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    Published on: July 18, 2011

    by Kevin Coupe

    The city of Los Angeles gets a lot of teasing and even ridicule; it is, after all, one of the nation’s more eclectic and idiosyncratic metropolitan areas.

    Over the last few weeks, a new word has become associated with the City of Angeles - “Carmageddon,” used to describe the just-passed weekend, when the often-gridlocked 405 Freeway (yes, even on weekends) was to be closed down for a10 mile stretch so it could be widened. Local officials sounded the alarm early and often, using every means at their disposal, to warn drivers that they should expect alternative roadways to be clogged and even impassable.

    What was eye-opening about the event is that none of this happened. A lot of people stayed home, reducing traffic. Some people used a $150-per-trip helicopter service to go to work (if they had to ... it was, after all, the weekend). Some took advantage of special Jet Blue offer - a $4 fare between Burbank and long Beach airports. Of course, this promotion created its own little drama, as reported by the Los Angeles Times:

    “A flurry of Twitter activity ensued, followed by tough talk from the Wolfpack Hustle, a local cycling club, that six of its best riders could beat the 150-seat Airbus A320 - including drive time to and from the airports, check-in and security screening.

    “In the end, the cyclists crushed it, cruising along the Los Angeles River to reach the final destination, the lighthouse in Shoreline Aquatic Park, in 1 hour and 34 minutes.

    “The plane had barely taken off. Cyclist Joe Anthony, on board as part of the challenge, said there was only one advantage to the airliner. ‘It's legal to drink beer and fly, whereas the cyclists have to follow all the rules,’ he said.”

    It’s always eye-opening when people companies come up with unique solutions to extraordinary challenges, but there was something even more attention-catching about “Carmageddon.”

    Work went so smoothly that the expansion efforts ended 18 hours ahead of schedule.

    Proving that at least sometimes, though you may hope for the best and expect the worst, life jumps up and surprises you with the best ... though usually only because you’ve done everything you can possibly do to prepare and execute efficiently and effectively.

    Go figure.
    KC's View:

    Published on: July 18, 2011

    Crain’s New York Business reports that “rumors were circulating in Big Apple business circles last week that Walmart wants to buy Rite Aid Corp., the nation's No. 3 drugstore.”

    Neither company would comment on the speculation, Crain’s writes.

    Meanwhile, the Wall Street Journal this morning reports that Walmart is in “advanced lease negotiations for a location in southeast Brooklyn that would anchor a shopping mall there, though a number of logistical, financial and political roadblocks remain.

    The Crain’s story says that there seem to be two realities driving a possible acquisition. One is that Walmart, more than two years after it originally announced plans to open a store in New York City, has yet to announce a single location and continues to face opposition from unions and some political leaders. The other is that Rite Aid continues to “drown in debt” and lose market share to Walgreen and CVS ... and a sale to Walmart might be the best way to get out from under a bad situation that shows no sign of getting better.

    At the same time, Crain’s writes, a purchase of Rite-Aid could boost its sales by 10 percent overnight, and give it some 4,000 locations - almost 200 of them in New York - that it could for the small-store formats it seems to placing a big bet on these days.

    The only problem, Crain’s suggests, could be that Rite Aid is unionized, and Walmart remains assiduously anti-union. While experts say that Walmart could legally void all union contracts if it bought Rite Aid, it would also set up a confrontation - complete with pickets - that would not be good for its image or bottom line.
    KC's View:
    Two things bother me about this story. One is that Walmart has not grown by acquisition here in the US, and the other is that 4,000 stores would be a lot to swallow, even for the Bentonville Behemoth. (I’ve been told that Walmart came very close to acquiring Walgreen a number of years ago, so this would not be an entirely original tactical consideration for the company.)

    That said, I wonder if this might depend on how anxious Walmart management is to make a big US deal, to prove that eight straight quarters of stagnant sale-store sales isn’t dampening its aggressive instincts, and to juice its stock price a bit. The company seems to be doing a lot these days to prove it isn’t the same old Walmart ... could acquiring a company like Rite Aid be yet another step in that direction?

    Published on: July 18, 2011


    The Financial Times reports that Tesco “is poised to trial a version of its successful Clubcard loyalty scheme in the US, as it strives to stem losses at its Fresh & Easy chain.

    “Tim Mason, chief executive of Fresh & Easy, said the business, which currently has 176 stores and will have 214 by the end of February next year, was ready to support a loyalty scheme. It will be known as the Friends of Fresh & Easy card, but will be based on Clubcard ... The US loyalty card will build on the Friends of Fresh & Easy programme that customers can sign up to, to receive fortnightly e-mails containing information and special offers. Some 360,000 people have become Friends of Fresh & Easy.

    “The new card, which offers one point for every dollar spent in Fresh & Easy, and rewards customers digitally rather than through physical vouchers, will be trialled in Bakersfield, in central California, this autumn. If it is successful, it could be rolled out across Fresh & Easy by the end of February.”

    And here’s the kicker: “Fresh & Easy will be working with the arm of Dunnhumby that analyses Clubcard data for Tesco, based in the UK, because its US unit works with Kroger, the US supermarket that is a direct competitor of Fresh & Easy.

    Among the other details reported about the new loyalty program:

    • “Mason said the Friends card differed radically from anything in the US market, where customers are forced to sign up to loyalty cards to obtain lower prices on selected products. The card could replace the coupons that Fresh & Easy has been using to help drive sales. It will be able to personalise offers and distribute them cheaply via e-mail.”

    • Mason also described the card program as “the icing on the cake, not “the cake itself,” which is why Tesco waited until now to introduce it - he felt that the business needed to be established first so it could support a loyalty program.

    • Mason denied that the new program was either a “u-turn” for the company, nor a “last roll of the dice, though it generally is conceded that Fresh & Easy needs to get more traction in the markets where it operates by the end of the 2012-2013 fiscal year.
    KC's View:
    This is a big deal. Tesco’s great advantage in the UK always has been its ability to gather information, drill down for greater insights, and then respond to what it has gleaned with effective marketing and merchandising strategies. In a word, Dunnhumby. Bringing that level of sophistication to US markets where most retailers simply are not in the same league gives the company a tremendous shot in the arm.

    Could it be too late? Maybe. Is this a last ditch effort to keep Fresh & Easy alive? perhaps. But I’ve always felt that these are very smart people with patience, deep pockets and a long-term plan ... and so short of someone coming in and making a big time bid for Fresh & Easy that cannot be refused, Tesco isn’t going anywhere for the time being.

    Published on: July 18, 2011

    Reuters reports that as the bankrupt Great Atlantic & Pacific Tea Co. (A&P) works its way through reorganization, Tengelmann - the German company that owns 38 percent of its stock - plans to bail out of its position in the troubled retailer.

    "We hope that A&P can be led out of its insolvency. But we do not believe that we will be significant shareholders after the process ends," Tengelmann Chief Executive Karl-Erivan Haub told reporters last week.

    "A&P is currently in free fall," Tengelmann's Chief Financial Officer Jens-Juergen Boeckel added.

    A&P has been in bankruptcy protection since December, and has in recent years gone through a series of management changes in its top ranks
    KC's View:
    Rats abandoning a sinking ship?

    Maybe. But I have to believe that if some other retailer - or equity firm, like a Yucaipa Cos. - comes in, the company will be better off. Though it hard to imagine that anyone would want to fix a disaster that seems to have been created not by the people on the front lines, but by people at the top - especially ownership - who seem to have shown a singular lack of patience, innovation, marketing savvy and competitive brio.

    Published on: July 18, 2011

    The Washington Post reports that a federal judge has ruled against Safeway in a suit that the retailer filed looking to stop the city of San Francisco from banning the sale of tobacco in store with pharmacies - even if the pharmacy is not the unit’s main business.

    City officials originally passed a ban on the sale of tobacco by pharmacies, with an exemption for supermarkets that contained pharmacies, but that exemption was found to be unconstitutional. And so the exemption was lifted...and Safeway filed a suit challenging the law.

    Safeway said it was “disappointed” with the ruling, but had not yet had an opportunity to review it and decide on a course of action.
    KC's View:

    Published on: July 18, 2011

    The Nevada News Bureau reports that a Las Vegas Albertsons supermarket is now offering a new service - a “DMV In A Box” kiosk that “will now offer customers the ability to renew or reinstate automobile registrations on the way to the produce aisle.” The machines also will offer “services including driver’s license and ID card renewals, the ability to print out driving records, and the option to reinstate vehicle registrations that have been suspended due to a lapse of insurance.”

    According to the story, “The self-funded kiosk program went into effect when the 2011 Legislature passed Senate Bill 441. In the coming years, the Department of Motor Vehicles plans to deploy dozens of new kiosks throughout the state with no up-front costs to the taxpayer.”
    KC's View:

    Published on: July 18, 2011

    • In Colorado Springs, the Gazette reports that Walmart, “which has nine supercenters and two Sam’s Club warehouse stores in the Pikes Peak region, says it will build two Wal-Mart Market grocery stores — which are much smaller than a supercenter — in Colorado Springs that will open in mid-2012 ... The Springs Wal-Mart Markets will be about 50,000 square feet each, making them close in size to a Safeway or King Soopers.”
    KC's View:

    Published on: July 18, 2011

    Internet Retailer reports on a new study from Carnegie Mellon University saying that “online retailers can gain sales if they tighten up their e-commerce privacy policies, suggests a new study from Carnegie Mellon University.”

    Here’s where the story gets a little more interesting .... and this is a direct quote from the story:

    “Researchers there conducted an experiment in which consumers bought batteries and sex toys; participants were willing to purchase more often, and for larger amounts, from retailers with stronger privacy protections.”
    KC's View:
    Gee, you think?

    Maybe the consumers would have responded a little differently if they’d been buying batteries and, say, a flashlight. Or something else a little less provocative.

    Though I have to say that I’m becoming increasingly annoyed when I get the sense that people are abusing my email address and sending me stuff I don’t want. I know that is something that I’ve always tried to respect here on MNB - if people are kind enough to trust me with their email addresses, I shouldn’t be giving or selling them to other companies. (Not that I don’t get offers. I do. But since I know how irritated I get when some of the other folks in this space send me emails that consist purely of poorly disguised advertising, I’m not going to do it.)

    I do like this story, though. After all, how often do I get to use the words ”sex toys” on MNB?

    Published on: July 18, 2011

    The Wall Street Journal this morning reports that Reader’s Digest Association, which publishes the magazine of the same name as well as titles such as Everyday with Rachael Ray, has put itself up for sale. The company, which went through bankruptcy protection a few years ago, is said to be hoping for a sale price of around $1 billion.

    People “familiar with the matter tell the Journal that the company “has hired financial advisers to shop the company to potential buyers, including private-equity firms and other media companies, these people said. The process may result in the sale or spinoff of some Reader's Digest properties rather than the sale of the entire company, two of the people added.”
    KC's View:

    Published on: July 18, 2011

    • The New York Times this morning reports on how retailers “are playing a multiples game to entice shoppers to buy more than their shopping lists dictate. The old gimmick — buy one, get one free — has been expanded to include some pricing equations worthy of Isaac Newton, or at least of middle-school math class.

    “Using buying patterns detected from loyalty cards, receipts and other research, grocery chains are searching for the multiples sweet spot: The current Pathmark circular advertises Bush’s baked beans at three for $5 and Yoplait yogurt at 10 for $6. At Cub Foods, Sprite 12-packs are on sale at three for $11.97. Kroger has lemonade, socks and Kroger gummi bears candy on sale at 10 for $10.”

    The story goes on: “Grocery stores have always offered deals, of course. But grocery chain executives say that in this economy, with people visiting stores less frequently, spending less per trip and sticking to their shopping lists more closely, the competition to offer compelling deals is stronger than ever.”

    • The National Grocers Association (NGA), in public comments filed with the Federal Trade Commission (FTC) on July 13, 2011, requested the withdrawal of the Interagency Working Group's Proposed Nutritional Principles and limits on food marketing.  Peter J. Larkin, President and CEO of the National Grocers Association said, "This is just another example of unnecessary regulatory overreach at a time when the food industry has taken giant steps in providing consumers with nutritional information and healthy food choices."

    The comments come as coalition of food companies, including General Mills, ConAgra Foods and Kellogg, is proposing new advertising standards that will result in a further reduction in advertising of so-called “unhealthy foods” to children, a move is seen as an effort to avert the imposition of mandated guidelines by the federal government.

    • The National Grocers Association (NGA) also announced that the inaugural NGA Sales, Operations and Profitability (SOP) Conference, scheduled to take place at the Broadmoor Hotel in Colorado Springs, August 20-21 has been postponed. 
     
    "While we have received very positive feedback about the conference program, we were also hearing from members about late summer vacation plans, difficulty justifying travel to Colorado Springs for a day and a half event and several business related conflicts that were limiting our ability to meet the minimum attendance threshold required for us to conduct the event" said Peter Larkin, N.G.A. President and CEO. "NGA and our Board of Directors felt it would be best if we postponed the event until we were able to build an adequate audience for the talented speakers and panelists lined up to talk about key issues facing independent grocers in today's competitive environment."

    The conference may be rescheduled as a stand-alone event later in the year or a decision could be made to fold the SOP conference content into The N.G.A. Show in Las Vegas next February 12-15, 2012.

    • The Wall Street Journal reports that Ralcorp Holdings “is splitting up its Post Foods cereal and private-label food businesses, throwing a curveball into ConAgra Foods Inc.'s attempt to buy the entire company.

    “Ralcorp late Thursday disclosed a proposed tax-free spin-off into two publicly traded companies owned by Ralcorp's current shareholders.

    “The transaction is structured to avoid a big tax bill for Ralcorp. Selling Post Foods could have resulted in a tax bill of up to $1 billion, a person familiar with the matter said, so Ralcorp never put the business up for sale ... The move comes as ConAgra has a $4.9 billion offer to buy Ralcorp in its entirety on the table. Ralcorp rejected the offer in May. Aside from reiterating its interest last month, ConAgra hasn't countered with another offer.”
    KC's View:

    Published on: July 18, 2011

    Responding to my piece last week about how tablet technology and e-readers are changing the way people do things - from pilots who use iPads instead of carrying manuals to kids who interact with e-books in entirely different ways - MNB user Kathy Hogard wrote:

    While I also feel that change is good, sometimes I wonder if these changes are really thought through before initiated.  For one thing eReaders sound great for children when you think of how electronically savvy kids are these days however should children experience audio reading?  I would think that to do so would be detrimental for these kids.  Will we create a new generation of illiteracy among people who grew up listening to audio books?  Interactive is good, but audio should be reconsidered for children that need to learn (and practice) reading.  Give them audio after they are hooked on books.

    But MNB user Christine A. Myres wrote:

    I am not yet an iPad owner but have a close friend (actually several) who are, and when I saw William Joyce’s newest The Fantastic Flying Books of Mr. Morris Lessmore for the iPad I persuaded her to buy it ($4.99) … it is as much for adults as kids and you may not be a kid’s book fan but this is pretty special. Maybe it’s only because it’s a novelty but it was such fun to actively take part in the reading experience, and it was read to you … which was also great because it took you back to the time you were read to (if you were lucky enough to have parents who did that). It’s a small investment for a chance to try this new thing out, if you don’t think so I’d be happy to reimburse you!

    This book would make me buy an iPad.


    I will check it out. Thanks.




    Several years after President George Bush signed it into law, the mandated move to more efficient light bulbs continues to be a matter of political and cultural debate.

    In part, here is what I wrote about this issue:

    I accept that it is a legitimate charge that sometimes government makes unwanted intrusions into people’s lives. But if it is determined by experts and scientists, let’s say, that it is important for the nation’s economic and environmental health and sustainability that we get more efficient in our usage of everyday electricity, isn’t it government’s responsibility to respond to big picture and long-term exigencies to which individuals and businesses might not pay sufficient attention?

    And, from a global perspective, even if other countries don’t make the same adjustments, isn’t it important to show a sense of leadership about things such as sustainability and the environment?

    Here’s the broader philosophical question: Are there times when it does not make sense to be purely market-driven, because sometimes in the pursuit of profit, larger and even more important concerns may be ignored ... at our own peril?


    One MNB user responded:

    Kevin-you are right on the mark here. Seat belts and helmets for motorcycle riders are regulated by government, what difference does it really make whether it is a federal or state law. Those arguing against this type of legislation should be careful lest they agree that state "marijuana" laws should be in effect over federal law. Just like food, moderation should be the rule. The current crop of far right seem to be against everything, except social legislation.

    But MNB user Lonn Whitmill wrote:

    The overriding question is how much power should the government have in our lives.  Are light bulbs the issues or the last straw?

    I for one believe that we teach correct principles and then let the people make their decisions.  If it is a compelling reason then the concept will take hold and flourish.
     
    Let us not forget that with freedom comes responsibility.





    And, we continue to get email about the proposal that was floated suggesting that parents of morbidly obese children perhaps ought to lose custody of their children for a time on the grounds that allowing them to get so fat amounts to child abuse.

    MNB user Lorraine Khazrai wrote:

    Where is the government’s responsibility in making our kids obese in the first place.  Over the years they have cut out Physical education and now even recesses in our schools as not being vital to our children.  It is exactly this lack of movement for kids that is causing as much of their obesity along with poor nutrition.  The funding for school lunches is being cut and the quality and health of the food is decreasing in many instances.  Why not put our money and focus there and on education rather than on overworked social workers who can’t even help kids who are in danger in homes currently.  Kids who are obese already have a low self esteem and removing them from their environment is only going to push it lower.

    You may an excellent point. But this is hardly surprising in a political climate where people talk about an education deficit in this country, worry about how other countries are being more competitive than we are, and then try to figure out a way to cut teacher salaries and eliminate time and programs from the educational year as a way of saving money. (While all the while spending money on stuff that is a lot less important.) This happens, of course, while blowhards spend time talking about “American exceptionalism” as if it is a matter of divine right, not something that has to be earned every single day with hard work, determination, innovation and tough decision-making.

    From another MNB user:

    No one is suggesting that children who are a few pounds (or a few tens of pounds overweight) should be removed from their homes.  The issue concerns morbidly obese children whose weight is a severe threat to their health and wellbeing.  What should be done for a 9 year old who weighs 400 pounds or a 9 month old who weighs 80 pounds and who is too heavy to crawl, much less to start standing and learning to walk?  What should be done when the parents of such a child are unable or unwilling to come to grips with such a serious threat to their child? What would you do if you were the child welfare workers involved?  Removal of a child from its home must always be the last choice after all efforts to help have failed.  But when all those efforts fail, what would you decide to do?  Would you decide based on the child's best interest or knee-jerk reactions about parental rights?  There were no death panels and there are no gangs of child welfare workers hunting down our children.

    Another MNB user wrote:

    Regarding parents keeping obese kids in the home, lets take it a step further and say no parents can take a baby home from the hospital until they have passed the same rigorous review of their background as this country requires for adoption” FBI background check, home study (they open closets, medicine cabinets, dresser drawers, ask personal and invasive questions), personal references, income requirements, tax return reviews, interview by the birth mom & her family, six month waiting period until baby legally belongs to the parents and they are entitled to a birth certificate naming them the parents.  But, just before its final go before a judge in a closed court room where the judge admonishes the parents that if he sees them in divorce court he will come down on both of them like a ton of bricks.

    I thank God every day I could become a parent through adoption.  My wife and I experienced every event listed above.  It was worth it, our family now includes two boys and we are blessed.  We should not let just anyone raise a child.


    Another MNB user wrote:

    Having recently taking my daughter too Disney World, I can say with confidence that childhood obesity is an EPIDEMIC.  I was absolutely disgusted by what I saw there.  Children between the ages of 10 and 15 should not weigh 200 pounds, period.  I’d guess 20% of the kids I saw fell into that category.  And of course, almost every one of them was with an obese parent.

    While it does seem that removal of a child from a home due to obesity is too extreme, it is a form of child abuse in my view (and thus warrants a severe response).  I guess the ultimate question is who bears the responsibility (my experience tells me it’s the parents…I didn’t see any obese children with fit parents).  There is little doubt that these kids (and all of us as a society) would be much better off if there was some form of severe penalty for families whose children become obese.  The problem with removing the kids, is that it punishes them as well.  This is not their fault.  The bottom line is there needs to be some external incentive for parents to prevent their children from becoming obese.  Not only do we all pay higher health care premiums because of this behavior, but the children likely suffer tremendously both emotionally and physically for the rest of their lives over these behavioral patterns (patterns ingrained in childhood are extremely difficult to change, as most of us know).

    I’m sure many would argue that the parents are fighting against a lot of external factors (crappy food in the schools as exposed by Jamie Oliver and incessant marketing from food companies primarily).  But at the end of the day, these are external factors that parents have control over.  You can both make a healthy lunch for your child and throw out the TV…these are choices…maybe not choices people WANT to make but given the appropriate incentives, they will.  Maybe children with a body mass index over a certain level should be required to undergo regular counseling (paid for by the parents) until they get below that level?  Or maybe there should be a health insurance tax / surcharge on parents whose children are obese?  Without incentives, people don’t change…period.

    And while I understand genetics can contribute, obesity levels in this country are multiples of those in the rest of the world.  Genetics are only a factor in a small minority of cases.


    MNB user Don Kirkley wrote:

    I think there are three major problems with this.

    1)      Who decides who is to be removed from a home?
    2)      I would think that it would overwhelm the foster parent system.
         I cannot think of anything that government has done that has been entirely successful and had no unintended consequences. (ex. Welfare system

    Parents need to do their duty. It is not always fun nor easy but it must be done.
     



    We had a story last Friday about how a coalition of food companies, including General Mills, ConAgra Foods and Kellogg, is proposing new advertising standards that will result in a further reduction in advertising of so-called “unhealthy foods” to children ... at least in part to stop the federal government from mandating tougher standards.

    I wrote:

    Here’s where the whole thing falls apart for me.

    Trix, Lucky Charms and Count Chocula “make the cut” as cereals appropriate for kids, under the CPG companies’ plan. I’m a little skeptical of any plan with this sort of rating system.

    That said, who the hell else would you market these cereals to?


    One MNB user wrote:

    To answer your question ... Trix would be marketed to Silly Rabbits. Lucky Charms would be marketed to Irish Leprechauns, and Count Chocula could be marketed to Vampires with a taste for alternative food.

    Oh.
     
    KC's View:

    Published on: July 18, 2011

    • In the FIFA Women’s World Cup finals, Japan defeated the United States 3-1 in overtime, giving the US women a disappointing end after a magical run, but the same time providing a little distraction and inspiration to the people of Japan, who have had a tough 2011 so far.

    • It was 42-year-old Darren Clarke of Northern Ireland who won the British Open with what the Washington Post called “a never-show-you’re-nervous performance at Royal St. George’s. With his closing even-par 70, in intermittent downpours and unrelenting wind, Clarke finished at 5-under 275, three shots clear of the field, becoming the third different Ulsterman in the past six majors to win a championship.”
    KC's View: