retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 19, 2010

    by Michael Sansolo

    As you think about how you maintain relationships with customers, trading partners or whomever, take a moment to consider the history of Vlade Divac and Drazen Petrovic. Their story is a lesson in how quickly relationships change and it is a story you won’t soon forget.

    Last week ESPN aired a short documentary about the two athletes in a segment called “30 in 30.” It is a story about athletes and basketball, but also about pain, war, death and relationships.

    Divac and Petrovic were teammates on the Yugoslavian national basketball team in the 1980s, when the Eastern European country became a global power. Hard as it is to remember, at that time few Europeans played in the NBA and their basketball skills were barely known by casual fans.

    The anonymity didn’t last. In the 1989, Divac joined the Los Angeles Lakers and Petrovic, his best friend, joined the Portland Trail Blazers. To ease themselves through the language and cultural transition, the two talked nearly daily, especially as Petrovic struggled on his new team.

    After the season, the two returned to their national team for the world championships, which the Yugoslavs won in Argentina. During the victory celebration a fan ran on the court in brandishing the flag of Croatia, one of the republics that combined to make up Yugoslavia. Divac, an ethnic Serb saw the display as an affront to Yugoslav unity and grabbed the flag. The moment changed his life and his relationship with Petrovic.

    At the time, Yugoslavia was a powder keg. The collapse of the Soviet Union was leading to sweeping change across Eastern Europe. Yugoslavia’s own problems were caused by the death of its long time dictatorial leader who held the many republics together by force. Croatia was on the verge of declaring its independence setting off a bloody war with Serbia (later followed by horrible conflicts with Bosnia, Kosovo…and more). The map changed and obviously the Yugoslav team never again played as a unit.

    As Divac recalls in the documentary, he didn’t see the flag incident as anything major. He didn’t mean disrespect or a political statement. Others saw it differently. By the time the victorious team returned home the video had been played over and over. Divac was vilified in Croatia and hailed in Serbia.

    Life changed on the court. Petrovic and the other ethnic Croats on the Yugoslavian team never spoke to Divac again. Even back in the NBA, Petrovic would go to great lengths at games with the Lakers to avoid even crossing paths with Divac.

    The rest of the story is just as sad. The war was bloody and awful. Petrovic survived, became a star in the NBA and then died in a car accident in the 1990s. Although the horrible war between the countries ended long ago, Divac remains a hated figure in Croatia. The documentary ends with Divac visiting Croatia to finally see Petrovic’s grave. As he walks, the camera repeatedly captures groups of Croats spying Divac and throwing what can best be described as ugly looks at a man they cheered 20 years earlier.

    Sometimes the lessons from stories like this require some explanation or connection. Not this one. During the documentary, a sad looking Divac sums up the lesson simply as he recalls his doomed relationship with Petrovic. The players had a special relationship that grew over a lifetime, but ended in one second and could never be repaired. All it took was one second, but all it ever takes to destroy is a relationship is one second and some misunderstanding.

    Michael Sansolo can be reached via email at . 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 19, 2010

    And speaking of how quickly a relationship - or a reputation - can go south, let’s follow up on Michael’s column with another eye-opening example...

    Inevitably, when there is any reference on MNB about poor service in the airline industry, a number of people will write in to rhapsodize about Southwest Airlines, which for many good reasons has turned into the model of how to run a nimble, efficient and effective airline.

    Which made it all the more surprising last week when the Chicago Sun Times took note of a new report from Flightstats, an organization that tracks airline performance data, saying that “for the first time in recent memory, with a 78.5 percent September on time arrival performance, Southwest finished dead last among the largest domestic carriers.”

    The story went on: “Southwest's problems come as United and Continental are proving exceptionally adept at getting their planes to destinations on-time, which means within 15 minutes of the scheduled arrival time. The newly merged United said Tuesday that Continental and United ranked first and second respectively in the August 2010 Department of Transportation on-time report, with 87.1 percent and 85.1 percent of their respective flights arriving on time.

    “The two airlines look even better in September, according to the more nimble Flightstats, which has just released its September data. Flightstats' results shows United jumping to the No. 1 spot with an impressive 88.9 percent on-time arrival performance, while U.S. Airways finished No. 2 with 86.6 percent of flights arriving on-time, just ahead of No. 3 Continental at 85.6 percent. Delta Airlines and American Airlines also finished well ahead of Southwest.”

    Go figure.

    Now, United said that its improved performance could be traced to a companywide initiative that included paying bonuses to employees instrumental in getting planes on-time to where they were supposed to be.

    And a Southwest spokesman said the only thing he could say: "It's a disturbing trend, and I can assure you our guys are on it.”

    It is hard to know what created this problem, but one possibility is that some level of complacency set in. In any customer service business, you are only as good as you are today and tomorrow; yesterday’s positive reviews aren’t worth much to a passenger late for a meeting or connection.

    The lesson is clear. Nimble is good, but only as long as it keeps you hungry, focused and clear about strategic and tactical goals.

    And that’s our Tuesday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: October 19, 2010

    The Wall Street Journal has an interesting piece about how to get people to behave in environmentally friendly ways - which essentially comes down to creating expectations and establishing patterns.

    According to the story, “Studies dating back at least three decades clearly show the power of social norms. We tend to ascribe our actions to more high-minded motives, or to practical concerns about money. But at its core, our behavior often boils down to that old mantra: Monkey see, monkey do.

    “Researchers are now learning how to harness that instinct to nudge us to go green.

    “It's not easy. Though about two-thirds of Americans tell pollsters they are active in or sympathetic with the environmental movement, it has proved tough to get the average consumer to make even relatively simple changes, like using energy-efficient light bulbs or caulking drafty windows ... But psychologists and behavioral economists are increasingly concluding that for the masses, a simpler, cheaper approach may be in order. It can include new laws and taxes ... but it doesn't have to.

    “The magic ingredient: Peer pressure.”

    An example comes from a study of how people respond to the placards in hotel bathrooms urging guests to be more conscious of how they use energy:

    “Over a three-month period, researchers tested two different placards in a 190-room, midprice chain hotel.

    “One card was headlined ‘Help Save the Environment’ and urged visitors to ‘show your respect for nature’ by reusing towels. The second read, ‘Join Your Fellow Guests in Helping to Save the Environment’ and noted that 75% of guests participated in the towel-reuse program. The guests who were exposed to the peer pressure the fact that so many of their fellow travelers were doing it—were 25% more likely to reuse towels.

    “A follow-up study found that tweaking the wording on the placard so it was specific to the guest's room (as in: nearly 75% of guests who stayed here in Room 331 reused their towels) yielded even better compliance.”

    Of course, it doesn’t always work, and some behaviors are more easily swayed than others. But the general suggestion is that if businesses are more sensitive about how they urge certain changes, they can be effective in the long run.
    KC's View:
    Fascinating. In other words, the signs that we’ve been urging retailers to post in their parking lots saying, “don’t forget your reusable bag” may not be enough. What they also need to do is post signs that say something along the lines of, “With your help, we manage to save XX bags every year. Thanks for being part of the solution.” Or something like that.

    It is a good idea. Because while a lot of stores have been selling or giving away reusable bags for the past couple of years, I wonder how many of them are clearly communicating to their shoppers the impact that this shift in behavior has had, and why it is important.

    That’s the last piece of the puzzle...and it may be the most important, most influential part.

    Published on: October 19, 2010

    The Oregonian has a long piece examining shifting food shopping behavior that has changed under the cold light of recession.

    Among the most telling changes:

    “Many shoppers abandoned store loyalty for the place with the best deals, bipping here for a few items and bopping over there for a few more. Often it's based solely on price. Sometimes, it's to score special hard-to-find products.

    When asked before the downturn how many stores they had hit in a week, shoppers used to say two or three. Today it's more like three to five, said Shelley Balanko, vice president of ethnographic research at Hartman Group, a retail researcher based in Bellevue, Wash.

    “Local shoppers talk of hitting New Seasons for milk and eggs, items the grocer says it's sold at cost in recent years. They might move on to Costco for bulk toilet paper and paper towels and visit the Dollar Store, Grocery Outlet or Trader Joe's for certain items on their list such as cheap dish soap, discounted organics, or cheese and wine.

    “Later in the week, they might pick up $50 worth of items at Safeway to redeem the retailer's occasional $10 off coupon, and then grab rice, pasta and dried beans in the bulk bins at WinCo.”

    And, the story goes on:

    “Customers and retail experts say a few grocers hit home runs in recent years, including New Seasons and Whole Foods, with their attention to unique products and local offers, an increasingly important aspect to shoppers, especially with produce.

    “They point to WinCo's ‘Wall of Values,’ where some of the stores' best deals are piled along the wall near the entrance. It may not be pretty, but it gets the idea across. Customers say they choose stores based on how coupon-friendly they are or what loss leaders stores have on a given week.

    “The strikeouts?

    “Consumers said they're not so thrilled with, or perhaps don't believe in, the idea of everyday low prices. Across the board, Balanko said, customers reported they're not all that interested in loyalty card programs.”
    KC's View:

    Published on: October 19, 2010

    The Chicago Tribune reports that the US Food and Drug Administration (FDA) “has slapped a warning letter on Wright County Egg, the Iowa egg producer at the center of last summer's salmonella outbreak, for failure to control rodents and other sanitation violations.

    “The warning letter, dated Friday and made public Monday, followed weeks of negotiations between Wright County Egg and federal officials over how the company would correct a lengthy list of sanitation and biosecurity deficiencies identified by FDA inspectors in visits to the mammoth laying facilities.

    “Failure to correct violations noted in the warning letter could lead to seizure of eggs or closure of the Wright County facilities, according to the FDA document.”
    KC's View:
    I don’t get it.

    The people who own Wright County Egg, the DeCoster family, has a long history of questionable sanitation practices, if the stories I read about the company in the media are accurate.

    In addition, they continue to be under investigation by both the US Department of Justice and the FDA for possible criminality in this salmonella case.

    And the FDA is negotiating with them over warnings and improvements?

    Maybe I’m wrong on this, but I’d prefer to think that the feds go in there and say, “You are going to do A, B, C, and D. You are going to have it done in a week. if you don’t do it, not only are we not going to allow you to reopen, but we’re never going to allow you to be in the egg business ever again. Ever.

    “And, if you make all these improvements in a timely and effective way, and we ever catch you making a food safety mistake again, not only are we going to close you down permanently, but we are going to seek penalties that will include your top management being forced to eat your own damned eggs for the entire length of your prison sentence.”

    Published on: October 19, 2010

    Bloomberg reports that Walmart “sold $5 billion of debt in a four-part offering at some of the lowest coupons ever. The transaction included $750 million of three-year, 0.75 percent notes that yield 30 basis points more than similar- maturity Treasuries and $1.25 billion of five-year, 1.5 percent debt at a spread of 48 basis points, according to data compiled by Bloomberg.”
    KC's View:
    A confession here. I have no idea what any of this means, except that I gather that Walmart - which says it is hunting for expansion opportunities, especially in international markets - wants to have relatively cheap funding available to it.

    The interesting thing is how many companies are stressing that the capital is likely to be used for non-US acquisition efforts. But I still wonder if there could be a big buy on the horizon in the US, something that could really jumpstart Walmart’s urban small store strategy.

    Published on: October 19, 2010

    The CBC reports that “workers at nine southwestern Ontario stores in the Loblaws supermarket group have voted in favour of a new collective agreement. Roughly 1,700 unionized employees at the stores in Windsor, Essex County, Sarnia and Chatham took part in a government-supervised re-vote on Thursday and Friday. They voted 68 per cent in favour of accepting the deal.”

    The employees joined with almost 30,000 of their brethren who approved a new Loblaw contract about 10 days ago.

    KC's View:

    Published on: October 19, 2010

    Billboard reports that “when Keith Urban releases his sixth studio album ‘Get Closer’ on Nov. 16, he won't only get closer with his fans but he'll snuggle up with Target as well. The Grammy-winning country singer will release a deluxe version of the album to be sold exclusively at Target stores nationwide and”

    The deluxe version contains four “live” tracks from Urban’s recent “Love, Pain & The Whole Crazy World Tour” that are not on the regular version.

    According to the story, “Urban is the latest musician to partner with Target, but the company has collaborated with artists including Taylor Swift, Prince, the Black Eyed Peas, Christina Aguilera and Pearl Jam in similar capacities.”
    KC's View:
    Nice use of language, but it probably is misleading to suggest that Urban is “snuggling up” with anyone when he’s got Nicole Kidman at home.

    But seriously, the Target strategy is clear - have something that the others guys don’t have. It is an approach that should be employed throughout the store, in virtually every department or category, whenever possible. Not just the perimeter of the store, in fresh food sections that more easily differentiated, but even in center store sections that tend to be bland are more similar to what the competition does.

    Published on: October 19, 2010

    In the UK, Eat Out Magazine reports that Starbucks there is testing a new “ping marketing” initiative that allows customers to opt into a program that sends promotional text messages to their cellphones whenever they come within range of the cafe.

    These messages are said to be relevant ... dependent on their age, gender, interests and for the first time, their location.”
    KC's View:
    My first reaction to this is that it would be an incredibly annoying service that, if I opted into it, I’d probably opt out fairly quickly. (Especially if it happened to me in a city where Starbucks is ubiquitous, on almost every corner.

    But then I thought about it some more, and it occurs to me that it would a) depend on how really relevant the message is, and b) being set up so that I wouldn’t get more than one ping, say, every four hours. Then it has the opportunity to be meaningful and not be annoying. (Maybe it could even let me set up the frequency factor...because someone would say four hours, some would say six, some would say 24. But whatever I choose, I’ve given permission...and that’s what really matters as the store tries to cement the relationship with the shopper.)

    Published on: October 19, 2010

    • The Boston Herald reports that Big Y plans to close and then reopen four former A&P stores in Connecticut under its own banner next month. The four - in West Hartford, Branford, Mystic and Old Lyme - are part of a group of seven being acquired by Big Y in a deal that is scheduled to close on November 1. The other three stores - in Middleton, Naugatuck and East Haven - are still being evaluated.

    • Fairway is scheduled to unveil its new Stamford, Connecticut, store, next Wednesday, November 3. The 80,000 square foot store, which is Fairway’s seventh unit as it embarks on an accelerated expansion program fueled by investor dollars, is being billed in ads as “your local food library.” (Which may not be quite the right metaphor, since Fairway has to be hoping that people will not bring back the foods they acquire there...)

    • Supervalu’s Shop ‘N Save division announced that it is acquiring the St. Louis-based Rinderer's chain of six drug stores.

    According to the St. Louis Post-Dispatch, “Three Rinderer's locations--at 4447 Natural Bridge in St. Louis, 500 U.S. 50 West in Union and 68 North Bellwood in Bethalto--will become Shop 'N Save pharmacies. The remaining stores will be closed this month. Their prescription files well be transferred to Shop 'N Save pharmacies at stores in Florissant, Moline Acres and Ferguson.”
    KC's View:

    Published on: October 19, 2010

    • ConAgra Foods announced that Paul T. Maass, a two-decade veteran of the company who has been president of ConAgra Mills within the commercial foods business since 2007, will succeed Robert F. Sharpe Jr. as president of commercial foods when he retires in May 2011.
    KC's View:

    Published on: October 19, 2010

    Yesterday, MNB took note of a New York Times report 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.”

    One MNB user responded:

    Using Lactic acid to wash salad greens…..the vegans will go crazy over this news, wait for it…

    I’m not vegan but have lived in “heavily vegan” areas, such as Maui and southern CA.

    Another MNB user wrote:

    Fresh Express' move to FreshRinse sounds risky. I have absolutely no knowledge in this area, but I wonder if this creates risk for lactose intolerant people. It just feels like a lawsuit waiting to happen when one of these unsuspecting people falls ill as a result of Fresh Express' new process. Then again, maybe the process already has widespread use with no negative consequences.

    And MNB user Andy Casey chimed in:

    Still sounds gross - think I will continue to buy fresh produce rather than bagged although I realize it may well be washed the same way.  Just too much information.

    Yesterday’s Eye-Opener referred to a scene from the new movie The Social Network:

    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.

    Which prompted MNB user Pat McCafferty to write:

    It all depends on the criteria for success.  Sean Parker built an enterprise, popularized it, then, bankrupted it.  I do believe the winner in Napster/Sean Parker vs. the recording industry was Steve Jobs and the rest of the Apple shareholders and everybody else in the music downloading business.

    Fair point. In business, winning generally means staying in business and making money. But the point I was trying to make is that Napster changed expectations and revolutionized business models. No matter who won, we all know who lost...the traditional business model, as practiced by people who thought that business would always be done a certain way.

    Another MNB user wrote:

    The big lesson I take away…is… desktops, laptops, palmtops, social media were all started by young kids with a vision no one else could see…not even the older, well educated, seasoned veterans of the business wars???  And, in some ways the older, well educated, seasoned veterans of the business wars still do not see all of the value. Sometimes what we know gets in the way of progress.

    Only sometimes?

    MNB recently wrote about an Ad Week story about a survey reporting that 71 percent of respondents say that they believe “it is important that companies take environmentally responsible actions,” but that 66 percent say that “the environmentally friendly alternatives for many of the products I use are too expensive.”

    Which led one MNB user to write:

    This is an absolute true statement if your program for switching to a higher priced product does not have a viable end of life solution and show cost savings.   Here in Seattle, the city has already diverted 6,000 tons away from landfills because of the new laws.   Check your garbage bill!  There is money to be saved by either recycling or composting.  I as a consumer have reduced my small garbage bill by 50% by doing this.  Businesses with larger loads can really save a lot of coin by diverting away from landfills.

    Here in Seattle, both Microsoft and the University of Washington have saved so much in reduced garbage tipping fees, that it has more than paid for the additional expense of new compostable products.  The key is our unique marking system that allows for EZ identification that allows the package and the food waste to go into the compost bin.

    Yes, not every city is set up as well as Seattle.  But we offer a turnkey template for others to mimic...

    And on another subject, MNB user Dave Moore wrote:

    In your OffBeat you wrote:

    That’s it for this week’s OffBeat - just Parker, Spenser and a good red wine.

    I ask: What more could you ask for on a crisp fall day? I also enjoyed the new Spenser. Parker is a great example of making something hard look easy. Try writing in that tight minimal style and you will find it isn't easy. Reads easy; writes hard.

    Tell me about it.

    Parker used to say he could always tell the non-writers - they were the ones who thought writing for a living was fun and easy.

    He would probably agree with the legendary sportswriter Red Smith, who once said: “There’s nothing to writing. All you do is sit down at a typewriter and open a vein.”

    On the other hand - and I think he would agree with this as well - it beats hard labor. In fact, to be honest, it beats any kind of manual labor.

    ( is so great how many emails I’ve gotten in response to my Parker piece last week. I may have a follow-up in the form of a little surprise later this week.)
    KC's View:

    Published on: October 19, 2010

    • In Monday Night Football action, the Tennessee Titans beat up on the Jacksonville Jaguars, defeating them 30-3.

    • And, in the American League Championship Series, Cliff Lee and the Texas Rangers defeated Andy Pettitte and the New York Yankees 8-0, taking a 2-1 game lead in the best-of-seven series. Lee struck out 13 Yankees, becoming the first pitcher to have three 10-plus strikeout games in the same postseason.
    KC's View: