retail news in context, analysis with attitude

Published on: December 7, 2010

by Michael Sansolo

What turns great companies into merely good ones or good ones into bad ones? It goes back to something my longtime colleague Joy Nicholas always used to remind me: attitude determines altitude. In other words: you can’t fly if you don’t believe.

I love highlighting positive examples in these columns, but the simple truth is that the negative lessons often tell us more and deserve our keen attention. That’s probably why an article in this weekend’s New York Times got me thinking of the team killer that all of us have faced and likely lost to throughout our careers. It’s the attitude cancer known as cynicism.

In the Times interview, Kathy Savitt, the CEO of Lockerz, a social network and e-commerce site, talked about the importance of guts in dealing with tough problems; the importance of respect in the workplace and the need for wit. All are positive traits that help build a winning environment. But as all of us who have worked on teams know, bad behaviors can drive out the good, just as bad people sometimes drive out the bad. Savitt put cynics at the top of the list:

“It’s easy for people at many companies to become cynical, which leads to politics, which can create a cancer that can topple even the greatest companies. Cynicism is the first cell, so to speak, that can metastasize within an organization.

“A good example is when a team member has a great idea or has a big issue with a customer experience and no one responds, no one even acknowledges it. The idea festers, problems mount, no one listens. That’s a recipe for cynicism.

“Another cell for cynicism is when you feel a company is not living out its core values. And just a lack of overall communication can cause problems. Leaders can have the greatest of intentions and their senior team may feel completely bought into the vision. But if people on the front lines don’t know what’s going on in the company you might have a seed of cynicism that can grow.”

Among all the big problems companies face these days, cynicism might hardly make the list. But it should. It’s cynicism that turns employee-customer experiences into problems and cynicism that poison the workplace from the inside out. Savitt’s words remind us that leaders hold the antidote through clear communication and by addressing problems head on.

Virtually everyone in business today has a to-do list that is simply too long to ever complete. We all need to find ways to cut costs, improve service and build a value proposition that somehow can succeed in today’s incredibly challenging environment. None of it will happen unless our team is on board with a winning attitude and that won’t happen accidentally.

There’s a great line in the sports (and civil rights) movie Remember the Titans when a player is challenged on his attitude. Attitude, the player reminds his challenger, is a reflection of leadership. When the leader shows he is listening, the player’s attitude changes.

So make your to-do list one item longer. Eliminate the cynics or address the reason for the cynicism. There’s really no alternative.


Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: December 7, 2010

The New York Times reports this morning that the US Supreme Court has agreed to hear to review Walmart’s appeal of a class action suit against it that charges the giant retailer with employment and gender discrimination and that could, if Walmart loses, cost it billions of dollars. The suit, the Times writes, alleges that Walmart “discriminated against hundreds of thousands of women in pay and promotion.”

At issue in the appeal is not Walmart’s guilt or innocence. Rather, it is whether the suit should be allowed to forward as a class action. Walmart says, as the Times reports, that the hundreds of thousands of women included in the class action, who worked in some 3,400 stores in 170 job classifications, “could not possibly have enough in common to make class-action treatment appropriate.”

“We are pleased that the Supreme Court has granted review in this important case,” Walmart said in a statement. “The current confusion in class-action law is harmful for everyone — employers, employees, businesses of all types and sizes and the civil justice system. These are exceedingly important issues that reach far beyond this particular case.”

The Times reports that “in their brief urging the justices to deny review, the plaintiffs said Wal-Mart’s objection to class-action treatment boiled down to the enormous size of the class. But size is ‘legally irrelevant,’ the brief said. ‘The class is large because Wal-Mart is the nation’s largest employer,’ the brief said, ‘and manages its operations and employment practices in a highly uniform and centralized manner’.”

Published on: December 7, 2010

by Kevin Coupe

The Boston Globe reports that there is at least one institution happy with all the controversy about airport security lines.

Amtrak.

The railroad’s Acela Express high-speed service has grown into an unqualified success since it was launched in 2000. According to the Globe, Amtrak had as its goal “grabbing a larger share of the lucrative business travel market from short-haul air routes between Boston, New York, Philadelphia, and Washington. By most measures, it has succeeded.

“Amtrak now transports 55 percent of passengers in the Boston-New York air-rail market, up from 16 percent in the mid-1990s, according to the New England Transportation Institute, a nonprofit research organization in Vermont. Acela’s ridership has risen nearly 30 percent, from 2.5 million passengers in its first full year of service to 3.2 million passengers in fiscal 2010, which ended in September. Air travel, on the other hand, has declined.

“Last year, nearly 30 percent fewer people flew between Logan and the three New York-area airports than in 1999, the year before Amtrak introduced Acela, according to the Bureau of Transportation Statistics. Air passenger numbers decreased 35 percent between Boston and Philadelphia and 8 percent between Boston and Washington in the same period ... Meanwhile, Amtrak has its eye on the day when no one will choose to fly from Boston to New York. In a report looking ahead to 2040, when projected 220-mile-per-hour train speeds will cut the 3 1/2-hour trip to 83 minutes, Amtrak officials forecast air travel on the route will fall to zero.”

Here’s how David Lim, Amtrak’s chief marketing officer, assesses the opportunity: “We’ve designed a product for the business travelers’ needs, and we’re trying to reach them at the most relevant points of their travel experience. The underlying assumption being the airport experience has not been the best in the last couple of years.”

And because Amtrak doesn’t want to just let the trend evolve on its own, the company has become more aggressive in its marketing. The Globe writes, “ Amtrak is targeting airline passengers where they live — in airports and security lines. A larger-than-life banner promoting Acela now stretches above the three-lane roadway at Logan International Airport. A TV ad for the high-speed rail emphasizes ‘taking off your shoes only if you feel like it’ - a reference to tightened airport security measures that recently some say have bordered on groping.”

It was just a month ago that MNB had another Eye-Opener about trains (which may reflect my prejudice for this particular mode of transportation). At the time, we referenced the fact that experts were saying that Amtrak revenue was growing because of what was termed “the real game changer” - the ability for people to use “smart” technology - laptops, smartphone, iPads and the like - to work and communicate from almost anywhere.

And Michael Sansolo has written here about his enjoyment of long distance bus travel; there is a real sense that travel is getting more competitive.

Matthew Coogan, director of the New England Transportation Institute, tells the Globe, “I would hope that we’re going to see a stabilization, where Amtrak really knows it’s got to compete for your dollar, where those aviation companies know they have to compete for your dollar, and the bus industry knows they have to compete for your dollar. And we seem to be seeing it. Who would have guessed you would get a good Wi-Fi connection on a Greyhound bus? But you do.’’

“Compete” is a verb. We’re seeing it in the transportation business. And we have to practice it in the retail business - by identifying and implementing game changers, and then with in-your-face marketing.

All aboard.

Published on: December 7, 2010

The Seattle Times reports that Kraft Foods “is seeking a preliminary injunction in the U.S. District Court for the Southern District of New York to prevent Starbucks from behaving as though their agreement has been terminated -- specifically, meeting with Kraft's grocery store customers to discuss a transition away from Kraft.”

The move comes after Starbucks CEO Howard Schultz said last month that his company was ending its 12-year relationship was ending, complaining that Kraft was not looking out for Starbucks’ best interests.

According to the Seattle Times, “Kraft says Starbucks must buy it out, which analysts say would cost $1 billion or more. It says Starbucks made an offer in August to buy out the agreement, but Kraft rejected it as inadequate. In October, Starbucks sent Kraft a letter alleging breach of contract, which Kraft disputed in a letter on Nov. 4, the same day Schultz went public with news of the break-up.

“Since then, there have been public statements about who did what wrong -- Starbucks alleging that Kraft hurt its brand, and Kraft alleging that the contract goes on indefinitely unless both parties agree to a buy-out.”

The New York Times writes that “Kraft claims that Starbucks unilaterally decided to end their agreement, and Starbucks says that Kraft failed to aggressively promote its brands, which include Seattle’s Best Coffee, in stores. The bitterness has also spilled into the fast-growing market for single-serve coffee machines, with Kraft accusing Starbucks of undermining sales of its Tassimo coffee system ahead of the peak holiday season.”

Published on: December 7, 2010

Winn-Dixie Stores announced that it is making the move into digital marketing with a web-based interactive circular, store locator, online shopping list, and online advertising and revenue sharing platform.

Powering the deployment of Winn-Dixie’s digital marketing programs in MyWebGrocer, which says that the addition of the Florida-based retailer brings the total number of stores using its products and services to more than 10,100 nationwide.

Full disclosure: MyWebGrocer is a longtime and valued MNB sponsor.

Published on: December 7, 2010

Consumer Reports is out with a report in its January 2011 issue saying that its “latest tests of 42 samples from cans and pouches of tuna bought primarily in the New York metropolitan area and online confirm that white (albacore) tuna usually contains far more mercury than light tuna. Canned tuna, Americans’ favorite fish, is the most common source of mercury in our diet.”

According to the magazine, “The Food and Drug Administration (FDA) and the Environmental Protection Agency (EPA) say that women of childbearing age and young children may eat up to 12 ounces a week of light tuna or other ‘low in mercury’ seafood, including, within that limit, up to 6 ounces per week of white tuna.

“Consumers Union’s fish-safety experts continue to suggest a more cautious approach. Because of its potential effects on fetal development, Consumers Union advises pregnant women, as a precaution, to avoid eating tuna.  Consumers Union further advises that children who weigh more than 45 pounds limit their intake to 12.5 ounces of light tuna or 4 ounces of white tuna per week; and children who weigh less than 45 pounds limit their intake to no more than 4 ounces of light tuna or 1.5 ounces of white tuna.”

Consumer Reports says that its tests, conducted at an outside lab, found:

“Every sample contained measurable levels of mercury, ranging from 0.018 to 0.774 parts per million. The FDA can take legal action to pull products containing 1 ppm or more from the market.  (It never has, according to an FDA spokesman.)”

“Samples of white tuna had 0.217 to 0.774 ppm of mercury and averaged 0.427 ppm. By eating 2.5 ounces (about half a can) of any of the tested samples, a woman of childbearing age would exceed the daily mercury intake that EPA considers safe.”

“Samples of light tuna had 0.018 to 0.176 ppm and averaged 0.071 ppm. At that average, a woman of childbearing age eating 2.5 ounces would get less than the EPA’s limit, but for about half the tested samples, eating 5 ounces (about one can) would exceed the limit.”

The magazine concludes that “the FDA should strengthen its current guidance and advise pregnant women to avoid tuna altogether, especially given the uncertainties about the impact of occasional fetal exposure to high mercury levels.” And, it says, “The FDA should continue to test for mercury across the spectrum of fish and seafood in the marketplace in order to provide consumers with adequate information on the mercury levels of all fish.  There may well be other species that vulnerable groups like pregnant women should avoid but FDA needs to conduct more testing to draw conclusions.”

Published on: December 7, 2010

The New York Times this morning that in anticipation of a Walmart foray into the Russian retail marketplace, “Two of Russia’s largest grocery store chains, Pyaterochka and Kopeika, said on Monday that they would merge their operations in a move that would better position them to compete with Wal-Mart ... The deal, worth about $1.7 billion including the assumption of debt, was also a sign of renewed confidence in the Russian consumer market, which has been picking up because of rising prices for oil and other commodities that Russia exports.”

Published on: December 7, 2010

As Google launched its new eBooks business, making hundreds of thousands of titles available online and positioning it as a competitor to Amazon’s Kindle, Apple’s iPad and a range of other e-book readers, the Wall Street Journal reports that a major shareholder in the Borders Group chain is proposing that the company should merge with Barnes & Noble.

According to the Journal, “A hedge fund managed by Borders investor William Ackman is now offering to finance a bid of $960 million in cash, or $16 per share, for Borders to buy the much bigger Barnes & Noble, which put itself up for sale in August. Mr. Ackman, whose Pershing Square Capital Management LP holds 37.3% of Borders shares, made his offer in a regulatory filing that became public Monday.

“A marriage of the two book behemoths could lead to some significant cost savings through economies of scale. Barnes & Noble also has proven to be a more adept operator, with skills that it could be applied throughout a single, combined chain. But a combination of the No. 1 and No. 2 bookstore chains in the U.S. would face headwinds, including antitrust scrutiny and Borders' own shaky finances.”

The paper notes that this would be an unusual deal “because it would entail using a smaller company, Borders, with a market capitalization of about $100 million, to make a bid for a Barnes & Noble, with a market capitalization of about $865 million.”

Published on: December 7, 2010

• In Pittsburgh, the Post-Gazette reports that Giant Eagle is using a new 170,000 square foot fresh foods preparation facility in Beaver County to experiment “with becoming its own food supplier -- at least for certain products. The sprawling facility, formerly used by various food distributors, has plenty of empty, echoing space.

“But about 70,000 square feet is in use, with almost half of that outfitted with the massive kitchen equipment needed to supply all of the grocer's 228 Giant Eagle stores and 160 GetGo convenience stores with pre-cut fresh fruit as well as to start taking over the job of supplying them with soups and certain prepared foods ... In addition to controlling quality, the grocer believes it can capture profit margin and increase flexibility by doing the work itself.”

• Reuters reports that Unilever said yesterday that it “plans price hikes in response to higher costs for inputs such as vegetable oil ... Demand for plant oils from Russia and Asia is strong but supply is being affected by hedge fund speculation and the use of those oils for biofuels.”

Published on: December 7, 2010

• Kellogg Co. said yesterday that CEO David Mackay will retire at the end of the year. He will be succeeded by current COO John Bryant, who said he is not planning any dramatic strategic changes for the company.

• Rodney McMullen, president and chief operating officer of The Kroger Co., has been appointed to the GS1 US Board of Governors and was named Chairman, the organization announced today. He will serve a two-year term as Chairman.

Also newly elected to the board were John Hogan, Vice President of Customer and Logistics Services for Johnson & Johnson; Larry Pulliam, Executive Vice President of Foodservice Operations for Sysco Corporation; and Sanjay Sarma, professor of mechanical engineering at the Massachusetts Institute of Technology (MIT).

Former Board Chairman J. Alexander M. (Sandy) Douglas, Jr., President of Coca-Cola North America, completed his term and will remain on the board for another year.

GS1 US is a not-for-profit organization that develops supply-chain standards, solutions and services for 25 industries.

Published on: December 7, 2010

“Dandy Don” Meredith, who parlayed a relatively short career as a Dallas Cowboys quarterback into a career as a “Monday Night Football” color commentator alongside Frank Gifford and Howard Cosell that changed the art and craft of sports broadcasting, died Sunday of a cerebral brain hemorrhage. He was 72.

The Wall Street Journal reports that “In a career that stretched more than two decades, Mr. Meredith threw touchdowns, pitched ice tea, cut country singles and had a recurring role on the TV show "Police Story” ... Mr. Meredith retired from the "MNF" booth following the 1984 season and concentrated on playing golf. He returned to ABC for the final broadcast of "MNF" in 2005 to sing Willy Nelson's "The Party's Over," his trademark late-game reaction to blowouts.”

Published on: December 7, 2010

MNB yesterday wrote 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.”

I commented, in part:

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.

MNB user Kevin M. Fitz responded:

Hmmm, transparency and experience for you always seems to mean the elimination of any people to people contact. If I can check out with minimal contact I can improve my experience. Kevin, I listened to you in Salt Lake a couple of months ago and read your posts daily, you don’t look below the surface much!

Hardly the first time I’ve been accused of being shallow, and likely won’t be the last.

I can understand why you think that, but to be fair, I’m not exactly anti-people. I am anti-retailing experiences that don’t use people to their advantage. That allow, for example, checkout people to spend more time talking to each other than to shoppers. Who don’t create cultures that encourage customer interaction. Who use self-checkout systems as a way of simply cutting labor costs, as opposed to deploying at least some of those people onto the sale floor where they can help shoppers and maybe even do a bit of informed selling.

Also to be fair, I said in the same commentary that I love the idea of allowing employees to be in the aisles with iPod based technology that permits them to checkout customers with just a few items, avoiding the traditional checkout and perhaps even creating a better connection between the employee and the shopper.

Here’s the problem. Because a lot of stores don’t do a good job of creating meaningful customer-employee connectivity, technological solutions often are able to supplant them.

That’s reality. Amazon.com, for example, knows a lot more about its customers and acts on that knowledge than most brick-and-mortar retailers.

MNB fave Glen Terbeek wrote:

AisleBuyer is just another example that proves that the stores of the future will only exist if and when they provide a unique value above and beyond distribution value.  If you read this article closely, it basically confirms that the store is a physical shopping experience,  not a logical shopping experience. The smartphone can help to make the current store logical. However online sites can do a much better job of sorting items by nutritional values, suggest related items,  meal recipe solutions, etc. than a physical store can, while eliminating the physical shopping chore, and the dreaded checkout.  We already have shoppers paying a $8-10 pickup fee so they can avoid the physical store experience.

Retailers shouldn't assume shoppers will continue to come to the stores, and need to interact with them closer to when and where they make the decision to shop; when demand is created. Shopper demand is created 24/7 (not when they visit the store) and the future service provider (not today's store) that closes the gap between the time that demand is created and captured will be winners.

It is time for the industry to understand the shopper has an information advantage and control, and we need to start changing the industry model accordingly.  




Addressing the confluence of stories yesterday, MNB user Ken Hillman wrote:

An interesting flow to your articles today...pushback on Steve Martin being an artist and Groupon being a steal at over $6 Billion. To me, the takeaway comes from rebranding. Once you have established yourself as A, the market often only allows B to be B...but fights back if A wants to innovate to be B...see?

Yup.

And MNB user Gary A. Narberes wrote:

Interesting article of yours to read this morning after catching Steve Martin on CBS’s Sunday Morning yesterday.  While a photo montage showed him in his “wilder days” the comedian was quite dead pan through the entire interview which took place in an art gallery and centered on his new book.

I would have to chalk this one up to an actor perfecting his craft apparently you can’t be funny and be serious about art at the same time.

I, like the audience at Y, found it a bit uncomfortable to watch since there was rarely a hint of the man that has made us laugh for years.

Hey, it’s hard to reinvent yourself. It takes time, patience, perseverance ... and an audience that allows you to go there.

I would never classify myself in the Steve Martin class. But I’ve done a bit of reinvention myself over the years, if only to be relevant.

I can remember when I started working for “Supermarket Insights,” the video magazine program, back in the mid-eighties. John Lightfoot used to tell me that I had to forceful about offering my opinions...but I always said no, that my job was to report. He probably is laughing these days, since I’ve reinvented myself as a guy who does nothing but offer opinions...but I think reinvention is the same as evolution.

Published on: December 7, 2010

The New England Patriots buried/destroyed/embarrassed/beat up on on the New York Jets 45-3.