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    Published on: August 15, 2011

    by Kevin Coupe

    There were a couple of Eye-Opening articles this weekend about economic trends and how people are coping with them.

    The Los Angeles Times had a story about what it calls “Generation Vexed — young Americans who are downsizing expectations in the face of an economic future that is anything but certain. Career plans are being altered, marriages put off and dreams shelved.

    According to the story, “Fewer than half of Americans believe that the current generation will have a better life than the last, according to a Gallup poll this spring. It was the most pessimistic showing for that barometer in nearly three decades.

    “Another poll, of Americans ages 18 to 29, found that three-quarters of them expect to delay a major life change or purchase because of economic factors.”

    The simple truth, LAT reported, is that “the economy has been in sorry shape for so long that it has covered a significant portion of young people's lives. The recession officially ran from December 2007 to June 2009, but with slow growth and high joblessness since then, it doesn't feel much like it ended.” Joblessness is likely to continue to be a problem for them, in part because of economic contraction and in part because older workers won’t want to give up their jobs because of their own economic concerns.

    At the same time, the New York Times had a story about how “in recent years, a wave of white-collar professionals has seized on a moribund job market, a swelling enthusiasm for all things artisanal and the growing sense that work should have meaning to cut ties with the corporate grind and chase second careers as chocolatiers, bed-and-breakfast proprietors and organic farmers.

    “Indeed, since the dawn of the Great Recession, more Americans have started businesses (565,000 of them a month in 2010) than at any period in the last decade and a half, according to the Kauffman Foundation, which tracks statistics on entrepreneurship in the United States.

    “The lures are obvious: freedom, fulfillment. The highs can be high. But career switchers have found that going solo comes with its own pitfalls: a steep learning curve, no security, physical exhaustion and emotional meltdowns. The dream job is a ‘job’ as much as it is a ‘dream’.”

    I have to admit to having a personal reaction to both stories.

    We have a son who has just moved home after graduating from college. He’s got a full-time job working for a wine retailer, and we’re encouraging him to save as much money as he can right now so that he’ll be able to take risks later. But we’re also telling him not to take employment for granted ... that in the end, he has to be responsible for himself, and can’t trust anyone else to look out for him. (Other than his parents, of course.)

    I’m not sure this is a positive thing. At least not completely. It may be that the breakdown of trust may be the hardest thing for the business community to grapple with, because it will be hard to get employees to feel a sense of ownership if they feel they are seen as costs rather than assets, that in the end, they are on their own. On the other hand, it may create a more self-reliant and independent workforce.

    And I’ll tell you this.

    I’ve been on my own for most of the last 16 years. There’s nothing like it, in part, I suppose, because (as Mrs. Content Guy) says, I don’t always play well with others. But I also think it is because for the most part, I never worked for anyone who really knew how to take advantage of my skills and passion ... who understood that as a matter of personality, I always took ownership of the places where I worked. That passion was largely seen as a nuisance, not a positive trait that could contribute to a business’s ultimate success. Sad to say, I never really had a mentor in anyplace I worked, and I feel that gap even - or maybe especially - as I get older.

    The workforce is changing, in ways both tangible and intangible. I see it in various ways in my own household. (Mrs. Content Guy started off as a banker/stockbroker, but ended up as a third grade teacher to satisfy her own passions.) And it will be companies and leaders with eyes wide open that will be able to take advantage of these shifts.
    KC's View:

    Published on: August 15, 2011

    The Wall Street Journal reports that Walmart, apparently stung by the fact that its internet retailing arm continues to lag behind Amazon.com as well as a number of other retailers, is streamlining its online management structure in a bid to integrate it better with the company’s bricks-and-mortar operations.

    According to the story, “E-commerce managers in developed markets will now report directly to the executives in charge of stores in each country, instead of reporting to a global e-commerce team.

    “Wal-Mart also said that Raul Vazquez, who had been in charge of global e-commerce initiatives in developed markets, and Steve Nave, who oversaw California-based Walmart.com, are leaving the company ... By placing leaders in key countries in charge of their e-commerce strategies, the reshuffling leaves a diminished role for Wal-Mart global e-commerce head Eduardo Castro-Wright, who will now have fewer executives reporting directly to him.

    “Mr. Castro-Wright was appointed to head a newly created global e-commerce team last year after being replaced as president of the struggling U.S. store business. Mr. Castro-Wright, who also oversees global sourcing operations, will remain in charge of e-commerce strategy and acquisitions and maintain a ‘dotted-line’ relationship with e-commerce leaders in the developed countries.”

    The Journal writes that “in the U.S., Walmart.com will now be headed by Joel Anderson, who was serving as the retailer's senior vice president of the northern plains region, but who had formerly worked in e-commerce as a chief merchant at ToysRUs.com. Under the new structure, he will now report to Wal-Mart U.S. president Bill Simon.”
    KC's View:
    The story notes that Walmart does not break out its online sales from bricks-and-mortar sales, so it is hard to know the extent to which the retailer’s e-commerce efforts are not working. But this move raises the specter that when Walmart releases its most recent quarterly numbers later this week, they aren’t going to be as positive as the company would like ... and so it is taking some preemptive action to reassure investors.

    The other thing to remember, though, is that integrating the physical and virtual stores is the Walmart long game - that, from everything I’ve been told, Walmart sees the small stores it is opening as potential delivery depots for online orders, and that Walmart sees this structure as being a potential game-changer in its ultimate battle with Amazon.com.

    I’m not sure this will play out as well as Walmart would like, but I’m told this is the plan. And streamlining management may just be laying the groundwork.

    Published on: August 15, 2011

    Los Angeles Times columnist David Lazarus has a piece about an admittedly unscientific survey he ran, in which he asked CVS customers how they felt about the retailer’s loyalty rewards program. Overwhelmingly, Lazarus writes, customers said that they did not want to have to bring in their receipts in order to redeem the “Extra Bucks” that CVS promises them, that is said to give them up to two percent back on their purchases.

    Instead, customers told Lazarus, they would just like the rewards automatically stored on their CVS cards.

    “Not that CVS cares,” Lazarus writes.

    The columnist says that CVS tells him that the small number of people who wrote in to say they like having to redeem their paper receipts proves its point, and that the company believes that the program as-is makes the process more exciting.
    KC's View:
    I’ve been banging this drum for a long time, and I’m completely in agreement with Lazarus. It has always seemed to me that the CVS loyalty program - like a lot of so-called loyalty programs - is more hat than cattle.

    Lazarus has one passage in his column that I think makes the point extremely well:

    “Now the company apparently sees greater financial merit in promising a reward but deliberately making it difficult for many people to receive it. In the most recent quarter, CVS Caremark pocketed $816 million in profit. Chief Exec Larry Merlo attributed that in part to ‘solid expense control.’

    “Maybe CVS should remember that loyalty programs work both ways. If a company can't (or won't) live up to its part of the bargain, it may find that customers are all too willing to take their loyalty elsewhere.”

    Boy, does he have that right. And when CVS defends itself, it sounds to me like a crock.

    Published on: August 15, 2011

    The Boston Globe reports that Whole Foods has opened its first Wellness Club at its store in Dedham, Massachusetts, noting that it is “a concept that combines health with commerce.

    Heather Hardy, who is overseeing the effort for Whole Foods, says that it is all about “empowering people to make healthier choices.”

    The Globe writes, “Access to that empowerment comes at a price: It costs $199 to become a member of the Wellness Club, and monthly dues are $45.

    “As at a gym, club members check in at a front desk, but in this case it’s steps from the salad bar, near the fish. Inside the glassed-in, 950-square-foot space - with sage-colored walls and fresh-cut flowers - they can access a reference library, undergo a lifestyle evaluation, or take a cooking class.

    “Part of the concept is to learn how to prepare a dish - such as mango quinoa porridge - from a chef in a sleek kitchen, and then head out into the store to find, and buy, the ingredients ... Help from visiting nutritionists, lectures on how to handle late-night cravings, and even day trips to leaf peep are part of the club’s offerings. A personal coach can create an eating plan and club members can sign up for one-on-one cooking session with chef Ryan Parker at an additional cost.”

    The story notes that “a thousand products that meet the club’s code of health - whole foods, plants, nutrient-dense foods, and healthy fats -have been tagged with the Wellness Club seal of approval. Club members receive a 10 percent discount on those items, from produce to the bulk aisle.”
    KC's View:
    I do love the audacity of this program, launching at the same time as the economy once again appears to be reeling. But perhaps Whole Foods has it right - offering this option at the same time as it seems to have more products on sale in its aisles. Perhaps it makes sense to cover both ends of your customer base. No reason that the existence of the Wellness Club should annoy people who aren;t writing checks to belong.

    I also love the notion of education - it is something that more retailers ought to do, even if not quite on the scale of what Whole Foods is doing.

    BTW...I was fascinated by the report in USA Today this weekend about how Ford is telling buyers of its new 2012 Mustang Boss 302 that they can get free driving lessons from Team Mustang and Ford Racing at the Ford Racing High Performance Driving School at Miller Motorsports Park in Utah. Of course, the car goes for more than $43,000 ... so you have to have more than a few bucks to qualify. But I endorse the idea that when people buy a product, companies ought to take the initiative in teaching them how to use it most effectively.

    Published on: August 15, 2011

    The Chicago Sun Times reports that US employers increasingly are asking their workers to improve their fitness and personal health - dealing with conditions such as obesity, tobacco addictions, high blood pressure and high cholesterol - with the alternative being that they will have to pay higher insurance premiums.

    An example cited by the paper:

    “At Health Care Service Corp., which employs 16,000 people and operates health insurance providers including Blue Cross and Blue Shield of Illinois, the wellness programs include a focus on obesity and getting employees who smoke to quit. As an incentive, this year the company tied 5 percent of its yearly employee bonus plan to a companywide goal of losing 20 tons of weight. To help workers and their dependents quit smoking, the company’s initiatives include requiring smokers to pay more for their health insurance; reimbursing employees for nicotine replacement products, and providing one-on-one counseling. Since the programs were launched, the number of smokers has dropped from an estimated 22 to 25 percent of workers to 13 percent among those self-reporting, said Dr. Paul Handel, chief medical officer at the company.”

    According to the story, some say that these kinds of programs and unfairly intrusive, and often target people least able to take the financial hit. However, the paper writes, “Wellness experts say the programs aren’t aimed at punishing workers but are a recognition that when it comes to making healthier choices, some people are motivated more by the risk of losing $100 vs. gaining $100.”
    KC's View:
    This is the Safeway approach. And as I’ve said here before, I approve. People need to have skin in the game when it comes to their health and health care costs.

    Published on: August 15, 2011

    NY 1 reports that a NY 1-Marist College poll reveals that “64 percent of adults in the city support the idea of Walmart coming to the city, while 31 percent would oppose it. Five percent remain undecided.”

    According to the story, “When asked if the big-box store would make their neighborhood a better place to live, residents were mostly split.

    “Thirty percent said it would improve their neighborhood; 25 percent said a Walmart would make it worse; and nearly half said it would make no difference at all. However, a super majority of New Yorkers said they would purchase goods from the store.

    “Nearly three quarters said they would be very likely or likely to shop, while around a fourth surveyed said not very likely or not likely at all.”
    KC's View:

    Published on: August 15, 2011

    • The Associated Press reports that Yale University’s Rudd Center for Food Policy and Obesity “found that parents often inferred sugar-laden cereals were more nutritious than some alternatives when the packaging touted ‘whole grain,’ ‘organic,’ ‘supports your child's immunity’ and related phrases,” and suggested that “increased regulation is needed from the U.S. Food and Drug Administration to reduce confusion about the nutrition claims.”

    Decanter.com reports that “growth projections for US wine consumption have slowed amid increasing economic instability – with sales of Australian wine slumping by 12.5% last year.

    “Wine consumption in the US increased 2.1% to 303.1 million nine-litre cases in 2010, according to the 2011 Wine Handbook, published by the Beverage Information Group. Sales of domestically-produced wine rose 3% to 229.4m cases, but imports fell marginally to 73.6m cases.”

    • The Minneapolis / St. Paul Business Journal reports that Target plans to have a Pret a Manger sandwich shop in its new store opening in downtown Chicago next summer. This is a new move for Target, which previously has had Starbucks and Pizza Hut stores in some of its locations.

    The new Target is in the former Carson Pirie Scott building, in Chicago’s famed Loop.

    • The Financial Times reports that “food producers are calling on the European Union to abolish sugar quotas as a shortage of the sweetener has led to sharp price rices after reforms in 2009.

    “R&R Ice Cream, Europe’s largest private-label producer of ice-cream, says it is struggling to find sugar for next year’s production while Nestlé, the world’s biggest food producer by sales, says there is not enough supply in the region to meet demand.
    KC's View:

    Published on: August 15, 2011

    • Charles C. Bowlus, chief executive officer of Efficient Collaborative Retail Marketing (ECRM), has passed away following complications after emergency surgery. He was 64.
    KC's View:

    Published on: August 15, 2011

    FYI, we posted a special Facebook-only FaceTime yesterday, which can be found here.

    The subject: What businesses can learn from bicycle messengers. Really.
    KC's View:

    Published on: August 15, 2011

    Here’s more than we need to know about one man’s passion for Walmart...

    CBS News reports that a Louisiana man was arrested last week in a Walmart parking lot there after he exposed himself to customers.

    The man, Travis Keen, said he indulged in his exhibitionism because he “gets aroused” whenever he goes to Walmart.
    KC's View:
    Not precisely the endorsement that the Bentonville Behemoth was hoping for. This week, it is was just hoping for a rise in US same-store sales and maybe its share price.