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    Published on: November 23, 2011

    FaceTime is available as both video and in text form. They are similar, but not identical. Feel free to enjoy either, or both...

    There is a whole list of things I could talk about this week. The problem is, I might lose my temper.

    There’s the ceaseless flood of press releases from every consultant on the planet about Black Friday, Cyber Monday and every potential shopping trend known to man. It all boils down to this: desperate retailers are going to open earlier and earlier, hoping to get a few early dollars from desperate consumers ... and whatever happens next weekend, in the long run there will be even more sales down the road and even more desperate retailers running them. Maybe we could actually wait until there are some results before analyzing them?

    There’s the continuing abuse of the words “gourmet” and “artisan.” Just stop. I’m begging you. Fast food pizza and burgers cannot be either, even if you call it that. Stop lying to the American public.

    There’s the Congressional Super Committee, which was completely mis-named. Should have called it the Congressional Stupid Committee, because there was no way that you could put all these politicians in a room in this environment and gotten any sort of meaningful compromise. Though I am convinced that there is one way it could have worked - and that is if all the members of the committee had been women.

    Or, I could complain about “Fringe” going on hiatus until next January, which is completely unacceptable. Or about “The Daily Show” going on vacation for Thanksgiving, which leaves me without any sensible political analysis, save for “Morning Joe,” for a couple of weeks. Or about the new Star Trek movie not coming out until 2013.

    I’m just totally ticked off about all this stuff.

    But it is Thanksgiving I’m going to take a deep breath, let all the anxiety flow away, and just say, Happy Thanksgiving. I hope you have a great one ... that you are able to enjoy the weekend without too much agita from retailers and marketers.

    And, in keeping with this sentiment, may I just say that I was overwhelmed by the number of emails I got last week about MNB’s 10th birthday. The fact that you feel the way you do about MNB is enormously touching to me - it is almost as if MNB is as important to your morning as it is to mine. That means a lot, and for that, I am extremely thankful.

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

    KC's View:

    Published on: November 23, 2011

    by Kevin Coupe

    This morning’s Eye-Opener comes courtesy of Feargal Quinn, founder and former CEO of the iconic Irish supermarket chain Superquinn. (He sold the company years ago to an investment group, which recently sold it to the Musgrave group, which hopefully will restore it to past glories. At present, Quinn keeps busy as an elected member of the Irish Senate, as well as host of a television program on which he goes around the country helping businesspeople improve their business strategies and tactics.)

    At the 5th annual Good Food Ireland conference recently, Quinn recalled that the use of the Irish language made Superquinn different from the competition, and added: "I believe the Irish language gives us an advantage that we haven't always used and we can use more."

    That strikes me as being as much metaphor as demonstrable fact. If a retailer can create a straight line of communication with its customers - in essence, speaking a language that others cannot or do not speak - that gives it a tremendous advantage. That is something that Superquinn, during its heyday, always seemed to do - its stores spoke to consumers in a unique way, and told a story about the power of good food. It created powerful connections ... it did not just sell stuff.

    And I suspect that one of the reasons that Superquinn’s new owners ran into trouble is that they lost track of the narrative, and in doing so, lost track of their customers.

    Tell the story. Speak a unique language. In doing so, you can capture the shopper’s attention, imagination ... and at least a part of the shopper’s wallet. You can, in essence, open their eyes.
    KC's View:

    Published on: November 23, 2011

    The Food Marketing Institute (FMI), the National Association of Convenience Stores (NACS), the National Retail Federation (NRF), and two companies – Boscov’s Department Store and Miller Oil Company – have filed a lawsuit challenging the Federal Reserve’s recent ruling on debit card swipe fees.

    According to the announcement, “The legal challenge is a unified response to the fact that the Federal Reserve’s final rule on swipe fees does not follow the legal requirements in the debit card swipe fee portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule did not go far enough; allowing big banks to continue gouging merchants and consumers with unjustifiably high swipe fees and failing to promote the competition among card networks that would help reduce network fees.”

    “FMI’s members will suffer significant and irreparable monetary injury directly traceable to the Board’s misconstruction of the statute,” FMI General Counsel George Green, said. “The bottom line is that we are fighting back against a rule that ignores the clear language in the law and will put more money in the pockets of the big banks at the expense of retailers and their customers.”

    “The Federal Reserve missed an opportunity to give consumers the relief that they deserve and this needs to be corrected,” said NACS President and CEO Hank Armour.

    “The proposed rules followed the law, but the Federal Reserve Board changed its view of the law midcourse and without justification when issuing the final rules,” said Doug Kantor, a partner at the Washington law firm of Steptoe & Johnson and lead counsel in the lawsuit. “Not only did the final version fail to introduce competition, it provided a loophole for the big banks to exploit and actually increase some fees. The Fed’s job was to implement the law as written and it did not do that.”
    KC's View:
    The best defense is a strong offense. I think that it makes sense for retailers and trade associations to get aggressive on this, especially since the banks seem intent on creating strategies and imposing fees that, in essence, seem designed to teach government a lesson for trying to regulate it.

    For me, it is simple. Banks like to impose usurious and hidden fees wherever and whenever they can. They are like vampires - they like to live in the darkness and suck the life out of all they encounter. They need to be exposed to the light, they need to be regulated by intelligent public policy that is based in the fact that they are part of a national infrastructure, not independent of it. And I’m happy to see that someone is fighting back.

    Published on: November 23, 2011

    The Wall Street Journal had an interesting story about how Pfizer plans to begin selling its highly successful Lipitor cholesterol-fighting drug directly to consumers, bypassing traditional pharmacies. The strategic move is necessitated by the fact that the company’s patent protection is about to run out, which means that most patients are likely to move to generic versions of the drug. Pfizer is partnering with a mail order pharmacy company to sell Lipitor at prices comparable to what people would pay for generics.

    According to the story, “The effort may provide a new road map for selling prescription drugs, one no longer circumscribed by 20 years of patent protection and a 1984 law that sought to curb drug spending by authorizing generics following a patent's expiration.

    “Pharmaceutical companies historically abandoned brand-name medicines once the patents ran out, turning to new products. Yet the industry is facing a so-called patent cliff, with medicines tallying more than $100 billion in world-wide sales set to face generic competition in the U.S. over the next several years.”

    At the same time, Pfizer is working to expand the drug’s global reach: “Long term, Pfizer is kick-starting sales in fast-growing emerging markets like China, where the drug maker is betting that growing numbers of people diagnosed with high cholesterol will pay more for a so-called branded generic version of the drug than cheaper no names.”
    KC's View:
    Can you spell “disintermediation”?

    This is a serious effort, marked by the fact that Pfizer has spent more than $600 million in the past year to market Lipitor, which you would not think it would do if it expected sales to go into the toilet. And it could get a lot bigger, because there are a bunch of drugs about to go off the patent cliff and find themselves competing with lower cost generics.

    If it works effectively, expect all sorts of companies to try to figure out how to disintermediate traditional retailers ... who will have to figure out an effective response.

    I’m a Lipitor users, and it will be interesting to see if I get any sort of communications from Pfizer.

    Published on: November 23, 2011

    The New York Times reports that some Starbucks baristas in New York City have followed through on a rumored threat, and are locking up their restrooms and making them available only to employees - a reaction to what they see as the abuse of the facilities by both customers and non-customers.

    “I have personally cleaned up almost every humanly fluid and plenty that didn’t seem human,” one employee posted on a website, the Times notes, while another wrote, “I am continually amazed by what people will do when given a few square feet of privacy. Why do you want to have sex in a bathroom? I think the toilet would be kind of a mood killer.”

    However, as the rumored restroom closings were reported in local and then national media, Starbucks corporate executives took note.

    “Within days,” the Times writes, “according to current and former employees who requested anonymity to avoid getting in trouble with the bosses, higher-ups from Starbucks management visited at least two offending shops and ordered them to liberate their restrooms.

    “The locked lavatories appeared to touch a nerve, exposing the public’s dependence on what is essentially a corporate marketing strategy. Starbucks has long styled its outlets as gathering places where people can sit, use its free Internet access and empty their coffee-filled bladders without being urged to move along.”
    KC's View:
    We had this discussion a lot on MNB, and I get that being NYC’s public restroom comes with its challenges and problems. But the thing is, the upside of that informal designation may be a lot greater than the downside. And I think that’s what the folks at Starbucks need to recognize.

    Published on: November 23, 2011

    MSNBC reports on a UK baker that used Groupon there to offer a 75 percent discount on 12 cupcakes, which normally cost the equivalent of $40 (US).

    The problem was that Rachel Brown underestimated the appeal of the offer - and some 8,500 people signed up for the daily deal. Which meant that she actually had to hire temporary employees to keep up with demand, and ended up losing between three and four dollars on each batch sold.

    "Without doubt, it was my worst ever business decision," she told the BBC. "We had thousands of orders pouring in that really we hadn't expected to have.”

    A Groupon spokesman says that while the company remains in contact with all the companies offering deals through its service, ultimately “they know their businesses best and what they're able to handle.”
    KC's View:
    The lesson seems to be that you need to look before you leap. Or, at least before you bake.

    Published on: November 23, 2011

    MarketWatch reports that Walmart hit a major milestone yesterday - it opened its 10,000th store worldwide, a Sam’s Club near Cuernavaca in central Mexico.

    Crain’s Chicago Business reports that “a group of Illinois warehouse workers has accused Wal-Mart Stores Inc. and a Florida staffing firm of failing to pay employees for the hours they've worked.” According to the story, the “workers claim that Eclipse Advantage promised they would be paid minimum wage, which is $8.25 an hour in Illinois, and given the ability to earn a bonus. But their paychecks, the suit said, failed to match the actual hours employees worked and did not equal minimum wage.”
    KC's View:

    Published on: November 23, 2011

    The Los Angeles Times reports that Naked Juice and its parent company PepsiCo have been sued in Los Angeles County Superior Court, accused of deceptive marketing practices. The suit claims that rather than being”all natural,” Naked Juice actually contains “unnaturally processed and synthetic ingredients” such as zinc oxide, ascorbic acid, and cyanocobalamin.

    The plaintiff in the case is hoping it gets class action status, and is seeking both monetary damages and an injunction that forces Naked Juice to change its marketing practices.

    According to the story, Andrea Foote, a spokeswoman for Naked Juice, would only say that “we stand behind the juices that we craft and we’re committed to full compliance with labeling laws and regulations.”
    KC's View:
    Back in the Nixon ad ministration, Ben Bradlee of the Washington Post used to call that sort of a statement “a non-denial denial.”

    Published on: November 23, 2011

    • The Sacramento Bee reports that “Northern California's major supermarket chains and their union have agreed to extend their labor contract again, amid signs of increasingly difficult negotiations over pay and benefits.

    “The contract was extended to Dec. 15 by Raley's, Safeway and Save Mart, and leaders of the United Food and Commercial Workers. The contract would have run out Saturday night.”

    The contract originally ran out on October 8, but it has been extended twice to this point.

    • The Orange County Register reports that the new loyalty marketing card being used by customers at Fresh & Easy Neighborhood Markets is encountering some issues because of a faulty magnetic stripe. The company says that the next batch of cards will use a hardier stripe and should stand up to usage.
    KC's View:

    Published on: November 23, 2011

    • Target Corp. announced that it has named Casey Carl, most recently the company’s senior vice president of hardlines and one of the leaders of Target's multichannel steering committee, will be its new president of multichannel and senior vice president of merchandising. The announcement says that Carl will oversee Target's mobile and social networking efforts as well as, while continuing to lead its entertainment, toys, sporting goods and electronics business.
    KC's View:

    Published on: November 23, 2011

    Regarding yesterday’s meditation on the changing eating habits of millennials, one reader - who described himself as “Michael from Toronto” - wrote:

    I read this article a couple of times along with your comments to be sure that I read them correctly.  I would have to agree with you that that this phenomenon seems to be the effect rather than the cause.  While I recognize that your family is spread out somewhat, it seems that you gain some comfort from having everyone sit down to dinner at your home.  Our six children range in age from 15 to 31.  I like to say that three-and-a-half are still around (one is in University about 60 miles from here and tends to be home only in the summer).  Two have flown the nest permanently and are now married although they are often a part of those gatherings.  Dinner is an important time in our household and has been for a very long time.

    I would suggest that we sit down to dinner together at least four times per week.  Sure, the choices may not be as traditional as they once were but it is the physical togetherness that seems to count.  And who cares if we are eating omelets for dinner? Cell phones are not permitted at the table.  The telephone (yes, we still have a land line) is not answered; if they really want us they can leave a message.  And we talk about our respective days.  Because of hectic schedules, it sometimes may end up being only a 30 minute affair but it is that time when the family can still bond and find some solitude. 

    To your point about choice, more often than not, there are several offerings at the table. We may stir fry in several different sauces with varying spice levels to please all palates. While we are no longer the meat and potatoes society in which I grew up in the 50’s and 60’s, there is no reason why we cannot take even those few minutes from our hectic lives to try to connect with each other.  If we do not instill these values in this Millennial generation, then they will have no blueprint to follow with their children.  I can only hope that our children will take this away to their families and still find that time to be together.

    I suggested yesterday that because eating habits are changing, it is possible that traditional supermarket layouts could be seen as obsolete. Which led one MNB user to write:

    Actually, as I read this I realized that the set-up of traditional grocery stores while fine for weekly shopping is cumbersome when dropping in for a few items. It would be nice if the store was set-up for occasion as opposed to category. I had to traverse most of the aisles to pick up the few ingredients I needed and still missed one I did without so I wouldn’t have to get out of line. Not sure how this would work, but if I were to go in undecided on what to do for dinner it sure would be nice if I could go to a spot that had a recipe and all the items needed to make it in one convenient place. Maybe even an up sell like they do in restaurants with an appetizer and/or dessert suggestion that would be easy to add-on. Not sure how it would work, just an idea from the fringe.

    MNB reported yesterday that 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 videos showed a worker swinging a bird around by its feet, hens packed into cramped cages, male chicks being tossed into plastic bags to suffocate and workers cutting off the tips of chick’s beaks.)

    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.

    I loved this response from an MNB user:

    Those responsible have been terminated?? Really? Does that mean they were swung around by their heels before having their head’s bashed in? Actually, I think maybe they were fired? I’m sure the humor and irony of the word chosen was accidental …

    Actually, maybe the should have been swung around by their heels for a bit...

    And, on another subject, MNB user Glenn Cantor wrote:

    Your acceptance of your error in reporting the Associated Food Stores layoffs offers a tremendous, modern-day business lesson.  We all use email to communicate news and ideas, and sometimes we are too quick to respond without first thinking through the implications.  Those who know me, know that this is a fault on which I constantly work to improve.

    On the surface, you may still feel that your prompt reporting was appropriate.  At issue, however, is not your opinion, but rather the long-term perception of you by others.  In admitting your mistake, you have confirmed the credibility of the opinions you offer.  In today’s world, being first or being right may seem personally satisfying.  However, being trusted is ultimately paramount.

    MNB user Steven Ritchey wrote:

    If you never make a mistake, you’re not doing anything.  Sometimes I think you take the analysis with attitude thing a bit too far, but as long as you don’t take yourself too seriously, I have no real problem with it.

    And MNB user Gary Harris, responding to the fact that I ended my apology by saying mea culpa, mea culpa, mea maxima culpa, wrote:

    Ego te absolvo a peccatis tuis in nomine Patris, et Filii, et Spiritus Sancti.

    KC's View:

    Published on: November 23, 2011

    This is Thanksgiving weekend here in the US, which is the best holiday of the year because it brings families together without the pressure of presents and expectations. There’s just food and football and fellowship - all good things. In keeping with tradition, MNB will be on hiatus for a four-day weekend. The archives, of course, are always open...and we’ll be back Monday, November 28.
    KC's View:

    Published on: November 23, 2011

    There is a little gem of a movie out there right now called Margin Call that deserves your attention - and not just because it manages to turn approximately 24 hours before the 2008 economic meltdown into a tense, enthralling piece of storytelling.

    Margin Call is the story of a company very much like Lehman Bros., where the risk management department suddenly discovers that its liabilities actually exceed the worth of the entire company. (It is a lot more complicated than that, but the movie makes the specifics as understandable as they need to be for the story to unfold.) But it is more than that, because it is the story of the people who helped to create the mess by selling things that they did not entirely understand, to people who could not entirely afford them, creating an economic house of cards that was facing a stiff wind. Margin Call isn’t exactly sympathetic to its characters, but it certainly humanizes them; it explains how they’ve been seduced by the system, by the money, by the power, but mostly by the money.

    It helps that writer/director JC Chandor has populated his film with terrific actors who have never been better - Kevin Spacey, Paul Bettany, Stanley Tucci, Simon Baker, Zachary Quinto and Jeremy Irons fill the screen with characterizations that are vivid, even in small moments, and that offer little surprises that keep the movie consistently interesting. Irons is particularly great as the company’s CEO, who likes to tell people to explain things to him like he is a child or a golden retriever, but who is a lot more canny about survival strategies than he lets on. And Tucci is memorable, especially in a scene where he recalls a previous job building bridges. (That scene alone ought to get him an oscar nod for Best Supporting Actor.)

    Even Demi Moore, in a throwaway role, is pretty good; I’m convinced she’s there because of her role in 1994’s Disclosure, in which she had so much power as a corporate shark that she was accused of sexually harassing Michael Douglas. This role and this movie show how much the world has changed since then, and it is one of those little fillips that make Margin Call fascinating.

    Beyond the fact that Margin Call is a terrific movie, it also is filled with business lessons that go beyond the investment world. You need to discover some of them for yourself, but one thing to look for is the extent to which the people are the top are isolated from or ignorant about how day-to-day business is being conducted. They’ve lost touch with the front lines, so that when a young analyst uncovers the problem, they’re shocked ... and then, like so many of the banks and investment firms, focused on the short term and their own survival instead of the bigger picture and implications.

    Margin Call is terrific, and easily one of my favorite movies of the year. See it.

    I found a quote the other day from playwright Arthur Miller (“Death Of A Salesman”) that pretty much sums up what I think at the present time:

    “The only thing that I am reasonably sure of is that anybody who's got an ideology has stopped thinking.”

    How great was it to see Jimmy Buffett as helicopter pilot Frank Bama on this week’s “Hawaii Five-0”? He was in just a couple of scenes and had just a few lines, but the guy knows how to steal a scene. And he didn’t even sing.

    Not sure precisely what wines we’ll be serving tomorrow for Thanksgiving dinner, but I suspect that at some point during the afternoon we’ll be opening a bottle of the 2010 Victorino Albarino, and perhaps the excellent 2009 Paradise Ridge Sauvignon Blanc.

    I hope you enjoy wines this holiday weekend that do more than quench your thirst, but that also touch your soul and enhance the best holiday of the year.

    Have a great holiday weekend, and I’ll see you Monday.

    Slainte! And Happy Thanksgiving.
    KC's View: