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    Published on: January 13, 2012

    by Kevin Coupe

    Here’s a number that will take your breath away. reports that “Facebook is expected to hit 1 billion users sometime this summer, possibly in August 2012. The new estimate was made by extrapolating the social network’s current grown rate and using a simple process of linear regression on the data from the end of 2008 ... This is likely because the company’s quick expansion in many of its early adopting countries (such as those in North America and Europe) has slowed: most of those countries’ populations interested in social networks are already using the world’s biggest one. Developing countries are now increasing interest as well, however, and are thus keeping the growth more or less steady.”

    And here’s the amazing thing. Potentially, they - we - are all connected.

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

    Published on: January 13, 2012

    Vending Times reports that Kroger is looking to satisfy the convenience store needs of students at Ohio Northern University by making available to them a nine foot tall robotic vending machine that can dispense some 200 items - including beverages, refrigerated meals, cleaning supplies and OTC medicines.

    According to the story, the Shop24 vending machine “accepts cash and credit, debit and supplemental nutrition assistance program (SNAP) cards, as well as student meal cards.”

    The story notes that this is the second vending machine that Kroger has tested, the first one being located at one of the company’s gas stations. It also says that “Shop24 Global LLC says its automated convenience stores have been installed in more than 250 locations in 15 countries and have over 150 million transactions.”
    KC's View:
    I got a real sense of deja vu reading this story - it seems like the first time I read and/or wrote about Shop24 was decades ago. If I’m not mistaken, I saw one of its installations at ANUGA or SIAL, and I raved at the time that these would shortly find a home in the US.

    I’m glad I didn’t put a time frame on that prediction. (At least, I don’t remember one...)

    The thing is, I’ve always thought that these sorts of vending machines made a ton of sense, allowing retailers to extend their brands into different places and create a differentiated competitive offer. I still think they will have a place long-term, though it is taking a lot longer than I thought...

    Published on: January 13, 2012

    The Washington Post this morning has a story about how “more people older than 55 are employed than ever before, according to the latest figures from the Bureau of Labor Statistics” - this despite the fact that the Great Recession has raised the overall unemployment and under-employment level in this country.

    A major factor in the decision is the simple fact that economic factors - the diminishment of 401(k) plans, the rising cost of goods and services - have conspired to create a level of fear in this generation that its members do not have the means “to support their retirement needs.”

    According to the story, “An August survey by the AARP Public Policy Institute of people older than 50 showed that 57 percent reported that they were less confident than before the recession that they will have enough money to live comfortably throughout their retirement years. Similarly, 61 percent of the respondents said that their savings had fallen since the recession ... The number of people older than 55 who are working has actually risen by 3.1 million, or 12 percent, since the beginning of the recession, according to the latest figures from the Bureau of Labor Statistics. The phenomenon extends even to people 75 years and older; there are more of them working today than before the recession, too.

    “By contrast, the number of people between the ages of 25 and 54 who are working has shrunk by 6.5 million, for a drop of 6.5 percent.”
    KC's View:
    This shift is germane to marketers who might be employing such people, as well as those selling to such people - working people probably have somewhat different needs from those who are retired.

    I get the whole economic insecurity thing. But I’m more interested in the part of the Post story noting that “the statistics show as well that a growing proportion of older people are interested in work.” And not just for economic reasons; there seems to be a sense that the notion of retirement is evolving, and while older people may not want to stay in the same job into their seventies and eighties, they want to be doing some job. For the money, but also for the stimulation.

    I know I feel that way. I may want to do this somewhere warmer, and I suppose at some point in the distant future I might not want to do this every day, but I think that in one form or another I’m going to be doing this until I drop...or my fingers fall off. (Assuming, of course, that anyone wants to read it.)

    There is, by the way, one other thing that upsets/annoys me about this Post story - the idea that it seems to equate “older workers” with people over the age of 55.

    Give me a break.

    Published on: January 13, 2012

    The Chicago Tribune reports that Dish Network plans to close “more U.S. Blockbuster stores across than it had  planned and will turn the remaining outlets partly into Dish customer-service points.”

    CEO Joe Clayton says that the company will shutter stores deemed to be unprofitable.

    "We are committed to keeping the profitable stores open that are generating positive cash flow, but there are ones that aren't going to make it," Clayton says.

    The story notes that “Dish, which paid $320 million for Blockbuster, said last July it would keep 1,500 stores open and retain 15,000 employees, or about 90 percent of the outlets at the time.”

    No time frame has been set for the closures.
    KC's View:
    No surprise here. The simple truth is that Blockbuster is, for the most part, an obsolete business model, squeezed on both sides by Netflix and Redbox, not to mention the greater availability of downloading services.

    Just another great example of a retailer that breathed in its own exhaust, and was unable to see the realities of a changing marketplace.

    Published on: January 13, 2012

    The Chicago Tribune reports that Burger King “is testing delivery in a few Washington, D.C. area restaurants as part of a test that will include 16 restaurants by January 23 ... Customers can order online or over the phone, and orders will include a $2 delivery fee. Order minimums vary by store, but will range from $8 to $10. Customers must be located within a 10 minute drive of the store.”

    No timing for any sort of national rollout has been announced.
    KC's View:
    This move comes as Wendy’s has passed Burger King to become the nation’s second ranked fast food burger chain.

    And I’m sure that a lot of folks will now change back, saying, “Wow! Now that I can get Burger King delivered, I’m abandoning Wendy’s.”

    Yeah. Sure they will.

    Published on: January 13, 2012

    So much for food price inflation.

    The Financial Times reports that “the threat of food inflation, a serious concern for emerging countries last year, is starting to recede as high prices for grains restrain consumption and better crop yields in Europe and Russia replenish stocks ... At the same time, the US reported that its domestic production and stocks of corn, a key commodity for the global food chain, were higher than previously thought, sending prices sharply down.”
    KC's View:

    Published on: January 13, 2012

    The Wall Street Journal reports that “a strategic review at PepsiCo Inc. is more likely to result in a renewed marketing push for its core soft drinks business—and sharp cost reductions to pay for it—rather than a rebuke of CEO Indra Nooyi or any drastic move such as a Kraft-style breakup.”

    Nooyi has been under pressure from the investor class because of a perception that she has focused on healthier products at the expense of the soft drinks portfolio, a charge that she has rejected as being inaccurate.

    According to the story, it seems likely that Pepsi will “slash hundreds of millions of dollars in costs, including the elimination of thousands of jobs, and increase the marketing budget for its flagging North American beverages by around 20% this year, to pump life back into brands such as Pepsi after being heavily outspent by Coke in recent years.”
    KC's View:
    When I talk to people in the industry, there are two words often used to describe Indra Nooyi’s situation: “thin ice.”

    Published on: January 13, 2012

    Reuters reports that the United Food and Commercial Workers Unions and Employers Midwest Health and Pension Fund have filed a class action suit against Walgreen Co., charging the drug retailers with “overcharging for various generic drugs in a bid to boost profits.

    Generic drug maker Par Pharmaceutical is also a defendant in the case.
    “Starting April 1999 through December, 2006, Par and Walgreen conspired to increase their profit through at least two schemes to illegally fill prescriptions with Par's higher-priced products rather than the specific drugs prescribed by physicians," the suit says, in part.
    KC's View:

    Published on: January 13, 2012

    ...with brief, occasional and sometimes even gratuitous commentary...

    • It was interesting to see a story in the Los Angeles Times noting that “Kohl's Corp. is opening its first-ever California design center in Santa Monica with an eye toward spotting West Coast trends while also expanding its New York design office. The 6,000-square-foot design studio, opening Monday, will house a team of 20 graphic designers who will focus on creating prints and embellishments for a variety of brands for the department store chain.”

    I found this story intriguing because it was not that long ago that Walmart decided to close down its New York fashion office and move its people and functions to Bentonville, Arkansas. And I just saw this as a curious juxtaposition. I think that companies are healthier for having diverse points of view that gather expertise from a variety of sources. It isn;t just a matter of dollars and cents; it is a matter of understanding that ingenuity and imagination need different kinds of care and feeding. IMHO...

    • The New York Times reports that CVS Caremark has agreed to pay $5 million to settle Federal Trade Commission (FTC) charges that it “misrepresented the price of certain prescription drugs in one of its Medicare drug plans, causing many older consumers to pay significantly higher prices than advertised.”

    According to the story, the move comes after two years of being investigated by the FTC.

    The Times notes that CVS says that “the settlement related only to the practices of RxAmerica, a subsidiary of Longs Drug Stores, that took place before CVS Caremark acquired Longs in October 2008,” though the FTC “asserted that some continued after the acquisition.”

    Reuters reports that the Coca-Cola Co. says that only a “relatively small number” of consumers have contacted the company to express concerns about low levels of a fungicide called carbendazim had been found in orange juice products imported from Brazil, a discovery that led the US Food and Drug Administration (FDA) to halt all orange juice imports while inspections are made.

    The story notes that “Coca-Cola's Simply Orange and Minute Maid, along with PepsiCo Inc.'s Tropicana, are the major U.S. brands currently made in part with Brazilian orange juice ... The FDA initially didn't say which company reported finding the fungicide, but Coke stepped forward to identify itself Wednesday after PepsiCo said it hadn't contacted the agency.”

    Just like to use this moment to thank the dozens of folks who wrote in yesterday about the Randolph and Mortimer Duke reference I made in my commentary about the orange juice story. Yes, I agree that “Trading Places” is a terrific movie,. And no, I don't want to bet you a dollar that the Dukes are involved in this new situation...
    KC's View:

    Published on: January 13, 2012

    ...will return.
    KC's View:

    Published on: January 13, 2012

    Two movies to talk about this week, each of which surprised me in different ways.

    I had been looking forward to Tinker Tailer Soldier Spy immensely; it is one of my favorite genres, and I thought that the combination of an intellectual spy thriller, some terrific actors (Gary Oldman, Colin Firth), and what appeared to be stylish production design would be hard to resist.

    Sad to say, I felt let down by the experience, and I’m not entirely sure why. So many of the elements were perfect, and yet in some ways I felt like the total was less than the sum of its parts. I love spy thrillers, and I love to be caught off guard by the denouement of a cleverly constructed story - but in this case, the conclusion seemed perfunctory rather than organic. There was no delight, no real pleasure in watching Oldman’s spymaster, George Smiley, unravel the puzzle. I know I’m in the minority on this one, but that’s how I feel.

    The Girl With The Dragon Tattoo may be billed as “the feel bad movie of the year,” but I found it to be an exciting thriller, meticulously directed by David Fincher and well-acted by Daniel Craig and Rooney Mara. Fincher knows his way around serial killer movies, and his take on the best-selling novel is pretty much flawless - he doesn’t flinch from the really awful scenes of brutality that are difficult to watch but necessary to the story.

    I’d seen the 2009 Swedish film version of the novel, and remembered loving it, feeling like it had taken me places I’d never seen before. I was chagrined to find that as the new film version unfolded, I recalled very little about the earlier movie. That was good for enjoyment purposes, but it made me think that the 2009 movie was less memorable that I’d thought.

    I also have two wonderful red wines to recommend to you this week (both of which were brought to my attention by my wine merchant son, Brian)

    • 2008 Chamonix Cabernet Sauvignon, from South Africa.

    • 2007 Rock Face Cabernet Sauvignon from California’s North Coast.

    Both are lovely - rich and full and perfect with a hunk of beef on a cool winter night.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    KC's View: