retail news in context, analysis with attitude

Published on: November 10, 2011

This commentary is available both as text and video. The two versions are similar, but not identical. Enjoy either, or both.


Hi, I’m Kevin Coupe and this is FaceTime with the Content Guy.

Just a few random things on my mind this morning...

First of all, I went yesterday to get a new iPhone. The one I’ve been using is so old that it came out before they were assigning numbers - we’re talking original equipment here, four years old. But now the software has improved so much that the original iPhone can’t handle it, so I finally broke down to get the new iPhone 4S.

I’m not going to rave about it here. To be honest, I haven’t had it long enough to rave. But I am going to rave about Savannah, the young woman who took care of me, patiently answered every question I had, and then helped me transfer all my stuff over to the new phone when the folks at the set-up desk got overloaded. This was a classic case of what we talk about here on MNB - an example of an employee taking ownership of the shopping experience. It makes an enormous difference, and I wish more employees did it. I wish more companies created cultures where employees were motivated to do so. So big kudos to Savannah.

One of the things I wanted to get for the iPhone was a clear film that covers the glass screen and protects it; I know from experience how important this can be. But while the folks at the Apple Store used to both sell them and put them on - which was great for guys like me who are all thumbs - they’ve stopped installing them because it is so easy to get it wrong, and it just created too many problems. But Savannah suggested that I go to a nearby kiosk in the mall run by a company called Ghost Armor, where they both sell and install the protective film - for the same price that Apple just sells it.

So I did - and they were great. Again, a great customer experience - but it made me think of something else: how many businesses like these have popped up over the past few years where before there would have been no reason for them to exist. That made me think in broader terms - are we all on the lookout for opportunities created by new trends, new products, new technologies....opportunities that could change the faces of our businesses and give us new ways to generate sales and profits? I think we need to be vigilant about this.

And finally, I have to report back to you on something I noticed while visiting colleges with my daughter last weekend - I am amazed at the level of quality and service in some of these school cafeterias. They are talking about local, organic, sustainability and good taste ... and I have to believe that these students are likely to emerge from college with more sophisticated palates and much more information about what they eat ... and that will raise the bar for marketers who then will be charged with selling them products and services. It is a challenge, but it will be good for everybody.

That’s what’s on my mind this Thursday morning, and as always, I want to hear what is on your mind.

Published on: November 10, 2011

by Kevin Coupe

The New York Times this morning reports that celebrity chef and restaurateur Mario Batali put his foot in his mouth ... and it may cost him some of his best customers.

Batali owns and runs a number of New York City restaurants - with expensive menus and hard-to-get reservations - that cater to high level banking and Wall Street executives.

On Tuesday, Batali appeared at a Time event promoting its Person of the Year issue, and in an off-handed remark, he mentioned US bank executives and both Stalin and Hitler in the same breath. He wasn’t exactly equating them, but he was drawing a kind of equivalency ... and almost as soon as he said it, the comments went viral, as people used Twitter and the Bloomberg terminal system to spread them.

Just as fast, executives started saying that they would now boycott any and all of Batali’s restaurants.

“The irony is that he has made millions of dollars building a restaurant empire off the backs of Wall Street wealth,” one senior executive told the Times.

Two Eye-Opening lessons here.

One. We live in a world of instant communications. You say it, and technology will ensure that almost everybody can hear it.

Two. It is a good life rule to never compare anybody to Adolf Hitler or Josef Stalin.

Published on: November 10, 2011

Fast Company has a story about brand equity with an interesting observation about something called the “Meaningful Brands Survey,” which talked to some 50,000 consumers in the US, France, Spain, the U.K., Germany, Italy, Mexico, Brazil, Colombia, Chile, Argentina, China, Japan, and India, and “found that only 20% of the brands they interact with have a positive impact on their lives. And they feel that 70% of brands could disappear entirely without them noticing.”

Umair Haque, director of the Havas Media Labs, which conducted the survey, tells FastCompany that the trick to being perceived as meaningful is to “focus on outcomes, not outputs.” He says, "Did this brand make you fitter, wiser, smarter, closer? Did it improve your personal outcomes? Did it improve your community outcomes? Did it pollute the environment? We're trying to get beyond ‘did this company make a slightly better product’ to the more resonant, meaningful question: Did this brand actually impact your life in a tangible, lasting, and positive way?"

The story goes on: “More than half (51%) of consumers want to reward responsible companies by shopping there; 53% would pay a 10% premium for products from a responsible company. And they want companies involved: 85% of consumers want companies to be engaged on global issues, but only 22% think they're getting enough.”

Published on: November 10, 2011

National Public Radio yesterday reported that Walmart “is planning to offer medical services ranging from the management of diabetes to HIV infections, NPR and Kaiser Health News have learned ... the retailer sent out a request for partners to help it ‘dramatically ... lower the cost of healthcare ... by becoming the largest provider of primary healthcare services in the nation’.”

According to the story, “The 14-page request ... asks firms to spell out their expertise in a wide variety of areas, including managing and monitoring patients with chronic, costly health conditions. Partners are to be selected in January.

“Analysts said Wal-Mart is likely positioning itself to boost store traffic, possibly by expanding the number of its in-store medical clinics and the services they offer. The move would also capitalize on growing demand for primary care in 2014, when the federal health law fully kicks in and millions more Americans are expected to have government or private health insurance.”

But not so fast.

Shortly after the NPR story ran, Walmart issued a statement saying that the request was “overwritten and incorrect.” Dr. John Agwunobi, senior vice president for health and wellness at Walmart, said that the company is "not building a national, integrated low-cost primary health care platform.”

Published on: November 10, 2011

The Conference Board is out with a report saying that “U.S. households are expected to spend an average of $497 on gifts this holiday season,” and that “only 7 percent of consumers said they plan to spend more on holiday gifts this year, while approximately 40 percent plan on spending less than last year.”

The study goes on: “Consumers will be heading to the malls and online searching for bargains. Four out of ten holiday shoppers say they expect more than half of their purchases to be on sale or discounted. An additional three out of ten expect a quarter to half of their purchases to be discounted.

“Close to two-thirds of consumers expect to purchase a portion of their holiday gifts online, with about 15 percent saying more than half of their gifts will be purchased online.”

Published on: November 10, 2011

The Seattle Times reports that Amazon.com yesterday threw its “strong support” behind “a new Senate bill that would allow states to compel online vendors to collect sales taxes. It was the Seattle-based Internet retailer's clearest endorsement of the federal legislation, and a stark contrast to its sometimes-combative opposition to attempts by individual states to require the same thing.”

However, there is hardly unanimous support for the bill. The Times notes that it is opposed by eBay, which “fears many of its small member vendors would lose a crucial edge in price over big retailers.”

The bill under consideration, the Times says, “would give the 45 states with sales taxes the power to require all remote sellers to collect state and local taxes under simplified rules.

“So not only would Blue Nile have to add taxes to its online diamond sales, but Nordstrom would have to start collecting taxes on online or catalog orders shipped to states where it doesn't have stores.

“The tax decision would be left to each state. But cash-strapped legislatures aren't likely to forgo the extra money.”

Published on: November 10, 2011

Earlier this month, MNB took note of a Slate story about a new smart phone application called Card Case, made by a company called Square, which it suggests could make carrying credit cards obsolete.
“Because Card Case runs on your phone, it may sound at first like the same clunky, phone-and-pay-pad systems being peddled by other firms,” Slate reported. “But Card Case doesn’t let you pay with your phone; it lets you pay with your name. With this app, you go into a store, choose what you want to buy, and then tell the cashier your name. That’s it—you’ve just paid. You don’t have to pull out your phone, you don’t have to open the app, you don’t have to sign, swipe, or wait for change. As long as your phone is on your person while you’re in the store - in your pocket or your purse - Card Case can authorize your payment without you having to do a thing.”

Now, Reuters reports that Square has gotten the best kind of payment - a multimillion dollar investment from Richard Branson, the British billionaire who is the founder of the Virgin Group. And his investment follows a $100 million investment “ led by venture capital firm Kleiner Perkins Caufield & Byers and an investment for an undisclosed amount by credit card company Visa in April.”

Published on: November 10, 2011

TheStreet.com reports that Nordstrom is breaking with what seems to be the conventional wisdom among big retailers - instead of opening early on Black Friday, the day after Thanksgiving, the company has said that it will open at a normal time on Friday and that will not even start decorating its stores for the holidays until after Thanksgiving. The reason is explained on Facebook, in a picture from one of Nordstrom’s windows: "We just like the idea of celebrating one holiday at a time.”

Meanwhile, Walmart is going in the opposite direction - today it is expected to announce that it will open all of its stores nationwide at 10 pm on Thanksgiving.

Published on: November 10, 2011

The Los Angeles Times reports on a new vending machine called the Smart Butcher, which is selling fresh beef at one location, a c-store in Odenville, Alabama.

According to the story, “With cash or credit cards, customers can buy a selection of meats restocked by the developers every few days: a 1-pound tenderloin for $4, a 12-ounce rib-eye for $5, a New York strip for $6, two pounds of hamburger beef for $6.99 and 2 pounds of sirloin tips for $8.95.”

The store owners say that the Smart Butcher has been generating a lot of traffic and sales, though the machine developers don’t yet have plans to expand their presence.

Published on: November 10, 2011

• Delhaize announced that in honor of Veterans Day tomorrow, its Food Lion, Harveys and Reid’s stores will offer a 10 percent discount to active and retired military personnel “to show their support and appreciation for those who are currently serving or have served in the U.S. Armed Forces.” To receive the discount, active military, reservists and veterans should request the discount at check-out along with their loyalty card.

• Supervalu announced that it plans to implement a broad scale, strategic Scan Based Trading program for its Direct Store Delivery (DSD) business. The program, developed by iControl Systems USA, will be implemented in this calendar year.

• The Sacramento Bee reports that “unable to reach agreement on a new labor deal, big unionized chains including Raley's extended their current contract for another 11 days with the United Food and Commercial Workers, the union said Wednesday.
The extension, the second since talks began in September, covers 60,000 workers in Sacramento, the Central Valley and Bay Area. It runs through Nov. 19.”

The negotiations are taking place in an environment where Raley’s is facing greater competition than ever from non-union companies such as Walmart and Fresh & Easy. In addition, Raley’s said earlier this week that it has decided to stop providing health coverage to its retired hourly employees age 65 and older, saying that its current financial situation makes it impossible to offer it as a continuing benefit.

Published on: November 10, 2011

The Baltimore Sun reports that “putting animal rights over fashion imperatives and its own vibrant shopping scene, leaders of the California city of West Hollywood have given final approval to a first-in-the-nation ban on the sale of fur clothing within its limits.”

The ban takes effect on September 21, 2013 - assuming that it stands up to the inevitable court challenges.

According to the story, “Opponents say nearly half of the 200 apparel stores in town sell at least some fur items, and that merchandise made with animal pelts is estimated to account for up to $2 million in revenues for those businesses each year. But the city's famously left-leaning political establishment ultimately embraced the ban, won over by supporters' arguments that furs are produced from animals that are inhumanely killed for their pelts.”

Published on: November 10, 2011

Got a number of emails yesterday responding to our piece about what appears to be a growing economic generation gap - the Pew Research Center says that “the wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt. The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data being released today.”

MNB user Chris J. Grathwohl wrote:

My theory on the economic generation gap:  spending habits.  The older generation was more prone to saving for the future, whereas the younger generation is more inclined to spend for immediate gratification.

I look at my parents and their friends who lived in modest homes that they could easily afford, drove cars until they wore them out, and put money aside for “future emergencies”.  In summary, they lived within their means.

I see today’s young adults living in enormous homes, driving new expensive cars, and living paycheck to paycheck not saving a dime for the future.  No wonder the foreclosure rates are where they are.  One thing turns for the worse – say a job loss - and they are in big trouble.

I fall right in the middle of the two age groups – I’m 46, have 2 kids in private K-12 schools and am staring down the barrel of tuition bills for the next 12 years.  It scares the hell out of me and my wife even though we both have good jobs, but it forces us to save and live within our means.  I lost my job two years ago.  I was out of work for 3 months (I was fortunate to find a great position in such a short time!) but never missed paying a bill on time because I had savings to fall back on.

The story quoted Harry Holzer, a labor economist and public policy professor at Georgetown University: "It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them.”

One MNB user responded:

I am in full agreement w/Harry Holzer re retiree’s benefits crowding out younger people’s needs.  I am old enough to qualify for Medicare (not doing so since am still working full time w/benefits) so am of the generation that is doing the crowding out.  I am, like others, friends on FaceBook w/many of my high school classmates.  It is disturbing, to say the least, to read the posts they leave as to how they feel so entitled to all of their government benefits, as if they actually paid into the system anywhere near what they will be taking out.  I am not for redistributing income in any shape or form, such as new/extra taxes on the wealthier among us, but if the system has over promised what it can do for retirees and that harms the following generations, then it’s time for an adjustment.

I have always felt that the seniors who came from the eras of WW1, the Depression, and WW2 deserved the maximum of what the government could provide in their later years.  They didn’t have a lifetime of uninterrupted work to accumulate enough savings to retire on.  Same goes for retired military personnel who earned a substandard pay formula for 20 years while defending our country.  But, for our generation, for someone w/o special problems, shame on them if they didn’t save for their retirement.  I will view any social security funds I get as icing on a cake, not the cake itself.

MNB user Jeff Foster wrote:

It's no wonder there's a generation gap.  Many youngsters graduating from college now are saddled with enormous amounts of debt from college loans.  This can put off their having disposable income for many years.  Perhaps the Department of Education should investigate the high cost of a college education and regulate them.  Our family will be facing that problem with our daughter next year.  We want her to get a good education, but don't want her to get an education that won't qualify her for a financially rewarding career.  Families should have some serious discussions about what is going on in the real world while the kids are choosing their career paths, not when the rubber hits the road when they graduate.  Many college bound youngsters have seen the movie "Animal House" and want to emulate the antics they have seen there.  They have been sold a bill of goods that they shouldn't miss out on the "College Experience".