retail news in context, analysis with attitude

Published on: November 22, 2011

by Michael Sansolo


One of the benefits of attending a college with a program in physical education was that we liberal arts students got a chance to learn many different sports. I don’t know why, but I once chose a course in figure skating and learned a lot about balance and backward skating. Though I didn’t know it at the time, I also got a huge lesson in life and business.

Here’s why. When you try to do anything in figure skating there is one simple rule: if you never fall, you aren’t trying hard enough. Since I spent a lot of time on my butt, I felt I was trying really hard.

I recalled that lesson this week while reading an interview in the New York Times with Kathleen Flanagan, president of CEO of Abt Associates, a consulting firm. (The Times article appeared in a column called “Corner Office” that appears every Sunday in the business section. It should be mandatory reading for anyone aspiring to leadership.)

Flanagan recounted her rapid climb up the corporate ladder and how it came with one big lesson early on. Sensing her nervousness at moving into management while still in her 20s, Flanagan’s boss told her to both embrace the butterflies she had in her stomach, while she maintained steadfast belief in herself. (It’s kind of like the great advice on advancement from the film Bull Durham: “You play this game with fear and arrogance.”)

It’s easy to read a lot into Flanagan’s story about butterflies in the stomach, a condition I’m betting all of us have experienced countless times. Most of the time we get those runaway nerves when we venture into new places—literally or figuratively. When we do the routine, we rarely feel any form of anxiety. If anything, we’re more likely to feel boredom or déjà vu. When we go where, as Star Trek tells us, we’ve never gone before, the butterflies get active and big.

Just as with figure skating, you can’t do anything if you don’t practice and master the basics, but you certainly don’t break any boundaries by simply skating circles around the rink. When you take a chance you might fall on your butt, but that is the only way to get airborne. In business the reality is different because if you don’t take the chance you risk watching while someone who does. If, and when, they succeed their advantage can be overwhelming. Taking chances seems so risky in our current environment, when cost cutting rules, but it’s riskier still to do nothing when companies like Amazon or Facebook rewrite the rules with every step they take.

It seems those lessons come at us constantly and while we enjoy some Schadenfreude when a company like Netflix or Bank of America makes a huge mistake, we have to admire their guts for trying. It’s worth keeping that in mind while we watch Walmart open smaller stores, Dollar General open larger ones and see Google experiment with changing the way everyone pays for everything.

It’s worth asking regularly whether you are skating around in circles or trying to soar with the butterflies.


Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: November 22, 2011

by Kevin Coupe

So much for six degrees of separation.

The New York Times this morning reports that scientists at Facebook and the University of Milan have done some recalculating, and now say that “the average number of acquaintances separating any two people in the world was not six but 4.74.”
The estimate comes via a one-month experiment run on Facebook. According to the Times, “The researchers used a set of algorithms developed at the University of Milan to calculate the average distance between any two people by computing a vast number of sample paths among Facebook users. They found that the average number of links from one arbitrarily selected person to another was 4.74. In the United States, where more than half of people over 13 are on Facebook, it was just 4.37.”

Now, there are legitimate questions that can be raised about this study. For one thing, it was a self-selecting subject group - if you aren’t on Facebook, you weren’t considered. For another, the definition of “friend” isn’t what it used to be. (I have more than 22,000 MNB subscribers ... am I just separated from them by one degree? It all depends on your definitions.)

But the real message of this study is not in the specific numbers. Rather, it is in the simple notion that however you treat one specific customer, you have to understand that this treatment may well be communicated to thousands, perhaps hundreds of thousands, other people.

That is both powerful, and scary. Powerful, because if you do something right, it will be communicated enthusiastically to a lot of other people. Scary, because if you mess up, it is unlikely to be just an isolated incident.

Not only do leaders and managers have to think about that, but they need to make sure that all the people on the front lines of their businesses understand just how fragile the relationship with the shopper can be, and how they are uniquely and individually responsible for the company’s success or failure.

It can be an Eye-Opener.

Published on: November 22, 2011

Good piece in USA Today focusing on the outright “weird” eating habits of Millennials, who nosh “as if our social-media habits are going right to our stomachs.”

No longer do people eat breakfast foods at breakfast, lunch foods at lunchtime, and traditional dinner foods at suppertime - people eat what they want, when they want it, and they don’t pay attention to traditional definitions.

“These may seem like quirky, student eating habits, but they're evolving into lifetime traits,” USA Today writes. “The numbers are mind-boggling. At least 35% of the meals eaten by Millennials aren't meals at all, but snacks, reports consultancy The Kruse Company. Four in 10 Millennials snack more than once daily, reports research firm Technomic. And only 5% of all consumers eat three square meals a day, says Technomic.”

There are marketing implications: “A culture hungry to put its personal stamp on everything it touches is driving some food makers and restaurant operators bonkers. At the same time, it's offering all kinds of opportunities to those willing to sprint ahead of the food curve.” Many companies “have turned their new product labs and test kitchens on their heads. It's no longer about inventing the next big meal, but about concocting the next big snack.”

Published on: November 22, 2011

The Seattle Times reports that the Seattle City Council seems poised to adopt new legislation that would ban the use of free plastic shopping bags, and impose a five-cent fee apiece on paper shopping bags. If passed, it would take effect on July 1, 2012.

According to the story, “The Seattle ordinance is modeled on one adopted this year in Bellingham, which takes effect next summer ... Council members say the measure would help clean up Puget Sound and protect marine life.”

The story notes that Hilex Poly, the nation’s largest manufacturer of plastic bags, said yesterday it prefers a statewide approach, and said that the proposal is “simplistic” and “does not address plastic litter in all of its forms.”

PCC Natural Markets (PCC), the nation’s largest consumer-owned grocery retailer, has announced its support for the proposed ordinance, noting that it “discontinued offering plastic shopping bags to customers at all of its stores – within and outside of Seattle city limits – in October 2007. PCC shoppers responded very positively to the elimination of plastic bags at checkout; two-thirds of PCC customers bring their own reusable bags or opt not to use a PCC-provided paper bag for their baggable purchases.”

“PCC wholeheartedly endorses this highly visible and impactful step the City of Seattle is taking to reduce the considerable and unnecessary waste generated by the distribution of single-use plastic shopping bags,” says Tracy Wolpert, PCC’s CEO. “We know from experience that consumers will ultimately view this ban as an initiative proposed with the health and safety of our communities and the environment in mind.”

The Times notes that Town & Country Markets, which has six grocery stores in the Seattle area, also supports the plastic-bag ban. "Getting plastic out of the system is the right thing to do," says Tony D'Onofrio, sustainability director for the markets.

Published on: November 22, 2011

Lubbock, Texas-based United Supermarkets announced a public-private partnership with Texas Tech University and Texas Tech University Health Sciences Center “to develop, implement and evaluate a multi-tiered approach to enhance primary cancer prevention and help cancer survivors reduce their risk for cancer recurrence, within rural communities. This project is funded by the Cancer Prevention Research Institute of Texas (CPRIT) and runs through February 2013.”

According to the announcement, “The goal of the project is to substantially prevent cancer and cancer recurrences in one rural community – Muleshoe, Texas.  If successful, this project will develop a feasible intervention program which could be replicated and enable other small, rural communities to successfully address multiple cancer risks and ultimately reduce the cancer incidence within the community ... The project aims to address the most preventable sources of cancer – obesity, tobacco use and sunburn. Randomly selected participants will be evaluated through repeated measurements of body mass index (BMI) and blood pressure levels, combined with an analysis of the participants’ three-day food records, supermarket sales records, and survey data assessing health status and cancer-preventing related behaviors. Additionally, behavior changes in both the type and frequency of sunburn prevention practices and tobacco product usage will be monitored.”

Published on: November 22, 2011

Just a day after McDonald’s and Target dropped Minnesota-based Sparboe Farms as an egg supplier, citing undercover videos shot by the advocacy group Mercy for Animals that showed cases of animal cruelty, Sparboe said that the video depicted “activity completely at odds with Sparboe's animal welfare policies and do not represent their company or the high standards that have always been a hallmark of their operations.”

The company acknowledged that the video and a subsequent internal investigation “confirmed violations of Sparboe's animal care policies,” and said that it has “zero tolerance” for such acts, and that the people involved have been terminated.

Published on: November 22, 2011

The National Retail Federation (NRF) is out with its annual list of the retailers with the best customers service, and they are, in alphabetical order: Amazon.com, JCPenny, Kohl’s Department Stores, Land’s End, L.L. Bean, Newegg, Nordstrom, Overstock.com, QVC, and Zappos.

How these companies are ranked won’t be released until the annual NRF Show in New York in January.

Published on: November 22, 2011

In the UK, the Telegraph reports that eBay plans to open a brick-and-mortar store in London, just off Oxford Street, for just five days - from December 1-5.

The story says that “the shop will have no tills and only a very limited selection of products, none of which shoppers can take away with them. Instead, 200 of the bestselling items such as a party dress from House of Fraser or an inflatable ride-in Dalek toy will be on display for customers to inspect. If they want to buy it, they can then use their smart phones to scan in a so-called QR code on the ticket ... There will also be a separate area of the shop with eight tablet computers, with the full assortment of eBay's 200m products, if people just want to browse and buy from the internet.”

Published on: November 22, 2011

• The Boston Globe has a piece about a website called Zaarly.com, described as “an online marketplace where people list services or goods they want to buy, such as Apple Inc.’s iPhone, bicycles, or sweaters.” The site serves as a way for people to either avoid long lines or hire a personal shopper who can stand on line for them.

According to the piece, Zaarly.com is one of a number of sites that “can help people save time and money, offering bargain-hunting tips and the best comparison deals from top retailers, analysts said, sparing consumers the trouble of surfing myriad retail sites or walking through dozens of stores.”

Published on: November 22, 2011

• The Wall Street Journal reports that meat producers are compensating for higher costs and a decline in Americans’ meat eating habits by doing two things: 1) turning to foreign markets, where US beef can fetch a higher price than in home markets, and 2) focusing on branded, value-added items that consumers perceive as being worth a higher price.

• The Boston Globe reports on yet another holiday survey, this one from NPD Group. This one says that “17 percent of survey respondents told NPD that they plan to start their shopping on Thanksgiving weekend this year, compared with 12 percent in 2010 and 11 percent in 2009.”

The reason? NPD says that “brick-and-mortar retailers are feeling some heat from online rivals. In a bid to generate excitement, brick-and-mortar merchants are extending their Thanksgiving hours and loading up on promotions as they look to entice consumers to come to their stores.”

• The Minneapolis/St. Paul Business Journal reports that Target Corp. has received petitions with 190,000 signatures asking that the company reconsider its decision to open its doors at midnight on Black Friday, the day after Thanksgiving.

However, the story also says that despite the outpouring, Target is not going to change its mind.

Published on: November 22, 2011

• The Network of Executive Women (NEW) announced that it has named Kathy Bayert as its director of learning and advisory services.

Bayert, who most recently served as senior manager, organizational effectiveness for the Sara Lee Corp. Organizational Development Global Center of Excellence, will oversee and develop training tools for members and develop content for the Network's educational programs, including the NEW CPG Retail Diversity Forum, NEW Executive Leaders Forum and NEW Leadership Summit. She will also act as an advisor to NEW sponsors and members working to build and sustain workplace diversity and inclusion activities.

Published on: November 22, 2011

I received the following email yesterday from Monte Peterson, chairman of Salt Lake City-based Associated Food Stores’ Board of Directors, responding to a piece that ran last Friday about layoffs, salary cutbacks and other changes taking place at the company:

For some time now, the Board of Directors (made up of independent store owners that are members of Associated Food Stores) has been reviewing all aspects of our company. Neal Berube had been asked to lead a team of executives at AFS to help us identify areas of value and areas within our company that need continuous improvements.

On November 11, 2011 the Board of Directors unanimously elected Neal Berube as President and Chief Executive Officer of Associated Food Stores. At that time the Board also approved and set into action a detailed plan which would allow us to further position the company as a leader in the industry and allow our retailers to thrive in our respective markets.

The leadership had to make some difficult decisions which companies everywhere have been making for the past two to three years. Our leadership values every team member and has been optimistic about a potential economic turnaround. Unfortunately, the global and national economic situation has not turned toward the positive as quickly as hoped.

In coordination with the Board of Directors, AFS leadership made adjustments and 70 positions within the company were affected. We were able to provide opportunities for 42 of the 70 positions as they were transferred from administrative and other supporting functions to merchandising and store-level positions in an effort to invest in retail support. These 42 people represent some of AFS’ best and having them at retail will have a positive impact on our store guests’ experience throughout the holiday season and over the long term. The people, whom we were not able to offer a continuing opportunity, were treated with respect and compassion.

The reality of the situation is we currently hold the number one position in the Utah market with 35% of the share. Our cash flows are strong due in part to a dramatic turnaround at Fresh Market. Much has been said about Fresh Market over the last couple of years. We are proud to say that the Fresh Market store teams have been hard at work looking for ways to improve store operations and their guest experience. Prior to taking over as CEO of AFS, Neal Berube was directly involved in the turnaround during his previous role as President of Fresh Market.

Associated Food Stores has serviced the needs of its member retailers for more than 70 years. We look forward to continuing that legacy for decades to come. Our Board and team members are incredibly optimistic about our new leadership and look forward to working with them during the months and years ahead.

Fair enough.

What Mr. Peterson is discreet enough not to mention in his email is that the leadership at AFS was dismayed by my story last Friday and felt strongly that I had not been fair to them in how it was reported and the details that were in the story. I’ve had some time to think about this, and to a great degree I think they are right - and while they have not asked for me to address this issue, I’m going to do so anyway.

The meat of the story was that a) as many as six dozen people had been laid off, b) a number of people have been asked to take salary cuts of up to 25 percent, and c) some of the people laid off were escorted from the building.

I was clear in my reporting that this story came via several sources, but one thing that I was not clear enough about was why I was unable to reach AFS for comment before posting the piece. I wrote that “MNB was informed about the layoffs late last night, and was unable to reach AFS for comment,” but what I meant to convey was that because of the timing of the tip and when I file MNB, and the time difference between New England and Utah, there was nobody I could call to get a comment. It was not like I tried and was rebuffed - and I should have been clearer in my language.

As for the facts of the case ... while there is a small difference in numbers, the original story did not mention that a majority of the people laid off from existing jobs were offered other positions. That’s not what I was told by my sources, but that is the stated position of AFS. The company also maintains that nobody was escorted from the premises, and that there were no significant salary cuts. Again, that’s not what I was told.

Ultimately, AFS feels that if I were doing my job right, I would have held the story for a day or two while checking with them for comment, that it was irresponsible for me to depend on people who might be disgruntled for my information. As I said last Friday, I felt secure about my sources ... and I was as clear as I could be, without revealing names, about where the story came from. That said, upon reflection, I think AFS is right on this one.

If I had it to do over again, or if faced with similar circumstances, I think I would probably make a different decision. One of the things about the internet and forums like MNB is that they make it possible to spread information with amazing speed. But speed for its own sake isn’t always a good idea. As has often been said here on MNB in a number of contexts, just because you can do a thing doesn’t mean you should do a thing.

There were elements of my commentary that I think were pretty tough. I wrote then and continue to believe that this is a difficult time of year to impose these kinds of changes, and it can have an enormous negative impact on morale. But let me also amplify on something else I wrote last Friday - which is that sometimes companies and their leaders have to make tough decisions, and there is almost never a good time to take drastic measures. There are bad times and less bad times. And sometimes, life doesn’t give you a choice.

I also believe that AFS is in a time of transition. There has been a change in the company’s leadership, there are changes taking place in terms of staffing and operations, and the company faces enormous challenges - some of them as a result of past decisions, and some of them because of an unforgiving economy. It is my sense that perhaps not everyone in the company is on the same page ... and it is up to current management to get everyone reading from the same hymnal, heading in the same direction. (I know I’m mixing my metaphors here, but c’est la vie.)

After 10 years of doing this, you’d think that I’d learn not to screw up. But the thing is, I will make mistakes from time to time. I hope they’re mostly small ones. But whether they are small or large, or matters of fact or judgement or opinion, the very least you can expect is that I won’t be defensive about them, and that I’ll be willing to explore my thinking and my actions and consider whether I should have done things differently.

In this case, I should have. Mea culpa, mea culpa, mea maxima culpa.

Published on: November 22, 2011

• In Monday Night Football action, the New England Patriots destroyed the Kansas City Chiefs 34-3.

• Justin Verlander, starting pitcher for the Detroit Tigers, won the American League Most Valuable Player award yesterday, just one week after he won the Cy Young award, which goes to the league’s best pitcher. He is the first starting pitcher to win both awards since Roger Clemens did it a quarter-century ago.