retail news in context, analysis with attitude

Published on: June 15, 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. Because of my travel schedule, we’re doing this on Wednesday this week...

I’ve had the most remarkable experiences lately. I’m not sure if you’ve had similar encounters, but perhaps you have ... and they certainly are worth noting.

We were in PetSmart the other day, shopping for dog food, which we seem to run out of really quickly now that my son has moved home with his dog, giving us two animals constantly running round the house making us crazy. But we’re in the dog food aisle, and something amazing happened. Someone in a PetSmart uniform asked if she could help us. Which she did - because she actually seemed to know something about the dog food we were buying. And then we were in the bird section - we also have a cockatiel at home - and Mrs. Content Guy is looking for different things, and someone else in a uniform comes up and asks if he can help. Which he did.

Then, we get to the checkout, and there’s more than one lane open ... and the people there are really, really helpful.

Now, I’m beginning to think I’ve dropped into “Invasion of the Body Snatchers,” because I’ve been shopping at PetSmart for years, and the staff there is at worst surly, and at best cannot be found.

The interesting thing is that a few days earlier, I was in Home Depot looking for some stuff, and in almost every aisle I found someone in an orange apron willing and able to answer my questions.

Is there something in the water?

Maybe.

Maybe these are just isolated incidents. Maybe I just got lucky.

But I’m thinking that just maybe these companies, which I’ve always found to have a somewhat tenuous grasp on the concept of customer service, have gotten the message ... that if they are going to have a sustainable, viable business, they actually have to be nice to the people who walk in the front door and intend to spend money before they walk out again. Otherwise, I - and a lot of people like me - will walk in someone else’s door, or maybe just do even more of my shopping online.

Wouldn’t that be a good thing? Wouldn’t it be nice if the seeds of customer service are being planted in places where they never used to be found, and if something positive is growing there?

I hope so. We all do a lot of complaining about lousy customer service, so I thought it was worth noting when a couple of companies get it right.

I hope I see a lot more of this.

That’s what’s on my mind this Wednesday morning. As always, I want to hear what is on your mind.

Published on: June 15, 2011

by Kevin Coupe

A retailer’s core value proposition may be the most important thing it has going for it; if it is real and tangible, it is the very that defines what the retailer is and what it has to offer.

And so, can you imagine how tough it must be for a retailer to totally remake one of its foundational value propositions?

According to USA Today, that is what what Jiffy Lube - the nation’s largest oil change chain, is trying to do.

Oil changes will still be done in a jiffy, but the chain is doing something radical - saying that the long-held notion that a car’s oil must be changed every 3,000 miles is incorrect. Or at least not true in every case.

Which would sort of be like a food retailer saying that three meals a day isn’t always necessary, or that breakfast isn’t the most important meal of the day.

The story says that Jiffy Lube “franchisees will combine customer information on driving habits and the recommendations from their car's owners manual for types of driving, from light to ‘severe,’ to come up with a specific schedule for that customer.

“The system, which uses a kiosk with a computer to access a database of manufacturer guidelines, has been in testing for several months.”

The story says that the traditional approach isn’t always right, because cars are better made today and gasoline is of a higher quality, which prolongs oil life.

What Jiffy Lube is doing, in essence, is trading in one of its core values - come see us every 3,000 miles - for a more personalized approach to one of life’s regular duties. In other words, instead of doing things by rote, drivers are being encouraged to approach this task with eyes wide open.

Not everyone agrees, of course. Pat Wirth tells USA Today that people who don;t change their oil regularly - at least every 5,000 miles - are asking for trouble. "We know what we see," she says.

In this case “we” refers to the 1,200-member Automotive Oil Change Association, of which she is president.

Published on: June 15, 2011

The Food Marketing Institute (FMI) yesterday announced that “the US Department of Justice Antitrust Division submitted a final consent decree in its enforcement action against Visa and MasterCard to address some of the anti-competitive practices related to credit cards,” and begin to create the opportunity for greater competition in the marketplace.

Among the changes being pushed by the Justice Department is the ability for retailers to promote discounts for certain kinds of payments (cash vs. credit cards, for example), something that has been forbidden by credit card company rules,

“This is just a first step, but a vital one, to help alleviate some of the card network restraints on FMI members’ ability to provide discounts to their customers.  This enforcement action is focused on anti-competitive practices related to credit cards and re-enforces the need for credit card transactions to be subject to the same reforms authored by Senator Durbin related to debit cards,” says Leslie G. Sarasin, president and chief executive officer of the Food Marketing Institute (FMI).

“Neighborhood supermarkets look forward to continued scrutiny of anti-competitive practices with credit and debit cards that were not addressed in the department’s enforcement action,” she said. “Visa and MasterCard have hundreds of pages of non-negotiable, take-it-or-leave-it network rules that have stifled and continue to stifle market competition.”

Katherine Lugar, executive vice president for public affairs with the Retail Industry Leaders Association (RILA), agreed that continued oversight is needed, saying in a prepared statement, “Visa and MasterCard have a long history of handcuffing merchants through the anticompetitive network rules.  We expect Visa and MasterCard will continue to tie merchant’s hands by not providing the information needed to give consumers the credit card discounts and other valuable incentives as intended by this remedy. ”

Published on: June 15, 2011

The Wall Street Journal reports that since the US Senate has declined to take action that would delay the creation of rules by the Federal Reserve that would but limits on “swipe fees” charged on debit card transactions, financial services industry lawyers are planning to appeal whatever rules are issued by the Fed in court.

Once the rules are issued, the Journalsays, the banking industry will argue that the Fed misinterpreted the law. According to the story, “Industry lawyers and executives intend to say the Fed should never have imposed a hard cap on fees and that the cap it did impose is illegally low.

“The industry will likely use the Administrative Procedure Act for its legal cudgel. That law governs how government and independent agencies carry out their tasks. It sets the rules for public comment periods and ensures agencies don't create rules in an arbitrary or capricious manner.”

The fee regulation is part of the financial reform legislation that was passed by the Congress and signed into law by President Obama last year.

Published on: June 15, 2011

The New York Times this morning reports that the United Food and Commercial Workers (UFCW), frustrated with its failed attempts to organize employees at Walmart, has “provided a sizeable sum” to create the Organization United for Respect at Walmart (OUR Walmart), which is designed to “press for better pay, benefits and most of all, more respect at work.”

According to the story, “In recent weeks, OUR Walmart has organized gatherings of 10 to 80 workers in Dallas, Seattle, Los Angeles and other cities, meeting inside churches, fast-food restaurants and employees’ homes, where the workers chewed over how they would like to improve Wal-Mart. One big concern, they said, was low wages ... Unlike a union, the group will not negotiate contracts on behalf of workers. But its members could benefit from federal labor laws that protect workers from retaliation for engaging in collective discussion and action.”

The Times notes that “Wal-Mart officials say that the new organization is essentially a stalking horse for eventual unionization, and they say the retail union is intent on pushing up Wal-Mart’s wages and slowing its expansion to help protect the union’s members at other retailers from competition.”

Published on: June 15, 2011

Crain’s Chicago Business reports that Groupon has yet more competition - AOL and American Express, which “are teaming up to offer daily deals at local merchants, the latest example of how the daily-deal business that Groupon pioneered is attracting competitors big and small.”

According to the story, “AOL's hyperlocal news sites called Patch will be paired with a new online and mobile-commerce platform from American Express called Serve to begin offering daily deals this fall to on the fast-growing service, which had 9.2 million visitors in May, up 33% from April. The service will debut in Eugene, Ore. ... American Express says its Serve platform eliminates the need for using paper coupons, which has been a drawback of online daily deals so far. AOL's Patch sites, which operate in hundreds of communities in 23 states, could offer news content that's more enticing to users than cleverly written ad copy.”

The story notes that it won’t be easy competing with Groupon: “AOL and AmEx, both headquartered in New York, will confront a formidable force ... in Groupon's 83 million subscribers and 3,600 sales reps. It's the leader in the business of allowing local merchants to use the web to reach customers with big discounts to e-mail subscribers and more recently limited-time bargains based on users' locations.”

Google, which failed in its attempt to acquire Groupon last year, also is testing a daily deals service in Portland, Oregon.

Published on: June 15, 2011

• The Wall Street Journal reports that while Tesco managed to stop the sales decline that had afflicted it in its UK home market, the company continues to suffer from “low UK consumer confidence, high inflation and fears over job security. It lags its competitors in same-store sales in the home market it dominates by market share, although its international business is growing strongly.” Nonfood sales, especially electronics, continue to be a problem for the company, dropping five percent in the first quarter.

In the US however, the Journal writes, Tesco’s Fresh & Easy Neighborhood Market business “reported double-digit sales growth of 11.1%, up from 8.6% sequentially.” The company says that “the improving trajectory is needed if the company is to reach the its target of breaking even towards the end of fiscal 2013.”

Published on: June 15, 2011

The Salt Lake Tribune reports that Harmon’s has decided to stop selling tobacco products at two of its stores, following a trend which has a number of retailers deciding that such items are no longer worth stocking.

“They’re just getting more and more cumbersome to deal with,” Dave Davis, president of the Utah Food Industry Association, tells the paper. “And there seems to be less and less of a market for them in grocery stores as well.”

The story notes that “tobacco products have to be stored in a locked cabinet away from the reach of children, Davis says, and store owners must spend hours educating staff on tobacco sales laws and face stiff fines for noncompliance. The products are also perishable, meaning grocers can lose big money on expired or unsold stock.”

“Many grocers are saying, for the headaches, it’s just not worth it,” Davis says.

And, the Tribune goes on: “Harmons isn’t alone. Dan’s Foods pulled tobacco products from its stores a little more than two years ago, said Rand Mickelson, of Associated Foods, which owns the chain. Store owners took a tongue-in-cheek approach to the announcement, with signs reading: ‘We’ve quit cold turkey. (Although we still sell cold turkey).’ The chain wants to promote healthy lifestyles, Mickelson said, and decided that tobacco products weren’t conducive to that mission. While the trend may be gaining momentum, it’s not new. Bowman’s Market in Kaysville stopped carrying tobacco products and alcohol in 1989, said Gaylen Sprague, the company president, and expected others to follow suit much sooner.”

The story points out that these moves may be less of an issue in Utah than in other places. The state has the lowest smoking rate in the country, and the Mormon religion advises believers to abstain from tobacco.

Published on: June 15, 2011

For US airlines, the difference between profit and loss may be found in the price of a checked bag.

The Seattle Times reports that “US airlines collected $3.4 billion for checked luggage last year, according to a government report issued Monday. That's up 24 percent from 2009 and a big reason the industry made money again after three years of losses.

“In 2010, the major airlines made a combined $2.6 billion in profits, less than they collected in bag fees. The fees - typically $50 round-trip for the first piece of checked luggage and $70 for the second - allow the industry to navigate between rising fuel costs and customers who expect rock-bottom airfares.”

Published on: June 15, 2011

United Supermarkets has installed a unique piece of hardware in the parking lot of its Market Street location in Lubbock, Texas.

A hitching post.

For horses.

According to the company, one of its regular customers likes to ride his horse to the store, and he joked with company CEO Robert Taylor that what the parking lot really needed was a hitching post where he could tie his horse up.

In a matter of weeks, the cedar post was built.

The company notes that in case of accidents, there is something called a “muck rake” stashed nearby, and there is a dumpster just across the street.

Published on: June 15, 2011

• The Grocery Manufacturers Association (GMA) announced that it has launched an International Food Additive Database designed to provide industry with easy access to accurate and current regulatory requirements on food additives in importing countries around the world. It can be accessed at www.foodadditivedatabase.com.
 
“The International Food Additive Database will be an invaluable tool in helping to expand export markets for U.S. specialty and processed food products,” said Pamela G. Bailey, president and CEO of the Grocery Manufacturers Association (GMA).  “The Database will help U.S. exporters ensure the products they are shipping comply with the food additive standards and regulatory requirements in the export market and, by establishing a single global source of food additive standards, it will also help U.S. federal trade officials prevent and eliminate trade barriers to U.S. food products.”

• Bloomberg reports that Sara Lee Corp. Executive Chairman Jan Bennink has set as a corporate goal becoming the world’s second-biggest coffee seller, “leapfrogging rival Kraft Foods Inc.” Bennink said that the goal follows naturally Sara Lee’s decision to split into two businesses, focused on coffee and meat, and he said that it could be achieved through acquisition.

To achieve that goal, Bloomberg writes. “Sara Lee will have to more than double its share of the global coffee market, according to data tracker Euromonitor International. Bennink, a Dutchman who ran Royal Numico NV before selling the baby-food maker to Danone SA in 2007, plans to focus on Sara Lee’s Senseo single-cup coffee machine, which debuted a decade ago.

Published on: June 15, 2011

• JC Penney announced that it has hired away Apple’s retail chief, Ron Johnson, to be its new CEO on November 1, when Myron E. Ullman III, the current CEO, steps down to become executive chairman.

According to the Times, JC Penney is “betting that a deity of the digerati can revive its sales in the same way he found success in brick-and-mortar stores for Apple ... Retail analysts said the expectation was that Mr. Johnson could similarly transform Penney, which like many traditional big mall retailers has been struggling since the recession and the huge growth of online shopping.”

Published on: June 15, 2011

... will be posted on Thursday this week.

Published on: June 15, 2011

Got several reactions to yesterday’s Eye-Opener piece about what I viewed as a poor attitude and lousy choice of words by LeBron James in the wake of the Miami Heat defeat in the NBA championships at the hands of the Dallas Mavericks.

One MNB user wrote:

A couple points about your view on Lebron James:

You may have read “get back to your miserable little lives” into what the ringless king said, but I read, “People have been hating on me for a year now and although they finally got what they wanted, it’s petty in the grand scheme of things and I’m not going to let it bother me.”  For a guy who’s been getting endlessly killed since The Decision, I think we can allow him this one “shut up and get over it now” comment.

You feel that athletes have an obligation to “create a product that people actually want to root for”?  I disagree, the only people he’s beholden to are his teammates and the Miami fans, and although they are probably one of the weakest fan bases in all of sports, they were still cheering for him.  It’s not his job to make everyone want to root for him.  In fact, by having everyone rooting against him, the NBA enjoyed some of the highest ratings for the Finals they’ve seen in years.  He’s the villain and it brings fans to the sport, hence your mention of it in the Tuesday Morning Eye-Opener.
 
Keep up the good work (talking about the CPG industry that is, you can give up the sports commentary...).

It wasn’t just me who came to that conclusion about James’s attitude.

And to me, the very use of the phrase “The Decision” speaks to the utter egomania at play here.

MNB user Mark Raddant wrote:

It is ... instructive to note the difference between LeBron’s constant references to “ME, MY, I, MINE” in his interview and Dirk Nowitzki’s discussion of his team and their play.

LeBron worked all year on HIS game.  The Mavericks worked on THEIR drive to a championship.

In the same piece, I commented about CEOs who are disconnected from the front lines,and wrote:

I know CEOs who like to visit stores in luxury cars that cost more than many store employees make in a year, and I know CEOs who visit stores in battered SUVs that are far less ostentatious.

Which led one MNB user to write:

Funny you should make that comparison about LeBron. A few years ago one of the major networks did a bio piece, while he was still in Cleveland, and showed him going back to his old high school.

I was disgusted to see him pull up in a Lamborghini and remember thinking, what kind of message is that sending to these kids.

It was at that point I really started to dislike Mr. James and he has only managed to nurture it from there.



In a story yesterday about banks using bank statements to issue coupons both virtual and physical, and allowing retailers to track best customers, I wrote:

Any retailer needing a bank to help it identify and reward its best customers is not doing its job, is not paying attention.

Which promoted this response from an MNB reader:

I disagree with your comment below.  Retailers like Target and Costco commonly use their credit card to identify their best customers; what they’re buying, what they’re not buying, what they’re buying elsewhere.  Seems like these companies are ahead of the game vs. companies that only mine their loyalty cards.

My point was perhaps inarticulately made.

I guess I should have written that retailers should not depend only on banks to identify good customers.

I think that if a retailer wants to use credit and debit card information to mine shopper data, that makes sense. But I’d also be willing to bet that a retailer like Dorothy Lane Markets, which may have the best frequent shopper program in the business, knows more about its customers - and has a more intimate relationship with its shoppers - than retailers only using credit card data.

It is creating a relationship that is important. Not just mining data.




Responding to Michael Sansolo’s piece yesterday about tectonic changes taking place in food retailing, one MNB user wrote:

There are two economies…and they diverge at $75K…watch what HH making <$75K do while grocery shopping and you’ll be shocked.

We would totally agree with you about this. And the bigger national problem - affecting far more than retailing - is the fact that there seems to be a growing chasm between these two groups.




We’ve had some stories recently about how Target’s move to sell groceries cheaper than Walmart has alienated some of its core “cheap chic” customers.

One MNB user wrote:

I am one of those higher income shoppers who enjoyed the visit to Target for this or that. I am quite disappointed in the change so perhaps you are not far off the mark in your surmising they may be losing some of these shoppers.  I went to Target for the nice things they carried at good prices.  Toiletries, well-considered (tasteful) household  and garden/patio items mainly. They whacked the toiletries section and discontinued personal care products I specifically made trips for.  I zoom past the food section and feel badly they took out the garden and decimated the outdoor section for the food.  I could go to Walmart for this new Target  experience. They took out their point of distinction for me and my reasons to go.  I used to like going there, enjoyed it even.  Now, just the past weekend oddly, even the store was depressing, like the old Kmarts and it seemed to smell unpleasant though the smell was perhaps due to remodeling.  I bought something I now need to exchange and found myself disinclined to want to go back to that store and reconsidered just keeping the item as is.  What does that say?

Nothing good.

