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    Published on: August 16, 2010

    In a changing environment, only a fool keeps doing business the same way.

    Two examples, from my world...

    The Los Angeles Times reported last week that Rupert Murdoch’s News Corp. - which owns Fox News, The Wall Street Journal, the New York Post, the Times of London and a wide range of other media properties, “is embarking on an ambitious plan for a new national digital newspaper to be distributed exclusively as paid content for tablet computers such as Apple Inc.'s iPad and mobile phones.

    “The initiative, which would directly compete with the New York Times, USA Today and other national publications, is the latest attempt by a major media organization to harness sexy new devices to reach readers who increasingly consume their news on the go. The development underscores how the iPad is transforming the reading habits of consumers much like the iPod changed how people listen to music ... Although it would draw the reporting resources of the Post and Dow Jones, Murdoch could potentially invest millions of dollars to staff the operation and charge a yet-to-be determined subscription fee. One person familiar with the plan said News Corp. envisions a staff of several dozen reporters and editors and that the budget has not yet been determined.”

    Now, I suspect that the economics of all this have not been worked out yet, but the Times notes that News Corp. has been at the forefront of trying to figure out a viable and profitable financial model: “Murdoch has been increasingly focused on building readership and revenue on digital platforms, erecting a pay wall around the Times of London and announcing plans to charge for access to News Corp.'s other newspaper websites. The media giant offers the Wall Street Journal on the iPad for a $4 weekly subscription fee.”

    In a changing environment, only a fool keeps doing business the same way. Murdoch is no fool...and he knows that to remain relevant, he has to change.

    The second example is Pete Hamill, one of his generation’s most prominent journalists - the former editor of both the New York Daily News and the New York Post, a foreign correspondent, the author of more than 20 books and of countless newspaper and magazine stories and columns - as much a print animal as one can imagine.

    And yet, this November, when his newest book comes out, on the subject of immigration in America, there will be no paper and ink involved - it will be Little, Brown & Company’s first straight-to-e-book venture. The timing is propitious - the immigration debate is hot right now, and avoiding actual print allows Hamill to report and write much later into the publication process. And being timely could mean that Hamill’s book could help shape the debate as the mid-term elections approach.

    All of this is new to the 75-year-old Hamill - he doesn’t own any sort of e-reader, but, he says, “I don’t have any moral superiority. I don’t care, as long as people are reading.”

    And besides, only a fool would resist the notion that things change...and one must change with them.

    Two examples from the media business. The question is, in your business, are you recognizing the inevitable changes that come with time, technology and the incessant drive of innovation? And are you beginning to do business differently?

    That’s my Monday morning Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: August 16, 2010

    The Great Atlantic & Pacific Tea Co. announced late Friday that it plans to close 25 of its 429 stores, or about six percent of its fleet, in five of the eight states in which it operates.

    The 25 stores reportedly in Connecticut, Maryland, New Jersey, New York and Pennsylvania, but A&P has not yet divulged specific locations.

    According to the company, the closures are part of “the implementation and execution phase of its comprehensive turnaround.” The company said that “the affected stores include locations in close proximity to other Company stores, those facing real estate and cost issues, and underperforming non-core stores.” The closures are expected to be completed during the third quarter.

    The announcement quoted A&P’s CEO, Sam Martin - who joined the company from Office Max just three weeks ago, replacing Ron Marshall, who served for seven months, who replaced Eric Claus, who had the job for four years - as saying, “As part of our turnaround, we have initiated a detailed review of our store footprint and have decided to close these 25 locations ... We are moving forward aggressively to advance our turnaround and position A&P for a strong future. Even as we reduce our store base and drive efficiencies across our Company, A&P continues to remodel stores and take other important steps to enhance our customers’ experience across our store formats. To this end, we are set to re-open two newly remodeled stores in the coming month.”

    A&P’s announcement said that the turnaround initiative “is designed to generate sustained profitability and cash flow, drive sales growth, restore competitive margins to the business and strengthen the foundation of the Company for the long term.”
    KC's View:
    In the end, A&P is going to have to provide shoppers not just with a reason to go into its stores, but a compelling reason to leave the places where they already are doing their shopping. It is hard to see how, in this environment, A&P won’t be caught, yet again, a day late and a dollar short. It always seems to be playing catch-up while most of its competitors are trying to move in to the future.

    I remain unconvinced. The best that A&P probably can do is stabilize the situation so that the chain is a little more attractive to a potential buyer.

