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    Published on: November 29, 2010

    Over the weekend, the always-reliable David Pogue, technology columnist for the New York Times, had a piece in which he looked “to review, to reminisce — and to distill some insight from the first decade in the new tech millennium.” One of the interesting things about it is the fact that a number of the lessons Pogue cited seemed to have some parallels in the retail world. Some examples:

    ”Things don’t replace things; they just splinter.” Pogue wrote about technology, “TV was supposed to kill radio. The DVD was supposed to kill the Cineplex. Instant coffee was supposed to replace fresh-brewed.

    “But here’s the thing: it never happens. You want to know what the future holds? O.K., here you go: there will be both iPhones and Android phones. There will be both satellite radio and AM/FM. There will be both printed books and e-books. Things don’t replace things; they just add on.”

    That’s a great lesson for retail practitioners, suppliers, analysts, and even pundits. Sometimes there is the temptation to see change as being absolute, but the simple fact is that in a diverse economy, made up of varying demographic groups, there potentially is room for all formats and retail iterations, the traditional and the radically provocative.

    Of course, this cuts both ways - you have to remember that regardless of whether you yourself are traditional or radically provocative. There always will be room for the other guy, especially if the offering is compelling and offers a differential advantage.

    ”Some people’s gadgets determine their self-esteem.” Pogue wrote, “Today’s gadgets are intensely personal. Your phone or camera or music player makes a statement, reflects your style and character.”

    I think it is fair to say that when people feel loyal to various stores, it is because they feel those choices say something about who and what they are. That goes for people who shop at Wegmans or Dorothy Lane Market or Lunds or Bristol Farms ... or people who shop at Walmart or Target or WinCo or Costco.

    And it seems to me that if a store does not speak this way to the shopper - does not prompt a specific response or connection, it may be that the store may be too nebulous or fragmented in its approach.

    We want our customers to have intensely personal reactions to our choices, even if they disagree with us and tell us so...because the very act of making a complaint often means something else - that they care.

    ”Sooner or later, everything goes on-demand.” “The last 10 years have brought a sweeping switch from tape and paper storage to digital downloads,” Pogue wrote. “Music, TV shows, movies, photos and now books and newspapers. We want instant access. We want it easy.”

    And the next generation of customers will extend this desire...indeed, this every segment of their lives. Not all the time, and not for everything.

    But retailers better be ready with increasingly responsive options...and with evolutionary and multiple offerings that create personal connections with their shoppers.

    That’s the gospel according to Pogue, extended to the broader world of retailing...and it’s our Monday Eye-Opener.

    - Kevin Coupe
    KC's View:

    Published on: November 29, 2010

    The National Retail Federation (NRF) says that over the just-passed Black Friday weekend - the post-Thanksgiving, traditional beginning of the end-of-year holiday shopping season - both sales and traffic were up over a year ago.

    According to NRF, “212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year. People also spent more, with the average shopper this weekend spending $365.34, up from last year’s $343.31. Total spending reached an estimated $45.0 billion.”

    In addition, “the number of people who began their Black Friday shopping at midnight tripled this year from 3.3 percent last year to 9.5 percent in 2010. In fact, by 4 a.m. nearly one-fourth (24.0%) of Black Friday shoppers were already at the stores. Thanksgiving Day openings have also been a boon to the industry, as the number of people who shop on Thanksgiving – both online and in stores - has doubled over the past five years, from 10.3 million in 2005 to 22.3 million in 2010.” Online sales on Thanksgiving reportedly increased 28 percent from last year to $407 million.

    As a possible indication that recessionary concerns may be receding, NRF notes that “both department stores (52.0% this year vs. 49.4% last year) and clothing stores (24.4% vs. 22.9%) saw healthy increases in traffic, while the percentage of people who shopped at discounters declined 7.2 percent, from 43.2 percent last year to 40.3 percent this year.”

    “While Black Friday weekend is not always an indicator of holiday season performance, retailers should be encouraged that a focus on value and discretionary gifts has shoppers in the spirit to spend,” said Matthew Shay, NRF President and CEO.
    KC's View:
    Hardly a scientific analysis, but Mrs. Content Guy and I both had the impression as we walked around downtown Chicago this weekend that the streets and stores were more crowded. It was her impression that there were a lot of people shopping but not necessarily carrying shopping bags, which reinforces the notion that a lot of people will be waiting for a few weeks to see what sales might be available as we get closer to Christmas.

    Published on: November 29, 2010

    The Financial Times this morning reports that “plans to revamp its international e-commerce platform to make it easier for the company to reach customers in new markets.

    “The online retailer, the world’s largest by number of visitors, operates online businesses in six countries outside the US. It says it has set up a new team that will create ‘the architectural underpinnings to greatly simplify country expansions’, by translating content into different languages and adjusting taxes, prices and delivery options to better suit customers’ locations.”

    The story, by Jonathan Birchall, notes that Amazon’s move “underlines the increasing globalisation of online retailing, as companies such as Gap, the US clothing retailer, and Walmart, the world’s largest retailer by sales, seek to use e commerce sites and cross-border shipping to reach a wider audience.”
    KC's View:
    And the thing that every retailer needs to understand is that Amazon sells almost everything. So if Amazon comes to your country, or expands its operations there, it means that it is entirely likely that you will be competing with them.

    Published on: November 29, 2010

    • The Wall Street Journal this morning reports that Walmart has made a firm $2.32 billion (US) offer to acquire 51 percent of South Africa's Massmart Holdings Ltd., which is the company’s first move into sub-Saharan Africa.

    The acquisition requires regulatory approval, and is likely to be opposed by local labor unions concerned about Walmart’s anti-union reputation. According to the Journal, “Wal-Mart has committed to working with local suppliers and said it will honor all preexisting contracts with organized labor bodies.”
    KC's View:

    Published on: November 29, 2010

    Bloomberg reports that chocolate manufacturers are finding that “younger consumers are famously tricky ... to reach via traditional marketing. That’s pushing many chocolate makers - long content to pitch consumers through magazine ads or supermarket promotions - online in search of youth with a sweet tooth.”

    That means using blogs, Twitter and Facebook to communicate with shoppers; in a nod to how transparency appeals to this demographic, “New York boutique chocolatier Jacques Torres is also embracing the Web. Besides the usual social media tools, he’ll soon debut a live video feed from his factories that he hopes will wow serious chocoholics.”

    Bloomberg notes that these moves are important at this time of year, since “chocolate is a popular gift in tough economic times. Two-thirds of U.S. adults buy chocolate during the holidays, according to researcher Mintel International Group. This year, Americans will spend more than $200 million on gift boxes of sweets, predicts market tracker Nielsen Co.”
    KC's View:
    Hardly revolutionary in 2010, but worth noting ... because there are still a few companies that think they don’t need to make such investments or embrace these new sales tools.

    Published on: November 29, 2010

    Fascinating story in the New York Times about Rhonda Kallman, founder of the New Century Brewing Co. and one of the co-founders of the company that makes Samuel Adams, who developed a caffeinated beer called Moonshot ’69, which has been positioned as an upscale, gourmet beer sold in small batches.

    But now, Kallman’s company is one of those being targeted by the US Food and Drug Administration (FDA), which is calling on companies making caffeine-and-alcohol drinks - such as Four Loko and Joose - to reformulate them or face regulation.

    Kallman says, according to the Times, that “her beer, which has an alcohol content of 5 percent, is being unfairly lumped in with high-alcohol, high-caffeine malt energy drinks that bear no resemblance to Moonshot or other beer.

    “The Food and Drug Administration said the letters were sent because caffeine was put directly in the beverages as a food additive and was not naturally occurring, as it would be in a beer brewed with coffee.”

    “This is prohibition in 2010,” says Kallman. “It’s devastated the company, and as a U.S. citizen, I’m just flabbergasted.”

    Jay R. Brooks, a beer writer who runs the Brookston Beer Bulletin blog, tells the Times that Kallman’s beer has been unfairly targeted by FDA.

    “There’s nothing about what she’s doing that makes it similar to Four Loko,” he says. “She was the dolphin that got snared in the net.”
    KC's View:

    Published on: November 29, 2010

    As the United Nations Climate Summit in Cancun, Mexico, gets underway, the Consumer Goods Forum (CGF) announced two food industry climate change initiatives, to work toward ending deforestation and to phase out the use of refrigerant gases with high global warming potential.

    CGF pledged to mobilize its companies’ collective resources to help achieve zero net deforestation by 2020, and “to begin phasing-out hydrofluorocarbon (HFC) refrigerants as of 2015 and replace them with non-HFC refrigerants.”

    The team of Forum member companies charged with delivering the deforestation and refrigeration pledges is co-chaired by Unilever and Tesco and includes Ahold, Barilla, Carrefour, Coca-Cola, Delhaize, General Mills, Henkel, Johnson & Johnson, Kellogg, Kraft, Kroger, L’Oréal, Metro, Nestlé, Pepsi Co, Procter & Gamble, Sara Lee, S.C. Johnson, Sobeys, Tesco, Unilever and Walmart.
    KC's View:

    Published on: November 29, 2010

    Starbucks, which announced a couple of weeks ago that it was ending the partnership with Kraft Foods that distributed its packaged products to supermarkets and other retail outlets, reportedly feels that Kraft mismanaged the sales effort and is guilty of “material breaches” of their contract.

    According to Reuters, Starbucks charges that “Kraft mismanaged store displays and marketing and failed to take ‘commercially reasonable measures to address the erosion of Starbucks market share,’ according to an October 5 letter from Starbucks' attorney Aaron Panner to Deanie Elsner, president of North American beverages at Kraft.

    “Unless Kraft fixed the breaches within 30 days, the letter said, their deal -- whereby Kraft sells Starbucks and Seattle's Best bagged coffees at grocery stores and other chains like Target Corp and Costco Wholesale Corp -- would end on March 1, 2011.”

    Kraft has denied the charges and replied, “"If Starbucks wants to terminate in order to pursue an alternative arrangement, it needs to give Kraft sufficient time to execute an orderly transition and compensate Kraft for the fair market value of the business, plus a premium.”
    KC's View:

    Published on: November 29, 2010

    • Walmart has introduced a new holiday shopping application for smart phones, “My Holiday,” which is designed to help shoppers stay within their budgets by listing price-appropriate gift options, as well as store locations and online buying availabilities.
    KC's View:

    Published on: November 29, 2010

    • The New York Times this morning reports that “Apax Partners has agreed to acquire Advantage Sales and Marketing from J.W. Childs and BAML Capital Partners, the latest large leveraged buyout in which a company passes from one private equity group to another.” The deal is said to value Advantage at $1.8 billion, according to reports; Apax will own 85 percent of the company, with existing management owning the balance.

    • The Boston Globe reports that a Canadian biotechnology company has asked the US Food and Drug Administration (FDA) for approval of a genetically modified (GM) apple that will not brown as quickly after being sliced. US apple growers appear to be skeptical about the use of the GM technology, which originally was developed in Australia for use in potatoes.

    • The Network of Executive Women (NEW) has announced that it has launched a Canadian version of the diversity organization, the first NEW expansion outside the US.

    “As the first region outside the United States, NEW Canada will pave the way for future international expansion,” says NEW Executive Director Joan Toth. “Through active and passionate committee members, the start-up process has been a thoughtful one, with support from Walmart and other key NEW sponsors and industry suppliers. We appreciate the Canadian Council of Grocery Distributors for giving us the platform to launch NEW Canada and to gain support from all of the major chains in Canada.”

    • The Wall Street Journal reports that Campbell Soup plans to “begin shifting attention away from reducing salt in its products to focusing more on ‘taste adventure’ as its U.S. soup business has turned cold ... The shift comes as heavy supermarket promotions of such simple meals as boxed macaroni and cheese have battered Campbell earnings in recent quarters.”

    According to the story, Campbell has already “unveiled new labels for its soups and store shelf displays. This fall, the company launched a new advertising campaign with the slogan, ‘It's amazing what soup can do,’ highlighting the convenience and health benefits of canned soup. Campbell also plowed more money into discounting.”

    • A group led by Kohlberg Kravis Roberts has agreed to acquire Del Monte Foods for $4 billion.
    KC's View:

    Published on: November 29, 2010

    • Kroger Co. announced that Paul Scutt, Senior Vice President, Retail Operations, will retire in late February 2011 after a distinguished 45-year career with the company.

    "Paul has been a driving force behind Kroger's safety, productivity, and cost control improvements," said David B. Dillon, Kroger's Chairman and Chief Executive Officer.  "Under Paul's leadership, the company has significantly reduced employee accidents, improved management of product shrink and other operating costs, and instituted process changes that have allowed Kroger to invest in its Customer 1st strategy."

    According to the announcement, “Mr. Scutt began his career with Kroger in 1965 as a store clerk.  In 1970, he left Kroger to serve in the U.S. Army, including a 15 month tour in Vietnam.  Upon his return from military service with the rank of Specialist 5th class, Mr. Scutt earned his degree from Indiana University and entered Kroger's management training program.  In 1976, he became a store manager and quickly rose through the company's operations and merchandising leadership positions.”
    KC's View:

    Published on: November 29, 2010

    “Surely this isn’t a serious story?”

    “It is a serious story. And don’t call me Shirley.”

    Leslie Nielsen, who moved from being a serious film and television actor with credits like Forbidden Planet, The Poseidon Adventure, and TV’s “The Bold Ones,” to being a marvel of deadpan comedy in movies like Airplane!, The Naked Gun (and its TV series predecessor “Police Squad), has passed away in a Florida hospital at age 84.
    KC's View:
    I think it is fair to say that as much as audiences enjoyed Nielsen in all those comedies, nobody had any more fun than he did, since Nielsen seemed to delight in his new-found comedy career.

    There were a lot of folks who, we discovered, were capable of being funny when put in the right movie with the right lines - everyone from Peter Graves to Robert Stack, George Kennedy to Lloyd Bridges, and even Priscilla Presley and Kareem Abdul-Jabbar. (O.J. Simpson even seemed funny at the time, but events have given his appearance in The Naked Gun unintended irony.) But nobody seemed to be having more fun than Nielsen.

    Published on: November 29, 2010

    MNB user Tom Redwine had some thoughts about a story from last week:

    I appreciate your pointing out the Washington Post article 'From Chili Dogs To High-Tech Applications,' but there might be one aspect of the article that the WaPo folks might've missed; the idea that a chili dog vendor got his community (i.e. his fans or fans of his business) to write an app for the business for fun... 

    OK, I'm sure there were some chili dogs involved in the final prize, as well as recognition from a larger base of people, but wow! What a great example of the power of collaboration, and one that many more organizations would be wise to encourage. my commentary about this evolving website, I wrote:

    Here, is seems to me, is the key learning from this story: There is no such thing as a finished product.

    There are just steps along the way. Experiments to be conducted. Trials to be run. Mistakes to be made. Opportunities to be explored.

    The thing about figuring out what the end game is, is that there is no end game.

    I’ve long argued that retail stores should not have prototype stores, because such creations tend to tell a concrete story and suggest that development is complete; there should instead be laboratory stores, where research and development (R&D) into new ways to surprise and delight (S&D) the customer is an ongoing and organic process. That’s certainly the case when it comes to creating mobile applications or web sites.

    Which led MNB user Garry Adams to write:

    I agree with you.   I’ve always said “there are 2 types of retailers – the quick and the dead” ... I remember telling that to a group of Blockbuster executives several years ago – they laughed.

    Who’s laughing now?

    Speaking of Blockbuster, from MNB user Tim McGuire:

    Kevin, in your comment to a reader's quite coherent and sincere description of why their family still goes to Blockbuster to rent DVDs, your response was "Not to be overly cynical, but I wonder how many people would describe their local Blockbuster employees as being "welcoming and friendly"?

    I think you are being overly cynical - we all know that you think anyone who has a choice between shopping online or in a store is crazy to choose the store experience - you make that clear every day.  But please recognize that there are still many people who, on many occasions, for many items, find the physical store a better choice for them.  Your reader's comment was a quite eloquent explanation of why that is true for them in this situation.  Although you may not agree with their choice, it would be less cynical of you to accept it, rather than demeaning it with a sweeping comment that suggests there are no good store experiences or friendly retail workers.  Just a thought...

    Fair point.

    To be clear, though, I do not have a knee-jerk negative reaction to physical retail experiences ... though I certainly understand why it might seem that way. In this case, I was actually talking specifically about my recollection of the Blockbuster experience, where the clerks seemed to be teens who would rather be anywhere else and whose knowledge of film went as far back as the early 21st century, and whose idea of a classic Hollywood director is Judd Apatow.

    My guess, based on conversation with a lot of people, is that most folks had generally the same impression. But perhaps my cynicism got the better of me.

    Continued discussion of taxes, the economy and the deficit...

    One MNB user wrote:

    Until we put anything and everything on the table the economic problems of this country aren’t going anywhere.  I wonder sometimes how stupid some of our politicians think we are to tell us we can lower taxes and not cut spending and be able to provide every service we desire.  And people buy this crap because it’s what they want to hear.  Too many of our leaders have no integrity.  Give me someone with integrity, someone who’ll make hard decisions, I may not like what they do every time, but I know they won’t shy away from at least trying to do the right thing, and I know when the “defecation hits the rotary oscillating device”, they will be there. (now can you remember what movie that quote came from)  Don’t tell me what you think I want to hear, tell me what I need to hear.  I don’t expect perfection from the leaders I vote for, I expect honesty and integrity, two things I don’t see nearly often enough.

    MNB user Mark Monroe wrote:

    I don’t follow the logic of the reader who stated that you can’t add a war tax because it won’t go away…I think he/she is confusing spending projects with taxes.  Certainly government projects, once instituted, tend to be permanent, but I don’t think the same is necessarily true of taxes on their own (unless directly associated with those spending projects).  So, if the argument is the Iraq / Afghanistan wars are never going away, therefore a tax associated with them will never go away, then I’m not sure that argues against a war tax (i.e., don’t we need some disincentive to going to / remaining at war?).

    Back to my prior theme (and building upon another reader’s comment): if everyone received a separate War Tax deduction on their paycheck every two weeks, I’m guessing the public discourse about the wars would have a somewhat different tone right now…

    As for taxes generically, a reminder: the top marginal rate in this country used to be 90% (for those making over $250,000).  Those rates were regularly cut up until the mid-80’s, when the last bout of tax increases was put in place.  And, as previously stated, we’ve had nothing but tax cuts (in various forms) over the past 17 years.  So, taxes can and do go away (if anything, it seems lately that it’s the tax cuts that won’t go away).

    Another MNB user wrote:

    Please read “Aftershock,” by Robert Reich…the excesses described in the Times article will all make sense and you will realize that the only economic trickle-system is a trickle-up system. And as Stephen Colbert aptly demonstrated, the only thing middle class gets in the way of “trickle-down” consists of drool dripping from wealthy chins.

    It is on my list.

    From another MNB user:

    I think that we need to look deeper into the “record” profits that have been “earned” by American business. You asked if we believe in the trickle-down theory and normally, I am a believer in that model. However, I have learned that that model works best in times of significant economic growth – which I equate to sales growth of businesses, not just profit growth. One concern that I have about the profit growth is that, in many cases, it has come via significant expense cutting/expense management. While this is good news with respect to corporate excess, and in some cases a necessary “right-sizing” of a business, my concern is that it is a short term win for business. This could help explain why we are seeing record profitability while jobs recovery is not very strong.

    A number of companies that I work with have had significant layoffs and then subsequently announced solid earnings. If these companies had truly re engineered the work effort so that they could get by with less, I would be less concerned – however, in most cases, the work effort has transferred to the remaining folks – which I believe is not ultimately sustainable. Our challenge is to get growth going from a consumption basis…however, given that the growth rates we saw before the economic downturn were driven by highly leveraged consumption, I think we as a nation are going through a necessary right sizing of our economy which means that it will be a slow, but positive growth. It also means, as you have often pointed out, that we are in a very competitive environment for the consumer’s wallet.

    MNB noted last week a New York Times report about how “American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms ... The next-highest annual corporate profits level on record was in the third quarter of 2006, when they were $1.655 trillion.

    “Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history. As a share of gross domestic product, corporate profits also have been increasing, and they now represent 11.2 percent of total output. That is the highest share since the fourth quarter of 2006, when they accounted for 11.7 percent of output.

    “The sobering part, according to the Times: ‘The current growth rate is far too slow to recover the considerable ground lost during the recession’.”

    One MNB user responded:

    KC, there is another side to this.  Most companies asked their organizations to “do more, with less”.  Some of that belt tightening was losing excess, but some of it was cutting into the bone.  At some point employee burnout will set in, quality will suffer and innovation will be non-existent as employees are in survival mode. Some companies are hitting their short term goals at the expense of long term growth and viability.  The problems surfacing week after week at J&J are a direct result of poor management and unrealistic goals coming out of the Pfizer consumer business acquisition.  It remains to be seen what price they will pay for their short term greed.

    Finally, in a note about the sales of Beatles songs and albums on iTunes, I asked the following question:

    Is there a single current young artist - in any genre - who you think will still have his or her music being played and adored in 40 years time?

    Geoff Harper responded:

    Justin what’s-his-name?

    Yeah. Right.
    KC's View:

    Published on: November 29, 2010

    It is Week Twelve in the National Football League...

    New England Patriots 45
    Detroit Lions 24

    New Orleans Saints 30
    Dallas Cowboys 27

    Cincinnati Bengals 10
    NY Jets 26

    Jacksonville Jaguars 20
    NY Giants 24

    Minnesota Vikings 17
    Washington Redskins 13

    Carolina Panthers 23
    Cleveland Browns 24

    Tennessee Titans 0
    Houston Texans 20

    Kansas City Chiefs 42
    Seattle Seahawks 24

    Philadelphia Eagles 26
    Chicago Bears 31

    St. Louis Rams 36
    Denver Broncos 33

    Tampa Bay Buccaneers 10
    Baltimore Ravens 17

    Miami Dolphins 33
    Oakland Raiders 17

    Green Bay Packers 17
    Atlanta Falcons 20

    Pittsburgh Steelers 19
    Buffalo Bills 16

    San Diego Chargers 36
    Indianapolis Colts 14
    KC's View: