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    Published on: July 26, 2010

    So last week I was in San Francisco, sitting at an outdoor table at the Cafe Zoetrope, sipping on a really good chardonnay and dipping bread in olive oil with crushed red pepper. And I noticed that across Kearny Street there is a restaurant called the House of Nanking, with a line out front. Impressive, considering that the restaurant was nestled in between a Thai Oriental Massage parlor and the Grassland Cocktail Lounge, where, the tattered green awning said, “good friends and girls meet.”

    When my waiter passed by, I said, “That must be a really good restaurant, huh?”

    The waiter chuckled and shook his head. “Nope. It actually isn’t very good at all. But they have really good advertising. But they don’t tell you that not only is the food lousy, but they rush you because they like to turn over tables fast.” And then he recommended another Chinese restaurant a couple of blocks away, saying that the food was much, much better.

    I watched the line and thought to myself, that’s an interesting lesson. Two, actually.

    One, advertising does matter. Sell a compelling message, and you can attract a crowd, no matter what part of town you’re in.

    But the second lesson is even more important: You have to deliver on the promise, because if you don’t, people will talk.

    I cannot imagine any circumstances under which I’m going to the House of Nanking. No way. Because word of mouth fights in a different weight class than advertising.

    The fact is that around the corner on Jackson Street, there is another Chinese restaurant called Hunan Home. Being in the middle of Chinatown, it is just one of hundreds, but I know this one because 15 or more years ago, Murray Raphel took me and a bunch of other folks there, raving about the coconut shrimp. The shrimp was everything he said it was, and I often have returned...because that restaurant delivered on the promise and had word of mouth - from an advocate - working on its behalf.

    The questions are:

    What kind of marketer are you? What kind of message is being spread on your behalf? And are you living up to the promise?

    That’s my Monday morning eye-opener.

    - Kevin Coupe
    KC's View:

    Published on: July 26, 2010

    Bloomberg scoops that Walmart has lost yet another senior executive, as Dottie Mattison, who came from the Gap three years ago to run the retailer’s apparel division, resigned.

    It was the third major departure from the company in a month.

    According to the Wall Street Journal story, Mattison’s departure may have been a foregone conclusion since “Wal-Mart in June split Ms. Mattison's responsibilities, assigning her to oversee brand merchandising, product development and sourcing, while Lisa Rhodes was put in charge of merchandising for such categories as jewelry and women's apparel.”

    Walmart has been struggling in its ongoing efforts to become more fashion-oriented. Lately, it has been talking to going back to basics, though quality continues to be an issue. One story noted that while it is a positive for Walmart that it carries $3 t-shirts, the problem is that it looks and wears like a $3 t-shirt.

    • The Wall Street Journal this morning reports on a new relationship between Walmart and Seventh Generation, the environmentally friendly household products manufacturer. Seventh Generation CEO Jeffrey Hollender used to say that he did not want to do business with the giant retailer, but that is changing.

    “Starting next month,” the Journal writes, “Seventh Generation staples, including laundry detergent, dish soap, all-purpose sprays and disinfectant wipes, will be sold in about 1,500 Wal-Mart stores. By September, other cleaners, diapers and baby wipes will be available on Walmart.com.

    “The move will bring Seventh Generation's specialty products to the broader, mainstream audience it has long coveted. For Wal-Mart, which draws more than 137 million U.S. customers every week, carrying Seventh Generation could help boost its green credentials by finally winning over one of its most vocal corporate critics.”

    Walmart says that this partnership could have broader implications. "We're not just putting [Seventh Generation's] products on the shelf," Al Dominguez, Wal-Mart's vice president of household chemicals and paper goods, tells the paper. "We want their help in developing a category that's more sustainable."
    KC's View:
    I hope that the result of this partnership is that good comes out of it for both sides. But there is always the possibility that the result will be biblical...

    “For what does it profit a man to gain the whole world and forfeit his soul?” Mark 8:36

    Published on: July 26, 2010

    SeattlePI.com reports that as Kroger-owned Fred Meyer eliminates the use of plastic bags in its Portland, Oregon, stores, it is doing so with the form conviction that eventually it will be a chain-wide initiative.

    “We're doing it because we felt like it was inevitable,” said Melinda Merrill, a spokeswoman for Fred Meyer, tells the website. “That's why we decided to get ahead of it.”

    Merrill also notes that it is easier for a company to deal with one set of rules, as opposed to a patchwork of regulations. “If Seattle has a ban and Everett has a fee and Redmond has a different fee, it's really hard to implement," she says. "We would screw that up."
    KC's View:
    One of the things that I find interesting about the objections to canvas bags is that people say they can be unsanitary. Which always makes me wonder - don’t these folks do laundry?

    Published on: July 26, 2010

    A joint study from Deloitte and Harrison Group entitled, "The 2010 American Pantry Study: The New Rules of the Shopping Game," suggests that “92 percent of people surveyed have changed their grocery shopping behavior in the last two years.  In particular, 89 percent said they have become more resourceful while 84 percent say they are more precise when they shop.”

    The study says that “American consumers have re-learned how to shop — and in the process re-shaped the playing field for both consumer products marketers and packaged goods retailers.  The recession has made it necessary for Americans to rethink and adjust their shopping patterns, which has resulted in a more strategic, informed — and even calculating —approach to a shopping game previously driven by impulse, advertising responsiveness and the fundamental attractiveness of brands.”

    The survey also showed that “while this new shopping approach is generally based on spending less, approximately two out of three (65 percent) people do not feel like they are sacrificing much. In fact, 79 percent reported feeling smarter about the way they shop versus two years ago. Moreover, consumers have embraced a persistent recessionary mindset, as 93 percent surveyed said they will remain cautious and keep spending at their current level, even if the economy improves.”

    And, from the study:

    “This new resourceful shopper has an ever-evolving set of tools at their disposal and the insight to know how to use them effectively.  They view their ability to mix coupons while leveraging multiple channels, discounts and store competitions as essential to getting the most value for their dollar.

    “The study also uncovered that loyalty cards are very important to shoppers with 84 percent reporting having at least one, and 65 percent describing them as an ‘essential/very important’ money-saving method.  In addition, 44 percent of consumers surveyed are now using loyalty cards in grocery stores every time they shop. According to consumers surveyed, coupons are another popular tool with 67 percent of people increasing their coupon usage and finding them across a variety of media outlets including: newspapers (59 percent), mail (54 percent), store (53 percent) and online (41 percent).”
    KC's View:
    An interesting if not very surprising study, especially when considered in the context of the following story...

    Published on: July 26, 2010

    According to a new “American Pulse” survey, “almost half (48.2%) disagree/strongly disagree that this is a financial “recovery summer” for the US ... Only 17.6% agree strongly agree in the summer revival and two in five (43.4) think the Obama administration’s efforts for getting the economy back on track have made matters worse. (32.4% say attempts have been helpful and the jury is still out for 24.2% of Americans.)”

    The survey was conducted by BIGresearch.,
    “Additionally, more people think President Obama’s accomplishments, such as healthcare and financial reform should be booed (41.4%) than applauded (37.6%) and one reason could be uneasiness over increased government spending. 75.1% say that the growing deficit is hurting future economic growth for America.

    “From all the uncertainty over the economy, new consumer behaviors are emerging. For example, 65.5% of consumers say they have cut back their credit card usage. And almost three-fourths of those (72.9%) say they don’t plan on ever returning to how they used credit cards prior to the recession. Further, it appears that consumers are looking for additional ways to stretch their dollars. As a result of the recession, 33% say they have purchased items at thrift/charity stores such as Goodwill, 30.8% say they have bought at wholesale clubs and 30.4% say they have bought online. 26.9% have hit up garage sales because of tough economic times.”
    KC's View:
    I’m not doubting the veracity of these survey results, but I would point out, just to be fair, that the only lines I’ve seen lately have been at various Apple Stores, where high-priced iPhones and iPads seem to be in demand. I’ve yet to see a bread line, or a gas line.

    I’m just sayin’...

    Published on: July 26, 2010

    The New York Post reports that “a 110 proof beer, the world’s strongest, was launched Thursday by a British firm selling the tipple for $762 a bottle. The blond Belgian ale, named The End of History, is an astonishing 55 percent alcohol by volume (ABV) and is presented in a case made from stuffed animals, including stoats and squirrels.

    “Made by BrewDog, based in Scotland, the beer is infused with fresh juniper berries and nettles from the Scottish Highlands and was developed using an extreme freezing technique.”

    Two bottles reportedly have been sold to a beer enthusiast in Denmark.
    KC's View:

    Published on: July 26, 2010

    USA Today reports on some negative reactions prompted by Walmart’s decision last week to put Radio frequency identification (RFID) tags on clothing such as jeans and underwear:

    “‘This is a first piece of a very large and very frightening tracking system,’ said Katherine Albrecht, director of a group called Consumers Against Supermarket Privacy Invasion and Numbering.

    “Albrecht worries that Wal-Mart and others would be able to track movements of customers who in some border states like Michigan and Washington are carrying new driver's licenses that contain RFID tags to make it easier for them to cross borders.

    “Albrecht fears that retailers could scan data from such licenses and their purchases and combine that data with other personal information. She also says that even though the smart tags can be removed from clothing, they can't be turned off and can be tracked even after you throw them in the garbage, for example.”

    Walmart says that it wants manufacturers to put the RFID trackers on removable tags, not in the clothing; the company also says it has no intention of tracking where garments go and how they are used.
    KC's View:
    The question I would ask is why Walmart - or any other company - would want to track underwear and jeans once they leave the store. Quite frankly, most companies have more than enough to do each day, and don’t even get to all the legitimate pieces of business that need to get done each day. I don’t want to minimize privacy issues at a time when technology is eroding our personal space...but this just doesn’t seem like an issue to me.

    Published on: July 26, 2010

    • The Richmond Times Dispatch reports that Kroger “s expanding its fuel program to allow customers to redeem points at 26 Richmond area Shell stations beginning Monday. This would be in addition to redeeming points at fuel centers located at Kroger stores. Points are earned when shoppers use their Kroger loyalty card at check out. For every 100 points a customer racks up, they get 10 cents off per gallon of gas. They can redeem a maximum of 1,000 points at once, which translates into $1 discount at the pump at a Kroger fuel center.”

    Reuters reports that “scientists at Coca-Cola Co. are working on developments ranging from plant-derived plastic to beverages with new textures, as the world's largest soft drink maker aims to stay ahead of consumers' quickly changing tastes ... toying with beverage formulations that may take the company beyond liquids.”

    Evaluating the possibilities is the responsibility of Coke’s Venturing and Emerging Brands (VEB) unit, which is both assessing outside proposals as well as working on internal product development.
    KC's View:

    Published on: July 26, 2010

    • Walgreen-owned Duane Reade has promoted its executive vice president and chief merchandising officer, Joe Magnacca, to be its new president.

    • Target Corp. has named Matt Zabel as vice president of government affairs. Zabel had been chief of staff for U.S. Senator John Thune since 2004. He replaces Nate Garvis, who retired from Target earlier this year.
    KC's View:

    Published on: July 26, 2010

    Daniel Schorr, a journalist for more than seven decades - for CBS, CNN and NPR - who got on Richard Nixon’s “enemies list” because of his reporting on the Watergate scandal, died last Friday at age 93.
    KC's View:

    Published on: July 26, 2010

    Got a lot of emails on Friday responding to our report and commentary about the dismissal of A&P CEO Ron Marshall after less than seven months on the job - a move that was described here as merely symptomatic of a company in disarray and possibly unable to compete because of its own dysfunction.

    One MNB user wrote:

    This is such a sad story.  Can anyone dig A&P out of the mess it is in?  How many times have we read this story, the words may have been tweaked slightly, but it’s the same issue, time after time.  It’s like trying to bail out the Titanic with a Dixie Cup!  Pathmark was once a wonderful organization, a true leader and innovator in the supermarket industry.  The associates who worked at Pathmark were very proud of Pathmark and what it stood for – clean stores, high quality products and great prices.  It was truly an family oriented company.  Unfortunately, Pathmark was the victim of the economic downturn, coupled with the greediness of investors.  Sad to say, most of the Pathmark associates who were let go back in 2008 after the consolidation with A&P have yet to find work, or anything comparable to what they once had.  One could only wonder what would have happened if the tables were turned and Pathmark purchased A&P?

    MNB user Pat Patterson wrote:

    I entered the retail food business on Feb 1, 1971, a point in time when A&P had sales in the 5 - 6 billion dollar range & Kroger was third with sales around 3 billion.

    A&P has successfully been attempting to go out of business at least from that point in time regardless of who was running the show.  Enough said.

     
    MNB user Ed Dowd wrote:

    I sold A&P a number of private label products in then 80's and 90's and they never understood the value of P/L and where it fit into its scheme. They never took advantage of their strengths and then they let the whole dept. go in 2001 and brought in "analysts" with no grocery experience who managed the business to zero. The last bid an analyst sent me on cheese, had estimated volumes down 50% and they had no guarantees that the number would hold. So, after supplying at least part of their cheese program for 50 years, I passed. It wasn't worth it.

    MNB user Marty Gillen wrote:

    I've said it before, but it looks like there is not much time left for A&P,  so I'll say it again:  please take this horse and put it out of its misery with a shot to the brain.
     
    Another MNB user chimed in:

    All you have to do is go back and read the classic book called “The Rise and Fall of The Great Atlantic and Pacific Tea company” to see why a lot of businesses fail! The main reason is they forget about what is important to the customer and only worry about what is good for the stock holders and investment bankers. The problem with A&P is that Marshall is probably right when he says that it is systematic, deep and profound in the core business values of the company. Maybe it is time that Haub is asked to leave since he is part of the values and direction the company keeps going or sell the company in pieces? Sometimes the problem is not with the players or the coach it is with the owners or the GM.

    If they’re trying to maximize shareholder value, they’re doing a lousy job.

    I think it is important to note here that not everyone is a Ron Marshall fan, and I’ve gotten more than few emails from industry friends suggesting that one of the reasons he was unable to make any progress in a half-year on the job is that he was an autocrat with inadequate people skills.

    But even if this is accurate, the fact remains that Christian Haub and the board hired him,...and have to take responsibility for yet another management change that disrupts the company.

    I was pretty tough on Haub last week, which led one MNB user to write:

    Come on, KC, how do you really feel?

    Being honest is what you pay me for. But to be clear, this is business, not personal.

    I’ve met and interviewed Christian Haub numerous times over the years, and I’ve always found him to be a gentleman - he seems like a genuinely nice guy. But A&P is just a mess...and he has to take some responsibility for that.




    Last week, in a story about how President Obama signed the landmark Wall Street Reform and Consumer Protection Act, which included a provision to reform and regulate credit and debit card swipe fees, I noted that “Rep. John Boehner (R-Ohio), the House minority Leader who hopes to become Speaker of the House if the GOP is able to capture control of the body in this year’s mid-term elections, already has called for a repeal of the bill.”

    This led one MNB user to challenge me:

    Nice distortion of the facts!  Where is the journalistic objectivity?  Boehner is calling for the repeal of the law NOT because of the impact on credit card exchange fees and the new transparency – you make it sound like he is against that idea – but rather because it is one more example of government getting bigger.  Like most overreaching legislation, the few positives are far outweighed by the negatives and the last thing we need right now is more onerous government regulation and a giant new bureaucracy.  The nanny state steps in again to try and protect us from our own stupidity, irresponsibility, and/or greed.  Add to that the fact that it does nothing to reign in or fix the disasters we call Fannie and Freddie, and there are plenty of reasons to call for its repeal along with the health care bill and no doubt the cap and trade bill that Congress will rush through ahead of the November mid terms.  This administration and this Congress are a joke!!  If you are going to take time to report on an issue, why don’t you report both sides of the argument?  Do you really just want to be another left-leaning cheerleader for disastrous policies?  It’s your publication – you have every right to print what you want.  And, I have every right to no longer subscribe if it just gets to be more than I can stand.  We are very close to that point.

    This is actually a reasonable criticism ... and shortly after receiving it, I took out the offending paragraph. I would have elaborated on it, but I was about to go onstage to give a speech, and didn’t have time, and so I thought it was better to simply eliminate it and explain later.

    My original intention was to do something that I’d done before - which was to point out the irony that Democrats passed a bill that a Republic-leaning retail industry had been pushing for, and to suggest that if people actually talked to each other and negotiated in good faith - as opposed to staking out positions as a way of appealing to the base and getting elected - then we might have a more functional government. I wrote that paragraph as a way of reminding myself that I wanted to do so, but I screwed up and forgot to make my original point. Simply put, I goofed.

    I will say this, though. I try really hard to be fair here. It wasn’t that long ago that I wrote a piece praising Boehner for a position he’d taken - and so I hope I cannot be characterized merely as a “left-leaning cheerleader for disastrous policies.” I actually do try to see and comment on both sides of most issues. I try not be an ideologue, simply because I think ideology generally tends to be a substitute for thoughtfulness.

    I’m not an economist, but it seems to me that there is a more than enough blame to go around on both sides of the aisle for the “disastrous policies” that resulted in the economic state of affairs in which we find ourselves, and that continues to influence consumer behavior.

    I’m not pro-bureaucracy or pro-regulation, but I do think it is fair to say that one of the reasons we found ourselves on an economic precipice is because there was not enough regulation of the financial services industry. What worries me that is that all the new regulations don’t do anything to really fix the problem ... and I am concerned that the people in Washington writing the regulations may not sufficiently understand the businesses they are trying to regulate.




    I made a comment in “OffBeat” on Friday about sitting on a plane reading my Kindle, sitting next to a guy with an iPad, and how I felt like I was using old technology...and immediately got iPad envy.

    Which led one MNB user to write:

    Does the Kindle do what you require of it?  Is the IPad going to give you more things that you really need?  Sounds like my 24 year old son.  He sees the new gadget and says I need that.  Most of the time he is disappointed and reflects that the old one really worked better for him.

    You compare me to your 24 year old son, and I’m supposed to feel bad about that?

    Not at my age.

    You’re right that sometimes “the new gadget” disappoints...but in my experience, it often is a genuine improvement in terms of the experience. And you’re right... I’m a sucker for a new experience, especially when it comes to technology like the iPad.

    (Damn you, Steve Jobs!)




    On Friday, my “Eye-Opener” piece concerned CEOs - specifically Danny Wegman of Wegmans and Ric Jurgens of Hy-Vee - who see their roles as “changing the world,” not just making the numbers ... an attitude of which I completely approve.

    MNB user Lorinda Olivas responded:

    Thank you for your positive comments in the Friday eye-opener. As a Wegmans employee for 13 years now, I am proud to live the experience of not just working for a supermarket, but working for a company continuously trying to change our communities for the better. I feel I make a difference in someone’s day every day I work. Because we know we’re working for a bigger purpose than just selling product. I know that’s what makes our company successful. 

    Can’t say it better than that.

    The power of a CEO with a vision is that it enables employees to have a greater vision.
    KC's View:

    Published on: July 26, 2010

    Alberto Contador, the Tour de France defending champion, won his third title on Sunday in the world's most prestigious cycling competition.
    KC's View: