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    Published on: October 25, 2010

    SEATTLE -- “Ability is what you're capable of doing,” Raymond Chandler once wrote. “Motivation determines what you do. Attitude determines how well you do it.”

    There was lot of ability, motivation and attitude on display in Seattle over the weekend, as I got to spend a little bit of time in one of my favorite US cities. The air may have been chilly and the rain may have been frequent, but that did not stop me from visiting two intriguing retailing experiments that resulted from their companies looking to define and exploit new opportunities.

    On Saturday afternoon, Starbucks had the official opening of its new store in the Capitol Hill district, just east and up the hill on Olive Street from downtown. This store already had drawn attention from the media because it represents a departure for Starbucks - a store that after 4 pm adds beer and wine to its menu, as well as a list of sandwiches, salads and cheese plates designed to give the location a different vibe and broader appeal.

    Being opening night, the new Starbucks - at least four or five times the size of its traditional cafes - was packed. There was a jazz band. Despite the rain, people sat outside at tables, under large umbrellas. (This is Seattle No concessions to the weather here.) The decor is cool - wood, steel, and glass. And there seemed like plenty of suits from headquarters in attendance. (Again, being Seattle, even the “suits” didn’t actually wear suits. There was lots of black, and plenty of piercings.)

    Starbucks isn’t overreaching. The cafe offers just eight wines, most of them from the Pacific Northwest, and three bottled beers. No draft beer, which is, in my view, a mistake. Most of the food platters also seemed to be pre-wrapped, which takes away from the aura of freshness. (This may reflect a lack of kitchen space or expertise.) But many of the associates seemed highly engaged with the patrons, who were lined up at the coffee counter and were to or three deep at the rear bar.

    What makes this different from formats like the 15th Avenue Coffee & Tea format - a stand-alone store that, except for a small “inspired by Starbucks” sign, bears none of the traditional branding accoutrements of the giant coffee chain - is that this time, Starbucks seems to be trying to find out how far it can push its brand equity. This is clearly a test to see if Starbucks can find new ways to bring in evening customers.

    There’s no reason to think this won’t work, though there probably are some inherent limitations. Starbucks not only needs to find locations big enough to house such a store, but the real estate also needs to be located in the right kinds of neighborhoods. I can see a couple of dozen of these being opened around the country, in places like Portland, Oregon’s Pearl District; Greenwich, Connecticut; Cambridge, Massachusetts; Santa Monica, California; and in Chicago’s Lincoln Park. Starbucks could even create a kind of satellite structure, opening one of these and then surrounding them with its smaller, more traditional stores. Whether the concept is sustainable over the long term will depend on economics and opportunity, but there were no weaknesses that I saw that can’t be remedied.

    (To be fair, there have been some published criticism of the concept suggesting that it doesn’t work ... but I don’t see that. The beer and wine doesn’t start flowing until after 4 pm, at which point patrons have a different mindset than during the day.)

    The other experiment that I visited was the Seatown Snack Bar, which is chef Tom Douglas’s newest entry in the Seattle restaurant scene.

    Douglas, as MNB readers know, is the guy behind Etta’s Seafood...and the Seatown Snack Bar is actually located right next door to Etta’s, across the street from the Pike Place Market, in what used to be a furniture store. The Seatown Snack Bar is actually two different concepts - eat-in and take-out - centered around the notion of convenience and what one local magazine described as the “upscale downmarket ... the movement that’s messing with old assumptions about what belongs in dining rooms and what belongs in diners.”

    The take-out side has its own dedicated space, and features a range of rotisserie, pot pie and sandwich offerings. But these aren’t just your run-of-the-mill sandwiches - I tasted a porchetta sandwich made with sweet pepper relish, and it positively melted in my mouth. (Porchetta is pork loin slow cooked on the rotisserie after being seasoned with garlic and fennel.) The sandwich goes for nine bucks, which is more than a Subway sandwich would go for, but a deal for someone looking for a tasty and convenient lunch or dinner; Seatown also has special pricing on happy hour dinners between 5 and 7 pm daily.

    Next door, in the sit-down restaurant, it’s all about casual, with tables and a long bar humming with activity. There’s a raw bar for oysters, caviar and shrimp, and about a dozen appetizers and almost as many entrees - all being made right in front of diners in the display kitchen. I had two appetizers - a red butter poached duck egg, served with Walla Walla onion toast, and a dungeness crab, pork and chickpea stew - and they were fabulous. (Pretty much everything that I saw being sent from the kitchen looked great, but I’m only one guy...) There’s a small but strong beer and wine list (I went with a French white on the recommendation of my server, who said that the 2000 Piquepoul les Perles would be perfect with my duck egg, and she was right), and a number of specialty cocktails.

    The overall vibe is of an upscale diner - while the prices are higher than they would be at a less distinctive restaurant, I got away for about $32 before tax and tip, which struck me as a bargain under the circumstances. (I was full without being stuffed. Perfect.)

    I am intrigued by this whole notion of the “upscale downmarket.” What this really speaks to is the notion of never settling for lowest common denominator food, of always reaching for something new, something challenging...of bringing not just ability and motivation to an enterprise, but also plenty of attitude, which pushes you to the next level.

    Lots going on in Seattle, as companies push the envelope on what have been their traditional approaches to the food business. There’s lots to like here...and lots to emulate.

    - Kevin Coupe
    KC's View:

    Published on: October 25, 2010

    There are some folks who view the whole texting phenomenon as just something that distracts young people from actual human interactions, but since there is no evidence that it is going to go away anytime soon, it is worth considering the possibility that in some cases, texting can actually reflect the most profound kind of human connection.

    The New York Times had a piece over the weekend about Don Brawley Jr., a Georgia man who has been suffering from cancer for more than four years, and who has gradually lost his ability to speak. Brawley has two sons - both ministers - and as he faces the end of his life, he realized there was much he had not shared with them. At a time he most needed his voice, it was betraying him.

    The Times writes, “It was the voice, coarse and commanding, of the Vietnam War paratrooper, Brooklyn homicide detective, National Guard sergeant major that Don Jr., now 61, had been. It was the voice thickened by years of drinking. It was the voice that for so much of his sons’ boyhood went deliberately evasive on the subject of what he had seen in the killing fields of two continents.

    “By his own admission, Don Jr. had watched from a detached distance as his two sons both heard the call to ministry in their teens. He was a soldier who had called on God only during times of distress in Vietnam, a cop who saw nothing godly as he waded through the murder wave of the crack-cocaine era. What pride he felt was at a remove ... And now — maddeningly now, when Don Brawley Jr. had been sober and Christian for 14 years, forthcoming and available at last, trying to live by Jeremiah’s prophecy that the Lord had plans for him — his voice of calm and reassurance and paternal pride had vanished.”

    And do, the Times writes, “without his sons knowing, Don Jr. taught himself to text. He had always thought of texting as a feeble, newfangled excuse for conversation. Even now, with little choice, he faced the added obstacle of working with fingertips numbed in a common side-effect of chemotherapy.

    “Yet one day late last winter, the first letters popped across the screen on David’s BlackBerry. Since then, the communication has rarely stopped. At every opportunity, the father has offered his wisdom, his experience, his compassion to his sons, a dying man bequeathing.”

    “As a father, I really want to pass to my sons expressions of love,” Brawley told the Times in an e-mail this week. “Too often, fathers have prepared their sons with all the tools they need to negotiate the financial world, but leave them starving in life’s relationships.”

    As the end draws closer, Brawley says he “has no fear of death,” but only “laments the dwindling of time.”

    “The closer I get to what the doctors tell me is the end,” he wrote to the Times, “the more important each word of our conversations are.”

    And sometimes, as fate would have it, those conversations take place using a technology that for some is a distraction, but for others is the best or only way to forge important and lasting connections.

    In other words, not everything is what we think it is.

    And that’s my Monday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: October 25, 2010

    Bloomberg Business Week reports on a new consumer survey by American Express that suggests that superior customer service prompts people to spend more money; “More than 60 percent of U.S.respondents ranked great customer service as important, but only one-third believe they're getting it,” according to the story.

    Amex says that “business owners, despite their best intentions, don't always know what it is that will most satisfy their customers. They might think it's price, when really it's personalized service, like customers being able to quickly find what they need in the store, or getting follow-ups and reminders ... business owners haven't put in place the systems and processes to ensure that they can provide ongoing service easily. Business owners in these challenging economic times are working more hours and having to lay people off. They're not as focused on things like service.”

    The harsh reality, according to Amex, is that a bad customer service experience tends to create ill will that often is communicated beyond the store. Respondents told the company that “they put greater credence in negative reviews on blogs and social networking sites than they do on positives ones. This just highlights the power of the Internet to influence opinions about your business. So if someone's unhappy and they're talking about it online, you need to directly reach out to that person and you may need to go into the discussion yourself and talk about what you've done to fix the situation.

    “An unhappy customer presents a great opportunity to learn about what you can do better as a business owner. And maybe you can turn that person into a happy customer and maybe even an evangelist for your brand.”
    KC's View:
    The good news, according to the survey, is that 75 percent of respondents say that they like to share positive service experiences...while just 59 percent like to share bad experiences. So that’s something that businesses can work with...as long as they stay focused on service as a key and relevant advantage, whatever the format or venue.

    Published on: October 25, 2010

    Interesting piece in the Wall Street Journal about how a number of elite US retailers - Saks, Bloomiungdale’s, Neiman Marcus, and Nordstrom - have begun allowing shoppers to post user reviews of their stores and products on their websites.

    “The changes are being driven by the need to beef up online sales, and a realization among luxury retailers that customers want the ability to take shopping advice from their peers,” the Journal writes. It also, no doubt, is driven by the fact that so many online retailers are making this option available, and the elite retailers were actually losing credibility by not offering it.

    According to the story, “Product reviews have been shown in surveys to boost loyalty and sales with online customers who can't see or touch the merchandise. According to the E-tailing Group, 71% of online shoppers said their choices are most influenced by customer reviews, followed by discussion forums. Retailers also have discovered that reviews tend to be overwhelmingly positive, averaging 4.3 out of 5, according to Bazaarvoice Inc., which provides review software for 1,000 retailers, including Saks and Nordstrom.”
    KC's View:
    Every retailer ought to offer this kind of service. It may create a kind of transparency that will be uncomfortable to some ... but the alternative is to look irrelevant and out of step with a world in which such options aren’t really options anymore. They are a cost of doing business - and are a form of customer service.

    Published on: October 25, 2010

    USA Today reports that “the future of diabetes in America looks bleak, according to a new Centers for Disease Control and
    Prevention report ... with cases projected to double, even triple, by 2050.

    “According to the report, one in 10 U.S. adults have diabetes now. The prevalence is expected to rise sharply over the next 40 years with as many as one in three having the disease, primarily type 2 diabetes, according to the report, published in the journal Population Health Metrics.

    The biggest contributor to the increase in diabetes cases is the national obesity epidemic. Diabetes, the story points out, can lead to adult blindness, kidney failure, limb amputation, heart attack, stroke, some forms of cancer and even dementia.

    According to the story, “The CDC estimates the current cost of diabetes at $174 billion annually — $116 billion of which is in direct medical costs.” That number could easily double if nothing is done to check the rise of diabetes in the US - and doctors say that radical steps need to be taken to restrict the amount of sugar and unhealthy food ingested by people, especially kids, as well as increase the amount of physical exercise that most people get.
    KC's View:
    To a great extent, whether someone gets diabetes or not depends on how they live their lives (or how they were raised by their parents). If personal behavior and responsibility can affect whether or not we get this disease, and all of the maladies that can result, then it seems entirely legitimate that people need to have skin in the game when it comes to health care costs, sharing them with companies in a meaningful way so that good behavior results in lower costs, and bad behavior means you have to pay for it.

    It also is hard for me to argue, just based on the numbers involved, against significant restrictions on what foods schools are able to sell to kids. As much as I’d like to think that the markets ought to take care of themselves, there clearly is a public policy component to this.

    Published on: October 25, 2010

    The Los Angeles Times reports that a Los Angeles-based federal judge “has certified two separate class-action lawsuits against grocery chains Ralphs and Albertsons -- the latest step that moves forward a legal fight between the retailers and 9,000 workers who claim they were illegally denied millions of dollars in benefits during the 2003-04 grocery lockout and strike.”

    The cases go back to the mutual aid agreement that the two chains shared with Vons during that labor action, in which they agreed that whichever chain was hardest hit would be financially aided by the others. It was subsequently ruled by the U.S. 9th Circuit Court of Appeals ruling that Albertsons and Ralphs had violated federal antitrust laws, and Ralphs later “pleaded guilty in 2006 to felony charges connected to rehiring locked-out workers using fake Social Security numbers.” The retailer it paid $20 million in fines and $50 million into a fund to reimburse workers and the union.

    Despite these cases, the California Unemployment Insurance Appeals Board ruled that affected workers were not entitled to benefits during the job action, a ruling that is now being challenged in the class-action suits. While the union says that the agency did not consider the illegal actions by Ralphs and Albertsons in making its determination, Ralphs says that it is confident that the courts eventually will rule in its favor.

    Albertsons is not commenting on the case at this time.
    KC's View:

    Published on: October 25, 2010

    HealthDay News reports that a new study conducted by Brown University researchers and published in the American Journal of Clinical Nutrition suggests that “coffee and tea might do more than boost your energy levels: Regular consumption of the world's two most popular beverages may also shield you against a form of brain cancer.

