retail news in context, analysis with attitude

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: