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    Published on: March 8, 2012



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

    I’ve had a number of really positive experiences with customer service representatives over the past week, and I thought since we all spend a lot of time complaining about the bad moments, it is worth sharing the good ones.

    For some reason, the water reservoir in my two-month old Calphalon coffee maker has started to leak. I went to the place where I’d bought it, but they couldn’t really help me with the problem. So I called Calphalon...and while I’d never registered my purchase, the woman on the phone instantly understood the problem and said she’d mail me a new one that I’d have in a day or two.

    I was amazed.

    Then, I went down to my local deli the other day, and noticed a promotion that I’d never seen before. The place is called Uncle’s Deli, and essentially they will pack both a breakfast egg sandwich and a lunch that includes a sandwich, fruit or chips for your kid and only charge $9.95. For parents on the go, that struck me as both convenient and downright cheap.

    Finally, I have this Weber Grill that is about five or six years old, and for some reason the cast iron cooking shell has begun to break down. You can’t really use the grill anymore because the top is falling offI went to the place I’d bought it on the off chance that I’d have an extended warranty on it - I didn’t - and to scope out what it might cost to replace it.

    The salesman suggested that before I did anything rash, I should just give Weber a call. Which I did. And while I’d never registered the grill when I bought it, she could tell a lot just from the serial number. So she registered it instantly, and asked if I could email her some pictures of the problem. Which I did instantly, using my iPhone. In less than 10 minutes the nice woman from Weber told me that she was shipping me a new one, free of charge...and since I’m useless at putting things together or fixing things, she even gave me the names and numbers of a number of places locally that could do it for me.

    I was blown away.

    In all of these cases, the company is giving me a reason to come back. Now, I’m not going to need another grill for a while, and probably not another coffee pot. But they showed great loyalty to me as a consumer...and while they probably could have sold me new stuff, they played the long game. Not only will I go back to them, but I’ll talk about them.

    Which I just did.

    That’s what is on my mind this Thursday morning. As always, I want to know what is on your mind.

    KC's View:

    Published on: March 8, 2012

    by Kevin Coupe

    It didn’t get a lot of attention yesterday, but Apple hosted an event in San Francisco at which CEO Tim Cook introduced a new iPad that will go on sale next week., and that has a 9.7-inch high-def retina display, a faster processor, and more battery power. It also introduced a new and improved Apple TV system with 1080p definition and software that is said to be vastly improved and better integrated so it can be controlled by the iPad.

    All of which continues to push forward the importance of mobile computing, which is really what businesses need to think about.

    As was noted the other day on MNB, Apple expects to sell as many as 60 million iPads this year, bringing the total number if iPads sold since its introduction just two years ago to more than 100 million.

    Can’t leave home without one.

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

    Published on: March 8, 2012

    There is a terrific piece in the new Fortune about Ron Johnson, who has gone from engineering Target’s cheap chic approach to housewares through the designs of Michael Graves to running the Apple Stores (described as “the most profitable retail stores in the world) to being the CEO of JC Penney, which he wants to turn into "America's favorite store" by the end of 2015.

    It is worth reading in its entirety , but here are some relevant excerpts:

    • “To attract customers, Johnson unveiled a radically simplified pricing strategy, a slimmed-down but improved selection of brands, and a change in the store's layout, which will consist exclusively of mini-boutiques arrayed around a ‘town square.’ His goal is to reclaim the department store's long-lost identity as a place shoppers visit not only for the goods but also for the enchantment of discovering something new.

    “The new pricing strategy is ambitious -- and risky. Customers have been trained by Penney's and others to hold out for massive discounts. In the era of online shopping, few have the inclination to visit a store with a faded brand like J.C. Penney's. Johnson knows all of that and seems to relish the challenge. Behind his preppy, earnest exterior beats the heart of someone who is out to change the experience of today's shopper -- one $4 towel at a time.”

    • “Johnson promises a more appealing experience. He plans to improve the mix of Penney's offerings, partly by reducing the number of items and also by partnering with brands (including some that are new to Penney's) to create a sort of mall within a store. By the end of 2015, every store will host 100 or so discrete shops, including Martha Stewart, Izod, Arizona, and Sephora. The concept isn't original. Many department stores already have branded mini-boutiques; the difference is that all Penney's will consist solely of such mini-stores.

    “The shops will be laid out along pathways, with a square in the center. The square might offer, say, free ice cream in the summer or balloons for kids. The idea is to lure visitors, who will then shop.

    “Johnson's new pricing strategy offers only three categories: ‘everyday’ (about 40% off the old retail price); a monthly sale on certain items; and a final, ‘best’ price. Forget serial discounts; Johnson insists people will come because the prices are ‘fair and square.’ He's pitching it as a return to the company's original values.

    • “(Johnson) knows he's risking his reputation by proclaiming ‘transformation’ rather than incremental change. But he won't admit even the possibility that his plan might not succeed. ‘The only things that haven't worked for me are when I've held back,’ he says. ‘There's no reason to sell an idea short. The only risk would be to not fulfill the dream’.”
    KC's View:
    I cannot even imagine a planet on which I would say I was looking forward to visiting a JC Penney. But there you go ... that’s precisely what Ron Johnson has done for me - created high expectations where there used to be none.

    I have no idea if this is going to work. But I’m certainly willing to give him a shot, and it’d be really cool if he could simultaneously revive and reinvent JC Penney.

    The signs are good. Not only are the new Ellen Degeneres commercials very cool, but he stood up to the small group of haters who tried to stop Degeneres from being named JC Penney’s new spokesperson.

    Beyond that, I just love the idea of a guy who figures that if you are going to succeed or fail, you might as well do it big.

    Published on: March 8, 2012

    The New York Times has a story about the growing interest in selling subscriptions as one way of generating recurring revenue - not exactly guaranteed, but about as close as you can come in the retail biz.

    The model seems to be Amazon.com’s Subscribe-and-Save service, which allows shoppers to place standing orders to a wide range of categories, creating an automatic replenishment service that also generally offers significant discounts (often underwritten by manufacturers that are as interested in recurring revenue - even at lower margins - as Amazon).

    One example: Petflow.com, which is totally based on selling subscriptions for pet food - especially attractive for those big 40 pound bags.

    “In its first month, July 2010, the company shipped about 60 orders; by January of this year, that number had leapt to 27,000,” the Times writes. “In 2011, PetFlow exceeded $13 million in revenue — with 60 percent of its sales coming on a subscription basis — and it projects revenue will exceed $30 million this year.”

    Alex Zhardanovsky, Petflow’s founder, says it is “the holy grail of business.”

    Interestingly, the Los Angeles Times reports on a Santa Monica company that is taking the same approach. The Dollar Shave Club is described as “a new membership-only website that promises to ‘shave time, shave money’ by sending customers a shipment of razor blades automatically every month. The company estimates that it will save members as much as $292 per year on shaving ... The company offers three kinds of razors: the Humble Twin, a standard two-blade razor, for $3 a month; the 4x, a four-blade razor for men and women, for $6; and the Executive, a “state-of-the-art” six-blade razor for $9. Shipping is included.”

    Sure, the blades are private label, not a national brand ... but the company thinks that it may have detected a consumer sweet spot - razors are are item that tend be be both costly and requiring constant replenishment.
    KC's View:
    Well, that may be a little bit of an overstatement ... but I’ve long been an enormous proponent of Amazon’s service. Not only does it guarantee Amazon sales, but it also takes customers who use it out of the market in various categories ... and the stores where they used to buy those items don;t even know they are gone.

    I’ve checked out Petflow, and I may well give it a try. I want to double check the prices vs. where I buy those 40 pound bags of food now, but it sounds like a pretty good idea to me.

    (This service seems like it might be really attractive to a certain friend of mine who tends to get a five o’clock shadow by 11 am...)

    And while I don’t shave very much, the Dollar Shave Club also seems intriguing ... especially because the folks there seem to have a “sacred cows make the best hamburger” attitude toward business.

    > You have to check out this slightly profane video describing the business.

    Published on: March 8, 2012

    Reuters reports that Walmart plans to add more self-checkout lanes to both its Walmart and Sam’s Club stores around the US as a way of cutting both costs and prices.

    CFO Charles Holley said yesterday at a Bank of America Merrill Lynch conference in New York City that self-checkout “has the potential to save Wal-Mart millions of dollars.” The story notes that “for every one second in average transaction time at the Walmart U.S. chain, the company said it spends about $12 million in cashier wages.”

    Walmart has recently reversed a long string of stagnant quarters in terms of US same-store sales, but is still looking for ways to grow sales and profits.
    KC's View:
    My position on self-checkout has been consistent over the years. It can be a good idea if it is viewed as enabling by customers, but it is not a good idea if it is seen as just a way to save money on labor. The checkout is one of the few places - especially at a Walmart - where customers and front line employees actually interact, and I don’t think it is ever helpful to reduce those interactions. (If it is, you have other problems.) I like it when self-checkout allows stores to actually move employees to the aisles ... but unfortunately, that seems not to happen that often.

    It is ironic that Walmart is expanding self-checkout at a time when some companies are cutting back on it. (Though the reasons for at least some of those cutbacks seems to be antiquated systems that the chains don’t want to spend money to replace, not some high-minded strategic imperative, which is what they’d like us to believe.) Also, I’ve had plenty of retailers tell me that self-checkouts aren’t so much speedier than manned checkouts as they create the perception of speed. Maybe, since Walmart specializes in the perception of having the lowest prices, that is appropriate...

    Published on: March 8, 2012

    Internet Retailer reports on a new study from iPerceptions saying that “the percentage of web shoppers intent on making a purchase increased to 22% of site visitors in the fourth quarter of 2011 compared with 16% during the same period in 2010,” but that “ only 58% of those shoppers said that they were able to complete their purchase, a dip from 60% a year earlier.”

    The reason that some e-tailers are losing sales they could be capturing? According to the story, “34% said they did not complete a transaction because they couldn’t find the product they were looking for and 32% said the product they were looking for - and found - wasn’t available. 18% said the site’s pricing information was unclear, 7% said that product information was lacking, 6% said the shipping policy and final price were undesirable and 4% said they faced a technical issue.”
    KC's View:

    Published on: March 8, 2012

    The Wall Street Journal reports that the US Department of Justice (DOJ) has warned Apple and five major US book publishers that it intends to sue them “for allegedly colluding to raise the price of electronic books.”

    Here’s how the Journal framed the story:

    “The case centers on Apple's move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in early 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that ‘wholesale model,’ booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model.

    “To build its early lead in e-books, Amazon Inc. sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But publishers deeply disliked the strategy, fearing consumers would grow accustomed to inexpensive e-books and limit publishers' ability to sell pricier titles.”

    When Apple prepared to introduce the first iPad, the story goes on, “the late Steve Jobs, then its chief executive, suggested moving to an ‘agency model,’ under which the publishers would set the price of the book and Apple would take a 30% cut. Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.” This then allowed the publishers to apply pressure to Amazon to adopt the same model, which raised the price of e-books available for the Kindle.

    The Journal notes that “several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle, these people said. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions.”
    KC's View:

    Published on: March 8, 2012

    • The Sacramento Bee reports that Tesco plans to open five new Fresh & Easy Neighborhood Markets in the California capital region over the next week or so.

    Fresh & Easy now has more than 185 stores in California, Arizona and Nevada.
    KC's View:

    Published on: March 8, 2012

    ...with random, italicized and occasionally gratuitous commentary...

    • The Augusta Chronicle has an interesting piece in which it quotes Sue Perry, deputy editor at ShopSmart Magazine as saying that “in the past, shoppers could save up to 50 percent when they purchased store brands. Now, the savings are, on average, about 30 percent.” The reason? Companies are investing more money in making sure the products and their packaging are the equivalent of national brands, and those efforts cost money. Those costs have to be passed on to shoppers...

    • Great piece in the New York Times yesterday about actor and Louisiana native Wendell Pierce (HBO’s “Treme”), who this summer with two business partners plans to open several supermarkets under the Sterling Farms banner in neighborhoods where supermarkets are scarce. They’ve already opened up a c-store - Sterling Express - described as “the first in a convenience store chain that will sell fresh produce, salads and competitively priced staples in addition to the usual chips and sodas. In intriguing — and intended — ways, his effort to bring more-nutritious fare to an urban food desert parallels the TV series, which charts New Orleans’s struggle to rebuild after Hurricane Katrina.”

    Here’s the great quote from Pierce: “Bringing fresh food into these areas helps create economic growth. But it also helps people understand that there’s value in eating better. It’s not something that’s only available in a better neighborhood.”

    You can read the whole story here>/A>.

    In a place like New Orleans, the story makes clear, great supermarkets are as important as great restaurants. But I think it is not just in places like New Orleans. I think that having great places to buy and eat food is almost as important as breathing.

    Published on: March 8, 2012

    First of all, thanks for all the good wishes yesterday. The plague came and went, and I’m feeling a lot better today. (And yes, to those people who said I should not be traveling on business when sick, I know that I was running the risk of infecting other people. But I’m a one-man show...and my position has generally been that if death and/or blood are not involved, I’m doing my best to show up.)




    Got the following email from MNB user Joe Davis:

    Kevin, good eye-opener on the AMEX-Twitter sync.  Here in Atlanta we have synced up our cards with FourSquare and taken great advantage of the “Small Business” program they have with some of our neighborhood favorites.  Much like the Twitter deal, you just check-in, use your card to pay, and you get $5 off on your next statement.  When we first came across it at one of our favorite restaurants, we called over the manager to ensure he wasn’t paying anything out of his pocket if we used the discount – as we want him to grow his business, not subsidize it.  He said it was AMEX’s money and their program that he signed up for, so I think this is a great example of how to use social media in an incremental and value-added manner.

    Agreed.

    Once again, to piggyback on Michael Sansolo’s piece yesterday about the social networking study being released by the Coca-Cola Retailing Research Council (for which he serves as research director) it is worth reading the first three sections, which can be downloaded for free here.

    This is important, need-to-know stuff.




    We had a piece yesterday about how Kroger was putting in electric car charging stations in some of its Texas stores, and I noted that this was ironic since Chevy has announced that it will stop making Volts for five weeks because of soft sales; this despite the fact that some reports suggest that 100,000 electric cars will be sold in the US this year.

    One MNB user responded:

    Didn’t California have problems with brown outs not that long ago?  What’s going to happen when people plug their cars into this already fragile and stressed resource?  Electricity isn’t free and just because it costs $X.00 per Kilowatt today doesn’t mean it won’t go up as demand increases.  All the assumptions get thrown on their ear if they don’t figure in the Law of Supply and Demand.  Remember what Corn for Ethanol did to our food prices, an unintended consequence that I don’t think anyone thought through.

    Coal is still the predominant fuel used to create electricity today and it’s also a limited resource.  We’re merely swapping one fossil fuel for another.  Has anybody asked if this is a good idea first?

    A far better option would be a solar array on every house used solely to charge your vehicle but I’m not sure the technology is sufficient to provide enough energy to justify the switch.  I guess technology wise I still lean toward the Hybrid engine technologies that seem to be hitting a more mature period in their production.


    Another MNB user wrote:

    I just had to smile on your comment about the forecasts of 100,000 vehicles. I was thinking of Mark Twain and the quote "The reports of my death have been greatly exaggerated". In this case, the reports of electric vehicles sales forecasts have been EXTREMELY over forecasted. In all, GM has likely had more success than others. If the words success and Volt can be in the same sentence. For January and February, GM sold 626 Volts and the majority were sold to themselves - the government.
     
    GM, Nissan, Mitsubishi have all struggled. While we can and should applaud alternative works, they are not being seen as a value to the consumer or at least the average consumer.
     
    Charging stations along with other green initiatives by retailers are the politically correct thing to do. They are image over substance, but image is important. Most retailers, as likely Kroger is also, are installing them with grants on our tax dollars. Their cost is limited. Their use will be extremely limited to zero. They can claim a PR gain. We paid the bill. All good.
     
    While I don't know for a fact that Kroger is using grants. Many other retailers have and if Kroger is not, they have missed the opportunity to gain the PR points out of our wallets.
     
    Currently the over $8,500 or more in tax incentives are not driving people to the dealers for Volts, Leafs or other choices. It cost your family and mine $5.3 million to put those few 600+ Volts on the road. Its hard to make that value equation work.
     
    Chrysler announced today that it will soon make available a RAM 2500 pick up available for commercial fleet sales that operates on compressed natural gas. GM will soon make that same announcement. Honda's Civic CNG is the "Green Car of the Year" by many that give such an award.

    All alternatives should be our pursuit in my opinion. I have a hard time understanding that we're not as passionate about it as we were about a moon landing in the 60's. There is as much at risk now as there was then if not more - much more.
     
    In the meantime, our stores will add charging stations for cars that don't exist. We're ignoring other alternatives such as CNG. We think of these initiatives in the wrong context. We don't have a national passion for the real need based on our own security. We run the risk of trivializing a desperate need by making the pursuit as annoying as un-used reserved parking spaces.




    On the subject of Food Lion using as double coupon promotion in Fayetteville-area stores, MNB user Mark Heckman wrote:

    Double and triple coupon promotions are still effect ways to stimulate short term sales, while decimating short term profits, if that's the retailer's goal.  I question whether these ad hoc promotions will do much to enhance Food Lion's price image unless they are coupled with a comprehensive EDLP shelf program that actually brings Food Lion within reasonable range of Walmart.  To be blunt, traditional supermarkets, who still are convinced they must maintain gross margin rates in the mid-to high 20% range, are going to find the going very tough with an increasingly savvy shopper that has the knowledge of a "good price" engrained in the shopper psyche!!




    We had a piece yesterday about how Walmart has asked a federal judge in Dallas “to reject a proposed class-action lawsuit in which women allege that the world’s largest retailer discriminated against Texas female workers over pay and promotions. The company said the claims are barred by the statute of limitations ... The case also can’t be pursued as a class-action matter because there is little in common among the claims made by the plaintiffs, it said.”

    I commented:

    I don’t mean to sound naive, but what bothers me about this story is the fact that Walmart is looking to get the case tossed because of technicalities - not because there wasn’t systemic - which is not to say coordinated and approved - problems with the way a lot of women were treated there for a long time. I think a lot of this has changed - there seem to be a lot more women working at the top of the Walmart ladder these days. But through legal maneuvering, the real issue isn’t being dealt with.

    Which prompted one MNB user to write:

    Kevin, I just had to comment on this situation.  The courts are throwing out the case on a technicality for lack of a better term.

    I can’t help but ponder the story not long ago about Monsanto.   Just as small farmers lose in the courts against Monsanto, so will women one on one against Walmart.

    Real change has appeared to have changed at Walmart and maybe the women in the suit can find solace at least in that.  Monsanto on the other hand is still using the courts to overstep and push the envelope with their right to patent protection.

    KC's View:

    Published on: March 8, 2012

    • Peyton Manning closed the books on 13 years with the Indianapolis Colts yesterday, announcing that he was being cut by the team after a season during which he could not play because of a severe neck injury.

    However, Manning said he has no intention of retiring, and a number of teams are rumored to be interested in his services, including the Miami Dolphins, Seattle Seahawks, NY Jets, Washington Redskins, Arizona Cardinals and San Francisco 49ers.

    Let the bidding begin.

    • The Boston Globe reports that Fenway Park, longtime home of the Boston Red Sox, has been listed in the National Register of Historic Places.

    Fenway Park is celebrating its 100th anniversary this year, and it is the oldest operating major league stadium, the story notes.

    I think I’m amazed that it took so long. Fenway Park isn’t just a ballpark. It’s a cathedral.
    KC's View: