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    Published on: March 22, 2011

    by Michael Sansolo

    Today, don’t just read MorningNewsBeat; today, take action. Here’s why: thanks to a host of political events, the banking industry is about to pull a fast one on the retail industry and all our consumers. Unless we do something, the industry will lose and our customers will lose.

    Kevin has written for weeks about how the banks are pushing the US Senate to delay or overturn legislation that limits the swipe or transaction fee banks can charge retailers when credit and debit cards are used. The financial industry ads are very, very slick and very good. They paint this as a battle that consumers can’t win. Essentially, they say, the new law pads the pockets and profits of big retail.

    Only one problem with that: it’s wrong.

    First, let’s be clear on something: I have a big bias on this one. I became aware of transaction fees in the mid-1990s, when FMI’s Electronic Payments Committee first identified the problem. Supermarkets had really just begun widely accepting credit and debit cards and it went wide almost immediately. The problem was the fees retailers found themselves paying to handle these transactions.

    That was only the beginning. The more ingrained credit and debit card use became, the higher the fees climbed. As more than one retailer said, the banks started making more money on each transaction than any supermarket.

    The retail industry (supermarkets, convenience, drug, mass, etc.…) began working together to change the system. There were lawsuits, ad campaigns and lobbying for legislation. For the most part it was a frustrating process that always seemed to result in higher fees and unsatisfactory endings, even when retail’s position seemed to prevail. The simple truth was that the firepower and market share owned by Visa and MasterCard created what sure seemed like a very uncompetitive playing field, where higher and hidden rates were the rule.

    Then it seemed to end, thanks to the Durbin Amendment in the financial reform act. Suddenly, bank fees would be limited and retailers would have the opportunity to pass the savings to customers. And that takes us back to Kevin’s articles on the push in the Senate to stop the changes.

    Here’s where you come in. The first part is simple: Talk to whatever association you belong to and join their lobbying campaign to SHOUT at Congress that this is the wrong way to go. Understand that you are battling a very well funded group that is worried about losing a cash cow. The fight won’t be won easily.

    So then go a step further. Throughout the entire process we’ve done a poor job explaining this issue to the customer and it is their voices we need to enlist. If they stay uninformed they have no reason to care which big business wins: banks or retailers. Michelle Singletary, the excellent money columnist for the Washington Post, wrote about this issue recently, laying most of the blame on the banks. In her frustration, Singletary said consumers should strike back by using only cash. That may not be the best direction, but we should pick up on her message of engaging customers and helping them understand the cost of money.

    Just as we need to educate consumers on so many topics - food safety and nutrition for starters - we need to talk about money. We can teach them that not all transactions are equal or equally safe and that some of those they see advertised most - especially signature-based debit cards - are the most expensive.

    We need to remind them that retail is a massively competitive industry, where cost savings are pushed back to the customer all the time - something that rarely happens with the banks. In short, we need to educate and energize them. If not…well, the cost of doing nothing is pretty high.

    As they said in the movie Network, you start by getting mad as hell.


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

    Published on: March 22, 2011

    by Kevin Coupe

    As has been noted here on MNB, the British government has taken the forward-looking, 21st century position that because checks are an inefficient way of transacting commerce, they will be banned in the UK as of 2018. Compare that to the US, where we have senators sitting on financial services committees who have admitted that they have only a passing familiarity with the use of ATM cards.

    When the UK initiative is mentioned, one of the questions that inevitably comes up is how British people will be able to give money to each other when they don't have cash and checks no longer are available to them.

    Well, the Associated Press reports on one possible answer: Visa has announced that “it is creating a service to allow individuals to use their own Visa or a bank account to send money to a personal Visa debit, credit or prepaid card. Users also may bring cash to a participating bank to make a transfer. Users also will be able to send money using a recipient's mobile phone number or e-mail address. In those cases, recipients will receive a message that someone is sending them money and then enter their own Visa account number to receive it.”

    Now, the fees that Visa may charge for this service are not mentioned in the story; based on the history of the company and what we know about interchange fees, it is entirely possible that they will be usurious.

    Put that aside for a moment. The fact is that this is 21st century thinking.

    There are always reasons not to do things. But real 21st century thinking finds innovative solutions, and leaps ahead, rather than be tethered forever to the traditions and methods of the past.

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

    Published on: March 22, 2011

    Reuters reports that the World Health Organization (WHO) believes that “the detection of radiation in food after an earthquake damaged a Japanese nuclear plant was a more serious problem than it had first expected,” and that “cases of contaminated vegetables, dust, milk and water are already stoking regional anxieties despite Japanese officials' assurances the levels are not dangerous.”

    A WHO spokesman tells Reuters that while there is no evidence that contaminated product is being exported, “it's safe to suppose that some contaminated produce got out of the contamination zone.”
    KC's View:
    Maybe “safe” is not exactly the right word, in this case.

    As was pointed out to me yesterday by an MNB user, part of the problem we are going to face is that our inspection services are stretched thin as it is, and having to examine more food looking for possible contaminated product from Japan will make their jobs even harder.

    And you have to believe that the potential for some level of consumer panic is high - especially here in the US, where the mere use of the words “irradiated food” is enough to get some people almost apoplectic with concern; imagine if they have to worry about food that may be contaminated with nuclear radiation.

    BTW...maybe this is the wrong time to mention this, but is this the point where Country of Origin Labeling (COOL) starts to look like a much better idea?

    Published on: March 22, 2011

    HartfordBusiness.com writes a new book, entitled “"Branded: How Retailers Engage Consumers With Social Media And Mobility," which maintains that social media can be effective in reaching out to older consumers.

    According to the story, co-authors Bernie Brennan and Lori Schafer say that “buyers ages 52 and older are up to five times more engaged with social media than they were even two years ago. Not reaching out to them via social media is a mistake many retailers make.”

    The story goes on: “Retailers can reach them through Facebook, which Brennan said is 70 percent of social media, and YouTube, which skews to an older demographic ... There's a method to targeting these older consumers through social media. Simply bombarding them with coupons and special offers doesn't engage them. Brennan said retailers needs to cement a relationship with these consumers and then try to sell them.”
    KC's View:
    I still can’t get past the fact that “buyers 52 and older” are defined as being older consumers.

    I always want to respond to statements like that with Woody Allen’s final line to the Congressional committee from The Front.

    BTW...if you are attending the Western Michigan University Food Marketing Conference next week, I’ll be facilitating a panel on social media that will feature, among others, Brad Keown of Facebook, Craig Elston of the Integer Group, James LaRue of Kellogg’s, and Rich Tarrant of MyWebGrocer. I’ve talked to all the panelists, and it should be fascinating ... and I hope that if you are in attendance, you’ll stop by and say hello.

    Published on: March 22, 2011

    The Financial Times reports that Tesco, which operates in 14 countries, “has forged ahead with its own programme to cut emissions. The measures the supermarket chain has put in place include the goal of being a zero-carbon business by 2050. Its efforts to cut emissions include a new generation of green stores, built to a new low-carbon blueprint ... Other moves include working with third parties, such as suppliers, to cut the environmental impact of the supply chain, and encouraging its customers to be greener.”

    According to the story, Tesco has saved the equivalent of $162 million in the UK alone from its emissions programs.

    “It has been good for the business, and good for the planet too,” says Lucy Neville-Rolfe, Tesco’s corporate and legal affairs director.
    KC's View:
    Neville-Rolfe makes another important point - that Tesco has moved ahead with its climate change initiatives no matter what governments mandate or recommend.

    “I always prefer a non-regulatory solution,” she says.

    That’s a position we take a lot here on MNB. Too many companies wait for governments to step in before they do anything, and then whine about government intervention being bad for business.

    The feeling has long been that if companies were aggressive and progressive, it might alleviate the need for government regulation ... or at least allow industry to better set the tone for the discussion.

    Published on: March 22, 2011

    The Columbus Dispatch reports on how the Kroger in Brewers Yard, Ohio, is offering free live music and a sociable setting as a way of attracting shoppers on Friday nights, turning mundane grocery shopping into a night on the town.

    It is part of a broadening trend, the story suggests: “Grocery stores have always tried to offer good deals on food to create customer loyalty, but an increasingly competitive landscape has caused many grocery retailers to try to outdo one another by offering valuable shopping ‘experiences’.

    “That's led some chains to turn their stores into community gathering places.

    “These days, it's not unusual to find grocery stores that offer comfy chairs spread out in front of flat-screen TVs airing cable news and football games; free Wi-Fi hot spots and specialty coffees; gourmet in-store restaurants and cooking classes; wine-tasting events; and even live bands.

    “The goal, it seems, is to see which store can offer the best and most non-grocery amenities.”

    For Kroger, the Dispatch writes, “that's translated into the Brewers Yard store's Tap Room, which serves specialty beers and wines and draws about 80 people to the Fridays at Five event each week ... Other area grocers have also gotten into the "experience" business.

    “Giant Eagle offers cooking classes and demonstrations by celebrity chefs at its Market District store in Upper Arlington, plus wine-tasting events, celebrity-themed beauty makeovers and a restaurant with nine stations featuring a wide variety of foods made by 30 in-house chefs.”
    KC's View:
    I may have the opportunity to be in Ohio in a few weeks, and I’m going to do my best to check out both the Kroger and the Giant Eagle. They sound very cool.

    Published on: March 22, 2011

    • Walmart Canada said yesterday that it plans to “implement a record number of price Rollbacks this year to help meet the needs of the growing range of value-focused customers across Canada.” The retailer said that there will be “more than 100,000 individual price Rollbacks in 2011, crossing all major categories from groceries to general merchandise. Combined, these Rollbacks are expected to translate into customer savings of more than $55 million over the course of the year.”

    Walmart Canada currently has 325 stores in that country.

    Reuters reports that “South Africa's main retail union said it will picket the offices of the country's competition watchdog, demanding it block Walmart's plan to buy local chain Massmart, or attach tough conditions.

    “South Africa's Competition Commission recommended last month that the world's largest retailer's plan to buy Massmart, South Africa's third-largest listed store group by value, and which owns chains such as Game and Makro, for more than $4 billion.”
    KC's View:

    Published on: March 22, 2011

    Wine Spectator reports that Rep. Jason Chaffetz (R-Utah) has introduced a new version of the Comprehensive Alcohol Regulatory Effectiveness (CARE) act that, if passed and signed into law, “could end direct shipping of wine and other forms of alcohol in the United States, or at least put major roadblocks in front of lawsuits by consumers and wineries trying to reduce restrictions on direct shipping ... The bill’s stated intention is to ensure state governments maintain their ability to regulate alcohol under the 21st Amendment, which ended Prohibition, and protect them from costly litigation challenging their laws governing direct-to-consumer wine shipping.”

    The story notes that the bill has a level of bipartisan support: “In addition to Chaffetz, who represents Utah’s 3rd district, eight other representatives are sponsoring 1161 thus far: Rep. Bruce Braley (D-Iowa), Rep. Howard Coble (R-N.C.), Rep. John Conyers (D.-Mich.), Rep. Ted Deutch (D-Fl.), Rep. Jim Jordan (R-Ohio), Rep. Gary Miller (R-Calif.), Rep. Dennis Ross (R-Fl.) and Rep. Debbie Wasserman Schultz (D-Fl.). Last year’s CARE Act was eventually sponsored by 153 representatives, with 94 Democrats signing on and 59 Republicans.”
    KC's View:
    Which just goes to show that bad legislating knows no partisan boundaries.

    This is dumb. The ability to direct ship benefits both consumers and wineries, and the only reason to create restrictions is to protect certain constituencies - like distributors that don’t want to have to compete on a level playing field.

    More to the point, how come GOP legislators - who keep preaching the notion that government has to stop meddling in people’s lives and businesses - somehow forget that position when it comes to issues on which they have a vested or political interest?

    Published on: March 22, 2011

    Bloomberg reports that Apple Inc. is suing Amazon, accusing the online retailer of improperly using the trademarked “App Store” name for a mobile software developer program. The trademark infringement suit “asked for a court order to prevent the company from using the “App Store” name, as well as for unspecified damages.”

    Apple’s App Store, available via iTunes, has facilitated more than 10 billion downloads since it was launched in 2008, the company said.

    According to the piece, Amazon has not provided “a substantive response” to Apple’s requests that it stop using the “App Store” term.
    KC's View:

    Published on: March 22, 2011

    ...will return.
    KC's View: