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    Published on: November 17, 2011

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

    This morning I’d like to talk about the notion of core values.

    I’m prompted by the reports coming out that Starbucks, apparently tired of being used as New York City’s public restroom, has decided to restrict access to its bathrooms in the Big Apple, even making some of them employee-only.

    Now, I get the impression that this plan is in flux, and the company may even have changed its mind by the time you see this. But this is sort of a big deal.

    Various newspapers in New York make the point that in a city with limited access to public restrooms, it was great to have a Starbucks on almost every corner. Not only could you get a latte, but you could take care of other personal business as well ... and I’m not talking about checking email on your laptop.

    Hey, I’m a middle aged guy. Access to clean public restrooms is sort of important to me. When the temperatures are changing, it can actually reach crisis levels.

    The thing is, it always has sort of appeared to me that having open and clean restrooms, if not a core value at Starbucks, certainly was an important part of the experience. It was part of being the third place - especially important because when you are relaxing in a third place, drinking giant coffees, a restroom can be an important thing to have.

    Now, people may have to go elsewhere.

    Now, I get that Starbucks probably is not just tired of being the de facto public restroom for the city of New York, but probably also tired of paying for repairs and cleaning and all the other costs associated with keeping these bathrooms clean and functioning. I get it.

    The thing is, sometimes you have to make choices. Is this a core offering, or isn’t it? Is it part of what makes Starbucks Starbucks, or isn’t it? These are all questions we have to ask ourselves about our businesses, and sometimes the answers aren’t always to take the easy solution. Or the cheaper solution.

    Sometimes - in fact, oftentimes - it means we have to do the hard thing. The more expensive thing. The thing that makes us different.

    Again, I don’t know if this potential move by Starbucks qualifies. I suspect it might, but they’ll have to decide that for themselves. And then, of course, the ultimate judge and jury will decide - the shopper.

    They may buy smaller coffees. They may not hang out as long. They may buy their coffee elsewhere. We’ll see.

    But here’s the message I want to send to Starbucks, and any other company thinking about decisions like these. This isn’t a decision about plumbing. It is about something far more fundamental.

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

    KC's View:

    Published on: November 17, 2011

    by Kevin Coupe

    Adjust or die.

    That would seem to be what the Salvation Army is doing this holiday season. The New York Times reports that in addition to urging people to throw money in those familiar pots, the charity also “is testing the use of Square, a mobile payments start-up that allows anyone to accept credit card payments via mobile devices.”

    According to the Times, “The Salvation Army plans to put Square to use at 10 locations each in Dallas, San Francisco, Chicago and New York. Bell ringers will carry Android smartphones donated by Sprint Nextel that are equipped with Square’s postage-stamp-size card reader and two apps, one from Square and one from the Salvation Army. Donors swipe a card, just as they would at any credit card processing terminal, and the money goes into the Salvation Army’s account.”

    While Square does get 2.75 percent of teach contribution, the arrangement could actually be positive for the Salvation Army, since it also could reduce the opportunity for theft that exists with small cash donations. And, since fewer people carry cash these days, it is termed by one expert as being a “no-brainer” if the charity wants to be relevant in 2011 and beyond.

    It is that kind of Eyes-Open approach to doing business that is required these days.
    KC's View:

    Published on: November 17, 2011

    The Washington Post reports that food industry lobbyists have convinced the US Senate and House of Representatives to reject a move by the Obama administration and the US Department of Agriculture (USDA) to mandate that school lunches be more nutritious by offering more fruits and vegetables and reduce the amount of starch and tomato paste included in meals.

    According to the story, opponents of any change argued that the cost of vegetables would make such a change economically prohibitive, especially at a time when many school districts are economically challenged.

    The story notes that “the USDA proposal, based on recommendations from the National Academies’ Institute of Medicine, would put a one-cup-per-week limit on the amount of white potatoes and other starchy vegetables served to schoolchildren.

    “The proposal also would have nixed the favorable treatment granted to tomato paste.

    “Currently, an eighth of a cup of tomato paste is credited with as much nutritional value as half a cup of vegetables and thus counts as one vegetable serving. That enables foodmakers to better market their pizzas to schools.

    “The argument for the special consideration given to tomato paste has been that once it’s mixed with water, as often happens in making pizza sauce, more of a vegetable is created.

    “The USDA wants to bring tomato paste in line with how other fruit pastes and purees are treated.

    “Ordinarily, these types of issues would be hashed out as the USDA gathers comments from the public while finalizing the proposal. But several lawmakers made an end run around the process. They added amendments to block the two changes — on starchy vegetables and tomato paste — to agriculture spending bills moving through the Senate and House.”

    Margo Wootan, a director at the Center for Science in the Public Interest, responded to the move: “Given all the concern about childhood obesity, Congress should be helping schools serve healthier foods, not hurting that effort.”

    Meanwhile, the Wall Street Journal this morning reports on a new analysis of federal data that “provides a dismal picture of children's cardiovascular health that suggests the current generation of teenagers could be at risk of increased heart disease” and “found that the adolescents performed poorly overall on a set of seven criteria set by the American Heart Association for ideal cardiovascular health.”

    According to the story, “Diet in particular was a problem, with not one of the 5,450 children randomly selected for the survey from the U.S. population meeting the standards for diet. Taking out the diet measure, still just 16.4% of boys and 11.3% of girls were rated ideal on all of the other six criteria, which included smoking, exercise, weight, cholesterol, blood pressure and blood sugar.”

    It was just last week, the Journal notes, that “the National Heart, Lung and Blood Institute called for all children between 9 and 11 years old to get a cholesterol test in an effort to detect heart risk at an early age.”
    KC's View:
    First of all, I’m with Jon Stewart on this one. With all the crap going on in this country, the one thing that Congress can agree on is that pizza is a vegetable and that kids ought not be restricted in their access to french fries. (Maybe that’s what they’ve been feeding the Super Committee.)

    I love french fries. I love pizza. I mean, I really love them. So much so that I have to be careful about how much I consume. And I always tried to be careful about how much I fed my kids.

    I realize that Congress isn’t really saying that pizza is a vegetable, but this decision has the potential of being seen in the same light as the old “ketchup is a vegetable” ruling back in the eighties.

    I realize that there is an argument that dictating what kids can eat in school-served lunches could be seen as an unnecessary government intrusion, but the opposing argument is that the physical conditioning of our kids is not just a health care issue, but a national security issue. That’s a pretty compelling argument ... and I think that if we’re trying to educate our kids, it seems eminently sensible to give them healthier food and a rounded diet - which can include pizza and french fries, but with some intelligent limits.

    What people really ought to be upset by is the fact that lobbyists seem to have this kind of sway in Washington. The subject may be pizza and french fries, but we’re really talking about the meat and potatoes of how Washington works. And it is sort of disgusting.

    Best government money can buy.

    I cannot help but think of the speech that Arthur Jensen, the network executive played by Ned Beatty, delivers to Howard Beale (Peter Finch) in Network:

    You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rubles, pounds, and shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today

    And YOU have meddled with the primal forces of nature, and YOU... WILL... ATONE! Am I getting through to you, Mr. Beale?

    You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM, and ITT, and AT&T, and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state, Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do.

    We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business, Mr. Beale. It has been since man crawled out of the slime. And our children will live, Mr. Beale, to see that... perfect world... in which there's no war or famine, oppression or brutality. One vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock. All necessities provided, all anxieties tranquilized, all boredom amused.


    Can I get an Amen?

    Published on: November 17, 2011

    The Coinstar Grocery Snapshot Survey is out, with the following findings:

    • 81 percent of consumers “are spending the same amount or more money on groceries in the last three months (August - October) than they did in the three months before.”

    • “56 percent of consumers have used more coupons within the past 6 months than they have in the past.”

    • “57 percent of consumers say they are most encouraged to use loyalty or value cards when instant rewards are credited to their current purchase.”

    • “Consumers are relying more on the money they have in their pockets, using debit cards (42%) or cash (27%) as their primary form of payment for groceries.”

    When asked what constitutes great customer service in supermarkets, shoppers told Coinstar it is 1) knowledgeable and friendly employees (63%), 2) varied, extensive, and well-organized inventory (62%), and 3) ease and speed of the experience made possible by efficient staff (61%).
    KC's View:

    Published on: November 17, 2011

    The National Retail Federation (NRF) is out with its annual preliminary Black Friday Shopping Survey, predicting that “up to 152 million people plan to shop Black Friday weekend (Friday, Saturday and Sunday), higher than the 138 million people who planned to do so last year. According to the survey, 74 million people say they will definitely hit the stores and another 77 million are waiting to see if the bargains are worth braving the cold and the crowds.”

    In addition, the report says that “nearly one-quarter (23.1%) will seek out coupon websites like RetailMeNot.com and FatWallet.com, and 32.3 percent will specifically keep track of the email coupons they receive from retailers ... The survey found 17.3 percent will monitor retailers’ Facebook pages and 11.3 percent will check out group buying sites like Groupon and LivingSocial. Of those who own tablet devices and who plan to shop for or research holiday items this year, one in five (21.3%) will seek out group buying sites and 31.2 percent will check out retailers’ Facebook pages.”

    At the same time, the Boston Globe reports that a survey from Accenture suggests that “only 44 percent of consumers are expecting to shop on Black Friday, the day after Thanksgiving and one of the busiest shopping days of the year ... That’s down from 47 percent last year --- and there’s a strong possibility that Black Friday 2011 could see the lowest Black Friday turnout at stores in three years.”

    Accenture offers a possible explanation - that “penny-pinching consumers are focused on discounts, and they believe that retailers won’t offer their best discounts until just before Christmas. As a result, these consumers are inclined to put of their holiday shopping until later in the season.”
    KC's View:
    I see all these numbers and projections, and it convinces me that there is only one thing to do on Black Friday.

    Sleep late.

    Published on: November 17, 2011

    MyHealthNewsDaily.com reports on a new study from Auburn University suggesting that “people who snacked more frequently had higher amounts of fruit, whole grains and milk in their diets, and had lower levels of sodium ... the study showed that the more a person snacked, the more likely he or she was to eat both healthy snacks and healthy meals.”

    However, the study also concluded that “frequent snackers fell short of eating enough vegetables, and the overall healthiness of the study participants' diets left a lot of room for improvement.”
    KC's View:

    Published on: November 17, 2011

    The Associated Press reports that more than 25 million current and former Netflix subscribers are being offered what is described as a “sliver” of a $27.5 million settlement related to price fixing charges against Walmart and Netflix - less than one dollar apiece after lawyers’ fees of more than $7 million are taken out.

    According to the story, the settlement offer comes from Walmart - which is not admitting any wrongdoing - and goes back to the company’s decision in 2005 to get out of the DVD rental business and outsource it to Netflix: “Wal-Mart's retreat from DVD rentals represented a David-versus-Goliath victory for Netflix. But another large company, Blockbuster, still loomed as an imposing threat. Netflix lowered its prices and prevailed in that clash too, culminating in Blockbuster's bankruptcy last year.

    “As Wal-Mart and Blockbuster fell by the wayside, Netflix's growth rapidly accelerated ... Dozens of lawsuits filed in state and federal cases alleged Netflix wouldn't have done as well had it not secretly negotiated with Wal-Mart to divide up the DVD market. The lawsuits, which were eventually consolidated into the federal case in Oakland, contend the alleged agreement kept the prices to rent and buy DVDs much higher than they otherwise would have been. The suit points to internal Netflix documents indicating that Netflix was considering lowering the monthly price on its most popular subscription plan from $22 to $16 per month just before Wal-Mart dropped out.”

    Netflix says that there was no price fixing, and that Walmart simply dropped out because it could not compete in the rental business.

    AP writes that “most people covered by the agreement were notified when the details were sent in mass e-mails late Tuesday. A federal court judge gave tentative approval of the settlement in early September. A final hearing on the settlement's merits is scheduled March 14 before U.S. District Judge Phyllis Hamilton in Oakland, Calif.”
    KC's View:
    There is much about this story that does not make sense, at least not to me.

    First of all, how come Walmart is writing a check and not Netflix? Am I missing something?

    Second, maybe it is just me, but if I were Netflix and had planned to lower my prices to better compete with Walmart and Netflix ... and then Walmart decided to outsource its DVD rental business to me, and I thought that I had Blockbuster on the ropes ... then I might decide not to lower my prices, simply because I might not have to.

    Is this price fixing? And besides - and I realize this exposes my stunning lack of legal knowledge - how come two partners in a business venture are not allowed to discuss how to price their product in a competitive way?

    On the other hand, Walmart is willing to write a $27.5 million check...so there must be some fire somewhere, and not just smoke.

    Published on: November 17, 2011

    Bloomberg reports that Starbucks is raising prices “in certain U.S. markets to help recoup higher commodity and rent costs ... the price increases vary by store and region.”

    Alan Hilowitz, a company spokesman, said, ““We regularly review pricing and make adjustments as needed to support the business.”

    • The Boston Globe reports that Dunkin’ Donuts will sell the one-cup-at-a-time Keurig Brewing System at select stores through the end of the year “as a way for customers to buy the coffee maker as a holiday gift ... Dunkin’ Donuts recently began selling K-Cup Portion Packs that are designed to be used by the Keurig brewing system.”
    KC's View:

    Published on: November 17, 2011

    • The annual GS1 Connect 2012 conference - the event formerly known as “U Connect,” renamed to be more recognizable and relevant to potential attendees - has been scheduled for June 4-7, 2012, at the Aria Resort and Casino in Las Vegas.

    In addition to sector-specific content, GS1 Connect will present sessions that provide best practices and innovations supporting key supply-chain processes for product and location identification; inventory efficiency; traceability and safety; business-to-consumer (B2C) communication; trading-partner collaboration; and data quality, data management, and data synchronization.

    • The Lakeland Ledger reports that “Publix Super Markets Inc. and Houston-based Waste Management have “announced the opening of the Organics Recycling Facility in Okeechobee. The seven-acre facility, located next to a Waste Management landfill, uses a computer-controlled aeration system to process food waste from Publix stores into organic compost products.”

    • The Boston Globe reports on a new food franchise that may be getting some traction - Energy Kitchen, which has “a menu that features no item with more than 500 calories - think the Bison Burger and steamed vegetables.” The company says that “menu options include the likes of grilled salmon and turkey meat loaf and such side dishes as baked fries, steamed vegetables, mashed sweet potatoes, and asparagus salad. The food is grilled, baked, or steamed, but never fried.”

    According to the story, “the company believes that there is an appetite to open a thousand of its restaurants over the next decade ... Currently, 11 Energy Kitchens are up and running in New York, New Jersey, and Florida.”

    • The Chicago Sun Times reports that a federal bankruptcy judge has ordered the public auction of Moo & Oink, described as a “revered African-American community meat-store operator” in the Windy City. The company was placed in Chapter 7 bankruptcy on September 30, the story notes, “after the United Food and Commercial Workers Union Local 1546 and the union pension and health and welfare funds filed a claim alleging that Moo & Oink owes the pension and other funds $3 million. The union represented Moo & Oink employees.

    “Moo & Oink disagrees that it owes $3 million to the pension fund, said attorney Rick Firfer, who represents Moo & Oink.”
    KC's View:

    Published on: November 17, 2011

    Regarding Walmart’s US same store sales increase, one MNB user wrote:

    Is a 1.3% comp sales number really something to write home about when inflation is 3-4% at a minimum?  Don't think they are out of the woods yet, by any stretch of the imagination!



    On the subject of escalating losses by the US Postal Service (USPS), one MNB user wrote:

    Hope you have seen the USPS television commercial that’s been airing recently that discusses how (and I’m paraphrasing here) “customers appreciate getting paper billing statements for services, paying bills with checks through the mail, and receiving advertisements in the mailbox”, all while showing happy people placing the monthly statements neatly into a file cabinet.  Talk about being tone deaf and out of touch with today’s consumers, businesses, economy and environmental emphasis.

    The only thing missing was the Packard automobile driving down the street.


    They actually did plan to show a mode of transportation in that commercial. But they couldn’t get the horse out of the barn.

    Another MNB user wrote:

    Several years ago Ohio Gov. Taft eliminated the state liquor stores shifting that to independent agency stores - e.g. there are now "liquor stores" inside some supermarkets as well as free standing privately owned liquor stores.  This saved a lot of money and actually was more convenient for customers.  The US Postal Service should eliminate their retail operations and shift that to independent agency stores which might be located inside other retailers (e.g. supermarkets) or privately owned retail operations. 

    The Postal Service would still ship the mail and parcels, and deliver the mail.  Service would also improve.  A long time postal clerk nearby retired and is now working part time as a cashier at a supermarket.  I can't help but laugh at the fact that this former Post Office employee moves a lot faster at this new job than I observed when that person worked at the post office.




    We had a piece the other day about JC Penney’s reinvention efforts, engineered by the former chief of the Apple Stores. Which led MNB user Gary Harris to write:

    Had a chance to sit in on a JC Penney presentation last week at the Learning2011 Conference in Orlando.

    Two of their trainers gave a presentation on a new initiative for their 31 field trainers who used to schlep around with a bunch of 4” thick training manuals and hold product sessions at the stores. The content has been repurposed for (wait for it…) the iPad. (who knew?) Trainers now bring the content directly to the sales floor and teach employees between customer interactions.


    It’s a start.
    KC's View: