retail news in context, analysis with attitude

Published on: October 5, 2010

by Michael Sansolo

What is the best measure of success and what is the best way to measure the impact of a successful leader? Far smarter people than I have long argued that managers are evaluated incorrectly.

Whereas most are rated on cold statistics - profits, sales, turnover, etc. - those measures can miss the big picture. There are many times that a retailer, for instance, may find their best manager in their worst performing store because he or she is the person pulling off the impossible, keeping things working in spite of awful conditions. Sometimes statistics tell only part of the story and the trick is to look even deeper and more knowledgeably.

There is a near perfect example of this argument this year from the world of baseball, where statistics are straight-forward and nearly everything can be measured and misinterpreted. Whether you like or detest sports, this is an example of managing that should command your attention because a cursory look at basic numbers will completely distort the picture…and obliterate the lesson.

As Kevin wrote yesterday, the baseball playoffs are set and include many regular participants like the Yankees, Braves, Twins and Phillies. This story, however, is about one of the four worst teams in baseball, the Baltimore Orioles.

The Orioles have not been good for years. Long a model franchise on the field and financially, the Orioles have endured 13 consecutive losing seasons and the team’s bottom line performance has slumped. Ever since the retirement of Cal Ripken Jr., the Orioles’ wonderful home stadium, Camden Yards, has seen a growing number of empty seats. Incredibly, in 2010 things seemed even worse. Through their first 105 games, the Orioles won only 32 times and were headed for an historic level of failure. Or so it seemed until Aug. 3rd.

On that date, the Orioles hired Buck Showalter, a veteran manager with a history of hard-nosed leadership. Under Showalter, something incredible happened: the Orioles became a different team. Over the final two months of the season, the Orioles won 34 games and lost only 23. Virtually every player on the team suddenly started playing better. The question is: what changed?

Players said it began on day one when Showalter met with the team and spoke frankly. As one player said, “We know what he expects. There was no magic formula, just a good shift in gears.” One other player said there was an extra element, admitting that when Showalter took over there was also “a little fear in there.”

Showalter himself says he emphasized only a few changes and none about fear. Partially he worked to keep the team’s bad moments from snowballing into something worse, which helps stop long losing streaks. And he urged maturity among his team with words that any manager should copy.

As Showalter said, “Your attitude should never go in a slump.” Baseball is a difficult game with hundreds of intangibles, but Showalter says attitude should not be on that list. “There are certain absolutes you control.”

He urged personal responsibility, albeit in a baseball way. His pitchers were told to simplify their approach instead of over-thinking situations. They also needed to understand that if they created a bad inning, it would be their responsibility to get out of it. His words worked. The pitchers became significantly better after Aug. 3rd.

Of course, there’s no telling if Showalter’s success with the Orioles means the team will be in playoffs a year from now. Showalter has been fired before and in baseball the only absolute truth seems to be that every manager eventually gets the boot. (Bobby Cox in Atlanta is a different story, but we’ll leave that aside today.) But even if Showalter doesn’t coach another victory, he leaves us with a wealth of managerial lessons.

Lay out clear expectations; manage attitudes; urge maturity and responsibility; and understand that sometimes the numbers don’t tell the whole story. In short, a winning lesson in many, many ways. Even from a last place team.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: October 5, 2010

The New York Times reports this morning that the US Department of Justice has reached a tentative deal with Visa and MasterCard that would resolve the antitrust suit against the companies.

According to the company, “The proposed settlement, which is subject to court approval, came after a two-year investigation into rules imposed by Visa, MasterCard and American Express that often prohibit merchants from steering customers toward cash, checks or other payment types that avoid transaction fees ... Last year, those fees, which are divided between payment networks and the banks that issue their cards, cost merchants $35 billion, the Justice Department said ... Under the terms of the proposed settlement, merchants could offer consumers an immediate discount or rebate for using a particular type of payment, a particular credit card network (Visa versus American Express), or a low-cost card within that network (a Visa debit card rather than a Visa credit card).”

The settlement does not allow merchants to charge a fee for credit card usage.

No settlement was reached with American Express, and the antitrust suit against that company is moving forward.

As the Times notes, this is the second major victory that retailers - and consumers - have scored over the credit card companies: “As part of a major overhaul of financial regulation, Congress passed legislation that is expected to limit the swipe fees that Visa and MasterCard can charge merchants for each debit card transaction.”

Responding to the settlement, Leslie R. Sarasin, president/CEO of the Food Marketing Institute (FMI) said, “This is a monumental development for supermarket retailers and most importantly, their customers. Supermarkets have been prevented by credit card companies from accepting less expensive forms of plastic, ones that do not require the merchant to pay excessive fees just for the privilege of accepting a particular card, thus essentially preventing competition ... e believe this is a positive development when Justice Department action, supported by seven state attorneys general, mirrors legislation passed by Congress and intended to benefit consumers."   

“This is a historic move by the Department of Justice, and a significant step towards a more competitive market,” said Henry Armour, CEO of the National Association of Convenience Stores, Alexandria, VA. “For the first time in history, the Visa and MasterCard stranglehold prohibiting price competition on cards is being broken. With price competition on cards, consumers and small businesses win.  After vigorously fighting these reforms on Capitol Hill for years, it is a major breakthrough to have these much needed reforms forced upon the credit card cartels by the Department of Justice."  

Published on: October 5, 2010

Okay, here’s one that most people probably did not see coming.

There are published reports that in Washington, DC, the 52 Starbucks with two single-stall bathrooms are taking down the lavatory signs that say “men” and “women,” complying with local regulations that say all restrooms have to be gender-neutral, accessible to transgender and gender-non-conforming customers. The signs will now say “Restroom,” allowing anyone to use them.

The law has been in effect since 2006, but the general sense is that most institutions have not complied with it ... and there has not been a huge outcry about it. However, organizations that represent the LGBT community are ramping up pressure on businesses to adhere to the regulations.

Some people will say that such regulations are unnecessary. Some will say that they don’t understand the problem, since people who are “gender-non-conforming” actually have more options, able to use both the male and female lavatories. Some will say that the real losers in this deal are men, who almost always have shorter lines to deal with than women. And some will say that this is a deadly serious issue, not to be joked about or trifled with.

The debate reflects a simple reality about the 21st century - that “inclusion” has implications that a lot of people probably don’t think about. No matter how you feel about these rules and the issue in general, what really matters is how customers feel about it. Obviously, in DC, that issue is important to some people. And that ought to be important to retailers.

That’s what inclusiveness really is all about, and retailers ought to think about it.

And that’s my Tuesday Eye-Opener.

- Kevin Coupe

Published on: October 5, 2010

The troubled Great Atlantic & Pacific Tea Company (A&P) is defaulting on leases held in Michigan, according to a report from Crain’s Detroit Business, as it tries “to walk away from nearly $150 million in unpaid rent across the region” on its Farmer Jack stores there.

Here’s how Crain’s frames the story: A&P, it writes, “has stopped paying rent on nearly 2 million square feet of retail and industrial space locally, triggering 24 lawsuits... In 2007, A&P decided to leave the region, vacating 66 stores. Twenty were either bought or leased by Kroger Co., and several others have been leased or subleased.

“There are 27 stores remaining under long-term leases, with some running beyond 2020, according to a list of stores the company released in 2007. Leases are in the name of Borman's Inc., the Farmer Jack parent company prior to A&P.

“For three years, A&P had been paying the rent and seeking subleases until letters started arriving in June. Most landlords got the same letter, from Mark Krysinski, a partner at the Southfield ... The letter says that Borman's ‘has decided to return possession of the leased premises’ to the owner and that the company will ‘cease paying rent.’ It added: ‘Enclosed please find the keys to the front door of the locked premises.’ ... That letter was cause for nearly all of its recipients to file lawsuits, alleging breach of contract, among other charges.

Published on: October 5, 2010

Brand Keys, the brand and customer loyalty consultancy, is out with its annual survey of top 50 branded loyalty leaders, and notes that retailers make up 16 percent of the list - with Walmart coming in at number three, exceeded only by the Apple iPhone and Samsung cell phones (#1 and #2 respectively for the second consecutive year).

Amazon.com came in at number seven, with Target at number 26, Sam’s Club at number 29, and BJ’s at number 42.

Published on: October 5, 2010

USA Today reports that Frito-Lay is planning to “quietly” stop using a biodegradable Sun Chips bag that it launched to “great fanfare” 18 months ago, but that was widely criticized because it was so noisy.

According to the story, “The company is returning them to their former bags that can't be recycled — but won't wake the neighbors — while it works frantically to come up with a new, quieter eco-friendly bag.”

"Clearly, we'd received consumer feedback that it was noisy," Aurora Gonzalez, a Frito-Lay spokeswoman, tells USA Today. "We recognized from the beginning that the bag felt, looked and sounded different."

At least equally important was the fact that the new packaging seemed to be contributing to a sales decline of about 11 percent over the past year.

Published on: October 5, 2010

In a message posted on its website, Aldi has laid out the details of a series of card hacking case that may have put the financial information of a number of its customers at risk. Here is the text of the message:

“Aldi Inc. recently learned that, from approximately June 1, 2010 to August 31, 2010, tampered payment card terminals were illegally placed in some Aldi stores, enabling unauthorized individuals to fraudulently obtain payment card information from a limited number of our customers.  The tampered terminals were capable of capturing information such as name, card account number and PIN.  We believe some terminals in a limited number of stores in the following areas may have been impacted:

• Connecticut (limited to greater Hartford area)
• Georgia (limited to greater Atlanta area)
• Illinois (limited to greater Chicago area)
• Indiana (limited to greater Indianapolis area)
• Maryland
• New Jersey
• New York (limited to greater Rochester area and Lower Hudson Valley)
• North Carolina (limited to greater Charlotte and Raleigh areas)
• Pennsylvania (limited to greater Pittsburgh and Philadelphia areas)
• South Carolina (limited to greater Charlotte area)
• Virginia (limited to greater Washington, D.C. area)

“The crime was immediately reported to federal law enforcement authorities, we began an investigation, and we conducted a thorough review of all stores nationwide and removed terminals we believe may have been affected.  In addition, we ensured that the relevant payment card brands were notified.  We also implemented additional security measures to prevent this type of crime from reoccurring.”

There have been some reports that at least 200 people were affected by the tampering in the Chicago area alone.

Published on: October 5, 2010

Nice piece in the Wall Street Journal about the “new normal” that is facing many US families, even though the government has officially declared an end to the recession.

“At midnight on the first of the month, a scene unfolds at many Wal-Mart Stores Inc. sites that underscores the deep financial strains that many low-income American consumers still face.

“Parking lots come to life after 11 p.m. as customers start to stream into the stores, cramming their shopping carts full of milk, infant formula and other necessities.

“Then at midnight, when the government replenishes their electronic-benefit accounts with their monthly allotments of food stamps, nutritional grants for mothers with babies or other aid for needy families, they head for the registers.”

The Journal notes that “the midnight scenes, which also play out at Kroger Co., the nation's largest supermarket chain, and other 24-hour stores, indicate that many Americans are still living from pay period to pay period, unemployed or underemployed two years after the recession took hold.”

And, the story goes on, “Wal-Mart executives have cited the midnight rush for the past year as evidence that stressed consumers are stretching the limits of the ‘paycheck cycle.’ The company hasn't disclosed exact figures, but it says purchases made with electronic-benefits cards have surged in the past two years. Participation in the federal food-stamp program swelled from 26 million Americans in 2007 to more than 33 million last year, and it continues to surge. As of June, the latest figures available, more than 41.2 million people were receiving monthly assistance, which averaged $133.36 a person.”

Published on: October 5, 2010

The Network of Executive Women (NEW) yesterday officially announced something that was accomplished at the organization’s Leadership Summit last week - that Michelle Gloeckler, senior vice president of merchandise execution for Walmart, has been elected as the new president of NEW.

Published on: October 5, 2010

Advertising Age reports on a new in-store television network called 3GTV, which is scheduled to be tested in nine Bloom stores in the Washington, DC, area later this month. According to the story, the founders believe that their approach will avoid the “taint” of traditional in-store TV approaches that have kept them from broad success.

Even Walmart, it seems, has been unable to overcome the resistance that many people have to TV sets dotting the retailing experience. According to the story, “The biggest and most recent bold plan came two years ago, when behemoth Walmart joined its longtime in-store TV partner PRN, analytics firm DS-IQ and media shop Starcom Mediavest Group to launch the Walmart Smart Network.
The new network addressed prior shortcomings with Walmart TV by building screens directly into end-cap displays, customizing messages by store and section, measuring response and refining messages based on sales.
Walmart expected to deploy the upgraded network in all its stores by early this year. That didn't happen, and it's not yet clear when it will.”

The Bloom approach is not yet being revealed by the 3GTV founders, but they promise that it will be something different.

Published on: October 5, 2010

• Kroger announced that associates of its Ralphs and Food 4 Less/Foods chains have ratified contract agreements with the International Brotherhood of Teamsters Locals 63, 166, 495, 572, 630, 848 and 952. The new agreements cover 2,700 Ralphs and Food 4 Less/Foods Co. employees working at four distribution centers, two manufacturing facilities and office operations in Southern California.

• Bloomberg reports that “Sara Lee Corp. held takeover talks with private-equity firm Apollo Global Management LLC in recent months that failed to result in a deal, according to people with knowledge of the situation.

“Sara Lee undertook a strategic review in August and chose not to explore a sale of the company, said another person, who declined to be identified because the discussions were private. Apollo’s approach follows interest in Sara Lee from KKR & Co. near the beginning of this year, the people said.”

Published on: October 5, 2010

• Supervalu announced that Tim Lowe, the senior vice president of its Shoppers Food & Pharmacy chain, has been promoted to the chain’s presidency.

Published on: October 5, 2010

WHAM-TV News in Syracuse, NY, reports that actor Alec Baldwin recently was spotted doing a bit of filming inside a Wegmans store there.

According to the story, “You may remember during a May appearance on the ‘Late Show with David Letterman,’ Alec Baldwin indirectly plugged Wegmans. He said his mother refused his offer to move to California because she wouldn't leave Wegmans.”

Baldwin’s mom reportedly was with her son at the Syracuse store Saturday.

A Wegmans spokesperson told the station that “the film is actually a surprise for their employees.”

Published on: October 5, 2010

Yesterday in my piece about GM salmon, I noted that the technologists say that the fish will be engineered so that they cannot breed with traditional fish.

And I wrote:

That part about engineering the salmon so they can’t reproduce ... haven’t we all seen that movie before?

Oh, yeah...”Jurassic Park.” What was the John Hammond line? “Nature will always find a way.”

Well, I goofed.

I got a number of emails from folks yesterday pointing out that it was not Hammond who says the line, but Ian Malcolm, the Jeff Goldblum character who talks about chaos theory.

Sorry about that. But i love the idea that so many of you caught me on this. Yet another reason why I love the MNB community...

Published on: October 5, 2010

I wrote yesterday:

I see no point in scientific growth if we are not going to use the tools we discover, and it seems perfectly reasonable to genetically engineer crops and animals if it serves the purpose of creating more food and addressing global issues like hunger.

MNB user Elizabeth Archerd responded:

Well said. And that is the argument made by the proponents of the technology. Except that...No commercially available GMO seed in use does that. Not one of the genetically engineered traits increases yield or nutrition - all the things the promoters take about.

What do they do? They resist pesticides, allowing farmers to spray more chemicals on the plants (and recently the USDA scientists are learning of the damage done to both plant roots and the soil  around them by this "safe" chemical - RoundUp).

Or they cause the plant itself to make a pesticide. The particular pesticide the plants produce is the natural pesticide of last resort for organic farmers and overuse is developing resistant insects. That means an important weapon in the organic arsenal is being destroyed by our friends in the agro-chemical industry. Nice touch, that.

Fish in the sea are not declining due to a lack of genetically engineered species. They are being over-fished and facing environmental problems from human activity.

Let's think about unforeseen consequences. The "golden rice" that was supposed to cure third world blindness by adding vitamin A to the diets of the poor had 19 patents on the genetics. How were the poor supposed to afford that? But why were those people so nutrient deficient that they didn't get vitamin A? Largely thanks to the Green Revolution - the first application of genetic engineering of a different sort, in which seeds were hybridized that required large inputs of chemicals for the plants to thrive. That catapulted some farmers into wealth while many others descended into severe poverty. They go blind because they only eat rice, as they can no longer afford vegetables. They don't need high tech rice, they need carrots.

This stuff is far more complicated than "if we develop science we should use the tools." When you mess with the fundamental building blocks of biology, with a mindset that is about single outcomes and that ignores the systemic impacts, you put us all at risk.

Our culture inspires a "can do" attitude which is great when dealing with practical problems in the known world. But we have a cavalier attitude about complex systems that we barely know anything about. Science cannot study what it does not know is there, what it has not understood yet. To play around with genetics in the environment is a crime. Scientists are limited human beings, and they work for companies with agendas and strategies that are run by other limited human beings. We are in early days with this science and to use it for commercial purposes is unwise at best. We don't know yet how well the mess this may unleash can be cleaned up.

Another MNB user observed:

You take a leap that is inconsistent …science and the tools they provide are sometimes good and sometimes bad…please consider the facts before stating GM is good if it cures hunger. You must not connect the two in the same statement they are separate arguments.

We should all fight hunger. But not necessarily with a scientific tool that may have the capability to destroy the earth as we know it. Let’s proceed with caution before we give the green light to a tool we know very little about.




On the subject of a law being considered by the US Congress that would limit the ability of wineries to ship freely across state borders - which I judged as being far better for wholesalers than for retailers and consumers, and thus utter nonsense - one MNB user wrote:

Follow the money.  This is a prime example of why the common folks loathe Congress.  In Ohio wholesaler and retailer money has perpetuated a minimum markup system at both the wholesale and retail level that essentially doubles the price of wine.  If a wholesaler pays the winery $10 the retail ends up being a minimum of $20.   And of course there is no way the winery could sell direct to the retailer.  It has to go through a wholesaler.  I hear there are some Ohio people who buy their wine in neighboring states where it is cheaper but I don't know if that is true (wink, wink). 

MNB user Gary Stephenson wrote:

I couldn't agree more with you! The push for a change is intended to benefit various state/national wholesalers, etc. However, I will point out that there's a number of states where you currently can't ship wine directly from out of state -- my own state for example!

That would be Georgia.

What can I say? Some states are not as progressive as I would hope.

And MNB user Allison Meyer wrote:

I completely agree with you on your point of view of this bill. Like most bills that are anti-consumer, the company or companies backing the bill understand that if they are honest in their intent, their bill will have no chance.  So they shroud it in a "we're saving the children and protecting these "small" wholesalers message."

Not only are shipping companies vigilant about ensuring that wine is not put in the hands of minors, but how many 18 year olds would know to go to the website of a producer in Oregon who makes a niche pinot noir that is not distributed in their state?!?  I mean, that's who we're really talking about.  That's who those ordering wine online are ordering from.  The wholesalers disgust me.

Me, too.




On another subject, one near and dear to my heart, one MNB user wrote:

I understand that you are a long-suffering Mets fan, but your Phillies bashing is getting a little tired.  You have a lot of followers in Phillie-ville.  We would never, ever resort to bashing the Muts …I mean Mets.  There’s such a thing a kicking someone when they’re down!  Maybe they’re living by that old saying “Been down so long it looks like up to me”!

Wait a minute. Here is what I wrote yesterday:

I still think it will be the Twins vs. the Phillies in the World Series, though I’ll probably root for the Giants to go the Series. (I can’t root for the Phillies or the Braves...as a Mets fan, I just cannot bring myself to do it. I respect them, and I’m happy for Bobby Cox. But I can’t root for them.

If that strikes you as “Phillies bashing,” I can’t help you. But I think you may be a little thin skinned on this subject...




Finally, some great notes from folks about my obit for Stephen J. Cannell, the co-creator of “The Rockford Files.”

MNB user Steven Ritchey wrote:

This was simply my favorite detective show of all time.  I loved Mannix, I thoroughly enjoyed Harry-O, but Rockford was cool and Jim Rockford was the perfect character for James Garner.  I’ve always enjoyed James Garner, and while I know that if we live long enough age does eventually catch up to us, I still wish Garner was still working.

MNB user David Burke wrote:

Amen on Stephen Cannell and “The Rockford Files”…

Published on: October 5, 2010

In Monday Night Football action, the New England Patriots defeated the Miami Dolphins 41-14.

And, in Major League Baseball, the New York Mets finally held its leadership accountable, firing General Manager Omar Minaya and the field manager, Jerry Manuel, after yet another disappointing season.