retail news in context, analysis with attitude

Published on: October 5, 2011

by Michael Sansolo

As a frequent flyer around the country, I’m accustomed to frequently doing the exact opposite of what we always suggest in this MNB column. In short, my eyes are open in airports, but I really see nothing. Like so many around me I move in a fog of purpose, going to my gate and my plane as quickly as possible without any interactions.

Luckily, my eyes were open recently.

It was early evening when I landed at my home airport—Washington Dulles. As I raced through the baggage claim area toward my car I noticed a long line of wheelchairs headed my way. In each chair was an elderly man, every one looking tired and quiet. Many wore thick glasses and more than a few sported one or two hearing aids. Each was also wearing an absurdly loud orange t-shirt.

And each of them was a hero.

These gentlemen were part of what is called an Honor Flight. Honor flights are organized around the United States to fly the surviving combatants of World War II to Washington, DC, for a visit to the relatively new memorial dedicated in their honor. I haven’t been at the memorial to see how these men react to the memories of their youthful deeds, but I have been there with my 80+ father and seen his quiet and sad reaction to the shrine. I watched him gently touch the marble fountain where the words of Pacific theater battles bring him memories of his war years.

And so with eyes open I watched the slow parade of elderly men in Dulles airport, wheeling its way to security. I quickly talked to one volunteer escort to learn that this group was from Toledo, Ohio. It occurred to me that this group of geriatrics once stormed beaches in France, Italy and across the Pacific, changing the world as they went. All I could think to do was call out “thank you” to the group. A volunteer turned and thanked me for noticing.

Sometimes, my eyes need be wider open. It’s amazing what I can see.

Published on: October 5, 2011

It is the thing that every retailer fears.

Disintermediation.

And now, Advertising Age reports that “Paramount Pictures has quietly introduced an online streaming option for ‘Transformers: Dark of the Moon,’ taking home viewing straight to consumers without the need for middlemen such as Netflix, Facebook, Blockbuster Movie Pass, Vudu, a cable company or a satellite provider.

From now until the end of February, the story says, “Consumers can visit vod.transformersmovie.com to stream an HD version of the movie for $4.99 or an standard version for $3.99. Users have 48 hours to watch the movie from the time of signup.”

Published on: October 5, 2011

The New York Times reports that “cookbooks have recently begun to show signs of strength in the digital book market, bolstered by publishers who are releasing e-book editions of new titles simultaneously with the print versions and converting older, classic cookbooks into digital form.”

One of the best examples is the release today of Julia Child’s “Mastering the Art of French Cooking,” which Knopf is bringing out as an e-book, and which serves as an example of how difficult cookbooks can be to replicate in an e-format because of their complex layouts. “And the book is better experienced on tablets than on dedicated e-readers,” the story says. “While it is possible to read it on a black-and-white Kindle or Nook, many of the design elements cannot be viewed on those devices.”

According to the Times, “The production staff had the entire book retyped by hand, since no electronic file of the book existed. The illustrations throughout the cookbook — tiny sketches of sauté pans and freshly julienned carrots — were scanned at a high resolution so they could be transferred to the e-book. And the publisher managed to recreate the two-column format, just like the original version of ‘Mastering.’

“Other features are purely digital: live links allow readers to jump to other sections in the book, as when Ms. Child suggests that cooks preparing Potage Velouté aux Champignons should also read the recipe for Fluted Mushroom Caps. And readers who are unsure what a roux is can click on the word and gain access to a pop-up dictionary entry. (It’s a mixture of butter and flour.)”

Published on: October 5, 2011

• Published reports say that a leaked memo from Amazon.com says that six weeks before the online retailer begins shipping its new tablet computer, the Kindle Fire, it is selling an average of 2,000 units per hour ... or close to 50,000 units a day.

If the pattern continues, that would mean that by the time the actual Kindle Fire reaches a consumer’s hands, Amazon will have sold in excess of two million of them. MSNBC writes that “of course, at $199, the high demand isn’t a huge surprise. Based on the sales numbers, it looks like people are willing to overlook the Kindle Fire’s shortcomings compared with the iPad, including the lack of 3G mobile broadband and front-facing camera.”

Published on: October 5, 2011

Costco announced yesterday that on November 1 it will raise its basic Goldstar membership fee from $50 to $55, and its executive fees from $100 to $110.

Half of its 22 million members are in the executive program, Costco says.

Published on: October 5, 2011

The Boston Globe reports that a new survey by consumer advocacy website Consumerworld.org concludes that “groceries sold at pharmacies and drugstores are frequently more expensive than those in supermarkets - and in some cases, significantly pricier.”

The study was limited; according to the piece, “Edgar Dworsky, founder of the website, said he decided to compare the prices at six Somerville stores - Walgreens , Rite Aid, CVS , Stop & Shop, Shaw’s, and Market Basket - because of the growing number of aisles that many pharmacies are devoting to groceries.”

Published on: October 5, 2011

Bloomberg reports that “President Barack Obama sent pending free-trade agreements with South Korea, Colombia and Panama to Congress after lawmakers created a path for renewing benefits for workers who lose their jobs to foreign competition. The trade accords reached under President George W. Bush and revised by Obama had been stymied in a stalemate with House Republicans over the aid, called Trade Adjustment Assistance.”

According to the story, “The Senate voted to extend the aid on Sept. 22, and House Speaker John Boehner, an Ohio Republican, said he would consider the worker assistance in tandem with the trade deals after the Obama administration sent up the measures.”

The Grocery Manufacturers Association then praised the Obama administration for sending Congress the free trade agreements, saying that “the agreements are critically important to increasing the exports of U.S. food and consumer products.”

Published on: October 5, 2011

• Kroger-owned Fred Meyer Stores announced that a tentative agreement has been reached with Teamsters Local 117. The agreement covers 360 associates working at the warehouse and distribution center in Puyallup, and now goes to those employees for ratification.

• The Wall Street Journal reports that “meal preparer Orval Kent Food Co. and parent Chef Solutions Inc. filed for Chapter 11 bankruptcy protection Tuesday with a plan to sell their assets.” The companies have lined up $38 million in financing to allow them to continue to operate as the process unfolds.

• The Yakima Herald reports that Winco has, for the second time in a decade, decided not to open a store in the Yakima Valley, and the retailer will now sell nine acres that it acquired in Union Gap.

"We have been more conservative," said Michael Read, a WinCo spokesman. "We had planned for more aggressive growth. With the continuing recessionary economy, we have slowed our growth and took a hard look at all the properties in our portfolio."

• Unified Grocers announced that "Natural Directions," its exclusive brand of organic and natural products, is partnering with Gelson's Markets in Southern California to help support the Society of Design Administration's (SDA) 6th Annual Canstruction LA
Event, a unique community service project developed by the SDA and held in cities throughout North America to provide hunger relief.

Canstruction LA invites teams of prominent Los Angeles architects, engineers, and designers to showcase their talents by designing giant structures made entirely out of canned foods that will be judged and awarded prizes for ‘Juror's Favorite,’ ‘Best Meal,’ ‘Best Use of Labels,’ and ‘Structural Ingenuity.’ At the event's completion, the cans will be donated to the Los Angeles Regional Food Bank.

The LA event is scheduled for October 7--19, 2011.

• The NY Daily News reports that Trader Joe’s is opening its first store on New York’s Staten Island, a borough that does not have a Whole Foods or a Fairway, and the new store is “ shaping up to be a mecca for foodies.”

The story continues: “Outside the 15,000-square-foot space on Richmond Ave. in New Springville, a regular flow of curious passersby pull up to the parking lot and peep in the windows.

“Captain John Martinelli (otherwise known as the store manager) has been treated like a celebrity in his Trader Joe's Hawaiian shirt. ‘I'm an all-star,’ he says. ‘Everywhere I go, if I have my shirt on, people are like, 'When are you opening?' 'Are you guys going to carry this?’”

Published on: October 5, 2011

• The New York Times reports that “Arthur C. Nielsen Jr., who transformed the company his father founded in 1923 into an international leader in market research, helping to make its name synonymous with television ratings, died on Monday in Winnetka, Ill., where he lived most of his life. He was 92.”

Nielsen became president of the A. C. Nielsen Company in 1957 and its chairman in 1975, and, the Times notes, “presided over the company’s growth from a modest operation, generating less than $4 million a year in revenue, to one with revenue of more than $680 million.”

A. C. Nielsen was sold to Dun & Bradstreet for $1.3 billion in stock in 1984, and was subsequently sold again to the Dutch publishing company VNU.

Published on: October 5, 2011

Yesterday, commenting on the continuing uproar about Bank of America assessing $5 per month debit card fees to allow people to buy things with their own money, I wrote:

The thing is, it seems to me that people in favor of financial services reforms should be applauding the Bank of America move ... and suggesting that this proves that the reforms are working. After all, swipe fees were invisible ... people were paying them, they were raising the cost of goods, but consumers (and even many retail employees) were unaware of their existence. All they knew was that banks spent tons of money trying to get people to use signature-based debit cards, which had expensive fees attached to them, and they responded to those campaigns by using them.

Now, because limits have been put on swipe fees - which, by the way, opponents should forever label “invisible swipe fees” - banks have to be more transparent about the fees they charge.

This isn’t about government determining how much profit a company can fairly make. It is just about making sure that how companies make those profits, on the backs of unsuspecting and, quite frankly, susceptible consumers, is completely transparent. In the end, if we know more, we can vote with our feet and our wallets. Which strikes me as utterly fair. And appropriate.

One MNB user wrote:

I hope you'll forgive me, but I'll decline to applaud Bank of America for instituting a "transparent debit card fee" to its customers each month for those that continue to use its debit cards.  This is nothing short of a blatant attempt at "double-dipping" into retailer's and consumer's pockets, and is pure, good 'ol fashioned greed.

All Bank of America is doing is trying to make up for some of the lowered profits they are losing with the recent swipe-fee reform, which as you aware was substantially increased at the last minute by massive pressure from bank lobbyists in Washington.  I haven't banked at BofA for years, for this and many more reasons.... 

Unfortunately for consumers, this trend will probably catch on with other banks looking to circumvent the recent swipe-reform regulations, while our legislators in Washington ponder a new, yet even more ineffective (knee-jerk reaction) law to pass in response to BofA's new fees.....

Please understand. I was by no means applauding Bank of America for being transparent. What I was saying was that the Durbin amendment that limits hidden swipe fees forced them to be transparent, and so financial reforms - whatever their limitations and flaws - seem to have worked at least to this extent.

Another MNB user wrote:

The banks seem to be working in lockstep to protect their best financial interests, no quarter to the public that bailed them out (sorry about the pun).  Maybe it's time to let Walmart enter the banking business?

That’s what I’ve been saying. Unfortunately, I do not seem to have as much clout as the financial services industry and their high-priced lobbyists.

On the general subject of transparency, one MNB user wrote:

History shows that science, democracy, capitalism and markets all thrive when open discussion of competing ideas occurs.  Science, capitalism and democracy have NOT thrived in cultures where, for whatever reason, open discussion and transparency is inhibited.  USSR vs. USA.  Totalitarian regimes vs. Democratic.  Secular government vs. religious.  Everywhere open discussion has been encouraged, markets and culture thrive.  Everywhere open discussion and debate are discouraged, wealth and culture wither.

From another MNB user:

Thanks again KC for hitting the nail on the head! It is about getting the story “right”. Or identifying the real problem when it comes to finding solutions.

There is a chance the light of day is finally beginning to dawn upon the public about the real issue. And the best path to a “fair fee” is transparency and in that sense, the new law has succeeded to some degree. These fees are costing the consumer money in more than one way, COG and bailouts.

It’s too bad that the final agreed upon cap was, IMO, too much of a compromise. Had card swipe fee remained as low as intended I wonder what the bank’s new monthly fee have been then? $10 per month?

Imagine what the bank would have to charge if all the fees, both the swipe fees and the percentage of the sale the retailers pay were taken away from them.

That would certainly shake up the “free market” in banking. Talk about shaking up a business model, that would make running the USPS look like managing a lemonade stand.

As it is, I now look forward to seeing how many consumers shift their banking to small banks and credit unions that now have a new chance to compete. The small institutions will have a better chance to survive given their inherently lower cost of overhead without having to support skyscrapers and excessive executive compensation and incentives. Methinks the Game is On!

One can hope.

MNB user Rudy Dory wrote:

It was not all that long ago that a large number of banks were on the public dole.  (They seem) to forget that what the banks offered for free was not paid for by the banks but by the merchants they overcharged.  With the new fees to consumers, they can at least shop around for a bank that has a lower fee or doesn’t charge as much.  We merchants were a lot more handcuffed.  I agree with you that we merchants should be glad that the fees are becoming more transparent.

And MNB user Andy Casey asked a question being posed by a number of people:

I’m going to ask this again because I still haven’t seen it – where are the retailers who are lowering their prices because their costs have been reduced?

I hope they do. But let’s be clear. The new rules have just gone into effect. Let’s give them a little time ... but if retailers don’t do this, they should - and will - be called out.

And if any MNB user sees an ad in which a retailer addresses this issue, I hope you’ll send it to me. If you do, I’ll send you an MNB tsotchke while supplies last.
 



Regarding Michael Sansolo’s piece yesterday about the Post Office, MNB user George Denman wrote:

Great article on the dilemma facing the post office and their silly investment in advertising  to get people to write more letters. They need a Chief Listening Officer to talk and listen to consumers and learn where to focus their improvements and scale back the waste. They act as though their services are indispensable and they are quickly becoming disposable.




On the subject of Denmark’s new “fat tax,” one MNB user wrote:

So let me get this straight……impose yet a new tax (my money) on specific foods that the government decides are fat-inducing while allowing folks that receive food stamps/cards entitlement (my money) to spend it however they wish including foods that would conceivably be considered ‘fatty’ and taxed again when purchased. Folks, never forget that TAX is another word for YOUR MONEY! Who will spend it wisely, you or the government?

Another MNB user chimed in:

Adding taxes, like erecting prisons, draws out the “Not in my back yard” mentality.  The not-fat people want to tax the fat people.  The non-smokers want to tax the smokers.  The healthy want to tax the sick.  How many examples are there?  As many as make me in a position to be better than you. 

We are in this together.   Stop taxing by condition and let’s figure this out.

Published on: October 5, 2011

In the American League Divisional Series, the Texas Rangers defeated the Tampa Bay Rays 4-3, winning the best-of-five series three games to one and moving onto the AL Championship Series.

And, in the other ALDS, the New York Yankees staved off elimination with a convincing 10-1 win over the Detroit Tigers, evening the best-of-five series at two games apiece.

In the National League Divisional Series, the Philadelphia Phillies defeated the St. Louis Cardinals 3-2, and the Arizona Diamondbacks beat the Milwaukee Brewers 8-1 ... giving the Phillies and the Brewers 2-1 leads in their respective best-of-five series.