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    Published on: January 4, 2012

    by Michael Sansolo

    There’s a scene early in the movie War Horse that captures everything you need to know about the nature of change. It’s the first battle of World War I that includes the picture’s hero, a horse named Joey, and it speaks volumes about living in the past and fighting the wrong war.

    In the scene, the well-trained, highly disciplined British cavalry charges a German encampment only to run straight into the new reality of war: the machine gun. Think about sword-wielding soldiers on horseback riding briskly at machine guns and guess who wins the battle?

    Most of us would insist that we would never let that happen, that we find ways to stay current. Except the world just keeps changing that fast around us. We live in a time where new technologies emerge so quickly and so regularly that we cannot possibly keep up. Permit me an example from another industry that seems instructive.

    Over the holidays I was talking to a young relative about the collapse of Eastman Kodak, once the giant company in his hometown, Rochester, NY. I was trying to make a lesson about preparing for the future and he began explaining the Lytro. Just like that, I was behind the curve again.

    I’m betting that many of you haven’t heard of the Lytro either, so take a few minutes to visit www.lytro.com and prepare to be amazed. Everything you know about taking a photograph is about to change in ways that you have seen in science fiction movies and can now purchase for around $400. Yes, you can buy it today.

    I’m neither a scientist nor an engineer so I’ll probably say this wrong, but the basic difference in the Lytro is how it takes a picture. Rather than capturing an image, it captures the light field being emitted by the subject in a small-computerized system. That, in turn, enables you to manipulate a picture after you take it.

    You know how pictures get ruined when you focus or include the wrong image in the foreground or background? The Lytro lets you move the focus off that object after you take the picture. You can switch a photo from 2D to 3D, change the perspective or do whatever else you want to the image. This isn’t Photoshop changes to an already taken picture. With the Lytro, the photo is alive inside your camera.

    Imagine for a second that you work for Kodak. Your world has been rocked for decades, starting with the global competition you didn’t see coming from Fuji film and fast forwarding to a world where no one uses film, sends off for prints or even needs a camera thanks to today’s cell phones. No doubt, someone at Kodak figured they had seen it all, except then some scientists figured out a way to capture a living photo and market it at a reasonable price. Yikes.

    And that’s what we have to remember about competition. It’s always evolving, always changing and every time we think we’ve seen the be-all, end-all it just means something else amazing and unforeseen is around the corner. It reminds us why we have to constantly search for the next big thing or the next way to get better. Like it or not the finish line is constantly moving. Kodak, which once ran a beautiful ad about how quickly life changes (to remind us of the power of photography), now is victim of the same. Blink once and people are using an Instamatic. Blink again and there’s the Lytro.

    So ask yourself how you are changing. Are you entering 2012 thinking about the battles you won in the past without contemplating what could be coming in the future and what can you must do about it?

    Just remember, a mediocre machine gun beats excellent cavalry every time.


    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 .
    KC's View:

    Published on: January 4, 2012

    by Kevin Coupe

    Shortly after Michael sent me his column yesterday, the following story was posted on the Chicago Tribune website:

    Eastman Kodak Co. may be kicked off the New York Stock Exchange if it cannot boost its share price over the next six months, the latest blow to the once iconic photography company and blue-chip stock.

    The company, whose shares fell more than 80 percent in 2011, received a warning from the New York Stock Exchange notifying it its average closing price was below $1.00 for 30 straight days.

    Its shares, which hovered in the $90 range in 1997, closed at 76 cents per share Tuesday. Kodak was a component of the Dow Jones industrial average from 1930 until 2004.

    Kodak warned in the statement it may not be able to meet the NYSE's listing requirements "given the liquidity challenges confronting the company and the recent market experience with our listed securities."


    In other words, there is yet more evidence that Kodak remains a horse in a machine gun world.

    It is an Eye-Opener.
    KC's View:

    Published on: January 4, 2012

    AFP reports that Pierre Dukan, described as France’s “top diet guru” and a bestselling author, is calling for the French government “to grade students on their weight in a bid to curb growing obesity ... Dukan suggests that students in their last two years of high school be awarded extra marks if they manage to maintain an acceptable Body Mass Index (BMI), a measure of body fat based on height and weight.”

    Dukan says that such an approach would be “a good way to sensitise teenagers to the need for a balanced diet,” and denied that it would punish overweight children: “There is nothing wrong with educating children about nutrition. This will not change anything for those who do not need to lose weight. For the others, it will motivate them.”

    Here’s the irony: AFP notes that France “remains among the lowest-ranked European countries in terms of obesity, with 12.7 percent of women and 11.7 percent of men considered obese, according to a study released by the European Union's statistics agency in November.”

    Meanwhile, in Georgia - a state with one of the highest childhood obesity rates in the US - Children’s Healthcare of Atlanta is out with a controversial series of commercials trying to draw attention to what it sees as a dire state of affairs there.

    The ads and commercials are in the vein of dramatic anti-tobacco ads, and feature obese children bemoaning the fact that they can’t play with other children, are made fun of by other kids, or have parents who ignore their obesity until they develop diabetes.

    Linda Matzigkeit, senior vice president of Children's Healthcare of Atlanta, says: "We needed something that was more arresting and in your face than some of the flowery campaigns out there."

    The campaign has generated a lot of strong reactions, including some from parents who believe that it is over-the-top and runs the risk of further alienating obese children and turning them into objects of fun.
    KC's View:
    Y’think the Atlanta ads are controversial? Just try suggesting that US kids should get graded on their BMI during their last two years of high school. That’ll cause a riot in some school districts.

    I think that schools have a role in educating kids about nutritional issues, and that includes serving healthy food in cafeterias, providing appropriate classes, and also returning physical education to a prominent position in the curriculum. But grading kids on their bodies? That’d be really dangerous. (It also ignores the other problem, which is teenaged girls so focused on their bodies that they develop eating disorders.)

    As for the Atlanta ads ... I understand why some people are sensitive, but I really don’t think they are that bad. Tough, but hardly over-the-top.

    But you can make up your own mind. You can see the ads here.

    Published on: January 4, 2012

    Reuters reports that Groupon’s daily deals business “grew in November as the largest daily deal company extended its lead over rival LivingSocial, according to estimates released on Wednesday.

    “Groupon's gross billings totaled $154 million in November, up 6 percent from the $145 million it collected in October, Yipit estimated,” while “LivingSocial's gross billings declined 5 percent to $52 million in November, versus the previous month.”

    Meanwhile, “Amazon.com's daily deal business, AmazonLocal, generated $5.8 million in gross billings in November, down 6 percent from October. That was the first monthly decline since Amazon got into the business last year, Yipit noted.

    “Google's daily deal business, Google Offers, generated $3.5 million in gross billings in November. That was up from October, helped by national deals run with large merchants including outdoor gear and clothing company REI, according to Yipit.”
    KC's View:
    Not sure about you, but my use of daily deal offers is totally based on what shows up in my email box. I get hundreds of these things, but they mainly seem to be for massages, manicures, pedicures and various other products and services that I have absolutely no need of or interest in.

    But when I got an offer from Whole Foods, I used it. Or one from the local New Balance store, which I jumped all over. Who sent it to me did not matter. I don;t care if it is Groupon or LivingSocial or someplace else. There’s no loyalty to one site or another ... just interest in relevant deals.

    (Which, in my view, would be one good reason not to invest in either company. They are only as good as their last deal, and that strikes me as a tenuous advantage at best. Of course, my investment advice is worth exactly what you are paying for it. A long time ago, I told my girlfriend - now my wife - that we should invest in J. Bildner & Sons because it struck me as a high-growth company. last time I ever invested in a retailer....)

    Published on: January 4, 2012

    The Wall Street Journal reports that “farmers and the food industry are asking the Obama administration to ease coming federal guidance that will advise consumers to minimize their intake of dioxins, chemicals that may be harmful at certain levels ... Food producers, grocery suppliers and restaurants are concerned the EPA will set a safety threshold for dioxin that is below the amount a typical American gets from food. They warn that would unnecessarily alarm consumers.”

    The WSJ explains that “dioxins are a byproduct of paper, metal and cement production, but the primary source of exposure for people is food. Meat and dairy products in particular absorb the chemicals, which are ubiquitous in the environment and get into what livestock eat, especially if the animals graze. When ingested at high levels, dioxins are linked to human reproductive problems, acute skin conditions and cancer.”

    The Environmental Protection Agency (EPA) is scheduled to release guidelines later this month, but the Journal notes that while scientists generally agree that dioxins are poisonous, there is disagreement in the scientific community about acceptable levels.
    KC's View:
    Experts say that one of the best ways to avoid dioxins is to eat more fish, fruit and vegetables ... and to avoid meat and chicken. Hence the opposition to federal guidelines from places like the American Farm Bureau Federation and the National Chicken Council. Not that they are necessarily wrong, but the question is how their opposition to guidelines are viewed by the consuming public. (To be fair, the Journal notes that US guidelines are expected to be far more stringent than those outside the US. But again, I’m not sure that this is a bad thing.)

    I’m old enough that when I hear the word “dioxins,” and I immediately think “Love Canal,” a story that came to symbolize the notion of wanton disregard for public health. I think that in looking for some relief from the government, the food industry has to be careful not to be seen as more interested in its own business models than in the welfare of its customers.

    Published on: January 4, 2012

    The Rochester Democrat and Chronicle reports that Wegmans pulled its Alec Baldwin commercials off the air two weeks into a planned three-week, pre-Christmas run, citing complaints that it received from consumers critical of the actor’s highly publicized run-in with American Airlines over a mobile device he would not turn off as the plane readied for take-off.

    “We had perhaps a couple of dozen complaints, and we take complaints from our customers seriously,” Wegmans spokesperson Jo Natale tells the paper.

    Natale says that the company had already decided not to use Baldwin as a spokesman during 2012.

    Baldwin’s personal passion for the retailer came to light when he appeared on “Late Night with David Letterman” and said that he could not get his mother to move out of western New York because she would not leave Wegmans.
    KC's View:
    The guess here is that Mrs. Baldwin is not going to stop shopping at Wegmans anytime soon, no matter what the company does to her son.

    Good thing that “30 Rock” is coming back on the air. Baldwin has had a tough month - he recently announced that he had lost his appetite for running to be the next mayor of New York City...a decision that came after the American Airlines incident, though he did not cite that as a reason.

    Published on: January 4, 2012

    Starbucks announced yesterday that it is increasing its coffee prices by about one percent in the Northeast and in the Sunbelt, a move that will affect cities that include New York, Washington, Boston, Atlanta and Dallas. Prices are not slated to rise on the west coast or in Florida.

    According to the Wall Street Journal, “Starbucks has raised prices in its cafes annually since the recession began, though the company said its increases have been ‘far less’ than those of its rivals.

    “Starbucks will face higher commodity costs than some of its competitors in the coming months. The chain made contracts to buy coffee for the fiscal year that began in October because prices were rising and Starbucks wanted to eliminate the volatility of buying on the spot market. But the market for coffee soon fell, and Starbucks was stuck paying more than it would have otherwise.”
    KC's View:
    I’m already hearing some blowback on this ... with some people saying things like, “Starbucks misjudges the market and they’re going to make me pay more?”

    Will this make them buy coffee at Dunkin’ donuts or Caribou Coffee or Java Joe’s or some other place? Beats me. But I wonder what the ceiling is for Starbucks’ prices.

    Published on: January 4, 2012

    KXAN-TV News reports that an HEB store in North Austin “has been remodeled into a market that caters to the Latin community in the area ... The revamped grocery store is set-up Mercado style and customers will be able to get freshly made tortillas as well as aguas frescas.

    “H-E-B said the store features new products and services not found in any other H-E-B in Central Texas.”

    The retailer said it spent $7 million dollars to expand the store by an additional 6,000 square feet.

    • The Wall Street Journalreports that the US Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) are saying that “tests of factory-sealed Mead Johnson infant formula pulled from some store shelves after a Missouri infant died from a rare infection showed no traces of bacterial contamination ... The agencies said there was no need for a recall of the formula and that it could continue to be used following the manufacturer’s directions.”

    The agencies continue to test to determine the source of the original contamination.

    Bloomberg reports that Denny’s “will raise menu prices this year to help make up for higher commodity costs and maintain profit margin,” though the company “declined to specify when the increase will take place or how much it will be.”
    KC's View:

    Published on: January 4, 2012

    • Hy-Vee announced that Gary Goodhall has been promoted to vice president, business development at Hy-Vee, Inc. He had been assistant vice president, business development.
    • Sears Holdings Inc. has hired Ron Boire, the CEO of Brookstone and former high-ranking merchandising executive with both Best Buy and Toys R Us, to be its new chief merchandising officer and president of the Sears and Kmart store formats. He also will be responsible for integrating Sears's stores, website and mobile-phone applications.

    Coverage of the hiring noted that the move represents a shift for Sears Holdings, which the Wall Street Journal noted has long been criticized “for giving short shrift to the shopping experience,” with CEO Lou D'Ambrosio “a former technology executive who had no prior retail experience.”

    The move also comes as Sears Holdings said it would close up to 120 Sears and Kmart stores following disappointing holiday sales.
    KC's View:

    Published on: January 4, 2012

    On the evening of Monday, January 16, during the annual National Retail Federation (NRF) Show in New York City, MNB will be hosting a special retailer-only reception that is sponsored by Balance Innovations and WorldPay. (Michael Sansolo and I can promise terrific wine and beer, splendid food, and sparkling conversation...and maybe even a cameo appearance by Mrs. Content Guy.)

    If you are a retailer attending NRF, please let me know ASAP (email me at kc@morningnewsbeat.com . There are just a few slots left on our retailer-only guest list, and we’d love to have you join us.
    KC's View:

    Published on: January 4, 2012

    Regarding the continuing trend of men doing more supermarket shopping, MNB user Liz Aviles wrote:

    I read the LA Times’ story with great interest since our agency recently fielded a survey exploring the rising numbers of men who are not only grocery shopping, but also taking on the primary responsibility for turning those groceries into meals for their families. We’ve been tracking these changes for the past few years and are also amused by the media’s recent coverage of this story. I completely agree that the grocery shopping experience is no longer the homogenous picture that most marketing depicts. Still, even with a growing body of research that speaks to this shift, many brands are reluctant to veer from the belief that today’s grocery shopper is still a mother with kids and a husband who remains uninvolved in the care and feeding of their families.

    Given the number of studies that still focus on the “phenomena” of men grocery shopping, our research team decided to dig a little deeper and explore how and why more men are cooking for their families. Their responses certainly speak to changing parenting dynamics, but they also highlight the emotional satisfaction that many men derive from cooking for their partners and their kids. I hope the media’s chatter will eventually recognize this part of the story.


    Agreed.




    MNB user Tim Korosec had some thoughts about some of Best Buy’s online miscues during the holiday season:

    My 25 year old son told me what just happened to him at Best Buy and I knew you would enjoy the "experience".  My son looked on Bestbuy.com to look for a battery for a camera.  $19.99 on-line.  He happened to be in the local Best Buy store and thought he would check the price in store.  $29.99.  He took the battery to the checkout and asked a customer service manager if they would match THEIR OWN on-line pricing and he was told"no".  They would match competitors on-line pricing, but not their own.  He was told he could go home and purchase it on-line and then check the option for picking it up in store and get the on-line pricing.  At which point my son pulled out his iPhone and went to Bestbuy.com  and purchased the battery and chose to pick it up in-store. He did this while standing in front of the cashier.  He then showed the cashier his on-line receipt from his phone and they completed his purchase for $19.99.  Giving him the same battery he had taken from their shelves to ask the original question if they would match their own on-line pricing.  Customer service?  Hardly.

    I don’t mean to be harsh here, but companies that pretend not to understand how the world works in 2012 - or worse, don’t know how the world works when it comes to how consumers shop - are morons. They’re guilty of retail malpractice. And they have no right to survive. (And, in the end, little likelihood.)

    Was that too harsh?




    One MNB user reacted to yesterday’s piece taking note of a Reuters report that Wegmans, Wawa and W.L. Gore & Associates (maker of GORE-TEX clothing) “have joined the ranks of hot tech companies like Facebook in the debate over a U.S. securities rule that can force privately held companies to disclose finances they'd rather keep secret ... They are lobbying for legislation that would increase the number of shareholders a company can have before it must make detailed disclosures to the U.S. Securities and Exchange Commission, and exempt employees from that cap.”

    Companies such as Facebook have attempted to skirt the 500 shareholder rule for some time.  Facebook tried to circumvent the SEC by selling a block share to Goldman Sachs as one investor; Goldman-Sachs would then sell pieces of that block to individuals.  But Facebook would only show one shareholder net.  The 500 shareholder limit is to reduce investor uncertainty in significant or larger companies.  Companies can offer stock options to executives as they please – they just cannot do it under the table once they surpass 500 stockholders.  The rule was implemented in 1934 and limitations expanded since.  It was the rolling back of such depression-era financial and regulatory rules that directly led to the 2008 financial meltdown.  This taxpayer would rather not repeat that debacle.




    We had a story before going on vacation about retailers that simply don’t “get” their markets, which prompted one MNB user to write:

    I worked for a Midwest retailer (CUB) who opening a store in Chicago.  They went to great lengths to ensure they were providing the correct products for the customers that lived closest to the store.  It was primarily African American.  As we were doing the final walk through just before the store opened, one of the folks who had flown in from Minneapolis, remarked about one of the signs over the HBC section that said “ ETHNIC HAIR CARE”.  He remarked that due to the fact that almost all of the customers coming to this store were African American, wouldn’t this be just HAIR CARE?  We all thought about it and the sign was changed before the store opened.  At the end of the day you have to think like a consumer to do any type of display and have it be successful.

    Absolutely.
    KC's View:

    Published on: January 4, 2012

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    KC's View: