business news in context, analysis with attitude

Published on: February 13, 2012

by Kevin Coupe

It is amazing what you can learn from reading a newspaper. And not just learn; it also is amazing how the most unlikely article can give birth to an idea.

It started the other day as I was reading the New York Times and saw an interesting story in the Home section about interior designers who specialize in creating new living spaces for divorced men. But the story grabbed my attention because of the clever way that the writer, Emily Weinstein, built her case.

Her premise was that this Valentine’s Day, because the economy seems to be getting better, a lot of people who have been putting off their divorces because of the recession may now be ready to take the plunge. (Or, since taking the plunge refers to getting married, maybe what they really want to do is climb out of the deep end. Whatever.)

The drop in the nation’s divorce rate since the crash of 2008, by the way, is a proven fact. It has been compared to a similar occurrence during the Great Depression. I suppose that the good news is that if economic good times lead to more divorces, this in turn will prime the pump of the economy because more lawyers will be gainfully employed, more houses or condos will be sold and/or bought, etc... Happy days are here again. (Well, maybe not for the people actually getting divorced. But maybe for the economy as a whole. I should hasten to add here that despite the fact that I read this Times piece with great interest, I am not getting a divorce, am not considering a divorce, and have no personal experience with divorce. Though I do live in constant fear that Mrs. Content Guy will realize that she could have done a lot better...)

But I digress.

The Times piece about interior designers for newly divorced men made the point that a lot of newly divorced men have no sense of style (their wives did all the decorating), no real idea how to live on their own (their wives did most of the cooking, cleaning, bill paying the child rearing), and are desperately in need of a civilizing influence. And so these designers help them navigate these waters, designing homes that, for example, might have a masculine aesthetic without being overbearingly macho, be child friendly without looking like a day care center, and be attractive to members of the opposite sex. They also manage to integrate into their designs things that guys simply need to have, like the biggest possible flat screen HD TV that a room can handle.

Here’s what really got me. One of the designers told the Times that when working with newly divorced men, she often found herself acting as a therapist as much as a decorator. She wasn’t just helping these guys turn an house or apartment into a home, but also was helping them create needed structure as they began a new chapter in their lives.

Bingo.

That struck me as an enormous insight, and one with great application for many companies in the retail business, but especially the food business.

If there is going to be a sudden influx of people in this country who are going through a divorce, which is what historians and economists suggest is going to happen, then a lot of those people (mostly guys) are going to have no idea how to feed themselves, how to equip and stock their kitchens, and how to cook for their kids or their dates. Retailers in markets where there are a lot of these people - let’s call them transitional customers - now will have a marketing wedge, if they care to use it.

And it isn’t just people going through divorce. Not to be gloomy, but the same opportunity exists in markets where there are a lot of elderly people. The simple reality is that some of these folks are going to pass away, which may leave a lot of their surviving spouses in a state of transition, needing help as they adjust to a new stage of life. You’d think that stores in certain sections of Florida and Arizona could be using such a concept to really differentiate themselves, and to create lasting and meaningful connections to such shoppers.

And yes, there’s even a movie connection I can make here. Think about that moment in The Descendants when George Clooney’s character, a self-described detached parent dealing with the fact that his wife is in a coma, has no idea who to call to get his swimming pool cleaned, or how to handle his two daughters. He is the prototypical transitional customer, and he’s in the market for help ... even if he doesn’t know it.

Retailers with cooking schools - ranging from supermarkets with such offerings to Sur la Table - could offer cooking classes specifically designed for these transitional customers. Stores like Sur la Table could market special kitchenware packages to this group, while grocers could help them with a “stock up your new kitchen” package.

Think of it as offering a kind of Apple Store Genius Bar,.

It takes the retailer beyond the role of just selling stuff. It allows them to be a resource for information and guidance, not just a source of product. And, it also is a concept that does not just cater to high end shoppers (which, let’s face it, is the market on which those decorators-for-newly-divorced-men are focusing), but conceivably to transitional customers at all ends of the economic ladder.

I could be wrong, but I think it is a big idea.

Published on: February 13, 2012

by Michael Sansolo

By conventional measures, the Sugar Mountain Bake Shoppe on Park Avenue in Rochester, NY, isn’t really all that special. It’s a tiny little store, with a handful of tables, some cute decorations and really tasty and pricey cupcakes, if that’s your thing.

But this isn’t an age of conventional measures and the Sugar Mountain Bake Shoppe understands that in a way that many other businesses do not. The size of the business is completely different if you look at it through Facebook, where every day Sugar Mountain offers up delicious details of the daily specials and loads of information and how, why and where to order.

On Facebook, the tiny shop has more than 11,000 followers and their comments bring a passion for desserts that would overwhelm the little store in seconds. And with Facebook as a friend, Sugar Mountain can sustain a successful business in desserts and catering that might have been unthinkable in a different era.

In many ways the world of social networking that is all around us is a new phenomena, connecting people in groups and on subjects in numbers that stagger the imagination. Facebook, by far the biggest of the networks, is closing in on 1 billion users and many others, from Twitter to LinkedIn boast hundreds of millions of followers. In any given week more than 90% of social network users check in with their networks. Some 40% do so daily before having breakfast or getting dressed.

Yet in many ways, social networking is really old hat. Essentially, it is all about technology helping people come together in much the way humans have always gathered throughout the centuries. Now instead of meeting around the campfire, the cracker barrel or the water cooler, social networking gathers groups in cyberspace.

The groups they form are increasingly focused on businesses they use. Nearly 40% of consumers have friended or linked to retailers and brands through Facebook. Another 25% follow companies on Twitter. They don’t make these links simply to pad their “friend” statistics; they come to benefit. These friends and followers gain exclusive access to deals and offers and find interesting and important content.

And that’s where businesses find their opportunity and their challenge. Behavioral scientists suggest that a shopper needs three elements to make a purchase: motivation, ability and trigger. Minus one of the three, an action - linking to a company or buying a product or service - might never take place. But when companies manage to supply all three - like the Sugar Mountain Bake Shoppe - wonderful things happen. Purchasing is motivated and shoppers become active and activists.

These new insights on the human needs driving the use of social networking come clear in the consumer interviews at the heart of the second section of the newest study from the Coca-Cola Retailing Research Council of North America. The second section of the study is available for free downloads starting this morning following a general session at the National Grocers Association convention. Visit http://bit.ly/UntanglingtheSocialWebPart2 to get the latest chapter, or click here to download the introduction and first section of the report.

As we’ve explained many times before, I am the research director of the Council and am heavily involved in this project.

Any qualms companies have about building a social networking presence will be quickly dispelled by the findings. When the Integer Group, the firm handling the study, asked shoppers why they failed to interact with specific companies in the social web, most said they either never thought about making that connection or couldn’t find any way it would benefit them to do so. Essentially, they had the ability to connect, but lacked the motivation or the trigger.

As a point of comparison, let’s return to the Sugar Mountain Bake Shoppe. Customers have the ability to connect and get motivated by the sumptuous descriptions of the special cupcakes of the day. The trigger is that all varieties are made in limited quantities, so if you wait…you lose.

The challenge for businesses is to bridge those gaps, to give your customers the connection, the motivation and the trigger to reward these new relationships. Done correctly, it creates a recipe that would delight even Sugar Mountain and your bottom line.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: February 13, 2012

LAS VEGAS -- Idaho independent grocer Archie McGregor, President of Archie's IGA in St. Marie's, Idaho, and Dissmore's IGA in Pullman, Washington, has been awarded the 2012 Thomas K. Zaucha Entrepreneurial Excellence Award.
 
First presented in 2009, the award is given each year by Kraft Foods at the annual National Grocers Association (NGA) Show to an independent grocer that exemplifies persistence, vision, and creative entrepreneurship. The award is one of the most prestigious honors awarded to independent grocers.
 
McGregor, a longstanding member of NGA, began his grocery career more than fifty years ago and also is a 25-year member of the Independent Grocers Alliance (IGA) and previously was named IGA International Retailer of the Year.

Published on: February 13, 2012

WebProNews.com reports that Twitter is partnering wit two major satellite operators - Iridium and Thuraya - so that people will be able to Tweet via its Twitter SMS (Short Message Service) service.

The story notes that on its blog, Twitter says, “Now, even if phone lines and the Internet are inaccessible — for example, in a war zone or after a natural disaster — people will be able to share news and stay informed via Twitter ... We work with as many carriers as we can to support SMS around the world. If your carrier does not currently support Twitter SMS, you can still Tweet. Just use one of our long codes.”

Published on: February 13, 2012

Marketing Daily reports on the 2012 edition of the Brand Keys 2012 Customer Loyalty Engagement Index, noting that “more than ever, the core drivers of brand loyalty are emotional rather than rational ... While emotional engagement factors have become more critical each year, the influence of two core, overarching components rose markedly in 2012: the brand’s ‘values’ and the consumer’s brand ‘experience.’”

“Across most of the 83 product categories, we found that consumers’ loyalty now hinges more than ever before on the degree to which a brand has established a clear core value proposition -- a differentiator that goes beyond the basic utility of a product or service,” says Robert Passikoff, president and founder of Brand Keys. “Today, delivering on the ‘rational’ reasons to buy a brand -- good or superior quality and value for the price -- is just the ‘door-opener.’ If that’s all a brand is doing, it’s in grave danger of being commoditized. In fact, it’s not a brand; it’s a category placeholder.”

Among the notable findings:

• Coke and Diet Coke displaced Pepsi and Diet Pepsi and the number one soft drink and diet soft drink for the first time in more than a decade.

• As a reflection of the national interest in craft beers, Samuel Adams tied Coors for the top position in the beer category for the second year in a row and Sam Adams Light - which was not even in the rankings last year - leapt into the number one spot in the light beer category.

• Starbucks and Dunkin’ Donuts tied for first place in the packaged coffee category, though Dunkin’ Donuts edged Starbucks to take first place in the coffee shop category.

• Häagen Dazs and Ben & Jerry’s tied for the top spot in the packaged ice cream category.

Published on: February 13, 2012

Slate reports that he Oglala Sioux Tribe is suing five beer companies - including Anheuser Busch and Molson Coors - charging that they “sold beer on the perimeter of the teetotalling South Dakota reservation with the knowledge that it would be smuggled in and illegally traded. They are demanding $500 million for health care and rehabilitation.”

According to the story, “The reservation, which is about the size of Connecticut, has dealt with poverty and alcoholism for decades. One in four children born suffers from fetal alcohol syndrome, and the life expectancy, between 45 and and 52 years, is the lowest in the U.S. ... The average income on Pine Ridge is $27,300, and half the population lives below federal poverty standards.”

Published on: February 13, 2012

Business First of Columbus reports that Ohio-based Marco’s Pizza plans to open “hundreds of its pizza shops” inside Illinois-based Family Video stores, with Family Video spending $100 million to become a Marco’s Pizza franchisee.

According to the story, “WIthin seven years, about 250 pizza shops are expected to open in Family Video locations ... Marco's currently has more than 280 stores in 21 states, and at least 100 new locations are expected to open this year.

“Adding the pizza franchise will help Family Video use the 2,000 square feet it has gained in its 7,000-square-foot stores in the transition from VHS tapes to DVD.”

Published on: February 13, 2012

Forbes reports that Amazon says that it has no plans to create a stand-alone video streaming business, despite rampant speculation that just such a launch was imminent.

According to the story, “Brad Beale, head of digital video content acquisition at Amazon, said that the way the company offers streaming video now – packaged with the company’s Amazon Prime shipping service – is the approach it plans to take ‘at least into the near future.’ Prime members pay $79 a year for free two-day shipping on most products sold on Amazon.com, and they get streaming video thrown in as a bonus.”

Published on: February 13, 2012

• Safeway announced that its private brand skipjack (chunk-light) canned tuna “will be responsibly caught using free-school purse-seine methods. The company will transition to the purse-seine method by the end of the year. Free-school tuna is caught by purse-seiners using traditional methods of spotting schools of fish using radar and sonar, while captains employ powerful binoculars to spot birds attracted by schools of tuna.”

Joe Ennen, Senior Vice President of Consumer Brands, said the new sourcing policy is an important step in addressing consumer demand for high quality, sustainably sourced product.

• The Wall Street Journal reported over the weekend about how “coconut water is hitting a growing number of U.S. store shelves, whether in cartons, cans or bottles. U.S. retail sales rose to as much as $400 million last year, according to industry estimates. That is a tiny fraction of the country's $100-billion-plus market for nonalcoholic beverages, but the new category has roughly doubled its revenue each year since 2005—helped by celebrity musicians, models and athletes who have endorsed the drink, even as it draws lawsuits over health claims.”

The story goes on: “As a sign of faith that coconut water is more than a fad, Coca-Cola Co. plans to exercise its option to acquire a majority stake in Zico, the No. 2 coconut-water brand in the U.S. by sales, in the coming weeks after purchasing a minority holding in the start-up for less than $15 million in 2009. Coke won't disclose the price, but the option was triggered after Zico hit revenue targets.”

• CNBC reports that PepsiCo CEO Indra Nooyi says that she has no intention of splitting up the company’s soft drink and snack businesses, saying that the two components “together create a lot more shareholder value than apart.”

Nooyi says, “We cannot have a successful snack business in many emerging markets unless we have the beverage market scale ... If you don’t have geographic diversity, if you don’t have product diversity and scale to really have heft in these emerging markets, you really can’t succeed.”

• The Wall Street Journal reports that Dunkin’ Donuts seems to be having some issues in its global expansion efforts, with costs and profits not living up to expectations or even the standards established by its domestic business. The biggest problems seem to be in South Korea and Japan.

CEO Nigel Travis tells the paper that the company hopes to turn around its global business “by making marketing dollars more effective, cutting down costs from suppliers, and hiring more people to support the franchisees.”

Published on: February 13, 2012

• Whole Foods Market announced that two Regional Presidents, David Lannon and Ken Meyer, have been promoted to Executive Vice-Presidents of Operations, joining the executive leadership team. The company's 12 Regional Presidents will report to them.

Lannon brings 25 years of company experience to the position, working most recently since 2007 as Regional President of the Northern California region where he led 36 stores.

Meyer has been with Whole Foods Market for 17 years, most recently as Regional President for the Mid-Atlantic region since 2005 where he oversaw 39 stores.

• NACS announced that Doug Reed has joined the association as vice president of marketing. Prior to joining NACS, Reed was the director of interactive technology at OTM Partners and, he was responsible for developing the plan, strategy and execution of the We Card retailer training program’s transition to virtual learning.

Published on: February 13, 2012

• We got email last week suggesting that MNB had erred in not taking note of the passing of Nello Ferrara, the inventor of spicy-hot Atomic FireBalls and lip-puckering Lemonheads, and the chairman of the Ferrara Pan Candy Co. Ferrara died last week at age 93.

The Chicago Sun Times, in reporting Ferrara’s death, noted that he’d lived an interesting life. As a young lawyer, he worked on a U.S. Army war crimes tribunal in Tokyo, and often saw General Douglas MacArthur, who he described as “pretty stern.” And, he sang a few duets with Frank Sinatra, a result of his work building the Villa Scalabrini nursing home, where Italo-American residents sometimes would be entertained by Sinatra, Dean Martin and Jimmy Durante.

• Jeffrey Zaslow, a longtime writer for the Wall Street Journal and the author of "The Last Lecture," about Randy Pausch’s final days, and the co-author, with Arizona Rep. Gabrielle Giffords and her husband, astronaut Mark Kelly, of their memoir, "Gabby: A Story of Courage and Hope," died over the weekend of injuries suffered in a car crash in northern Michigan. He was 53.

Published on: February 13, 2012

Received the following email from an MNB user about the mass layoffs announced last week by Supervalu:

I am one of the 800 (that number will increase) to be let go.  You will surely receive many e-mail responses on this subject.  I think what is needed to be addressed is the lack of accountability for the Supervalu Board of Directors.  It is quite obvious they have made a hire that will never turn the company around.

Supervalu was a very good company to work for.  Great people, Great leaders.  A leader in the Wholesale segment of the food retailing industry.  Corporate retail was added.  Some was successful, some not.  That buying power helped reduce costs for the independent retailers.

I think it is safe to say, that 17 quarters of negative store sales should be a good indicator that current Corporate Initiatives are not functioning properly.  Becoming “Americas Neighborhood Grocer” while out sourcing IT functions to India (Mexico) could possibly send a mixed message.

Many companies hire inept Corporate leaders.  That is a process that can be understandable.  Allowing those leaders to continue to function, reduce company value/stock value, reduce employee earnings/value, destroy the lives of people who have worked for years to build up a company/ and put limited value into the company assets is what makes this whole thing a travesty.

Those who refer to this as a Supervalu employee reduction should realize that Supervalu does not exist anymore.  What we are seeing is a continuation of Albertsons and the poor management that lead that company to ruin.

Here’s the question that Supervalu leadership needs to ask itself:

How many people who remain in the organization - as opposed to the people being laid off - feel this way?

Because if these beliefs and emotions are gaining traction and growing at Supervalu, then they have even bigger problems than some believe.




On the possibility of Apple striking an agreement with Walmart to put Apple Stores inside a number of Sam’s Clubs, one MNB user wrote:

This would be a HUGE mistake for Apple and something I would bet that Steve Jobs would have never signed off on it. With that said, Apple continues come up with things that take them away from top quality one on one inter facing with their customers.

MNB user Larry Lyons wrote:

“Apple quality service”…and that would mean checking them out at the Apple kiosk, instead of sending their customers to stand in line at one of the three open registers, stacked 10 deep at the front end!!

And MNB user Bryan Nichols wrote:

What a great example of an incongruent marketing message.  Placing an Apple Store inside a downscale warehouse club will do nothing for Apple’s image.  Costco would make much more sense, as the brands share a similar upscale brand image and commitment to service.




We had a piece recently about how San Francisco International Airport installed a yoga room, which airport managers feel gives it a differential advantage. I agreed. But one MNB user wasn’t so sure:

You're right.  I can just imagine all those people who'll be flying to San Francisco just to use the yoga-room.

I’m not sure that people are going to route themselves through SFO because of the yoga room. But I think anyone who travels has favorite airports, and that’s usually for a variety of reasons. I like the availability of Starbucks and Jamba Juice, a United Club, and/or free Wi-Fi. And if an airport has a good train system into the nearby city, that’s an enormous advantage.

I think that airports need to have differential advantages, just like any other business.




We also received a number of emails about Friday’s story about continued and deepening losses at the US Postal Service (USPS).

MNB user Tom Elliot wrote:

I know you rail against the PO for a lot of their mis-steps, and much of that IS deserved.  I'd like to point out a shipping experience I had recently in support of the PO.  I wanted to send a care package to my sister in Switzerland that had about $100 worth of stuff in it.  I made my package and headed online to see what it was going to cost me to send 13 pounds overseas. 

UPS and FedEx were in the $220 range for their cheapest, slowest offering, which was I think guaranteed 2 or 3 day delivery.  The USPS was just under $81 for 3-5 day delivery, and it got there in 3 days. 

I did it all on-line, including filling out the customs forms and paying for and printing the postage.  If my mail carrier wasn't a walking route, I could have given him the package and gotten it taken care of without leaving the house.  Since he IS a walking carrier, I drove it the 3 blocks to the PO and, despite them being closed, a USPS employee answered the bell on the dock at the back of the building and happily took my package. 

The USPS might have it's issues, but for international shipping, my limited sample experience would say it's top notch!

Fair enough.

On Friday, I took note of a suggestion made by reader Jeff Folloder:

What if...the USPS pitched, say, Kraft... We have this logistics and delivery system that has every deliverable address in the US already connected.  We mean ALL of them.  Why even bother with the Walmarts and Krogers of the retail landscape?  We will integrate directly into your new website and handle all of the direct to consumer logistics for you.  Customers get what they want and you can sell whatever you want, without the whole take-a-buyer-to-lunch-and-negotiate-the-slotting-fee thing.

Talk about the government actually doing something to promote business!  And it might even make the post office relevant again...

Not everybody agreed that this was a good idea.

MNB user Mike Franklin wrote:

Kraft would respond, “thanks but no thanks; our business is driven by our customers’ positive experience with our brand…your brand on the other hand has been proven unreliable, unresponsive, non-productive, and we do not want your employees going postal on our customers…in essence, we cannot co-brand with you, you bring nothing to the table.” “Oh, and you say your strength is your rolodex of every address in America…we can purchase that online!”

MNB user Marty Berlin wrote:

Interesting idea, but one that puts the federal government in direct competition with private business. If the idea doesn’t work, is the government (the taxpayer) going to continue to subsidize this entity so that it can remain solvent? Not good.

Now, if the post office was to sell their assets to private business………?

From another MNB user:

…in additional to having all the great convenient locations, let’s not forget they have the exclusive right to “own” every mailbox in front of each of our homes and how much that means.

Kevin, you have rightfully challenged their decision making several times recently. Why don’t they get it? It was not that long ago that Fed Ex was dependent on overnight mail, much of which it lost to fax machines, to be followed by computers. Had they not responded with an improved business model, they too would have been dead broke. The USPS has an incredible infrastructure, that with some creative solutions could be a very sustainable business. I personally do not think it would be that difficult and would jump at the opportunity to flip the ship back upright...

To me they are being about as creative in finding their niche in the delivery segment as Superalu is in finding theirs in grocery retailing. Crisis management! Let’s close locations and cut out a day of service, with no plan in sight how that works into a future business model.

Perhaps there is more. I have a son who had hoped to make his career there after returning from Iraq. He was only scared off by the frustration of dealing with many inept, lazy and overpaid union workers. That is not a jab at union workers, as look how well UPS has done with the right management. I have a wife that is coming up on 30 years of service at the USPS, only to be leaving at the first good opportunity they offer due to the lack of team atmosphere and skilled management decision making. Wouldn’t you love to put together a team of forward thinking people to tackle this one?

And another MNB user wrote:

What happens to privacy with this idea?  The government sells out to save the postal service?

Since they are going after the Catholic church, why not keep going, right?

Well, that last line strikes me as a gratuitous shot that seems perfectly in keeping with some of the irrational hysteria of the last week or so. But since I occasionally take gratuitous shots at people and ideas, I’ll let it go ... except to respond that just because people may have differing views on social policy does not necessarily mean that they are “going after” anyone. Unless, of course, throwing gasoline on the fire serves your own political purposes.

I just get so tired of this stuff. Last Friday, there was a piece in the New York Times about growing enthusiasm for Rick Santorum, and it quoted one new convert to his cause as saying that she liked him because he was the only real family man in the race. That may be the image that some folks would like to perpetuate, but last time I checked, Mitt Romney seemed like a pretty solid family man. Ron Paul seems like a good family man. Among the folks who have left the race, Michelle Bachman, Jon Huntsman and Rick Perry all seemed like family-oriented people. (Herman Cain’s credentials in this area probably can be considered suspect,as can Newt Gingrich’s ... though if you believe in redemption, one can even debate that.) And, by the way, Barack Obama seems like a pretty good family man (at least for a Socialist Muslim).

I know I’m digressing here, but this email just set me off. Could we please just debate issues, and not get into this stuff? It strikes me that the country would be better off if we had serious people discussing serious issues in a serious way. But that’s just me.

As for the privacy issue ... I think what Jeff was suggesting is that the USPS has an infrastructure that could be useful to companies looking to differentiate themselves in the area of delivery. Not that they’d be violating anybody’s privacy.




I was a little critical on Friday of an MNB user who wrote in about a Tesco Fresh & Easy store having to discontinue the handing out of samples because of homeless people - described as “freeloaders” - who would come into the store to eat for free.

That reader actually wrote in to say that he didn’t mean to be harsh in his assessment of the homeless folks, but the exchange actually led to my favorite email of the weekend from MNB user John Hall:

A more politically correct description of the freeloaders would be ‘free range grazers’.

Now that’s funny.