business news in context, analysis with attitude

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.

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.

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.

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.

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.”

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.”

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.

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.

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.

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.

Published on: March 1, 2012

...will return.