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    Published on: August 10, 2011

    by Kate McMahon

    There’s just no escaping the avalanche of “daily deals” on line, with Groupon, Living Social, OpenTable and competitors promising beaucoup savings on products and services ranging from artisanal cheeses, Thai food and Botox injections to fly-fishing trips and pole dancing lessons.

    The bargains ($200 worth of food and drink for $100!) and the explosive growth of the category have captured the attention of coupon aficionados, Wall Street, Main Street and the media. One study reports that 47 percent of the nation’s consumers subscribe to at least one online daily deal website.

    But the critical part of the equation for participating businesses is what happens after the deal is launched and the bottom line is calculated. A recent study by Rice University management professor Utpal Dholakia shows decidedly mixed reviews.

    First, a little Daily Deal 101: Typically, merchants get 25 percent of the coupon value. For example, in a Groupon deal offering $50 worth of food at a local eatery for $25, the restaurant gets only $12.50 and Groupon takes the rest in exchange for marketing and promotion. The goal, of course, is new customers, and there are plenty of tales of small businesses being inundated (and overwhelmed) with first-time customers cashing in coupons.

    And therein lies one of the “red flags” Dholakia cited in the study: Although almost 80 percent of the deal users were new customers, less than one in five returned for a full price purchase and only one-third spent beyond the deal value.

    Among the other key findings:

    • Almost 22 percent of deal buyers never redeem the vouchers they've purchased.

    • Some 55.5 percent of businesses reported making money, 26.6 percent lost money and 17.9 percent broke even on their promotions.

    • Forty-eight percent of businesses indicated they would run another daily deal promotion, almost 20 percent said they would not and 32 percent said they were uncertain.

    "The major take-away from the study is that not enough businesses are coming back to daily deals to make the industry sustainable in the long run," Dholakia said. "And our results from three studies and close to 500 businesses surveyed show that the deals are nowhere close to the rates of financial success for participating businesses that some companies claim to be having."

    For businesses considering entering the fray, Dholakia offers the following advice: offer a daily deal of relatively high face value ($50 or more) with a shallow discount (at most 25 percent off face value), a short redemption period (three months or less), and a limit on the number of deal vouchers that consumers can buy.

    More advice comes from daily deals proponent and B2B marketing specialist John Amato, CEO of MarketSharing, who responded to the Rice survey on the social media website

    He writes that the three most important factors for a successful deal are: Know your margins before setting a price, prepare for the surge of daily deal seekers so daily operations are not disrupted, and most importantly, get your employees on board. Both Amato and Dholakia agree that educating employees about the goal of the promotion is critical for success.

    And finally, it follows that the daily deal crazy has prompted a new genre for consumers with buyer’s remorse: daily deal resale sites such as CoupRecoup, DealsGoRound and LifeSta for those who want to unload unused coupons. As for the previously noted pole dancing lessons? Plenty available on the resale sites.

    Comments? Have you had your own experiences - good and/or bad - with Daily Deal sites? Send me an email at .
    KC's View:

    Published on: August 10, 2011

    by Kevin Coupe

    A shout-out this morning to Jacci Baker, who works at the deli counter in a Lake Mary, Florida, Publix supermarket located on International Parkway.

    Mrs. Content Guy and I were in there the other day to pick up some stuff to bring to a friend’s house, and Ms. Baker may have created the single best service deli experience I’ve ever had.

    She was friendly, and insisted that we try every item we ordered, just to make sure we liked the flavor and the thickness of the slicing. She up-sold us on some ham, by saying it was by far her favorite ham in the case and had the best flavor. And she created a sense that of all the people in the store at the moment, we were her highest priority.

    It was a high-impact performance, and demonstrated the importance of having the right person on the front lines, interacting with the shopper and really understanding the product. Sure, there is a role for ordering kiosks that virtually eliminate any human interaction. And sometimes, when things are really busy, there doubtless limits on how much interaction there can be.

    But the right person in the right place - it can have the effect of turning “a” retailer into “my” retailer.

    And that’s Eye-Opening.
    KC's View:

    Published on: August 10, 2011

    The reports that Walmart is making its Vudu video streaming service available for Apple’s iPad, a move described as stepping up its digital investments “to counter the effect of declining DVD sales, a waning staple of its retail business.” The new availability further puts Walmart in direct competition with Apple’s iTunes service, as well as other services such as video streaming offered by

    Walmart is the nation’s biggest seller of DVDs - with 40 percent of the national total going through its checkout lanes - but streaming and broadband services have been eating away at video sales.

    According to the story, “Video-on-demand and Vudu's cloud computing system are far from Wal-Mart's comfort zone in big box retail, but the service underlines how falling sales at the company's U.S. business are forcing the company into unconventional new ventures.”

    Walmart has suffered through eight consecutive quarters of stagnant US same stores sales. It is scheduled to release its most recent quarterly results next week.

    Meanwhile, the New York Times reports that Walmart has decided to shut down its MP3 online store at the end of the moment.

    While Walmart launched this business in 2003 to compete with Apple’s iTunes music download store, and has consistently undercut iTunes on price, the Times writes that “along with most other sellers of digital music, including Amazon’s MP3 store, Wal-Mart has failed to significantly challenge the market dominance of iTunes, which sells more music than any other store, digital or physical.”
    KC's View:
    No matter how big or small you happen to be, you have to be nimble enough to take advantage of new platforms, engage with new technology, and get off the trains that aren’t going anywhere.

    Published on: August 10, 2011

    The Wall Street Journal reports that the US Department of Agriculture (USDA) found a dangerous form of salmonella at a Cargill turkey plant last year and then again four times this year in stores selling Cargill turkey, but was unable to do anything to get it off the market “until an outbreak killed one person and sickened 77 others.”

    According to the story, “Food-safety specialists said the delay reflected a gap in federal rules that don't treat salmonella as a poisonous contaminant, even if inspectors find antibiotic-resistant forms such as the Heidelberg strain implicated in the latest outbreak.
    ‘We have constraints when it comes to salmonella,’ said Elisabeth Hagen, the USDA's top food-safety official, in an interview. She said that unlike E. coli, salmonella isn't officially considered a dangerous adulterant in meat unless that meat is directly tied to an illness or death.”

    The story notes that “Cargill and the U.S. Department of Agriculture announced the recall of ground turkey from the Cargill plant in Springdale, Ark., on Aug. 3. The USDA said the third-largest meat recall in history affected 36 million pounds of ground turkey.”
    KC's View:
    Well, it seems pretty clear that we need a change in the law so that USDA can act more quickly and decisively on these issues.

    Of course, as the story says, “A food-safety law passed year gave the FDA authority to order recalls of many types of food for the first time, but meat and poultry remain the responsibility of the USDA, which can only request recalls, not order them.”

    And I’m guessing that any proposal that would give any agency of the federal government more authority, or requiring additional funding, ain’t gonna happen these days.

    Published on: August 10, 2011

    USA Today has a cover story analyzing data from the 2010 Census, saying that it “represents more than just a current snapshot. The end of the first decade of the 21st century marks a turning point in the nation's social, cultural, geographic, racial and ethnic fabric. It's a shift so profound that it reveals an America that seemed unlikely a mere 20 years ago — one that will influence the nation for years to come in everything from who is elected to run the country, states and cities to what type of houses will be built and where.”

    One of the most significant shifts has been towards ethnic diversity, which seems to have happened much faster than experts expected. Here is how USA Today frames this issue:

    “One of the most significant demographic trends of the past 20 years is the explosive growth of Hispanics. Now at 50 million — almost one in six Americans — Hispanics have more than doubled their numbers in 1990.

    “The Hispanic boom has spread far beyond traditional immigrant gateways such as California and Florida, altering the American landscape in states such as Kansas and North Carolina.

    “Just more than 1% of North Carolina 6.6 million residents were Hispanic in 1990. In 2010: Almost 7% of 9.5 million people were.

    “Asians grew at a similarly rapid rate but they still account for a small share of the population (4.7%). Since 2000, more Asians were added (4.3 million) to the population than blacks (3.7 million).

    “Hispanics surpassed blacks in 2003. African Americans' presence in some traditional strongholds is shrinking. They are leaving cities and heading for the suburbs or returning to the South.

    “Fifty-seven percent of the USA's blacks live in the South, the highest since 1960. Some are retirees settling in Florida and North Carolina; others are professionals lured by thriving metropolitan areas in Texas and Georgia. Most of Chicago's population declines since 2000 were due to a loss of more than 181,000 black residents. There were declines in Cleveland, Philadelphia, Dallas and Atlanta. The black population in Washington, D.C., is slipping below 50%.

    “The USA's racial and ethnic balance has been further upset by the growing number of Americans who claim more than one race.”

    In addition, the story notes, there have been changes in how people live, and how they live together:

    “Various forms of three generations under one roof; adult children returning to their parents' home, sometimes with a spouse and their own children or both; blended families that include stepparents or stepchildren; and extended families that include an parent, a child, cousins and others, related or not ... A wide variety of living arrangements have flourished among all ages: unmarried partner couples, both same-sex or opposite sex, sometimes with their own or related children or adult roommates.”

    In addition, “The share of one-person households continues to grow, up from 25% in 1990 to 27%. The recession has slowed the trend by forcing some young adults to live with parents or roommates. But as Baby Boomers flood into their empty-nesting years and beyond, the trend could accelerate.”

    And, there are fewer children than ever before: The story notes that only one-third of US households have children, and the proportion of US residents under 18 is at an all-time how (24 percent). At the same time, “Having children increasingly has become detached from marriage. The share of births by unmarried women has risen from 26% to 41% since 1990 and could be headed higher. Among Hispanics, it's 53%; among blacks, it's 73%.”

    And finally, along with a projection that Americans increasingly will be moving to urban areas from rural areas, the story notes that “the Census projects that less than half of the U.S. population will be white and not Hispanic by 2042 — a moving target that will be influenced by future immigration and fertility patterns.”
    KC's View:
    It is all a moving target ... but one that marketers increasingly have to be aware of, and compensate for.

    Michael Sansolo has written it in this space, and it bears repeating. If you are operating a store that Ozzie and Harriet would be recognize and be comfortable in, then you are in mortal danger of slipping into irrelevance, because we no longer live in an Ozzie and Harriet world.

    I know this because a sizable percentage of the MNB audience just went to Google to find out who Ozzie and Harriet were. This happens all the time. I was on an elevator the other day and a guy’s cell phone began to ring - it was the theme from “The Man from U.N.C.L.E.” I laughed with recognition, the guy and I started chatting about Napoleon Solo and Illya Kuryakin, and the rest of the folks in the elevator stared at us as if we were from Mars. It was only when we told them that Illya Kuryakin was played by the same actor - David McCallum - who plays Dr. “Ducky” Mallard on “NCIS” that we began to have any relevance to them at all...

    Published on: August 10, 2011

    Reuters reports that some “62,000 grocery workers in Southern California are ready to vote on giving their unions the go-ahead for a strike if Ralphs, Vons and Albertsons supermarkets do not put an acceptable contract offer on the table by next week.”

    According to the story, “The Southern California employees have been without a contract since it expired in March. While the union workers previously voted to authorize a strike, changes to offers now being negotiated require another vote.”

    "Either they vote to authorize a contract or they vote to authorize a strike," says Mike Shimpock, a spokesman for the United Food and Commercial Workers Local 770.

    The region’s three major chains - Kroger-owned Ralphs, Safeway-owned Vons, and Albertsons - are negotiating together, and have not commented on the ultimatum, which could lead to a replay of the 2003 strike/lockout that roiled the industry in Southern California for more than four months.
    KC's View:

    Published on: August 10, 2011

    Published reports suggest that Whole Foods has run into some public relations issues with its ongoing Ramadan promotion.

    As noted by MNB a couple of weeks ago, Fast Company reported 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.”

    But now, there are reports that some negative online reaction to the promotion - saying that it meant that Whole Foods was either "jihadist" or "anti-Israel” - led to an internal company memo suggesting that while it would continue to sell Halal foods, it would be backing away from the promotion, which basically treated Ramadan the same way it would Passover, Christmas or Easter.

    Whole Foods, however, is saying that this is not the case - that the internal memo was an independent and unauthorized response by just one of its divisions, and did not represent official company policy. The Ramadan-themed promotion, apparently, will go on.
    KC's View:
    I’ve said it before and I’ll say it again. While some terrorists may be Muslims, that does not mean that all people of the Muslim faith are terrorists.

    Published on: August 10, 2011

    MarketWatch reports that Walmart “is in talks to acquire the Brazilian unit of French retailer Carrefour, in a step that would create the largest retailer in Latin America nation.” None of the players are commenting, nor has a potential price been speculated about.
    KC's View:

    Published on: August 10, 2011

    • Winn-Dixie Stores announced that guests using the new Winn-Dixie Customer Reward Card (CRC) at any of the grocer’s 95 stores in the Tampa/St. Petersburg, Tallahassee, Gainesville, Fla., Albany and Columbus, Ga. areas, can earn significant fuel discounts at participating Shell stations ... For every $50 in qualified purchases using the new CRC at Winn-Dixie, guests earn a 5 cents-per-gallon discount on fuel that is redeemable on a single fill-up, up to 20 gallons at any one of more than 300 participating area Shell stations.

    The program is slated to be expanded to Winn-Dixie’s Central Florida stores next month.

    Bloomberg reports that in the UK, Tesco, Sainsbury and Walmart-owned Asda Group were among the retailers and dairy producers fined by the Office of Fair Trading (OFT) “for coordinating cheese or milk prices. The supermarkets indirectly exchanged retail price plans through the dairy processors’ information exchanges in 2002 and 2003, according to a statement e-mailed by the OFT.”

    The total amount of the fines was the equivalent of $81 million (US).

    Tesco has denied any collusion and described the fines as being “without merit.”

    • Nielsen Holdings announced that it has acquired Marketing Analytics, Inc., described as “one of the pioneers of marketing mix modeling and a leader in analytics and advanced planning software.  Marketing Analytics’ 52 employees will join the Nielsen team, and Nielsen will acquire all other assets including software and ongoing client projects. Terms of the deal were not disclosed.

    • The Wall Street Journal reports that “Ralcorp Holdings Inc. added another twist as it stands in the crosshairs of a buyout offer from ConAgra Foods Inc., agreeing to buy the Sara Lee Corp. unit that makes private-label refrigerated dough in North America for $545 million.

    “The deal adds to Ralcorp's private-label-food business and expands it into a new category, a stronger indication that Ralcorp is more willing to pursue its previously announced spinoff of its Post Foods business than be acquired by ConAgra. It also makes Ralcorp a bigger company for ConAgra, which has a $4.9 billion offer on the table, to swallow, and could force ConAgra to wait until the split-up and just buy Ralcorp's private-label business.”
    KC's View:

    Published on: August 10, 2011

    • The Food Marketing Institute (FMI) announced that Terry Levee has been named as its Director of Food Safety Programs, responsible for developing and implementing programs and activities geared toward helping retail and wholesale food companies meet critical food safety needs. He will report to Hilary Thesmar, Ph.D., RD, FMI’s Vice President of Food Safety Programs.

    Levee’s industry tenure includes positions at two FMI member companies, Giant Food/Ahold USA and Winn Dixie Stores, Inc. At Giant, he monitored company wide food safety performance to ensure all practices met Ahold, Giant, local, state, county and federal food safety standards and regulations. Prior to working at Giant, Levee served 19 years at Winn-Dixie, as its technical, scientific and regulatory expert for all food safety and retail quality assurance issues and programs.

    • The Global Market Development Center (GMDC) announced that Mark Mechelse, former Director of Marketing & Client Services of AIM Global Solutions, has been hired to serve as Director of Industry Insights.
    KC's View:

    Published on: August 10, 2011

    Responding to yesterday’s piece about Pret A Manger’s culture and show US expansion, one MNB user wrote:

    My husband and I took a trip to London in 2007 and stopped by a Pret a Manger in Mayfair.  I'm not sure if this is still the case, but, in general, we had a bit of a struggle in London trying to pay for everything with credit cards.  Pret was no exception, but the nice woman behind the counter finally worked it out and we were on our way.

    Back home, I was reviewing our receipts and saw my husband had signed the Pret a Manger credit card slip for 60 pounds, instead of 6 pounds (basically $120 for a parfait and a latte!).  We surmised the woman working at Pret must have added a zero to our total, but figured it was our loss since my husband had signed the slip in haste. 

    However, I took a shot in the dark and went on Pret's website to find a customer service person to email about the issue (hey, 100 bucks is 100 bucks after all).  Much to our surprise, someone got back to us within a day and within two days, our credit card was credited the full amount, no questions asked.  I was amazed at this level of service for two naive travelers from across the pond.  I've been singing their praises ever since!

    Which is how a smart retailer turns a customer into ad advocate.

    We continue to get email about Walmart’s troubles.

    MNB user Andy Casey wrote:

    Your response to the reader suggesting WM’s woes are the result of the economy rather than their stores prompted me to write.  I won’t say it is totally to blame but I saw some US Department of Labor statistics recently which confirmed that if you are in the upper 2/3 of the economic structure and have a job, the recession is largely over for you but for those in the bottom third – even with jobs –it is a very different story.  My suspicion is that more of Target’s customers fall into the first category than is true of Wal-Mart.

    Fair point.

    Another MNB user wrote:

    From time to time we shop WM principally for groceries and or items that we know will be lower priced than the local supermarkets.

    We have a nephew that works with WM in Montana and every time (regardless of the time of day) that produce department is inviting and well stocked.

    Compare that to a local WM here in Utah and there is NO comparison.   We finally got so disgusted that we walked out of the store with no perishables.

    Sad but true.   The person stocking bananas said he had no help so we was just doing what he was told.   YIKES. 

    "Can't you see the condition of your department”

    "It's not mine mister."

    How sad.

    Which is how a retailer turns a customer into an ex-customer.

    Regarding the Amazon-sales tax debate, one MNB user wrote:

    Why is it that the only people I hear complaining about Amazon are 1) brick and mortar stores who are unwilling to admit their business model is not as efficient and 2) people who see Amazon’s revenue and think they’re entitled to it despite tax laws that say otherwise?

    MNB user John R. Hurguy wrote that “’s business model is not sustainable without corporate welfare.”  I would argue that brick and mortar book stores may not be sustainable without government interference.

    And when did “corporate welfare,” as it relates to state and local tax breaks, become a four-letter word?  Is it no longer okay for states to compete for companies to do business within their state lines?  Encouraging existing business development, and luring new business, through tax incentives, grows the overall state tax base, spurs job growth, and improves local economies.

    You catch more flies with honey than with vinegar…

    Responding to Michael Sansolo’s column yesterday, MNB user Rosemary Fifield wrote:

    I gotta admit, all of this GenY, GenX, Millennial etc. stuff drives me nuts. How can we characterize entire generations, and who can keep track of who's who? I missed the Baby Boomer thing by one year (on the other side from here, not the near side!) so what am I? (I know I've read it somewhere, but I can't remember because I don't identify with it.) And why does it matter? The best thing said here was "listen more than you talk." I'm used to admitting I'm wrong. Now I'm working on talking less so I don't have to admit it so often.

    I wish I could do the same thing. But since I essentially make a living writing and talking - what Tony Kornheiser would call “yodeling” - it is hard to cut down on the writing and talking. But I do try to balance it out with the listening...

    One other thing, and it has been oft-pointed out here on MNB. A Baby Boomer born in 1946 is a vastly different person than one born in 1964. They may be connected in terms of demographic definitions, but that’s all. Characterizing any generation as one thing or another is a dangerous game.

    On another subject, MNB user Denis Zegar wrote:

    I can't help but to jump into the fray on government inefficiency and high gas taxes.

    Americans have been led to believe by anti-government legislators and pundits that lower taxes is the panacea to all that's good.  In other words, the "free lunch" syndrome is alive and well.  Americans complain about high gas prices while europeans pay more than twice what we pay.  The US excise tax is 18 cents per gallon and state taxes average about 20 cents compared to Europe's gas tax of more than $4 per gallon.  This may explain why their highways and bridges now surpass ours.  The bottom line is that 38 cents per gallon is insufficient to pay for the decay of our infrastructure.  Since 1960 the number of autos on the road has been increasing at the rate of 3.7 million per year.

    Today there is an estimated 254 million passenger vehicles on the road;  another 6.6 million small trucks and 2.2 million semi trucks.  Simple math tells you that the taxes collected can't keep up with the heavy usage on roads and bridges that were never designed for that amount of traffic.

    Grover Norquist and Tea Party ideologues, who live in LaLa Land and still believe in the free lunch principle, need a refresher course in Paying For What I Use 101.  Instead of blaming all the worlds woes on big, bad government, lets look at what we have accomplished without the idealogical fanfare.  FDR created the WPA to put Americans back to work.  Approximately 8 million jobs were created that had a lasting legacy, with 651,087 miles of roads, 124,031 bridges, 125,110 public buildings, 8,192 parks, and 853 airports.  Congress could create 15 million new jobs by simply investing nearly $1 trillion in needed infrastructure work or roughly the cost of the Bush tax cuts for the wealthy.

    In my world math always trumps ideology and history is our best teacher.

    I’ve always agreed with the great Pete Hamill, that ideology - on either side of the aisle - is a lousy substitute for thought.
    KC's View: