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    Published on: March 25, 2011

    by Michael Sansolo

    At the end of my column on credit/debit card fees earlier this week, I urged you all to start taking action by first getting mad. Well, it’s been all of three days and let me say this clearly:

    I, for one, am mad as hell and I’m not going to take it anymore!

    The transaction fee debate moved in an unexpected direction this week. The Washington Post reported Thursday that the National Education Association (NEA) inexplicably jumped into the financial reform issue. The powerful teachers’ union is urging the US Congress to delay enforcement of the Durbin Amendment that would regulate the fees banks can charge retailers for handling credit and debit cards.

    Say what?

    First, let’s get one thing out of the way. I really like teachers. I have two sisters involved in public education (plus a sister-in-law and Mrs. Content Guy) and I think they all do a fabulous job. So nothing I have to say here is about bashing teachers because I wouldn’t trade places with them for one second.

    That said: why in the world is the NEA jumping into this issue? Sadly the NEA website had no information about this issue and my call to the NEA press office went unreturned. But the Post had the NEA’s letter to House and Senate Leaders.

    “We believe that this amendment, while well-intentioned, could have a significant negative impact on the cost of mainstream banking services to middle and lower-income consumers, including teachers and education support professionals, because of the benefits currently made possible by debit cards,” the NEA letter reads, according to the Post.

    Let’s simplify that. Because the banks may charge fees, these groups think the banks should keep charging fees. I wonder who the NEA thinks is paying the current fees that are levied on retailers? Sorry to tell you, but they are passed onto those same teachers and education support professionals along with all other consumers of all products. But let’s not think this through too much. In short, because the banks behave like bullies, let’s leave them alone.

    As I said, I’m mad as hell, which leads me to two angry thoughts. First, I’m still hoping to talk with someone at the NEA to find out if this position has anything to do with the branded credit cards the union offers members. I don’t know if that influenced their position, but it sure doesn’t look great.

    Yet, today I am ready to take another step. There isn’t a supermarket, drug store, convenience store, hardware store or other market in this country that doesn’t regularly run community-based promotions tied to local schools and I think that’s wonderful. But what would happen if the next time these retailers are approached with those promotions, they have a regular policy to ask for a copy of the e-mail or letter from the local teachers union telling the NEA to change its position on swipe fees?

    If they tell you that’s impossible, tell them to take the promotion to the nearest bank. I’m sure they’ll be really helpful!

    Maybe, then, the NEA will be mad as hell.
    KC's View:

    Published on: March 25, 2011

    Crain’s Chicago Business reports that Walgreen is buying Drugstore.com for $409 million, a deal that also will give it the company’s other websites, including Beauty.com and SkinStore.com.

    Walgreen said that the deal is about “strategic growth,” and said that Drugstore.com’s offices will remain in the Seattle area.

    "Drugstore.com significantly accelerates our multi-channel initiatives by expanding our product selection for our customers, adding new capabilities through their well-known beauty and skin care websites," Walgreen's President of E-commerce Sona Chawla said in a press release.

    The deal is expected to close by the end of June 2011.
    KC's View:
    Walgreen already has a fairly robust web presence, but this deal demonstrates that the company believes that there is a lot of room left for growth in this segment, and it intends to be aggressive about it.

    It will be interesting to see how Walgreen integrates Drugstore.com’s operations into its own - perhaps allowing people who buy on the site to pick up products at brick-and-mortar stores, and perhaps figuring out how to use shopper info from both the physical and virtual locations as a tool to sell more. Could there by a “Subscribe & Save” initiative in its future? I’m guessing yes...because it makes a lot of sense.

    I suspect that this move could in part of a response to what appears to be gathering momentum at Walmart in the e-commerce space; it simply makes sense for Walgreen to marshall as many advantages as possible to prepare for the coming wars. And when you add Amazon’s ongoing efforts to the mix, it isn’t hard to imagine that we’re fast getting to the point where the e-commerce boat is leaving the dock, and those not aboard will be left on land with decreasing options and increasing irrelevance.

    Published on: March 25, 2011

    The first decade of the 21st century in the United States was marked by faster-than-expected growth of the nation’s Hispanic population via both births and immigration, which represented more than half the country’s growth during that time.

    According the Wall Street Journal this morning, “The Census Bureau - in its first nationwide demographic tally from the 2010 headcount - said Thursday the U.S. Hispanic population surged 43%, rising to 50.5 million in 2010 from 35.3 million in 2000. Latinos now constitute 16% of the nation's total population of 308.7 million.

    “The Census Bureau has estimated that the non-Hispanic white population would drop to 50.8% of the total population by 2040 - then drop to 46.3% by 2050. This demographic transformation - Latinos now account for about one in four people under age 18 - holds the potential to shift the political dynamics across the country.” And, the story notes, “The increasing racial diversity among U.S. children underscored a shift that is likely to make whites a minority in the early 2040s. Of the entire Hispanic population, children make up about one-third, compared with one-fifth among whites.

    In addition, “Nearly 92% of the nation's population growth over the past decade - 25.1 million people - came from minorities of all types, including those who identified themselves as mixed race. Nine million people, or 3%, reported more than one race.”

    Among other observations from the story:

    • “In addition to the 16.3% of people who identified as Hispanic or Latino of any race, 63.7% identified as white; 12.2% identified as black; 4.7% as Asian; and 0.7% as American Indians or Alaska Natives. Other races made up the rest.”

    • “States in the South and West posted the sharpest growth rates during the decade, with the population of the West surpassing the Midwest for the first time. More than half the U.S. lived in the 10 most populous states, with about a quarter in the three largest states: California, Texas and New York.”

    • “The Census Bureau said the population continued shifting toward the South and West, which together accounted for 84% of the decade's population growth ... The Census data also showed blacks moving out of big cities in the North and into suburbs and the South, marking more black-white integration.”
    KC's View:
    These shifts are going to have an impact not just on the nation’s political dynamics, but also on the business of retailing ... and marketers have to pay close attention to what this burgeoning population wants and needs. It won’t be the same old, same old ... and if companies don’t pay attention, it will be at their own risk.

    It won’t mean creating Hispanic-themed stores and departments. It means being finely tuned to the whole process of assimilation, and calibrating one’s efforts carefully. And, it means understanding that not only will the shoppers of the future have diverse backgrounds, but that employees of the future will be of greater diversity as well.

    Published on: March 25, 2011

    The Wall Street Journal reports on how Frito-Lay “is embarking on an audacious plan ... to make half its snacks sold in the U.S. with only natural ingredients. Many are already in grocery stores.”

    The problem that Frito-Lay is facing, the story says, is the “conflicting currents in the marketplace: Many customers say they want to lose weight and eat better - but it's not clear that healthy snacks sell as well as junk food.

    “Still, Frito-Lay is saying so long to monosodium glutamate and roughly three dozen other artificial ingredients in more than 60 snack varieties. Lay's flavored potato chips, Tostitos tortilla chips, multigrain SunChips and Rold Gold pretzels are all getting a makeover ... Frito-Lay is holding off so far on converting its Doritos and Cheetos brands to all-natural ingredients. Those products, with bold flavors, are harder to retool and are marketed to teens and other consumers who might be turned off if told the chips were all natural. As well, going all natural risks highlighting the artificial ingredients that were in the chips before.”

    Health advocates caution that “all natural” is not the same as “healthy”; the fat and sugar content in some of these reformulated products apparently is not changing significantly.
    KC's View:
    Baby steps are a lot better than doing nothing, and I think it can be fairly argued that this is a lot better than baby steps.

    And Frito-Lay has its own conflicting currents to deal with - it wants to deal with increasing calls for more nutritious and healthier foods, but it has a bottom line to worry about.

    Published on: March 25, 2011

    The Pioneer Press reports that Target Corp. has joined “the National Salt Reduction Initiative, a partnership of health groups, restaurant chains and food companies (that) seeks to improve public health by reducing the abundance of salt in processed and restaurant foods, which it says contributes to high blood pressure, heart attacks and strokes. The New York City-based group aims for a 20 percent reduction in salt consumption within five years.”

    Target has pledged “to reduce salt levels in three of its Archer Farms-branded products: cold cuts, tortillas and breakfast cereals. Because the salt-reduction group monitors 62 packaged-food categories, that leaves plenty of room for more.”

    According to the story, other companies that have enlisted in the initiative include Kraft, Heinz, Campbell's, Subway, Starbucks and Au Bon Pain. The motivation, in part, is that if they don;t act on their own to reduce salt, sugar and fat levels, there could be government regulations that force their hands.
    KC's View:
    Even if this is their only motivation, I have no problem with it. Getting in front of the issue, rather than being forced to make changes by the government, strikes me as both smart management, prescient leadership, and a sustainable strategy.

    Published on: March 25, 2011

    USA Today reports that LL Bean is adopting a new no-fee shipping policy, with no minimum order.

    According to the story, “The outdoors and clothing retailer joins Zappos.com, a seller of shoes and clothing, in offering permanent, no-strings-attached free shipping. The move ups the ante for retailers accustomed to selective free shipping offers, particularly around the holidays, and sometimes tied to minimum purchases or vanity credit cards ... It’s clear customers want free shipping, and retailers are increasingly providing it. In 2009, 30% to 35% of online holiday purchases involved free shipping; this past holiday season, the figure grew to 40% to 45%, said Andrew Lipsman, analyst at comScore, an Internet research firm."
    KC's View:
    The question is to what extent such moves influence the overall consumer view of what is appropriate for e-tailers to charge. Worth thinking about.

    Published on: March 25, 2011

    The Associated Press reports that “Target Corp. is suing a San Diego pro-gay marriage group to get it to stop canvassing outside its San Diego County stores, alleging its activists are driving away customers. Rights advocates say the trial between Target and Canvass For A Cause that begins Friday could further strain relations with the gay and lesbian community after controversy over its $150,000 donation to a business group backing a Minnesota Republican candidate opposed to gay marriage.”

    According to the story, Target “insists it remains committed to the lesbian, gay, bisexual and transgender community and its lawsuit has nothing to do with the political agenda of the organization ... Target says it has taken similar action against a number of organizations representing a variety of causes. It alleges in the lawsuit that the San Diego group's activists harass customers by cornering them near its stores' front entrances and debating with them about their views on gay marriage.”
    KC's View:

    Published on: March 25, 2011

    • Safeway Inc. was recognized this week by the Association of Fundraising Professionals (AFP) with the organization’s 2011 Freeman Philanthropic Services Award for Outstanding Corporation.

    The award honors companies that demonstrate outstanding commitment to important causes through financial support and encouragement, as well as the company’s ability to motivate others to take on leadership roles in their communities. The award was presented to Larree Renda, Executive Vice President of Safeway Inc. and Chair of the Safeway Foundation, earlier this week in Chicago during AFP’s 48th International Conference on Fundraising.

    When announcing the award, AFP specifically praised Safeway’s long-standing partnerships with a number of highly respected charities as “the epitome of corporate philanthropy.”

    • The Washington Post reports that the US Postal Service (USPS) “will reduce its workforce with layoffs and offers of buyouts and will close seven district offices from New England to New Mexico to help address record losses. The reorganization, designed to eliminate 7,500 administrative, executive and postmaster jobs this year, came as a commission that is evaluating the Postal Service’s plan to eliminate Saturday delivery concluded that one in four letters would be delayed by not just one but by two days.”

    According to the story, “The independent Postal Regulatory Commission also said that postal officials underestimated the losses the agency would suffer from handling less mail - and overestimated the cost savings.” In addition, the commission said that “the Postal Service did not adequately evaluate the effect of five-day service on rural areas.”
    KC's View:
    The USPS keeps thinking about bandages on a hemorrhaging business model, not rethinking the whole enterprise within the context of a world that has both email and a wide variety of overnight services.

    It’s typical. But it also is a mistake that other businesses should be careful not to make.

    Published on: March 25, 2011

    ...will return.
    KC's View:

    Published on: March 25, 2011

    I remind myself constantly how lucky I am. And when I forget, usually something happens to remind me.

    Take last night.

    A friend of mine, Terry McSpaden, invited me to his restaurant, Sails, which opened late last year in Rowayton, Connecticut, just a couple of miles down the road from where I live. I love Terry - he’s a great, grizzly bear of a guy, and I first met him 27 years ago; I’d do anything I could to help him out. In this case, he had hired some folks to take a series of pictures for Sails’ new website, and he wanted a table of folks that he knew to be amendable to having their picture taken during dinner. I can do that, I said. and I showed up on time, resplendent in jeans and clean white sneakers. (My good sneakers. My others aren’t as white.)

    In addition to amazing lobster risotto, I ended up sitting next to a more formally dressed fellow in his 90‘s named Dr. Lee Davenport, a physicist who regaled us with tales of his exploits during World War II, talking about his involvement with the development of microwave radar systems, anti-aircraft guns, and the nation’s first drone aircraft. He spoke of his time in Normandy in the days just following D-Day, He talked about how he worked in the area of nuclear energy decades ago, and he patiently explained to us what needed to happen to make nuclear power affordable in 21st century terms.

    He was, in a word, fascinating. Hardly your ordinary Thursday night dinner companion.

    And I couldn’t help but think, as I was listening to his stories, how lucky I was to be sitting there - drinking great wine, eating wonderful food, and being exposed to someone with compelling stories and greater insight and perspective.

    (The evening was made even better when the woman I was sitting next to, a beautiful thirtysomething model named Laura, told me that she thought I was about her age. Either she needs glasses or Sails needs better lighting. But I’ve been glowing from the compliment ever since.)

    Life is good.

    The same kind of experience took place about a week ago in the Red Carpet Club at Los Angeles International Airport, when I ended up in an extended conversation with an American doctor who teaches at the college level in Australia. His subject of choice - the science of mating.

    Seriously.

    He told my daughter and me how he teaches a class in Australia that endeavors to explore how people meet up in social situations, and that he sends his undergraduate students out into bars to try to pick up three people ... and has his graduate students shadow them and then do a debriefing of the people they try to pick up. We had a long conversation about he moved from serving in the US military (he was born in NY) to getting his doctorate and then moving to Australia, where he can teach what he loves and go surfing his his spare time.

    Great guy. Fascinating conversation.

    Lucky me.




    Good news for “Fringe” fans (and I know a lot of them read MNB, because I love your emails whenever I mention the show). As of this morning, what may be the best series on television has been renewed for a fourth season; the ratings-challenged challenged series has gotten what is called a “full season” pickup from Fox, which is both a little surprising and a total thrill to those of us who are hooked.




    On another TV note, I’ve consistently found the reimagination of “V” to be a disappointing exercise, with none of the audacity and creativity of “Fringe.” But I’ve kept watching, hoping to be surprised, and enjoying the performances of Elizabeth Mitchell as the ultimate Earth mother looking to protect her planet, and the fabulous Morena Baccarin (of the late, much-lamented “Firefly”) as the Alien queen who is the ultimate bad mother. Other than them, though, there hasn’t been much to watch.

    Until the final episode. Because the producers have no idea whether the show will be renewed or not, they essentially threw everything but the kitchen sink into the episode - which made for a wildly thrilling hour that actually had some suspense. There was matricide, patricide, the murder of a child, the imprisonment/torture of another, the threat of alien invasion .... it was great!

    And, it had one of the best camp lines ever delivered on television. I won’t give it away, but it was delivered by Baccarin with amazing relish after a particularly dramatic moment. (“V” watchers will know exactly what I’m talking about.)

    But you have to do it more than once. If “V” comes back next year, they need to do this weekly, not just at the last moment in order to save their own skins.

    Pun intended.




    I loved The Lincoln Lawyer. It has a strong plot, focusing on a slightly sleazy LA defense attorney looking for redemption, from the novel by Michael Connelly. It has wonderful supporting performances by Marisa Tomei (who gets better with age) and William H. Macy (who does more with about 10 minutes of screen time than most actors do with entire films).

    And, it has a fabulous star turn by Matthew McConaughey as Mick Haller, the titular attorney of the film, who is compelling, charismatic and utterly perfect for this modern film noir. He’s made a lot of forgettable romantic comedies in recent years, but this performance is reminiscent of his first star role, as a lawyer in A Time To Kill.

    The Lincoln Lawyer is a smart legal thriller. I recommend it highly.




    I’ve been watching a lot of legal movies lately because of one of the more improbable speech bookings that I’ve ever gotten - I’m giving the luncheon speech tomorrow at the meeting of the National Court Reporters Association in Baltimore. They were looking for an amusing speaker on an unusual subject, and Saul Farber at Leading Authorities, the awesome speakers bureau that represents me, suggested that I’d be a good fit talking about a certain business book that I co-wrote but am trying not to plug too much here on MNB.

    It’ll be fun, and it has given me an excuse to re-watch everything from To Kill A Mockingbird to Inherit The Wind, The Verdict to Michael Clayton ... which has been its own kind of fun. Legal movies are great - they tend to be smart, filled with interesting dialogue and featuring excellent actors.




    A note to the folks who asked a question about yesterday’s video commentary.

    Yes, it was a bird.

    Just wanted to see if you’d notice.




    My wine of the week - the 2009 Marquesa de Valserrano Rioja Blanco, which is soft and silky, but has enough body to stand up to a nice spicy tilapia.



    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Slainte!
    KC's View: