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    Published on: May 6, 2011

    by Kevin Coupe

    About a month ago, we reported that Sbarro had filed for bankruptcy protection, and we generated a little bit of discussion by suggesting that it was probably because it is “a greasy example of overpriced, lowest common denominator pizza. In other words, perfect for malls and airports.”

    (I got a little grief from some airport foodservice folks who thought I was unfairly painting with a broad brush.)

    But had a piece the other day in which it called Sbarro “America’s least essential restaurant,” and said why. The explanation, I think, is Eye-Opening, because it defines in many ways the difference between success and irrelevance.

    Some excerpts:

    • “The food there is mediocre and unimaginative - assembly-line Italian festooned with cheese and sugary tomato sauce, a bland version of the homey fare found at postseason soccer banquets or church fundraising suppers. It's expensive, too - a doughy, oleaginous slice of plain pizza costs $3.49 nationwide, and you're certainly not paying extra for ambiance.”

    • “Sbarro's biggest asset is its ubiquity. The store has slightly more than 1,000 worldwide locations, mostly in shopping malls - a footprint that lots of chains would kill for ... But malls are in decline.”

    • “Sbarro courts the indifferent eater - tourists, children, people who just want a slice and a place to sit while they talk about the amazing pants they saw on sale at The Limited.”

    • “Sbarro's marketing tactics tell you all you need to know about its failure to match its quick-service competitors. The chain was actually founded by Italian immigrants, and was family-owned until recently - a heartwarming tale, but one that Sbarro seems determined to keep to itself ... Even its logo - the red, white, and green of the Italian flag, with Sbarro printed in the white part - is banal and overly literal. "Sbarro: We serve Italian food, of a sort." Or: "We're here, and we've got pizza." That's not much of a motto if you're trying to rebuild a failing business, especially if the pizza you've got tastes terrible.”

    To be fair, the author does say some of the food at Sbarro isn’t horrible. Finishing one meal, he writes, “I finished it all, used the complimentary breadstick to wipe the platter clean, and didn't experience any atypical gastrointestinal trauma on the way home. (While ‘it didn't make me feel sick’ hardly counts as a ringing endorsement, Sbarro needs to take all the praise that it can get right now.)”

    The point here is not to dump all over Sbarro.

    Rather, it is to point out that while some might assume that the rocky economy and declining mall traffic might be the chief reasons for Sbarro’s troubles, it isn’t hard to imagine that maybe - just maybe - the real problem is that it was a food company that didn’t focus on the food ... a characteristic shared by more than a few food companies that have priorities other than taste and aroma and eye-appeal.

    While not all these companies might qualify for the description “least essential,” Sbarro’s travails should at least serve as a eye-opening warning - that misplaced priorities and inattention to details and core values can be a dangerous combination.
    KC's View:

    Published on: May 6, 2011

    Internet Retailer reports that a new study suggests that there will be plenty of investment this year by retailers in mobile commerce.

    A study of 68 merchants conducted by Forrester Research projects that “web-only retailers this year will invest an average of $37,750 on m-commerce sites, smartphone apps and/or text messaging programs, retail chains $343,068 and consumer brand manufacturers $135,250 ... The wide variance in investment among merchant types might be attributed to the features and functions the merchants choose to offer through their m-commerce sites and apps. For example, a retail chain is likely to include a location-based service in its smartphone app to drive shoppers into physical stores, while a web-only retailer would have no use for such services.”

    The good news, according to the story, is that “generally speaking, merchants do not need to invest much to jump into m-commerce when compared with e-commerce technology. M-commerce systems can ride on top of existing back-end e-commerce systems, keeping the cost of entry relatively low.”
    KC's View:
    There is no question in my mind that retailers and manufacturers of all stripes need to be investing in mobile technologies, both as a way of selling goods and simply communicating on an ongoing basis with smart phone-equipped shoppers who are looking for a relevant and value-added connection to favored brands. To not test the waters is to risk allowing the competition to make inroads that could give them, in the long run, a strong edge in the marketplace.

    Published on: May 6, 2011

    The Integer Group is out with a new study saying that “nearly one in four shoppers are willing to pay more for something if it makes them feel like they are contributing to saving the environment. Shoppers ages 18 to 34 are slower to embrace making purchasing changes to benefit the environment than those shoppers ages 35 to 44 and 55 to 64.”

    The study goes on: “While college-aged consumers are expected to quickly embrace eco concerns, the data shows they aren't necessarily willing to pay money to do so. Also interesting, is a higher eco-consciousness amongst the 55+ set compared to younger generations. Results show that all consumers are willing to make easy changes such as switching out light bulbs or getting paperless statements, but when it comes to doing something that requires more time, money and effort, such as only purchasing locally-grown organic food or carpooling, the amount of willing participants drops.”
    KC's View:
    One of the central conclusions of the research seems to be that marketers using the environment as a sales took need to illustrate the tangible benefits of changing behavior, as well as focus on both emotional and functional needs. That strikes me as sensible, especially these days; depending on the demographic, of course, more than ever people need to see clearly the impact of their actions, both on the environment and their own lives.

    I’ve always thought that retailers that invest in environmental technologies ought to be clear about their efforts, with signs that describe the innovations and state, in no uncertain terms, what the impact of these initiatives are. Most people would feel good about patronizing retailers that are being intelligent about the environment, and it could have the effect of strengthening the connection between store and shopper.

    Published on: May 6, 2011

    Lovely story in the Lexington Herald Leader about Fitch’s IGA there, where owner Leonard Fitch has been having trouble keeping the store going because of lower sales and higher costs, all related to the recessionary economy.

    Fitch is something of an anachronism - he doesn’t sell tobacco, alcohol or lottery tickets, and closes on Sundays. He’s also the kind of guy who served on the city council for 42 years, and who is regularly asked to officiate at funerals, even though he isn’t a minister. And so, when word got out that he was having business issues at the store his father bought more than 50 years ago, Leonard Fitch became a kind of community project, with people chipping in to paint and clean the store, as well as bring in local produce and help Fitch improve the in-store displays.

    And one other thing. People apparently also are adjusting their shopping habits, because for the first time in a couple if years, sales actually are up.
    KC's View:
    I was worried when I first read this story that the locals were going to give Fitch IGA a new coat of paint and then go buy their food down the street at Walmart. Nice to see that this isn’t what happened, and always nice to read a good news story.

    Hometown proud, indeed.

    Published on: May 6, 2011

    CNet reports that there is significant speculation in the marketplace that Amazon could come out with a new tablet PC before the end of the year, as it looks to be more competitive with the iPad and build on the success of its Kindle.

    The story suggests that one of the advantages that Amazon could have is an ability to charge a low price for such a tablet; it would not need to make money on the hardware, the story says, because it would be likely to more than make up for any losses selling software and applications that can run on the gizmo.
    KC's View:

    Published on: May 6, 2011

    Bloomberg reports that “Ralcorp Holdings Inc. investor Jack Murphy says he expects the biggest U.S. maker of store-brand foods to consent to a takeover if spurned suitor ConAgra Foods Inc. boosts its bid at least 7 percent.”

    It was reported yesterday that ConAgra upped its unsolicited bid to acquire Ralcorp Holdings to $4.9 billion, a two-dollar-per-share increase from the previous proposal that was rejected by Ralcorp - and was rebuffed again by Ralcorp, which maintains that an acquisition would not be in the best interests of its shareholders.

    “Ralcorp will listen at a higher price, and we think ConAgra is willing to bid higher,” Murphy, senior portfolio manager at Levin Capital Strategies, told Bloomberg yesterday. “Our gut says $92 to $100” per share, up from the $86 per share that is the most recent offer.
    KC's View:

    Published on: May 6, 2011

    • Nestle Waters North America reportedly plans to acquire Texas-based Sweet Leaf Tea Company , a company in which it originally invested in 2009. Terms of the deal were not disclosed.
    KC's View:

    Published on: May 6, 2011

    Advertising Age reports that Ed Shirley, “the most senior remaining executive who came into P&G from its 2005 acquisition of Gillette, will step down from his post as vice chairman-global beauty and grooming effective July 1. He will retire from P&G in January following a six-month special assignment in which he'll continue to report to Chairman-CEO Bob McDonald.”

    According to the story, “Jodi Allen, who had been VP-North American baby care since 2008, has been named VP-North American operations and marketing. She'll report to Melanie Healey, group president-North America, and Marc Pritchard, global brand-building officer in that new role, where she succeeds Kirk Perry.

    “Mr. Perry has been promoted to president on special assignment, according to people familiar with the matter, where he'll lead a team of executives developing a plan to streamline how P&G's global business units and market development organizations work together. He'll report directly to Mr. McDonald and Global Human Resources Officer Moheet Nagrath.”

    The end result of all these moves, the story suggests, is that it “appears to leave a wide open field for CEO succession at P&G among several group presidents in their 40s and 50s. That's one indication Mr. McDonald, 57, plans to stay in the post for several more years, as prior P&G CEO successors have generally had two or three years of grooming in posts reporting directly to the CEO.”
    KC's View:

    Published on: May 6, 2011

    I got a number of emails yesterday about my “Face Time” commentary suggesting that the latest, dead-tree edition of Newsweek, which featured the Royal Wedding on the cover because it was put to bed too late to cover the killing of Osama bin Laden, was an indication of business model fast on its way to being obsolete ... and that all businesses need to be aware of when such things are happening.

    MNB user jim Martin wrote:

    Kevin, no offense intended...The fact is, no one today expects to get breaking news from print, but in a multi-generational / cultural / socioeconomic world the reasons and preferences for print only or print + online compared to online only are to numerous to mention.

    And MNB user Jerry Lynch wrote:

    Kevin, I suspect many people still read the Newsweek “Royal Wedding” issue you described as irrelevant while taking in the news of Sunday evening. Call it multitasking!  Since the dawn of radio, print has always faced the risk of being behind the story but has been able to stay relevant and valued. Monday the Newsweek  website had the story and I’m sure the next print edition will contain more and varied coverage of Bin Laden.  As we know obsolescence is all but guaranteed if you sit still.   Newsweek and other magazines aren’t standing pat but instead constantly reinventing themselves to make sure they provide value to their readers. That value proposition will continue to evolve and come in many forms- print, web, mobile, etc  and all of the above.

    I understand that there are all sorts of reasons not to kill the dead tree editions of magazines right now - the culture hasn’t yet gotten to the point where everybody is getting all their information online. But I would argue that we will get to that point faster than anyone thinks, and that these publications need to be preparing for that eventuality now.

    And, I think that newsweeklies are, perhaps, the most vulnerable to looking irrelevant. (And that Newsweek, for me, looks about as off-target as I can imagine.)

    MNB user Jeff Folloder wrote:

    Like you, I wonder why the US "news" magazines are not planning for the funerals of their flagship offerings.  They ceased to be useful for me long ago when their focus canted towards entertainment and fluff.  But in this age of instant information and a veritable fire hose of data flow, how is it that The Economist tends to be engaging, timely, thought provoking and insightful?  It's a print magazine and its relevance has only increased.  How can this be?

    I feel the same way about The New Yorker, which consistently offers provocative, literate and thoughtful journalism. I guess it is a great argument for the notion that in the end, content is what will win out ... though I do think that how it is delivered will matter, especially to the next generation of consumers.

    Regarding the repositioning taking place at Food Lion, one MNB user wrote:

    Could their repositioning include the sale of one or more divisions that are dragging down their earnings?  I was in Florida on vacation recently, and visited a couple of their SweetBay stores.  They seemed to me to be stepchildren, forced to promote their price versus Wal-Mart and Publix, which in my opinion is not the game they need to be playing in that market at this time....they don't seem to have a positive niche...

    Yesterday I took note of the fact that Walmart is going to begin selling Amazon’s Kindle, which led one MNB user to write:

    Careful, Kevin - your praise for Amazon marketing its Kindle at Walmart is in direct conflict with your previous stances against restaurant brands selling their branded products in grocery stores.  Share of stomach and all that?

    The same logic should apply whether you're talking about e-readers, cars or salad dressing, right?

    Well, you’re half-right.

    When I raised that criticism of restaurant brands being sold in supermarkets, which I argued was counter-productive because those restaurants are in the business of taking sale away from supermarkets, I was actually arguing that it was the supermarkets that were making the mistake because they were unwilling to play hardball. I don;t blame the restaurants for trying to get their brands into supermarkets - it is a great way to build brand appeal. (I’m making a philosophical argument here about the battle for share of stomach.)

    Using this argument, it should be Walmart that is leery about sending any business Amazon’s way, since Amazon may be its biggest and baddest competition.

    Which is a good point, and I had not thought of it in those terms.
    KC's View:

    Published on: May 6, 2011

    I promised myself that I was going to take it slow when I sat down to read “Sixkill,” the last Spenser novel completed by Robert B. Parker before his death in January 2010. While it has been announced that the series will be continued by mystery writer Ace Atkins, this would be my final opportunity to enjoy the adventures of the now-legendary Boston private detective through Parker’s unique prism.

    The problem was, as soon as I sat down to read it, the noirish musicality of Parker’s famously reductionist prose grabbed me and simple momentum took over. Except to get myself a drink and fix dinner for my family - interruptions of which Parker no doubt would have approved - I read “Sixkill” straight through. And loved every moment.

    As a reader and longtime fan of Parker’s work, it is hard for me to put aside the notion that this was his last book; I can’t imagine that he knew that as he sat down to do his usual ten pages per day. And yet, it is hard not to connect that reality with some of the aspects of the story that struck me as having an elegiac quality. There are echoes of previous books, like “Early Autumn,” in Spenser’s relationship with an Native American named Zebulon Sixkill, who goes through some of the same experiences that Paul Giacomin did in the earlier novel. Spenser doesn’t do any cooking in this book, and there are just passing mentions of Hawk; but there is a great deal of specificity about times and places that reflect his love of Boston, and meals and beverages and restaurants are described with a savvy eye of a man who loves to eat and drink. One cannot miss Spenser’s enduring tenderness for Susan Silverman, and how that reflects Parker’s own feelings about his wife, Joan.

    There is more boxing in this book than in recent novels, which is good; I’ve sort of missed the scenes at Henry Cimoli’s gym. And there are plenty of gunfights and fistfights; this is, after all, a hard-boiled mystery novel from the man who revitalized the form with “The Godwulf Manuscript” back in 1973.

    It was with misty eyes that I came to final pages of “Sixkill.” Not wanting it to end, but knowing it would, and then being completely jazzed by the resolution. No tidy bow here, because Parker never seemed to believe in that convention. He liked to say that his books were almost never about who stole the Maltese Falcon, but rather were about how people act, and should act, and the ambiguities that inform their behavior.

    And then, it ended. But I suspect I won’t be alone in saying that if Parker’s Spenser had to have a coda, the last four paragraphs of “Sixkill” are perfect. Simple, brisk, illustrating character through action, and in the final analysis, telling us everything we need to know about Spenser.

    Well done.

    That’s it for this week.

    Have a great weekend, and I’ll see you Monday.

    KC's View: