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    Published on: August 1, 2011

    by Kevin Coupe

    It is 30 years since MTV went on the air with its first music video, The Buggles’ “Video Killed The Radio Star.”

    Amazing.

    The cable channel, which relentlessly has focused on youth culture even as it morphed from a place dominated by music videos introduced by “VJs” to one where one can mostly find reality programming and shows about teen mothers, has survived by continuing to change, evolve and adjust to changing audience interests and desires.

    That’s how you create a sustainable business model.

    Now, I have to be honest here. I would be amazed if I have watched as much as one hour - total - of MTV’s programming over the past three decades. Not my thing. But that said, I was still amazed to learn that it has been around as long as it has been, and impressed to read varying stories of how it has evolved.

    It’s been Eye-Opening.

    And here’s the question I would pose. Is there any doubt that 10, 20, 30 years from now, MTV will a) continue to exist, and b) will be something entirely different than it is today?

    No doubt in my mind. And again, that strikes me as the very definition of an Eye-Opening and sustainable business model.
    KC's View:

    Published on: August 1, 2011

    Bloomberg reports this morning that US banks, “fresh from their losing battle with retailers over debit-card fees,” have turned their attention to another issue - demanding that Walmart’s expansion into check-cashing and prepaid debit cards means that it ought to be subject to inspection by the new Consumer Financial Protection Bureau that was created by the Dodd-Frank regulatory legislation.

    “If you’re going to play in the financial sector, you play by the rules,” Richard Hunt, president of the Consumer Bankers Association, a trade group, tells Bloomberg.

    The story continues: “Banks have tried for more than a decade to slow Wal-Mart’s moves into finance, fearing its ability to under-price the competition without similar federal supervision. The financial industry, alongside unions and community groups, fought against the retailer’s bid in 2005 to open an institution known as an industrial loan company, or limited-services bank, in Utah. Wal-Mart eventually dropped the application.

    “While the Dodd-Frank law generally excludes retailers from the consumer bureau’s authority, it allows the agency to choose to supervise non-bank companies that are significant players in the market. The bureau’s decision on which companies fall in that category has become another point of contention in the long-running feud between banks and Wal-Mart.”

    The Consumer Financial Protection Bureau has not yet determined how it will do oversight of non-bank companies, but is in the process of soliciting public comment before reaching a conclusion.
    KC's View:
    The irony here is so thick you cut could it with a knife.

    If I’m not mistaken, the banks don’t even like the existence of the Consumer Financial Protection Agency and have spent a lot of money lobbying Congress to try to get its powers limited and/or defunded. The agency’s very existence and mission has become so contentious that the woman who helped create it - Elizabeth Warren - was deemed by the Obama administration to be be un-comfirmable by Congress as its leader, and so in an utter act of gutlessness it decided to bypass her. (Warren has struck me as a reasonable person with only consumer interests at heart ... but that’s the last thing that banks are interested in. And, BTW...one of the pundits who has struck me as most persuasive about Warren’s credentials has been Joe Scarborough of “Morning Joe,” who is anything but a liberal.)

    And now, of course, banks want the agency to protect them from Walmart.

    Seems to me that it is entirely fair that Walmart be regulated by the agency as it works its way into the financial services business. And it ought to get exactly the same level of rigorous scrutiny as the banks.

    But the banks don’t want rigorous scrutiny. Just selective scrutiny. And because they have no sense of either irony or propriety, they want to use an agency they don’t want to exist to tame the ambitions of a retailer they don’t want in their business.

    Unbelievable.

    Published on: August 1, 2011

    Fast Company reports that Whole Foods “has become the first prominent supermarket chain to run a Ramadan marketing campaign--and they're hoping Muslim customers will return the favor as they break fast. Even though Muslims traditionally forego meals during the day, lavish evening Ramadan meals could mean big bucks for the natural foods giant ... as well as brand loyalty from a demographic not traditionally courted by megastore advertising.” The story goes on: “While it is a relatively small promotion, it also marks a new benchmark for the Muslim-American community: the first coordinated Ramadan promotion by a national supermarket chain.”
    KC's View:
    This is more a “toe in the water” effort, as opposed to a full-body dive into waters that could be treacherous; after all, there remain considerable anti-Muslim pockets in the US. So, Fast Company notes, Whole Foods will be using the internet to run a virtual ad campaign, as opposed to using in-store advertising.

    To me, here is the interesting paragraph: “There are approximately 1.8 million Muslims living in the United States. Of these, Arab Muslims are a distinct minority; the bulk of the population consists of African-American converts to Islam and South Asian (Pakistani, Indian, Bangladeshi and Sri Lankan) Muslims. And 45% of Muslim immigrants report annual household income levels of $50,000 or higher--placing them squarely in Whole Foods' demographic.”

    Published on: August 1, 2011

    The Wall Street Journal reports that Walmart, “which scours the globe seeking the lowest-cost suppliers, is finding it can save money by buying more fruits and vegetables grown closer to its stores.

    “Other food retailers, including Supervalu Inc. and Safeway Inc., also are racing to expand the amount of locally grown food they offer, as more Americans flock to farmers markets and gourmet grocers such as Whole Foods Market Inc. in search of fresher produce. While some retailers, such as Wal-Mart and Kroger Co., say that buying locally yields savings, most of the chains say their main objective is to satisfy changing consumer preferences.”
    KC's View:
    Of course, because “local” has neither a legal or even commonly agreed-upon definition, that means retailers have a lot of wiggle room when using it to describe products. But the general consensus seems to be that local sourcing can reduce transportation expenses and spoilage, while at the same time making a compelling value argument to consumers.

    Published on: August 1, 2011

    Foodtown Inc., the 66-store cooperative, has announced the formation of Allegiance Retail Services, which the company says “will function like a co-op by providing retail services to current members of Foodtown, as well as various independent retailers seeking the benefits of co-op membership while retaining the ability to operate under their existing banners.”

    According to the announcement, members of Allegiance are given access to the products and services they need to successfully compete in today’s marketplace, including collective buying power, advertising and marketing services, private brand products, and technology services.
    KC's View:

    Published on: August 1, 2011

    The Wall Street Journal reports that the Borders brand name - despite the fact that the company’s 399 stores are going out of business - may not be dead and buried. A September 14 auction of the company’s intellectual property has been scheduled, which will include the Borders.com website.

    According to the store, the company wants “to sell off the right to use Borders’s logo, its trademarks, customer membership lists and other intangible property. The move follows the path of other now-defunct retailers like Circuit City and Linen ‘n Things, whose brand names continue to attract online customers who gravitate towards their familiarity.”
    KC's View:

    Published on: August 1, 2011

    • ShopSavvy, which markets mobile shopping assistant software, today announced that it has teamed with Grocery Server, the grocery deal comparison search engine, to deliver what it calls “hyper-relevant grocery deals, coupons and incentives to ShopSavvy’s more than 11 million users. The unique Grocery Server deals content will be incorporated into ShopSavvy in the coming weeks.

    “Once launched, ShopSavvy users who scan grocery items will not only be able to compare prices, but will also see current coupons and deals available on that item or similar items at nearby grocery stores, as they shop.”

    • The New York Times reports that “Amazon.com, which has an estimated 70 percent of the online book market in Britain, got closer this week to controlling the rest of it when the Irish Competition Authority approved its pending purchase of a major rival, the Book Depository.”

    However, the UK’s Office of Fair Trading (OFT) may not follow suit, the Times suggests, because of growing sensitivities about media monopolies that have been exacerbated by the News Corp. phone hacking scandal. Numerous publishers, authors and other booksellers also have opposed the deal.

    The Times writes that “the Book Depository, which focuses on traditionally bound books rather than anything electronic, sometimes seems as if it were designed to be the anti-Amazon: its Web site is ugly and hard to navigate,” but also offers free shipping.

    While terms of the deal have not been disclosed, speculation has been that it is less than $200 million, which the Times describes as “pocket change for Amazon.”
    KC's View:

    Published on: August 1, 2011

    • The Boston Herald reports that “even as it plans to open a first-in-the-region Wal-Mart Market in Somerville, representatives for the world’s largest retailer said the company is still aggressively scouting Boston locations, despite Mayor Thomas M. Menino’s unrelenting opposition.”

    Business Report writes that the South African government wants Walmart to quintuple its supplier development fund from 100 million rand to 500 million rand ($15 million US to $75 million US) as part of Walmart taking a controlling stake in Massmart there. The deal already has been approved and Walmart has taken operational control of the company, but some elements in the country continue to look for new concessions from Walmart.
    KC's View:

    Published on: August 1, 2011

    We posted a special Sunday FaceTime yesterday, which can be found at here.
    KC's View:

    Published on: August 1, 2011

    Bloomberg reports that “food prices in the U.S. may be rising faster than the government forecast as companies including Coca-Cola Co., Safeway Inc. and Chipotle Mexican Grill pass higher commodity costs on to consumers. Rallies in meat, grain and dairy products since February may mean the increase in food costs will surpass the 3 percent to 4 percent that the U.S. Department of Agriculture predicts, said Christopher Hurt, an agricultural economist at Purdue University in West Lafayette, Indiana. The USDA today left its forecast for this year’s gains unchanged and said 2012 prices will increase 2.5 to 3.5 percent.”

    • The Press-Telegram reports that Long Beach, California’s new ordinance banning single-use plastic shopping bags goes into effect today, which the paper says “makes Long Beach the 12th city or county in California to restrict plastic bags since San Francisco's in 2007 ... About 66 larger retailers, such as supermarkets, drugstore chains and stores including Target and Walmart, are now banned from distributing the bags.”

    • Cargill announced it will be investing approximately $36 million (Canadian) in a waste-to-energy project at its High River, Alberta, beef processing facility that will increase to 80 percent the plant’s ability to generate energy it uses to produce meat products.  A portion of the funds, approximately $10 million, will be provided by the Government of Canada as part of its initiative to help meat processors reduce their environmental footprint.  This public-private collaboration for creating energy from waste that otherwise would be destined for a landfill is the first of its type in North America and the largest single waste-to-energy project Cargill has undertaken on the continent.
    KC's View:

    Published on: August 1, 2011

    Thanks to the MNB user who sent us a link to the following store from the Food and Drug Administration (FDA) Law Blog:

    “A federal district court dismissed with prejudice a claim that Bayer’s labeling of gummy vitamins violated the Arkansas Deceptive Trade Practices Act.  Plaintiff alleged that the brand name ‘ONE A DAY’ is misleading because the daily serving size for the vitamins is two gummies.  Acknowledging that plaintiff’s claim ‘carries a logical appeal’ and ‘is not silly,’ the court nonetheless ruled that no reasonable consumer would be deceived when the label is considered as a whole.  The label stated the dosage three times, as well as the number of servings in the container.  Further, plaintiff failed to allege that he was deceived.”
    KC's View:

    Published on: August 1, 2011

    On Friday, MNB took note of a MarketWatch report that Starbucks plans to open 800 new stores in the coming fiscal year, a 33 percent increase over its store opening rate during the past year. A quarter of these units will be in the US, with the rest overseas; China alone will represent 25 percent of the overseas total, or 150. Starbucks has said it wants to have 1,500 stores in China by 2015.

    My comment:

    I wonder if the folks at Starbucks are breathing their own exhaust. That’s at least a possibility, since they are getting aggressive about store openings at the same time when the economy seems to be shaky ... which, history suggests, isn’t a good idea. (If it doesn’t work, I wonder who Howard Schultz will blame this time?)

    MNB user Mark Olivito responded:

    Wow!  I love your courage, keep up the good work…..but this is awfully critical of Howard Schultz, someone who has pioneered stock options & health care for part time retail workers, helping to drive a better customer experience.  You have always been a big fan of Jim Donald, for good reason.  But it seems like you are not “fair and balanced” in your view of a hired gun vs a company founder.  His choices were to take action and control of the company, and as a result, take on FULL accountability, or continue to see it slide.

    If you have not read “Onward,” it’s a good read, obviously from the POV of Howard Schultz.


    A fair point.

    To be clear, I’ve never said that I’m fair and balanced. That’s somebody else’s slogan. Mine is “news in context, analysis with attitude.” On that scale, I think I can claim truth in advertising.

    Sure, Jim Donald is a friend of mine. I’ve always been up front about that. (Though we’ve become friends since he left Starbucks.)

    When Schultz re-took the CEO job, I wrote that is seemed like a specious argument to suggest that he’d somehow been disengaged from the company’s strategic and tactical efforts. He was still the chairman, and he still controlled the board. I understood the reasons, but thought he was being disingenuous. And not fair about his own responsibilities.

    I’ve read parts of “Onward,” and it strikes me as self-reverential. But hey ... he’s built a great company, I still drink his coffee every day, and he has a lot to be proud of. But I still think my question - asked about an expansion taking place during a time when a lot of people have a recessionary mindset - is a legitimate one.




    Friday’s Eye-Opener read as follows:

    With all the debate, accusations and recriminations taking place in Washington, DC, these days as they debate the debt ceiling and the broader economic crisis, here’s a note from Business Insider that is a definite Eye-Opener.

    According to the story, the US Treasury’s latest daily statement says that the government yesterday had an operating cash balance of $73.8 billion.

    Compare that to Apple’s last earnings report, which said that the iconic company had $76.2 billion in cash and marketable securities on hand at the end of June.

    “In other words, the world's largest tech company has more cash than the world's largest sovereign government,” Business Insider writes.

    Of course, there’s a good reason for that: “Apple collects more money than it spends, while the U.S. government does not.”


    I still think that’s amazing.

    One MNB user observed:

    What would Steve Jobs do? If the role was reversed, would Steve Jobs cut investment in apple, or would he attempt to raise revenue? Maybe a combination of the two. What do you think?

    I think he’d do both.

    I suspect his argument would be that you can charge more for premium products and services. (One of the problems the government has these days is that it looks like it is delivering cut-rate products and services.)

    I also would refer you to another statement that Jobs made about investment and innovation: “We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up.”

    Jobs said that during the 2001 recession, and the innovations that were begun then resulted in game-changing technologies and products such as the iPod, iPhone, iTunes and the iPad.

    Seems to me that if you stop investing, you stop innovating. You stop innovating, and you grow stagnant and die.

    Another MNB user disputed the numbers:

    Government figures don’t include Fort Knox…does Apple have a Fort Knox???  Plus the government can print all the money they want…can Apple print money??? Just sayin...’

    Actually, it almost seems sometimes that Apple does print money.

    Plus, I don’t trust Fort Knox.

    I’ve seen Goldfinger.
     
    KC's View: