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    Published on: February 8, 2012

    by Kate McMahon

    The social networking firestorm that engulfed the estimable Susan G. Komen for the Cure breast cancer charity last week epitomized the power and fury of Facebook, Twitter and message boards across the internet.

    The Dallas-based foundation reversed its decision to yank funding for breast cancer screenings provided by Planned Parenthood after a three-day onslaught of online criticism. While the political and fund-raising fallout for Komen remains uncertain, the influence of people airing their views on Facebook and Twitter has hit new heights.

    Though not dominating the front pages of mainstream media, another controversy - this one involving a conservative group, a huge national retailer, and social media users - also was lighting up the internet last week.

    JC Penney, under new leadership from former Apple retailing chief Ron Johnson, unveiled its new game-changing campaign to cut prices year-round, eliminate most coupons and specials, redesign store layouts and its logo, and introduced a new spokesperson, Ellen DeGeneres.

    It appears JCP scored thousands of new customers and online attention not by virtue of its ambitious pricing plan or aggressive TV ad campaign featuring consumers screaming at coupons. But rather because a conservative group, One Million Moms, called on JCP to fire the popular DeGeneres because she is “openly homosexual” and offensive to the store’s “traditional family” customers.

    Boy, did that backfire for OMM, an extension of the American Family Association. DeGeneres, one of Hollywood’s best-liked personalities and a popular spokesperson for both American Express and Cover Girl, has 9 million Twitter followers, more than 6.8 million fans on Facebook and three million daily viewers.

    Shortly after OMM’s call to arms, the Gay and Lesbian Alliance Against Discrimination launched a "Stand Up for Ellen" website; within 17 hours, more than 10,000 people signed an online petition supporting DeGeneres and JC Penney's choice. That number now tops 37,173 names.

    But more importantly, the comments on news stories, blogs and Twitter were overwhelmingly pro-Ellen and JC Penney. This entry was typical of the more than 15,000 responses to a story:

    “ I don't shop at JC Penney but I will go out of my way to try and do so now. As a father of two in a "traditional" marriage I would go to bat for Ellen over some ignorant organization shoving their morality down our throats.”

    Over at the JC Penney Facebook page wall, one woman wrote:

    “I made it a point to shop JC Penney twice this weekend just because they hired Ellen! I plan to go back.”

    (Not all the comments on the JCP page were positive, but the most negative ones seemed to rip the TV ads with the primal-screaming consumers.)

    Even the wall on the OMM Facebook page has vocal JCP/Ellen backers, including one who penned: “How’s that anti-Ellen thing working for you moms? Not so great, I’m guessing.”

    JC Penney on Friday confirmed it “stands behind its partnership with Ellen DeGeneres.” One cynical blogger questioned whether the OMM attack was part of a well-orchestrated JCP publicity stunt to draw attention to its new pricing campaign.

    I think not.

    Personally, the original Komen decision made me question my long-time support of that organization, and the OMM attack is enough to send me straight to JC Penney for the first time in years.

    But I also think this story, along with the Komen uproar and the online campaign by technology companies and citizens that recently grounded two pieces of federal legislation seen as heavy-handed and censorious, prove even to naysayers that attention must be paid to social networking. Public reaction moves at break-neck speed, and companies that do not understand and embrace this new communications force might just as well be selling typewriter ribbons or telecopiers.

    One final note. During the initial uproar over her hiring by JCP, Ellen DeGeneres was wise enough to stay out of the war of words and simply let it play out. But now that it has concluded, DeGeneres - who, as it happens, is a former JC Penney sales clerk at its Metairie, Louisiana, store, said she was glad to be back on the payroll and “proud and happy to say that JC Penney stuck by their decision to make me their spokesperson.” And, she added, “Most importantly, I'm gonna get my employee discount again. Hello new pillows!"

    Comments? Email me at .
    KC's View:

    Published on: February 8, 2012

    Supervalu Inc. announced yesterday that it “plans to reduce its national workforce by an estimated 800 positions. A majority of these reductions will take place by the close of the company's fiscal year on February 25, 2012. The reductions include both current positions and open jobs that will not be filled.”

    According to the announcement, the moves are part of the company’s “strategic plan to remove permanent expenses from its business as well as reduce overall operating costs, efforts which are necessary in helping the company achieve its plan to deliver more competitive pricing to its customers. The announcement affects all company offices and crosses most departments within the organization. In general, store level associates are not affected by this announcement. Associates whose positions are eliminated will be eligible for severance and outplacement services based on our eligibility guidelines.”
    KC's View:
    It is hard for me to judge these reductions from the outside. On the one hand, maybe they are necessary in order for Supervalu to remain viable. But it also perpetuates the image of a company in retreat, not moving forward.

    But let’s look at the reductions from the inside. I got a couple of emails yesterday that are relevant to the discussion.

    One MNB user wrote:

    Concerning the announced layoffs of up to 800 employees at Supervalu, I would like to make an observation of not only SV but all companies going through downsizing.  As one of the ‘downsized’ in SV’s cost cutting initiative last year I believe I have insight into this.  I understand that companies need to make periodic cost cuts to stay competitive and more importantly to stay in business, but are they really making the best decision for their own company?

    Case in point, I was part of an entire department that was eliminated, but the layoffs mainly affect those long termed or higher paid associates that will allow the companies to achieve their cost reduction goals the quickest.  With this strategy you not only gain your salary, benefits, bonus (if any) reduction goals but hundreds if not thousands of years of experience also are eliminated.  Sure,  you can hire many replacements for those downsized at a cheaper salary but also with minimal or even no relevant experience for the role.  Many have never worked in the industry or even understand the business.  What I am curious about is why don’t they use a Total Cost of Experience (TCE) model?  By that I mean use a model similar to a Total Cost of Ownership used for application, hardware, etc., purchases – long term value versus short term cost savings.  For example a person with 25 years of experience who makes $100,000 would have a TCE of $4,000 per experience year while someone who was just hire 2 years’ experience who is paid $30,000 per year would have a TCE of $15,000 per experience year or a 73% TCE savings.  In this case the long term employee is the much better value to the company.   It has never been possible to turn around a company when much of the knowledge, history and experience has left.

    Of course the company or Wall Street doesn’t measure by TCE, only the bottom line cost reduction

    BTW.  Am I bitter about being downsized?  No, it was a blessing and I am now at a company that values my experience, knowledge and talents.   And I don’t have to look over my shoulder to see if a pink slip is being sent my way.

    And, from another MNB user:

    Supervalu will lay off 800 people this week. It started today, the last day is scheduled to
    be 2/24/12. I was one of those laid off at Shaw's. Needless to say, I must ask for anonymity.

    I wish I had something of value to add to the article you will inevitably write about this. I wish my experience at Shaw's was better, but the people that I saw there had no imagination, just did what they were told and brought nothing to the table in terms of differentiating themselves in terms of the marketplace. Shaw's/Star is a store of last resort for too many people. I would listen to Mike Stigers talk and be mesmerized by his speaking ability (the man could lead a cult). But in the end, Shaw's will probably go down as another New England institution that could not keep up with the times. They are introducing an app soon that is a mere extension of their website - you can't order groceries through your phone - so what's the point?

    As I said...views from the inside, about a company perceived by some as being in retreat, losing value instead of adding value.

    I look forward to responses from the other side.

    Published on: February 8, 2012

    A new supermarket company, Belle Foods, announced that an agreement has been reached with Southern Family Markets LLC and several of its subsidiaries to purchase all 57 grocery store locations of the Southern Family Markets grocery chain headquartered in Birmingham, Alabama. The stores are located in Alabama, Florida, Georgia, and Mississippi, and operate under banners such as Food World, Piggly Wiggly, Bruno’s, and Southern Family Markets.

    Terms of the transaction were not disclosed.

    William (Bill) White, the CFO of Big Y Foods and a 30-year industry veteran, formed Belle Foods and serves as the President and CEO. His son, Jeff White, serves as the Chief Administrative Officer.

    “We are very excited about this acquisition and look forward with great anticipation to growing this business, being strong partners in the communities we will serve, and bringing back the family-owned roots which have always made these stores so special,” Bill White said.

    “This transaction brings many great opportunities to all who are involved,” stated Max Henderson, President of Southern Family Markets. “It will allow the business to continue its commitment to its communities, to develop and grow its associates, and to improve operations.”

    According to the announcement, “Belle Foods intends to provide offers of employment to Southern Family Markets employees, as it works with representative unions through the transition. The Food Partners is acting as Southern Family Markets’ strategic and financial advisor for the transaction, which is expected to be finalized during the ensuing weeks. After the transition is complete, Birmingham Logistics LLC, a subsidiary of C&S Wholesale Grocers, Inc., will continue to provide the full array of warehousing, distribution, and procurement services to all stores.”
    KC's View:
    It strikes me as being more than a little ironic that as one major company announces layoffs and cutbacks, there is evidence of entrepreneurial energy in another locale as a company comes into existence and expresses confidence in the future. I love it.

    I look forward to visiting these stores as the folks at Belle Foods put their imprint upon them ... and I hope they are ambitious in their plans and aggressive in their implementation.

    Remember the Latin proverb: "Fortes fortuna adiuvat.”

    Published on: February 8, 2012

    by Kevin Coupe

    Maybe this only could happen in San Francisco, but it is a great example of finding a differential advantage by offering something unique.

    San Francisco International Airport reportedly has unveiled a new Yoga Room, a dimly lighted 150-square foot room with mirrored walls, that is open to all passengers, and that bans shoes, cell phones, food and beverages. “Silence is appreciated,” says a sign on the wall.

    The Yoga Room is located past security in Terminal 2.

    We’ve all seen how many airports have upgraded their facilities in recent years, adding better restaurants and enough stores and services to populate a good-sized shopping mall ... but this apparently is the first yoga room ever to be installed in an airport.

    But if this catches on, and becomes a value-added advantage for SFO, then it may not be the last.

    Either way, it’s an Eye-Opener.
    KC's View:

    Published on: February 8, 2012

    Forbes reports that Redbox parent company Coinstar “will pay up to $100 million for the 9,000-10,000 kiosks now operated by NCR under the Blockbuster Express name; those will be added to the roughly 35,000 current Redbox locations.

    Coinstar CFO Scott Di Valerio notes that the company will own the physical kiosks, but not all of NCR’s retailing relationships, which suggest some locations will be moved or mothballed.”

    According to the Forbes story, there could be antitrust objections to the deal, since “Redbox already has 37% of the U.S. video rental market by units; by dollars the total is in the 20%-23% range ... If you thrown in another 10,000 kiosks, the total could soon hit or surpass 50% of the market.”

    It will be up to the Department of Justice to decide whether the market should be considered within narrow confines (kiosks only) or as the broader universe of all video rentals, which would include kiosks, mail, and even video streaming.
    KC's View:
    Not a lawyer, and don’t even play one on TV, but I think logic suggests that you have to consider this deal in the broadest possible context. Kiosks don’t just compete with other kiosks, but also with Apple’s iTunes, Amazon, Netflix, and all sorts of other downloading and streaming options.

    For example...Reuters reports this morning that is about to announce a deal with Viacom that will allow them “to launch a standalone subscription service to compete with Netflix Inc.” The service would go beyond Amazon’s current video streaming business, which is offered as part of its Prime service.

    The big story here is that Netflix increasingly is under attack from a number of quarters, and that the entertainment landscape is rapidly changing. This should inform how the DOJ approaches the Redbox/Blockbuster question, but also how every retailer thinks about the world of consumers. Because it is changing consumer needs and desires - even those needs and desires that consumers don’t yet realize they have - that really are driving the shifting marketplace.

    Published on: February 8, 2012

    Fox News says that the US Centers for Disease Control and Prevention (CDC) is out with a report saying that nine out of 10 Americans consume much more than the daily recommended amount of sodium.

    According to the story, “Currently, the U.S. Dietary Guidelines recommends the average individual should consume a limit of 2,300 milligrams per day.  But the average person’s actual sodium consumption per day – 3,300 milligrams, according to the report.  And that doesn’t include salt added at the table.

    “The Vital Signs report - the CDC’s monthly report of the latest health data - found that a meager 10 types of foods are to blame for more than 40 percent of people’s sodium consumption.  And most of these foods are everyday items found in restaurants or the grocery store.

    “The most common sources of sodium resemble a typical lunch menu.  Breads and rolls, luncheon meat, pizza, soups, and cheeseburgers top the list, along with cheese, pasta and meat dishes. Fatty snacks such as potato chips, pretzels and popcorn were also responsible for a large portion of people’s sodium per day.”
    KC's View:
    So, in other words, everything we like to eat is bad for us?


    I have to admit that having just typed those words, I went over to the larder (I’m working in the kitchen this morning) and checked out my favorite pasta. Zero sodium. Opened the freezer to look at the bag of frozen shrimp. 270 mg of sodium per serving, or about 11 percent of RDA. Olive sodium. Emeril’s essence...135 mg of sodium per serving, or about six percent RDA.

    I think I’m okay for the cajun shrimp I’m making for dinner tonight. (Yes, I’m one of those people who often thinks about what I’m going to make for dinner before I finish breakfast...) But clearly this is what I - and a lot of other Americans - have to do each day.

    And it will be helpful if manufacturers can work even harder to eliminate sodium from the foods they are peddling to the American public.

    Published on: February 8, 2012

    The Wall Street Journal reports that the San Francisco Board of Supervisors “ voted Tuesday to make it illegal for any shop in the city to offer disposable plastic bags to customers. The law expands a 2007 bag ban that applied to large grocery stores and pharmacies, and also mandates stores charge customers 10 cents apiece for paper bags.

    “The legislation, meant to reduce litter and waste-processing costs, requires all retail outlets top stop distributing single-use plastic bags in October. Starting in 2013, the ban will apply to restaurants as well. Reusable bags will remain legal.”
    KC's View:
    Yoga rooms and plastic bag bans. I know that there are some people in the MNB community who think that the nation would be better off if California - and San Francisco in particular - seceded from the union. Or fell into the Pacific.

    But I have to say that I love California. Especially San Francisco. And have ever since I saw Bullitt the first time. Though I have to admit that perhaps my favorite San Francisco movie is the 1978 version of Invasion of the Body Snatchers, directed by Philip Kaufman and starring Donald Sutherland.

    But I digress...

    Published on: February 8, 2012

    The New York Times reports that pure play online grocer Fresh Direct has decided not to succumb to the entreaties and subsidies proffered by the state of New Jersey - including $100 million in tax breaks - and instead will keep its operations in New York City.

    Fresh Direct has been based in Long Island City, Queens, but now will move to a 500,000 square foot building in the Bronx.

    According to the Times, “It is costing New York quite a bit keep the online grocer, which has outgrown its Long Island City headquarters, on this side of the Hudson. The total value of the incentives from the city, the state and the Bronx tops $120 million, Mayor Michael R. Bloomberg’s office said in a news release. That includes $74 million in city tax exemptions, $18.5 million in state tax credits, and $18 million in cash, split between city and state, to get the project rolling.”
    KC's View:
    Some say that the NYC tax breaks are too generous, but I’m not sure how I feel about it; if local people are hired, and it can bring economic diversity and development to the Bronx, it probably is a good thing.

    I’m waiting to see how the sometimes bombastic NJ Gov. Chris Christie responds to the rejection. It may not be politically correct, but it almost certainly will be quotable.

    Published on: February 8, 2012

    • The Winnipeg Free Press reports that “Walmart Canada plans to spend more than $750 million over the next year to open, relocate or remodel 73 retail stores, including former Zellers locations.” The company said that “the initiative will create more than 14,000 jobs when factoring in store employees, as well as trade and construction jobs.”

    More than half the projects will be supercenters, the company says.
    KC's View:

    Published on: February 8, 2012

    • Almost 50 percent (49%) of U.S. online consumers believe their personal finance prospects will be  good or excellent  over the next 12 months , according to fourth quarter 2011 global consumer confidence findings released today from The Nielsen Co. The quarterly results were the highest for 2011 and a six percentage point increase from Q3 2011.  According to Nielsen’s survey, the number of U.S. respondents who described their job prospects as “bad” dropped from 28 to 19 percent between Q3 and Q4 of last year as well.

    • Consumers Union, Food & Water Watch, and the Center for Food Safety announced that they have “submitted a formal petition asking the U.S. Food and Drug Administration (FDA) to classify and evaluate AquaBounty’s ‘AquAdvantage’ genetically engineered (GE) salmon and all of its components as a food additive. The groups’ legal petition contends that the current agency review process that treats GE salmon only as a new animal drug is insufficient to protect public health, and that the agency is required by law to review the GE salmon under what should be a more rigorous process for any novel substance added to food.”

    • Ahold USA announced “that for the first time it appears on the U.S. Environmental Protection Agency’s (EPA’s) list of the largest green power purchases. The company ranks No. 7 on the EPA’s Top 20 Retail list and No. 30 on the National Top 50 list. Ahold USA is purchasing more than 149 million kilowatt-hours (kWh) of green power annually, which is enough green power to meet 7 percent of the organization's electricity use. Ahold USA is buying renewable energy certificates (RECs) from 3Degrees. In addition, Ahold USA is generating green power from its on-site renewable energy systems which demonstrates a proactive choice to switch away from traditional sources of electricity generation and support cleaner renewable energy alternatives.”

    • The Boston Globe reports that Martha Stewart’s latest product line - called “Martha Stewart Home Office with Avery” - is about to be unveiled exclusively at Staples stores around the country. There are more than 300 SKUs in the line, the company says, priced between $1.99 and $16.99.
    KC's View:

    Published on: February 8, 2012

    • Pick n Pay in South Africa announced that its CEO, Nick Badminton, is stepping down from the job after a five-year tenure, “to spend some quality time with my family and my bicycle.” Badminton is 50.

    Pick n Pay, which is owned by the Ackerman family, has been under pressure of late because of Walmart’s acquisition last year of 51 percent of Massmart, a South African retailer that it hopes to use as a springboard to other parts of Africa.

    Reuters reports that “Pick n Pay chairman Gareth Ackerman would take the role of executive chairman responsible for strategy, while deputy CEO Richard van Rensburg would be responsible for operations until the new CEO is found.”
    KC's View:
    Once again, I can only say that I hope Badminton’s family (and bicycle) are as happy about spending more quality time with him as he is about spending time with them.

    Published on: February 8, 2012

    Regarding the possibility of opening a bricks-and-mortar store in Seattle to test whether it makes sense to open units around the country to compete with Apple Stores, one MNB user wrote:

    One thing more to consider….if Amazon has a physical presence in WA – will all internet purchases by WA residents from be subject to a sales tax? Just asking….

    My understanding is that Washington State residents already pay sales taxes on their Amazon purchases.

    MNB user Matthew Muir wrote:

    I wonder if this is in response to Retailers overseas who are retailing Kindles?  In Australia, Woolworths retails them in around 1,000 stores, with what appears to be a fair amount of success.

    But a Kindle based store? Unsure...

    Me, too.

    Responding to Michael Sansolo’s column yesterday, about how the phrase “10-4” is being phased out as an anachronism, one MNB user wrote:

    Michael is right on point!  To his example of companies that remained stuck in their current business model, I’d add Xerox.  They invented Ethernet but couldn’t figure out how to bill it.  They invented the fax machine but insisted on slapping meters on it.  If it didn’t have meters, the X couldn’t bill it.  Think the Mouse, the Mac – all from Palo Alto Research Center.  All could have been Xerox winners if they’d been able to detach from the rate-per-copy pricing that was their bread and butter.

    An interesting and inspiring story of a company that took the other path is the story of the Warren Featherbone Company, a company that started out manufacturing whalebone corsets in the 19th century.  Its CEO, Gus Whalen, was the keynote speaker at a Supply Chain conference about fifteen years ago.  When whales were no longer used for corsets, the company switched to plastic – then a scary new product.  When nobody wore corsets anymore, the company started making children’s clothing.  Whatever disastrous blow the company was dealt, it just grabbed on to something new and reinvented itself.  Too bad more Supply Chain leaders didn’t take Gus’s narrative to heart!

    But MNB user Bob Anderson wrote:

    Wow as an ex police officer I’m sorry to hear of this change, as the 10 series code was put in place for a reason, and that was to cut down on talking do to the high volume of calls. Also to simplify the discussion as some folks may get a little wordy when others are needing the air time.

    On another subject, MNB user Regina G. Tator wrote:

    I had the pleasure of working with Larry Zettle when I was at Price Chopper and he certainly goes down in the books as not only one of the good old grocers, but he also was an amazing mentor.  He had a passion for private brands that contributed greatly to the growth of the PC program.  My favorite LZ story was walking from the hotel to the airport at O'Hare with Larry and he dropped his bags.  I feared he was having a heart attack, but he was saluting Cubs memorabilia in the gift shop.

    I always knew if I picked up the phone I could get advice and the gift of that knowledge is something I will truly miss.

    I also continue to get email about the Super Bowl commercials and half-time show.

    One MNB user wrote:

    Interesting debate on ESPN radio today.  The under 30 crowd thought Madonna was lame. The consensus was they liked the showmanship but not the music and yes thought her dancing was not up to par,  They all mentioned she was over 50 - wending comments with "what do you expect".

    In contrast, the crowd at our super bowl party (admittedly 40-60 year olds)  all moved upstairs away from the food  and adult beverages (a major feat with this crowd) to watch on  the 120" in anticipation of the show  - and to a person - all loved it.  Thought it was the best in the last few years.

    This debate is more about cultural divide than the quality of the production.  The NFL needs to start thinking about the younger audience and putting on a show all age groups will respond to.  Or maybe they already have since everyone obviously watched it and everyone is talking about it and having an opinion.

    To the commentators I say in the end, art is in the eye of the beholder and like a virgin - Leave Madonna alone.  She fulfilled her end of the bargain.

    To the NFL - get younger and remember your audience is changing.....  Kevin - I am sure there is a business lesson in there for you to comment on:)

    All of which makes sense. Except of course, that I am at the upper end of the age range in your Super Bowl p[arty group, and I hated Madonna. As did my 22-year-old son. So there are no clear lines of distinction on this one.

    From another MNB user:

    Not that you need another Madonna Half-Time Show e-mail, but IMHO, it looked like her videos from her “golden” years. Even the new song sounds like a throwback. I thought the production was okay. I think she has a great make-up artist and terrific personal trainers. I also sympathize with feeling 30 in the  heart, but the body is 50+ no matter  how hard you train. Not one of the better half time shows, but not really the reason I watch anyway, at least I knew the songs.

    MNB user Larry Lyons wrote:

    I continue to be amazed at the things people get upset about.

    I commented during the performance Madonna was not really dancing, but that the “show” was entertaining.

    My teens were disappointed LMFAO was not given more time.

    If you enjoy something, fine share it.

    If you don’t, quit griping already…nobody cares.

    Then I’m in trouble. Because I make at least part of my living “griping.”

    Got the following email from an MNB user regarding yesterday’s story about at-home male fertility tests being sold in drug stores around the country:

    Actually, it sounds like a great idea – so long as it provides accurate results.  It sounds like a purchase that women are likely to make for their partners when they’re picking up their own DIY fertility test.  I’m not saying he’d enjoy the process – but if the couple wants to get pregnant they may both have to be willing to be uncomfortable.   And if the doctor’s office is a little too uncomfortable, this product makes it possible to take stock in the privacy of your own home.

    As a young (32) planning-to-be-a-mother-sometime-soon I am highly aware of the high rates of infertility and I’d feel good knowing what our odds are going in.  I’m glad we have the option to do both tests at home.

    Well, he might enjoy the process. Sort of depends on what the process is.

    And I’d like to say, for the record, that I went out of my way yesterday to avoid using phrases like “going in.”
    KC's View:

    Published on: February 8, 2012

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    KC's View: