was going to be unavailable.  I wish an Apple laptop was more affordable.  I think everyone would buy one – me first!

Razor blades – I have a favorite too and based on what you and others are saying I’d better start stashing, but I may need to take out a loan to do so.  Can anyone tell me why razor blades are so expensive???  The markup must be more than jewelry!




Speaking of new and improved, we took note yesterday of a Denver Business Journal report that Whole Foods is introducing a new “GreenBox” - an environmentally friendly pizza container - at more than two dozen stores in the Rocky Mountain region.

According to the story, “The GreenBox is made from recycled material and features a top that breaks down into pizza plates, eliminating the need for additional disposable plates. Also, the bottom of the box can be folded to become a compact storage container for leftover pizza, so plastic wrap and foil aren't needed.”

Which led one MNB user to write:

Little things are important.  GreenBox is a pizza box, plates, and leftover container is brilliant!  That little story on the green box just makes me want to shop there and might even make up for an average pie.  But I know Whole Foods doesn’t make average pie.  I can’t wait to try it.




Finally, a very nice note from MNB user Mark Raddant:

Thanks again for a rather amazing set of articles and comments.

I liked some of the quotes which you have offered lately, and here is one you haven’t passed on yet, but it has served as my mantra for years, and the older I get (and it comes from Dylan’s “Ballad of Easy Rider”, which I am old enough to have heard while seeing the movie of the same name, first run) the more I appreciate it:  “those not busy being born are busy dying”.  It works in business, life, and if you follow current thinking in human genetics, even in our genes.  (According to Brian Dawkins, once our bodies get the message we aren’t being daring, creative, vital, our bodies start to kill us off because we become a drain on our genome’s progress, not a contributor.)

Anyway, keep up the continually thought-provoking work.

It is a great sentiment, oft repeated.

That’s also the mantra from The Shawshank Redemption, one of our favorite movies - “Get busy living or get busy dying.”

And in Jimmy Buffett’s song, “Growing Older But Not Up,” he put it this way: “I’d rather die while I’m living than live while I’m dead.”

It all works for me.

I figure that while I may have an expiration date, I should act like my “best by” date is always right now.