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    Published on: October 12, 2010

    by Michael Sansolo

    According to a famous story, Albert Einstein explained the Theory of Relativity in the following way: If you put your hand on a hot stove for a second, it feels like an hour. If you talk to a beautiful woman (or man, your choice) for an hour, it feels like a second.

    Last week I put Einstein to the test. In the midst of a lengthy drive home my car needed gas and I needed something light to consume. The gas purchase went fine, but then Einstein found me. I went into McDonald’s to get one of their new fruit smoothies. I’ve had one before and found it passable so I figured it was a fast, cheap and moderately healthy snack.

    Only this McDonald’s was having a tough night. The man after me ordered a Big Mac, something McDonald’s makes millions of times a day, and it took five minutes to fill that order. He was lucky. He came and went in the time I waited for my smoothie.

    Now, I understand McDonald’s and I know why I eat there sometimes. The food is inexpensive, consistent and fast. But on this night in Hagerstown, Maryland, I finally understood my real value equation. At McDonald’s, time trumps everything. Sure, I was ticked at the lackadaisical attitude of the staff and the lack of an apology. But really only one fact stood out:

    It took 11 minutes from the time I placed my order until the time I held the wild berry smoothie in my hands. And that was way too long.

    As I drove back on the highway, I noticed something else: the smoothie didn’t taste very good. I thought about that as I drove and realized it probably tasted exactly the same as my one previous McDonald’s smoothie, but after an 11-minute wait, it was simply unsatisfactory and almost undrinkable.

    Let’s be honest here: I wait more than 11 minutes for most every meal I eat. I’ve waited more than 11 minutes for a glass of water in a fancy restaurant. I’ve waiting longer than 11 minutes at vastly superior fast food places like In-N-Out Burger or Five Guys. This summer I waited in the sun for 30 minutes to get an incredibly overpriced cupcake at Washington’s famous Georgetown Cupcake store. I wait far more than 11 minutes for the wonderful cookies my wife whips up in the kitchen. Eleven minutes is nothing, but in all those other cases I waited gladly because I appreciate the product. In McDonald’s, where my goal was a quick bite and a return to the road, 11 minutes were an eternity.

    Einstein knew what he was talking about. But I think it goes further.

    The Theory of Relativity clearly has a parallel in understanding consumer value. The same shopper who delights in the limited choice of products at Trader Joe’s or Costco, complains if a specific SKU is suddenly missing from their local supermarket. The same shopper who gripes when milk prices rise by five cents, willingly pays higher amounts for certain clothing items, grooming or even a movie ticket. It doesn’t make any sense, but it’s just the way it is. We assign different values, needs and wants to different products, services and experiences.

    It makes me think back on the report, “The World According to Shoppers,” done a few years back by the Coca-Cola Retailing Research Council (Full disclosure: I am the research director of the council and worked on that report). The report challenges the reader to think about how his or her stores, products or services compare to what the consumer wants and what the competition offers. It requires a cold, hard look in the mirror to recognize strengths and weaknesses and to determine if either are properly emphasized and fulfilled.

    It’s a tool for discussion that is probably more valuable in today’s economic climate then it was in the early 2000s when it was produced. (You can download a copy by clicking here. Look under the tab for North America.) As economic times have changed, values have shifted, which means a successful formula in 2008 could be woefully wrong today.

    Success might very well lie in understanding what is expected of us and making certain that we deliver on the promise each and every time. It may seem awfully complex, but when you think about it within the context of an 11-minute wait at McDonald’s, you realize something else: it doesn’t take an Einstein to figure this out.

    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 .
    KC's View:

    Published on: October 12, 2010

    Bloomberg Business Week reports that Walmart, in its never-ending pursuit of lower prices and greater efficiencies, is looking to work with some of its suppliers in the purchase of certain raw materials, believing that combined buying power will add up to reduced costs.

    According to the story, “Products already being purchased with suppliers include sugar, which goes into the company's store-brand soda and five-pound bags, and paper, used in Wal-Mart's back-office printers.”

    "Around the world, we found we were buying the same raw materials" that Wal-Mart suppliers buy,” Hernan Muntaner, Walmart’s vice-president for international purchase leverage, tells Bloomberg . "When you put the volume together of what we bought and what [suppliers] bought, and buy from just one supplier, you can reduce the cost."

    To this point, however, “only makers of private label goods sold under Wal-Mart's house brands have joined in its so-called collaborative sourcing program. Manufacturers of branded products have taken a pass because they're loath to share pricing data and product formulas, say executives at three companies approached by Wal-Mart.”

    Among those companies: PepsiCo. Bloomberg Business Week reports that Walmart has floated the notion that they could partner to buy potatoes that would be used in their respective chips, but that Pepsi is resisting.

    And, the story says, “This is just the company's latest attempt at slowing expense growth. Wal-Mart is already consolidating its roster of suppliers, eliminating distribution middlemen in nations such as Japan, and taking over the U.S. trucking operations from some of its suppliers in a bid to haul goods more cheaply. International chief Doug McMillon says the company is saving hundreds of millions of dollars a year from such changes—and wants savings of over a billion dollars eventually.”
    KC's View:
    I’m shocked. Shocked. I cannot believe that manufacturers would be concerned that, given access to certain recipes and formulas, Walmart might be tempted to replicate them as closely as possible so that they could compete with these manufacturers.

    Where has trust gone?

    Of course, it seems entirely possible that Walmart could at some point tell its suppliers that they will get preferred status if they combine their buying functions, and that if they do not, selling product into Walmart will be a little more complicated. And expensive.

    If we know one thing about Walmart, it is that the Bentonville Behemoth likes to start with a carrot. But there’s always a stick available, just in case...

    Published on: October 12, 2010

    Call it the amazing, disappearing logo.

    Last week, Gap unveiled a new logo that was meant to reflect what the company said was an “evolving brand identity.” Described as putting “the retailer's name in a bold Helvetica font with a blue gradiated box perched atop the P,” the logo instantly received almost unanimous negative reaction in social media and on a wide variety of websites...not to mention from marketing and design experts who questioned why Gap was abandoning its iconic logo.

    Yesterday, the company said that it was ditching the new logo and going back to the old version, and would make the official announcement via Facebook.

    Here is the statement released by Marka Hansen, president of Gap Brand, North America:

    "Since we rolled out an updated version of our logo last week on our Website, we've seen an outpouring of comments from customers and the online community in support of the iconic blue box logo.

    "Last week, we moved quickly to address the feedback and began exploring how we could tap into all of the passion. Ultimately, we've learned just how much energy there is around our brand. All roads were leading us back to the blue box, so we've made the decision not to use the new logo on gap.com any further.

    "At Gap brand, our customers have always come first. We've been listening to and watching all of the comments this past week. We heard them say over and over again they are passionate about our blue box logo, and they want it back. So we've made the decision to do just that – we will bring it back across all channels.”

    It is an interesting dilemma for marketers. You think about what happened with New Coke, or the Tropicana redesign, or Gap’s logo, and you start to question whether to even consider such changes if they could disenfranchise a public that feels passionately about your brand.

    On the other hand, these missteps actually revealed public passion for specific brands that might otherwise have been taken for granted.

    The big lesson is that we all have to make brand decisions with our eyes wide open...sensitive to what consumers think and feel, but not afraid of trying to advance the brand wherever and whenever we can.

    No pain, no gain, is the old maxim. Sometimes you have to move forward...but it makes sense to leave a trail of breadcrumbs in case a tactical retreat is required.

    And that’s my Tuesday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: October 12, 2010

    Bloomberg reports on a new study by Connecticut-based Consumer Edge Research suggesting that “the amount of consumers who said they plan to do more holiday shopping at Wal-Mart exceeded the share of those who expected to do less by 22 percentage points.”

    In addition, the story says, “Consumers are curbing spending as the unemployment rate hovers near a 26-year high, prompting stores to boost promotions to draw shoppers. Other retailers that may profit from shoppers’ caution include Amazon.com Inc., EBay Inc., and Target Corp. More shoppers plan to avoid stores owned by Costco Wholesale Corp., Toys ’R’ Us Inc., and department stores like Macy’s Inc.”


    The Consumer Edge survey also found that 27 percent of shoppers plan to spend less over all this year, compared with 13 percent who said they will spend more.

    “While consumers are indicating they will be spending about as much on the holidays this year as they did last year, they are also indicating they will be increasing their holiday shopping at the discount retailers, likely to seek out the best deals possible,” analyst Bill Pecoriello said in the Consumer Edge report.
    KC's View:
    I’m a little surprised that Costco is not identified as being a discount retailer, since that is one of its core values. That doesn’t seem to compute. But the rest of it seems pretty on target and in line with most of the projections we’re all seeing ... more people will spend a little more money this year, but they’ll spend it a little more carefully and intelligently.

    Published on: October 12, 2010

    • The Wall Street Journal reports that Walmart will begin selling the Apple iPad this Friday in hundreds of its stores, following the lead of Best Buy and Target, which already are selling the popular tablet computer.

    The story says that Walmart will charge Apple’s suggested retail price for the iPad, and will not offer discounts. The retailer also said that it will ramp up the number of stores carrying the iPad to 2,300 by the height of the end-of-year holiday season.
    KC's View:

    Published on: October 12, 2010

    The Wall Street Journal reports that there is some dissent within New York political ranks about the propriety of banning the use of food stamps for the purchase of sugared soft drinks.

    According to the story, “Sen. Kirsten Gillibrand, a longtime advocate for policies that encourage better eating habits, is not jumping on board the effort by Mayor Michael Bloomberg and Gov. David Paterson ... Her reluctance to embrace the effort is noteworthy because she has championed other nutrition and diet proposals from the mayor, including mandating that major restaurants post calorie counts and requiring that school lunches be healthier.

    “Also, she sits on the Agriculture Committee, which has jurisdiction over the agency that will decide whether to grant the sugary drinks request.”

    Gillibrand, who is running for re-election, tells the Journal, "I think giving parents and families the tools they need to make the right choices is a better approach."
    KC's View:

    Published on: October 12, 2010

    Interesting piece in Advertising Age about an under-targeted demographic group - single people.

    “They are a growing -- and graying -- force,” Ad Age writes. “Never-married single people ages 25 to 34 now outnumber the married crowd by 46% to 45%, a stark reversal from just a decade ago, when couples held a 20-point edge in the age group, according to an analysis of new Census data by the Population Reference Bureau. In essence, selling to singles no longer means just targeting teens and those in their early 20s.”

    The story suggests that a few marketers are focusing on this group, but that largely the demographic group is not getting the attention it deserves: “ Freed from the restraints of family life, singles have a reputation for splurging ... In 2009, singles of all ages spent a higher share of income on alcoholic beverages, clothing, shoes and tobacco products compared with other households, but less on housekeeping supplies and insurance, according to new data from the Bureau of Labor Statistics.”

    And, the story goes on, “In the restaurant industry, communal tables are hot -- making it easier for singles to mingle -- and more eateries are offering breakfast and staying open all afternoon as a way to cater to singles on the go, said Clark Wolf, a New York-based restaurant and hospitality consultant. Also, singles are behind the surge in trendy food-trucks that ‘allow for a lot of standing around in line, which is where people like to meet and talk,’ he said.”

    But the one thing that singles may not be looking for, according to the story, is being pushed into becoming part of a couple. That simply may not be the goal.
    KC's View:
    Single? I don’t even remember what being single was like...but it sounds like a pretty cool group.

    Published on: October 12, 2010

    The Philadelphia Business Journal reports that, in addition to the previously noted closing of a Genuardi’s store in the area, a Pathmark and a SuperFresh - both owned by A&P - are slated to shut down this week. The moves are a reflection not just of a tough economy, but of increased competition that has made Philadelphia one of the most over-stored markets in the country.
    KC's View:
    Wasn’t it WC Fields who said, “Last week I went to Philadelphia, but it was closed.”

    Not so much anymore. Philadelphia is definitely open for business...but you’d better be really good if you want to survive.

    Published on: October 12, 2010

    • Dollar Tree announced yesterday that it has signed an agreement to acquire Canada’s Dollar Giant Store chain, its first venture out side the US. Terms of the deal were not disclosed.

    • Bankrupt video rental chain Blockbuster reportedly is looking for a new CEO to replace Jim Keyes, according to a story in the Wall Street Journal, though Keyes could be retained if it is determined that he remains the best person for the job.

    “The move comes amid some creditors' dissatisfaction with Mr. Keyes and a desire to identify candidates who could steer the company into digital businesses, people familiar with the matter said,” the Journal writes.
    KC's View:

    Published on: October 12, 2010

    On the subject of whether certain product categories - such as soft drinks - should not be purchased with food stamps, we’ve gotten a lot of email.

    One MNB user wrote:

    Amen, amen, amen…I am in the Retail Food business (43 years and counting) and I have always been appalled by what the Food Stamp system will allow recipients to purchase.  When I worked in the stores as a cashier, I saw many people trading their Stamps for cash in order to buy liquor, cigarettes, etc.  Many times, the Stamps were used to purchase expensive seafood items (lump crabmeat, shrimp, etc.)  Boxed processed food was also a big seller.  Candy and Soda ranked high on the list of must haves.  I have often said the system needs to be revamped. Ban the purchase of soda and candy with Food Stamps throughout the country.  I would like to see the abuse stopped.  Personally, I feel that necessities such as soap should be allowed to be purchased with stamps.

    Many years ago I had a customer who tried to buy cat food with Food Stamps.  I explained that they were ineligible items.  He did his best to convince me that “Us poor folks have to eat cat food”.  Really?  I had just seen this gentleman get out of his Mercedes in the parking lot. He was none too pleased when I called his bluff and offered him a can opener to use on the cat food.  I told him I would allow the purchase of the cat food if he ate a can of it in front of me.  After calling me a few choice names, he dropped the issue of purchasing cat food with his Stamps.  Back in the 70’s, I saw a man purchase $50 worth of seafood in a seafood market with Food Stamps.  That should not be allowed.  Basics like fruit, vegetables, dairy, meat, canned goods, frozen vegetables should all be allowed.   Fluff like candy and soda should not be allowed.


    I’m not sure I object to people buying seafood - which can be healthy - with food stamps. But other than that, I get your point.

    MNB user Connie Montgomery wrote:

    You really are opening a can of worms on the debate of what food stamps should and should not allow product type purchase. (Going to be fun reading!)

    I live in San Antonio Texas, where there is a very large amount of people using food stamps.  Many of those people, in my opinion, can and should be able to work and earn a living.  After all, it is pretty cheap to live here in San Antonio.  But many have managed to get authorized food stamps without a real need.  (I know, it is my opinion, we all have them.)

    It is frustrating to be in a grocery line behind someone using food stamps.  I have seen cookies, chips, candy, and sodas to name a few, and others that I would consider "luxury" items being purchased with those food stamps. (I thought they used to not allow sodas, anyway.)   I also see them buying lobster, shrimp, and expensive meat cut items that I even bypass due to the recession.  They are purchasing things with our government dollars that those of us who are considered "middle class" are not buying or can't afford.  Food stamps should be allowed for "generic" only and not branded; chicken, catfish nuggets and hamburger meat, not steaks and lobster.  The government should control the food stamp purchases and limit them to economical purchases.

    That's again, my opinion, which is like something everyone else also has.
     

    MNB user Cal Sihilling wrote:

    Slippery slope here.  Why not put white bread on the list as well, twinkies, any high calorie foodstuff for that matter.  Thank God food stamps don't buy wine.  Put the effort into helping people find employment.  Nanny state.

    I’m not sure that it is the same as a nanny state. To me, a legitimate argument can be made that we should not live in a nanny state that dictates to people what they can and cannot eat. Which is different from telling people can and cannot eat while spending my money.

    MNb user Ken Wagar wrote:

    Is it just me or is it a bit strange to see a report in MNB about an attempt in NYC to ban sugar sweetened soft drinks from food stamp recipients because of health concerns and in the same edition, the same day see a report that PepsiCo will be giving away 10 million cans of their new sugar sweetened soft drink at Wal-Marts around the country this week? I realize they are two separate news reports but it is interesting that they appear on the same day. And if we ignore geography aren’t we talking about the same customer base here?

    Excellent point.

    MNB user Steve Sullivan wrote:

    UH.  They’re called FOOD stamps, aren’t they?

    Sorry to say, there is a need for them. My wife volunteered in a local elementary school where SEVENTY PER CENT of the students are below the poverty level.  This is in the second biggest banking city in the United States, where affluence abounds.  It can be a very eye-opening experience to meet these kids.  Some are homeless, some have their only meal of the day at school.

    Children (and adults, for that matter), need nutritious food.  That is the reason FOR the program.  There is no need for soda and the other beverages mentioned.  The parents have to say NO to the junk and spend the stamps for what they are intended.  This accomplishes 2 things, breaking the sugar addiction and getting more FOOD for the allotted dollars.





    On another subject, we got the following email:

    I was shocked to read that someone who is 42 didn’t know about Jim Jones.

    I recognize our history classes can’t teach us about every historic event, and certainly the person in their 20s had many more “events” to learn about in school (so much more has happened in recordable history).

    But 42, really? I am 39 and learned about the Jim Jones story in two high school classes, (Psychology and American History) and two university classes (World Religion and Comparative Politics). Please go back and ask these people if they have heard of Bay of Pigs? Fat Man and Little Boy? Do they know who Jack Ruby is? Are they familiar with Hall & Oates? Frogger?

    Thanks, I just subscribed and enjoyed reading your piece greatly.


    And thank you...for contributing.



    And, regarding Walmart’s decision to move from a profit sharing program to a 401(k) matching program, MNB user Chris Connolly wrote:

    As a former employee of a large privately-owned chain grocer who once had a profit-sharing plan and now as a fiduciary for both large and small retirement plans, I see both sides of this issue.

    From an employee perspective, profit sharing plans can be a lucrative benefit over the long term as employees collect contributions from the employer regardless of whether the employee makes contributions to the retirement plan.    Because the eligibility for contributions can be based primarily on hours of service, I saw young employees who had sizable account balances in a profit sharing plan at an early age because (in some cases) they were receiving contributions while still attending school and it became a motivational tool to get those young people to continue working for us after their education was completed. Often older employees could find themselves fairly well prepared for retirement after years in a profit sharing plan because the combination of years of employer contributions and prudent investing by the fiduciaries could evolve into a nice nest egg for a potential retiree.   If handled properly, a profit sharing plan can be a great tool for employee retention.

    Today, more employers want employees to have "skin in the game" and they establish retirement plans such as 401(k) plans that require an employee contribution to receive an employer match. Given the "spend it now" beliefs and attitudes of today's employees, employers will usually find lower participation in a retirement plan requiring contributions to participate and over the long term the average account balance per employee is much lower.

    With retailing companies, the lower balances are exacerbated even more by the fact that their turnover rate tends to be higher than average.   In the end, the cost of the retirement  plan to the company is lower because there are fewer dollars contributed by the company in the form of a match.   For a publicly traded company  such as Walmart, this could easily be construed as being a move that would appease the shareholders but would be a detriment to the employees.





    And, weighing in on another subject, MNB user Thierno I. Barry wrote:

    I read the opinion section of your MNB yesterday about Campbell’s Halal certification yesterday  and thought that that most failed to realize that Campbell didn’t do this simply to take a stand on Islam in our very polarized debate around Grand Zero but simply because it owed it to its shareholders. This might surprise many but Campbell has significantly more Muslim customers abroad than it does it the USA. And since most of its products are made in the USA and exported  to places in the Middle East and South East Asia, simply adding the Halal certification helps the company maintain its market share in those places.

    Precisely. The problem is that some people conflate this with political views that they choose to demonize.

    One MNB user wrote in an email posted yesterday that the people doing the demonizing are just a fraction of the overall population, and I responded:

    I agree that it is a fraction. But there’s pretty good evidence out there that the fractions are multiplying.

    Which led MNB user Tim McGuire to write:

    I hope that you are right that the "minute fractions of the world at large" that hold such narrow-minded views are indeed multiplying, because the rules of mathematics show that when you multiply two fractions, you end up with an even smaller fraction. 🙂

    Of course. This amply demonstrates my math abilities.

    If my father, who taught math for decades, knew about this, he’d shed a tear.
    KC's View:

    Published on: October 12, 2010

    In Monday Night Football action, the New York Jets defeated the Minnesota Vikings 29-20.



    And in the National League Divisional Series, the San Francisco Giants defeated the Atlanta Braves 3-2, winning the best-of-five series 3-1 and moving on to the National League Championship Series to play the estimable Philadelphia Phillies.
    KC's View: