retail news in context, analysis with attitude

Published on: November 8, 2010

Bloomberg Business Week has a fascinating piece about how a number of “America’s most powerful bosses” - people who Tom Wolfe referred to as “Masters of the Universe” - have converted to veganism. The names include Steve Wynn, Mort Zuckerman, Russell Simmons, Ford Motor Co. Executive Chairman Bill Ford, Twitter co-founder Biz Stone, venture capitalist Joi Ito, Whole Foods CEO John Mackey and Bill Clinton.

The story makes clear that it has been easier for these moguls to make the conversion because a) they can afford it, and b) they have personal chefs who can meet their demands. But many of them also have become evangelists for the vegan lifestyle, urging and even incentivizing their employees to make a similar move, reasoning that in the long run, it will save them money on insurance.

Is this likely to make veganism mainstream anytime soon? Unlikely, since at the present time, only one percent of Americans are vegan. But it certainly is a mini-trend worth tracking, if only because so many heavyweights have become true believers.

Like some other true believers, of course, some of them seem to be convinced that non-believers are either deluding themselves or are simply ignorant. Tom Freston, the former CEO of Viacom, has a comment that, while it may be accurate, borders on being callous, and certainly seems to reflect a certain superiority complex: “It’s probably a good thing in a CEO,” he says. “At least they won’t be toppling over like those McDonald’s CEOs.”

Then again, there’s no reason that the incivility and intolerance that seems to find its way into so much of current discourse should’t also find a home in some of the discussions between carnivores, pescetarians, vegetarians, vegans and all the other gastronomic persuasions.

I do have to say, though, that I loved the article’s somewhat snarky opening passage:

It used to be easy for moguls to flaunt their power, all they had to do was renovate the chalet in St. Moritz, buy the latest Gulfstream jet, fire 5,000 employees or marry a much younger woman.

By now, though, they’ve used up all the easy ways to distinguish themselves from the rest of us -- which may be why a growing number of America’s most powerful bosses ... are now using tempeh to assert their superiority.

(Now, if I were a mogul, and I needed to find ways to flaunt my power and establish my superiority, of the ones mentioned becoming vegan would probably rank fourth ... )

That’s my Monday Eye-Opener.

- Kevin Coupe

Published on: November 8, 2010

The New York Times has a fascinating, 2600+ word, front page piece yesterday that came down to this - that at the same time as the federal government is warning people to consume fewer whole dairy products, including cheese, as a way of fighting obesity and other fat-related health issues, the US Department of Agriculture (USDA) has a marketing department, called dairy Management, promoting the consumption of these very same products.

Here’s how the Times frames the story:

“Dairy Management, whose annual budget approaches $140 million, is largely financed by a government-mandated fee on the dairy industry. But it also receives several million dollars a year from the Agriculture Department, which appoints some of its board members, approves its marketing campaigns and major contracts and periodically reports to Congress on its work.

“The organization’s activities, revealed through interviews and records, provide a stark example of inherent conflicts in the Agriculture Department’s historical roles as both marketer of agriculture products and America’s nutrition police. In one instance, Dairy Management spent millions of dollars on research to support a national advertising campaign promoting the notion that people could lose weight by consuming more dairy products, records and interviews show. The campaign went on for four years, ending in 2007, even though other researchers— one paid by Dairy Management itself — found no such weight-loss benefits.”

And it gets even better. The story goes on:

“Dairy Management runs the largest of 18 Agriculture Department programs that market beef, pork, potatoes and other commodities. Their budgets are largely paid by levies imposed on farmers, but Dairy Management, which reported expenditures of $136 million last year, also received $5.3 million that year from the Agriculture Department to promote dairy sales overseas.

“By comparison, the department’s Center for Nutrition Policy and Promotion, which promotes healthy diets, has a total budget of $6.5 million.

“Although by law the secretary of agriculture approves Dairy Management’s contracts and advertising campaigns, the organization has become a full-blown company with 162 employees skilled in product development and marketing. It also includes the National Dairy Council, a 95-year-old group that acts as its research and communications arm.

“Dairy Management’s longtime chief executive, Thomas P. Gallagher, received $633,475 in compensation in 2008, with first-class travel privileges, according to federal tax filings. Annual compensation for two other officials top $300,000 each.”

Published on: November 8, 2010

The Wall Street Journal reports that Walgreens is suing Wegmans, claiming logo infringement.

According to the story, “Both companies use a similar script in their logos. The Illinois-based Walgreen Co. says in the court complaint that consumers could be misled into thinking the companies are connected.”

Walgreens says it has been using its “W” logo since 1951. But Wegmans notes that its current logo actually replicates one that was used in the 1930s.

Published on: November 8, 2010

Reuters offers a revealing assessment of Starbucks as the iconic coffee company seems to be enjoying a rebound both in sales and in its stock market value, noting that while things may seem to be good, there are at least some concerns in the ranks that “sharp cost-cuts, the introduction of corporate efficiency tools like scheduling software and an increased emphasis on pushing product sales” have turned the company from being a different sort of place to work to one that is not all that different from McDonald’s or other fast food ventures.

“Disillusionment among Starbucks workers ... may be early signs of a culture change that could strike at the heart of what makes Starbucks Starbucks: that warm, fuzzy feeling stemming from its original commitments to the global community as well as its own healthy, happy staffers who provide service with a smile,” Reuters writes.

“Of course, Starbucks' cafe workers are not the only ones being asked to work more for less. But the world's biggest coffee seller built its reputation as the anti-McDonald's. Its culture underpins the ‘Starbucks experience’ that draws loyal customers back time and again to pay a premium price for fancy coffee drinks that they could get for less somewhere else.

“For now, Wall Street is all smiles. After all, shares in Starbucks Corp have nearly tripled from recent lows and appear poised for more gains.

“But for investors and management, the question is whether Starbucks can keep growing if the Starbucks culture unravels.”

The story continues:

“Starbucks still offers better compensation than most of its peers — even after its painful retrenchment in 2008 and 2009. Nevertheless, its roughly 105,000 cafe workers are grappling with higher out-of-pocket medical costs, lost personal days, slower vacation accrual and hourly pay that is lower than at some of its fast-growing rivals.”

One of the things that seems to gnaw most at disillusioned employees is the dictum from Seattle headquarters that baristas have to be focused on selling products that also are sold in supermarkets, like the new Via instant coffee. Some say that the best baristas are the ones that connect with customers either intellectually or emotionally, as opposed to demonstrating “selling behaviors.”

Reuters writes, “While the financial community calls for Starbucks to put an even tighter squeeze on labor, some analysts acknowledge that cuts to employee perks could create higher turnover in future. That in turn could crimp recruiting just as the economy and employment pictures improve. Starbucks' size already makes it difficult to find the high-caliber workers it needs.”

Published on: November 8, 2010

USA Today reports on yet another threat to the nation’s food safety infrastructure - a declining number of large animal veterinarians.

According to the story, “Officials are worried about the impact on food safety, because large-animal veterinarians serve as inspectors at ranches and slaughterhouses.” The decline is taking place because existing vets are coming close to retirement age, and young people studying for the profession are, for a variety of reasons, choosing to work with smaller animals in traditional vet practices. “I don't want to deal with anything bigger than me,” says one 19-year-old student.

A number of states, as well as the federal government, have introduced or are developing incentive programs to get aspiring vets to reconsider their options.

Published on: November 8, 2010

USA Today reports that while Frito-Lay may have acceded to the complaints of its US customers that its new SunChips 100 percent compostable packaging was too noisy by changing the bags, in Canada it has taken a different approach - offering customer free earplugs to use while eating SunChips and explaining that people ought to be “happy to be making some noise about helping the environment.”

Published on: November 8, 2010

The Wall Street Journal reports that the state of Michigan has announced a ban on caffeinated alcoholic beverages, in what is called “one of the strongest responses yet by a regulator to rising public concerns in the U.S. over the drinks' safety.

“The move by the Michigan Liquor Control Commission follows a series of widely publicized incidents in recent weeks in which students in states such as Washington and New Jersey were hospitalized after drinking Four Loko, a fast growing brand. Some of the drinkers who became sick also had consumed other alcoholic beverages.”

According to the story, “The company that markets Four Loko, Chicago-based Phusion Projects LLC, said it intends ‘to pursue all legal options’ in response to Michigan's action. It said the liquor commission ‘did not provide advanced notice of its proposed action’ and did not give beverage makers ‘any opportunity to be heard on whether the ban is warranted or authorized by law’.”

Published on: November 8, 2010

• Crain’s New York Business reports that “a team of at least a dozen Walmart real estate experts is looking at space all over Manhattan—from East Harlem to the Sixth Avenue Ladies' Mile strip. And ... the company has not ruled out entering the local market via pop-up stores, as Target did. It could also purchase an existing big-box chain, such as Pathmark, whose parent, A&P, is choking on $1 billion in debt. Walmart is sitting on $10 billion in cash.

“In a down economy, Walmart hopes to build community support by highlighting its potential economic impact. Last year, the company spent $5.7 billion with 835 New York City suppliers, and its foundation has given more than $9 million in grants to nonprofits here in the past three years.”

• National Public Radio reports on how Walmart is partnering with American Public University to allow its 1.4 million US employees to pursue a four-year college degree, or even a master’s degree, by studying online.

The story notes that when surveyed by the retailer, 70 percent of Walmart employees liked the idea of taking college courses online, though only 400 have signed up for courses at this time. But Walmart is spending $50 million to slowly roll the program out over the next three years, and then will assess it to see if it is worth continuing.

Published on: November 8, 2010

Drug Store News reports on two new studies suggesting that “grapes, which contain natural plant nutrients called polyphenols, can help maintain healthy, flexible arteries and manage LDL or "bad" cholesterol,” as well as help maintain a healthy blood pressure.

Published on: November 8, 2010

• Published reports say that Amazon.com is about to acquire Quidsi, the parent company of Diapers.com, Soap.com and BeautyBar.com. Cost of the purchase is expected to be in the $540 million range.

Published on: November 8, 2010

• The Holland Sentinel reports that Meijer “plans to install electric vehicle charging stations at several of its Michigan stores.”

“This is a very exciting step for Meijer as we continue to look for ways to expand our sustainability initiatives,” said Julie Croll, senior vice president of properties and real estate for the retailer. “The key to our success through the years has been innovation, and we look at sustainability the same way.”

• The Associated Press reports that Burger King has decided to offer its customers free coffee every Friday morning in November as it looks to promote its new breakfast menu, designed to compete more effectively with McDonald’s a.m. business.

Published on: November 8, 2010

Unified Grocers announced the passing of Peter J. O’Neal, 65, operator of four Harvest Markets - two in Oregon, one in Washington, and one in California.

He served on the Board of Directors of United Grocers from 1989 to 1999, including serving as its Chairman. Since 1999, O'Neal served on the Board of Directors of Unified Grocers, Inc. serving as its First Vice Chairman since 2005.

Published on: November 8, 2010

Jill Clayburgh, who defined an entire demographic with her memorable portrayal of An Unmarried Woman in the 1978 Paul Mazursky film, died Friday at age 66 after living with chronic leukemia for more than two decades.

As the New York Times wrote in its appreciation, “She didn’t have the tics of Diane Keaton, the steel of Jane Fonda, the feistiness of Sally Field, the uncanny adaptability of Meryl Streep. She simply had the gift of resembling a real person undergoing life-altering change. In her signature role, that was enough.”

For a time, Clayburgh owned a niche. The Times notes, “she went from playing an opera star in Bernardo Bertolucci’s 1979 Luna, one of the most conversation-stopping films ever to open the New York Film Festival. She made widely seen comedies about smart, interesting women (Starting Over in 1979, It’s My Turn in 1980). She even turned up on the Supreme Court (First Monday in October in 1981), a likable presence even in highly unlikely circumstances.”

Published on: November 8, 2010

Lots of reaction to Michael Sansolo’s “Eye-Opener” last Friday suggesting ways to market to an expanding senior citizen population.

MNB user Richard Evans wrote:

Wow, what an inspired idea. Find a need and fill it. Can't get any more capitalistic than that.

Great piece.

Another MNB user wrote:

Here are some other services that could be offered to seniors:

Medications that are portioned out by the pharmacist.  So many seniors are on 5-15 different drugs at the same time.  Imagine if the medicine came pre-portioned in a weekly packaging.  There would be fewer chances of medication errors.
Arrange a shuttle bus one day a week that will circulate among the senior centers in the community.
Offer packaged items more in line with those required by a smaller household.

FYI....Byerly’s and Lunds use an interesting system in their pharmacies that actually package prescriptions together in dosage packets that are marked with the date and time they are supposed to take each packet. It is a very smart idea.

MNB user Lindy Bannister wrote:

We have been doing "assisted shops" at the Wedge Co-op for years. Sometimes the customers phone ahead and let us know when they would like to shop and often they just show up at our customer service center and ask for help. We have staff who take them through the store helping the person. We never put a time limit on, and the staff is free to take as long as they need. One of my favorite stories is the day I was leaving the store, watching an employee and a sight impaired member walking arm in arm down the street. Matt (our staff member) had his head thrown back, laughing as they walked to the bus stop which was a few light stops away. When I told him how proud he made me feel, his immediate reaction was that it was one of the best parts of his job and he just loved the interactions with the shoppers.

MNB user Jim Perko wrote:

Yes, you have a great idea…to harness that appeal.  The retailers are paying for so many PT personnel now, I am sure that isn’t the problem.  The functions of one’s duties will be different possibly in those hours, but I know the appreciation for those efforts would be felt.

Just like as an adult we took children to their activities and did other things while they were playing in a gym or at a school dance.  We necessarily didn’t drive all the way home.  Just think if you were able to drop your elderly person off and for an hour or so – get something else done off or your “honey do” list!!!
 
Go for it Mike - - keep pushing the envelope!

MNB user Jackie Lembke wrote:

Another group that would be very appreciative are working folks who would no longer have to dodge the senior shopper. My mom (before she became one of the senior shoppers) would fantasize about stopping at the store after work and not having to dodge seniors out shopping for a loaf of bread. Instead of senior times she wanted a working mothers only time, but would have settled for the senior folk shopping at any other time than 4-6 in the evening when folks were stopping on their way home from work.

MNB user David Zahn wrote:

Michael’s suggestion is one that has me doing the “V-8 Moment” and slapping my forehead and thinking, “why didn’t I think of that!”  That is so simple, so elegant, and so worthwhile!




I wrote last week that a story suggesting that the aspirational shopper is dead is, in fact, all wrong - that the aspirations may have been changed or modified, that people understand it may take more time to achieve their aspirations, and that customers will respect and patronize retailers that help them get there.

To which one MNB user responded:

Again, right on point…the aspirational consumer is still alive and making marketers drool…however, their aspirations have moved down Maslow’s Pyramid…instead of aspiring to “self-actualization” or “esteem” or “Belonging” they are aspiring to “Safety” and “Physiological” needs…

MNB user Joe Davis wrote:

At worst, they’re in a coma or something.  I’m with you on this one; I don’t think people have hit that depressing low where they lose or suppress their aspirations.  Our group released our bi-annual Why Behind the Buy report that was featured on Fox Business awhile back and while we’re seeing some grisly statistics, the overall picture isn’t so macabre.

The bleak overtones come from topics like how 49% of shoppers have experienced a decline in income and 18% went through a negative change in employment this year, and spending dropped by 7%.  I suspect statistics like this get retail analysts into a chicken little mentality.  We’ve talked a lot about the “new normal”, and it looks like the last few years have created a new generation of frugality (hopefully we elected some of them this week).  Even if spending habits are retracting, I think we’ll be in a much better place if the “don’t spend more than you earn” mantra has caught on.

It’s a holding pattern, I think.  What retailers and manufacturers are challenged with now more than ever is creating value.  And you and your readers of course know that’s not just price.  Like you said, I think there is a huge opportunity for retailers (and manufacturers) to play to indulgence and those “aspirations” in new ways. 

Here’s my personal view: I think the most enjoyable indulgence items are ones where I feel like I got a lot of value for my money (again, that doesn’t mean cheap).  And I aspire to enjoy life to the fullest without winding up in debtor’s prison.  I’ll shop at whoever’s store helps me do that.  If that pronounces me “dead”, I’d respectfully ask for a second opinion.




On the subject of Sparky Anderson’s passing, and his management style (“I got good players, stayed out of the way, let ’em win a lot, and then just hung around for 26 years”), one MNB user wrote:

Sparky’s management style rings so true, doesn’t it? It seems to me the greatest challenge that faces management is pride. As the level of management increases, so too, does the temptation to believe your position indicates some form of personal superiority. With greater responsibilities, comes greater perceived power and that is the fork in the road which determines the greatness of a leader. (In my opinion.)

 The paths diverging from that fork are decidedly different. The path of self awareness and humility is not marked, borrowing from Robert Frost, it clearly it is the road less travelled. I have found that not only your team but outside vendors will begin to treat you differently as you become responsible for increasingly larger pieces of the budget. With that added attention, and let’s be honest... “sucking up,” it can become easy for one to believe they are now someone special, and deserving of this form of “worship.” Only a humble spirit will understand this attention is about money and job security, not the reality of their own delusions of deity.

Larry Hays, long time manager of the Texas Tech Red Raiders and Lubbock Christian University Chaparrals was inducted into the Texas Baseball Hall of Fame a few years ago. His final record stands at 1,509 wins, fourth all-time in NCAA history. When asked what he attributes to his success, he responded, “It’s not complicated, the team with the best players wins.” I’m not sure if Coach Hays and Coach Anderson kew each other, but I suspect they would have liked one another.

The truth is, great leadership is not easy and it can be quite painful. It requires true humility. It insists you take responsibility for your team’s failure, and it demands you give credit and praise to your team for success. While this is a formula for business leadership, it is even better advice for marriage.

I am not a great leader... But I can recognize it when I see it. By contrast, I know prideful leadership by the nausea I feel when subjected to it.

And that’s my view.

Published on: November 8, 2010

It’s Week Nine in the National Football League...a week in which the Dallas Cowboys continued their collapse, the NY Giants continued their dominance of the NFC East, and three overtime games kept viewers on the edge of their couches or barstools...

NY Jets 23
Detroit Lions 20

Miami Dolphins 10
Baltimore Ravens 26

San Diego Chargers 29
Houston Texans 23

Arizona Cardinals 24
Minnesota Vikings 27

Tampa Bay Buccaneers 21
Atlanta Falcons 27

NY Giants 41
Seattle Seahawks 7

Indianapolis Colts 24
Philadelphia Eagles 26

New England Patriots 14
Cleveland Browns 34

Chicago Bears 22
Buffalo Bills 19

New Orleans Saints 34
Carolina Panthers 3

Kansas City Chiefs 20
Oakland Raiders 23

Dallas Cowboys 7
Green Bay Packers 45