    One thing. I got the following email from an MNB user last week:

    We love the Morning News Beat, but remember when you keep picking on A&P, you are hurting 35,000 hard working and innocent associates for the sake of making fun of the company.

    This seems to be a reference to my “dead company walking” line...and I get that the folks who work for A&P wouldn’t find me to be as funny as I sometimes think I am.

    No disrespect is meant to the rank and file who go to work each day trying to do their best in a bad situation. A&P’s problems are long-term and systemic...but I’ll try to be a little more sensitive to people who may not be to blame for the big issues the company faces.

    Published on: August 16, 2010

    In California, the Press Enterprise reports on Stater Bros.’ expanded training center, “a series of classrooms and offices on the company's massive corporate campus” that “plays host to about 3,500 employees each year, offering a range of classes, from one-day training sessions for general merchandising clerks to two-year programs for meat cutters to college courses that can be counted toward a certificate in retail management.”

    According to the story, “training goes beyond teaching employees to do the work; it's a philosophy that emphasizes continuing education, goal-setting and discipline. And it's valuable whether or not they stay in the company or the industry ... Employees are encouraged to train not for the jobs they have, but for the ones they want. Courtesy clerks take checker training so they're ready when a position opens. Store managers attend a leadership program to cultivate skills for corporate jobs.”

    The investment by Stater Bros. in training seems to go beyond that of typical chains, the Press Enterprise writes, quoting Cherie Phipps of the Western Association of Food Chains (WAFC) as saying that “grocery retailers tend to invest heavily in training because the industry has such a strong focus on promoting from within. Grocers typically build their teams from the ground up rather than recruiting from colleges and universities, even at the corporate level, she said. ‘It's a funny Although Stater Bros. is smaller than some of its competitors, it produces twice as many certificate-program graduates,’ Phipps said. ‘Stater Bros. has a really special culture. They treat each other like family ... They're tough, the expectations are tough, but they are a family’.”
    KC's View:

    Published on: August 16, 2010

    The Los Angeles Times reports this morning that the USA Food and Drug Administration (FDA) has completed its initial review of an application by a Massachusetts company to sell genetically engineered salmon that grows twice as fast as traditional salmon. “Within weeks, the company expects the agency to convene an advisory committee of outside experts to weigh evidence, collect public testimony and issue a recommendation about the fish's fitness for human consumption,” the Times writes. “The process could take months or more — which still sounds like progress to the company after its 14-year, $50-million investment.”

    According to the story, “Unlike ordinary salmon, AquaBounty's genetically modified fish grows during the winter as well as the summer, so it reaches an 8-pound market weight in 18 months instead of 36. That's accomplished by inserting part of a gene from an eel-like creature called the ocean pout into the growth gene of a Chinook salmon, then injecting the blended genetic material into the fertilized eggs of a North Atlantic salmon ... The salmon is identical in taste, color, protein and other attributes of a non-engineered North Atlantic salmon ... and consumes up to 25% less food over its lifetime. The AquaBounty salmon don't get bigger than other salmon; they just grow to full size faster.”

    Critics - including many in the traditional fish farming industry that would compete with the genetically engineered product - say that there is no need for such a fish and call it "Frankenfish."
    KC's View:
    At a time when there seems to be general agreement that the oceans are over-fished, I’m a little surprised that people would say that we don’t need more. For me, the biggest issue - after assuring that GM salmon is safe - is making sure that it is labeled as being genetically engineered. This kind of transparency is a bottom line requirement.

    Published on: August 16, 2010

    The Des Moines Register reports that the US Senate Committee on Health, Education, Labor and Pensions last week agreed on a bill that would overhaul the nation’s food safety apparatus and sent it to the full Senate for a vote.

    Published reports noted that the bill did not contain an amendment that would have banned the use of Bisphenol A (BPA) in plastic food and beverage containers, though its prime supporter, Sen. Dianne Feinstein (D-California) has promised to introduce it yet again to the full Senate.

    According to the Register, the approve bill includes the following provisions:

    • Increases FDA inspections of processors and gives the agency the authority to demand the recall of tainted products.

    • Requires facilities that manufacture, process, pack or hold food to have plans for preventing contamination by dangerous bacteria and other hazards.

    • Requires importers to verify the safety of foreign food suppliers.

    • Provides training for facilities to help them comply with new safety regulations and “includes special accommodations for small businesses and farms.”

    • Authorizes a pilot project to test new methods for tracking foods in the event of a food-borne illness outbreak.

    The House of Representatives approved a version of the bill in 2009.

    In a statement released on Friday, Leslie G. Sarasin, president/CEO of the Food Marketing Institute (FMI) said, “We commend the bi-partisan group of six Senate leaders who worked diligently to negotiate a manager’s package of The FDA Food Safety Modernization Act. Consumers have the right to expect that the food they purchase is safe, affordable and meets the highest quality standards. We are pleased to see the process moving forward and we urge the Senate to take up this bill as soon as they return from recess.”
    KC's View:
    There seems to be some concern that the Senate will be so bogged down with other legislation that it may not get to the Food Safety bill. To which MNB would respond, just do your damn jobs. Work nights, work weekends. Get this bill onto the President’s desk...sooner rather than later.

    Published on: August 16, 2010

    USA Today reports that “Kroger is making a big push into the beauty business, this summer more than doubling its number of store-brand cosmetics, shampoos and other items while preparing to launch more products this fall and next year.

    “The move by the nation's largest traditional grocer underscores how supermarkets, buoyed by the recession's lift to store brands, are aggressively expanding beyond food and drinks. Kroger says it's had double-digit percentage increases in sales during the slow, almost-quiet rollout of the Mirra beauty line that began last October.
    KC's View:

    Published on: August 16, 2010

    Walgreen announced that it will expand its “DR Delish” private label line of snacks and beverages beyond the New York area Duane Reade stores where they originated and into more than 6,000 stores around the country. The roll-out begins this week and will continue through the fall.

    Duane Reade was acquired by Walgreen last April.

    “Introducing the DR Delish line of products in our stores is one of the first big steps toward bringing the best of Duane Reade to Walgreens,” said Bryan Pugh, vice president of merchandising for Walgreens. “The DR Delish brand allows us to offer our customers snacks and beverages with premium recipes but at more affordable prices.”
    KC's View:

    Published on: August 16, 2010

    • The Phoenix Business Journal reports that Bashas’ grocery chain is set to emerge from Chapter 11 bankruptcy organization more than a year after going into bankruptcy protection. “After a week-long trial, U.S. Bankruptcy Judge James Marlar on Friday approved the reorganization plan,” the paper writes. “The decision is expected to be appealed by the company’s secured lenders, which oppose the plan.”

    • The Silicon Valley/San Jose Business Journal reports that family-owned PW Markets, which has been in business for almost seven decades, is closing its seven stores and hopes the lease the locations to other retailers. The family cited increased competition as the primary reason for closing down the business.

    • The Associated Press reports that an analysis of new statistics released by the US Centers for Disease Control and Prevention (CDC) indicates that “an estimated 87 million cases of food-borne illness occur in the United States each year, including 371,000 hospitalizations and 5,700 deaths, according to a...calculation that combines a CDC formula with recent population estimates.”

    According to the story, while the CDC has said that food-borne illnesses have been “holding steady” for the past five years, “ the CDC only counted instances in which one food - like grilled chicken - was clearly to blame. That was the case in about 45% of the outbreaks. Outbreaks involving multiple ingredients — like chicken salad — were not part of that accounting.”

    • The Associated Press reports that “Magic Hat Brewing Co., Vermont's largest craft brewery, has been sold to North American Breweries Inc. of Rochester, N.Y.,” which “owns the Genesee Brewing Company and Dundee Ales & Lagers. It's the primary U.S. distributor of Labatt beers and Seagram's coolers.” Terms of the deal were not disclosed.

    Drug Store News reports that “Procter & Gamble has announced plans to use renewable, sustainable, sugarcane-derived plastic on select packaging of its Pantene Pro-V, Covergirl and Max Factor brands. The pilot packaging program will be rolled out globally over the next two years, with the first products slated to be on shelf in 2011.”

    • The Boston Globe reports that the Center for Science in the Public Interest (CSPI) is accusing Unilever-owned Bern & Jerry’s is using unnatural ingredients in products that it claims are natural.

    “At least 48 out of 53 flavors of Ben & Jerry’s 'All Natural' ice cream and frozen yogurt contain alkalized cocoa, corn syrup, partially hydrogenated soybean oil, or other ingredients that either don’t exist in nature or that have been chemically modified," CSPI said in a statement.

    But Ben & Jerry’s says that it is adhering to guidelines established by the US Food and Drug Administration (FDA), and that in cases where certain ingredients do not meet the criteria, the “all natural” claim is removed.
    KC's View:

    Published on: August 16, 2010

    • US Foodservice announced that its has hired John Lederer, the chairman/CEO of Duane Reade, to be its new president/CEO, succeeding Robert Aiken, who left last december to join a private equity firm.

