retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: June 9, 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.

    One of my favorite business quotes comes courtesy of Stew Leonard Sr., who used to say that the customer who complains is your best friend. First of all, that customer cares enough about your business to register the complaint - and that’s no small compliment. Second, it gives you a chance to go from doing something wrong to doing something right ... something you might not even have known about if there had not been a complaint.

    I’m not sure that all businesses feel that way. We’ve all had experiences where we’ve complained - in person, on the phone, in a letter, via email - and we either get ignored or treated like we have some sort of disease. It is like the business is doing us a favor, rather than the other way around.

    They may not be able to act that way anymore. At least, not if they’re smart and paying attention.

    The New York Times reports about a new website called Gripe - that’s “G-r-i-dot-p-e” - that describes itself as a “Better Business Bureau for the Twitter age,” and says that its job is to remove the friction between the person doing the complaining and the company being complained about.

    According to the story, “with a little typing, its users can send off a gripe, which goes to Facebook, Twitter and the named company’s customer service department. The company is invited to remedy the problem and remove the stain of the publicized gripe, earning a ‘cheer.’ Users can also send out a ‘cheer’ in the first place, to applaud customer service well done.”

    In essence, this gives anyone with a complaint a megaphone, because they’re not just making their case to the company. They’re doing so on a stage, with an audience of potentially millions of people.

    Now, some retailers think that this is all too much. “Social bullying,” they call it. And they have a point, because this website - and the many others like it that inevitably will spring up - do have the potential of giving specific consumers too much power, and specific complaints too much publicity.

    But the sad reality is that there is almost nothing you can do about it.

    Oh, wait. There is one thing. You can make customer service your number one priority, regardless of the segment in which you operate and the strategy behind the store you run. You can track all these complaints and respond to them quickly and effectively. You can be transparent about your own operations, engendering both respect and loyalty among the customers that do like you, which can have the effect of blunting any controversies that could affect you.

    It isn’t a perfect system, and it isn’t a perfect world. But these are the realities with which we all have to cope, and it is better to know about them - and integrate them into your infrastructure and response mechanisms - than to do business in a vacuum of ignorance. Go down that road, and only bad things happen.

    That’s what is on my mind this Thursday morning. As always, I want to know what is on your mind.
    KC's View:

    Published on: June 9, 2011

    The New York Times reports that the US Senate defeated an effort to delay implementation of limits on debit card swipe fees, limits that were part of the Dodd-Frank financial regulations that were passed last year.

    As the Times writes, “The Wednesday vote, which followed a vigorous floor debate, was a victory for retailers, who have complained that banks and the companies that control the largest debit card networks, Visa and MasterCard, have consistently raised the fees on debit card transactions even as the market has grown rapidly and technology costs have declined. Those fees topped $20 billion last year, according to industry reports.”

    There were 54 senators voting in favor of a delay, but Senate rules require 60 votes to pass.

    The Federal Reserve Bank is supposed to come up with specific limits in time for them to be implemented by July 21; the Fed has said it intends to meet that deadline.

    After the vote, the Merchants Payments Coalition issued the following statement: “Merchants and consumers across the country owe a huge thank you to all of the Senators who reaffirmed the swipe fee reform law in the face of unprecedented pressure from Wall Street banks. For nearly a decade, the country’s biggest banks and credit card companies have worked tirelessly against these long-awaited reforms, and Main Street has finally prevailed. Today’s vote sent a message to the big banks and their allies that the Senate is prepared to support Main Street by protecting these critical reforms.”

    And Leslie Sarasin, president/CEO of the Food Marketing Institute (FMI) said: “FMI applauds the 45 Senators who voted to support their neighborhood grocery stores and their customers today.  There is no doubt in my mind that customers will see savings returned to their pockets once this rule is finalized ... This is a critical issue to the survival of small businesses.  Since 2008, more than 1,000,000 businesses have failed costing 3.6 million jobs and many report the growth of swipe fees as a strong contributor to their demise.”
    KC's View:
    Assuming the banks don’t find another way to derail regulation, this is where things get really serious.

    Retailers have been saying that a reduction in swipe fees will allow them to lower prices. Now they’ll have to live up to those words.

    People will be watching, especially because costs prices in general are going up, and this is one way that retailers may be able to hold the line.

    If it ends up that retailers have just been looking for ways ton improve their margins, and they have no intention of passing on the savings, they’ll not only look bad, but they’ll actually make the banks look good.

    I don’t think this is going to happen. I think that some big retailer will not only use the savings to lower prices, but also will turn this turn of events into a marketing program, which will create pressure on other retailers to do the same.

    I hope I’m not wrong.

    Published on: June 9, 2011

    by Kevin Coupe

    I have a vague memory of having to learn the periodic table of elements when I took chemistry back at Iona Preparatory School in the late sixties and early seventies. I remember virtually nothing about the experience, other than hating it intensely. I never have been been big on memorization, and I’ve always been lousy at math and science ... so the notion of memorizing the periodic table was a really lousy combination.

    That said, I was fascinated by a story in the Wall Street Journal this week saying that scientists have created two new elements - as yet unnamed - that need to be added to the table. (Creating, I suppose, an even longer list of elements to be memorized by high school students. feel their pain.)

    According to the Journal, the new elements “were first formed during experiments conducted by a team of Russian and U.S. scientists at the Joint Institute for Nuclear Research in Dubna, near Moscow, in 2004 and 2006. The new elements have 114 and 116 protons, respectively, in their nuclei and are the heaviest discovered so far.

    “Scientists have been creating new elements since 1940, when neptunium and plutonium were first forged at the University of California, Berkeley. As more elements have been created, a pattern emerged: Each new element was radioactive, slightly heavier than the one before, and in general, more unstable. Eventually, scientists hope to discover new elements that might be stable, easily studied and, perhaps, offer commercially useful properties.

    “Atoms of the two new elements - created in a clash of nuclear particles - lasted only milliseconds before decaying into simpler and more stable substances, making them hard to study and even harder to verify.”

    At one level, I have no idea what the hell they’re talking about. But I’m still fascinated.

    I sort of thought that the table of elements was a stagnant thing - it was what it was, and was not going to change.

    But as the Journal story teaches us, change is inevitable. Everything can be challenged. And the biggest threat to what we think is so probably is something we don’t even know exists.

    This seems to apply to the Periodic Table of Elements. And it certainly applies to virtually every business model. No matter what your business, it seems to me that you have to work on the premise that your advantages are going to be challenged, and likely that challenge will come from some entity you aren’t even aware of, or are worried about.

    I did a little checking on the internet, and the Periodic Table of Elements looks a lot bigger now that it did 40 years ago when I first tried, with limited success, to memorize it.

    Clearly, it isn’t locked in stone. It’s fluid. As is virtually every kind of business competition of which one can conceive.

    And that’s an Eye-Opener.
    KC's View:

    Published on: June 9, 2011

    Marketing Daily has a story about a new report from Forrester Research suggesting that it is no longer enough for businesses to be “customer-centric,” but that they must be “customer-obsessed” if they are going to survive.

    The story says that this is not a semantic difference: “It requires willingness to make fundamental thinking, strategic and investment shifts -- including redistributing money spent on brand advertising and other traditional dominance-creating areas ... To be customer-obsessed, a company must pull budget dollars from brand advertising, distribution lock-up, mergers for scale and supplier relationships, and invest in four priority areas, according to the report: real-time customer intelligence; customer experience and customer service; sales channels that deliver customer intelligence; and useful content and interactive marketing.”

    According to Josh Bernoff, senior vice president, idea development for Forrester Research and primary author of the report, entitled "Competitive Strategy In the Age of the Customer,” a customer-obsessed company “focuses its strategy, its energy, and its budget on processes that enhance knowledge of engagement with customers, and prioritizes these over maintaining traditional competitive barriers. Previous sources of competitive dominance -- manufacturing, distribution, even information mastery -- are now just table stakes."

    Among the new organizational priorities, the report says, should be “nimbleness and emphasizing speed over strength (management structures that permit rapid pursuit of customers in new markets and channels); valuing versatility over customer lock-in tactics (building true loyalty rather than blocking customer abandonment with contracts, proprietary technology, frequent-flier programs, etc.); global reach and strategy (in supply, demand and markets); and information-rich services (continuously updated information about products services with mobile accessibility).”
    KC's View:
    The report makes clear that the reason this shift in mindset is necessary is that technology-empowered customers want what they want faster, cheaper and better, and they want high service levels, and they use technology to identify where their needs can be best met ... and are perfectly willing to change allegiances if they think they’ll be better taken care of elsewhere.

    Which ought to have most retailers saying, “Yikes!”

    When you think about it, the notion of “speed over strength” ought to be very good for smaller retailers, who should be nimble enough to create for themselves service levels that are a differential advantage. Excellence in everything else is, as they say in the piece, just table stakes - the cost of getting into the game. Customer obsession is where you win or lose.

    Published on: June 9, 2011

    Supermarket union leadership in Southern California said yesterday that they are close to going out on strike as negotiations continue to be stalled between labor and the management of Ralphs, Vons and Albertsons. Healthcare continues to be the biggest dividing issue.

    "We're so far apart, if something doesn't happen soon, we will have a strike," Rick Icaza, president of United Food and Commercial Workers Local 770, tells the Los Angeles Times.

    Management demurred, and put out the following joint statement: "We are still actively negotiating, and any talk of a strike is unnecessary. The only place where we can reach an agreement is at the bargaining table, and we believe our focus should be there, reaching a fair and reasonable contract."

    The Times writes that “the supermarket companies would not comment on what kind of changes they are seeking with regard to employee healthcare. But the union said the chains want employees to pay more for premiums, deductibles and co-pays. The new payments could be as high as 50% of some workers' take-home pay, the union said.

    “The union's contract expired in March, and members have authorized a strike. Negotiations are being conducted under the supervision of a federal mediator.”
    KC's View:
    This is just nuts, especially when you think of this argument in the context of the study that is our next story....

    Published on: June 9, 2011

    In Minnesota, the Pioneer Press reports that Target Corp., “which has a long history of policies friendly to gays and lesbians, said it is remaining ‘neutral’ on Minnesota's controversial marriage amendment.”

    At the company’s annual meeting this week, CEO Gregg Steinhafel was repeatedly asked about the amendment, which would amend the state constitution to ban same-sex marriage.

    "Our position at this particular time is that we are going to be neutral on that particular issue, as we would be on other social issues that have polarizing points of view," Steinhafel said.
    "We're a retail store, we welcome everybody ... We have a broad team-member base, every shape and size and color. And so we are a very inclusive organization....We're going to continue to monitor, we're going to continue to assess, and see how that develops."

    According to the story, “Minneapolis-based Target has a long record of supporting gay and lesbian causes, including offering domestic partner benefits and being a major donor to Project 515, a group working to see that gay couples are treated the same as straight couples under Minnesota law.
    “But the discounter drew the ire of gay-rights groups last summer, after making a $150,000 campaign contribution to MN Forward, a group working to elect a pro-business but anti-gay marriage Republican as governor. That contribution created a huge headache for the company, resulting in boycotts, petition drives and protests nationwide.”

    It is worth noting that at this time Minnesota is not one of the states that issues marriage licenses to same-sex couples; recognizes same-sex marriages from other states; allows civil unions, providing state-level spousal rights to same-sex couples; and does not have a statewide law that would provide all or some state-level spousal rights to unmarried couples in domestic partnerships.

    The marriage amendment vote is not scheduled to take place until November 2012.
    KC's View:
    However I feel personally about such amendments and the concept of same-sex marriage, Target probably is making the right move here. The company can hire and provide benefits to anybody and everybody, but probably is correct to avoid taking a position on a political issue.

    The problem, of course, is that the perception is there that it already has - both ways. So it already has annoyed both sides of the political aisle on this one.

    Good lesson for all businesses. Take positions and support candidates with your eyes wide open, knowing that everything you say and do has repercussions, and that nothing is just “local” anymore.

    Published on: June 9, 2011

    The Seattle Times reports that Amazon.com CEO Jeff Bezos told the company’s annual shareholder meeting this week that “the company will stand its ground against efforts in many states to require the Internet giant to charge sales taxes on their behalf,” while he also “downplayed the possible threat to Amazon's edge against traditional stores if it's forced to collect sales taxes in more states. He noted that Amazon already does at least half of its business in places where it collects sales taxes or something similar, such as Europe's value-added tax.”

    Bezos said that Amazon objects to local efforts to have it collect sales taxes because “requiring Internet retailers to navigate the varied rules and rates of more than 7,500 local taxing jurisdictions would be too burdensome.” He said he is in favor of a federal response to the problem with a simplified sales tax initiative.

    However, the Times notes that Amazon critics aren’t buying Bezos’ position, saying that the company’s whole business model is founded on sales tax avoidance.
    KC's View:
    I am absolutely in favor of a national solution. It makes sense, it is easier to implement, and the revenues could be divided between the federal and state levels.

    Published on: June 9, 2011

    Consumer Reports is out with a new survey saying that 64 percent of Americans walk out of stores because of lousy service, and 67 percent end up hanging up the phone because they can’t get anyone to address their problems.

    According to the Reuters story, “Walmart discount stores and Sam's Club members-only warehouse clubs were ranked by the magazine's subscribers among the worst in areas such as buying small appliances, electronics, cellphones and groceries.” Walmart, however, disputes the finding, saying that “it is seeing its highest satisfaction scores in years.”

    Costco also got slammed in the rankings for having “least capable” employees, while Apple Stores and Southwest Airlines are highly thought of.
    KC's View:

    Published on: June 9, 2011

    Bloomberg reports that Walmart-owned Asda Group in the UK “may broaden a guarantee to sell grocery items 10 percent cheaper than rivals to non-food products such as electronics and toys.”

    In an interview, CEO Andy Clarke said, “We’ll look to keep extending the Asda price guarantee ... It seems a natural extension to broaden the ranges, including non-food.”

    The story notes that “Asda, the second-largest U.K. supermarket chain, guarantees that a fixed basket of grocery products is 10 percent cheaper than rivals or it will refund the difference. The retailer has 3 million customers that check prices because of the guarantee, the executive said, adding that price transparency is becoming more important with the prevalence of Internet retailers.”
    KC's View:

    Published on: June 9, 2011

    • Amazon.com-owned Quidsi, which owns and operates Diapers.com, Soap.com and BeautyBar.com, says that it is planning to open a new site “in coming weeks” that will be targeted at “the other baby in the family.” Wag.com, Bloomberg reports, will carry “more than 10,000 products for dogs, cats, birds, reptiles and small animals.”
    KC's View:

    Published on: June 9, 2011

    • The Food Marketing Institute (FMI) has released its Online Suppliers Guide, describing it as “a one stop shop for food retailers and wholesalers to find information on suppliers to fulfill their various product and service needs.

    The guide serves as a resource that “allows users to search for suppliers by company name, brand or any of a wide range of categories, from advertising and unsaleables to food products, private brands and more. Additionally, the FMI Online Suppliers Guide features an RFP Automator, allowing users to create customized requests and receive personalized responses straight to their inbox. All of these features streamline and accelerate the process for users in search of solutions to achieve strategic goals, improve operations and expand markets.”

    The guide is located on FMI’s website at http://fmi.officialbuyersguide.net/.

    • The Wall Street Journal reports that Kevin Petrie, head of procurement for Nestlé SA, said this week that the company “is facing unprecedented increases in prices for raw materials and expects the situation to continue for the next few years.”

    "In nominal terms we are seeing unprecedented rises in the price of commodities," Petrie said at the company's annual investor seminar. "We see tremendous volatility and headwinds."
    KC's View:

    Published on: June 9, 2011

    • The Global Food Safety Initiative (GFSI), managed by The Consumer Goods Forum, announced today that Frank Yiannas, VP Food Safety and Health, Wal-Mart, has been appointed Vice-Chair Elect to replace current Vice-Chairman, Yves Rey of Danone, effective February 2012, when Yves steps into the role of Chairman, succeeding Jürgen Matern of Metro AG.

    • Tesco has named Matt Atkinson to be its new group digital and marketing officer. Atkinson is the former CEO of Evans Hunt Scott (EHS), which in addition to handling projects for Barclays Bank and Volvo, also has been promoting Tesco’s Clubcard program for some 16 years.
    KC's View:

    Published on: June 9, 2011

    We took note the other day of a New York Times piece about Jonathan Kaplan, the founder of the Flip video camera, who now is developing a grilled-cheese-sandwich-and-soup chain that will round up purchases to the next dollar and give the difference to charity. MNB user Steven Ritchey wrote:

    The article about Jonathan Kaplan reminds me of an experience I had in Stillwater, OK two weekends ago.  My girlfriend and I traveled from the Dallas. TX area to Stillwater to move her daughter from the apartment she lived in down to her new job in Austin, TX (just graduated college, yea).  On the way up there, the air conditioner in my 20 year old pickup went out.  Long story short, took it to a Firestone dealer in Stillwater, ended up having the compressor and other assorted parts replaced.  The total bill came to 1,389.76.  The manager asked if I would let him round it to the next dollar and use it for a donation to Meals on Wheels.  When I saw that Kaplan’s Grilled Cheese Sandwich shop was doing the same thing it made me what a painless way to make a difference.  Most of us can afford to go up the next whole dollar on most purchases, and in these economic times there are lots of people who need  help.  I wish more people were doing this.  The 24 cents Meals on Wheels of Stillwater got from me won’t go very far, buy when you put it with all the other donations people will make, maybe it will make a difference.

    Agreed.




    We took note of the Anthony Weiner fiasco - which only seems to get uglier and more sordid by the day - earlier this week, and tried to draw some business lessons from it. Which led MNB user Mike Franklin to respond:

    I still think the lesson here is…not that you’ll get caught…not that it won’t go away…and not that he didn’t learn from all the others…the lesson is we have decades of very hard work to be done by our elected officials to restore America…and we need more than idiots in office to accomplish this task.

    Agreed.

    BTW...I am getting really tired of this clown trying to stay in office. If he had a shred of human decency, he’d resign immediately. He isn’t doing his district any good, and he’s putting his wife in an awful position. He should quit, wait a year, and then get a talk show co-hosted by Elliot Spitzer.

    There’s only one reason for him to stay in Congress - because it is so immensely entertaining to watch Jon Stewart eviscerate him night after night.




    And MNB user Bill Jensen had some thoughts about how supermarkets could mimic the Apple Store:

    Kevin, just playing off your importing ideas theme, one thing the Apple Store does well is organize classes. You sign up online, and the class introduces you to the features of the product. My wife attended one for the iPad2 which we bought at her desire, to take pics (and share with her family/friends) of our first grandchild. She is not a technical person, but was quite comfortable after that class to use her iPad2, including some great shots with a then 2 hour old grandchild. The iPad2 in her hands is a walking ad to all her friends, not only of the product, but the training included, which actively involved her using her own product.

    How many grocery stores *really* promote training people how to prepare and cook their food? Not just offer some, but promote it heavily? And how many dividends would that pay if someone is telling their friend, "I bought my Salmon at X store, but they showed me how to grill it to perfection, and which side dishes to use", etc. That will help the store immensely, by word of mouth advertising, and a true loyalty "program". Hands on training works for grade school and the school of life.


    Also agreed.
    KC's View:

    Published on: June 9, 2011

    The Chicago Tribune reports on a new study from McKinsey saying that “at least 30 percent of employers are likely to stop offering health insurance once provisions of the U.S. health care reform law kick in in 2014 ... The McKinsey study also found that at least 30 percent of employers would gain economically from dropping coverage even if they compensated employees for the change through other benefit offerings or higher salaries.”

    McKinsey also projects that “losing employer-sponsored insurance would not prompt workers to leave their jobs, contrary to what many employers assume ... The study found more than 85 percent of employees would remain at their jobs even if their employer stopped offering insurance, although about 60 percent would expect increased compensation.”
    KC's View: