business news in context, analysis with attitude

Published on: May 26, 2011

by Kevin Coupe

Content Guy’s Note: Below is a commentary on the same subject as the video piece, but it isn’t word-for-word the same. You can look at both, or either...it is up to you. I look forward to hearing from you.

Hi, I’m Kevin Coupe, and this is FaceTime with the Content Guy.

We’ve had a travel theme running through a number of columns this week, so for the moment I’m going to stick with it, using a specific travel experience to make a broader retail point.

Last week, I had the privilege of traveling to Oklahoma City for a speech, and my return was delayed by severe weather that threw all the local airports into a tizzy. Finally, after a bunch of cancelled flights, it seemed to make the most sense for me to drive three hours to Dallas a catch a flight from there. Except for the downpour, the drive was just fine, though I have to admit that I got a little nervous when one of those storm-chaser trucks sped past me, going in the same direction. Uh-oh, I thought ... and realized that if I saw a tornado, I had no idea what to do. But I made it to Dallas without any real problems.

Now, I have no real complaints to make about either United or Continental, the airlines that juggled my itinerary back and forth. The people there seemed to be doing their level best to get me where I needed to go, and they were generally pleasant and cooperative.

Once in Dallas, I spent about four hours waiting for my plane to take off. Then, another big storm hit, and things got hairy, and we were delayed another four hours. Now, I knew that I was destined to sit in a middle seat in the back of the plane, but that was okay - I just wanted to go home.

At about 10 at night, they finally loaded us onto the plane, and I got lucky - I got bumped up to first class. But my luck didn’t hold for long - the plane taxied around the tarmac for about 20-25 minutes, and then the pilot announced that FAA rules prevented the crew from flying any more that day, and they took us back to the terminal, where we all had to find hotels, get our bags and get rebooked for the next day. I thought a riot was going to break out at the back of the plane, but I stayed calm - I fly a lot, and I’m generally pretty lucky about these things, and so I figure every once in a while things are going to go south. I had stuff to read and work to do. C’est la vie.

Early the next morning, we were all back at the airport, getting on the same plane, and the same crew and flight attendants were waiting for us. This is where the pilot crossed the line. As people re-boarded the plane, he let us all know that this had been a major inconvenience to him, that he was supposed to be starting his vacation that day.

Totally the wrong thing to say.

What he should have said was, I’m really sorry about yesterday, things were totally out of my control, but as soon as we get this plane in the air I’m going to get it to New York as fast as I possibly can.

But no. He was sorry he’d been inconvenienced.

When you think about it, this happens a lot. I cannot tell you how many times I go up to a cashier - in any number of venues - and say, “How are you?” And they then let me know what a long day they’ve had, how glad they will be to leave work, and generally how miserable their jobs are.

Happens all the time.

I’ve never done it, but what I want to say back is, cut the crap. You have a job, you’re getting paid, you should take pride in what you do, and you should at the very least not be complaining to me. Whine to your spouse, your family, your co-workers, even your boss. But not me. And while you’re at it, while I’m at your register, I’d appreciate it if you talked to me, not your co workers. Show a little respect. Show a little dignity.

This is a message that all retailers ought to hammer home to their employees. Treat your customers like your job depends on it.

Because in the end, it does.

That’s what is on my mind this Thursday morning. As always, I’d like to hear what is on your mind.

Published on: May 26, 2011

by Kevin Coupe

I love stories like this one.

In Buffalo, North Dakota, the town’s only grocery store is closing this weekend. The owner, Fred Wrangler, said he was closing it down because he’d been unable to turn a profit for the past five years.

But the store is scheduled to reopen next Wednesday with a new name - Buffalo Food Market - and under new ownership ... residents of the community.

According to a wire story, residents of Buffalo were able to buy up to 100 shares in the store for $500 apiece, which resulted in the $50,000 necessary to buy out the inventory. It isn’t a very big store - there are just two employees, one full-time and one part-time - but next week, it’ll be back in business as a kind of public service.

I have no idea if it’ll be able to break even under the new arrangement, or if the whole idea is even sustainable. Time will tell, on both scores.

But it remains, to my mind, a cool idea, somehow hearkening back to a different place and time.

And in this place and time, that’s an eye-opener.

Published on: May 26, 2011

The San Francisco Chronicle reports that Andronico’s CEO Bill Andronico has confirmed that the eight-store Northern California retailer is looking to “recapitalize” and "bring in lending/investor partners to replace the existing lender group and, additionally, provide growth capital."

The story comes a week after reports surfaced that some of Andronico’s vendors were not being paid, and had not been paid in months.

Andronico’s email to the paper says, in part:

"As with other small family companies, Andronico's continues to operate with many business challenges on a daily basis. The economic climate of the past several years has also contributed to these difficulties.

"Andronico's has been a closely-held, family business since it began in 1929 and we are dedicated as always to insure our commitments to our vendors, employees and communities are met.

"Andronico's looks forward to being a part of our community for another 80 years and more. We thank our vendor and staff network for their continued support."

Published on: May 26, 2011

The Chicago Tribune has a piece about an anti-GMO protest in the Windy City, where activists showed up wearing white hazmat suits to draw attention to the sale of foods containing genetically modified organisms.

The interesting thing is that the protest took place at Whole Foods, where they concede that even the nation’s largest retailer of organic foods - which by their very definition should not have GMOs - can’t complete avoid selling products that contain them.

According to the piece, “Some consumers are concerned that such changes may pose health risks and say manufacturers should be required to prove GMOs are safe for human consumption before putting them on the market. They also say products containing genetically modified ingredients should be identified for the consumer; the U.S. is one of the few industrialized nations that does not require such labeling or testing.

“Industry representatives say that GMOs are safe and that labeling them is unnecessary, citing a 1992 statement from the FDA saying the agency had no reason to believe GMOs ‘differ from other foods in any meaningful or uniform way.‘ No mainstream regulatory organization in the U.S. has opposed the introduction of GMOs.”

The story goes on: “With an unprecedented number of genetically modified crops being greenlighted by the Obama administration in recent months amid public debate - including ethanol corn, alfalfa and sugar beets under certain conditions - some advocates say the issues may be reaching the awareness of consumers beyond the health-conscious shoppers who frequent Whole Foods.

“They cite polls taken by the Pew Center, Consumers Union and Harris Interactive over the last decade that have consistently found the vast majority of Americans would like to see genetically modified foods better regulated and labeled.”

Published on: May 26, 2011

The San Diego Union Tribune reports that contract negotiations between Southern California’s three major supermarket chains - Albertsons, Ralphs and Vons - “remain stalled” over healthcare benefits.

"We are not making a lot of progress," Mickey Kasparian, president of United Food & Commercial Workers Local 135, tells the paper. "The goal is to negotiate a contract, neither side wants a work stoppage. But right now we are closer to a strike than a deal."

The two sides have been in negotiations since March, when the most recent contract expired. A strike was authorized by members of the union last month, but to this point any sort of labor action has been avoided.

Published on: May 26, 2011

The New York Times reports that Walmart has filed a lawsuit in Oklahoma, seeking to recover “a trove of company documents” from Bruce O. Gabbard, a former computer security employee who was fired in 2007 after being accused of taping phone calls between a Times reporter and company executives without authorization.

According to the story, “Gabbard has been on the run ever since, pursued by Wal-Mart’s lawyers, who claim he took a trove of company documents with him when he left. A corporate fugitive, he fled Wal-Mart’s home state of Arkansas and has not returned because a state judge has ordered he be arrested on sight and questioned under oath about whether he pilfered documents.

“Now Wal-Mart has filed suit in Oklahoma - where Mr. Gabbard has moved - seeking to enforce the Arkansas judge’s order. Mr. Gabbard’s lawyers say the motion amounts to an attempt to have their client arrested and brought back to Arkansas, which would be highly unusual in a civil dispute.”

Walmart says that while Gabbard claims to have returned the documents in question, there is evidence that he retained copies of them, and the company wants them returned.

The Times writes that Gabbard “has maintained he was a fall guy. His superiors knew he was monitoring phone calls, he says, and had encouraged him to find the leak to the newspaper. Wal-Mart says he acted alone.

“After his dismissal, Mr. Gabbard embarrassed the retailer, telling The Wall Street Journal he was part of an elaborate operation that snooped on employees, stockholders and company critics. Wal-Mart also accused him of leaking trade secrets to the news media, including a plan to increase the retailer’s stock price called ‘Project Red’.”

Published on: May 26, 2011

• Internet Retailer reports that Ocado, the British pure-play e-grocer, has begun construction on a new 350,000-square-foot warehouse in suburban Wimbledon that will serve as a new distribution hub. The facility is slated to be finished late next year and will be able to handle as many as 120,000 orders per week when it opens, and eventually as many as 180,000 orders per week.

Ocado currently handles close to 93,000 orders per wee out of its existing facility, but is on a positive trajectory - sales were up 29 percent last year, and the number of active customers was up 19 percent.

Published on: May 26, 2011

The Wall Street Journal reports on a new study done by a pair of Columbia University economists saying that “food in New York City is actually cheaper than in other parts of the country,” a conclusion that “overturns the conventional wisdom that big cities have more expensive groceries than smaller ones.”

In fact, the report says that a family that moved from Des Moines to Manhattan would see a 10 percent drop in their supermarket expenditures: “Expensive foods at New York's high-end stores were less pricey than the same products in smaller cities, and inexpensive foods at New York's low-end stores also cost less than their Iowa equivalents.”

Published on: May 26, 2011

The Associated Press reports that things are good in the deal-a-day business - their needs are so great that many of them can’t hire enough people on a weekly basis.

According to the story, “Deal-a-day websites blast email offers for deep discounts, sometimes good for only a few hours. And they’re becoming so popular that their offices are starting to look as crowded as their subscribers’ inboxes.

“In just three years, the business model has changed local advertising, delivering faster results than other marketing methods. Store owners get immediate revenue and can see exactly how many customers an offer brings in.”

How much as it changed?

“The sites are expected to generate $2.7 billion in revenue this year, more than doubling from last year, according to Local Offer Network, which collects and distributes deals from hundreds of sites. The daily-deal market could reach $4 billion by 2015, says Mark Fratrik, vice president at marketing research firm BIA/Kelsey. While that’s a small slice of the $142 billion in online retail sales, daily-deal revenue is growing much faster than overall e-commerce.”

Published on: May 26, 2011

• The Palm Beach Post reports that “Winn Dixie this week sued Dollar General claiming the discount retailer shouldn't be selling food at stores in shopping centers where the Jacksonville-based grocer is the anchor tenant.

“As part of its leases, Winn Dixie has the exclusive right to sell groceries, according to the lawsuit filed in U.S. District Court.”

Winn Dixie says that Dollar General violates those lease covenants in more than 100 cases.

• In Toronto, the Globe and Mail reports that “in growing numbers, Canadians are adopting the frugal shopping habits they picked up in the recession, such as bargain hunting and buying fewer non-essentials, even though they feel relatively optimistic about the economy’s future, according to new global research from Boston Consulting Group, which will be released next month. Americans, on the other hand, feel more confident about spending than they did two years ago, although they’re much more pessimistic than consumers here about the fate of the economy.

“The reason for the divergence: many Canadians are still feeling financially strained as policy makers, including Bank of Canada Governor Mark Carney, warn against the dangers of taking on too much debt. Americans, in contrast, began saving during the economic meltdown and now feel less stressed than in 2009. These shifting trends are reverberating with retailers. While consumers on both sides of the border are watching their spending as food and gas prices soar, Canadians in many instances are scaling back even more.”

• Western New York-based Tops Friendly Markets yesterday held grand re-opening celebrations to mark the completion of major renovations of its Towanda, Pennsylvania, and Penn Yan, New York, locations, all former Penn Traffic stores that had been acquired and re-branded.

• The Wall Street Journal reports that “several environment and health-advocacy groups are suing the Food and Drug Administration to ban the widespread use of two antibiotics in animal feed to treat livestock.

“The groups charge that the FDA concluded years ago that large-scale dosing of penicillin and tetracyclines in animal feed was causing bacteria to become resistant to drugs that humans rely on to fight infections, but the government agency failed to act.

“The FDA reported last year that livestock grown in the U.S. consumed about 28.6 million pounds of antibiotics and the agency confirmed recently that about 74% of those antibiotics were administered through feed.”

• The Los Angeles Times reports that California Pizza Kitchen has been sold to private equity firm Golden Gate Capital for $470 million. Golden Gate also has ownership positions in retailers that include Border Mexican Grill, Romano's Macaroni Grill, Eddie Bauer, Express and J.Jill.

Published on: May 26, 2011

• The Food Marketing Institute (FMI) announced the appointment of Dr. Hilary S. Thesmar, Ph.D., RD, as vice president of food safety programs for the nation’s largest food retail trade association. Starting in mid June, Thesmar joins FMI from the National Turkey Federation (NTF), where she served as senior director of scientific and regulatory affairs.

• Tesco China announced that it has appointed Echo Lu as its new COO, succeeding David Hobbs , who has returned to the UK as Tesco’s Operations Director.

Prior to her new role as COO, Lu was the Operations Director for Tesco - East China.  

Published on: May 26, 2011

Regarding MNB’s rhapsodic coverage of online grocery, one MNB user wrote:

I have always questioned the possibilities for online grocery.

Most peoples' food needs are far too immediate and almost always subject to last minute change.

Let's just say I've spoken with a few people in the know and Amazon Fresh is finding that the margins are just too low, especially facing pricing and promotions activity within conventional grocery. Things don't look good, and I would be surprised if they were around too much longer.

I find it hard to believe grocery delivery would work in most cities between traffic and distance. It does make sense in the case of Fresh Direct in NY, but as they say there is no place like New York. Besides, Whole Foods has been delivering there for about 7 or 8 years.

I could see a possibility for online order/in-store pickup, but one wonders again whether the labor cost will generate enough in extra sales in such a  low margin business.

I respectfully disagree. But we’ll see.



Got the following email from MNB user John Franklin:

I enjoyed your piece this morning on 30 Years of Loyalty Marketing. The big question is What is Loyalty? A couple of stories that illustrate that quandary:

I worked in the airline biz for 10 years from the mid-80’s when “frequent flyer” programs were in their biggest growth phase. The concept was good, but the execution was all wrong. The biggest fumble was that flyers were rewarded for segments and/or miles and not for the fare paid, so the grandma making her annual trip to visit the grandkids for $248 got the same reward as the suit paying $1248 to negotiate a multi-million dollar sale.

Not only that, but American kicked their program off to gain loyalty among their Dallas-based travelers; however, the first time that a flight was unavailable or too pricey, that traveler jumped ship to Delta (who used to have a sizable hub as the #2 carrier in Dallas…remember that?). One can’t be “loyal” to two equal brands, but one can be opportunistic. By the time the hotels got into the frequent traveler game, they had had time to watch and learn, and they rewarded guests in points per dollar spent. They also gave bonus credit for the number of stays and nights, so they could really discern the most frequent guests and reward them with elite rewards. Well done, Marriott and Hilton.

As for the Grocery business, Kroger is clearly on the cutting edge with their use of the dunnhumby database. Originally designed and rolled out for Tesco in the UK, they know who is buying what and when, and can tailor offers that really matter to a given shopper’s household. It’s been said that Tesco (via this data) knows the menstrual cycle of 80% of women in the UK and knows how to target their offers accordingly. A bit creepy, but not a huge leap if they have the data.

By contrast, here’s a story of what’s wrong with most grocery loyalty (or, as you correctly say, coupon-delivery) programs: a friend went on a ski vacation to Colorado with his family. On the drive out to the mountains, they stopped at a Safeway to stock up for the week rather than pay resort-area grocery prices. At checkout, the clerk asked whether they had a frequent shopper card so they could save money. My friend replied “no” but gladly signed up and took advantage of the savings. What just happened? The clerk was rewarded for signing up a new member, my friend saved $30 at a grocery store that has no locations in his hometown, and the retailer gave up those $30 from what’s already a low margin. Yikes!



Even before I did my FaceTime commentary above, I got the following email from MNB user Kathy Bassininski:

I have read your column since just after you started it.  I have shared it with many people. 

As you have often mentioned, customer service is key to loyalty.  This hit home with me today as I have truly experienced one of the worst treatments of customers ever. 

Last evening I was supposed to be on an 8:39 connecting United Airlines flight from Chicago to Minneapolis (key words are “was supposed to be”).  After boarding, our flight was delayed for “mechanical issues”.  We were then delayed by 2.5 hours while a  new plane was being sourced.    

At ~ 11:15, many of the passengers received a text that our flight was cancelled.  Meanwhile, we had waited all of this time with no information, no aircraft and no movement to put us on a plane. 

At ~11:25 – the crew left the boarding area (never a comforting sight).

At ~11:30 – An announcement that our flight is cancelled and one person trying to rebook and handle about 100 passengers.  Help arrived after 10 minutes. 

United personnel told all of us we couldn’t stay at the Hilton O’Hare which is attached to the airport as it was booked.  Not to worry as we would only be about 5 minutes away and most of us were automatically rebooked for the 6:00 a.m. flight.  We are then told to go to the hotel shuttle area and catch the shuttle to the Ramada O’Hare.

The shuttle held about 10 people.  There were 100 of us.  The driver was surly at best, the van wasn’t marked except for a computer printed sign taped to the window and the drive was more than 20 minutes.

We arrive at the hotel, the lobby has dirty floors, dirty windows and one clerk.  We start the process of swapping vouchers for rooms.  The gentleman behind me in line looks up hotel rating on line – one star and many, many write ups that speak to the lack of cleanliness.  The first gentlemen to get his room comes back while the clerk is helping the third guest.  And guess what – his room has unmade beds, is dirty and the t.v. is on and his key lets him in.  He asks for a new room.

The next guest in line is told that the shuttle to the airport only runs on the hour and the 4 a.m. shuttle is full.  The rest of us on the 6 a.m. flight need to either take the 3 a.m. shuttle or get a cab.  Clerk can provide a cab phone number for us.

More guests from our flight arrive in a taxi (as the shuttle had left with us).  I take taxi back to airport and walk up to United associates at the luggage security counter.  I explain that my flight was cancelled and I had a voucher but the hotel was quite dirty, was their anything they could do for me?  Funny enough – these United personnel guessed that I had been sent to the Ramada O’Hare.  Turns out I was the 7th person to come back after being sent there.  I was issued a new voucher to – the Airport Hilton (the one that was full)!  They call someone else and state that I am the 7th customer to return complaining about the lack of cleanliness and can they stop sending people there?

At 4:45 I arrive back at the gate for the flight.  One of the women that was in line the night before with me says she was looking for me to catch a cab back, I said that I didn’t spend the night.  She shares that the sheets on her bed had holes in them.  Two other women then share that United wouldn’t give them their luggage back to go to the hotel.  So they had nothing with them to shower, change into, etc.  One woman stated that the room smelled so she slept on a layer of her own clothes on top of the bed.

So after a crummy experience with flight equipment, a 2.5 hour delay – United sends us to a hotel that is dirty, their service and the hotel’s clearly lacking in any “customer” service and a lack of transportation to and from to make this inconvenience a bit palatable.  While we all appreciate a safe flight, it wouldn’t have taken any time for their personnel to have understood the ratings of the chosen destination for their inconvenienced passengers or the location’s proximity to the airport or to have given passengers their bags.  I can’t tell you how many people were vowing NEVER to fly United again.

Customer service is the difference.  Given an option – I will choose anything but United.

My general experience with United over the years has been positive .... but I agree with you about the Ramada O’Hare. To call it a hell hole would be too generous.



MNB user Jerry Jewett offered the following thoughts about ethical business behavior:

A good study in Ethics & Values is Costco. They are criticized by Wall Street because they pay their help to much and are to generous with bonuses for all employees. They do not pay their top management people outrageous salaries & bonuses. They are not paupers but they are a long way from Bankers,Energy Co. GE. Home Depot and many others

They want a specific % mark up on product in the stores & no more. Even when they know they can get more they stay at the % they feel is enough.

It would be unique if the oil Cos. felt that way. Gas would still be about $2.50 per gal.

I asked an attendant at the Costco Gas Station how they determine their price. He said #1 they can not be higher than a competitor. #2 they can only make so much per gallon even if a competitor is higher they will not go up to meet them if they have the profit they want. Yesterday I filled up at Costco they were .06 lower than any other station in the area. Costco sales just keep growing & the stock price has gone up $21.00 in the last 17 months.



Responding to Michael Sansolo’s column about the value of a good travel agent, MNB user Rick Henry wrote:

My wife is a former owner and now a travel agent who works out of the home as I do (the commute can be terrible!).  She has a loyal user base and is constantly being contacted by friends and associates who wanted to "do it themselves" on the internet to save money, but who now find their trip interrupted or canceled and go to her to clean up the mess.  Usually she is not able to undo what they did on the internet, but she always tries.

Those people always come back to her knowing that if they book with her, they will get what they wanted and if not, she will work to make things right.  She is definitely "valued added" and any good travel agent should look at themselves that way.

The broader business metaphor is worth noting.

Published on: May 26, 2011

Just a few quick notes this Thursday morning...



Not sure if it was the legal system, or simply a rare case of corporate shame, but apparently the Walt Disney Co. has thought better of its patent application that would have given it exclusive rights to the term “SEAL Team 6” for use on toys and games.

SEAL Team 6 was the secret operations unit that killed Osama bin Laden earlier this month. Disney filed the patent application two days after bin Laden was killed, earning substantial derision for looking to turn a profit on such an event.

The Wall Street Journal reports that it withdrew the application “out of deference” to the Navy - which actually doesn’t lay exclusive claim to the term, because it does not officially acknowledge the team’s existence.

The Disney move was cynical at best, and exploitative at worst. I’m glad they thought better of it.



Thor is, I’m afraid, a profoundly dumb movie. I tend to have mixed reactions to comic book movies; I’m getting a little old for them, but not so old that I don’t enjoy them when they’re good. The Christopher Nolan Batman movies, for example, are prime examples of excellent filmmaking; I liked the original Spider-Man, the two Iron Man movies, and the original Christopher Reeve Superman.

Thor, despite the fact that it was directed with Shakespearean brio by Kenneth Branagh, doesn’t even come close to any of those. Maybe it’s because the whole notion of Norse Gods takes me beyond any possible willing suspension of disbelief. Or maybe it is because the script seemed generally uninspired. But it just doesn’t do it for me. (And can someone tell me what the hell Natalie Portman is doing in this movie?)

That said, it has a winning performance by Chris Hemsworth (who played Jim Kirk’s dad in the Star Trek reboot) as Thor. My son and I both think that with a little roughening around the edges, he’d be a prime candidate to play Jack Reacher in any film based on the Lee Child novels.

But it isn’t enough to save Thor from being a depressing experience.



It is possible, I suppose, that I’m just not connected enough to the Marvel universe to get Thor. I was always a DC Comics guy growing up, and some allegiances never change.

A couple of weeks ago, against my better judgment, I watched the two-hour series finale of “Smallville,” the TV series that for ten years has tracked the slow growth and maturation of Clark Kent before he ever became Superman. A lot of it has been silly, but I wanted to see the final episode, in which Clark finally figured out he could fly, donned the red and blue suit and became the Man of Steel.

I have to admit that despite the fact that I had no emotional connection to the show, I got goosebumps at the end. They had the John Williams theme from the movie, and when Tom Welling leapt up into the sky (like a bird! like a plane!) I went with him ... the same way I was with George Reeves and then Christopher Reeve at various times in the past. I felt a little foolish, Mrs. Content Guy looked at me like I had three heads, but so it goes.

Just goes to show you. Old fanboy habits die hard.



I have two wines for you this week. None are from the MNB Wine Club selections, though all are available from Nicholas Roberts Fine Wines, which powers our club.

They are:

• 2009 Don Guido Chianti, which my son brought home for an Italian meal, demonstrating that he has excellent taste.

• Telegram Sauvignon Blanc from California, which is crisp and refreshing...and perfect now that the weather seems to be changing for the better.

Published on: May 26, 2011

As pretty much everyone in the US knows, next Monday is Memorial Day here, a national holiday that unofficially kicks off the beginning of summer.

Which means that MNB gets to sleep in on Monday.

As is the tradition around here, I’m also going to take Friday off as well and turn it into a four-day weekend. The weather report looks reasonably promising, the ingredients for margaritas are in the larder, and I’m ready to put the top down on my car. Finally.

So I hope you have a good weekend, and I’ll see you Tuesday.

Sláinte!!

Published on: May 26, 2011