    Lederer joined Duane Reade in 2008; previously, he was the president of Loblaw Cos. from 2001 to 2006.
    KC's View:

    Published on: August 16, 2010

    Lots of reaction to last Thursday’s rant about the lack of civility in society in general...with most people agreeing with my general sentiment, but a number of people disagreeing with one example that I cited.

    For example, one MNB user wrote:

    While I agree with your rant on society lacking humanity these days, I would like to respectfully disagree with you (this is after all a conversation on civility) about your comment regarding "the row of parking spaces that is reserved for energy efficient cars" and how shoppers ignore the signs and park their gas guzzlers there. Not a good example in my opinion.

    So if you have $40,000 or more dollars to buy a hybrid, you get a parking spot up close? It seems sort of elitist to me. What about the environmental activist that just graduated college who drives a beat up '89 Accord? Or what about the composting soccer mom who drives a '98 Dodge Caravan? Or what about the retail store manager who really wanted a 2010 Toyota Highlander Hybrid but didn't have it in the budget and had to settle for a regular V6 version. They have to park further back and drivers of Hybrids should get spot up close? This really bothers me and I'm sure it rubs others the wrong way. I have no problem with those who thumb their noses at this elitist Whole Foods policy and act in an "uncivil" way.  In fact, I am inclined to borrow my friend's '78 Cadillac Fleetwood, drive to Whole Foods lot and park it horizontally across the the whole row of "energy efficient car" parking spots.


    Another MNB user wrote:

    Why are People who drive Hybrids deserving of a special parking place and what about having children and strollers means you get to park up front.  It seems to me that the more we make individuals special because of their lifestyle choices the more we tend to create conflict and division and damage the civility of society.  It’s as if those lifestyle choices make you better and more deserving of consideration than someone who has taken a different path.  Once you create privilege you create another chance for conflict. I have always felt that there is no greater value of one lifestyle over another and that everyone is equal and should be treated as such.

    It is an interesting perspective, and I’ll have to think about it.

    I’ve never had a problem with the idea of pregnant women and hybrid cars getting preferred treatment ... and for a retailer like Whole Foods, giving hybrid owners better parking spaces seems in synch with its broader brand message.

    But I’ll reconsider.

    Other comments on that piece...

    MNB user Craig Espelien wrote:

    On the flight attendant issue – planes are becoming more and more uncaring – both attendants and passengers.  I have never seen so many folks who blatantly disregard the “turn off your electronic devices” – especially Kindles or other reading devices.  Now, I realize that a single user is not much of an issue – but I heard it expressed this way and thought it made sense:  one person who ignores a 4-way stop sign is not a problem – but we would have chaos if everyone did it.  Food for thought – follow the instructions as provided by the flight attendants, suck it up for five minutes where you might be disconnected.  Please.

    I compared rude people to animals, which led MNB user Kathleen Whelan to write:

    I think you are maligning animals. I'll take animal behavior any day.

    MNB user Rick Marcum wrote:

    Two things come to mind:  1. Perhaps a read of “All I Needed to Know I Learned in Kindergarten,” Robert Fulgum, would help these people.  In essence it is about living with others and treating them with respect.  2. There is also a guy we are all, in one way or another, familiar with whose name is Jesus that said, “Do unto others as you would have them do unto you.”  If you attempt to live your life as both Fulgum and Jesus illustrate for us, then the woman on the plane would have apologized and waited, SUVs would not be parked in the illegal spots, people with 20 items in their grocery carts would not be in the “10 item only” line  and folks would not be running around thinking only of themselves.  Remember, that we all have a “ripple effect.”

    MNB user Richard Evans wrote:

    Please allow me to join in with you on your "rant".

    You said "When that flight attendant swore at those airplane passengers, in some small way he was giving voice to a growing frustration that I think exists among many people with how our culture and civilization is going to hell in a hand basket."

    The observations you make are a good comment on what we have become. and just as an aging person does not necessarily like the wrinkles, moles and sagging skin that goes along with their age, we are at odds with the symptoms of an aging society.

    We all would like to think that things will get better as time goes on, and sometimes it does, but I believe many times it does not and it may take a catastrophic event to snap us back to civility where we can once again live with one another in peace and harmony.

    I am partially handicapped and it never ceases to amaze me how many times I see a perfectly healthy young person pull into a handicap designated parking space simply because they are too lazy or too much in a hurry to park where they are supposed to park.

    Even though there is a sizable fine attached to parking there without the proper tags. they do so anyway depriving a legitimately handicapped person from parking where it would be easier for them to gain access.

    Why?  Because they simply, as you pointed out "don’t give a damn what the signs say." I think that this a symptom of a much deeper problem in our society. We are all a bunch of spoiled brats who think we are owed something special simply because we exist. Reality has not yet come into focus for many people.

    I hope it does before it's too late.


    Another MNB user wrote:

    I couldn’t agree more…our politicians and what they accomplish and how they behave is a reflection of pop culture – the moral fabric of the American culture is being stretched and torn from every angle. This not meant to say the left, right or middle are wrong…we are in this together and must band together to preserve human dignity and the condition in  which we live.

    And, from another MNB user:

    I have to agree our politicians are just an extension of our society. I guess we are getting what we give. (Or some say deserve.) To add to the mix, ever attend a youth sporting event where the parents are yelling at the officials like their nuts? Start them young with the attitudes don’t we? Look at me rant now.

    One MNB user wrote:

    WOW, the column about society becoming more rude, etc was the best one I've seen in MNB.




    And speaking of calm, reasoned and civil debate...we also got a number of emails about the debate in San Francisco about a proposal banning free toys from children’s meals, a move that some think would get kids to eat healthier and address the obesity issue.

    MNB user Dave Vosteen wrote:

    San Francisco is one step above hell. As a matter of fact, California is the land of fruits and nuts. Glad I live in new Hampshire!!!!!!! LIVE FREE OR DIE!!!!!! I love this motto.

    Careful. You are coming dangerously close to calling them pinkos and commies.

    MNB user Karen Shunk wrote:

    Just a couple of comments about limiting toy giveaways in children’s meals:

    I lived in San Francisco during most of the eighties.  We didn’t have many chain stores or restaurants (except where tourists were likely to be) because of regulations limiting their presence in SF.  It’s part of what made San Francisco special and interesting.  Once they loosened restrictions on where these businesses could open, the city suddenly had to figure out a lot of things like what to do about all the trash they generated.  It was the deregulation of the late eighties and early nineties (sound familiar?) that brought a lot of the problems that they are now trying to deal with.  Fat kids in SF?  Really, that used to be really rare compared to the surrounding suburban areas where people drive more and eat at chain restaurants more often.  Sad that they are apparently no longer rare.

    My two kids (five and eight) recently admitted to me that they don’t like McDonald's’ food.  They beg for it because of the toys (which I hate – just more landfill!).   If you’re not allowed to market alcohol to kids, why can you market food to them that is patently unhealthy for them?  I understand the role of parental discipline here; my kids get to see the inside of McDonald's maybe three times a year.  But, in my bones, I feel like there is something really wrong with this model of marketing.

    MNB user Elizabeth Archerd wrote:

    Okay, this fast food toy ban to address childhood obesity is patently ridiculous, unless the kids are eating the toys after dessert.

    The obesity/fast food connection is not proven. Our widespread obesity problem has more to do with social class and government subsidies than anything else.

    Research seems to indicate that poor children can gain weight on rice and vegetables, while middle-class children can maintain healthy weight on "unhealthy" food. Stress may cause the body to convert food to fat for storage.

    USDA subsidizes the grains and oil seeds that seem "cheap" because we pay for it with taxes rather than at the grocery store. Approximately 60% of the calories in "food products" come from three things: refined flour, refined sugar and refined vegetable oil. Check out the ingredients of most boxed, bottled and many canned "food products" in the standard grocery store and you see that most of it is some mixture of the above three.

    Since those three products are cheapest for food "manufacturers" they form the basis of many products, but they are not the basis of a nutritious diet. You can eat that stuff until you feel sick yet never feel satisfied, and there is widespread malnutrition among our fattest citizens.

    The food industry needs a major overhaul if we are going to get healthy. Banning toys is absurd.


    And MNB user Richard Thorpe wrote:

    Wow – a city that seems to put the welfare of her citizens ahead of business profits. Self regulation in advertising junk food to children is working just great isn’t it? I don’t think so.  Removing incentives to purchase unhealthy food is not punishing the restaurant industry, it is helping children.  It does appear that some California cities are well ahead of the rest of the country on environmental and other social issues but that just might be a “good thing.”   Perhaps if the toys had been included with the few healthier foods, salads for example, the ban would not have been needed. We regulate a many things when it involves children – limits on the promotion of junk food has not crossed the line in my opinion. Junk food is as bad as cigarettes.
    KC's View: