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    Published on: October 18, 2010

    “The Social Network,” the new film depicting (with a certain amount of artistic license) the drama surrounding the people who founded Facebook, contains a number of business lessons. When Michael Sansolo writes a sequel to The Big Picture: Essential Business Lessons from the Movies, we’ll delve into all of them...but for the moment, on this Monday morning, let’s look at one of them.

    At one point the movie depicts a meeting between Mark Zuckerberg, Eduardo Saverin (the two co-founders of Facebook) and Sean Parker, the founder of Napster, who was giving them some business advice.  Saverin was skeptical of Parker, who kept talking about how with Napster he'd changed the world and won his battles against the record companies.  Saverin says, "But you lost.  And now Napster is out of business."

    And Parker responds, "I lost?  Eduardo, can I interest you in buying a Tower Records?"  The message couldn't be clearer - sometimes the winners and losers are not just calculated in dollars and cents...sometimes they are calculated in how you change the you pursue audacious and innovative goals.

    One other amazing thing about the movie ... pretty much all the events portrayed in this movie happened within the last five years.  It tells you how new a phenomenon Facebook is, and how fast the pace of change is.

    It is a very, very good movie...and an eye-opening one.

    - Kevin Coupe
    KC's View:

    Published on: October 18, 2010

    Sometimes, when covering a story, one piece of the narrative gets so much attention that it obscures another piece...which may, in fact, be just as important.

    In this case, the Walmart story got most of the spotlight last week was the decision by the company to invest in smaller store formats. But the piece that got lost, upon further review, was the fact that Walmart confirmed its plans to test online grocery shopping in 2012, and plans to use the small stores as drop-off locations for products ordered online - which would enable those small stores to actually sell a lot more SKUs than they are able to physically carry.

    In addition, Walmart’s US CEO, Bill Simon, said that he anticipated that Walmart’s efforts would be “enabled by learnings” gleaned from Asda’s online efforts in the UK.
    KC's View:
    Thank goodness for the Financial Times, which covered the e-commerce piece in its blogs.

    The thing is, if Walmart gets the small stores right, and the online component right, it becomes an even more formidable competitor than in the past with a game-changing combination. Companies and executives that do not recognize this ... and do not make plans for how to combat it ... proceed at their own risk. Denial is not an option.

    Of course, it is not a forgone conclusion that Walmart will get it right. It has made missteps before, and other companies - like Tesco - have been less than successful in gauging how to make small formats work.

    But you can’t proceed on a wing and a prayer, hoping that Walmart won’t get it right. You have to prepare for what you think can happen, not what you hope will happen.

    Published on: October 18, 2010

    The Seattle Times reports that one industry that seems to have prospered during these recessionary times is the cooking school business, which “let cost-conscious consumers combine the thrift of domesticity with the thrill of going out, often with a glass of wine tossed in ... Seattle is getting two new classrooms this fall, and more chefs are offering classes as a way to lure people out.”

    While most of the schools cited by the Times are either associated with restaurants or are independent, one is not:

    “One of Seattle's oldest cooking schools, run by PCC Natural Markets, has grown rapidly during the recession. After a lull last winter, 27-year-old PCC Cooks is selling out classes months in advance.

    “Attendance is up about 14 percent this year, and the program has more than doubled its number of classes to 1,000 since late 2004. Its class prices are low, many of them $35 to 40 for members and $5 more for nonmembers. Some prices will increase by $5 in January, but PCC will continue to underwrite part of the cost as part of its nonprofit mission to improve nutrition education, said PCC Cooks Manager Marilyn McCormick.”
    KC's View:
    At some level, it is a pretty good guess that one of the reasons that PCC’s schools resonate with shoppers is that the stores are part of a co-op that define themselves in terms of a mission, not just in terms of sales per square foot. By connecting nutrition with cooking and then with the products being sold in-store, PCC is able to make connections with its shoppers. And that is of critical importance when you are trying to create for yourself a compelling differential advantage.

    Published on: October 18, 2010

    The Chicago Tribune has a piece that looks to define, based on recent published research, the traits common to 21st century consumers. They come up with five, saying that:

    Consumers are basically optimistic. “They still believe in opportunity and good things to come. That means they don't want to go overboard with secondhand shopping or ‘radical frugality’; they simply seek value for their money.”

    Consumers are brand conscious, drawn to brands that they perceive as offering value, “partly because they have so many choices, and it's hard to know what to trust.”

    Consumers are seeking authenticity, and have “a desire for a more ethical and sustainable approach to consumption — and life.”

    Consumers are purpose-driven, and “there is a pervasive sense that consumerism needs to be tempered by a thoughtful awareness of its negative social and personal implications.”

    Consumers are embracing maturity. “Instead of delaying adulthood, young adults are increasingly likely to embrace responsibility and a more mature lifestyle.

    According to the Tribune, “These five shifts represent some big changes from the heady days of the previous decade, where credit was easy and consumers seemed to always want bigger cars and bigger homes. Now, companies have to come up with creative answers to the question: How do you market to consumers who aren't as fond of consuming?”
    KC's View:
    Of course, not all consumers reflect these trends, and certainly not all the time. These trends certainly don’t reflect the uncertainty that a lot of people feel about the economic and political environment, which translates into real caution when it comes to spending and investing. Authentic fear ... that’s something that studies like these don’t seem to factor into their thinking.

    Published on: October 18, 2010

    The Vancouver Sun reports that Sobey’s is looking to improve its reputation in the sustainable seafood department by pushing “seafood suppliers and producers to run sustainable fisheries and farms to sell their fish at 1,300 Sobeys stores across the country under retail banners that include Thrifty Foods and IGA. Sobeys, the second-largest grocer in Canada, is the latest to release a sustainable seafood policy as food retail giants jostle to convince eco-conscious consumers of their commitment to protect vulnerable fish stocks.”

    According to the story, “The new policy comes just a few months after Sobeys placed near the bottom of Greenpeace Canada's annual supermarket ranking on seafood sustainability, with a score of 14 per cent, ahead of Co-Op (12 per cent) and Costco (seven per cent). The Overwaitea Food Group came out on top with a grade of 51 per cent, followed by Loblaw (43 per cent), Safeway (36 per cent), Wal-Mart (28 per cent) and Metro (21 per cent).”

    And, the Sun writes, “In an interview, David Smith, vice president of sustainability at Sobeys, said it's not enough to sign on to certification programs to phase-out at-risk species from fish counters, so Sobeys has teamed with Sustainable Fisheries Partnership, an international non-governmental group that works with seafood suppliers and producers to create sustainable operations.”
    KC's View:
    Give credit to Sobey’s for responding to a situation that it felt put it at a competitive disadvantage.

    Published on: October 18, 2010

    Crain’s New York Business reports that John Catsimatidis, owner of New York-based Gristedes, may be one of the two highest bidders to acquire Food Emporium, which has been put up for sale by the financially troubled Great Atlantic & Pacific Tea Co. (A&P).

    Catsimatidis, who says he cannot discuss specifics because of a non disclosure agreement, confirms, however, that he would like to add the 16 Food Emporiums in NYC to his stable of 30 Gristedes units.

    The other high bidder, according to reports, is investment bank Morgan Stanley.
    KC's View:

    Published on: October 18, 2010

    Crain’s New York Business also reports that “family-owned D'Agostino's grocery-store chain is selling its only three stores in Westchester, according to a company insider. Those stores, located in Chappaqua, Rye Brook and Cross River, have struggled against competitors like Whole Foods, Super Stop & Shop and others, said supermarket consultant Burt Flickinger.”
    KC's View:

    Published on: October 18, 2010

    The Seattle Times reports that a dispute over privacy has broken out between and the state of North Carolina in a continuing court case that can be traced back to state officials trying to collect income tax on products sold by the e-tailer to residents of the state.

    According to the story, “North Carolina tax collectors say they want to turn over the names and addresses of customers in their state and a description of all purchases so they can get the sales tax money they're owed. But the American Civil Liberties Union argues that if Amazon is forced to comply with North Carolina's data demands, Internet users would start to think twice about buying controversial books, music and movies, violating their constitutional rights to free speech.”

    The story continues, “Amazon, which is being audited in North Carolina, says it has provided massive amounts of data about sales to state residents since 2003, including the city, county and ZIP code to which an item was shipped, the product code and total transaction price, but it did not turn over names and addresses.

    “Amazon says disclosure of such data would have a chilling effect on people's willingness to buy books, music and other ‘expressive works’ that might reveal an intimate fact about them ... But North Carolina says it doesn't want to know the details of people's reading habits, just a general idea about what they bought.”

    The irony is that Amazon has no physical presence in North Carolina, which ordinarily would prevent the state from collecting a sales tax. But North Carolina officials say that just the presence of local marketing affiliates qualifies as enough reason to collect the tax. The financially strapped state estimates that it will lose $162 million in uncollected e-commerce sales taxes this year alone.
    KC's View:
    I’m with Amazon on this one. I think that state sales taxes on internet purchases are inevitable (there is a bill in Congress that would create a system for collecting them), and that in the end it won’t hurt Amazon much because the company is so superior in other ways.

    But governments have no business attempting to find out what citizens are reading or watching or listening to. None.

    Published on: October 18, 2010

    • The Business Times has an interview with Andy Bond, the Walmart point person in charge of UK and African operations, in which he says that the company made a decision to target South Africa for expansion before deciding to acquire Massmart there are use it as a platform for future growth.

    “And we particularly like the fact that there is an under-serviced customer at the moment that's emerging out of being underprivileged in the past, and we have great experience of helping those customers and at the same time making good business for ourselves,” Bond says.

    According to the story, Bond also says that he plans to recruit locals for management roles, rather than parachuting people in from outside the country, and that he is going out of his way to assure labor unions that Walmart will be a friend, not an enemy.

    "We are very, very ambitious about the growth of Massmart and that growth will inevitably fuel job creation,” Bond says. “Every market we are in we increase the job market over time. I don't think anyone should be concerned that Walmart's entrance into the market will be a situation where we will reduce labour.”
    KC's View:

    Published on: October 18, 2010

    • Target Corp. announced late last week that customers who use any Target-branded credit and debit cards will get a five percent discount off most products purchased at one of its stores; users also will get a coupon for a five percent discount every time they fill five prescriptions at a Target pharmacy.

    The new program replaces one that offered a 10 percent discount off an initial purchase using a card, and then additional 10 percent discounts depending of frequency of use.

    • The New York Times reports that bagged salad maker Fresh Express said last week that in an effort to improve its food safety record, “it is abandoning the standard industry practice of washing leafy greens with chlorine” and will stead wash them in a solution described as a “mild acid solution” that “many times more effective in killing bacteria. The new wash solution, called FreshRinse, contains organic acids commonly used in the food industry, including lactic acid, a compound found in milk.”

    According to the story, “Fresh Express said that its new cleaning mixture was 750 times as effective as chlorine in killing bacteria suspended in wash water. It is also at least nine times as effective as chlorine in killing bacteria that has become attached to the leaves of produce.” The company said that the mixture does not require approval by the US Food and Drug Administration (FDA) because it already has been approved, and that it will license the procedure for use by other companies.
    KC's View:

    Published on: October 18, 2010

    In the past, while I’ve been traveling around the country, I’ve found the time to meet with local MNB readers for a glass of wine and some casual conversation. It is always great to put faces with the names of people who shoot me emails from time to time.

    Next week will present just such an opportunity. I’ve got a quick stop in Seattle next week, and plan to be at Etta’s - where else? - on Thursday night, October 21, from 6 to 7 pm. If you’re in the neighborhood - 2020 Western Avenue, across the street from the Pike Place Market - I hope you’ll stop by.
    KC's View:

    Published on: October 18, 2010

    Barbara Billingsley, the very personification of the stay-at-home suburban mom with her portrayal of June Cleaver on the old sitcom “Leave It To Beaver,” and then portrayed a woman with the unlikely ability to translate jive in the film spoof Airplane, died over the weekend at age 94.
    KC's View:

    Published on: October 18, 2010

    Responding to Michael Sansolo’s Eye-Opener last week bemoaning the fact that United is using the time usually given over to its safety video to allow its CEO to expound about its merger with Continental, a number of folks felt much the same way.

    One MNB user wrote:

    Michael clearly hasn’t flown Continental in awhile! Jeff’s CEO speech is the same thing that Continental has been doing since the Gordon Bethune era. (In fact, it’s always been fun to observe how quickly the tape changes when CO had a CEO change. I think the CEO’s like to know their face is in front of a bunch of captive passengers..)  This new process was started the day that Jeff S took over as CEO of the new UAL.

    MNB user Richard Lowe wrote:

    I join you in your disgust of the airlines today. I feel we need to go back to when they were government controlled. The SEC and FAA should never have allowed all these mergers and acquisitions. Their are now less flights at more cost and very few direct flights.

    Making airlines offer cheaper flights would help get the economy of the world going again by increasing tourism and business travel. We need to campaign for this and the benefit of the consumer!

    MNB user Gary Loehr wrote:

    I have heard the message and it is self serving corporate rhetoric.  The only thing I want to hear from the head of United is that flights out of Newark will no longer cost 3 times what the same flight out of LaGuardia (18 miles away) costs.  That would be relevant to many of the people on the plane.

    MNB user W. Patrick McSweeney wrote:

    While flying from Charlotte to Pittsburgh earlier this week, the flight attendant on a US Airways flight droned on and on over the PA system about signing up for an airline sponsored credit card that would grant 25,000 frequent flyer miles just for signing up.  Her monologue lasted two-and-a-half minutes (I timed it because the sales pitch drowned out the song that was playing on my iPod).  The volume was so loud and piercing and her sales pitch went on for so long I was wondering if any other passenger besides me was contemplating unbuckling their seatbelt, standing up and shouting “no more!” or taking an application just to stop the presentation.

    FYI...I flew United to Las Vegas yesterday and saw the video that Michael complained about...and I have to be honest, I thought it was completely inoffensive. I’m far more annoyed by the constant pitching for credit cards by US Air flight attendants.

    But that’s me.

    We wrote last week about how Amazon now has an application for the iPhone that allows you to take a picture of any bar code and instantly find out what Amazon charges for the same item...and then order that item from the e-tailer with one click of a button.

    Which led one MNB user to write:

    I read your piece on the new Amazon comparison app for the iPhone... Sure, it was bound to happen.  And you know what else is bound to happen?  Retailers deploying existing technology to completely block this type of activity on their premises.  Of course, it is illegal for most civilians to use such devices, but it wouldn't be too much of a stretch to think that their will be some lobbying on the Hill to make it happen.  And when it does, I'll giggle... There will be yet another place where cell phones don't work and I will be able to add another large slate of places where I do not have to listen to all that yammering.

    With all due respect...that is such a traditional way for retailers to attack such issues. Rather than dealing with the reality, it is easier to figure out how to block the signal.

    In addition to being the worst kind of competitive denial, it also sets a store up for monstrously bad publicity ... because once it gets out that you’ve set up this blocking technology - and trust me, it will get out - the local media will be all over you, and the lawsuits will fly.

    All of which would be unnecessary if you’d just decided to be competitive to begin with.

    This is 21st century reality. Check out this email from an MNMB user:

    We were out shopping and my husband mentioned that he had run out of toner for our printer at the house.  We were next to an Office Depot and I told him I would run pick some up.  I got there, found the toner I needed (no thanks to any help from the staff…) and thought it was a little high.  I whipped out my iPhone and found it 40 % cheaper and no shipping and no tax and asked the store if they would match Amazon’s price – they said no and I ordered it from Amazon standing in the Office Depot store.  It was at the house in two days.

    Adding a bar code scan to the app only lets me look up an exact match easier…  I am all for doing business in my community, however, times are tough and a 40 % up charge plus taxes is a little more than I can justify.  I not saying I would have cared about the differential on price on a can of green beans…

    What I usually find when checking on Amazon is that the “list” price used in stores is significantly higher than the actual manufacturer list price.  So the discounts offered in stores are artificial.

    Some of you love him and some of you hate him. But I have to say that this email from David Livingston, commenting on my constant harping about the recessionary economy, fascinated me:

    Do you really think we are in a recession?  I really can't imagine the economy being any better.  Two years ago I would agree with you.  But now with business booming and the stock market exploding?  I compare the stock market today to just 10 years ago and it looks pretty good.  Its nearly doubled in the past 15 years.  Gotta love it!!

    There are an awful lot of people out there without jobs or prospects who might disagree with you. I’m glad things are working out for you, but I also am reminded of the great exchange in Broadcast News, when Tom Grunick (William Hurt) says to Aaron Altman (Albert Brooks), “What do you do when your life exceeds your dreams?”

    And Altman responds, “Keep it to yourself.”

    And such a nice email from MNB user George Pruett, who apparently liked my review of “Painted Ladies,” written by the great Robert B. Parker before his deal last January. I mentioned that the Parker estate is looking for writers to continue his various series of novels, and Pruett wrote:

    With your great writing skills and love of the Spenser novels, have you considered taking on an additional project of continuing the series?

    I appreciate the kind words, but I think the Parker estate will be aiming higher than little old me. And I’m not sure my skills are up to the task. That doesn’t mean I won’t try to find time to write my own novel one of these days...
    KC's View:

    Published on: October 18, 2010

    In Week Six of the National Football League...

    Miami Dolphins 23
    Green Bay Packers 20

    Baltimore Ravens 20
    New England Patriots 23

    Cleveland Browns 10
    Pittsburgh Steelers 28

    Detroit Lions 20
    NY Giants 28

    Atlanta Falcons 17
    Philadelphia Eagles 31

    New Orleans Saints 31
    Tampa Bay Buccaneers 6

    Seattle Seahawks 23
    Chicago Bears 20

    Kansas City Chiefs 31
    Houston Texans 35

    San Diego Chargers 17
    St. Louis Rams 20

    NY Jets 24
    Denver Broncos 20

    Oakland Raiders 9
    San Francisco 49ers 17

    Dallas Cowboys 21
    Minnesota Vikings 24

    Indianapolis Colts 27
    Washington Redskins 24

    And, in the Major League Baseball League Championship Series, in the American League the New York Yankees and Texas Rangers are tied at one game apiece in their best-of-seven series, as are the Philadelphia Phillies and San Francisco Giants over in the National League.
    KC's View: