retail news in context, analysis with attitude

Published on: November 14, 2011

by Kevin Coupe

The New York Times has a column this morning by the always provocative David Carr in which he profiles John Paton, who he describes as “absolutely convinced that if newspapers are to survive, they will all but have to set themselves on fire, eventually forsaking print and becoming digital news operations.”

The irony is that Paton is a newspaper publisher.

Paton is actually a former newspaper reporter who now runs a management company called Digital First, which has been contracted to run two different newspaper chains. According to the story, “Paton has become something of a darling among media thinkers for putting his business where his rhetoric is. He issued Flip cameras to all the reporters at Journal Register papers, helped create a newsroom cafe that’s open to the community in Torrington, Conn., and has been pushing to dump ancient proprietary newsroom software in favor of free, Web-based publishing tools. He has financed a lab to foster employee innovation, and the company has formed partnerships with a number of Web companies to provide news and information.”

At the core of Paton’s moves is a central conviction, Carr writes - “that print is, if not exactly dead, dying a lot faster than anyone thought.”

You can read the full story here.

It is worth reading for the following reason: Sometimes you have to be willing to challenge virtually every single assumption that goes into your business. Every one. And if you can’t do it yourself, you have to ask someone else to do it. Because newspapers are just one example of an industry where there is no such thing as a sacred cow, and everybody has to be willing to ask the uncomfortable and even unpopular questions.

Everybody has to be willing to approach the world with Eyes Open.

Published on: November 14, 2011

The Wall Street Journal reports on how Amazon.com is investing in its Amazon Prime loyalty program, adding services such as movie and television program streaming and e-book lending, without raising the price from the $79 a year that it started charging when the program began in 2005.

According to the story, “Prime is so crucial to the Seattle-based company that it is willing to lose hundreds of millions of dollars a year on the program, by some analysts' estimates. Until this year, Prime offered only quick shipping for $79 a year. But the online retailer has added services to Prime while keeping the price unchanged as a means of keeping customers loyal to Amazon's more-profitable operations.”

One analyst tells the Journal that it is “estimated that Amazon spends more than $90 a year for each Prime customer, losing $11 annually for each subscriber. Of the $90, $55 comes from shipping costs and $35 comes from acquiring digital video content. The book-lending service raises those costs higher still.” And, analysts tell the paper, “Amazon can offset those losses because of its highly profitable businesses, such as getting fees from other merchants who sell through Amazon's website and by selling computing power and storage to other companies.”

While Amazon does not comment on estimates, one analyst tells the Journal that Prime has had a palpable impact on business - the typical customers who spent the $79 to get “free” two-day shipping are estimated to have tripled their spending on Amazon to $1500 a year. And, it is suggested that “up to 40% of Amazon's domestic revenue, which totaled $18.7 billion in 2010, comes from Prime members.”

Published on: November 14, 2011

The Financial Times reports that Simon Uwins, chief marketing officer at Tesco’s Fresh & Easy business in the western US, has left the company “to pursue other interests.”

According to the story, Fresh & Easy CEO Tim Mason said in an internal memo that “shaking up the retailer, bringing all elements of the chain related to customers in its commercial and marketing divisions into one team.

“The company has appointed John Burry as chief customer officer. In addition to his existing responsibilities for commercial and manufacturing, he will also now be responsible for marketing.”

FT reports that the general consensus seems to be that the ouster of Uwins, who has been with the financially and creatively challenged Fresh & Easy since its launch five years ago, suggests that Tesco’s new CEO, Philip Clarke, is taking a pro-active approach to getting Fresh & Easy to contribute positive numbers to the company’s bottom line.

Published on: November 14, 2011

The US Department of Agriculture (USDA) announced that it will delay for two months, until March 1, 2012, enforcement of new meat labeling rules that will provide nutritional profile information on single-ingredient meat products.

The reason, USDA said, was that a coalition of organizations said that more time was needed to make sure that labels were both accurate and user-friendly. Included in the coalition are the American Lamb Board; the American Meat Institute; the Food Marketing Institute; the National Cattlemen’s Beef Association; the National Chicken Council; the National Grocers Association; the National Pork Board; the National Pork Producers Council; and the National Turkey Federation.

The coalition released the following statement after the delay was announced:

“The mandatory nutrition labeling rule will have a significant impact on the regulated entities, and we commend FSIS for recognizing the challenges we face and for extending the effective date. When FSIS announced this final rule last December, we began working to understand the new requirements to ensure implementation. Over the past 11 months, we have worked with FSIS to fully understand the rule’s requirements, but we still have questions that need to be answered before a smooth implementation can occur.”

Published on: November 14, 2011

Forbes reports that data released “by Thomson Reuters and the University of Michigan showed that consumer sentiment rose in an index to 64.2 in October, from 60.9 the month before. The gain represented a five-month high for the index, and it topped the average expectation of economists polled by Thomson Reuters for 61.5.”

This suggests that it might actually be a decent holiday shopping season for retailers, who hope that a combination of heavy and early promotions combined with lower gas prices and a decline in savings rates could add up to a stronger bottom line.

The story notes that “the average economist outlook is for holiday sales to increase by 2.5%-3% this year,” though some are projecting stronger sales.

One thing that there seems to be general agreement on - e-commerce sales will be stronger this coming holiday season, perhaps up as much as 12 percent; the story notes that “the average shopper plans to do about 36% percent of their holiday shopping online, up from 32.7% last year, according to the National Retail Federation.”

Published on: November 14, 2011

The Grocery Manufacturers Association (GMA) announced over the weekend that it has joined with the US government and the World Bank in what is described as an “innovative public private partnership that has pledged $1 million for the creation of the world’s first Global Food Safety Fund for capacity building.  To be managed by the World Bank, the proposed fund will leverage the tripartite approach pioneered in APEC that enlists a wide range of stakeholders in training programs designed to enhance food safety and to facilitate trade.  

According to the announcement, “In the next decade, the fund is expected to grow to $15-$20 million.  The fund has three main food safety goals:

• “Developing, testing and validating pilot programs in APEC that will result in reproducible training modules which can be customized for roll out to developing countries all around the world. These programs would focus on critical needs-- supply chain management, food safety incident management, laboratory competency, risk analysis and strengthening food safety regulatory systems.”

• “Addressing high priority food hazards, such as aflatoxins in grain, Salmonella, Listeria, E. coli, and viral and bacterial pathogens in seafood.”

• “Strengthening Analytics and Metrics – much needed for consistent, reliable and scaleable testing, designing, and evaluation of the performance of food safety systems.”

Published on: November 14, 2011

• Walmart announced that it is “empowering Facebook users to write in – or nominate – local nonprofits to receive part of $1.5 million in grants this holiday season. Through its ‘12 Days of Giving’ campaign, the company will accept submissions via Facebook with an eye for local organizations that are providing basic needs such as food, shelter, clothing and baby supplies ... Starting today and through Nov. 30, users can visit Walmart's Facebook page to nominate a nonprofit for the ‘12 Days of Giving’.”

Published on: November 14, 2011

The Boston Globe reports this morning that Starbucks has been slapped down by the Massachusetts Office of Consumer Affairs and Business Regulation, which recently discovered that the coffee retailers was charging a $1.50 fee for “bags of coffee beans weighing less than a pound, never posting the addition to the price.”

State regulators “fined five Starbucks locations with $1,575 for overcharge violations two weeks ago,” the story says, a move that prompted the retailer to stop charging the fee at all of its locations across the country.

Alan Hilowitz, a spokesman for Starbucks, tells the Globe the company charged for half-pound bags to cover “the additional labor and packaging needed to accommodate those customers’ unique request.’’ The fee itself is not a violation, but not being transparent about it does violate the state’s consumer protection laws.

Published on: November 14, 2011

• The Chicago Sun Times reports that Safeway-owned Dominick’s plans to close three Chicago area stores over the next several months. One, in Orland Park, already has been shuttered, while another, in Carpentersville, is scheduled to close this week. Another, in Oak Lawn, is scheduled to be shut down at the end of the year.

• The Seattle Times reports that in the wake of last week’s referendum in which 60 percent of Washington State voters cast their ballots in favor of an initiative that gets the state out of the liquor business and allows private retailers to sell spirits - a shift that will result in more than 900 workers at state-run liquor stores and a Seattle liquor-distribution center being laid off - Costco has announced that “it will offer any displaced state liquor-store worker the opportunity to apply for a job at the chain.”

Costco’s chief legal officer, Joel Benoliel, tells the Times, "There is obviously no guarantee of a job, but anyone who would like to work at Costco will have the advantage of being interviewed. We will be working on a procedure to make that happen between now and June when the transition will happen.”

• The Arizona Republic reports that the trial of Michael C. Gilliland the founder of Wild Oats and, more recently, founder and CEO of Sunflower Farmers Market, on one count of child prostitution has been delayed until January 2012.

The trial was scheduled to begin today, but defense attorneys requested a 60 delay delay, and the motion was granted.

Gilliland is charged with paying an undercover police officer $100 to have sex with him in a hotel; the officer reportedly told Gilliland that she was 17 years old when he made the arrangement over the internet.

Published on: November 14, 2011

We had a piece a few days ago about how Apple has given itself a competitive edge by controlling various parts of the supply chain, making it impossible for its competitors to get certain kinds of equipment or space on airplanes shipping parts or computers, and commented that in business this is what you have to do - find ways to offer things that the other guy can’t. Which led one MNB user to write:

You don’t condone bullies when they’re picking on smaller kids. Why is it OK in business? 

Somewhat the same question you raised last week after reading the Steve Jobs bio. Why is conduct that is OK in pursuing inspiration, or competitive advantage, not the conduct you would accept in other situations? Not an answer that is easy to find.  Unless the end truly does justify the means, which in my mind is a sad conclusion to come to.

I don’t think that the end justifies the means. But I think there is a big difference between a bully picking on a little kid on the playground and Apple signing exclusivity agreements with vendors that provide specific products and services. To cite one example from the original article ... Apple saw that its competitors were shipping computers and components by ship to save money, and so it decided to ship by plane so it could be faster and more responsive. Is it unfair for it to book all the available air freight space so that its competitors cannot copy its moves? I don’t think so.




On another subject, an MNB user wrote:

Re: your notes on young children and smart phones/iPads, when my one grandson was about three and I was watching him quite often, he would come into my house lugging his diaper bag.  In it were his diapers, the wipes, and his laptop!  It was, frankly, a great case for a laptop.  Just the right size and padded.  He would pull the computer out from among the diapers and get right into  it.  My comment to his parents, of course, was always, “If a child can operate a computer, he can understand when it’s time to go to the bathroom.”

Also, re: this same grandchild, who is now a freshman drama major at ASU, he is a typical electronically connected teen ager.  I have watched him carry on 7 different texting conversation at the same time.  Anyway, as a typical grandmother, I send him lots of stuff at school.  Little notes w/money in them.  Homemade baked goods.  Etc.  He emailed me a few weeks ago that he LOVED getting real mail.  Even though totally immersed in social media, he said his (and his roommate’s) favorite part of the day is when the mail comes to the dorm.  He was emailing me to thank me for keeping in touch w/him via real mail and asking me to continue doing this.  I thought of you when he told me this as there are times when nothing beats real mail.  For him, I think it’s because it’s tangible.  Away from home, he can hold in his hand something from home.




Got the following report from an MNB reader:

A new Whole Foods opened last week in Folsom, CA (The suburbs of the Sacramento region and famous for Folsom prison), the new store has an outdoor beer garden. There are 8 beers on tap, several of them local, they serve food, and wine. There is a confined outdoor seating area that drinkers must stay within. I was there opening week and observed families, friends, couples enjoying the beer garden. My friends and I are headed there this weekend to check it out. It shows how trying new concepts can draw new potential customers. I know WF has done some in-store alcohol serving areas, but with the CA climate this really makes sense. This is their second store in Northern California that has an outdoor beer garden. The other store is in San Jose and the beer garden there has been wildly successful according to the "Bar Tender" I spoke to last week.

My local Whole Foods just unveiled one of the most amazing beer sections I’ve ever seen - it is fabulous. So clearly there is something happening here...




Last week we had a story about a study into why people eat so fast - and I suggested that in my case, it is because I was the oldest of seven, and that was the only way to get seconds.

One MNB user responded:

I was the 2nd oldest of 6 and it was EXACTLY the same in my house growing up.  Dinner was a sprint not a marathon.  I didn’t know I ate fast until I went away to college and some guys were giving me a hard time.  The same can be said for the shower.  We had 1 bath and 8 people.  If you were in the shower too long, you got hit with a cup of ice water.  We didn’t know any different, and now my kids always want to use my shower when they have their own and one extra in the house.

And Rosemary Fifield wrote:

For me, it was cramming in something to eat while working in a hospital where your lunch period could be cut short at any time. And I agree: it is a hard habit to break.




I allowed myself to rant a bit on Friday about the Penn State situation. And it generated a lot of email. let me share some of it...

One MNB user wrote:

You are wrong when you suggest we should “cut a little slack” for the college kids who are demonstrating against the firing of Joe Paterno.  First of all they are not kids they are young adults who have the opportunity to receive an education that is not universally available or affordable.  They are privileged in a sense and that means they have an obligation to understand the serious nature of what was allowed to happen.  Regardless of the accomplishments Joe Paterno had over his lifetime they are diminished by his and others failure to act on an issue that affected the most vulnerable members of our society.

I say grow up and realize that with privilege comes responsibility and when a “legend” falls as Paterno will, there is a reason and it must be acknowledged so this never happens again.

Point taken.

But let me suggest one reason for a bit of understanding.

If I had a kid at Penn State, I would have made sure that we had a number of conversations during the past week, and if my child had expressed any sympathy for Paterno, I would have viewed it as my parental duty to explain the reality of the situation ... and hopefully be persuasive enough that my child would not have been among the demonstrators.

I’m working on the premise that the kids demonstrating did not have that conversation. Or, their parents have no moral compass. Either way, there is a gap in their moral education. Hence, my belief that rather than condemning the students, it is time for Penn State to offer a mandatory course in morality and ethical decision making.

Of course, the only people in this case who really deserve understanding are the victims of child rape. And we should never lose sight of that fact.

Another MNB user wrote:

Hopefully the  fools siding with the coach, who certainly did not do enough to prevent additional abuses, will realize the seriousness of this situation when they become parents.  It will be wonderful for them to watch the youtube videos of their protests with their own children and defend their support of the coach over the kids.   Unfortunately they don't realize how their actions continue to denigrate the great Penn State brand, but they may realize this at job interview time as the investigation and subsequent trials are likely to go on for years.

Another MNB user chimed in:

If I hear one more commentary from newscasters, or anyone else for that matte,r about how this is going to tarnish/sully the legacy of a great man, I am going to vomit. His legacy? His legacy?! It seems to me his legacy is that he directly or indirectly ALLOWED THE CONTINUED RAPE AND VICTIMIZATION OF CHILDREN.

What more is there to say? Are we really going to debate whether a long and successful football career is more important? I am sickened and if even a whiff of the other rumors circulating are true, I hope heads roll far and wide, followed by criminal suits.

From another MNB user:

Thank you for saying what I’ve been thinking all week! I seem to be surrounded by people (good people, mind you) that feel the same way David Livingston does, and I just don’t understand it.

Paterno should get a free pass just because he’s been a coach for more than 40 years and is a huge donor?? Big deal! If you don’t stick up for kids who are in the situation these kids presumably were, you don’t remotely deserve to be considered god-like. We have people who have worked for my company longer than Paterno has been a coach, and are considered beloved by their customers and co-workers. But I can assure you my thoughts about them would be the same if they were in Paterno’s shoes.

What has the world come to that selling football tickets is more important than protecting our kids? End of rant.

Ah, David Livingston. We’ll get back to him in a bit.

From yet another MNB user:

On the Penn State scandal, the trustees did exactly the right thing.  Everybody associated with sweeping this under the rug must be fired.  While Sandusky is the villain (not a harsh enough description, but does one really exist?), the grad assistant is next in line.  I understand reporting the issue to Paterno.  In big time college athletics, the rank and file must follow a proper chain of command, especially when dealing with sensitive issues.  What is not understandable is the failure to stop the act.

Think about the 10 year old boy.  If you read the indictment (it was too disturbing for me to get through the whole thing), even if all the facts are interpreted in the most conservative way (if you believe what Paterno said he was told) then, at best, everyone condoned a child molester walking among them.  They couldn’t let Paterno coach another game.  It was uncomfortable watching the students protest in Paterno’s defense, but I could rationalize it as misguided young adults.  Think of uncomfortable scene if Paterno was on the sideline for a thunderous ovation Saturday.  Thank goodness the trustees didn’t allow that to take place.

Another MNB user offers:

You are absolutely dead on in your rant against the quote about Penn State firing “God”.  Laws, rules ,regulations, mores are all merely a codification of what humans need to do in order to function in groups.  One can obey the “letter of the law” and ignore the reason for the law’s existence, that is what is the problem in this Penn State mess.  Rules may have been followed but the reason for the rules was to solve the problem which was a breech of a societal  more regarding children.

From another MNB user:

I am a Penn State grad who is proud of the education and experience that I had there in the early 1980’s.  I would not trade my experience for anything. 

HOWEVER, anyone who would allow children to be abused or exploited, or in any way not report it, all in the name of football or harming ticket sales, in my humble opinion, should be not only fired, but have some other unmentionable things done to them. 

We may never know what happened or who reported what and how much to whom...this story continues to grow and expand daily and hourly..But what I will say, is that if the PSU football team is given any opportunity to remain as part of PSU tradition, I feel that the leadership around the team must change entirely.

I grieve for the boys involved....and how the reputation of my alma mater has suffered. But we can not tolerate abuse in any form.  It had to be...that heads rolled on this one. 

The media is in a frenzy over this, and rightly so, till justice is reached..but these boys may never recover.  I am saddened that the emphasis seems to be on the football “injustice” part of this and not the victims injustice.

I hope my university can recover, make amends and one day, go back to being just a school that has a large and proud group of alumni, who got a great education while they were there.

Now, to get back to David Livingston ... who seems to labor under the mistaken belief that the more he can get his name mentioned in the media - not matter the context - the better it is for his business.

On Friday, Livingston said here that firing Paterno was like firing God, and that “even if he was wrong morally it’s not good for business and is going to hurt ticket sales.

Which prompted many of the emails above.

Well, he’s written in again. And once again, I am conflicted about whether to use it ... but I am going to, because, once again, I think it may reflect the thinking of a number of people, and because it allows me to make a business point:

I should have said firing Paterno was like firing the Pope. The Pope knows some of the priests have done wrong but he's not going to get fired.  He has a multi billion dollar business to run called the Roman Catholic Church.

Not sure if you have been to State College but the football stadium is to Penn State what St. Peter's Basilica is to Rome.  Paterno is like the Pope.  And the students and fans are like a cult.  Paterno was probably the highest paid state employee and probably had more power than the governor.

Seriously, when 4,000 students riot over a coaching change, its surreal.

What should have happened was Paterno should have called a friend of a friend who would have assisted Sandusky in permanently disappearing.  Then paid off the victim.  I've heard other people have gone missing who have messed with the program.   Football is a multi million dollar business in State College and messing with that, well its going to piss off the wrong people.

So what you are suggesting is that Paterno and Penn State should have gone to even greater efforts to cover this scandal up? (I think you are even proposing that a well-timed murder/kidnapping would have been appropriate.)

That is your definition of a smart business move?

Forget the fact that such a move would reflect absolutely no moral compass, no sense of decency, no ability to discern between right and wrong.

Forget about the fact that your Catholic Church analogy doesn’t really work, since for a lot of people the Church’s moves have established clearly that it has absolutely no moral authority, and what does a church have if it has no moral authority?

It would be a stupid business move. Utterly, totally stupid.

Even if your solution solved the short-term problem, you have allowed an environment to exist that allows for immoral, unethical behavior. You haven’t solved the long-term problem.

You haven’t eliminated the cancer. You’ve cut out a couple of tumors, maybe, but haven;t really treated the disease. And you’ve allowed the patient to walk around thinking that he has been cured, while a cancer continues to fester and grow and compromise all the other organs in his body.

So, no. Paying off the victims and arranging for some disappearances is not an intelligent way to conduct business. Not to mention immoral, unethical, and completely devoid of any sense of decency.

Speaking only for myself, I could not hire anyone who would ever suggest that such a strategy makes sense.

And now, while I believe in the free and open expression of differing opinions, I have to admit that I don’t want to give this absurd approach any more space. Because it makes my stomach hurt.

Published on: November 14, 2011

In Week 10 of National Football League action...

Oakland 24
San Diego 17

New Orleans 26
Atlanta 23

Tennessee 30
Carolina 3

Pittsburgh 24
Cincinnati 17

St. Louis 13
Cleveland 12

Buffalo 7
Dallas 44

Jacksonville 17
Indianapolis 3

Denver 17
Kansas City 10

Washington 9
Miami 20

Arizona 21
Philadelphia 17

Houston 37
Tampa Bay 9

Baltimore 17
Seattle 22

Detroit 13
Chicago 37

NY Giants 20
San Francisco 27

New England 37
NY Jets 16