MNB user Kristy Chadbourne wrote:

As a longtime Target fan and shopper, I have found myself making less of those "impulse" purchases - the cool and funky home goods and cheap stylish clothing that used to abound at Target that you just "had to have".

Now it's more of a stock up trip on toiletries and paper goods, and less of a fun shopping trip that I'd look forward to...

That being said, I would still argue that Target is much, much "cooler" than Walmart even after losing some of it's cool.  They still hands down have a superior shopping experience.  Their stores are much better in terms of layout, stock position, merchandising and of course customer service.

From another MNB user:

The Target near me recently added a lot of food although it is still not a Super Target.  It has lost its cool as a result.  The store fixtures weren’t updated.  They moved things around and the store just looks dull now.  The dullness is the first thing I notice when I walk in because they moved women’s clothing up front and the old blue carpet and linoleum really stands out.  It reminded me more of a K-Mart.  Target sent out food coupons to get me to come in.  They were out of stock on the item I wanted and I noticed many other out of stocks.  The opportunity to make a good impression for their food dept. was lost on me.

That’s two people who compared Target to Kmart. Not good.




On the subject of the importance of customer service, one MNB user wrote:

I’ve been in retail forever and customer service is my number one platform.  My teenage son has heard more times than he’d like about my asking for a manager, writing a letter or calling corporate to discuss a customer service situation.  I don’t yell, but rather insist on being fairly compensated when I’ve been mistreated, overcharged or received unacceptable service such as the four tries to get a laptop fixed.  I also try to remember compliment an employee who has been very helpful or pleasant.

My son has been training at his first job which is to work in a brand new grocery store about to open.  He’s already told me what a cool place it is because if he overhears a customer tell the bagger to be careful with the bread because it was smashed last time, he may take immediate action.   He has a variety of actions he may tale to make the customer happy.   He is absolutely amazed that he is empowered to do this!  I am thrilled because he is learning a valuable lesson to use when he opens his own business as he aspires to do after college although.  And mostly because it reinforces one of the values I’ve tried to teach him his entire life;  treat others the way you want to be treated.




We had a story the other day about how Wegmans has taken foie gras off its cooking school menu, a decision of which I heartily approved. But not so fast, said one MNB user:

You fell for the trap Kevin and I am surprised at you.

Fatted liver is something that actually happens naturally in certain breeds of ducks. That’s how humans discovered it.

First, the ASPCA is not your local SPCA. Just like the Humane Society of the United States is not your local Humane Society.

Second, I invite you to visit the Hudson Valley Foie Gras site to learn how foie is made. Ducks are not hurt at all.

In Jan of 2012 Foie can no longer be sold in California thanks to groups like PETA. They went ahead and decided to convince our horrible former governor Schwarzenegger to sign into law the ban. So the decision was made for me the thousands of Californians who LOVE foie gras and will pay the price to eat it (it costs me at work, wholesale $26.00 lb for A grade.)

Perhaps I was swayed by the fact that I hate liver in all its forms. Want to torture me? Make me eat liverwurst.




Finally - and this brings us full circle to my LeBron James comments - I actually got an email about the brief posting yesterday noting that I would be in Barcelona for the rest of this week. What I wrote was this:

Tonight I leave for Barcelona, where I’ll be spending the rest of the week covering the annual Consumer Goods Forum (CGF) Executive Summit. (This is what used to be called the CIES Executive Summit.) Coverage of the Summit is sponsored, by the way, by TCC Global ... and I hope you’ll watch their videos, check out their site, and pay attention to their programs.

There’s no reason to think that delivery of MNB should be affected by the time zone differences, but you never know, especially because internet access can be a little dicey at times. But I’ll do my best to make sure MNB gets done in a timely fashion, and I thank you in advance for your patience.

MNB user Rick Henry observed:

Your mention about having to suffer through your visit to Barcelona sounded like you where whining about the inconvenience of being in one of the world's most beautiful cities while we live our "miserable little lives" in Anytown, USA.

"Dicey" internet, what a bummer dude!

Is that what I was saying?

I didn’t think I was complaining in the least; over the years, I’ve tried to maintain a constant sense of wonderment about how lucky I am to go to places like Barcelona.

Now, I could survive in Barcelona for a few days without internet service ... if I didn’t feel like I have the obligation - and privilege - of writing MNB each day. Far from whining, I was just trying to let people know that delivery of the Wake Up Call and posting of the site might happen at odd times this week.

BTW...this is exactly what happened today. A broken plane and missed connections meant that I was not able to get MNB out today until almost 11 am EDT.

Trust me - I don’t want anyone feeling sorry for me.

Far from it.