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    Published on: December 12, 2011

    by Kevin Coupe

    More than 500 people lined up at the local, independent bookstore in the Republican-dominated community where I live last Friday when it was announced that former President Bill Clinton would be there for a couple of hours to sign copies of his new book, “Back to Work: Why We Need Smart Government for a Strong Economy.”

    You had to go to the store the day before to pay for one of the limited number of vouchers that were available, which was the cost of the book, which then got you into the bookstore on Friday afternoon, where President Clinton was shaking hands and signing books. But plenty of people did it, and showed up at Barrett Bookstore along with local police, media and Secret Service agents. And I was among them.

    I was chatting with a friend of mine who was working there on Friday, and asked how they managed to get Clinton to go there, as opposed to one of the two much larger Barnes & Noble stores that are a few miles in either direction. And he grinned, “He called us,” he said. “Or rather, his people called us. All we had to do was say yes.”

    It took me about a hour to work my way through the Disneyland-like line to get to where Clinton - casually dressed in slacks and a v-neck sweater and wearing an enormous smile as he spent a few moments with each customer - told the woman in front of me that he was trying to do independent bookstores whenever possible, that the nearby town where he lives - Chappaqua, New York - recently lost its independent bookstore when it closed because of competition from chains, online booksellers and e-books.

    Clinton told the local Darien Times, "Selling books is very different from what it used to be. I'm trying to help the independent bookstores... I think for a community having a bookstore like this really adds a lot to the quality of life." And the Times notes that Clinton “also made it a point to purchase at least one item from each of the stores he visited during his tour.”

    The Clinton visit generated a lot of sales for Barrett Bookstore - at least $13,750, calculated at 550 books for about $25 apiece. It probably was as good a day as the store could have had, and it pointed to the continuing challenge that independents face - they have to offer things that the competition cannot because they are undersold by almost everybody else. It can’t always be a former president who seems to have a pretty good idea about the retail battles being fought on Main Streets all over the country.

    (For the record ... I had no intention of buying the Clinton book, though if I had decided to get it, I almost certainly would have gotten it on Kindle. But the Clinton appearance affected my behavior.)

    Independents - and virtually every kind of retailer - can’t stop thinking about tomorrow, and how they are going to compete in an effective, compelling and sustainable way. They have to keep their Eyes Open.
    KC's View:

    Published on: December 12, 2011

    The Los Angeles Times has a piece suggesting that Amazon.com’s latest gambit - offering a five percent discount, up to $5, on up to three items purchased by customers using the retailer’s Price Check shopping application - may have been a mistake because it has created an uproar about fair and unfair competition.

    According to the story, “Retail trade groups denounced the offer, saying it unfairly encouraged shoppers to check products at stores and then buy them online. Sen. Olympia Snowe (R-Maine) entered the fray, calling the promotion ‘anti-competitive’ and ‘an attack on Main Street businesses that employ workers in our communities.’ Amazon defended the device as pro-consumer and not anti-small business.”

    The Times reports that “the Retail Industry Leaders Assn., which represents many big-box retail chains, said the app unfairly encourages shoppers to use bricks and-mortar shops as ‘showrooms’ to check out a product before buying online.”

    Forbes has a piece along the same lines, suggesting that “Amazon is no longer a little fish whose actions go unnoticed, but it is behaving like one.  The strategy at Amazon is proceeding on the same line that has made it the largest online retailer starting from scratch not that long ago.” However, the story says, “with the size and market power comes additional scrutiny and a need to change the strategy.”

    Forbes writes: “The strategic blunder is not the Price Check app, but the promotion giving discounts and the publicity accorded to the promotion.  In an election year Amazon is an easy target for politicians.  Considering the size of Amazon, giving it the advantage of not having to pay sales tax certainly is not fair and the ire from this strategic blunder may accelerate the demise of this advantage.  In the long-term, losing the goodwill of a large number of potential customers is a strategic blunder by any means.”
    KC's View:
    The people objecting to this promotion are probably the same people who said that the US Postal Service could compete better by using a promotional campaign encouraging people to write letters.

    Oy.

    I would concede that Amazon’s Price Check promotion may have been akin to waving a red flag at a bull. Maybe not a good idea, and maybe better saved for a time when it doesn’t have a sales tax advantage (but will still have other advantages). And before you attack me on this issue, remember that I am in favor of Amazon collecting online sales taxes.

    The thing is, everything that the Price Check app makes possible was available before the promotion, and is available after the promotion. (Except the five percent discount.) Some people do use brick-and-mortar stores as showrooms, and then buy products online. This is a simple reality, and no amount of hang-wringing, screaming and gnashing of teeth will change it.

    It is incumbent on physical stores to find new ways to compete. It is that simple. They have to find way.

    Let’s go back to the Clinton book signing as an example.

    While I was on line waiting to meet President Clinton, I checked. I paid $23.95 plus tax for my copy at Barrett Bookstore. I would have paid $11.97 if I’d bought the hardcover from Amazon, or $11.97 on my Kindle. The book was $11.99 on iBooks, and on Barnes & Noble’s Nook.

    It is very difficult - especially in this economy - for people to justify spending twice as much money on a product just for the pleasure of shopping at a local store....unless, of course, it actually is a pleasure to shop at a local store.

    ‘Compete’ is a verb. Denying reality is not exactly an intelligent option.

    Published on: December 12, 2011

    Bloomberg reports that “the number of out-of-stock toys is increasing at the websites of Wal-Mart Stores Inc., Target Corp. and Sears Holdings Corp.’s Kmart chain while Amazon.com Inc. remains almost fully stocked, according to a Bloomberg Industries analysis.”

    According to the story, “Wal-Mart, the world’s largest retailer, was missing 34 percent of 116 toys tracked as of Dec. 7, up from 16 percent a month ago, according to a report led by Poonam Goyal, a Bloomberg Industries analyst. Out-of-stock items totaled 46 percent at Target’s website, 23 percent at Kmart and 29 percent at Toys R Us. Amazon didn’t have two of the 116 toys.

    “The data highlights Amazon’s advantage in e-commerce because it also sells the goods of other retailers through its site, so it is more likely to have items in stock, Goyal said. That will train shoppers to rely more on Amazon to find in- demand items, she said.

    In addition, “Prices online at Target, the second-largest U.S. discount chain, were 1.4 percent cheaper than Wal-Mart, the Bloomberg Industries survey also showed.

    “Amazon’s prices were 0.4 percent cheaper than Wal-Mart’s, compared with 4.6 percent a week earlier. Toys R Us also gained on Wal-Mart, reducing the price difference from 11.5 percent on Nov. 30 to 7.7 percent. Wal-Mart’s advantage over Kmart remained the same at about 6 percent.”
    KC's View:
    Somehow, I doubt that the reason Amazon has more toys is because it is selling fewer.

    These numbers have to be a wake-up call to brick-and-mortar retailers faced with an increasingly tough battle against an online retailer that has a high degree of customer focus.

    Published on: December 12, 2011

    The Associated Press reports that online sales in the US during the current holiday season are so far up 15 percent to $24.6 billion.

    Research firm comScore says that “sales on six individual days during the first 39 days of the November-to-December shopping season have exceeded $1 billion, led by Cyber Monday, the Monday after Thanksgiving, when sales hit $1.25 billion. Sales in the most recent week ended Dec. 9 rose 15 percent to $5.9 billion.”
    KC's View:
    My 17-year-old daughter accuses me of saying the same things over and over. Of course, my response to that is that if there were any evidence she listen to me the first time (or the second time or the third time or the fourth time), I would not have to repeat myself.


    I don’t mean to repeat myself with this “Main Street vs. E-Street” stuff. But I think it bears repeating.

    Published on: December 12, 2011

    The Chicago Sun Times had an op-ed piece over the weekend by Frank Keating, president and CEO of the American Bankers Association and former governor of Oklahoma, that attacked curbs on debit card transaction fees as “price-fixing schemes” that ultimately hurt consumers.

    Keating writes that “our nation’s big-box retailers ... have fared quite well, receiving a $7 billion windfall in profits annually ... Meanwhile, banks have been hit with a 45 percent reduction in the revenue they depended on to provide low-cost accounts, fight fraud and maintain the U.S. payments system.

    “What about consumers? They now pay higher costs for basic banking services — and continue to search in vain for the savings retailers promised to pass along.”

    Keating continues: “Bank customers are now paying for services they previously enjoyed free. Free checking is becoming harder to find and debit rewards programs have become a thing of the past. These are real consequences as banks of all sizes continue to adjust to government-imposed losses in revenue.

    “Of course, any rise in the cost of financial services will most negatively affect Americans least able to absorb the increase. The Federal Reserve Bank of Boston just released a paper studying the new regulations. To no one’s surprise, it predicts that lower-income individuals will be those most impacted.”

    Addressing Sen. Richard Durbin (D-Illinois), who helped push through the new swipe fee limits, Keating writes:

    “Maybe Sen. Durbin will listen to the question we’ve heard most often: Will consumers ever see savings at the register from the Durbin Amendment? The prospects are bleak. It appears that, despite promises to the contrary, our nation’s big-box retailers have chosen to simply pocket the money.

    “Perhaps it’s time for Sen. Durbin, in his supposed campaign to protect consumers, to call for an investigation into whether giant retailers have lowered prices for their customers as a result. We’re sure Americans would be interested in the findings.

    “We won’t hold our breath. It seems Sen. Durbin’s vendetta has blinded him to what’s best for consumers. And that’s very unfortunate.”
    KC's View:
    On so many levels, this is such a crock.

    Keating wants us to all believe that the banks were looking out for people - especially lower-income individuals. Yeah, right.

    Keating wants us to believe that the hundreds of millions in profits that the banks have lost because of regulation actually were being used to make the country better, instead of lining the pockets of a few fat cats at the top were perfectly willing to take taxpayer money when some of their bets went south. Yeah, right.

    And Keating wants us to believe that hidden and usurious swipe fees are actually good for Americans. Yeah, right.

    Listen, I think that retailers have in general made a tactical error by not making a point of how reduced transaction fees have helped them control prices. It would have been a great narrative, especially at this time of year and in this economy.

    Do I think that the current mandated fee reforms are perfect? No. I actually think that they should be more stringent ... and I think that there ought to be ways to protect retailers that specialize in small transactions, which have been hit by higher fees because of the way the legislation is constructed.

    But the idea that the banks have any moral or ethical superiority?

    Yeah, right.

    Published on: December 12, 2011

    The Boston Globe reports that as some supermarkets decide to back off self-checkout systems, CVS is going in the opposite direction. According to the story, CVS “has been replacing human cashiers with unmanned checkout terminals at some stores in key urban markets, including Boston. Self-checkout machines are being added as part of a redesign of some CVS stores, which are also expanding their food sections. The self-scanners help to save labor costs, according to analysts. CVS cited another reason for the switch: to make shopping faster and more convenient for customers.

    “‘We found that in urban markets, our customers shop our stores much more like a general store than a drugstore,’ said Erin Pensa, director of public relations for CVS, in a statement. Self-checkout machines ‘make it easier for shoppers to get in and out of the store and have greatly reduced ‘rush hour’ lines,’ Pensa said.”

    The story notes that “by the end of this year, CVS expects to complete redesigns in 420 of its 7,300 stores nationwide.”

    While some customers have embraced the self-checkout lanes, the Globe reports that there are some who miss the interaction they used to have with store personnel; ironically, the paper writes, “the increase in the do-it-yourself lanes at CVS began as the chain unveiled a new ad campaign promoting the company’s personal connection with customers.”
    KC's View:

    Published on: December 12, 2011

    Advertising Age reports that “Twitter is looking to strengthen its relationship with advertisers by launching brand pages that will be unveiled today as part of a more comprehensive redesign ... Brand pages have two key elements, both of them free. They can be customized with large header images that advertisers can use to display their logo and tagline more prominently than under the standard format, where branded elements of the page design are often partially covered by the time line of tweets.=

    “Brands can also choose to keep a particular tweet at the top of their time line, and that top tweet also auto-expands to reveal an embedded photo or video from Flickr, YouTube or other sources, without requiring the user to take action.”

    According to the story, there are more than 20 brands involved with the launch, including American Express, Best Buy, Bing, Chevrolet, Coca-Cola, Dell, Disney, General Electric, Heineken, Hewlett-Packard, Intel, JetBlue, Kia, McDonald’s, Nike, PepsiCo, Staples, Verizon, Subway, and Paramount Pictures (linked to the release of Mission Impossible: Ghost Protocol).
    KC's View:

    Published on: December 12, 2011

    • Walmart has to deal with a lot of issues, both inside and outside its stores. But here is one that the company probably did not see coming...

    Digital Journal reports that a 45-year-old woman in Tulsa, Oklahoma, was arrested over the weekend for allegedly mixing meth inside a Walmart store there.

    According to the story, it was noticed that the woman was spending an inordinate amount of time inside the store, and then it was discovered that she was “grabbing bottles off the shelves and mixing them with lithium and drain cleaner” in the back of the store. She apparently told investigators that she was too broke to buy the various chemicals.
    KC's View:

    Published on: December 12, 2011

    • The Los Angeles Times reports this morning that “inspired by strike threats from workers at Ralphs, Albertsons and Vons earlier this year, Food 4 Less employees voted Thursday to authorize a strike if parent company Kroger Co. does not offer them better wages and benefits.

    “Members of United Food and Commercial Workers (UFCW) from seven Southern California unions said workers at Food 4 Less sometimes make as much as $3 less than comparable employees at Ralphs, another Kroger chain.

    “The UFCW said in a statement that Cincinnati-based Kroger is ‘deliberately stalling progress’ on negotiations as a way to ‘weaken union resolve.’ Bargaining, the unions said, is expected to resume later this month.

    “Food 4 Less remains committed to reaching an agreement that is good for our employees and helps keep union jobs sustainable for the future,” responded Kendra Doyel, a spokeswoman for the chain. “We will continue to work with union leadership to negotiate a contract. Our employees do not want to strike and they look forward to serving customers in our stores throughout the holiday season.”

    • The San Francisco Chronicle reports that “the bank accounts of about 80 employees and customers at 23 Bay Area Lucky supermarket locations were breached after someone tampered with credit- and debit-card readers in self-checkout lines, the grocery chain said.

    “Many of the employees and customers had money taken from their accounts. Officials recommend that customers who have used the self-checkout terminals in any of the 23 stores within the past few months close their accounts immediately, said Alicia Rockwell, spokeswoman for Save Mart Supermarkets, which owns Lucky supermarkets.”

    The company said it is working with law enforcement agencies to find the perpetrators; the breached equipment has been replaced.

    • Want evidence that the yogurt category is hot? Look no further than the Associated Press report that Dannon Co. is buying commercial time during the Super Bowl - the first time, the company says, that a yogurt company has bought the expensive ad time.

    The commercial reportedly will air during the third quarter.

    USA Today reports that San Francisco has become “the first city in the nation to scale a $10 minimum wage. The city's hourly wage for its lowest-paid workers will hit $10.24, more than $2 above the California minimum wage and nearly $3 more than the working wage set by the federal government.”

    The changes take effect on January 1, 2012.

    • Hershey said late last week that it is acquiring Brookside Foods, a Canadian chocolate maker. Terms of the deal were not disclosed.
    KC's View:

    Published on: December 12, 2011

    • Smart & Final Holdings Corp. announced that David G. Hirz, president and chief operating officer, will be named chief executive officer effective January 1, 2012 and will also become a member of the company’s board of directors. Smart & Final’s current chairman and chief executive officer George Golleher will remain executive chairman of the board.

    Hirz, who joined Smart & Final as president in April 2010, has extensive supermarket experience. Between 1999 and 2010, he served as president of Food 4 Less supermarkets for eight years and Ralphs Grocery Company for three years. Both companies are divisions of The Kroger Company.  Hirz previously served as group vice president of operations of Food 4 Less, which he joined in 1991. Before that, he held leadership positions with The Boys Markets from 1985 to 1991, including district manager and director of store operations and administration.
    KC's View:

    Published on: December 12, 2011

    The Washington Post reported on an analysis showing that the Walton family, heirs to the fortune accumulated by Sam Walton, founder of the Walmart chain, has a combined net worth equal “to that of the combined net worth of the bottom 30 percent of Americans.”

    As the story notes, this revelation plays into concerns that “income inequality in the United States is currently at its highest since the 1920s,” and suggests that “the Waltons appear to be the clearest example of that divide.”
    KC's View:
    This is interesting because of the jarring comparison, but in some ways it strikes me as kind of specious.

    Sure, they have a lot of money that they earned the old-fashioned way. (They inherited it.) And sure, they’ve spent some of that money trying to protect it by lobbying for elimination of the estate tax.

    But for me - and, I suspect, for a lot of people - the concept of income inequality has nothing to do with how rich some people are, but the concern that the system is rigged against the lower end, that our economy has been constructed in such a way that it is harder for them to even achieve middle class status.

    I honestly don;t believe that most people care that just a few people are certifiably rich.

    They just don’t want to be poor, and with apparently diminishing options.

    Published on: December 12, 2011

    Regarding the surge in popularity for Coke’s Freestyle vending machines, one MNB user wrote:

    Was at a "famous national premium burger chain" the other day and got my first experience with the Freestyle machines.  A huge line of kids slopping soda and ice all over the place and slightly older patrons staring at the machine and mess in apparent befuddlement.  Wasn't pleasant, wasn't convenient and certainly did not enhance my dining experience.

    Blame the chain, not Coke or the technology. In my view, it is up to the chain to keep things clean, and help people understand how to use the customization technology. Otherwise, they are just giving away what could be a competitive advantage.




    I used the headline “Le Grande Orange” the other day for a story about orange wine, which led more than a few people to send me emails, of which the following one is typical:

    Le Grande Orange is also a very popular pizzeria, wine store and hang out in Phoenix.  You would love the wine selections and the food selection.  You have to look it up next time you are in Phoenix.

    I’ll put it on my list.

    Another MNB user wrote:

    I was introduced to an Orange wine in of all places Minneapolis MN late summer and loved it.  Can’t wait for summer to return to have it again.

    I also mentioned something called “green wines,” which led MNB user Jan Fialkow to write:

    The Portuguese vinhos verdes -- green wines -- are light, fresh, young wines with just a touch of "sparkle." And they're remarkably inexpensive. The summers down here in South Florida are hot, humid and nasty — and call for a refreshing, acidic wine that counteracts the oppressive weather. I've been opting for vinho verde for the last few years — ever since a sommelier turned me on to it. Not one of the OMG great wines, but a very good everyday quaff!
    KC's View:

    Published on: December 12, 2011

    In Week Fourteen of National Football League play...

    Cleveland 3
    Pittsburgh 14

    Indianapolis 10
    Baltimore 24

    Atlanta 31
    Carolina 23

    Houston 20
    Cincinnati 19

    Minnesota 28
    Detroit 34

    Tampa Bay 14
    Jacksonville 41

    Philadelphia 26
    Miami 10

    Kansas City 10
    NY Jets 37

    New Orleans 22
    Tennessee 17

    New England 34
    Washington 27

    San Francisco 19
    Arizona 21

    Chicago 10
    Denver 13

    Oakland 16
    Green Bay 46

    Buffalo 10
    San Diego 37

    NY Giants 37
    Dallas 34



    And in college football, Robert Griffin III became the first football player from Baylor University to win the Heisman Trophy, as the junior quarterback beat out Andrew Luck for college football’s highest honor.
    KC's View: