retail news in context, analysis with attitude

Published on: December 13, 2011

by Michael Sansolo

Allow me to let you in on something: I’m a massive liberal. Then again, I may be a huge conservative. More likely, I’m very confused.

A report released last week identified the television shows most favored by folks at either end of the political spectrum. Armed with that list I find myself a mess. Apparently on Wednesday’s when I watch “The Middle” I’m feeling conservative. Only 30 minutes later I change political orientation to watch “Modern Family.” Silly me, I thought I liked comedy.

It gets worse. Because I like “The Daily Show” and “The Colbert Report,” I’m a liberal again. So how to explain my affinity for “Mythbusters,” a darling of conservatives if not the neighborhood in California recently hit by a loose cannon ball from the show. In truth, I like both sarcasm and big explosions.

In our non-stop political silly season, we have a need to label everything. In business and marketing, we can’t do the same. A simple reliance on labels and well-studied tendencies can help in some cases and kill in others. Luckily for all of us, a classic case in thinking beyond labels is playing out this fall in the National Football League. And whether or not you like the NFL, start paying attention to the curious case of Tim Tebow.

Tebow, a wonderfully successful college quarterback, entered the pro ranks with diminished expectations. To hear the sports’ cognoscenti explain it, Tebow had no future because of his size, his poor throwing mechanics and even, inexplicably, his devotion to religion. For his first season and a half with the Denver Broncos, Tebow seemed to prove the doubters right. He got few chances to play and frequently looked ill-prepared for the professional game.

After pre-season games this year, Tebow was relegated to third string, but during the regular season everything changed. The Broncos weren’t doing well and Tebow’s coach, John Fox, gave the quarterback a chance. In his first eight games, Tebow has led the Broncos to seven wins an absurdly high level of success in any sport.

But this is more than a feel good story about a talented athlete who made the most of an opportunity. It’s a story about a manager learning to optimize the talent he had rather reading the labels and cursing what he was lacking.

What Coach Fox saw in Tebow is a quarterback who needs to play the position differently than his peers. Tebow’s is a big and powerful runner, but a frequently inaccurate passer. So the Broncos switched their offense to emphasize his strengths. What’s more, the Broncos’ coach recognized that despite his young age, Tebow has natural leadership skills. Washington Post columnist Sally Jenkins recently wrote about the intangibles of leadership in a column profiling how Tebow talks to his teammates before a game, rallying their focus and energy.

Now it’s impossible to say whether the Broncos will continue to have success or if this entire experiment will flop. It’s impossible to know how much Fox likes Tebow or just how comfortable he feels with the new approach.

This much we do know: Whatever his feelings, Fox recognized that the talent on his team could not win by using the football strategies and philosophies that now dominate the game. So he created a new game plan based around the talents of his young quarterback and in the process provided a lesson on the importance of flexibility in management. It’s a lesson managers all over the business world should admire. The talent on our teams is rarely a textbook mix of successful ingredients. So the challenge we have is to find a way to get the job done with the folks we have.

Sometimes labels need be ignored.

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: December 13, 2011

Even Amazon can screw up. But it also is capable of adjusting.

The New York Times reports that “the Kindle Fire, Amazon’s heavily promoted tablet, is less than a blazing success with many of its early users. The most disgruntled are packing the device up and firing it back to the retailer.

“A few of their many complaints: there is no external volume control. The off switch is easy to hit by accident. Web pages take a long time to load. There is no privacy on the device; a spouse or child who picks it up will instantly know everything you have been doing. The touch screen is frequently hesitant and sometimes downright balky.”

Many of these complaints have been registered on Amazon’s website, and the company has been paying attention; there are numerous reports this morning that Amazon will make software fixes where it can, and hardware fixes for the next generation of Kindler Fires.

As the Times notes, there is a lot at stake here for Amazon, which “sees the Kindle line of devices as critical for its future as a virtual store, and is willing to lose money on the sale of each one for the sake of market share. Once dominance is achieved, it plans to make money on the movies, books and music that users download directly from Amazon.”

And, to be sure, “the retailer says the Kindle Fire is the most successful product it has ever introduced, a measure of enthusiasm that reveals nothing; it has not specified how many Fires it has sold, nor how many Kindles it has ever sold. It also says it is building even more Fires to meet the strong demand.”

The Eye-Opening lessons are these.

1. Even the best retailers make mistakes.

2. The best retailers know how make fixes, and make them as fast as possible.

3. In the end, you have to keep your eye on the long game.

Published on: December 13, 2011

Bloomberg reports on how Supervalu is being criticized by the Center for Science in the Public Interest (CSPI) for its “nutrition iQ” approach to food labeling, which CSPI says is being “drowned out” by marketing and advertising campaigns funded by major CPG companies.

“People have habits and preferences, they trust brands,” Michael Jacobson, CSPI’s executive director, tells Bloomberg. Nutrition, he says, is “not nearly as visible as the big picture -- the brand name.” And Jacobson says that “food labeling won’t be as effective as long as grocers remain reluctant to anger manufacturers by singling out bad’ foods.”

However, Supervalu is determined not to play nanny to its customers, says Chief Marketing Officer Julie Dexter Berg: “We would never put a sign on Cheetos and say: ‘This is something you should not be buying’.”

The nutrition iQ system, as described by Supervalu, “uses established U.S. Food and Drug Administration Nutrient Content Claims as a framework to determine the nutritional benefits of items that pass a set of qualifying criteria and are, at a base level, better for you. Products meeting the threshold criteria are then further evaluated to identify their top one or two nutritional benefits, which are called out for consumers on color-coded nutrition iQ shelf tags.

“The program covers 11 different nutrient claims in seven categories with the shelf tags color-coded as follows: • excellent or good source of fiber are denoted by orange tags, • excellent or good source of calcium by blue tags, • excellent or good source of protein by yellow tags, • low or healthier level of sodium by dark green tags, • low calorie by a purple tag, • low saturated fat by a red tag and • whole grains by a dark orange tag. Supervalu says that “the tags are located in an area where consumers naturally look when making food purchases — on the store shelf right below the product's price, unit price and bar code. The at-a-glance cues are designed to help point consumers toward healthy food options. The information serves as a supplement to the more detailed information already found on the ‘Nutrition Facts’ portion of food labels, should consumers wish to compare products further.”

Supervalu CEO Craig Herkert tells Bloomberg that nutrition iQ is affecting what consumers buy, with healthier fare “selling more briskly,” the story says.

Published on: December 13, 2011

The Los Angeles Times reports that DIY retailer Lowe’s Co. is coming under “heavy criticism from activists, some politicians and customers after pulling its ads from a reality TV show featuring Muslim Americans.”

According to the story, Lowe’s used to advertise on a show called “All-American Muslim," on Discovery Communications Inc.'s TLC channel, but pulled its sponsorship after being hit with complaints by the Florida Family Assn., described by the paper as “a conservative Christian group that lobbies companies to promote ‘traditional, biblical values’.” The story says that the Florida Family Assn. calls the show "propaganda" that "hides the Islamic agenda's clear and present danger to American liberties and traditional values."

The TLC website describes the show as one that “takes a look at life in Dearborn, Michigan - home to the largest mosque in the United States - through the lens of five Muslim American families. Each episode offers an intimate look at the customs and celebrations, misconceptions and conflicts these families face outside and within their own community.”

Lowe’s is coming under attack by the Muslim--American community, plus various politicians and celebrities, who say that the attacks on the show and Lowe’s reaction is a demonstration of racial discrimination.

Hussam Ayloush, executive director of the Los Angeles chapter of the Council on American-Islamic Relations, tells the Times, “Imagine if Lowe's had decided many years ago to pull out its ads from shows like 'The Cosby Show' or 'The Fresh Prince of Bel-Air' or 'Seinfeld' because they were deemed to portray African Americans and Jews as normal people. The American public would have been outraged by any corporation who did that."

According to the story, “Lowe's spokeswoman Karen Cobb said the company had a ‘long-standing commitment’ to diversity and pulled the ads only after the show became ‘a lightning rod for people to voice complaints from a variety of perspectives.’ Other companies had also removed their ads from the show, she wrote in an email.”

Published on: December 13, 2011

• Reuters reports that Tesco “has put off its plans to set up wholesale stores in India for now,” a reaction to the government’s decision to abandon previously announced plans to allow foreign companies to take a majority share in chains there.

The story says that “Tesco currently has a franchise agreement with Tata's retail firm Trent under which the Indian firm's hypermarket chain Star Bazaar uses the British company's supply chains and infrastructure.

“The British retailer is currently focusing on setting up warehouses and back-end infrastructure for the Star Bazaar stores and is not planning to set up cash-and-carry stores.”

Published on: December 13, 2011

• The Long Island Business News reports that the United Food and Commercial Workers (UFCW) is protesting the decision by the bankrupt Great Atlantic & Pacific Tea Co. (A&P ) to keep its stores open on Christmas Day this year.

According to the story, the UFCW sent A&P a letter saying “that as this very difficult year draws to a close, now more than ever we should respect and welcome a day off for reflection and uninterrupted time with friends and family.”

Published on: December 13, 2011

Terrific story in the Business Courier about how kroger president/COO Rodney McMullen recently took part in the “By The Book” series sponsored by the Mercantile Library in Cincinnati, where he was supposed to discuss books that had shaped his life and career.

“When trying to pick the book to discuss,” the Courier writes, “McMullen had a number of criteria the book had to meet. It must stand the test of time, be inspirational, have a meaning that has changed for him over time, and speak to him on a personal and business level.

“McMullen toyed with the crowd of about 30 people, naming a number of books that were important to him, but not the one he was going to focus. He mentioned “Snowball” by Warren Buffet, “Team of Rivals: The Political Genius of Abraham Lincoln” by Doris Kearns Goodwin, and “Moneyball: The Art of Winning an Unfair Game” by Michael Lewis. (As a side note, McMullen said “Moneyball” helped Kroger decide to partner with Dunnhumby in an effort to take data and make information out of it that is beneficial to its customers.)”

However, McMullen said that the book that was most influential for him was Charles Dickens’ “A Christmas Carol.”

He said that on a personal level, the book is about how we all decide whether or not to be happy, and how to recover from mistakes.

On a business level, he said, the real lesson is that “you can make a difference. Every person has the power to make a difference on some scale, whether it’s one person or a nation.”

Published on: December 13, 2011

Lots of responses to yesterday’s stories about the ongoing competition between Main Street and e-commerce.

MNB user Marty Berlin wrote:

Small business is definitely facing some difficult challenges and I certainly don’t want to minimize that in any way. However as you stated, denying reality is not the answer. Getting traffic in the store is the first challenge and if an e-business is helping to do that for the brick and mortar businesses (even if it is only to window shop), it would be wise for those operators to find a way to take advantage of that. Make sure that the visit is an “experience”, one that makes the customer want to come back……again, and again. Fill it with sights, scents, tastes and touches that appeal to the senses. Engage the customer and build some relationships. Do whatever you can to add value to the “hands-on” experience.

Pike’s Place Fish Market in Seattle is a great example. There are a lot of places you can buy fish, but only one place I know of to have the experience you get at Pike’s.  It’s like going to the movies. We can certainly wait until the latest movie comes out on DVD to see it, but people still like to watch it at the theater. The big screen, big sound, the feeling of being part of the community, good popcorn, etc., all add to the experience.

Price is not going to do it for the majority of small businesses, whether their main competitor is e-business or a big-box store. But value/satisfaction is defined differently by different people and the opportunities are endless. If a small business is going to survive, they have to find out what that value/satisfaction is and then find a way to deliver it.

MNB user Sara Harrington wrote:

As a mother of a 4 year old who fully believes in Santa, I have searched for two “hot” toys for that age group in many stores and online. In both cases, stores don’t have them and the only place I can get them is on amazon.com. The only problem is that Amazon is charging literally double for both items. So it’s great that they have them in stock but they have lost a lot of points in my book for what I consider price gauging. And I buy from Amazon quite often and I’m (usually) a big fan. I did not purchase either toy through them though because even though they are convenient and have it in stock doesn’t mean I’m willing to pay twice the price.

Wow. I’m shocked by this. I suspect that it may not have been Amazon that was charging double, but rather one of the third-party vendors with which it works, and over which it exerts no price control. Because I’ve never heard of this happening before.

From another MNB user:

Last Saturday I tried to buy at a brick and mortar. But they were out of stock. They were nice enough to check nearby locations and found inventory at another store that was actually closer to home. Went there and found out that their inventory system is updated only once a day and they were out of stock at this location also. Went home and bought from Amazon. It arrived today (Monday). Sometimes brick and mortar stores bring their troubles upon themselves.

I wrote yesterday about my experience buying a physical book from a local bookstore where the author - former President Bill Clinton - was doing a signing.

Which led one MNB user to write:

Let’s go back to that bookstore.

It employs local people, it pays real estate taxes, it generates sales tax for the state and locality, it uses local utilities, it may even pay local bookkeepers, tax accountants, cleaning services, etc. Amazon does none of the above, so they can give you the low ball price. Amazon will do nothing for you on the day when you are in a strange town, with your luggage lost, wet socks, and no local business left to sell you dry socks.

If you’re lucky, that day will be when you land in The Keys, and you can just kick your shoes off and run barefoot in the sand.

If I’m lucky.

Another MNB user wrote:

Nice article, always great to get to meet an ex-president no matter what your politics are. It was very nice of President Clinton to highlight independents, too many people sign exclusives with the big boys and shut out the small time players. It seems to be the sign of the times, unfortunately.

Yet another MNB user wrote:

Yesterday after driving 5 miles to Toys R Us to get a couple things for my granddaughter and waiting in a long line to check out (5 of 14 checkouts were open on a busy Sunday afternoon) I was thinking maybe it was time to switch to e-tailers.   But get it delivered - earlier I had stopped at WALMART to pick up an item my daughter-in law ordered online and had shipped to store.  The layaway and on-line pickup was at the same counter - an even longer and slower moving line.  I will go back another time.

Still another MNB user chimed in:

As consumers are we supposed to limit our purchasing powers to “like” establishments? If I want to buy a sweater, why should I be limited to a brick & mortar store just because I saw it there first? Competition is competition and my dollar will be spent where and how I see fit. And who are these “retail trade groups”? Don’t they represent on-line stores as well? I am not anti-small business. But I am anti – “telling me how I should  make my purchases.”

A wiser man than me once said “competition is a verb”.

From another reader:

Did you go out of your way to work in that last paragraph?  “Can’t stop thinking about tomorrow…” – how Clinton-esque. Bravo.

I am no longer a hard cover book–ophile, Kindle is my weapon of choice. And I am a registered independent. But if someone of the stature of Bill Clinton was in my neighborhood bookstore to sign copies, I think it would be well worth the investment of $25 or so to meet him. In these days of 15 minute celebrity, it’s rare to come across a bonafide VIP. This is exactly the type of effort and thinking that small brick & mortars need to live by in order to survive and generate the most valuable asset – foot traffic.

I am an avid hockey fan. I don’t have the chance to see the games first hand but I watch them all on television. After my Bruins won last year, I saw all of the TV specials, read all the newspaper and magazine stories, and watched the highlight DVDs. But when the travels of Lord Stanley’s Cup passed through my home town, you can be sure I was on line awaiting my chance to see it for real. You cannot replace physical, three dimensional experience and if a business person can apply that to his trade, success and sales are sure to follow.

Agreed.

MNB user Jarrett Paschel wrote:

Regarding the constant tension between brick and mortar and Amazon, there is one issue that I rarely see discussed. Namely, there is no substitute for a curated selection that one can easily browse.

I just bought the new Michael Lewis book (Boomerang) after flipping through it at Barnes & Noble. I had no idea of its existence, and the odds are quite high that I probably would never known about it had I not encountered it there. I LOVE Amazon and am a Prime member, but no recommendation engine can ever compete with the physicality of browsing.

I say this not to suggest that we pass some legislative mandate limiting Amazon’s reach. Rather, I’m just saying that if the brick and mortars don’t figure out how to compete, there will be a LOT of authors losing out on potential sales. People can babble on about innovative ways to “get the word out” or building better search engines, but the bottom line is that I rarely wake up in the morning with the urge to find an unknown book to order from Amazon. On the other hand, if I find myself wandering by a book store, I often leave with a sack of stuff I never would have thought to buy. Impulse buys work very well in the physical, not so well in the virtual. An empty search window on a browser just doesn’t do it.

I have no answer--or political position--regarding this problem. But what I do know is that if brick and mortars fall by the wayside, we are going to witness a regression to a lowest common denominator selection of stuff.  The Lady Gagas of the moment will be fine, but the rest will struggle mightily.

I will tell you this. Getting the book that Michael Sansolo and I wrote into physical bookstores was a major hairball. Getting it on Amazon and Kindle and iBooks (and now Nook, by the way), was a relative breeze, and has represented a wonderful source of continuing sales.

For what it’s worth.

One final thought. Yesterday, we had four stories with the theme of “Main Street vs. E-Street.” But what I also should have said is that I firmly believe that the Main Street retailers who will win are the ones who figure out how to not make it ”either/or,” but offer both options, because they understand that the consumer makes decisions based on what is convenient and appropriate, not because of some philosophical bent.

Published on: December 13, 2011

In Monday Night Football action, the Seattle Seahawks defeated the St. Louis Rams 30-13.