business news in context, analysis with attitude

Published on: August 8, 2011

by Kevin Coupe

It is amazing - and Eye-Opening - what one can read on a Monday morning.

Take today.

The San Francisco Chronicle has a story saying that this past weekend marked the 20th anniversary of the world wide web, noting that on August 6, 1991, “Tim Berners-Lee posted the first website, and the world wide web became publicly available. The first website described the world wide web project and explained what people could find online.”

Can you imagine? Only 20 years? And today, the web seems like so woven into our lives that we cannot imagine living without it.

I mean, really cannot imagine living without it...

The Chronicle also reports on the results of a Telenav national survey revealing that “one in three Americans would rather give up sex than their smart phones,” and that that more than half of those polled said they would give up caffeine, chocolate or exercise before giving up their smart phones. In fact, more in than one in five people said that they would rather give up their toothbrushes than their smart phones ... perhaps not realizing that if they stop brushing their teeth, the only way people will want to spend time with them is virtually.

Published on: August 8, 2011

The New York Post reports that Walmart “made a bid this spring to acquire BJ'sWholesale Club for upwards of $3 billion ... Walmart, however, failed to pursue BJ's after the warehouse retailer rejected its offer of more than $55 a share in mid-April, according to sources.

“Instead, BJ's agreed in June to accept a substantially lower bid of $2.8 billion, or $51.25 a share, from private-equity firms Leonard Green & Partners and CVC Capital Partners.”

The story says that insiders remain divided about whether the bid was serious, or just an attempt by Walmart to get a look at BJ’s books under the guise of acquisitive interest. But most say that even it was serious, in all likelihood a bid by Walmart to combine BJ’s with its own Sam’s Club business would have drawn serious scrutiny from antitrust regulators.

Published on: August 8, 2011

The Los Angeles Times reports that as Amazon.com seeks to force a California referendum on the subject of whether it should be forced to collect online sales taxes just like its Main Street competition, it is working those very same Main Streets to collect the 50,000 signatures it needs to compel a vote.

According to the story, “Petition workers are swarming popular commercial hubs including Larchmont Village in Los Angeles, Colorado Boulevard in Pasadena and the Gaslamp Quarter in San Diego as well as Ralphs, Trader Joe's, Target and other major retailers — many of which have lost sales to Amazon ... that Amazon is using the foot traffic generated by conventional stores to fuel an effort to maintain its price advantage over them strikes some retailers as particularly egregious.”

But some say it is the perfect place for Amazon to make its case.

"It's a particularly clever shot across the bows" of the big-box stores, Bill Whalen, a research fellow at the Hoover Institution at Stanford University and a former speechwriter for Republican politicians, tells the paper. "It says that not only do we intend to fight you in the court of public opinion but actually we're going to come onto your front porch."

Published on: August 8, 2011

The Grocery Manufacturers Association (GMA) said that it is supporting the Fit for LIFE Act of 2011, legislation introduced by Representative Marcia L. Fudge (D-Ohio), which it described as “wide-ranging legislation aimed at combating childhood obesity.” The new version of the bill includes provisions that were a previous iteration as well as “language that would provide at-risk children with access to nutritious foods on weekends and during school holidays.”

“The food and beverage industry supports this comprehensive, commonsense approach to help young Americans – especially those in underserved communities – build healthy diets and lead active lifestyles,” said GMA President and CEO Pamela G.  Bailey in a prepared statement. “The Fit for LIFE Act targets the root causes of obesity. It will help children establish healthy behaviors at a young age.”

Published on: August 8, 2011

The Los Angeles Times reports that “since July 1, large supermarkets and pharmacies in unincorporated parts of Los Angeles County have been required to charge 10 cents each for paper bags and have been banned from using plastic grocery bags. Similar bans are in effect or pending in several cities across Southern California.

“The county ordinance was designed to encourage shoppers to bring their own reusable bags and cut down on waste. Some customers have been using odd contrivances to lug out their purchases - including baskets, cardboard boxes, old paper and plastic bags, backpacks and even their hands.”

The story suggests that while some customers already have gotten used to the ordinance and have begun bringing their own bags with them when they shop, others remain resistant - and in some cases are actually traveling farther to go to stores in areas not affected by the legislation. But the sense seems to be that this is a trend that is picking up steam, as more and more communities - at least in California - adopt the approach and try to get rid of single-use bags.

Published on: August 8, 2011

The New York Times reports that “to the rubbish pile that the Internet is creating, alongside the road maps, newspapers and music CDs, add one more artifact of consumer life, the paper receipt.

“Major retailers, including Whole Foods Market, Nordstrom, Gap Inc. (which owns Old Navy and Banana Republic), Anthropologie, Patagonia, Sears and Kmart, have begun offering electronic versions of receipts, either e-mailed or uploaded to password-protected Web sites. And more and more customers, the retailers report, are opting for paperless.”

According to the story, “Many people like keeping searchable records on a computer — e-receipts come in handy during tax season, make some returns a snap and are a tidy addition to the e-purchases already stored on countless hard drives. Others see the paper versions as an anachronism, wasteful of resources and as irrelevant as printed bank statements and mutual fund reports.

“And face it, paper receipts can be annoyances, burrowing into the bottoms of purses, getting lost in glove compartments or fattening up wallets — only to be pulled out and puzzled over long after their usefulness has expired.”

Published on: August 8, 2011

Consumers Union, the nonprofit publisher of Consumer Reports, has called on the US Department of Agriculture (USDA) to tighten its present Salmonella standard, which it says “allows almost half the samples tested at a ground turkey plant to be contaminated with this disease-causing bug.”

Jean Halloran, Director of Food Policy Initiatives at Consumers Union, said in a prepared statement, ““The current USDA ground turkey standard, which allows 49.9 percent of samples in a test run to be positive for Salmonella is unacceptable and clearly ineffective as a tool for food safety.”

According to Consumers Union, “USDA tests of 121 samples of ground turkey at 22 ground turkey facilities in the first quarter of 2011 show that 10.7 percent were contaminated, about the same number as for 2010.  Consumers Union believes this level is too high and a tighter standard is needed.”

“For one in ten packages of ground turkey to potentially be contaminated with disease-causing Salmonella is simply too great a risk,” Halloran said. “The current USDA standard, which allows almost 50 percent to be contaminated, is completely ineffectual as a tool for reducing this level.”

Consumers Union also called on Congress to give the USDA mandatory recall authority, as it just did for the Food and Drug Administration (FDA) under the Food Safety Modernization Act that was passed last year.

Published on: August 8, 2011

• In the UK, the Telegraph reports, Tesco is being criticized for tiered pricing - charging five percent less for some 800 products carried in its Scotland stores than it is charging for those products elsewhere in Britain. Tesco says that the different pricing was a technical error, but critics say that Tesco was conducting a secret test of zone pricing that is frowned upon - but not banned - by the UK Competition Commission, which says that tiered pricing can put independent retailers at a competitive disadvantage.

Published on: August 8, 2011

• Environmental Leader reports that “supermarket chain H-E-B and restaurant Denny’s are among the companies that will host over 100 electric vehicle charging stations in Austin, Texas.

“Utility Austin Energy yesterday announced the locations of the 103 plug-in charging stations (pdf) in its Plug-In EVerywhere network, fulfilling its commitment to the ChargePoint America initiative. The program, backed by federal stimulus grants, selected the Texan capital as one of nine participating metropolitan regions.

“The level two, or 220/240 volt, charging stations are located at restaurants, hotels, medical facilities, educational institutions, retail stores, libraries and recreation centers and at other public, private and non-profit partners. Chargers will be located at three H-E-B stores, three Denny’s restaurants, three Walmarts and two Sam’s Club locations ... Austin Energy offered rebates of up to $2,500 per charging station to the private, public and non-profit sectors to help defray the costs of installing the free charging stations offered by the company through the ChargePoint America program.”

• The Pittsburgh Tribune-Review reports that Giant Eagle is scheduled today to open its first in-store health clinic at its Finleyville location. According to the story, “The Healthy Directions clinic will be staffed by registered nurse practitioners in partnership with Monongahela Valley Hospital and will be able to diagnose and treat non-urgent illnesses, such as colds and the flu, on a walk-in basis. The Washington County clinic also will provide laboratory services for blood and urine, and health screenings for blood pressure, glucose and cholesterol, Giant Eagle said.

• Crain’s Chicago Business has a piece about the decision by Kraft Foods to split itself in two, framing it this way:

“Saddled with a $49-billion company weighed down by uneven growth models while facing a host of challenges, from restless shareholders to an unforgiving U.S. marketplace, Kraft Foods Inc. Chairman and CEO Irene Rosenfeld had few options.

“So just two years after she successfully sold investors on the idea that the company needed to get bigger when she made the $18.5-billion hostile takeover for Cadbury PLC, she surprised investors with an about-face Thursday, announcing a plan to divide the Northfield-based food giant's global snack business from its domestic grocery business.

“In doing so, Ms. Rosenfeld most likely pre-empted interloping from activist investors and gave herself more options for the businesses without hurting the stock by trying to slowly pare down a portfolio of brands with waning growth potential.”

Published on: August 8, 2011

USA Today reports that the US Postal Service said that it suffered a $3.1 billion loss during its third quarter, and “warned that without congressional changes it would default next month on a $5.5 billion payment to the federal government.

“For the nine months that ended June 30, the Postal Service lost a total of $5.7 billion. Mail volume continued to decline, led by first-class services, as more consumers relied on e-mail and electronic bill-paying. Total volume fell to 39.8 billion pieces, a drop of 2.6% from the same period a year ago.”

In addition to the proposed elimination of six-day delivery services, the USPS said that it plans “to identify and study nearly 3,700 under-utilized Post Offices for possible closure and introduced the new Village Post Office concept. Village Post Offices would be operated by local businesses, such as pharmacies, grocery stores and other appropriate retailers, and would offer popular postal products and services such as stamps and flat-rate packaging.”

Published on: August 8, 2011

• Walmart announced that John Westling, Executive Vice President of General Merchandise and Replenishment, is retiring after 23 years with the company. Wrestling joined the company in 1988 as an hourly associate, and rose through the ranks to his most recent position.

As a result, John Aden has been promoted to Executive Vice President, with responsibility for General Merchandise. Aden joined Walmart in 2007 and has served as Senior Vice President of International Operations, Global Leverage and earlier this year was named Senior Vice President of Hardlines for Walmart U.S.

And Pam Kohn has also been promoted to lead a new Merchandise Services organization as Executive Vice President. According to Walmart, this new organization “centralizes merchandising shared services functions of Merchandising Execution, Store Layout, Format and Space Productivity and Replenishment. Merchandise Services will set out to increase efficiency in these areas and allow the core merchandising functions to focus on meeting the needs of our customers.”

Published on: August 8, 2011

Responding to last week’s piece about an internal memo conceding that Walmart’s traffic is down over the past six months, and another piece noting that Apple Stores cheerfully put up with a guy doing things like bringing a goat into the store because, hey, he also might buy a computer, one MNB user wrote:

I think you missed a point this morning on Walmart. I agree with all of what you said on issues regarding traffic. However, the piece before that was about Apple and the goat. Now, what do suppose would have happened if the dude with the goat walked into a Walmart Supercenter?

That, IMHO, is what is wrong with Walmart’s traffic.

Excellent point.

Another MNB user wrote:

Having worked for WMT  from 1980 to 1995, …stockman, assistant manager, store manager, buyer,… I’ve seen the merchandise and merchandising change radically…as it should.

Two of your readers commented about “service” and “poor execution”... both remarks are talking about people.

I’d suggest that whatever WMTs clouded and multi-directional  future efforts may be, if they would simply make a concerted effort to improve the morale in their stores, any plan would have a higher degree of success.

Back in the day…when they had dynamic leaders, Mr. Sam, Jack Shoemaker, Don Soderquist, associates WANTED to excel! They WANTED to help customers, they were excited about the opportunities they knew were ahead for both the company and themselves.

Anywhere in the country you went, the cashiers were friendlier, you could find sales associates…and they were actually EAGER to help you. Those leaders never gave a speech without praising the job the associates were doing to make it all happen.

I wondered if perhaps I was simply being wistful about the “good old days” and that workers today just don’t care anymore. Then you go into an Apple Store, Trader Joe's, Firehouse Subs, and other organizations who are known for their people forward attitudes… Great people are and always will be available, but you have to find them, train them, let them know how important they are, and treat them as such. Until WMT addresses this with a passion, customers will continue to go elsewhere, as will their best workers.

WMT has plenty of wonderful workers today that no longer care, simply because management has shown little concern for their issues at store level. If you are in the store, on the front lines, and  as an employee you cannot satisfy your customer because of “policy”, it kills your spirit.

If management were to stop fidgeting with new and different “Plans”, establish a direction, and included their people in a meaningful way, almost ANY plan would work. As the largest employer in the world….you would think they would understand this better.

You’d think.

Another MNB user chimed in:

This is an unscientific sample of "ones" - one person, one store location about one mile away (about as far as I am willing to travel to shop at Walmart). At least at this location out of stocks are so high that I estimate they are losing 5 to 10% of potential sales for that reason.

Let me suggest something radical here.

Maybe it is time for Walmart to split itself up. Create four companies. US stores. Online. Sam’s Club. And International. And maybe they ought to be run out of four different places, not just Bentonville. Maybe it has gotten to the point that too many of Walmart’s leaders are living in the same neighborhoods, shopping in the same stores, golfing at the same country clubs, sending their kids to the same schools and attending the same churches. Maybe it has all gotten so insular that nobody is thinking outside the Arkansas box, despite their best efforts.

Maybe it has all just gotten too big. Sure, Sam Walton ran a different kind of company, but it was, in fact, a different kind of company. Maybe in 2011, if he were still alive, Sam Walton would be encountering exactly the same kinds of problems.

It is possible that Walmart has people issues, but it also may have structural issues that need to be resolved. And maybe it can only resolve these issues by rethinking what the company should look like for the next generation, and not be inhibited by legacies or structures or real estate.

Maybe that’s what every big company has to do, and as one of the biggest, Walmart has to do it more often than most.

Maybe it has to do it constantly. You know. Always.




Michael Sansolo wrote a piece last week illustrating the limits of a GPS system, and suggesting the importance of still being able to think and reason and not become too dependent on technology.

MNB user Mike Franklin responded:

We still have to think??? Weird!  This was one of your best.

Another MNB user wrote:

As testimony to Michael’s article, we were driving from SF to play tennis with a group of IGA grocers in Colusa Ca.

Our driver was using his GPS and announces “here we are.” But instead of being at the grocery store meeting place, we were at the county fairgrounds, in front of the livestock pens. The amazing thing is our driver without looking around, really thought we were at our destination!!




On another subject, one MNB user offered:

I live in a small town of 5,000 just 20 minutes away from a metropolitan area.   When Movie Gallery shuttered all of its stores, we lost our only source of movie rentals in our community.

We are DISH Network subscribers and have been continually unimpressed with the selection and pricing of their pay-per-view movies and only use their service when they have given us coupons for free movies.   Further, we do not wish to subscribe to our overpriced cable company for high-speed Internet access and we make do with much cheaper DSL service provided by our small local telephone company.   Our DSL speed is not favorable for downloading movies or attempting to watch TV shows and movies in real time on websites such as Hulu, etc.      I share all this because we read more and more about people eliminating satellite or cable services as a cost-savings measure and going to the Internet to watch television, first-run movies, etc.   I believe there are many rural areas like ours that do not have (and will not have any time soon) the technology to access the Internet at the speeds necessary to effectively utilize services like AppleTV.  

Last month I happened to stop by the local truck stop on the edge of town to pick up a drink and was greeted by a Redbox-imitation sitting just inside the front door.   There were three people waiting to use it.   The owner of the truck stop said it was one of the smartest things he could have added to his store as he now had local residents visiting his business to rent movies; he knew they were people who would likely never visit his truck stop for their other needs and lived nearby.   He said his customer count was up quite a bit and was looking to add similar movie rental dispensers at his other locations.   Needless to say, I waited in line, opened my account and rented a movie for that evening.  

While Internet streaming may be the future of how we watch television and movies, for some of us it may be years before we have the technological support to take advantage of it.   Redbox and its competitors should have a market for their services for some time to come.

Point taken.




Finally, last Friday I noted that the day’s MNB was going to look a little different because I was taking the day off to attend a family wedding and would not be using my usual 10+ stories and commentaries.

However, I wrote, we would be running a special Sansolo Speaks as well as Your Views and OffBeat, “just so you can get a little bit of your MNB fix.”

One MNB user apparently was offended by this turn of phrase writing:

You must have an ego the size of Connecticut!

True. I do.

However, on the scale of things, that’s not so bad, since by land mass, Connecticut is something like the 48th largest state. Out of 50.

And since I’ve got 22,000+ subscribers, and the list has been growing this summer by more than 100 each week, I figure that some folks must be reading, and that I owed them an explanation.

(I may do the same thing this week or next, simply because it is August, Michael Sansolo has said he’ll do an extra column, and I kind of enjoyed the three day weekend.)

This email did have other result, by the way. My daughter happened to read it over my shoulder when it came through, and she got all excited, calling out to Mrs. Content Guy, “Hey Mom! Dad got hate mail!”

I explained to her that this was not hate mail. Just healthy skepticism from a reader who thought it was important to let me know at 12:51 AM EDT on Friday that MNB was not nearly as irreplaceable as I thought it was.

Point taken.