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    Published on: October 19, 2011

    by Kevin Coupe

    Could this be the beginning of the rise of the machines?

    The New York Times reports that “data released this week from CTIA, the wireless industry association, shows that there were 327.6 million wireless customer connections, equal to 103.9 percent of the United States population. This is the first time there have been more customers than people.”

    And, the Times goes on, not only is this “also a 9 percent increase from the 300.5 million connections of a year ago,” but it also is “not bad, for a country teetering near recession, where about one-third of the population lives with little or no discretionary income.”

    In fact, “the math only works because several people have multiple accounts and devices, using one or more cellphones, tablets, wireless hookups for their laptops, readers, and other connections. There were 95.8 million smartphones and wireless PDAs at the end of June, up 57 percent from a year before, and 15.2 million wireless laptops, netbooks and modems, up 17 percent.”

    All of which seems entirely reasonable to me, since I am writing these words on a wireless laptop, at a hotel room desk where my iPad and iPhone are sitting nearby. We’re only in trouble if we find out that we’re all using the same wireless system, and it is called Skynet.
    KC's View:

    Published on: October 19, 2011

    Bloomberg reports that recent accusations in the Chinese city of Chongqing that Walmart has mislabeled ordinary pork as being organic are reflective of a broader and deeper problem there that local authorities say the retailer has been slow to address.

    “Wal-Mart has been quick in admitting their wrongdoings, but slow in correcting them,” Tang Chuan, the director of law enforcement at the Bureau of Inspection and Enforcement in Chongqing, tells Bloomberg. “Every time, it feels like we’re punching our fists into cotton.”

    According to the story, “Tang’s bureau shuttered all of Wal-Mart’s 13 stores in the city for two weeks on Oct. 9 and detained 37 people after the retailer labeled ordinary pork as organic, the most severe punishment in China since the company entered the country in 1996. U.S. and European business groups have complained of unfair treatment of foreign companies in China, where Wal-Mart has grown to 353 stores from eight in a decade ...  Chongqing fined Wal-Mart 3.65 million yuan ($573,000) after 12 of 13 stores in Chongqing were found to have sold the mislabeled pork. Wal-Mart pledged to cooperate with the investigation, which saw two employees arrested and another 35
    people detained. Tang would not comment on the status of those cases.”

    Walmart has refused to comment on the accusations.
    KC's View:
    Walmart may not be responding to the charges, but a lot of people will think that it already has responded with the resignations this week - for so-called “personal reasons” - of Ed Chan, president of its China operations, and Clara Wong, who ran human resources there. That whole “personal reasons” thing didn’t seem credible when it was announced, and seems far less so now.

    Walmart does talk, with justifiable pride, about how much money it has invested in places like China. But this episode - ironic though it may be because of China’s own systemic problems in the areas of food labeling and food safety - shows that it is more than just about the bucks.

    Published on: October 19, 2011

    The Boston Herald reports that “despite a promise by Wegmans to meet or beat Market Basket’s low prices, the New York grocery chain that drew more than 25,000 shoppers to its Bay State debut priced on the high end in surveys by the Herald and Consumer World.

    “A sample of 25 staples including milk, eggs, coffee and soup at Market Basket in Somerville added up to $69.15, while the same items at the new Wegmans in Northboro checked out at $70.95 — or $1.80 more.”

    Wegmans had vowed to “offer the same or lower prices compared to Market Basket and Walmart — the low-price leaders — on comparable items.”
    KC's View:
    This reminds me of a focus group I ran several years ago while producing a Japanese documentary about Wegmans. (What can I tell you? It’s been an interesting career...)

    We did the focus group down in Washington, DC, then a new market for Wegmans, because the Japanese funders wanted to understand the retailer’s appeal in areas where it did not have a longtime presence. And the highly diverse focus group told me almost unanimously that as much as they loved Wegmans fresh foods and customer service, they really loved Wegmans’ prices ... not because they spent the least there, but got the most for their money there. On the store’s fresh food perimeter, the value was enormous, they said, and in the center store, Wegmans was absolutely on par with local low price leaders.

    They defined value in terms broader than having the absolutely lowest price. And that’s something that more retailers should keep in mind. Not to mention newspapers that run such stories. (I hate market basket stories. They always strike me as hackneyed and predictable, and totally without subtlety.)

    Besides, for the record, the Herald story says that on 25 items, there as a total difference of $1.80 - which works out to a difference of about seven cents per item. Which ain’t a killer if you think the value is there.

    Context is everything.

    Published on: October 19, 2011

    Reuters reports that all the Apple Stores in the US are expected to close for 90 minutes today, as the company holds a live broadcast of a memorial service for its c0-founder, Steve Jobs, who passed away earlier this month.

    The event is scheduled to take place between 10 am and 11:30 am Pacific Time. While Apple was not confirming the specifics, people trying to make appointments at Genius Bars across the country found that there were no times available during this window.

    According to the story, “Staff members will reportedly view a live broadcast of the event, which will be held at an amphitheater at Apple’s Cupertino campus. Given the time difference, employees in Asia and Australia will be able to watch a re-broadcast of the celebration.
    KC's View:
    My sense is that this is not just be a top-down memorial; people I’ve talked to at several Apple Stores I’ve visited felt a real sense of loss with Jobs’s passing. One guy, who earlier this year celebrated five years working at an Apple Store, told me proudly that he had received a plaque signed personally by Jobs, something that the iconic figure insisted on doing as long as he was able. This was probably one of the last plaques signed by Jobs, this employee told me, and he would treasure it for the rest of his life.

    This morning’s memorial reminds me of the events of some seven years ago, when a one-store food retailer named Al Lees died. After a brief funeral service, the procession moved on to a local Massachusetts cemetery, passing Al’s store, and out front, dozens of employees stood, holding hands…and a banner that said, in essence, <“Thank You, Mr. Lees. We Love You & Miss You. But You Will Live On Through Us.”

    As will Apple.

    Published on: October 19, 2011

    The San Diego Union Tribune reports that long-defunct Crown Books, which went out of business more than a decade ago, has re-emerged as a brand name being used on “pop-up” bookstores all over the country.

    According to the story, “a San Diego company, A&S Booksellers, purchased the right to use the name ‘Crown Books’ and has opened some 300 temporary bookstores, recently in space vacated by the big book chains.”

    It is a reflective of a small but discernible trend: “That company is among some small, nimble independents — such as Warwick’s in La Jolla and Mysterious Galaxy in Clairemont Mesa — that are thriving amid changes in consumers’ book-buying habits and fierce competition from Amazon.com and other online booksellers,” the Union-Tribune writes.
    KC's View:
    Two things here.

    One, I think this is all very smart. If you want to compete with a Behemoth like Amazon, one of the ways you do it is by doing things differently - you either find intellectual niches or physical locations that Amazon is not specifically addressing, and you work them really, really hard. And if you can do it with a recognized brand name like Crown Books, you get a real advantage.

    (I’m in Portland right now, and went by Powell’s Books last night, which struck me -just in terms of traffic - as being indicative that it is possible to compete with Amazon.)

    Two, it is an interesting discussion to have within the context of broader moves that Amazon is making, endeavoring not only to get between readers and traditional bookstores, but also between writers and traditional publishers, by creating its own publishing arm that is party about money and partly, as Bloomberg writes, “about getting past some of the legacy processes that are typical with traditional publishers and expanding the potential market for a book.”

    And here’s the great line from the Bloomberg story that all retailers ought to read and see the broader implications:

    “Here’s a hint for book publishers: Take a lesson from the music industry and don’t spend all your time suing people for misusing what you believe is your content—think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.”

    Published on: October 19, 2011

    A new research report published by Temkin Group looks at the level of trust that consumers have in 143 large U.S. companies across 12 industries ... and here are the top 10, based on a survey of 6,000 consumers:

    (1) USAA (insurance)
    (2) Amazon.com (retail)(3) Costco (retail)(4) Edward Jones (investment firm)(4) Hyatt (hotel chain)(4) Sam’s Club (retail)(4) TriCare (health plan)(8) Kohl’s (retail)(9) Walgreens (retail)(10) Vanguard (investments)

    According to the study, “Retailers, investment firms, and hotel chains have the highest average rating, while Internet service provider and TV service providers have the lowest ... The research uses the Temkin Trust Ratings to gauge consumer feedback for airlines, banks, credit card issuers, health plans, hotels, insurance companies, insurance carriers, investment firms, Internet service providers, retailers, TV service providers, and wireless carriers.”

    The research is based on a survey of 6,000 U.S. consumers, who rated their recent customer service interactions with companies across 12 industries.

    KC's View:

    Published on: October 19, 2011

    Internet Retailer reports that CVS has “launched a new service ... that lets customers print Facebook photos on in-store printing kiosks. The Kodak Picture Kiosks enable in-store customers to access and print their photos or access their friends’ photos directly from Facebook.” Shoppers no longer will have to bring in disks and memory sticks if they want to print pictures.

    Internet Retailer also reports that YouTube is getting into the retailing business.

    According to the story, YouTube plans to launch “a feature called the Merch Store, where musicians and record labels can sell tickets, merchandise and music,” which the Google-owned video streaming service believes will have real appeal to the some 800 million people who go to YouTube each month.

    KC's View:

    Published on: October 19, 2011

    Schenectady, New York-based Price Chopper Supermarkets is launching a new e-commerce and digital advertising solution at its Niskayuna location, allowing customers there to order online and either have the products delivered to their home or office or be picked up at the store.

    Jon Strom, Price Chopper’s VP of Business Development, noted that “online shopping is taking hold nationwide and growing faster than 20% per year. It was a natural fit for us to offer this value added service to our customers.”

    The Price Chopper e-commerce and digital solutions package is powered by MyWebGrocer.

    As always, as a matter of full disclosure, it needs to be noted here that MyWebGrocer is a longtime and valued MNB sponsor, making it possible for you to get MNB every day for free. For that reason alone, we think they are terrific ... and we’re happy to take note of the company’s expanding influence in the online space, as the company serves more than 100 retailers in the US.
    KC's View:

    Published on: October 19, 2011

    Reuters reports that “PepsiCo Inc expects healthier products to make up as much as 30 percent of its portfolio in 10 years, as the company expands its range of juice, dairy and grain products.”

    CEO Indra Nooyi tells Reuters that “right now, good-for-you products are about 22 percent of the portfolio. It might rise to 27 or 30 percent of the portfolio (10 years from now), but the rest of it is also growing.”

    • The Associated Press reports that on January 22, 2012, the US Postal Service will raise the cost of first class mail to 45 cents, a one-penny increase.

    In addition, the cost of mailing a postcard will go up 3 cents, to 32 cents, letters to Canada and Mexico will increase a nickel, to 85 cents, and letters to other foreign countries will go up 7 cents, to $1.05.

    According to the story, “Under the law the post office cannot raise prices more than the rate of inflation, which is 2.1 percent, unless it gets special permission from the independent Postal Regulatory Commission. The commission last year turned down such a request.

    “The Postal Service lost $8 billion in fiscal 2010 and the bottom line is likely to be even worse when final figures for fiscal 2011 are released next month. The rate increase will make only a small dent in those losses, caused by the recession, movement of mail to the Internet, and a requirement that the agency fund future retiree medical benefits years in advance.”

    • The Boston Globe reports that Starbucks plans to expand its coffee lineup early next year by introducing two lighter varieties, which it has dubbed “blondes.”

    According to the story, “The varieties are Blonde Veranda, which is made from beans from Latin America, and Blonde Willow, which is a blend of Latin American and African beans. They will be available in whole bean bags, in an instant coffee offering under the Starbucks VIA Ready Brew label, and in single-serve Keurig cups. The new varieties will also be sold at Starbucks stores. The Blonde Willow roast will also be available in decaf.”
    KC's View:

    Published on: October 19, 2011

    We continue to get email weighing in on the discussion of the protests taking place around the country as a segment of the population expresses its dismay over the shape of the economy and the perceived out-of-whack power that one percent of the population seems to wield. Some of the email was specifically in response to an email we ran yesterday from a young person who has a job, enormous college loans ($60,000), and, I think it is fair to say, a sense that it will be difficult to meet her personal and professional goals.

    One MNB user wrote:

    In response to the recent college graduates comments on “your views”...

    I do remember the sixties.  I have two children paying their way through college right now and neither one of them are using student loans to do so.  Both of them will have spent much less than you amassed in student loans to pay for their schooling.  I on the other hand graduated with student loan debt that took years (and a good wife) to pay off.  Are my children part of the 1% or is entitlement just a relative term?


    Another MNB user wrote:

    Regarding the response from one of the Occupy Wall Street protesters, his/her points:
     
    “Student loans are a burden after graduation.”  No kidding! That’s the same reality now as it was for anyone who has ever chosen to incur student loans. You had a choice! Either get less expensive education (Community Colleges or smaller schools) or view this as an investment in your future and realize that you have an obligation to repay your loan. Be thankful that student loans are available. Don’t whine about your debt. YOU DECIDED TO INCUR THE DEBT!

    “Tuition and the opportunity to find work was different (much easier) in the 60’s. (The 99%) are only asking for the conditions that boomers graduated with.” Hmmm….and most of us were thinner, had more hair, and all of us were younger. So what! You can’t turn back the clock. If you are expecting to determine your own “reality” in the marketplace, you will have a rude awakening. It is difficult for many people out there looking for work due to the economic climate, not only for the recent graduates. Luckily, this person found a job. The question that he has to answer is whether or not his education was key to getting hired. If so, good investment. If not, poor decision.
     
    “I don’t think many of those critical of this movement understand what it’s like to begin their adult lives owing more than they could hope to make.”  Yes, we do understand, we just don’t agree with your premise that your choices do not have consequences. If you choose to incur debt for your student loans, you must consider this over the long term. It must be frustrating if you expect to pay back a loan for $60,000 in a short time. This is not reality now, nor has it ever been. I sense instant gratification, not reality!
     
    “Watching the rich get richer…”  I think that we all aspire to be “rich”. For many of us, that has nothing to do with what we make. Yet, demonizing the “rich” is convenient code for not determining our own course in life. Our immigrant relatives rolled up their sleeves, took any job to get started, and lived within their means. Some flourished and created jobs for others. Capitalism works! For those that abuse it, they should be taken to task, but don’t lump all into one batch. We need those successful small business owners that some would consider “rich” to get us out of this mess. Pulling the successful down and redistributing wealth will not help those that need a hand. They need opportunity, not a handout.


    From yet another MNB user:

    To the Wall-Street protestor who was whining about having $60,000 in student loan debt and working 60 hours a week after graduating.  Once you get the degree than the real work actually starts.  There are no guarantees in life, times change and you have to change with them.  Maybe they should have gone to an in state school, a cheaper school, or commuted.  Did they work part time while in college, on spring/winter summer break? 

    I always say there are 2 things I won’t let me kids do when it comes time for college 1) Raid my 401K (what’s left of it) to pay for school  2) Graduate with $60,70,100K+ in debt.

    While I agree some executive compensation is way out of control, turning to socialism is not the answer.  I am well beyond my college years and have spent the last 25+ years working 60-70 hours a week, and spent the last year working 50+ hours a week, networking, scanning on line jobs, contacting recruiters (too many to count), and sending out 400+ resumes, before finding a position.  Not sure the best way to find work is to spend time in a tent and not showering in NYC.  Are times tough, of course they are, but they are for many people. Focus on the good things you have and on the future.  That’s what got me through my recent bout of unemployment.


    Another reader chimed in:

    After reading the following, I have to wonder what percentage of the disaffected are living in major metro areas, which certainly does make it all more difficult. I wonder because just a few years ago I also found myself with $60,000 in student loan debt and a starting salary of about $25k. On that, I was able to make my student loan payments, have a very nice apartment with no roommate, subscribe to both high speed internet access and Netflix, contribute a maximum match to a 401k and make embarrassingly large credit card payments. With no overtime. That’s apparently a heck of a cost of living differential and maybe that kind of distribution should be looked into a little more.

    From another MNB user:

    While I sympathise with your reader who thinks it will take 30 years to pay off his $60,000 of student loans, I think he is taking a very narrow and pessimistic view of his future.  A college degree is an investment in a lifelong career, not something that's supposed to pay off in the first few years.  Perhaps if he does not progress beyond his entry-level marketing job for 30 years that view will come true, but that's not the way the world works - if he isn't setting his goals a lot higher than that and working hard towards them, then there's no one to blame but himself.

    I graduated almost 30 years ago and took an entry-level marketing job for the princely sum of $18,800 per year while newly married and supporting my wife as she went back to school for a second degree.  There were many Sundays when we had to decide whether it would cost less to buy groceries for dinner or gas to drive to my parents to eat there.  But we never expected to stay in that position forever - the idea was to work hard, build your skills, contribute in a way that adds value, look for additional responsibility, deliver results and advance in the company (or elsewhere in the industry) to grow your income over time to achieve (at least)  the stability and lifestyle your parents had - it worked for us, it worked for lots of other folks, and there's no reason why it can't work for dedicated, talented, well-educated people today.  Don't complain about being part of the 99% - work hard to be part of the 1%.


    And, another MNB user offered:

    Seriously?! 60K in 30 years. This is the problem with our educational system. They put this student through 4 years of school and yet didn't teacher them the financial basics. How to set up a budget to live within, how to successfully pay off debt, and how to prioritize personal responsibility. No wonder they can't get together on a cohesive message.

    It’s interesting.

    I went back to read the email that provoked all this response yesterday, just to check to see if I missed something. I don’t think I did, so let me see if I can respond with a bit of context.

    The person who wrote to me went to a public, not private, university. She’s working in a full-time job, and seems grateful for the opportunity. She knows she’s luckier than many of her peers, who have found it harder to get a job after graduation.

    There was nothing in her email suggesting that she doesn’t work hard, that she wants a handout, feels entitled, that she’s a socialist, or that she’s unwilling to make the tough choices that so many of us have made in our lives, as we dealt with financial realities by being responsible for our own decisions and aware of consequences.

    Now, I am not going to suggest here that everyone involved with - or sympathetic to - the protests taking place around the country have the same sensibility.

    But I also am not going to suggest that everyone involved with - or sympathetic to - the protests taking place around the country are socialists, are irresponsible, want a handout, or feel entitled.

    I have very little tolerance for whiny, unmotivated and lazy people, BTW...but let me suggest something really, really radical here:


    Compassion should be our default position.

    Again, not everybody feels this way, and certainly the people in this nascent movement have not been able to express it in terms of a narrative that seems either cohesive or compelling.

    But I think that many, if not most, of the people who are discontented are feeling that the playing field is less even than ever, and they wonder if their aspirations to work hard and achieve membership in the middle class and upper middle class might be restricted by the so-called “consumer hourglass” effect, in which economic realities seem to be squeezing the middle class out of existence.

    They read stories like the following, from the Daily Beast, and they wonder about the future:

    “Today’s Goldman Sachs earning reports provides a valuable lesson on how things really work inside Wall Street’s largest investment houses. Goldman Sachs had an awful three months, losing $428 million in the third quarter of 2011, and yet it continued to shovel billions into the bonus pool it will share with its employees at year’s end.

    Through the first nine months of 2011, Goldman set aside $10 billion in its compensation fund. If Goldman’s 30,000 employees split that bounty evenly, that would work out to $333,000 per person—plus the billions more Goldman will no doubt set aside in the last few months of the year.

    “Of course, the receptionist inside Goldman Sachs doesn't receive the same pay as all those analysts and other midlevel suits making salaries of $400,000 a year or more. Moreover, chieftains like Goldman CEO Lloyd Blankfein, who received $13 million in compensation last year, won’t have to share their year-end bonuses with as many people as last year. The bank laid off 1,300 employees in the third quarter of the year and plans on jettisoning another 1,000-plus jobs in the coming months.”

    I am not suggesting here that there ought to be any sort of governmental regulation on how much people can or should make. But how can one read stories like this one - or stories about failed and faired CEOs who walk away with millions of dollars in severance pay even as their companies lay off employees - and not feel at least some compassion for the protesters?

    As I’ve said, I have decided that compassion is my default position on this one.

    I think it is important that as marketers - and as citizens - that we not be so dismissive of the people who make up this movement ... especially because, if it gains traction and grows, we will all have to deal with its repercussions.

    I’m not alone in this. I was speaking with one of the most respected retailers in the country the other day, and he told me that he thinks it is extremely important that marketers take the protest movement seriously. And I watched as he quizzed our waiter about how he felt about the protests, trying to get a sense of both the moment and the momentum.

    One other thing.

    One MNB user sent me a link to a Washington Examiner op-ed piece suggesting that the protesters are just whiny, self-involved, spoiled liberals deserving of nothing so much as contempt, and that the people we really ought to feel for are our troops, who “would not complain to the cameras even if there were any left in the war zones documenting their struggles. They aren't whiners. They may be the same general age as the Occupy Wall Street gang, but they occupy a very different, less frivolous world.”

    And I would respond to this by suggesting that in its own way, this op-ed piece represents the height of cynicism. It suggests that nobody should ever complain about anything, or point out any sort of perceived inequity, because nobody is at risk as much as our troops.

    I think there ought to be room in our hearts and minds to have compassion for both groups. Different levels of compassion, of course, because few of us can even imagine what it is like to serve in places like Afghanistan ... and I would never suggest that there is some sort of equivalency in terms of hardship. (And it isn’t just young people protesting, by the way...I’ve seen some of the pictures, are there appear to be some weathered faces in the groups, and some of them even seem to be those of veterans.)

    Different worlds, and different levels of compassion. But I like to think that we are all capable of entertaining two different thoughts and feelings at the same time.
    KC's View: