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    Published on: October 3, 2011

    by Kevin Coupe

    To tax fat, or not to tax fat. That is the question.

    The nation of Denmark believes it has the answer, and that it will help it to take arms against a sea of obesity troubles.

    Time reports that Denmark has instituted a “fat tax,” even though less than 10 percent of its population is clinically obese, lower than the European average and much lower that the US average.

    According to the story, “Starting Oct. 1, Danes will see a price increase in products that are high in saturated fats, which researchers at Denmark's Institute of Food and Resource Economics have attributed to the cause of 4% of the country's premature deaths.

    “Butter, oils, and high-fat dairy products will see the biggest price increases; products with more than 2.3% saturated fat will be taxed 16 kroner per kilogram ($2.90 USD) of saturated fat. Shoppers should be ready to pay up to 30% more for a pack of butter, 8% more for a bag of chips, and a liter of olive oil will cost 7.1% more than usual.”

    This move will no doubt ignite some discussion of creating similar taxes elsewhere in the world, even here in America ... though it is hard to imagine that such a tax could possibly be passed in the current political environment.

    Regardless ... it is an Eye-Opener.
    KC's View:

    Published on: October 3, 2011

    Go figure. The Retail Industry Leaders Association (RILA) says that the announcement by Bank of America that since new consumer protection regulations will be a drain on its profits, it will shortly begin charging its customers a monthly fee of $5 for the use of their debit cards to make purchases, is good news.

    The fee is designed to make up for the limit on transaction/swipe fees mandated by the Durbin amendment, which was part of the Dodd-Frank financial overhaul law, and RILA says that “according to the Federal Reserve there are 14,821 banks in the United States not affected by debit swipe fee reform,” because they did not charge swipe fees to begin with.

    “Bank of America's new fee is great news for every other bank in America. If Bank of America wants to charge account holders to access their own money, every other bank, particularly credit unions and community banks will welcome the flood of customers in search of a new bank,” says Katherine Lugar, executive vice president for public affairs at RILA.

    She continues: “For years Bank of America and its big bank peers have been imposing hidden fees on all consumers, whether they used cash, plastic or even food stamps. Swipe fee reform will rein in these fees, increase transparency and allow consumers to see the costs associated with the various payment options and make decisions accordingly.”

    At the same time, Merchants Payments Coalition spokesperson Rachel Wolf released the following statement:

    "Mega-banks have been ripping off consumers and merchants for years, and will do anything they can to keep the practice going. This is even more of a reason that we need to actively work to make it more difficult for them to run these scams.

    "Swipe fee reform is about bringing competition to a fixed marketplace. Retail is a price competitive industry, and many consumers will see savings as a result of the reforms.

    "The big banks who try to levy unfair fees will soon learn the lessons of competition as consumers choose banks and credit unions, larger and small, that treat them fairly. The mega-banks can scapegoat and scam all they want, but they are likely to drop the fees when they lose customers to competitors."

    Meanwhile ... the Los Angeles Times reports that as Bank of America and many of its brethren are attacked for assessing fees for the use of debit cards to purchase products and services, Citibank is informing many of its customers “that they soon would have to start paying for their checking accounts unless they maintained significantly higher balances.

    “Letters are going out across the country alerting Citi customers of account changes, said the bank's retail banking chief, Stephen Troutner. In many cases, that means customers will have to maintain fatter balances to avoid fees, although Troutner said a basic account option makes dodging charges easier.

    “Higher fees are the new reality in retail banking, where regulations adopted in the aftermath of the bank bailouts have reduced revenue from several controversial fees by billions of dollars. At the same time, banks have seen their lending income decline due to the sluggish economy and low interest rates.”
    KC's View:
    One has to imagine that we will shortly start to see a number of advertisements from banks that will promote themselves as not ripping off the consumer, as not charging people for the use of their own money. And that, hopefully, will create pressure on the offending banks to change their policies.

    Published on: October 3, 2011

    There have been a number of stories over the past week or so about what appears to be a decline in food industry interest in self-checkout systems, prompted in part by an Associated Press piece that restated the decisions by companies like Big Y and Albertsons LLC to pull the technology from their stores.

    The story noted that a recent survey by the Food Marketing Institute (FMI) saying that “16 percent of supermarket transactions in 2010 were done at self-checkout lanes in stores that provided the option ... down from a high of 22 percent three years ago.” And, the AP continued:

    “Overall, people reported being much more satisfied with their supermarket experience when they used traditional cashier-staffed lanes.

    Supermarket chains started introducing self-serve lanes about 10 years ago, touting them as an easy way for shoppers to scan their own items' bar codes, pay, bag their bounty and head out on their way. Retailers also anticipated a labor savings, potentially reducing the number of cashier shifts as they encouraged shoppers to do it themselves.

    “The reality, though, was mixed. Some shoppers loved them and were quick converts, while other reactions ranged from disinterest to outright hatred -- much of it shared on blogs or in Facebook groups.”

    And, the story says:

    “Some scholars who follow the retail food industry say decisions by Big Y and others to do away with the self-serve checkout lanes aren't necessarily the death knell of the trend. Home Depot and some other businesses, which cater to customers with a do-it yourself mentality, report success with their self-serve lanes.

    “But not all supermarket shoppers share that mentality, and whether they embrace or reject the self-serve option may come down to demographics --  such as whether they're in a tech-savvy region -- and other factors that the supermarkets cannot control.”
    KC's View:
    What’s interesting is that so much of the discussion seems to be framed in absolutist terms - Albertsons and Big Y decide to get rid of self-checkout, and therefore the end of the trend is at hand. Perhaps this is inevitable, since the media coverage seems to be dictating some of the discussion, and the media tends to see things in absolutist terms.

    I actually think that Supermarket Guru Phil Lempert has it right when he is quoted in the AP piece as suggesting that there is other stuff going on here - the chains getting rid of self-checkout may have antiquated equipment in need of replacement and they’d rather not spend the money, or they are actually looking ahead to a time in the not too distant future when we all use our smartphones to check ourselves out, and the need for self-checkout lanes in supermarkets will be obsolete. (Though I tend to think that the reason may be the former than the latter ... there are not a lot of chains out there, I suspect, that are actively laying the groundwork for such an enormous technological shift. Some, but not many.)

    That’s been the position here all along. A few chains may decide to challenge conventional wisdom by offering only self checkout. Some chains will offer it as an option. Others will decide to get rid of it for philosophical reasons, while still others will get rid of it for operational/economic reasons, even if they frame the rationale differently. Then consumers will decide which of these retailers have made the right decision.

    And then, finally, some new technology - or use for current technology - will come along and make whole conversation moot.

    Published on: October 3, 2011

    Bloomberg reports that Facebook is being sued “by users of the site seeking class-action status over claims that the company secretly tracks their Web activity after they log off.

    “The company assures users that ‘cookie’ files installed on their computers to identify them and track their interactions with Facebook applications and websites while they are logged on are removed when they log off, according to a complaint in federal court in San Jose, California. Facebook admitted on Sept. 26 that the cookies track users’ Internet activity after they log off, according to today’s complaint.”

    According to the story, The Electronic Privacy Information Center and nine other groups are urging the Federal Trade Commission (FTC) “to examine whether Facebook’s new Ticker and Timeline features increase privacy risks for users by combining biographical information in an easily accessible format.”
    KC's View:
    Expect privacy issues to get a lot more attention in coming months. The Los Angeles Times had a long piece over the weekend about how all the gadgets we use every day - computers, smartphones, TV systems - also are tracking our movements and behavior.

    The Times wrote, “Few parts of our private lives remain shielded from digital observation. The modern home, stocked with networked devices, has become a digital transmission station, endlessly relaying data to a wide array of for-profit companies that are largely invisible to the average parent and child.

    “This explosion in the amount of data being collected has raised alarms in state capitols and in Washington, where lawmakers of both parties have proposed more than a dozen pieces of privacy legislation this year.”

    And, the Times went on: “Regulatory efforts are drawing resistance from companies such as Google Inc. and Facebook that rely on personal information to sell advertising, and so far, none of the bills has passed. Privacy observers say it may be years before legal protections catch up to industry practices.

    “In the meantime, as more people become aware of the extent to which their actions are being recorded, some privacy advocates worry that people will begin to censor themselves when using technology and avoid going places or seeking information that others might find objectionable.”

    Published on: October 3, 2011

    New York magazine has a long piece about the News. Corp - Floorgraphics war, which resulted in the revelation that someone at News Corp. “had illicitly accessed its competitor’s password-protected website,” giving it the ability to know and act on information about upcoming in-store promotional campaigns. While the story notes that “an internal investigation, as well as subsequent probes by the FBI and the Secret Service, failed to pinpoint the person responsible,” the story points the finger at Gary Henderson, described as a “veteran salesman” who was a former and disgruntled Floorgraphics employee who seemed to have all sort of inside information about the company but was unwilling to share how he got it - and who received an exorbitant severance payment when he left the company. And, the story quotes sources as saying, Henderson has more recently said that he had the approbation of his employers at News Corp.

    The story continues: “The Floorgraphics case isn’t as lurid as the British voice mail hacking scandal that forced Rupert Murdoch to shut down his flagship News of the World tabloid this summer. There were no hacked voice mails of murdered schoolgirls; this was about control of the small but growing market for ‘billboards on the floor.’ But the News America campaign against Floorgraphics contains many of the same hallmarks: hacking into password-protected systems to gain a competitive advantage, a corporate culture that put extreme pressure on employees for results, a cursory internal investigation, and large financial payouts after the fact.”
    KC's View:
    Much of this is old news. It is common knowledge that, as New York writes, a Floorgraphics lawsuit against News Corp. “was resolved in a series of deals that paid $29.5 million to the Floorgraphics owners and transferred the firm’s few remaining assets to News Corp. The Floorgraphics suit was the first of three to be filed against News America by various competitors who alleged anti-competitive and unfair business practices. News America paid more than $650 million to settle them.”

    However, it isn’t good news for the Murdoch empire that the dirty laundry continues to be aired ... and is likely to get even more publicity as the British scandal gets even more publicity. Because one gets the sense that the Murdochs won’t be able to make it go away just by writing checks; there is blood in the water, and if nothing else, their competitors in the UK aren’t going to let it go.

    This is subjective, of course, but in reading all the coverage of the British scandal and the rehashing of the Floorgraphics story, I cannot help but think that a) it is entirely likely that the Murdochs knew and condoned all of this behavior, and b) that the corporate culture at News Corp. borders on the perverse with little concern for business ethics, and 3) that just reading about these shenanigans makes me want to take a shower. This company seems slimy in the extreme.

    Published on: October 3, 2011

    Bloomberg reports that Walmart-controlled Massmart in South Africa plans to “repeat a price-cut promotion at its stores and open 23 new outlets over the next eight months.

    “Massmart reduced prices for 10 weeks starting in July, shortly after Wal-Mart’s acquisition of a controlling stake was approved by South African authorities. The latest promotion will run from today until Dec. 4, according to an e-mailed statement from the company. The first promotion saved consumers over 50 million rand ($6.1 million), the company said.”
    KC's View:

    Published on: October 3, 2011

    • Tesco is under fire in the UK for what the Financial Mail says is the increasing of prices by about 12 percent on a significant number of fast-selling items while at the same time announcing that it was cutting prices on some 3,000 items by between 10 and 30 percent.

    According to the story, “Only ten of 97 items in Financial Mail’s survey were found to be lower in price by more than ten per cent compared with prices collected online at the beginning of August ... The price of the majority of items, 61, was unchanged while seven were reduced by three per cent or less.”
    KC's View:

    Published on: October 3, 2011

    As expected, Barnes & Noble is reaching out to Borders customers after having acquired the bankrupt bookseller’s “intellectual property.” Over the weekend, Borders customers with their names and email addresses in the system received the following message:

    My name is William Lynch, CEO of Barnes & Noble, and I'm writing to you today on
    behalf of the entire B&N team to make you aware of important information regarding your Borders account.

    First of all let me say Barnes & Noble uniquely appreciates the importance bookstores play within local communities, and we're very sorry your Borders store closed.

    As part of Borders ceasing operations, we acquired some of its assets including Borders brand trademarks and their customer list. The subject matter of your DVD and other video purchases will be part of the transferred information. The federal bankruptcy court approved this sale on September 26, 2011.

    Our intent in buying the Borders customer list is simply to try and earn your business. The majority of our stores are within close proximity to former Borders store locations, and for those that aren't, we offer our award- winning NOOK™ digital reading devices that provide a bookstore in your pocket. We are readers like you, and hope that through our stores, NOOK devices, and our online bookstore we can win your trust and provide you with a place to read and shop.

    It's important for you to understand however you have the absolute right to opt-out of having your customer data transferred to Barnes & Noble. If you would like to opt-out, we will ensure all your data we receive from Borders is disposed of in a secure and confidential manner. Please visit before October 15, 2011 to do so.

    Should you choose not to opt-out by October 15, 2011, be assured your information will be covered under the Barnes & Noble privacy policy, which can be accessed at B&N will maintain any of your data according to this policy and our strict privacy standards.

    At Barnes & Noble we share your love of books — whatever shape they take. We also take our responsibility to service communities by providing a local bookstore very seriously. In the coming weeks, assuming you don't opt-out, you'll be hearing from us with some offers to encourage you to shop our stores and try our NOOK products. We hope you'll give us a chance to be your bookstore.

    KC's View:
    Too bad they didn’t write what they mean - which would gone something like this:

    Look, here’s the deal.

    Borders is dead. Right now, we at Barnes & Noble are doing everything we can to avoid the same fate ... which means we need you to help us stave off the techie infidels who work for

    Like the idea of having a bookstore in the neighborhood? Or, if not exactly in the same neighborhood, somewhere in the general vicinity of where you live? Then you’d better start doing business with us. Because we’re the only thing that stands between you and a world in which Amazon will sell everything to everybody.

    Please. We’re begging you.

    (And you’d better act soon, because there are some spammers who are offering us real money for our email list, and we could use some real money...

    Published on: October 3, 2011

    The Boston Globe has a piece about why the Friendly’s is in financial trouble and facing a possible bankruptcy filing.

    According to the story, “A series of owners and a heavy accumulation of debt have kept the budget restaurant chain in a bind for years. Sales have been on a slow but steady descent for more than half a decade.

    “But a bad economy and other complications have helped turn up the heat on Friendly’s finances. The company is getting squeezed by a continued decline in restaurant revenues and higher food commodity prices, making it even harder for the company to make ends meet.”

    But the bigger problem, the story suggests, is that its “time may have simply come and gone ... Even among its direct competitors, Friendly’s ranked 10th among 12 chains across the country in a consumer-preference survey published last month by Nation’s Restaurant News. Friendly’s scored poorly on questions on value, food quality, and reputation. Only one chain among the dozen ranked lower when consumers were asked if they were likely to return.”
    KC's View:
    I said the same thing on Friday ... though I was a little less kind in my assessment...

    Lousy food, not good for you, but plenty of it.

    Published on: October 3, 2011

    CNBC reports that “consumer spending, once the driving force of the U.S. economy, is likely to remain stagnant for years as households struggle to cut debt and build up savings, economists say.

    “According to a recent study from the BlackRock Investment Institute, the ratio of household debt to personal income (wages and salaries only) remains at a staggering 154 percent, which is only 7.5 percentage points lower than in pre-recession peak ... Until consumers repair their balance sheets, they are unlikely to increase spending and to take on any new debt even with interest rates close to zero percent.

    “That could continue to hamper the recovery since consumer demand makes up more than 70 percent of the U.S. economy.”

    Food Safety News reports that the US Food and Drug Administration (FDA) has unveiled the Retail Food Safety Action Plan, which “calls for several steps intended to strengthen state and local food safety requirements at grocery stores, restaurants, schools, and other food vending facilities, as well as to improve the oversight of food facilities by public health agencies. Specifically, the plan calls on these health departments to strengthen food safety requirements and ensure better training programs for personnel.”

    • The Boston Globe reports that the $2.8 billion sale of BJ’s Wholesale Club to private equity firms Leonard Green & Partners and CVC Capital Partners has been completed.

    • Catalina announced at the National Association of Convenience Stores (NACS) convention that it is expanding its nationwide point-of-sale media network into convenience stores, following a successful pilot program with technology partner, Outsite Networks.   The Catalina Network is a targeted consumer communication system, currently located at checkout in more than 26,000 retail grocery, drug and mass outlets throughout the United States.
    Catalina said that it “has been piloting C-store brand building programs over the past year in nearly 500 stores using a system that was specially designed for the channel.  It features a consumer-facing printer that can rapidly issue relevant promotional messages and coupon offers directly to consumers based on their individual purchase behavior.”

    Catalina said that its in-store pilot survey confirmed 79% of customers liked getting Catalina coupons, that 85 percent of men and 75 percent of women visit a convenience store at least four times in an average month, and that there are 145,000 convenience stores in the US generating $511 billion in sales revenue annually - all god reasons, Catalina said, to get into the c-store business.

    • The Chicago Sun Times reports that all four of the Windy City’s well-known Moo & Oink meat stores have been closed down, the company is in bankruptcy, and creditors are hoping to be able to sell off the company’s assets even as “a group of mostly African-American investors is working to purchase Moo & Oink intact.”

    Moo & Oink has been doing business in Chicago for 150 years.
    KC's View:

    Published on: October 3, 2011

    Over the weekend, Saturday Night Live had a pre-recorded skit that poked fun at the Netflix contretemps. (In case you’ve been living in a cave or have been in a coma, Netflix has in fairly short order increased its prices and turned a simple business model into something more complicated ... and said it would be better for consumers, even though nobody really believes it.)

    Well, the skit did not make it to air because of time constraints. But it is on the internet, and you can watch it here.
    KC's View:

    Published on: October 3, 2011

    Lots of reaction to the assessment of debit card usage fees that was the subject of an MNB story last week.

    One MNB user wrote:

    At least at this point the customer can see what they are paying and can choose to go to a competing bank if they want to instead of having the fees hidden…I don’t think these debit fees are going to stick but we shall see…good opportunity for smaller banks to take market share.

    MNB user Christine Myres wrote:

    I am so disgusted by this whole thing I could barf ... Let me get this straight: a bill that was intended to alleviate some of the financial burden of those of us who work for a living has been hijacked by the banks, so that instead of the business paying a ridiculous amount to allow me to use my debit card, I am the one now financially penalized for using my debit card.  What world do these banks live in?

    I do not bank with any of the ‘big’ banks for a reason, I am waiting to see what my bank’s response will be before I cut the #$%^&* thing up and go back to cash.

    MNB user Bill Smillie wrote:

    In addition to my day job, I own a retail grocery store and as I have told my Senators from Missouri, Credit/Debit fees are my 5th largest cost on my P&L Statement.  I have no say in the application of these fees and if I do not like it, I can cancel my agreement with Visa/MC and just close my store as I will not have any customers, because many(53%) use credit/debit to pay for groceries.   Many transactions like gum, cigarettes, pop, all cost me money as my profit goes to pay debit interchange fees.  We have created a monster in V/MC/AE and can’t live without them.  Frank/Durbin was well intended, but the Federal Reserve caved in and didn’t even follow their own recommendation for setting fees and set the limit at 24 cents instead of 12 cents.  Go figure.

    MNB user Steve Mowcomber wrote:

    Two words can resolve that issue for most banking customers – CREDIT UNION.   It’s time to take back the revenues from the coast to coast behemoths and go local.  The banks might be missing more than $6B in swipe fees if they alienate all their customers who have local options that don’t charge, and won’t charge and still offer all the same banking and loan options/services that a BofA can “attempt” to provide.

    From another MNB user:

    Seriously disgusting. You want to earn back your $6 billion? It’s a simple  

    Treat people fairly (stop gauging customers in ways that make them unwilling to do business with you).

    Provide great service.

    Offer great (or at least competitive) products.
    Hey, there’s a name for that: credit unions (i.e., co-ops) and I hope Bank of America’s customers (et al) take a good look at their alternative.
    On a related note, I wonder which provides greater economic stimulus: $6 billion in the hands of consumers or $6 billion in the hands of big banks?

    Good question.

    MNB user Jerry Jewett wrote:

    When are the people in the USA  going to wake up and realize they are getting taken advantage of Big Time.

    You put your money in their bank & you earn interest from 0% to .0075% The least amt. they loan that out for is about .0375 to 15 to 27% on credit card balances.

    Then they pay their CEO & other top Executives 2 to 5 million a year plus perks and stock options that amt. to as much as 20 million.

    Then when they quit or get fired  they get another 25 to 200 million in a severance package.

    In the movie Wall Street Michael Douglas said Greed is good. I thought the movie was trying to show greed as being corrupt. The way the big banks are acting today they took the speech as the way to succeed.

    Another MNB user wrote:

    Consumers should return to making all payments with cash or check to avoid paying monthly debit fees.  Then we'll see if banks begin to agree that these manual processes are more expensive than the electronic payments.

    MNB user Blake Steen wrote:

    REGULATION DOES NOT WORK.  The “evil” corporations will always find a way to stick it to us.  When Congress figures that out we will be in much better shape.  By the way to you Libs out there that is 6.6 billion that BOA is not paying taxes on.  The consumer never noticed the cost to them on the swipe (although I know they were feeling it in the cost of goods) now it is effecting them directly.  I’m sure Dick Durbin can afford the $5.00 fee he created.

    And MNB user Mike Franklin wrote:

    No noticeable change in prices from retailers after reduced card fees to retailers and now banks are making up the lost revenue through increased card usage fees…like I said before…this issue was not about the consumer…this was about businesses trying to determine who will take the money from consumers.

    Let’s give the retailers a little break here. After all, the new financial regulations have just gone into effect.

    But I do agree with you - I will be disappointed if we don’t see some of the retailers that were most active in trying to get swipe fees rolled back make some noise about how it is affecting prices.

    Regarding my review on Friday of Moneyball, MNB user Steven Ritchey wrote:

    Moneyball, as I understand it, reduces the game to statistics.  Statistics don’t always tell me the intangibles about a player, if he’s willing to be on the mound with the game on the line, if he’s willing to be at the plate with 2 out at the bottom of the ninth with his team needing a  hit to keep the  game going.  I can see melding the two systems, put together Billy Beane’s Moneyball theories, and conventional wisdom of employing scouts to put eyes on potential players.  Sometimes there’s a reason why conventional wisdom is around, sometimes it usually works.

    I’m a big believer in intangibles. To me, what Moneyball really is about is the willingness to challenge conventional wisdom, to ask the question that nobody else is willing to ask, and to embrace answers that others would see as antithetical to conventional wisdom. It also is about not always playing the same game as the competition ... especially better funded competition. To compete in such circumstances, you ave to be willing to try different, even unpopular angles ... and to me, that is the real lesson of Moneyball ... and it has less to do with statistics vs. intangibles, or even the game of baseball.
    KC's View:

    Published on: October 3, 2011

    In the Major League Divisional Playoffs...

    In the American League...The New York Yankees and the Detroit Tigers are tied at one game apiece, with the Yankees winning Saturday (after a Friday rainout) 9-3 and the Tigers winning yesterday 5-3. And, the Tampa Bay Rays and Texas Rangers also are tied at one apiece, with Tampa winning Friday night 9-0 and Texas winning Saturday 8-6.

    In the National League, the Philadelphia Phillies and St. Louis Cardinals are tied at one game apiece, with the Phillies winning on Saturday 11-6 and the Cards winning yesterday 5-4. The Milwaukee Brewers, however, have a 2-0 game lead over the Arizona Diamondbacks, winning on Saturday 4-1 and yesterday 9-4.

    In Week Four of National Football League action...

    Carolina 29
    Chicago 34

    Buffalo 20
    Cincinnati 23

    Tennessee 31
    Cleveland 13

    Detroit 34
    Dallas 30

    Pittsburgh 10
    Houston 17

    New Orleans 23
    Jacksonville 10

    Minnesota 17
    Kansas City 22

    San Francisco 24
    Philadelphia 23

    Washington 17
    St. Louis 10

    NY Giants 31
    Arizona 27

    Atlanta 30
    Seattle 28

    Denver 23
    Green Bay 49

    New England 31
    Oakland 19

    Miami 16
    San Diego 26

    NY Jets 17
    Baltimore 34
    KC's View: