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    Published on: December 8, 2010

    by Kevin Coupe

    Marketwatch has a profile of CEO and founder Jeff Bezos, noting that he has steered the company through enormous challenges, turning it into an institution that many believe is one of America’s best-run companies.

    The secret, Marketwatch writes, “lies in a willingness to make big bets and stick to them, even when conventional wisdom fails to foresee a payoff. Of course, it helps greatly when they are the right bets.”

    The story goes on: “Over the past decade, Bezos has placed (and cashed in) a wide array of successful wagers. He has expanded the company’s product base from books, CDs and movies to practically everything under the sun, from clothing to flat-screen TVs to garden supplies to groceries. This fall, he bought He allows competitors to use Amazon’s product pages to undercut the company’s own listings. He ships many items for free and prices high profile offerings at a loss to draw in customers.

    “Bezos, who turns 47 in January, also has the cheek to compete with consumer-electronics giants such as Apple Inc. and Sony Corp. on their home turf. Not to mention that little Amazon side business allowing companies to forgo expensive investments in computer servers and data centers - and which may someday raise the ire of such tech titans as Cisco, IBM and Hewlett-Packard.”

    But in the end, Marketwatch suggests, these are the reasons that Bezos has become one of the most successful and influential retailers of our generation: “His relentless focus on the customer, his long-term discipline in financial management and his willingness to make big bets, even ones that endanger current business lines.”

    Perhaps the most important of these is the focus on the customer. As Bezos has said numerous times, he prefers to innovate for the customer rather than chase competitors.

    Which ought to be a mantra for any effective retailer.

    That’s our Wednesday Eye-Opener.
    KC's View:

    Published on: December 8, 2010

    Bloomberg reports that Walmart plans to stop paying employees hired after January 1, 2011, an extra dollar-per-hour when they work on Sundays, changing a longtime policy in an effort to cut costs.

    The move will not affect any of the company’s existing 1.4 million US employees; it also won;t affect employees in Rhode Island and Massachusetts, where local laws prevented employees from being paid the extra money.

    "We regularly review our compensation programs and we are confident Wal-Mart’s pay and benefits are as good if not better than other retailers," says spokesman Greg Rossiter said.
    KC's View:
    I have no personal experience with this, but I wonder if this will create issues down the road when some people working on Sunday at the local Walmart are being paid on a different scale than others. Maybe it isn’t a big issue, but it could breed some discontent. And the last thing Walmart needs is discontent.

    Published on: December 8, 2010

    The Charlotte Observer has an interview with 90-year-old Ralph Ketner, the founder of Food Lion, in which he assesses the company he retired from in 1992 as well as retailing trends in general.


    On organics and other specialty items... “There are people who are willing to pay for the organic items and better selections and so forth, but I would rather cater to 80 percent of the people than I would to the 20 percent who want certain things. I'd say, ‘Go somewhere else and buy it’.”

    On Food Lion since his departure... “After I left in 1992, we had 1,017 stores. Our goal at that time was 2,000 at 2000. We planned to open 900 stores in the next eight years. We'd opened 318 in the last three years I was with the company, so it was not an unreachable goal.

    “But after I left - it's a funny thing. They didn't think we should sell stuff below cost. One-sixth of everything I sold was sold for less than we paid for it in carload lots. If we bought $10 million worth of Gerber baby food, we sold it one jar at a time for $8.5 million, 15 percent below cost. You can't take percentages to the bank, you take dollars to the bank.”

    On shopper loyalty programs... “If I were still running Food Lion and still had the lowest prices, then no, I wouldn't want it. There's a cost to getting that information. If you're catering to the person primarily because you're gonna take care of them and give them groceries at the lowest price possible, they're coming back next week. I don't need to know what color shirt they were wearing or how much cereal and what brand they bought. All I want to know is they bought it at Food Lion. I'm narrow-minded that way.”
    KC's View:
    I don’t want to be disrespectful to a 90-year-old man who has forgotten more about the retailing business than I am ever going to know. But “narrow-minded” is right.

    Ralph Ketner never had to compete with Walmart. Never had to compete with Aldi. Never had to compete with Amazon.

    The simple fact is that there is far more competition out there today than ever before ... and the fight to be lowest-priced is almost unwinnable. No matter how low you go, somebody else can go lower. At some point, it seems to me, you have to have something else other than low prices ... you need to be sharp on pricing, but you’d better have another quality, product, or service that distinguishes you in the eyes of the shopper, that gives you a differential advantage.

    Then again, what do I know?

    Published on: December 8, 2010

    Internet Retailer reports on a new study from Accenture saying that “73% of shoppers with smartphones favor using their smartphone to handle simple tasks in stores compared with 15% who favor interaction with an employee, the survey says.  Similarly, 71% favor using their smartphone to identify a store with a desired item in stock, while 17% would prefer to get that information by speaking to an employee.”

    The story continues: “The survey presents good news for retailers that have taken the plunge and created mobile apps. 69% of smartphone users are aware of smartphone apps from large retailers and 48% have downloaded at least one app. 90% of consumers who have downloaded an app from a large retailer found it ‘very useful’ or ‘useful.’

    “The survey also found that smartphone users would find it useful to download coupons to their phones (79%) and receive instant coupons as they pass by an item in a store (73%). But privacy remains an important concern of consumers. 54% of respondents worry that using smartphones will erode their privacy.”

    “Smartphones will permanently change the relationship between the store and the shopper,” Janet Hoffman, managing director of Accenture’s retail practice, tells Internet Retailer. “Today’s tech-savvy consumer wants a seamless shopping experience across store, mobile or online at a time that suits them. Ultimately, this trend will lead to a new definition of the store; purpose, place and size are all up for debate. Already we are seeing some shoppers treating stores more like a showroom to test products and then making their purchase online.”
    KC's View:
    This actually goes back to a discussion that we were having yesterday in “Your Views,” in which one MNB user thought that I am anti-people, anti-brick and mortar stores, and believe that technology provides better solutions in terms of service and transparency.

    I would argue that every retailer has the opportunity to turn its people - whether at the checkout, in service departments or in the aisles - into the stars of the show...or at least, into critically important supporting actors that provide the retailer with an enormous differential advantage. But too few do that.

    Too many view their people as costs, not assets.

    We can blame customers for preferring technology to people, or we can shoot the messenger. who talks about this issue. But I think those approaches are misguided - that the real blame falls to retailers who do not use people to their greatest advantage.

    Published on: December 8, 2010

    Fast Company reports on the “increasingly common practice of irradiation, which kills bacteria (such as E. coli) found on fresh produce. Fortunately, for the skeptical, researchers at AgriLife Research have figured out how to drastically cut down on the dose of radiation needed to kill bacteria found on produce.

    “Irradiation was recently approved by the FDA for leafy greens like spinach and lettuce at dosages of up to 4,000 Gray--an ionizing radiation dose that would kill a human on contact but purportedly leaves greens safe for consumption. While the practice was only approved in 2008 for greens, it has been used for years to kill pathogens found in meat and spices.

    “But critics contend that irradiation causes leafy greens to lose their freshness. AgriLife's solution: putting  greens in a Mylar bag filled with pure oxygen before irradiating them at dosages of 200 to 1,250 Gray. The dosage kills the vast majority of pathogens while staying below the threshold that causes greens to lose freshness and the FDA's approved levels of irradiation, according to PhysOrg.”

    KC's View:

    Published on: December 8, 2010

    The Washington Post reports that Walmart is laying out plans for what is being termed “not your typical superstore” as it unveils new designs and looks to alleviate concerns in Washington, DC, about the four stores it plans to build there.

    “To bolster support and try to persuade skeptics, the company is emphasizing the fresh food, pharmacies and delicatessens the four proposed stores would bring to the neighborhoods - as well as the jobs,” the Post writes. Walmart also working to develop parking lots that are either underground or above-ground parking garages, so as to avoid the “sea of surface parking” that usually accompanies one of its stores.

    The big focus that Walmart is putting on the stores, according to the story, is that they will serve local communities - pointing out that DC residents spent $41 million in a Walmart outside the city last year, and that this money would be better spent inside the city, where it would generate local sales taxes.
    KC's View:

    Published on: December 8, 2010

    In Minnesota, the Pioneer Press reports that Target “is enjoying a strong holiday season, and research into consumer buying habits released Tuesday added to the shine.

    “Retail researcher Britt Beemer surveyed 1,000 U.S. consumers since Black Friday and found Target's popularity grew significantly. Target shopping trips this past weekend were up 50 percent from last year - while consumer visits to archrival Wal-Mart slumped.”

    Target’s strength, according to analysts, is its apparel business, and is likely to become more of an advantage as Christmas draws closer. The story suggests that Walmart’s strength is electronics, but it is believed that the later it gets in the holiday shopping season, the more people will move toward budget-priced clothing and away from higher-priced clothing.
    KC's View:
    It is a limited sample, and it certainly helps that in this case Target is the home team. But the survey certainly points to an ongoing and tightening competitive struggle between these two superstore titans.

    Published on: December 8, 2010

    • The Chicago Sun Times reports this morning that Chicago Mayor Richard Daley “is proposing a lucrative property tax break to make way for Chicago’s second Costco warehouse store - this one on the Near South Side - in a move that could set a precedent for Wal-Mart and other big-box retailers.

    “The new Costco would be located at 14th and Ashland, creating 600 construction jobs, 125 full-time jobs and 125 part-time positions. Costco’s only store is located at 2746 N. Clybourn in Lincoln Park.”

    The Daley administration argues that while the tax breaks “would save Costco $1 million over a 12-year period ... the project would generate $27 million worth of local taxes during that same period.”

    Reuters reports this morning that Fortune Brands Inc., which owns brands ranging from Jim Beam whiskey, Titleist golf balls and faucet manufacturer Moen, plans to split into three companies ... Under a plan approved by Fortune's board, the company plans to spin off the home and security unit to shareholders in a tax-free transaction ... Fortune will either sell or spin off its golf unit, but a final decision has not been made.”

    According to the story, Fortune will retain the liquor business for the time being, though there have been a number of companies - including Diageo - that have indicated an interest in acquiring it.

    • The Nashville Business Journal reports that CVS Caremark “has asked a federal judge to dismiss a racketeering lawsuit filed in October by six Texas pharmacies and send the dispute into arbitration.” The retailer’s brief “argues that the pharmacies’ claims are covered by their respective contracts. Rhode Island-based CVS Caremark's pharmacy benefits business has its headquarters in Nashville.”

    The Texas pharmacies accuse CVS Caremark “of using confidential patient data to encourage members of its pharmacy benefits management plan to fill their maintenance prescriptions at pharmacies owned by CVS Caremark.

    Bloomberg reports that “Blackstone Group LP is teaming up with Bright Food Group Co., Shanghai’s biggest food and dairy company, to acquire vitamin and supplement retail chain GNC Holdings Inc.,” a move that the story says “may be the largest U.S. takeover by a Chinese buyer,” and one that also could give GNC an advantage in targeting the Chinese marketplace.
    KC's View:

    Published on: December 8, 2010

    Elizabeth Edwards, the estranged wife of former Sen. John Edwards (D-North Carolina), died yesterday at age 61 after a long battle with cancer.

    Elizabeth Edwards, who was variously portrayed as Joan of Arc and Lady Macbeth (and who may have had some characteristics of both but probably was somewhere in between), was seen as a major political asset to her husband, who twice ran unsuccessfully for the Democratic presidential nomination and was the Democratic vice-presidential nominee in 2004. However, she also endured public tragedy, dealing both with the death of a teenaged son in a car accident and the humiliation of being cuckolded by a husband proven to be both unfaithful and a congenital liar.
    KC's View:

    Published on: December 8, 2010

    MNB reported the other day that the US Senate passed via unanimous consent the Healthy, Hunger-Free Kids Act, described as “a bill that provides an additional $4.5 billion over 10 years to federal child nutrition programs including school lunch. If signed into law, it will be the first time that the federal government has increased funding for the programs in 30 years ... The bill allocates $1.2 billion to increase the number of children receiving food, an effort to meet President Obama's pledge to end childhood hunger by 2015. The remaining $3.2 billion would be used to improve the quality of school meals. This includes an extra 6 cents per meal per student for schools that meet new, stricter nutrition standards and funding for schools to establish school gardens and to source local foods. The bill also would mandate that the Department of Agriculture develop nutrition standards for all foods sold in schools, not just what is served in the lunch line.”

    One MNB user wrote:

    Once again the Obama Administration (ne Michele O.) is expanding the Nanny State once more.   Do the liberal left really think that banning certain food and drink from the school cafeteria will stop kids from eating what they want.  Is the next step to search the kids for contraband candy bars and soft drinks in their book bags?   Is that what the 5,000 folks that are being hired will be doing?   Michele is not going to stop at the school lunch room.   They are going to also target the small farmer who depends on small town markets to sell his products.   No more church bake sales and farmer markets at the town square.   Wake up America, the liberal left is going to never stop the idiotic "food police"mentality.   Only the intellectual pointy head liberals know what is best for this country.   The way we are headed, it will be like it was in the depression that folks will be glad to eat anything that they can get their hands on.   Where will the food police be then?   Perhaps they will have starved by then.

    Another MNB user wrote:

    Once again you have missed the big picture. Nobody wants obese or unhealthy children, but how many times must the American public tell everybody in government, STAY OUT OF MY BUSINESS!!!!!!! What I choose to feed my children is my business and should not be regulated by ANYBODY!!!!!!!!! I am thankful I live in a small town in a small state that I can still bring treats to class for my child’s birthday. I brought Ice Cream cupcakes the other day. I guess I should be arrested by the Obama patrol for making kids fat. Where is it going to end?????? They are just going to keep pushing legislation until we become a socialist country controlled by the government. Anybody that does not see that is either blind or chooses to ignore the infringement on peoples rights. WAKE UP!!!!!!!!!!

    While I understand your concerns, I simply don’t see this the same way. (Which means you probably think I’m an intellectual pointy-headed liberal. Which is okay. I figure that if I’ve managed to convince people that I’m an intellectual - and nothing could be further from the truth - then I’ll have to live with the other labels.)

    Best I can tell, the bill isn’t saying what you feed your kids. It is, however, saying that schools need to serve lunches and snacks that need to meet certain nutritional standards. That doesn’t strike me as nannyism. I think it is making a proper investment in our children.

    Let me repeat what I wrote when the bill passed:

    “I’m sure there are places where the child nutrition legislation overreaches. There almost always are. And I’m sure there are places in the bill that have been crafted for political expediency - by members of both parties - rather than children’s best interests.

    “But as a taxpayer, I think that public schools need to be held to a higher standard in all areas - and that includes in the cafeteria. If we want our kids to be the smartest, best-educated children on the planet, which will in turn make them the most innovative and competitive, then that ought to include feeding them and educating them about the importance of proper nutrition. That doesn’t strike me as a cost. It sounds more like a good investment. And for either side to use kids - and their best interests - for political advantage in this area would be a shame. “

    I actually liked the way that MNB user Kevin McCaffery responded to this story:

    I think Dean Vernon Wormer of Animal House said it best:
    “Fat, drunk and stupid is no way to go through life, son.”

    I wrote last week that I was almost disappointed that TSA security procedures were not all they’d be cracked up to be:

    “I went into the weekend thinking that there was at least a 50-50 chance that I was either going to be felt up or have naked pictures taken of me, and I haven’t had a weekend like that since college.”

    Which led one MNB user to write:

    I got a big LOL out of that one.  I can relate. 
    I’m flying to Boston at the end of this month.  Unlike you, though, I’m hoping not to be groped by a stranger (I like to at least have a drink or dinner first and these days you’re lucky if you get peanuts on the plane).  If they do take naked pictures of me, what they see serves them right.  Bo Derek I’m not.  This whole TSA thing is a joke anyway.   False sense of security.  We all still need to be observant, because the TSA is not what it’s crapped up to be.

    “Crapped up to be.” What a great phrase.
    KC's View: