retail news in context, analysis with attitude

Published on: December 5, 2011

by Kevin Coupe

The Los Angeles Times reports that a new report from the Pew Research Center's Internet & American Life Project suggests that “for most people under the age of 30 in the U.S., the Web is mostly a time killer.”

“Americans are increasingly going online just for fun and to pass the time," the Pew Research Center said in its report, released Friday. "On any given day, 53% of all the young adults ages 18-29 go online for no particular reason except to have fun or to pass the time.

"Many of them go online in purposeful ways, as well. But the results of a survey by the Pew Research Center’s Internet & American Life Project show that young adults' use of the Internet can at times be simply for the diversion it presents. Indeed, 81% of all young adults in this age cohort report they have used the Internet for this reason at least occasionally."

The Pew report goes on: "These results come in the larger context that Internet users of all ages are much more likely now than in the past to say they go online for no particular reason other than to pass the time or have fun ... Some 58% of all adults (or 74% of all online adults) say they use the Internet this way. And a third of all adults (34%) say they used the Internet that way 'yesterday' -- or the day before Pew Internet reached them for the survey. Both figures are higher than in 2009 when we last asked this question and vastly higher than in the middle of the last decade."

It is an interesting study, albeit one with a value judgement attached - because going online “for no particular reason except to have fun or to pass the time” is equated with wasting time.

I’m not sure that this is a fair or accurate characterization. I’m not even sure it is a bad thing ... though it certainly is an Eye-Opener.

But putting that aside, it is a mark of our changing culture, or how the internet is being hard-wired into people’s systems. Instead of picking up a newspaper or a magazine, or going for a walk, or going to a museum, people are going online. It is part of their lives ... and marketers need to be integrating these attitudes into their strategies and tactics.

Published on: December 5, 2011

Interesting story in Fortune about how Walmart may have won, “hands down,” the Bog Box store battle, that may not really matter in terms of the company’s future. Big box stores, the story suggests, are yesterday’s news, and there remain major challenges facing the world’s biggest retailer moves forward.

“In the war for online sales,” the story says. “Wal-Mart's greatest adversary may be itself as it attempts to get its 3,800 U.S. stores and millions of employees working together with Walmart.com ... As online sales have soared overall, Wal-Mart shoppers have failed to flock to the web in any sizable number – online sales are estimated to account for just 2% of its revenue according to Deutsche Bank Securities, or about $8 billion. By comparison, Amazon's revenue leapt 40% in 2011 from the year prior to $34.2 billion.

“That's why Wal-Mart has a renewed focus on leveraging its massive bricks-and-mortar presence to re-invent itself online. That means pushing customers to pick up online orders at Wal-Mart's stores, crediting store teams with online sales to turn them into a digital sales force and potentially delivering items purchased online from the local Wal-Mart, hitting Amazon and other e-tailers on their speed of delivery. And it also means a hybrid of online apps and digital tools -- but only when they fold in with offline too.”

Meanwhile, Fortune writes, “Wal-Mart is preparing for the end of the Big Box era. Although it still plans to open more stores in the U.S., even Wal-Mart notes these ‘are smaller than the larger Supercenters we've built in the past,’ said Karen Roberts, president of Wal-Mart Realty during its shareholder and analyst call in October. And this comes as pure-play etailer Amazon launched its first storefront called Beauty Bar in Long Island, NY this fall. While not branded Amazon, it's a toe in the water towards a hybrid model that Wall Street is eyeing closely.”

Published on: December 5, 2011

Interesting story in USA Today that retailers including Target, Costco, Sears and Kmart “are hawking freshly cut Christmas trees delivered door to door anywhere in the 48 contiguous states ... online tree sales — which at Sears costs as much as $189.99 for a 9-foot fraser fir tree from North Carolina— are becoming a lucrative business for some big chains. Some retailer sites cajole shoppers to purchase a tree even as folks sign on to just to purchase ornaments.”

It is a niche market, generating just a small fraction of the 27 million Christmas trees purchased each year, the story notes.

Published on: December 5, 2011

The Financial Times reports on the troubles at the top of Carrefour’s management structure, framing the story this way:

“On January 1, Lars Olofsson will mark his third anniversary as chief executive of Carrefour, the French hypermarkets group. Many analysts think it will be his last. After the former Nestlé marketing director’s confident start to turnaround the world’s second largest retailer by sales, the past 12 months have been punctuated by five profit warnings, strategic flip-flops, top management departures and a time-consuming Brazilian merger plan that ended in failure.” And, the company’s shares have dropped by 30 percent over the past year.

Central to Carrefour’s problems has been its European hypermarkets, which the company has rebranded as “Carrefour Planet” and converted to a more upmarket format; they have been losing market are and are not perceived well by customers.

Olofsson says he needs more time ... but the company’s main shareholders, Colony Capital and Groupe Arnault may not be inclined to be patient.

Published on: December 5, 2011

Reuters reports this morning that Wisconsin-based Roundy’s is seeking to raise $230 million through an initial public offering (IPO) of its common stock.

The company says it plans to use the money to pay down $800 million in accumulated debt.

Published on: December 5, 2011

Advertising Age reports that McDonald’s has decided to team up with the LivingSocial daily deal site to offer a $13 voucher booklet for five individual Big Macs and five individual large french fries (a $26 value) ... The deal is the first national daily offer by a fast-food chain, but it's capped at 1 million booklets. Daily deal coupons are often printable, but McDonald's will mail the vouchers instead. As part of the deal, the chain will also promote LivingSocial in restaurants and drive-thrus.”

Published on: December 5, 2011

• The Wall Street Journal reports that Google “is in talks with major retailers and shippers about creating a service that would let consumers shop for goods online and receive their orders within a day for a low fee,” a move that would help it “challenge the e-commerce supremacy of Amazon.com.” especially Amazon’s highly successful prime program.

Among the retailers to which Google is speaking, according to reports, are Macy’s, Gap, and OfficeMax.

Published on: December 5, 2011

The Chicago Tribune reports that the US is, at least for the moment, one hoof closer to horse meat being available for human consumption.

According to the story, the 2006 federal ban on the slaughter of horse meat “was lifted on Nov. 18 as part of a temporary spending bill signed into law by President Barack Obama. Still, easing of the ban does not mean additional money would be allocated for the U.S. Department of Agriculture, which would need to fund inspections within its budget as federal spending is expected to be trimmed next year. But animal activists say new slaughterhouses could be opened in a month.”

There currently are no horse slaughterhouses operating in the US ... “not that it makes a difference, as eating horse meat in the U.S. remains a cultural taboo, even though it can be found in restaurants as close as Toronto and in supermarket cold cases in French speaking Canada.”

But proponents say that it tastes good, and that there is no logical reason why horse meat should not be part of a regular diet.

Published on: December 5, 2011

The Associated Press reports that the financially troubled US Postal Service (USPS) “is pushing ahead with unprecedented cuts to first-class mail next spring that will slow delivery and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day.”

The cuts are expected to be announced today.

As the AP notes, “The changes would provide short-term relief, but ultimately could prove counterproductive, pushing more of America's business onto the Internet. They could slow everything from check payments to Netflix's DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.

“That birthday card mailed first-class to Mom also could arrive a day or two late, if people don't plan ahead.”

Published on: December 5, 2011

• Bloomberg Business Week reports that Walmart’s Asda Group in the UK “may take longer than planned to meet a goal of overtaking Tesco Plc as the U.K.‘s largest non-food goods seller, according to the head of its George clothing brand.

“Asda’s objective of surpassing its rival by 2015 may be hindered by a slowing economy, with a volatile consumer climate and increased sourcing costs becoming the ‘new normal,’ George Managing Director Andrew Moore said in an interview.”

Indeed, the slowing economy in the UK also is having an impact on Tesco, as Bloomberg notes that “Tesco’s non-food revenue slumped 4.8 percent in the first half as shoppers made fewer visits to its large-format stores.”

Published on: December 5, 2011

• The Staten Island Advance reports that Ahold-owned Stop & Shop is acquiring three King Kullen stores in the borough, a step seen as “a significant move to expand its presence on Staten Island,” where it already has two stores.

The sales of the stores marks King Kullen’s complete move out of Staten Island.

• Reuters reports that “India has put a plan to open up its retail industry to foreign supermarkets on hold, a senior government source said on Sunday, an embarrassing turnaround for a beleaguered government fighting to retain the support of key allies.”

The current government had announced that it would allow foreign retailers to own the majority of shares in supermarket chains operating in India, but was met with “fierce opposition” from a number of political quarters - including some that threatened to burn down stores owned by foreign companies - that were concerned that it would do harm to millions of small retailers throughout the country.

• The Wall Street Journal reports that in the UK, the Advertising Standards Authority (ASA) has asked the Office of Fair Trading to look into possible violations of the nation’s advertising code by daily deals site Groupon. According to the story, Groupon is accused of a “failure to conduct promotions fairly, such as not making clear significant terms and conditions; failure to provide evidence that offers are available and exaggeration of savings claims.”

Groupon denies the charges, with a spokesperson saying that the company is “constantly evolving [our] business process to ensure customers receive the best possible experience at the highest standards. We are cooperating fully with the OFT to ensure that the rights of consumers are protected."

Published on: December 5, 2011

Regarding the story we had the other day about how Patagonia was running ads suggesting that people actually buy less and embrace a more sustainable lifestyle, one MNB user wrote:

Just to be clear, that ad was not product marketing, that ad was brand building…huge difference.

Good point.

Another MNB user wrote:

Regarding Patagonia’s promotion of having less…   yayy!!!  I made a mid-life crisis move from my large home in the Chicago suburbs to Austin TX.  At that time I decided to scale back to whatever I could fit in a single moving pod, and it has changed my entire approach.  Besides Austin’s influence as a community that embraces green thinking, I find that I enjoy having only a half drawer of kitchen utensils,  2 pieces of reusable Tupperware, one jacket for most occasions,  only enough dish towels I can use in one week (rather than my previous stash that could have dried a zip code’s worth of dishes).  At Thanksgiving, my mother was appalled that I used a knife to portion my apple rather than one of the THREE different apple gadgets she pulled from here warehouse of “simple solutions”.  Point being… how many of those who struggle are in the hole financially because they think they need  stuff that they don’t really need?  I drive a 15 year old car (and usually take the bus) even though I could buy one outright among other cost saving, planet saving activities without being one of those people whose every move is driven by the management of their carbon footprint.

So, hang on to your servers, Patagonia..  when I do sincerely need something you sell,  I’m heading your way.   And I’m telling my passionately green neighbors.




I took note the other day of a story about how cities were getting rid of aging highways, and how this might reflect a new anti-car bias. Which led MNB user Brad Halverson to write:

A little out of it to assume aging highways were built with blinders on or are a mistake not to repeat. In the case of our Viaduct in Seattle, built 1953, it played an important role for workers getting to industrial powers like Boeing, the shipyards and Weyerhaeuser. It served an important need in Seattle’s growth. Today the joke is more about where to be when driving on the now crumbling viaduct, so when it falls you are safer, i.e. if in left lane, leap out of your car toward the water, and hope for the best. We are soon replacing it, and the waterfront will, indeed, be beautiful in time. But don’t assume green is an overarching premise. Even Seattle voters soundly rebuked Mayor McGinns campaign against the underground tunnel and his green vision of forcing cars on to slow city streets and bicycling to work. The tunnel is coming and the rest of the masses and freight movers need to get around if we stand a chance of keeping our economy progressing. Lesson learned – being green is nice, but if it hurts the many who have no choice but to move around in cars or it hurts commerce and business growth, then practicality wins. The best solutions of the future will incorporate all of these priorities, but only in ways that are affordable and practical for the majority of taxpayers.

MNB user Elliott Olson wrote:

I don’t view the ripping out of freeways anti auto. It is restoring a public space to a better use.

The Embarcadero in San Francisco is now filled with light, life and commerce. The crowds at the Ferry Building farmers market on a weekend morning are a delight to see and bring joy to the soul.

Another MNB user pointed out a mistake I made in my commentary:

The Embarcadero Freeway(480) was excessively damaged during the Oct 17, 1989 quake - not 1991.  I lived in The City, and my condo in Russian Hill was one block removed from the shifting landfill areas closer to the Marina.  When the freeway was finally removed, wow, was the embarcadero opened up!!  Wonderful.

Dopey mistake. Sorry about that.




On the subject of internet sales taxes, one reader offered:

There are really two separate issues in this article, paying your fair share for infrastructure and the right to be an American business, and, creating an uneven playing field. 1) should all businesses pay the price for being American companies or doing business in America. (My answer is an emphatic yes.) 2) Secondly, successful American companies are those that create an uneven playing field through a competitive advantage made possible through innovation and creativity (compete is a verb - you need to say that more often). We shouldn’t expect to get trophies for participation, we get trophies only for being the best.

You are the first person to suggest that I say “compete is a verb” more often.

Another MNB user wrote:

While its always uplifting to be able to use a 10% off coupon, especially for a large purchase; the imposition of a 6% to 9% state sales tax will quickly pop that joy bubble. No wonder so many people cross state borders to shop tax-free.  That is similar to driving an extra mile or two for cheaper gasoline due to less burdensome taxes.

Eliminating the sales tax benefit will not make brick and mortar stores competitive with online retailers, though it is a first step.  Local stores must pass along costs for retail buildings, sales staff, maintenance,  advertising, and other costs over and above local sales taxes.

Shipping fees and the lack of instant gratification seem to be the only drawbacks to online shopping.  Amazon and other online retailers ship directly from the warehouse, with nominal $3-5 shipping fees.  Those fees can be reduced or eliminated with membership fees.  On high value items, or when bundling larger orders, there are no shipping fees at all.  As long as gas remains above $3 per gallon; nominal shipping fees are not much of a deterrent to online shopping, from a customer's perspective.

Unfortunately, some customers will utilize staff expertise at brick and mortar stores to evaluate items as well as getting tactile and visual feedback about an item.   Then they buy online; and there are apps for that.  Scan the barcode, check the price and order. Right from the brick and mortar store.

Look for state governments to jump eagerly onto the bandwagon to tax online retailers for "fairness."  Pricing disparities, in favor of online vendors, still remain.  Brick and mortar stores must create such a compelling shopping experience that customers will continue to flock there.  Think Apple Store...

And, from another MNB user:

I’m pretty sure eBay would collapse.  While I only dabble in selling there, there are “power sellers” from whom I’ve purchased items and haven’t paid a tax (shhhh don’t tell my accountant who each year asks that question from the tax form).  I’ve often wonder eBay appears to be coated in Teflon when it comes to taxes, or if they are somehow making up for that when they do their business taxes?  I know they collect enough fees to make one wonder if it’s worth the effort for a dabbler to sell an item.  I noticed within the past year or so they’ve added a spot where you COULD charge sales tax to your buyer, but unless it’s an obscenely competitive price on an item, I think people would be more likely to go Amazon, etc.  Just my two cents versus 5.5%.

MNB user Ryan Tonies wrote:

I have to agree with you on many levels regarding your views on the ICSC’s argument, however I must contend online retailers that do not collect sales tax (i.e. Amazon.com) do make a difference on certain purchases from my standpoint.  Certainly on high ticket items such as HDTV’s, computers, Blu-Ray players, etc.   
 
Just last night my wife and I went to Best Buy to look at tablet PC’s and wanted to actually operate a few of them and see the physical dimensions before inevitably purchasing one from Amazon.  I felt somewhat bad because the 17-year-old salesperson (I’m assuming he was still in high school!) at Best Buy was extremely knowledgeable, polite, and helpful, but we knew that we would inevitably return home and buy it on Amazon and have it in two days on our doorstep with our Amazon Prime membership.    
 
Before going to Best Buy, I contemplated buying the tablet directly from the manufacturer.  I chatted online with one of their sales reps and asked if I would have to pay Wisconsin sales tax even though this was an online site and the CSR indicated that I would not only have to pay sales tax, but shipping to boot.  I informed them that I would be buying their product from Amazon.com for less (no sales tax) and free shipping!  That’s got to be the dagger for a lot of retailers.




On another subject, an MNB user wrote:

When I bought my iPad 2, I thought my main use would be iBooks.  I have since come to use my iPad almost like a computer.  It’s my go to for email and internet surfing via Safari.  I use it as an iPod.  I absolutely love the Notebook feature, especially when traveling.  I just put all my flight numbers, hotel/car rental confirmation numbers, etc on a page and just open to that when I need the information.  It’s now my calendar/date book.  I use it as a Tivo for a few shows I want to watch on my time (w my ABC app).  On and on and on.  But, the one feature I hate is iBooks.  As such, I don’t use it at all.  I quickly found I could download the Kindle app, and that is what I use for 100% of my electronic reading.  Glad to hear I’m not alone in that respect.




Responding to the news that Bobby Valentine is going to Boston to manage the Red Sox, MNB user Kathleen Whelan wrote:

It's time to dig out my "Certified Yankees Hater" Red Sox T-Shirt again!!  I think even my rabid National League fan parents (Brooklyn Dodgers) will smile down from Ebbetts Field in Heaven!

But MNB user Steven Ritchey wrote:

As far as I’m concerned Boston can have him, I witnessed his brand of baseball in Texas for way too long, long on hitting, short on pitching and defense.  I’m not sure if  he has the best interests of the team at heart, or strictly his own, I know it Texas, it seemed to be the latter.  The bright side is that I won’t have to listen to him do any more broadcasting of games.

I will respectfully disagree with you on the notion that Valentine has only his own interests at heart.

One can easily challenge some of his baseball decision-making, but Valentine is a native of Stamford, CT, just one town over from where I live, and his reputation is as a person who is charitable to a fault, that he sometimes takes too much charity work on and it can affect his baseball work. That was especially true in the aftermath of 9/11; he was managing the Mets at the time time, and his charity work was tireless. I have a lot of respect for Valentine as a person ... and I also happen to think that he’ll be good for the Red Sox.

Published on: December 5, 2011

In Week Thirteen of National Football League action...

Tennessee 23
Buffalo 17

Kansas City 10
Chicago 3

Atlanta 10
Houston 17

Oakland 14
Miami 34

Denver 35
Minnesota 32

Indianapolis 24
New England 31

Cincinnati 7
Pittsburgh 35

Carolina 38
Tampa Bay 19

NY Jets 34
Washington 19

Baltimore 24
Cleveland 10

Dallas 13
Arizona 19

Green Bay 38
NY Giants 35

St. Louis 0
San Francisco 26

Detroit 17
New Orleans 31