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    Published on: November 11, 2010

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    Hi, I’m Kevin Coupe and this is a Thursday Eye-Opener on MNB Radio, available on iTunes and brought to you by Webstop, experts in the art of retail website design.

    There are three subjects that often pop up here on MNB - how modern vending technology could change the retailing landscape, how retailers need to differentiate themselves, and why the need for really good R&D is equalled by the need for really good S&D, or “surprise and delight.”

    So it’s nice to see an innovation that sort of combines all three.

    Coinstar, the company behind the Redbox video rental system, is working with HEB in Texas and Giant Eagle in Pennsylvania to test an entirely different kiosk system called “Chirp.” This machine sells luxury items such as perfume, handbags, and jewelry for what they promise are prices as much as 75 percent off retail. And the idea is to put affordable luxuries within reach of people who are doing everyday shopping at their local grocery store, hoping to generate impulse purchases with a kind of treasure hunt approach - from week to week, the items in the Chirp machine change.

    Physically, the Chirp vending system resembles some of the upscale vending machines that often are found these days in airports, selling merchandise from Apple, Best Buy or The Body Shop.

    Now, I have no idea if the Chirp system will work, or will even find any kind of broad distribution. But I love the idea that Coinstar, HEB and Giant Eagle are pushing the envelope, trying something new and different, and looking for new ways to surprise and delight their customers.

    Like they say in the commercial, you can’t win if you don’t play.

    You can check out the Chirp system at www.ChirpChic.com.

    For MNB Radio, with a Thursday Eye-Opener, I’m Kevin Coupe.
    KC's View:

    Published on: November 11, 2010

    The New York Times reports that beginning today, Walmart is offering free shipping for some 60,000 products - including toys and electronics - bought on its website, with no minimum purchase required.

    The promotion runs through December 20. Walmart said it may offer other free shipping deals once this one expires. And, the company said it will not raise prices to compensate for shipping charges.

    “Everyone’s trying to figure out how we can serve a customer that’s trying to save every penny they can,” said Steve Nave, senior vice president and general manager of Walmart.com. “It’s the most competitive offer out there, and we’re pretty excited about it.”

    As the Times writes, “Even before Wal-Mart’s surprise move, shipping prices were this holiday season’s predicament for online retailers. In a bid for cost-conscious consumers, Target and J. C. Penney introduced their most aggressive free-shipping programs ever, and Sears, Toys “R” Us, Williams-Sonoma and others were trying to match the success of Amazon’s shipping program, offering unlimited two-day shipping for an annual fee.

    “But given Wal-Mart’s scale and influence in the marketplace, its free pass for shipping sets a new high — or low — in e-commerce. And it may create an expectation among consumers — free shipping, no minimum, always — that would make it harder for smaller e commerce sites to survive.”
    KC's View:
    It will be interesting to see how Amazon responds to this offer. I can see the company matching it...though that could create issues for people like me who paid for Amazon Prime membership, which gives us “free” two-day shipping for a year.

    But I also can see Amazon resisting this impulse, taking the position that it’s appeal goes beyond free shipping - that it has better prices, a better interface, or whatever.

    It’ll be instructive.

    Published on: November 11, 2010

    Nice piece from the Associated Press about Kroger CEO Dave Dillon’s ground game when it comes to gathering customer intelligence:

    “Dillon tells Wall Street analysts that the nation's largest traditional grocery chain has sophisticated consumer data none of its competitors can match. But he still frequently does ‘shopalongs’... visits consumers in their homes and peeks into their cupboards, shops stores alone and incognito, and drops in on employees unannounced. Most other top Kroger executives do, too. "’The data only tells you so much,’ Dillon said, whose company has a shopper data-mining and marketing joint venture with Dunnhumby, a marketing company based in London. ‘Dunnhumby tells me what to look for and I go in and see’.”

    One of the industry’s smartest people, Burt Flickinger III, of Strategic Resource Group, makes the following observation:

    "By being in the stores, by doing the shopalongs, Dillon personally commits himself to making Kroger a better company on Main Street, which makes it a better company on Wall Street. Even with all the great Dunnhumby data, Kroger still wants to get the best ideas from their store leaders, their employees and from the shoppers.”
    KC's View:
    Data is important. A ground game is equally so.

    And there’s more...

    Published on: November 11, 2010

    The Associated Press reports on how dunnhumbyUSA, which is co-owned by Tesco and Kroger, “has gone beyond gathering and mining Kroger loyalty card and survey information to provide consulting for retail clients including The Home Depot Corp. home improvement chain, Macy's Inc. department stores, electronics retailer Best Buy Inc., Panera Bread cafes, and car parts chain AutoZone Inc. It also provides information for some 150 consumer products clients, including Procter & Gamble Co. and Campbell Soup Co.”

    Here’s how dunnhumbyUSA CEO Stuart Aitken describes the approach that has helped “Kroger weather the recession better than other grocers”:

    “"I liken it to a bucket,” he says. “Let's pretend you have a bucket of customers. Many companies are focused on finding another faucet to fill that bucket, while Kroger focuses on plugging the hole in that bucket.”

    And while he won’t give specifics, Aitken says that this same approach is being used in the work that dunnhumbyUSA is doing for other clients.
    KC's View:
    From my perspective, the most important thing that they’re doing is starting from the right premise. The story notes that dunnhumby co-founder Clive Humby expects the enterprise to keep growing “behind its statistical insights into consumer behavior and focus on ‘the retailer learning to be loyal to its customers’.”

    That last line is the most important one. The best loyalty program is one that consistently demonstrates the retailer’s loyalty to its customers, as opposed to just throwing coupons at them in the desperate hope that they’ll be loyal to the retailer.

    Published on: November 11, 2010

    The Food Marketing Institute (FMI) announced yesterday that it is establishing a new Center of Excellence for Food Safety and Protection, which “will serve as a comprehensive resource for food safety and protection information, initiatives and programs to support FMI members, the food and consumer products industry and consumers ... The Center of Excellence will bring together food safety experts and professionals from government relations, asset protection, food defense, supply chain management, health and wellness, sustainability and industry relations to address all aspects of food safety.”

    Dr. Jill Hollingsworth, who has been serving as FMI’s group vice president of food safety programs, has been promoted to FMI Senior Vice President and will lead the Center.

    “The Center of Excellence for Food Safety and Protection will create a valuable benefit for members as they address all aspects of food safety and protection within their companies,” said FMI President/CEO Leslie G. Sarasin. “The Center will serve as a resource to consolidate our knowledge of food safety and strengthen our commitment to ensuring that the food we sell is as safe as possible.”
    KC's View:

    Published on: November 11, 2010

    Guiding Stars, the Delhaize-originated nutritional labeling system that uses a proprietary algorithm to rate every product in the supermarket and then give one, two or three stars to products qualifying as good, better and best for your health, announced that it has developed a new partnership with the MaineGeneral Health hospital “to help patients, visitors and staff identify more nutritious food choices in the hospital.”

    According to the announcement, “Guiding Stars will rate prepared meals, snacks and grab-and-go items according to their nutritional value in the medical center’s cafeterias and the food served to patients.”
    KC's View:
    Two small comments here, if I may.

    One, is it silly for me to think that if you are actually in the hospital, or even just visiting, that at a bare minimum the food being sold or provided ought to be healthy? It’s a hospital! (I’ve always agreed with the hospital administrators who banish McDonald’s and other fast feeders from their lobbies, on the premise that their very existence is probably responsible for a number of heart surgeries being performed...)

    Two, I wish that hospitals spent a little more time creating food that is actually tasty. That’d be a nice change. (I’ve never been in the hospital for anything stronger than a colonoscopy, but I’ve visited...and I’m amazed how hospital food can make the slop served in school cafeterias look good...)

    Published on: November 11, 2010

    The Citizen the student newspaper at Harvard University’s Kennedy School of Government, reports on an appearance there by Whole Foods CEO John Mackey in which he discussed his philosophy of “conscious capitalism,” in which companies “structure themselves around higher purposes beyond simply maximizing profits and shareholder value.”

    Mackey repeated his oft-stated position that companies “need to stop thinking about shareholder value, but the value of stakeholders,” and challenged the students to solve social problems through entrepreneurial efforts. “We need energy and creativity of people who come from good schools to create ventures to solve problems,” Mackey said. “As Michelangelo said, criticize by creating.”

    The Citizen notes that Mackey was greeted on campus by a small group of protestors objecting to his position that the government ought not get involved in health care reform (or at least the kind passed by the Obama administration), and his recent comment that there is no scientific consensus about climate change.

    “We thought it was important for those at the talk to know that this self-styled ‘conscious capitalist’ has shown himself to be more conscious of his own profits than of the importance of healthcare for all, the rights of workers to organize through unions, or acknowledging and tackling climate change,” Jesse Wilderman, a graduate student at the Kennedy school, told the paper. “As the leader of Whole Foods, Mackey has shown himself to a chief defender of inequality and the status quo, not the voice of an enlightened alternative; many HKS students did not want his mischaracterization of who he really is to go unchallenged.”
    KC's View:
    It is stories like these that make me wish that I had the time and money to go back to school ... I miss the old days of colloquies and protests.

    Mackey is a complicated guy who has proven himself to be someone of often unexpected views. That’s something that every student should learn - that people don’t always fall into expected patterns, and that wisdom comes when a) you challenge conventional wisdom, and b) you actually listen to the answers.

    Published on: November 11, 2010

    The Seattle Post-Intelligencer website reports that unionized employees there voted overwhelmingly to reject the latest contract offer from Fred Meyer, QFC, Albertsons and Safeway. Ninety-four percent of those who voted gave the union the approval to declare a strike - if necessary.

    According to the story, “The union is at a stalemate after nine months of negotiations with Safeway, Fred Meyer, Albertsons and QFC stopped in mid-October. Employees say the chains want to cut pay, hours, pension and health benefits -- and just in time for Thanksgiving, things are at a boiling point.”

    Another vote would be required in order to actually go out on strike.
    KC's View:

    Published on: November 11, 2010

    The Boston Globe reports that BJ’s Wholesale Club has hired Morgan Stanley to auction off the company.

    It is anticipated that BJ’s is likely to be sold to a private investment company - one bid reportedly already has been made, by the Los Angeles private equity firm Leonard Green & Partners, which already owns close to 10 percent of BJ’s stock - and the Globe notes that a sale would allow BJ’s “to improve its stores and product offerings and finally expand beyond its East Coast footprint.”
    KC's View:

    Published on: November 11, 2010

    HealthDay News reports on a new study from the Gillings School of Global Public Health at the University of North Carolina, Chapel Hill, saying that “obese teenagers are 16 times more likely to become severely obese adults than teens of normal weight.”

    As the story notes, “Severe obesity -- defined as a body mass index above 40 -- heightens the risk for a number of health complications, including type 2 diabetes, high blood pressure, high cholesterol, asthma and arthritis. In addition, people who are severely obese can expect significant reductions in life expectancy.”
    KC's View:
    And obese adults, I think we all can agree, are a drain on the nation’s economy and ability to be productive.

    Which is why it makes sense, in my view, for schools to be more careful about they serve kids in school and be more comprehensive about nutrition education. And it makes sense for companies to incentivize employees to live healthier lifestyles, and make people accountable for when they do not.

    Published on: November 11, 2010

    The Seattle Times reports that the Washington State Liquor Control Board has banned the sale of premixed caffeine-and-alcohol beverages such as Four Loko.

    Washington joins other states that have imposed similar bans, including Pennsylvania, Michigan and Oklahoma.
    KC's View:
    I realize that I’m at odds with a lot of MNB users on this one, and I certainly am sympathetic to the idea that maybe government should not be getting involved with this stuff. Sympathetic, but not in agreement. I think that products that are billed as being “liquid cocaine” and “blackout in a can” should be vulnerable to government regulation.

    Now, I would agree that it would be better if government would not have to do it. If every retailer in the country were to follow the lead of companies like Haggen, Wegmans and Tops and say that they refuse to sell products that are by their very definition irresponsible, then maybe government would not have to get involved.

    Most of us are parents. Most of us would be appalled if we discovered our kids were drinking this stuff. (I was when I found out my son had tried it.) And so those of us who have some control over what appears on store shelves ought to act like parents and say, this is where we draw the line.

    Published on: November 11, 2010

    • The Los Angeles Times reports that “prices for all manner of commodities are on the rise across the globe, a trend that is starting to pinch American consumers. On Tuesday prices of many raw materials continued to surge, with gold, cotton and sugar reaching record highs. A closely watched index of 19 major commodities closed at a two-year high, despite a late-day sell-off in gold and oil.

    “The effects are rippling from financial trading floors to local stores, forcing consumers to shell out more for everyday basics — a cup of coffee, a box of cereal, a gallon of gasoline. Those increases are being driven in part by short supplies of some crops and raw materials caused by poor weather in major producing regions and robust demand from emerging markets such as China and India.”

    Crain’s Chicago Business reports that “Charles Conaway, a former chief executive of Kmart Corp, agreed to pay $5.5 million to end a U.S. Securities and Exchange Commission lawsuit accusing him of misleading shareholders about the retailer's prospects prior to its 2002 bankruptcy.” The settlement comes “eight months after a federal judge in Detroit ordered Conaway to pay $10.2 million in the civil fraud case. A federal jury had found Conaway liable at a June 2009 trial.”

    Conaway has been appealing the jury finding, but this new agreement would end that appeal.
    KC's View:

    Published on: November 11, 2010

    • Walmart announced that Jeff Davis, its senior vice president of finance and strategy, has been named to the post of senior vice president and treasurer.

    Davis succeeds Charles Holley, who has been promoted to executive vice president/CFO.
    KC's View:

    Published on: November 11, 2010

    Michael Sansolo’s piece earlier this week about the Jon Stewart/Stephen Colbert rally in washington, DC, calling for sanity and civility in our discourse, prompted the following email from an MNB user:

    Anybody that thinks Stewart and Colbert are anything but a couple of left wing nuts that are not funny is crazy. I cannot believe you bought their manure. I am happy to rail on liberals at all times especially since they don’t know what being civil means. I will not be civil to people trying to destroy this country specifically DEMOCRATS!!!!!!

    I hope I’m wrong. But what worries me is the possibility that this sort of attitude is gaining traction in this country.

    It isn’t just the “I’m not going to be civil to people who disagree with me” nonsense, but the insistence that people who disagree with you are trying to destroy this country.

    Of course, this would seem to be a direct corollary to the “patriots and pinheads” approach to punditry, in which certain people seem to suggest that anyone who does not agree with a specific approach to governance is a pinhead.

    But let’s get back to this specific MNB user for a second. He claims that liberals and Democrats “don’t know what being civil means.” But without using his name - because he has asked me not to - I would point out that this very same user consistently is, shall we say, intemperate in the way he describes anyone who disagrees with him...and even the entire state of California.

    There is plenty of incivility to go around, on both sides of the political aisle and even among some independents who increasingly find ourselves disenfranchised from traditional political structures. But in this case, I daresay that this particular conservative should not be accusing anyone else of being uncivil.




    We also continue to get emails about the Four Loko caffeine-and-alcoholic drink controversy.

    MNB user Jeff Folloder wrote:

    Four Loko should be banned?  I'm sorry, but the product is not the problem.  People of been getting blasted out of their gourds for eons.  College kids binge drink and regular Joes make poor choices.  So we turn to government (the master of poor choices) to save us from ourselves?  Pretty hyperbolic if you ask me.  Why not insist that folks behave more responsibly and make the penalties for failure to do so more intense?  That may be simplistic, but the hew and cry for government intervention is driven by skewed attitudes and "facts".

    MNB user Richard Lewis wrote:

    In the South-West of France, where I had the pleasure to spend many summers growing up, they drink Kalimutxo (or Calimucho). One part red wine, one part Coke. With an ice-cube. Delicious.

    In the North of France, where I now live, an espresso and calvados is a common bar request. Two shots: delicious.

    In Majorca and parts of mainland Spain, they put a good two fingers of brandy in the coffee. Delicious.

    Then of course there is the "Irish Coffee" : whiskey, hot coffee and cream. An after-dinner cocktail well-known the world over. Delicious.

    One of any of these is a delight. Six is an incident.


    And MNB user Brian List wrote:

    The problem with Four Loko drinks, as opposed to a rum and coke or Jager Bomb, is that one can is equal to almost 5 beers.  And they come in fruit flavors to make them easier to drink.  Newly-minted college kids are drinking 2-3 cans in, say, less than 2 hours or so, and then the caffeine crash comes to a halt. Oops. Now you’ve drank 15 beers. Saying ‘what’s next, ban rum and coke’ is an irrational argument. These drinks are targeting towards younger drinkers (over 21 or not) to give them a quick drunk, without having to drink in volume, in a form that tastes good. See the problem?

    The reality of these drinks is that they are designed, formulated and promoted as being capable of knocking people senseless. People are encouraged to knock them back fast, and then have another. That’s the whole purpose.

    Some of you folks can hide behind the whole “it’s the same as a rum-and-coke or Irish coffee” argument, but I think it is disingenuous. Making these drinks, and marketing them, is irresponsible.

    And I’m wondering what it will take to change your mind. Your kid ending up in the hospital with alcohol poisoning? Your kid getting hit by a car driven by someone who has consumed a couple of Four Lokos? Or maybe your daughter being taken advantage of by someone who has had too many?

    I recognize that all these things can happen anyway. I know I cannot protect my kids from everything, including their own bad decision making.

    But I figure I have to draw the line somewhere. And this seems as good a place as any.
    KC's View: