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    Published on: March 1, 2012

    Hi, I’m Kevin Coupe and this is FaceTime with The Content Guy.

    There is a fascinating series of articles running on Slate.com that I want to draw your attention to, as the writers imagine what a cashless society might look like.

    You can read the stories here.

    The simple fact is that these days, if you don’t want to, you don’t really need to have cash in your pocket. All you need is a credit card and/or a debit card, and you can pretty much get through. I thought about this while reading the articles, and realized how many days I sometimes go without using actual paper money or coins. I was sort of amazed when I thought about it, the same way I was amazed when I realized I could drive from New York to DC and, because of EZ Pass, never need to have money in the car to pay tolls.

    There are all sorts of implications to this shift. One is that me give the money-grubbing bankers even more control over our lives, because they’re going to get fees every time we use something other than cash.

    There also are some positives, the articles make clear. Like a reduction in corruption - it is hard to bribe someone when the transaction is paperless and totally traceable. And maybe less crime - how likely is it that drug dealers are going to start taking credit cards? (Though they’ll probably figure out something.)

    But there are negatives - like an end to spontaneous charity, or certain kinds of tipping. Also, inevitably, an end to the piggy bank manufacturing industry. And will penny loafers become a thing of the past?

    Still, it is a fascinating trend that seems to be happening right before our eyes. And I’d be willing to bet that if you think about it, you may use cash a lot less than you think. And don’t forget - the UK is just a couple of years away from being a society in which checks do not exist, since the government has banned them as an inefficient method of making payments. (I rarely write checks. I let the bank handle all my payments.)

    We are all on what the article calls an “unstoppable wave of technological progress,” and it is important that we all think about these things, about where the world is going, how it will affect us as consumers, how it will impact how we do business, and what will happen next.

    Because if we don’t think about these things, we get caught unawares. And the real danger is that our competition won’t be, because they’ve been planning and strategizing all along, and now they have a competitive advantage.

    And then, basically, we’re screwed.

    That’s what’s on my mind this Thursday morning. As always, I’d like to hear what is on your mind.

    KC's View:

    Published on: March 1, 2012

    by Kevin Coupe

    It has long been the contention around here that one of the things wrong with this country is that nobody really understands what anything costs. From bananas to cars to a college education, there are so many promotions and discounts and various payment schemes that it is almost impossible to figure out the value of things because the actual cost is virtually obscured behind all the marketing clutter.

    Well, the Wall Street Journal reports that Time Warner Cable may be trying to establish some new pricing parameters for consumers by testing the notion of consumption-based pricing for broadband service.

    According to the story, Time Warner is testing the concept in South Texas,but plans to “offer a similar tiered-billing option in other markets in the future. Under the new pricing plan, consumers will get a $5 reduction in their monthly bill if they accept a cap of five gigabytes monthly ... The offer will be available to customers on three lower-speed tiers, which cost between $34.99 and $54.99 a month. Customers who go over the cap will be charged $1 per gigabyte up to a maximum of $25 extra.”

    However, the story notes that it wouldn’t be hard to go over the cap - streaming just three high-def movies via Netflix would likely take more than five gigabytes.

    Time Warner has tried this before, and run into enormous blowback from consumers, but the company seems to be dedicated to eventually making it work; the premise is that someone who reads email a couple of times a week should not pay the same as someone who watches a couple of high-def movies each day. Which seems fair. (Though let’s be clear. This isn’t really about consumer fairness. Time Warner is doing this to make more money.)

    Consumer resistance, I suspect, is as much cultural as economic. Americans have been trained to expect a lack of restrictions on what they consume; the whole notion of a “cap” seems somehow anti-American, a violation of so-called American exceptionalism.

    While the Time Warner move is rooted in pure capitalism (and there’s nothing wrong with that),it will be interesting to evaluate the consumer response, and the broader impact of consumption-based pricing.

    It could be an Eye-Opener.
    KC's View:

    Published on: March 1, 2012

    Interesting piece in the Minnesota’s Star Tribune about different pricing approaches taken by Target and Best Buy; Target decided to protect its margins and profits over the holidays, while Best Buy slashed prices to compete with the likes of Amazon.com.

    The story notes that “retailers have always struggled with the classic tension between sales and profit margins: you want to capture market share and drive same-store sales, but at what price?

    “In Best Buy's case, the retailer used to imply higher margin services like Geek Squad and Internet growth could somehow offset its eroding in-store sales.” But the company has concluded that it needs to drive up store traffic in order to be successful, and that discounts are the best path to generating that traffic.

    The story continues: “Target, on the other hand, doesn't face the same kind of existential pressure as Best Buy so ... the retailer can afford to be more high minded about the ‘race to the bottom’.” And the company seems to be satisfied that it has made the right decision...at least for the moment.
    KC's View:
    I’m not sure why the writer in this case thinks that Amazon and Walmart are not existential threats to Target. But that is sort of a flaw in the reasoning.

    I actually agree with the notion that the “race to the bottom” can kill a business in the long-term, because it erodes all value other than price, and you can always be undercut on price. So in that sense, I agree with Target. (JC Penney would seem to feel the same way, if its new ad campaign is to be believed.)

    But I’ll tell you a little story.

    Over Saturday afternoon, our flat screen TV went kablooey. As my daughter said, the picture started to “have seizures.” So we called the local one-store independent electronics retailer where we bought it to find out if we had an extended warranty and when it expired. This was about 5 pm, but in two minutes they told us that the good news was we’d gotten the extended five-year warranty, but the bad news was that the TV was six years old. (Of course.) We tried to describe the problem to the service guy, and then decided to set up a service call for Monday.

    “Want me to come out now?” he said.

    We were shocked. “Sure,” we said.

    And in about 45 minutes he was there.

    Now, there was more bad news. The TV was fried - it was an early model plasma flat screen, and beyond repair. But the guy spent about an hour with us, explaining different options (plasma? LCD? LED?), and helping us think through what was going to be a decent sized investment.

    Here’s the thing. We have a Costco, PC Richard and Best Buy closer to our house, but we never really thought hard about going to any of them. This local guy promises to match advertised prices, and he showed up at our house on a Saturday night to help us out. (There was a modest service fee because there was no warranty, but we got enormous value from his being there.) So on Sunday, when we needed to replace our TV, there was only one option - because my local electronics retailer has established his value in our minds.

    And the value was established on the front lines.

    One other note. Would he have done this for anyone? I have no idea. It is possible that the folks at County TV & Appliances looked at our customer record and saw that over the past 28 years, we’ve bought several TVs from them, as well as two dishwashers, a couple of refrigerators, a stove and a Weber grill (that they built and delivered for free). Maybe we earned that kind of treatment.

    But isn’t that the way it should be?

    Published on: March 1, 2012

    Reuters reports that a new decade-long German study reveals that “coffee drinkers have no more risk of getting illnesses such as heart disease or cancer, and are less likely to develop type 2 diabetes.

    "Our results suggest that coffee consumption is not harmful for healthy adults in respect of risk of major chronic disease," said Anna Floegel, lead author of the study and an epidemiologist at the German Institute of Human Nutrition Potsdam-Rehbruecke.

    The study follows on the heels of other studies suggesting the coffee consumption could increase the risk of heart disease, cancer and stroke.
    KC's View:
    Having just finished my fourth cup of black coffee of the morning, I’m relieved.

    All the various and conflicting studies are part of the reason that shoppers get confused. But I’m probably typical in this case - I’m going with this study because it validates and reinforces existing behavior. If this study said that coffee was bad for me, I’d think about it, but then I’d just wait for another study to come out.

    Published on: March 1, 2012

     CNBC reports on the changing face of the American coupon user:

    “Households with incomes of $100,000 or more are twice as likely to coupon as those who earn less than $35,000. College-degree holders are also twice as likely to use coupons as those who did not graduate from high school.” (The data comes from a study by Coupons.org.)

    Another interesting number:

    “Online and mobile access to coupons is helping to fuel this growth. Since before the recession, online coupon use has increased by 360 percent. One in five smartphone users used mobile coupons in 2011 — more than twice the percentage the year before.”

    And here’s something else interesting in the story:

    “Although coupon redemption is increasing, distribution by marketers is not. After two years of increased distribution, marketers of consumer packaged goods reduced coupon distribution by 7.5 percent last year, according to a report about the industry by Inmar.”
    KC's View:
    It probably is smart for coupon distributors to reduce the number of coupons out there, because if usage goes down as the economy improves, redemption rates may not drip down to the sub-one percent levels they were at before the recession.

    Published on: March 1, 2012

    The San Diego Union Tribune reports that “food trucks operating within San Diego County later this year will be issued letter grades indicating whether they passed safety and hygiene inspections,” as the county “Board of Supervisors voted unanimously Tuesday to direct officials to extend the restaurant grading system to food trucks ... The board's vote sets in motion a process to rate food trucks like restaurants, with signs of ‘A,’ ‘B’ or ‘C.’ It will apply to about 550 mobile facilities that prepare food.”
    KC's View:
    This strikes me as entirely fair.

    Food trucks should be held to the same safety standards as any other food purveyor. But let’s not lose sight of the real lesson that food trucks teach us - that there is a hunger out there for tasty, convenient foods that challenge the palate. That’s what many of these trucks do ... they bring unusual foods to people, often creating lines and buzz that a lot of traditional food retailers would kill for.

    Published on: March 1, 2012

    • Supervalu has announced the launch of what it is calling “a custom-built mobile application that gives customers the tools they need to be efficient while shopping our stores. The company tested the mobile app at its Cub Food stores this past November 2011, and formally launched the app to the rest of the company's traditional banners during the month of February 2012 ... One of the unique features to the app is its synchronization with the banner web sites. The shopping list is synchronized with the web site in real time so a member of the family can update the list from home while another is shopping.”

    The mobile application is available for use on all Apple iOS devices and Android devices.
    KC's View:

    Published on: March 1, 2012

    ...with occasional, random, italicized and sometimes gratuitous commentary...

    • In Toronto, the Globe and Mail reports that Loblaw Cos. “is racing to launch a new rewards card next year, in a bid to catch up to rivals’ loyalty program initiatives – and learn more about its customers.

    “Vicente Trius, the retailer’s new president, said at an investor conference that the company is working on a new card that it will roll out in 2013, although he didn’t elaborate on the details.” However, reports are that the company’s intention is to create a revolution in card marketing rather than just further an evolution.

    The story notes that the initiative comes “as competition is heating up with the arrival in early 2013 of U.S. discounter Target Corp. and its highly touted rewards program for U.S. customers. Domestic retailers, including Metro Inc. and Canadian Tire Corp., are also beefing up their loyalty offerings. They’re intent on tracking shoppers’ spending habits to help plan their own marketing and product rollouts, while also drawing customers who tend to shell out more when they use a rewards card.

    Said it before and I’ll say it again. One of the great advantages that any retailer can have is specific knowledge about who the customers are, what they buying and when they are buying it. Lack of knowledge, conversely, is the worst kind of competitive disadvantage.

    • The Food Marketing Institute (FMI) has released a study that demonstrates the positive, economic impact of permitting wine sales in the 8,489 food stores doing business in states that currently restrict such sales, citing the creation of more than 168,000 potential jobs, paying $7.2 billion in wages and providing billions of dollars in additional revenue to federal, state and local governments.

    Patrick Davis, vice president of state government relations at FMI, said, “As our members and their customers work to recover from this difficult recession, we feel the time has come for states to remove the barriers and enable food retailers to create more jobs in local communities, help consumers reduce their daily travel needs and provide new sources of revenues for overburdened state and local budgets.”

    I’ll drink to that. And I’ll tell you something else. I buy all my wine from a local independent retailer - the same one, as it happens, that powers the MNB Wine Club. As he is in favor of Connecticut allowing supermarkets to sell wine - he doesn’t think it will hurt his business at all. His feeling is that it will expand the pie of adult wine drinkers, and stimulate their interest in trying different kinds of wine. “I’m never going to sell the same wine as supermarkets, so I’ll just sell more better wine after they’ve tried the wines sold in supermarkets,” he says. I think that’s exactly way to think about competition - by focusing more on being different, as opposed to how much competition there is.

    • Wakefern Food Corp. has been named one of “NJBIZ magazine’s 2012 Best Places to Work in New Jersey” or the second year in a row.  This award, given annually, recognizes and honors top places of employment in New Jersey that benefit the state's economy, workforce and businesses.
    KC's View:

    Published on: March 1, 2012

    • The Grocery Manufacturers Association (GMA) announced the appointment of Louis A. Finkel as Executive Vice President of Government Affairs. Finkel is the former chief of staff for the U.S House of Representatives Committee on Science and Technology, as well as previously working in the government relations office of Exxon Mobil. Most recently, he was vice president, federal public affairs group, at McGuireWoods Consulting, representing corporate, trade association and not-for-profit clients before Congress and executive branch agencies.
    KC's View:

    Published on: March 1, 2012

    • Davy Jones, a member of the sixties rock group The Monkees, died yesterday of a heart attack. He was 66.
    KC's View:
    I’m not sure what Mrs. Content Guy would mourn more - the death of Davy Jones or Bobby Sherman. (Sherman, 68, is still alive and kicking.)

    The Monkees are such a fascinating marketing case - created by NBC because it wanted a sitcom about a group that would resemble the Beatles. But the pre-fab four managed to transcend those origins, creating a number of songs that continue to delight even all these years later.

    In Tom Stoppard’s play “The Real Thing,” the playwright protagonist is struggling with the songs he should talk about during an appearance on “Desert Island Discs” - a program on which they talked about the music you’d bring with you if stranded on a desert island. In the end, one of those songs is The Monkees doing “I’m a Believer” (written, BTW, by Neil Diamond).

    I’m totally with him on that one. In fact, I’m playing it on iTunes right now.

    I thought love was only true in fairy tales
    Meant for someone else but not for me.
    Love was out to get me
    That's the way it seemed.
    Disappointment haunted all my dreams.

    Then I saw her face, now I'm a believer
    Not a trace of doubt in my mind.
    I'm in love, I'm a believer!
    I couldn't leave her if I tried...

    Published on: March 1, 2012

    ...will return.
    KC's View: