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    Published on: December 6, 2010

    by Kevin Coupe

    I’m not sure how much national play this story got, but in the New York Metropolitan area it was a news story of some note.

    Last week, it seems, actor/comedian/writer Steve Martin, who has just written a serious novel set in the art world, participated in a “conversation” with a New York Times art writer at Manhattan’s 92nd Street Y, a forum for a lot of speeches, dialogues and various other events focused on politics and culture. During the session, the audience - including people around the country who were watching via closed circuit television - started emailing the Y management, asking why Martin was not talking about his career and, well, being funnier. Halfway through the conversation, someone from the Y even handed the moderator a note and asked her to pose different questions. And when the session was over, the Y offered the refund people’s money, and apologized for the evening not living up to its “standard of excellence.”

    I have to admit that I have mixed emotions about this one. Sure, it is important for any organization to responsive to the customer, but this seemed more a reflection of the growing desire for instant gratification. In business, that’s something we all have to be aware of; as has been written here on MNB many times, increasingly, customers want what they want, when they want it, how they want it,, where they want it, at a price they think is appropriate. Otherwise, they may go elsewhere. That’s something we all have factor into our strategic business plans.

    However, it also is critical for businesses to understand what they do, and who their customer is ... and have the courage of their convictions. There is such a thing, painful as it can be, as the intelligent loss of business. You can’t be all things to all people, and you can’t be so vanilla that you have no distinguishing characteristics.

    In this case, it is good to know that Steve Martin has not lost his sense of humor. He’s come a long way since the wild-and-crazy guy of his stand-up days, writing movies and plays, acting in both serious and comedic roles, and in yesterday’s New York Times, he wrote a brief op-ed piece, saying that the interruption of the on-stage conversation was “as jarring and disheartening as a cellphone jangle during an Act V soliloquy. I did not know who had sent this note nor that it was in response to those e-mails. Regardless, it was hard to get on track, any track, after the note’s arrival, and finally, when I answered submitted questions that had been selected by the people in charge, I knew I would have rather died onstage with art talk than with the predictable questions that had been chosen for me.”

    Martin added, “Since that night, the Y has graciously apologized for its hastiness - and I am pleased to say that I look forward to returning there soon, especially to play basketball.”

    And that’s our Monday Eye-Opener.
    KC's View:

    Published on: December 6, 2010

    It was decision time over the weekend in the brave new world of online coupons, as Groupon decided to spurn a $6 billion acquisition offer from Google, and spent $175 million to invest in LivingSocial, a competitive coupon site.

    Groupon’s gamble seems to be that by staying independent, it will be able to position itself for an even more profitable Initial Public Offering (IPO), perhaps as soon as its next year.

    Both Groupon and LivingSocial specialize in allowing companies to market their products and services in a targeted way to local consumers, and use social media tenets to build volume. They offer a deal-of-the-day, but if enough people do not sign up for it, nobody gets it - which encourages people to communicate about the deals to friends, family and co-workers.

    Bloomberg Business Week writes that “Groupon has attracted 35 million users in more than 300 global markets by offering discounts of as much as 90 percent on everything from massages to ski tickets. The company makes money by keeping part of the revenue raised by the coupons. Groupon’s sales may top $500 million this year, two people familiar with the matter have said.”

    And CNN writes that while “LivingSocial is currently booking average daily sales of more than $1 million, and is projected to top $500 million in revenue in 2011,” it “badly trails Groupon in daily use. In a survey tracking 81 group buying sites, measurement firm Experian Hitwise found that 79% of US visits last week went to Groupon. Living Social got 8% of the traffic.”

    Before the Groupon-Google deal fell apart, the New York Times wrote this about Groupon:

    “As investors fret that Google’s $6 billion bid for Groupon is too high a price to pay, new details about the company’s sales and growth suggest that it might be more like one of Groupon’s cut rate deals.

    “An individual close to Groupon, who spoke on condition of anonymity, said the company’s annual revenue is running in excess of $1 billion a year and its subscriber base tripled this summer, to 35 million users.

    “And an analyst at Barclays Capital, Douglas Anmuth, estimated in a research report released on Tuesday that sales could hit $1.5 billion in 2011.

    “At those levels, Google would be paying four times next year’s revenues. In contrast, the company paid $3.1 billion, or roughly 10 times sales, for DoubleClick in 2007. It bought YouTube for $1.65 billion in 2006, when the online video hub was making less than $11 million a year, according to a company filing. Also this week, Groupon disclosed new features, including a three-tiered pricing system, that would fundamentally change its business model and accelerate growth, focusing on local markets, although most likely at the expense of margins.”
    KC's View:
    I read these stories, and then I think about the crap-load of FSIs that fell out of my newspaper this weekend, most of which featured coupons that were completely irrelevant to my life.

    They went in the trash.

    But if I go to Groupon, I get engaged, I spread the word, and I help change the rules of the game.

    Forget whether Groupon is worth $6 billion. The real issue is if Groupon and its competitors are fundamentally changing consumer behavior, and have the potential for enormous impact.

    If you think not ... if you think that FSIs are the future ... then I think you are kidding yourself.

    Published on: December 6, 2010

    Stores magazine has a piece about AisleBuyer, described as a system that “enables shoppers to use their smartphone cameras to scan UPC codes and complete their purchases without having to wait in line: They can just show their phone’s screen to an employee at the front door and be on their way.”

    The system is just in pilot status at this point, at a Boston children’s store. But there are some interesting components to AisleBuyer that makes it worth noting.

    AisleBuyer has the ability to provide detailed product information to the shopper - including, if used in a food store, nutritional data that could help consumers make smarter buying decisions.

    And, AisleBuyer’s platform also provides “a complete analytics package that reflects how consumers interact with products from scan to checkout. It provides retailers with demographic, geographic and behavioral analytics, as well as targeting benefits previously only available to online retailers. The application will also suggest similar or complementary items for customers.”
    KC's View:
    All of which adds up to greater transparency on both ends, which is where the retailing business is going, especially in the food segment.

    And let’s face it, anything that can improve or eliminate the checkout experience is probably a good thing, since it generally is the worst part of shopping.

    Another interesting passage from Stores:

    This comes at a time when m-commerce has become a buzzword in industry circles. Last year, a Deloitte survey estimated that 19 percent of Americans used mobile devices for shopping – and the figure was twice as high among younger consumers.

    This is a critical piece of intelligence, because it suggests fundamental ways in which consumer habits are changing.

    Interestingly, Fast Company has a piece about how the Old Navy chain is using an iPhone-based system called ZipCheck, which allows any employee to check out a customer anywhere in the store. Here’s what the story says: ZipCheck “appears to be a modified form of the iPod Touch-based mobile EasyPay system Apple started using last year [1] at its retail stores. An iPod containing proprietary Apple software is attached to a barcode reader and a credit card scanner. The device is wirelessly connected to printers around the store as well as mini-printers the staff can wear on their belts, for easy receipt printing. The software in use at Mac stores allows staffers to process cash transactions, credit and debit cards, and even returns. In other words, store clerks can ring you up from anywhere.”

    If I worked for a supermarket chain (and had any real responsibility and/or authority, which might be a real mistake on the part of the company), I’d be calling the guys at AisleBuyer and ZipCheck today...and then try to figure out who their competitors are, and start calling them, too. This seems so emblematic of the shopping experience of the future ... and retailers have to pay attention.

    The customer of the future may well look at the traditional checkout experience as being obsolete and representative of old-world, antiquated thinking. Retailers certainly have to start considering this possibility, and figuring out strategic and tactical steps. In the food segment, AisleBuyer and ZipCheck may not be the precise answers...but there almost certainly will be some combination of the two, with a twist here and a turn there, that will be the answer. Or at least one answer.

    Retailers better start asking the questions.

    Published on: December 6, 2010

    Ahold USA announced that Robin Michel, president of the company’s Giant Landover division, will be leaving the organization by the end of the year “to pursue other opportunities.”

    The company said that Don Sussman, currently Ahold USA’s EVP supply chain, will oversee the operations of the division on an interim basis until a successor is announced.

    “Robin has played an integral part in revitalizing the Giant Landover business through several ambitious initiatives including the implementation of the Value Improvement Program (VIP) and Project Refresh to renovate 100 aging stores across the chain,“ said Carl Schlicker, CEO of Ahold USA Retail. “We wish her the very best in the future and thank her for her dedication to our customers and our business.”
    KC's View:

    Published on: December 6, 2010

    Bloomberg reports that Walmart has sued to stop the hiring by CVS Caremark of its former executive vice president and president of its northern US division, Hank Mullany, to be its new president of CVS Pharmacy.

    According to the story, Walmart charges that the hiring will violate a non-compete agreement signed by Mullany; an legal order has been issued that prevents Mullany from starting the new job until a December 15 hearing.

    According to the Bloomberg story, “Mullany, hired by Wal-Mart in 2006, oversaw operations at 587 Wal-Mart stores in 13 states including Pennsylvania, Virginia, New Jersey and New York, according to the suit. He was ‘privy’ to Wal-Mart’s national strategies and responsible for implementing those strategies in the northeastern U.S., lawyers for the Bentonville, Arkansas-based retailer said.

    “Wal-Mart and CVS, the largest provider of prescription drugs in the U.S., compete over prescription and over-the- counter drugs, as well as beauty aids and health products, according to the complaint ... Mullany signed a non-compete agreement in December 2009 when he was promoted to president of Wal-Mart North, according to Wal-Mart’s complaint. That role put him in charge of real estate and supply-chain functions for 1,312 stores in 19 states, according to the complaint. The non-compete agreement barred him from working for a competitor for two years after leaving Wal- Mart. He resigned in October and left the company on Nov. 5.”
    KC's View:

    Published on: December 6, 2010

    • The Philadelphia Inquirer reports that “ the Pennsylvania Supreme Court on Friday upheld sales of beer at Wegmans stores across the state, potentially opening the door for beer sales at other supermarkets and big retailers.

    “In a unanimous decision, the seven justices found that the Pennsylvania Liquor Control Board properly granted licenses to Wegmans Food Market Inc. to sell beer at eating areas in its supermarkets.

    “The stores have eat-in cafes that meet the liquor-code requirements to get restaurant licenses and sell beer to be consumed on the premises as well as to sell six-packs to go, the court ruled. The justices noted that their decision ‘may foreshadow the expansion of the practice of large businesses opening restaurants within their facilities’.”

    • The Hartford Courant reports that Supervalu’s discount format, Save-A-Lot, is expanding in Connecticut.

    “A 16,500 square foot portion of the former Shaw's supermarket, located at 425 Broad St. in Manchester, will become a Save-A-Lot grocery store,” the paper writes, and will open on January 20. At the same time, “a Waterbury Save-A-Lot store, located at 205 Union St. is also scheduled to open that same day. The grocery retail chain currently has seven outlets in Connecticut, including stores in Hartford, East Hartford, Bloomfield, New Britain, Meriden and Hamden.”

    • The Los Angeles Times reports that all but one HOWS Markets stores are shutting down, apparently the victim of a tough economy that was not kind of stores positioned as upmarket, and of a competitive offering that was not nearly differentiated enough.

    The company is closing down stores in Granada Hills, Malibu, Torrance, North Hollywood and Canyon Country, and keeping open only a Pasadena location.
    KC's View:

    Published on: December 6, 2010

    • In San Diego, KUSI-TV News reports that Walmart has begun a signature drive in the city, looking to push for a referendum that could overturn an ordinance that essentially prevents the building of supercenters within the city limits.

    Walmart has a month to collect 31,000 signatures, which would put the question on the ballot.

    Bloomberg reports that Walmart has confirmed that it is “working to ensure stable prices in the southwestern Chinese city of Kunming after a government order to justify and give advance notice of increases.

    “The company has noticed the situation in Kunming and is working with governments and suppliers to guarantee ‘supply of products, in particular daily necessities, as well as a steady price,’ Wal-Mart said in an e-mailed statement today. The Bentonville, Arkansas-based retailer is cooperating with both the local and central government, it said.”
    KC's View:

    Published on: December 6, 2010

    • The Grocery Manufacturers Association (GMA) announced that John Hewitt, general counsel at California’s Department of Food and Agriculture, has come on board as GMA’s director of state affairs.
    KC's View:

    Published on: December 6, 2010

    Elaine Kaufman, who was the owner of Elaine’s, the Upper East Side New York saloon that, as the New York Times wrote, was “one of the city’s best-known restaurants and a second home for almost half a century to writers, actors, athletes and other celebrities,” died over the weekend at age 81, of complications related to emphysema.
    KC's View:
    I mention this for one specific reason.

    Not to be unkind to the recently deceased, but Elaine’s reportedly had lousy food. Really lousy food.

    But what it did have was a) generous drinks, and B) a reputation for being friendly to people who were either creative or famous, and doubly friendly to people who were both. in other words, it was a comfort zone.

    That’s an important component. In the case of Elaine’s, the most important component.

    I’m not suggesting that every retail business can or should be like Elaine’s.

    But I do think that people who run stores can or should look and say, are we a comfort zone for our customers?

    Comfort can mean a lot of different things for different people.

    But it is a goal worth pursuing.

    Published on: December 6, 2010

    Responding yesterday’s “OffBeat” comments about glitches at a newly opened Burger, Shakes & Fries restaurant in Connecticut, MNB user Laurie Crosby wrote:

    Good customer service is a treat.

    You are absolutely right that BSF should have been prepared for anything to go wrong.  It should have been a main topic of the management meeting prior to opening, "be prepared" "expect the unexpected" "first impressions will either open the door or close it". Opening a new fast food burger joint is not rocket science.  Hopefully they don't need the "free coupons" on their grand opening, but it sure would have been nice to have them in their back pocket.

    We ski at Seven Springs Resort in PA and they unveiled a new high speed lift two years ago. Apparently it did not occur to anyone that the lift was new and there is a possibility that "anything can happen".  Many times the lift stopped working and people were stranded for 2 to 10 minutes.  At one point, the lift was inoperable for over an hour with stranded customers 30-40 feet in the air.  I would like to be able to tell you that the lift operators handed out free coupons for hot chocolate or coffee as they helped the customers off the lift and apologized for the mishap . . . . but I can't. Or an even more valuable coupon for a free ski day or free snowtubing (that would cost them absolutely nothing.)  Will those customers come back even if you don't give them a peace offering?  Yes, they will.  But what kind of reputation do you want your business to have?

    Good management has plans in place on how to offer good customer service 100% of the time. When a business is truly at fault, it starts with a heartfelt, sincere apology.  If this can be delivered, it is sometimes all you need.

    Also on the subject of customer service, but this time focusing on the online venue, we got the following email from an MNB user:

    I felt compelled to write this morning, based on my recent on-line experience with two majors - Toys R Us and  Here's how it played out.  

    I received the "wish lists" from the grandkids on Wednesday, Dec 1 and thought, thankfully, most items could be found at Toys R Us.  I went to the website and discovered not just one, but all four items I was searching for on-line were either "item not found" or "out of stock".  I then went to and not only found all the items I needed, but received suggestions for other items that would either compliment those I was intending to buy (batteries, AC adaptors, etc.), or for products purchased by others who had bought the items I was placing in my basket.  

    So, not only did I find and order all four items that I needed, I bought two additional gifts.  This was yesterday, Dec 2.  By this morning, Dec 3, I received an email confirmation that ALL ITEMS HAVE SHIPPED and are on their way, wrapped and ready for Christmas!

    I'm guessing that Toys R Us may have the items I was searching for, but either their site was malfunctioning or the items are stocked only in their brick-and-mortar stores and not available on-line.  Too bad.  They lost my on-line sale of $200 +, and I won't be back.

    BTW...Toys R Us had similar problems a few years ago, and it was a disaster. Which led the company to sign a fulfillment deal with Amazon, which cleaned it up and got Toys R Us back on track. Which in turn led Toys R Us to retake control of its online business again.

    And, at least in this case, drive the train right off the rails all over again.
    KC's View:

    Published on: December 6, 2010

    It’s Week Thirteen in the National Football League...

    Buffalo Bills 14
    Minnesota Vikings 38

    Jacksonville Jaguars 17
    Tennessee Titans 6

    San Francisco 49ers 16
    Green Bay Packers 34

    New Orleans Saints 34
    Cincinnati Bengals 30

    Denver Broncos 6
    Kansas City Chiefs 10

    Oakland Raiders 28
    San Diego Chargers 13

    St. Louis Rams 19
    Arizona Cardinals 6

    Carolina Panthers 14
    Seattle Seahawks 31

    Cleveland Browns 13
    Miami Dolphins 10

    Washington Redskins 7
    NY Giants 31

    Chicago Bears 24
    Detroit Lions 20

    Atlanta Falcons 28
    Tampa Bay Buccaneers 24

    Dallas Cowboys 38
    Indianapolis Colts 35

    Pittsburgh Steelers 13
    Baltimore Ravens 10

    And, in baseball news, it can be reported that New York Yankees fans climbed in off the ledges over the weekend after Derek Jeter came to terms with the team on a new three-year, $51 million contract with a fourth year option for $8 million. Jeter, at age 36 coming off one of the worst statistical years of his career, is taking a cut to stay with the Yankees, though it generally was conceded that no other team would have paid him more than the Yankees.
    KC's View:

    Published on: December 6, 2010

    Symphony IRI
    By Susan Viamari, Editor of Times & Trends, SymphonyIRI Group, Inc.

    Promotional activity across center store categories is on the rise as CPG marketers seek to drive purchase behavior in a down economy. To date, results of these efforts have been mixed, with some categories showing favorable volume shifts with promotional support, and others continuing to experience flat or negative growth.

    These high levels of promotional activity, though, have had another, perhaps less expected, impact on the CPG industry. Some consumers have become addicted to seeking out these promotional offers and are actually tailoring their shopping trips around these opportunities to save money. In fact, according to SymphonyIRI Group’s August 2010 Economic Update survey, 55 percent of consumers stock up on certain products when they go on sale in order to save money. In terms of driving purchase behavior, this is a good thing, particularly across categories which respond well to merchandising support. But, in terms of achieving margin goals and building and maintaining brand equity, the results are less favorable.

    CPG marketers can help wean shoppers off this affliction while still providing valuable savings, achieving margin goals and maintaining brand equity. The center store may hold the key.

    Center store is an important battleground for CPG manufacturers and retailers looking to establish shelf space dominance. This area of the store represents two-thirds of CPG sales, and it has been heavily impacted by private label throughout the past several years. To overcome the strong growth of private label that occurred early in “The Great Recession,” manufacturers relied heavily on promotional activity. During the past year, these high levels of promotional activity contributed to a decline in average price per volume across center store categories, which slipped of 0.6 percent. And, while private label inroads across some center store categories have softened and even stopped, overall center store unit sales growth remains rather anemic. Bottom line: This highly promotional business model is no longer viable or lucrative.

    Manufacturers must strike a delicate balance, establishing effective everyday pricing that provides value and encourages purchase behavior but still delivers against corporate and partner revenue and margin goals. Understanding the price elasticity of key categories and brands is paramount to these efforts.

    Another way to establish this balance is through collaboration. Much like group interventions that use the power of collaboration, marketers of national and store brands should work together to co-promote products with high purchase incidence, including complementary products targeted to expand shoppers’ baskets. Manufacturers should explore partnerships with retailers and/or manufacturers that serve complementary target audiences and trip types, and design affordable, multi-category solutions that build basket size or entice consumers to sample different products.

    Conservative shopping behavior is expected to continue well into 2011 and, perhaps, beyond. Researching and understanding your key and target customer base has never been more important. But, too often, manufacturers and retailers devote time and resources to collecting critical information about shopper attitudes and behaviors, and then apply this information about past behaviors to future strategies. This is akin to fighting a new war with old weapons. The forward-looking retailer and manufacturer will study and understand the past, but marry that knowledge with predictive analytics to more accurately forecast future shopper preferences, and anticipate and address those needs and wants.

    The center store will remain a critical battleground for 2011. It is a time replete with opportunity for CPG marketers. Those marketers who are able to sober consumers’ addiction to pricing discounts with innovative and value oriented marketing programs will be well-positioned to compete for shelf space and share of wallet.

    For more information about center store trends, download the SymphonyIRI Group’s Times & Trends Report, “Center Store: At Center Stage for Future CPG Success,” by clicking here.
    KC's View: