business news in context, analysis with attitude

Published on: April 12, 2011

by Michael Sansolo

One week from today, McDonald’s is firing a shot that, if successful, could alter the competitive landscape of food sales for quite a while to come. The sad thing is that McDonald’s is doing something any other company could do, but most have neglected to even try.

As recently reported here on MNB, on April 19th, McDonald’s is hoping to recruit 50,000 workers in a single day. Now it’s easy to dismiss this effort, because given the history of fast food jobs it is entirely possible that all 50,000 will quit in short order. McDonalds jobs are so lightly regarded that even the Urban Dictionary defines any form of menial work as a McJob.

And that is the exact reputation McDonald’s is challenging. In announcing the recruiting day, McDonald’s even used the McJob name, but in a completely different light. The company talked about all the opportunity that comes with working at McDonald’s and the huge percentage of franchisees, managers and company executives who began their careers essentially asking, “Do you want fries with that?”

But here’s the genius in the idea. McDonald’s is staging the effort at a time when unemployment is still extremely high and finding workers is unusually easy. In other words, it is a clear counterintuitive move, which is why it bears watching.

The reality is that we still have a demographic tidal wave approaching that we tend to forget about because of the problems of the recession. Sure, workers are in easy supply now, but the coming retirement of the Baby Boom generation is still an unavoidable reality. That means we are only years away from a time when scarcity will replace surplus among workers.

You have to believe that’s a big part of the opportunity McDonald’s is hoping to create. Recruiting and changing a perception now could help McDonald’s find a new generation of leaders at a time when others simply aren’t hiring. It could help McDonald’s build a reputation as a desirable place to work. In turn, that could create a major competitive advantage in the not-so-distant future.

Let’s look at this from another perspective, this time from the supermarket industry. Jobs in supermarkets are similarly besmirched, especially among young people who see them only as an avenue to ask, “Paper or plastic?” I have the great opportunity to regularly speak on college campuses and I rarely, if ever, find a student who shows any interest in a supermarket industry career. Sure they’ll take a job to get through school, but any thought of a career beyond that is laughable to them.

That’s wrong and that’s why this is an opportunity to copy McDonald’s. Supermarket jobs can also lead to great careers and the reality is jobs fall in a wide range of disciplines, including human resources, logistics, technology, marketing and more. Store management jobs can lead to levels of personnel and profit responsibilities far beyond what most people encounter in their entire lives.

Most don’t know that and frankly, most supermarkets don’t do a great job of spreading that word.

Just keep in mind that there is one part of this equation where McDonald’s can fail and it too is instructive. If the company hires 50,000 people, but manages them the same way fast food restaurants usually do, turnover will remain high. Supermarkets have the same problem. We need to both recruit and retain better than ever. That means better training for today’s managers to help them become tomorrow’s leaders. And it means better training to help them bring all those recruits along with them.

Here’s hoping that a competitive challenge of April 19th will change all that and make a lot of us think very differently.

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

Published on: April 12, 2011

by Kevin Coupe

This morning’s Eye-Opener comes from Scott Adams, the creator of Dilbert, who wrote a fabulous piece for the Wall Street Journal about the entrepreneurial skills that we should be teaching our young people.

Here’s how he frames the question:

“I understand why the top students in America study physics, chemistry, calculus and classic literature. The kids in this brainy group are the future professors, scientists, thinkers and engineers who will propel civilization forward. But why do we make B students sit through these same classes? That's like trying to train your cat to do your taxes - a waste of time and money. Wouldn't it make more sense to teach B students something useful, like entrepreneurship?”

The piece is precisely as entertaining and insightful as one would expect an Adams column to be. I’m not sure I agree with him entirely - I actually think that some of the business students who grew up to be investment bankers and hedge funders might have had a few more compunctions about business practices that threw the nation into a financial tailspin if they’d actually paid attention to a little Shakespeare, read a little F. Scott Fitzgerald or Ernest Hemingway, or understood that there is more to life than just creating wealth.

That said, he makes some salient points about the entrepreneurial qualities that businesses should be looking for in their employees. And those of us who are parents of kids who are moving into the world of business should forward the column to our children, as a reference they can use as they make themselves marketable.

The story can be found here .

Published on: April 12, 2011

CNN.com has a blog post from David Frum, the former Bush speechwriter and conservative political consultant, in which he analyzes the current argument over a proposed delay in debit card swipe fee regulation.

Some excerpts:

• “You might think the big banks would be too embarrassed to ask Congress for more special favors.

“You think wrong.

“The big banks are pressing Congress for a favor that will cost the average American household $230 a year. The bankers argue that the favor is needed to support small community banks. But since the lion's share of the favor will be collected by just four banks, it might be cheaper to subsidize community banks with a check direct from the Treasury.”

• “Banks keep debit fees higher than necessary in order to protect their much more lucrative credit card business. Credit cards of course pay banks not only a swipe fee, but very high interest rates. Banks are frightened that if they offered cheaper debit fees, many merchants might quit accepting credit cards altogether. They now threaten that if they cannot collect high fees on debit cards, they would have to cap debit purchases at $50 or $100.

“This threat makes little sense: You'd think it would cost a bank MORE to process lots of little transactions than a few big transactions. But if the banks' threat makes little economic sense, it makes a lot of psychological sense. The banks dread a world in which consumers pay cash instead of borrowing at 18%. The recession has brought closer such a world: total debit transactions now exceed credit transactions.”

• “The banks raise this question: How do we know that retailers will forward the savings from regulation on to consumers? ... The answer comes from the Australian experience. Based on that experiment, economist Robert Shapiro of Sonecon estimates that about 56% of the value of reduced swipe fees will reach the final consumer. That's the basis for his calculation of savings of $230 per household. That's also the basis for his further calculation that reduced swipe fees will translate into a one-time gain of 250,000 new jobs.”

Published on: April 12, 2011

The Wall Street Journal reports that continually increasing gasoline prices “are a double-edged sword for warehouse-style retailers such as Costco Wholesale Corp. and for fuel-producing companies like Valero Energy Corp. While higher prices at the pump bring higher revenue from fuel sales, they can also deter consumer confidence and discretionary spending.”

And the New York Times writes that “gas prices are approaching record highs, but so far most Americans do not appear to be drastically cutting back their driving or even their spending as they did in 2008.

“The question, economists agreed, is what happens if prices continue to go up and remain high. Prices for a gallon of regular unleaded gas are topping $4 at more service stations nationwide, revisiting the bleak territory of three years ago, when the average price for a gallon of regular gas reached a peak of $4.11 on July 17, 2008, according to the Oil Price Information Service.”

“At some point,” the Journal writes, “Americans ... will cut back on driving.”

Published on: April 12, 2011

• Crain’s Chicago Business has a complicated 3,300 word investigative piece looking at some of Walmart’s expansion efforts in Chicago, specifically the building of a store in the Austin neighborhood on the city’s west side. In essence, the story makes the claim that while Walmart made a big deal out of hiring minority-owned firms for the construction phase, much of the work actually was farmed out to non-minority firms. In addition, the piece makes the charge that Walmart keeps such a tight rein on construction, forcing bids down while simultaneously creating a process that encourages cost overruns, that it is almost impossible to make any money building its stores.

The piece is worth reading in its entirety: Click here.

• Meanwhile, published reports say that Walmart has closed on the $10 million acquisition of a 13.5 acre plot of land on Chicago’s South Side, where it plans to build a 155,000 square foot supercenter - one of a number of units that it plans to build in the Windy City as part of its urban expansion strategy.

Published on: April 12, 2011

• In Australia, WaToday.com reports on a new iPhone application developed there that “allows users to easily create shopping lists by scanning the barcodes of items in their pantry. The list can even be organised into aisles that match the layout of your local supermarket and items are checked off as they are added to the trolley.”

According to the story, the application was inspired by “the sheer incompetence of males when it comes to the weekly shop,” and a desire to remove “virtually all brainpower from the process.” The husband of one of the developers apparently went to the supermarket without a list and came back with all the wrong stuff.

The application, Scan2List, reportedly has a database of 150,000 bard codes, and those not recognized by the app can be imported manually.

• Business Insider reports on Storific, described as “a neat app that lets you order from participating restaurants and other venues straight from your iPhone. They work with restaurants, bars, nightclubs and hotels to provide the service.

“Here's how it works: when you get inside, a waiter gives you a check-in code that lets you display the venue's menu. You order, and your order is sent straight to the kitchen. In theory, the app lets everyone save time. For consumers, waiting ages to order somewhere can be torture. And for venue owners, that time is money.”

The app is just being tested now, with just 50 locations in the US; but the suggestion is that certain kinds of retail - such as Starbucks or fast food restaurants - might find this to be an ideal technological way to make the process even faster.

Published on: April 12, 2011

The Financial Times reports that film director and winemaker Francis Ford Coppola has hired wine expert Philippe Bascaules away from Chateau Margaux, one of the legendary vineyards of the Bordeaux region of France.

At the same time, Coppola announced that he has acquired the iconic Inglenook trademark from The Wine Group; he has long owned the Napa Valley property that was known as Inglenook when it was founded by Gustave Niebaum in 1879.

The goal, according to the story, is to “reinvigorate” Coppola’s Napa Valley vineyards. The legendary director of The Godfather tells FT that his property “only needs some top winemaking expertise, a new state-of-the-art winemaking facility (to be designed by Mr Bascaules) and a few tweaks to realise its potential as one of the world’s greatest wine estates.”

Published on: April 12, 2011

• Publix announced that it will open its first hybrid unit in the metro Atlanta market, combining elements of its traditional stores with those of its GreenWise natural and organic food store, on April 21.

• The New York Times reports that “Frito-Lay plans to spend this week in Times Square with a promotional event featuring a flavor kitchen, which is part of the company’s effort to stimulate sales of its snack brands like Lay’s, SunChips and Tostitos.”

According to the story, “The promotion is centered on the flavors of Frito-Lay products and how the company creates its newest product flavors. Chefs will be involved, along with the Hard Rock Cafe, Electrolux kitchen appliances and Padma Lakshmi, the host of ‘Top Chef’ on Bravo.

“The goal of the promotion is to let consumers in on the snack-making process and give them a chance to provide feedback on the kinds of flavors that Frito-Lay uses - and may potentially use - for its products.” And it comes as Frito continues to work again the perception that it is complicit in the nation’s obesity crisis.

• The Omaha World Herald has a piece about the plethora of options currently available in supermarket freezer cases, noting that “the abundance of different brands and choices are a reflection of food manufacturers vying for sales and market share in one of the fastest-growing and most profitable areas of the grocery store: the freezer. Today, more consumers than ever before are turning to frozen foods for a quick, convenient meal, or as an affordable solution to help feed their busy families.” Now that the economy is improving, however, the pressure is on manufacturers to innovate in a way that will continue to drive new sales.

• The Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA) yesterday announced “ the selection of three globally-recognized agencies to support the GMA-FMI Nutrition Keys front-of-pack nutrition labeling initiative.

“BBDO New York (along with its sister companies Integer, PHD and Proximity), Edelman and FoodMinds have been selected to work with GMA and FMI and their member companies to develop a dynamic and comprehensive $50 million, 12-month consumer education campaign that will build awareness, understanding and use of the Nutrition Keys icon.  The campaign will educate consumers through a variety of communications channels, including innovative point-of purchase strategies, advertising and digital/social media.”

Published on: April 12, 2011

Tesco is out with a press release saying that asparagus has earned the title of UK’s best selling aphrodisiac.

Tesco asparagus buyer Harry Jones is quoted as saying, "Our sales over the last few weeks leave us in no doubt that asparagus is fast gaining a new reputation as an aphrodisiac.

"We’ve always known about its reputed passion-increasing qualities but this is the first time we have marketed it, at point of sale, as a Valentine’s Day food. Not only did demand double for that period - which set a new sales record - but we have seen a 35 per cent rise in demand since then that we can only put down to its new found reputation as a food of love.”

Tesco says that there is scientific proof of the libido-improving benefits of asparagus - something to do with phytohormones and Vitamin E and all sorts of other minerals. And the company is said to be working with growers of English asparagus to extend the growing season so they can harvest even more.

Published on: April 12, 2011

...will return.