retail news in context, analysis with attitude

Published on: June 1, 2011

by Michael Sansolo

Any business looking for a compelling discussion of the importance of execution vs. strategy need look no further than the sports pages this past weekend. The world rarely presents a true story so straightforward and so compelling that it demands discussion.

What happened in auto racing this week fits that perfectly.

In truth, there were two great racing stories that griped me and I’m no major racing fan. The first was the Indianapolis 500, where the lead driver cruising to victory crashed on the final turn of the race and lost. It’s a great lesson in focus and finishing the job. It would have been a great story, except it was eclipsed on another track just a few hours later.

At the NASCAR race in Charlotte that night, Dale Earnhardt Jr. similarly lost a lead at the end of the final lap when his car ran out of gasoline. The details are what make this mishap worth discussing.

The race, like most NASCAR events, was hotly contested through all 600 miles. Heading toward the conclusion, Earnhardt’s pit team (based on the reports I read) recognized a problem. Their driver was running in third place and also was low on gas. Stopping in pit row for even a few gallons would cost the incredibly popular driver any chance of winning and break a winless streak that goes back three years.

Earnhardt’s crew chief had a strategy. If Earnhardt hung back a little, the two cars ahead of him were certain to run out of gas first. All the driver had to do was be a little more fuel efficient through the final laps and the victory could be his. And for a time, the strategy was working. In fact, both of the cars ahead of him did need more gas as the crew calculated.

Only fate intervened.

With just a few laps remaining in the race, a crash caused a restart and Earnhardt was in a position where he had to race his car harder than his crew wanted. In the process, he used up the precious fuel he had left and eventually could only coast across the finish line behind six other drivers.

That’s why the story merits discussion. Because so often we do discuss the relative merits of a great strategy or great execution and which is more essential to business success. As usual, the latter wins.

Earnhardt’s team, like so many businesses, had a fabulous strategy and would have won if only everything had gone according to plan. But like so many businesses, the unexpected occurred and when that happens, the best strategy suddenly becomes strangely ineffective. That’s where execution takes over.

As I say, I’m hardly a NASCAR expert - heck, I barely qualify as a fan. It’s quite possible that Earnhardt did everything possible to win, only the competitive landscape changed with that final restart. If so it was a reminder that great strategy and terrific execution sometimes aren’t enough. Sometimes the status quo shifts and what looked like a winning plan suddenly turns into 7th place.

That, too, merits discussion. For so many businesses these days, the path to success is anything but clear and consistent. Rather, it’s littered with unexpected challenges and twists of fate, many of which are unfair and completely unavoidable. In fact, the only thing we can expect these days is the unexpected.

Which is why at your next team meeting take a few minutes to consider Dale Earnhardt Jr. and ask yourself and your team what you would do when the same thing happens to you. Will you win or coast home on fumes?


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 .

Published on: June 1, 2011

by Kate McMahon

I kept searching for an added incentive to drive the extra miles and pay the premium prices to shop at the bright and welcoming Whole Foods Market that opened last year just a few miles from my home.

I found it in Natalie.

Natalie is a customer service rep at the Darien, Connecticut, Whole Foods, and her demeanor and efforts in resolving a register receipt issue have converted me from a sometime WFM customer to a full-time loyalist.

And it also reinforced for me personally what has become a mantra here at MNB – that consumers are seeking a rewarding shopping experience that transcends price comparisons.

And customer service is a huge part of that equation.

As previously noted, I consider myself a savvy shopper and utilize loyalty programs at area supermarkets, online and paper coupons, Costco and e-commerce to get the most out of my purchasing power.

My daughter just home from college is a fan of Whole Foods, so we stopped to pick up her favorite vegetarian sushi (I scrutinized the price), dumplings, a rotisserie chicken and a few other items. She paid for the $30.77 transaction with my debit card while I was chatting with another customer.

When I was checking my account on line three days later I found the charge posted from Whole Foods was a whopping $129.19. I looked everywhere for the receipt (even sifting through coffee grounds) but no luck. I was annoyed with myself, but decided to see if I could remedy the situation.

I returned to Whole Foods, found Natalie at the customer service desk and explained my dilemma, replete with no receipt or transaction number, just the dollar amount on my debit card. Rather than sighing and pointing me toward the exit, she patiently listened to my tale, took down my info and promised to get back to me the next day.

There was a message when I returned home 45 minutes later. Natalie informed me they located my transaction, which included my eight items, and about 20 others, totaling $129.19. I figured we had reached a stalemate since I did not have a receipt, but Natalie said she would investigate further and contact me in 24 to 48 hours.

An hour later she called back and said their video showed the transaction was not “closed” after my daughter entered my PIN and we received our groceries, Whole Foods was very sorry for the mix-up and would refund me the full $129.19. Stunned, I said I’d be happy being reimbursed for the groceries that were not mine, and she insisted they would refund the entire transaction in a form that was most convenient for me. Natalie was off the following day, and when I didn’t stop in as promised, a colleague called to follow-up with me. And yes, I got the full refund. And then I shopped. there some more. And told my friends about the experience. And continue to. (You’re reading this, aren’t you?)

There are a multitude of business lessons here:

• Make customer service a priority: Whether in a store or on-line, put your best people front and center. Train them and supervise. Disinterested employees, long lines or “hold times” on the phone, or difficult-to-navigate websites simply amp up frustration levels.

• It’s about respect: The customer is not always right, but does deserve to be heard and respected. I would have been content if the dialogue with WFM ended after the first phone call back from Natalie.

• Don’t over-promise – over-deliver: Be realistic in what you promise. When estimating the amount time for a response, delivery or even a table at a restaurant, it’s better to come in under the original estimate.

The bigger picture: As Don Gallegos, the longtime customer service guru often says, even when the customer is wrong, do you want to win the argument or win the sale? (He even wrote a book by the same title, and it is worth reading.)

A final thought. To accomplish the above objectives and create a culture where respect reigns, it has to start from the top.

Comments? Send me an email at kate@morningnewsbeat.com .

Published on: June 1, 2011

by Kevin Coupe

There was a terrific piece in The New Yorker recently about Pixar, the animation studio behind movies such as the Toy Story films, as well as Finding Nemo, Ratatouille, Wall-E and Up. The story looked at the culture and mindset that makes Pixar different from most studios, and how these things combine to make movies that not only are transcendent, but that also appeal to both children and grown-ups.

One of the things that the company offers employees on its Emeryville, California, campus, is Pixar University, which offers a variety of courses in things like “live-action moviemaking, sculpting, fencing, or whatever. These courses are open to any employee, regardless of what their specialty is.

“Why are we teaching filmmaking to accountants?” one Pixar executive says to The New Yorker. “Well, if you treat accountants like accountants, they’re going to act like accountants.”

It so happens that the executive who said this, Randy Nelson, used to be a juggler.

It is an eye-opening attitude. Businesses get better if they get people to think - and act - outside the silos in which they are used to doing business.

Published on: June 1, 2011

Bloomberg reports that antitrust regulators in South Africa have cleared Walmart to acquire a 51 percent stake in Massmart Holdings for the equivalent of $2.4 billion (US), saying that the approval is contingent on Walmart’s agreement not to cut any jobs for two years and honor existing labor agreements for three years.

The Competition Tribunal also said that “Wal-Mart and Massmart should also establish a 100 million-rand supplier-development fund.” (One hundred million rand is roughly equivalent to $15 million US.)

However, South African labor unions were angered by the decision; they had hoped that more stringent conditions would have been put on Walmart as part of the approval. According to the story, “The Congress of South African Trade Unions, the nation’s biggest labor federation, will encourage its 2 million members to boycott Wal-Mart stores and hold demonstrations and pickets in protest of the decision to approve the transaction.”

Published on: June 1, 2011

The Los Angeles Times reports that after two years of sluggish wine sales, Americans are starting to spend more on wine, signaling a post-recession rebound.

The story says that “domestic wine retail sales grew 7% in 2010 over the previous year, according to the Wine Institute in San Francisco. California wine producers, who make 90% of wine bottled domestically, saw retail sales grow 1% from the previous year, to $18.5 billion. And U.S. wine exports also jumped to a record $1.14 billion in 2010, up nearly 26% from 2009.

“For the first time, the U.S. in 2010 consumed more wine than France. While the French still drink far more wine per capita than Americans, the U.S. - with its much larger population - has more people pouring a glass of Cabernet Sauvignon or Chardonnay.”

"People are feeling a bit more confident about the economy and are going back to what they know," Tom Klein, the Wine Institute's chairman and Rodney Strong Vineyards' vintner, tells the Times. "The wine industry, is it easy right now? No. But I think the industry has turned a bit of the corner. People are being smart about what they buy, but they are coming back."

Published on: June 1, 2011

The Los Angeles Times reports that NCR Corp. is suing Dish Network Corp. for the continuing right to brand its DVD kiosks with the Blockbuster Express name.

NCR had contracted with Blockbuster to use the name on kiosks designed to compete with Coinstar’s Redbox business; the move actually had given Blockbuster a kind of relevance in a competitive world where it was being squeezed on one end by Redbox and on the other end by Netflix. But when Dish Network recently acquired bankrupt Blockbuster, it sought to terminate the deal ... and NCR now is in court to argue that its use of the Blockbuster Express name does not constitute trademark infringement.

There currently are some 9,000 Blockbuster Express kiosks in supermarkets and c-stores in the US, as opposed to 27,000 Redbox kiosks.

Published on: June 1, 2011

The Conference Board yesterday said that its May consumer confidence index dropped to 60.8, from a revised index of 66 in April, demonstrating a continuing pessimism about the employment situation and general business conditions.

According to the Los Angeles Times analysis, “Most economists were surprised by the decline. Some blamed a downward spiral in housing prices, recent weakness in the economy and even a series of tornados and floods racking parts of the U.S. A few suggested that the decline could be an aberration in an index that's often volatile on a month-to-month basis.”

And, the Times writes, “The consumer confidence index remains low by historical standards. In a healthy economy, the index averages about 95.

“The index has more than doubled, however, since touching a record low of 25.3 in February 2009.”

Published on: June 1, 2011

The BBC reports that NGO coalition Oxfam is out with a report suggesting that “the prices of staple foods will more than double in 20 years unless world leaders take action to reform the global food system, Oxfam has warned.

“By 2030, the average cost of key crops will increase by between 120% and 180%, the charity forecasts. Half of that increase will be caused by climate change, Oxfam predicts ... It calls on world leaders to improve regulation of food markets and invest in a global climate fund.”

Published on: June 1, 2011

• The Chicago Tribune reports that “Michaels Stores Inc., which disclosed that its checkout-line PIN pads were tampered with in Illinois and 19 other states, has been hit with two lawsuits seeking class-action status by consumers alleging that the arts and crafts retailer failed to safeguard shoppers' credit and debit card information and PIN numbers.”

• A Minnesota judge has “ordered a group of activists that have targeted Twin Cities area Cub Foods stores with protests over wages and working conditions to tone down their activities.

“The activists want better pay and working conditions for the janitors who clean the supermarkets' floors.

Supervalu, the Eden Prairie-based parent of Cub Foods, is suing the Minneapolis nonprofit Centro de Trabajadores Unidos en Lucha - and two activists associated with the advocacy group for low-wage workers - following a year of what Supervalu calls increasingly aggressive and disruptive protests, picketing and leafleting at various Cub Foods stores.”

The janitors are actually employed by Carlson Building Maintenance, the primary contractor to clean Cub stores in the metro area.

• According to NRF’s Consumer Intentions and Actions Father’s Day survey, conducted by BIGresearch, “Americans will shell out an average of $106.49 on dad, up from $94.32 last year and the most in the survey’s eight-year history. As dad gets more recognition, the gap between Mother’s Day spending (average of $140.73) and Father’s Day spending has narrowed substantially. Total Father’s Day spending is expected to reach $11.1 billion.”

Published on: June 1, 2011

MNB carried a story yesterday about how the private activist group Oceana is reporting that there is rampant fish fraud in the marketplace - companies passing less expensive fish off as more pricey varieties. And I commented:

The really startling part of this story is the report that most of the fraud studies have been done by private scientists and organizations - the government apparently just now is buying the equipment needed to tell the difference between one fish and another.

Which led one MNB user to write:

You really do believe the government is the solution for everything instead of the problem.

Nonsense.

I know this may seem ridiculous to either end of the political spectrum, but I think that government is perfectly capable of being both the problem and the solution. It depends on the situation and circumstances. What I try not to do is let any sort of ideology get in the way of reason.

In this case, it seems to me that government ought to play a role in making sure that companies that say they are selling certain things actually are being accurate and honest. In this way, government protects its citizens from being ripped off.

Or are we supposed to just let companies govern themselves? (By this logic, the tobacco companies would still be advertising the health benefits of their products.)

Now, is government capable of screwing up this oversight capacity? Sure. But that just means we need smarter and more accountable government, not no government at all.




We took note yesterday of a New York Times report saying that Walmart is facing increased “pressure to monitor and disclose how its international suppliers treat their workers.” According to the story, “At its annual shareholder meeting on Friday, the New York City pension funds, which own a small percentage of shares in Wal-Mart, plan to ask the company to require vendors to publish annual reports detailing working conditions in their factories ... Wal-Mart opposes the request, citing the difficulty of persuading suppliers to issue reports. The company contends that even if it could enforce such a plan, to do so might threaten the availability of certain products from those who did not comply.”

To which MNB user John Hall responds:

So in essence Walmart is saying ‘The needs of the company (sales and profits) outweigh the needs of people (human rights)’.   Is that correct?

Doesn’t do a lot for the Bentonville Behemoth’s public image, does it?

I understand there may be limits to how much of an impact Walmart can have with its suppliers. But it may be using the wrong argument in dealing with the pension fund pressure.




On another subject, MNB user Craig Espelien wrote:

I read the comments today on Fresh & Easy and my two cents is that if they could sell, they probably will.  In the past (and probably today) I get the impression that they feel they are the smartest people in the food business in the US – just ask them.  I have reached out to Tim Mason (who runs the US business) multiple times with some salient points on where they are missing the US consumer preferences.  As with most misguided moves, they are stuck in the middle of Save A Lot and Trader Joe’s – limited assortment made up of mainly private label products (with packaging not suited for the US market with too many earth tones and an overall drab appearance) but at the higher end of the foodie scale (but without the panache of the Trader Joe’s shopping experience).

While they continue to tweak, what they need is a relevant brand that resonates with the consumers.  Today, they are a smaller and more antiseptic version of Whole Foods (packaging appears to appeal to the natural organic crowd – not saying that is who they are but it is the feeling you get in the store).  This is not a competitive position to be in – as someone is already there and doing it far better.

Finally, their locations are not the most desirable.  They have paid no attention to ingress/egress and the locations I have visited tend to be secondary or tertiary sites – places no US retailer would select without some major modification of the traffic pattern (Cub Foods did this a lot in Chicago – took any site available as they felt their stores would be a draw – and they ended up with lots of underperforming sites due both to not having as much differentiation as they thought and being difficult to get in and out of).




On the subject of new mobile payment programs, MNB user Gail Nickel-Kailing wrote:

I've been using the Starbucks iPhone payment app for the last several weeks and love it. It works great, I always have my iPhone with me - not so with my purse/wallet. I like the fact that it keeps my card balance current so I always know exactly how much I have on the card. I'd love to see a broader application of a "mobile wallet" but am concerned about security. While I can "kill" my phone if it gets lost or stolen, how do I ensure no charges are made on it until that happens? It's more like cash in your pocket... extremely liquid if someone steals it.




And, regarding proposed bans on Bisphenol-A (BPA), which is believed by some to cause health problems when it is used in various kinds of packaging, one MNB user wrote:

Our governor has told the good people of Maine that the worst thing that can come of BPA is that girls will have beards!  Imagine living with that level of ignorance.  I would imagine (hope) though that any self respecting manufacturer is not going to use the substance.

Did he really say that?

Oy.

Published on: June 1, 2011