    “In fact, the latest research suggests that those who drink as little as a half cup or so of coffee per day may lower brain cancer risk by as much as 34 percent.”
    KC's View:
    If only six cups of coffee were six times as effective, I’d be all set.

    But alas, that does not seem to be the way things work.

    Published on: October 25, 2010

    As the recession has created an environment in which people are eating at home more than ever, and even cooking to a greater degree than they have in recent years, the Chicago Tribune reports that McDonald’s is aware of this growing competition.

    According to the story, McDonald’s executives are monitoring the supermarket industry more closely than ever, looking to figure out what it needs to do to compete with “the refrigerator,” and how far it can go in raising prices.

    That’s an important consideration, since the Wall Street Journal reports that McDonald’s “plans to raise menu prices to blunt higher costs, including what would be its first such increase in the U.S. in more than a year - a time when the burger chain's sales have thrived amid lower prices. The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2% and 3% in 2011.”
    KC's View:
    They may be raising prices a bit, but that doesn’t mean McDonald’s will be any less a tough competitor for share of stomach. Supermarket chains have to pull out all the stops to compete every minute for every meal opportunity - this is hardball, and there is no dearth of competition looking to nibble away at food expenditures.

    Published on: October 25, 2010

    The San Francisco Chronicle reports that Safeway’s Blackhawk Network, which markets gift cards in a wide variety of retailers, is working with Causes, described as “a for-profit company that lets Facebook Inc.'s users give money to charities.”

    According to the story, “Co-founded three years ago by former Facebook President Sean Parker, the Berkeley company has raised more than $16 million in financing ... Causes' Facebook application connects 119 million people to a range of charities, making it easy to donate small amounts.”

    The story says that “Causes' new $25 and $50 gift cards, which will be available in Safeway and Vons supermarkets in California, let people donate online to their choice of thousands of charities ... The gift cards are helping build awareness of the Causes brand outside of Facebook, according to Parker.”
    KC's View:
    This is actually a pretty neat idea - being able to give someone a gift card that allows them to go online and donate to a charity of their choice. In an economic climate that has not been kind to philanthropy, this could be a way of generating real dollars that otherwise might not be there for charities.

    Published on: October 25, 2010

    • The Washington Post reports that customers were lining up early Sunday morning - with one arriving at 4 am - so they could be among the first to shop at the new Wegmans store in the Woodmore Towne Centre in Glenarden, Maryland, the seventh store opened by the chain in the Washington, DC, area. Six more are planned for the area.

    • The Olympian reports that WinCo Foods has three new store openings planned for Sunday, November 7 - in Lacey and Everett, Washington, and Tracy, California - which will bring the chain’s fleet of low-cost supermarkets (said by some to be the format that gives Walmart executives nightmares) to 76.
    KC's View:

    Published on: October 25, 2010

    Regarding Walmart’s desire to acquire Africa’s Massmart, one MNB user wrote:

    The decision by Wal-Mart to make an offer to purchase Massmart is one of Wal-Mart’s riskier investments. Massmart is a multi-brand operator with formats that cover most of the African LSM (Life Style Measurement) shopper groups. Depending upon Wal-Mart’s injection of own management, they can make positive, sustained impact, particularly in supply chain / distribution & maintaining affordable pricing to shoppers. “Wal-Mart South Africa” (whatever that means) will need help from its US suppliers to assist their South African counterparts. Driving lower costs, understanding & maximizing POS data to “sell more” are skills not widely in place within South African FMCG supplier base. Conversely, a tremendous effort in buyer training will also be necessary to set in place a new “open” culture which will encourage CPG/ FMCG companies to invest in growth. Wal-Mart will learn a lot about franchise retail, which might be useful as the barriers to entering India (as one example) weaken.

    I’ve worked for over a decade with African retailers & can confidently say that change won’t be easy. PicNPay, Spar & Shoprite are all great competitors. The Unions are strong. For many social – political reasons, retail stores in Africa are over-staffed. Shrink is high. Information sharing is very low. Brands (and brand building) means a lot, both to retailers & manufacturers who can creatively exploit the opportunity.

    Should this acquisition come to happen, Delta Airlines should probably add a Northwest Arkansas –Johannesburg non-stop flight!





    MNB user Tom Duenow had a thought about my comparison last Friday of the debate over a Walmart store scheduled to be built near a Virginia Civil War battleground and the Muslim community center proposed for two blocks from New York’s Ground Zero.

    I appreciate your insights and comparison of the Civil War battlefield Walmart and Ground Zero mosque.  Sadly I’m afraid ideological stance outweighs rational thought these days and many folks will be for one and against the other regardless of the facts.  The optimist in me looks forward to the responses of your readers proving me wrong.

    Actually, your inner optimist has been rewarded. Nobody got outraged by the comparison. At least, not yet.



    One MNB user wrote about the ongoing Netflix shift to streaming and downloading, and away from the red envelopes that now move through the mail:

    I wonder how sincere CEO Reed Hastings was about the move toward "solely online".  Currently, it's just not feasible.  Studios have bizarre restrictions on what can and cannot be made available, in what format, and in what time frame.  In general, new releases are not available through the online mode.  And what of those folks doing their own version of "time shifting"?  There are legions of people that receive their movies in the mail, copy the movie (and just the movie without adverts) onto a blank DVD using a simple "back up" utility such as DVDFab, pop the original back in the mail, and then watch at their leisure.  Just sayin' but libraries of 1000's of movies get built up quite easily that way.  Call it an unofficial "benefit" that most folks really like.

    While I think it is a nice aim, I think that it is going to be a long time until it is actually done.  Everything, all the time is a concept that requires cooperation of the entire supply chain.  The MPAA is just not all that cooperative.  Maybe it is because of all of those time shifted libraries?


    In the current environment, a “long time” could mean five years. Which isn’t that long.

    The bigger point is that Netflix is embracing change, not denying it in the way Blockbuster did.




    Regarding Supervalu’s current travails, one MNB user wrote:

    Being a Fleming Refugee I see too many similarities with the Fleming debacle and SVU spiraling downward.  They can spin the last quarter results all they want, but the numbers reported are really bad.
     
    Yes we have seen this before.


    And another MNB user chimed in:

    SV had a powerful wholesale model geared toward single, multi unit independents and smaller regional chains.  They have stumbled badly, not the “I’ve fallen and can’t get up” but more of the “I keep falling while I’m trying to get up” with almost each retail attempt they have made.  The SAL format seems to be a winner and can and does compete with ALDI & WM.  WM wants to go smaller in the Neighborhood concept, but there is a problem with the mix to get the return.  The SAL format in the 15,000 SF range looks like a winner.

    Otherwise SV is stumbling along, lots of headquarters turnover---but it has to produce results now.  Kroger has the horsepower and momentum because they have a merchant running it.  Mr. Dillon is well-known and liked and has the concept and a steady hand plus Kroger can act and react quickly.  Everyone you talk to at Kroger has the same set of objectives.  The scorecard pretty much lays it out, for same-store sales, Kroger up, WM flat for 5 consecutive quarters and SV down something in the range of 9% for last the period.

    KC's View:

    Published on: October 25, 2010

    In Week Seven of National Football League action...

    Cincinnati Bengals 32
    Atlanta Falcons 39

    Pittsburgh Steelers 23
    Miami Dolphins 22

    Jacksonville Jaguars 20
    Kansas City Chiefs 42

    Washington Redskins 17
    Chicago Bears 14

    San Francisco 49ers 20
    Carolina Panthers 23

    Philadelphia Eagles 19
    Tennessee Titans 37

    Arizona Cardinals 10
    Seattle Seahawks 22

    Oakland Raiders 59
    Denver Broncos 14

    New England Patriots 23
    San Diego Chargers 20

    St. Louis Rams 17
    Tampa Bay Buccaneers 18

    Cleveland Browns 30
    New Orleans Saints 17

    Buffalo Bills 34
    Baltimore Ravens 37

    Minnesota Vikings 24
    Green Bay Packers 28




    And, in the Major League Baseball League Championship Series...

    On Friday night, the Texas Rangers defeated the New York Yankees 6-1, winning the best-of-seven series 4-2 and sending the Rangers to the World Series for the first time in the franchise history.

    And, on Saturday night, the San Francisco Giants beat the Philadelphia Phillies 3-2, winning the best-of-seven series 4-2 and setting up a Rangers-Giants World Series that will begin on Wednesday night.
    KC's View:
    There are all sorts of reasons I am rooting for the Giants in this one. (With apologies to MNB users and friends in Texas...)

    One. National League baseball is real baseball. None of that designated hitter nonsense.

    Two. The last time the Giants won the Series was the year of my birth, though just weeks before I was born. That’s a long time.

    Three. I like the idea that Barry Bonds, no matter how juiced up he was, could not get the Giants to the promised land. I want them to win now, just to make a point.

    Four. The Giants were my dad’s team when I was growing up, before the Mets were created.

    Five. I love AT&T Park. It is one of my six favorite stadiums. (The others, in no particular order, are Camden Yards, Safeco Field, Petco Park, Fenway Park and Wrigley Field.)

    And six. I promised a friend that I would root for the Giants. Enough said.