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    Published on: April 2, 2012

    by Kevin Coupe

    The Los Angeles Times had a piece the other day talking about a number of hotels “that have adapted their reception areas to be a better fit for the digital-savvy guest,” turning on its head the traditional hotel lobby experience in fundamental ways.

    Some examples from the story:

    • “At the Andaz West Hollywood, a host stands near the entrance to register guests on an iPad tablet. The 239-room boutique hotel ... also features free Wi-Fi and communal tables designed for laptop use in the lobby ... The Andaz ... used to have a standard lobby that was not particularly set up for working. Now, in addition to tables designed for laptop use, there are free computers for browsing the Web ... The walls were removed between the lobby, bar and restaurant, creating a common area where guests can order food and drinks 24 hours a day.”

    • “At the Hyatt Grand Champions Resort in Indian Wells, electrical outlets have been installed on the surface of the lobby bar so guests can power their laptops and mobile devices 24 hours a day ... (It) spent about $2 million to upgrade its lobby, removing the check-in counter, clearing access to the bar and adding a high-speed fiber-optic Internet connection.”

    • “The Luxe Sunset Boulevard Hotel in Bel Air recently created a large common area by removing the walls between the lobby and the restaurant, which added snacks to the menu for patrons who want to munch while clicking away. The hotel also increased the wireless Internet speed in the lobby by 600%.”

    • “The Loews Coronado Bay Resort (has) a lobby remodeling project scheduled to be finished in June (that) will include several built-in iPads at the bar and nearby tables.”

    According to the story, “Hotel operators say the investments are good business because they help boost hotel loyalty. Plus, guests who hang out in the lobby longer are likely to order more food and drinks.”

    Of course, all these changes also mean that many hotels are likely to eliminate the traditional business center. But that’s okay, because many operators say that they aren’t being used much, anyway.

    There is a good lesson here for retailers in any venue. Sometimes, you have to look around and try to figure out what components of your business have outlived their relevance, even if they’ve been there so long they feel like core values and/or bedrock traditions. And then, you have to have the courage and leadership to test new approaches and find new solutions.

    Not easy. Not simple. But the kind of innovation that is absolutely critical to remain relevant, especially to the next generation of shoppers (which is, in case you have noticed, rapidly becoming the current generation of shoppers).
    KC's View:

    Published on: April 2, 2012

    The Seattle Times reports this morning that Amazon.com has been sending emails to publishers demanding biggest discounts if the companies want to continue selling their books on the site. While many publishers are loathe to criticize the world’s biggest and most influential book retailer, the story cites one specific example - McFarland & Co., where they got 19 days notice that Amazon wanted to buy its (admittedly scholarly and often arcane) books at 45 percent off the cover price, or roughly twice the discount previously given.

    The folks at McFarland say that if they sell books to Amazon at that discount they’ll have to offer it to everyone, which would make their business unsustainable; they seem most irritated by the fact that they’ve been unable to actually talk to a live Amazon employee about the changed conditions.

    The broader problem - and this potentially could impact every company with which Amazon does business - is that Amazon continues to generate an increasing percentage of many companies’ businesses. In the case of McFarland, the story says, “Amazon generated nearly 70 percent of McFarland's retail sales and 15 percent of its entire business.” Which makes it hard for anyone to walk away from Amazon and refuse to play by its rules ... in the same way that so many manufacturers have found themselves at a disadvantage when dealing with Walmart, which accounts for a large percentage of their revenue.

    At the same time, the Seattle Times notes, Amazon has come under increasing criticism for being willing to use its considerable muscle to bludgeon its competitors - like last year, when it offered additional discounts to shoppers who went to bricks-and-mortar retailers to check out products and then placed orders for them with Amazon.

    Here on MNB, earlier this year, we reported that Amazon was said to be implementing changes in what it requires from its grocery suppliers, demanding what one source called “an incredible discount from all grocery suppliers. It's my understanding that a lot of suppliers, big and small, are walking away from Amazon."

    On the publishing side, Amazon also is working to compete with the same publishers with which it does business - creating its own imprint and developing systems that allow writers new ways to bring their work to market.
    KC's View:
    I am fond of quoting the research that shows Amazon and Walmart becoming the same size in about 2020, but that’s not to suggest that this is inevitable. Arrogance, missteps and an emphasis on short-term tactics rather than long-term strategy can derail any company.

    In Amazon’s case, I would recommend that CEO Jeff Bezos read “Macbeth,” in which Shakespeare refers to the title character’s “vaulting ambition,” or intense yearning for power that allows him to misjudge the situation to the point where tragedy ensues.

    You can read the entire and fascinating Seattle Times story here.

    BTW...I should note here that this is not our experience with our book, The Big Picture: Essential Business Lessons from the Movies. It is my impression that Amazon does not so much buy the books for sale as it takes them on consignment and then we get a piece of the sales. Which seems eminently fair to me ... they always are reordering because they’re always running out of stock. (Michael Sansolo and I love to mention the fact that The Big Picture consistently is among the five percent of all books sold by Amazon ... which sounds impressive until you realize that they sell more than eight million books, so all you have to do is be in the top 400,000 or so. But hey ... we’ll take our achievements where we can find them.)

    Published on: April 2, 2012

    There may be some in the meat industry or political world who are trying to reverse all the negative publicity about Lean Finely Textured Beef, more commonly known as Pink Slime, the inexpensive meat filler made from low-grade trimmings that has come controversial because it was not being labeled on packs of ground beef.

    But the question is whether these players will be able to effectively do battle with retailers that are making it clear that they have never had Pink Slime in their beef, or never will from this day forward.

    Take, for example, this email that went out from Fairway Markets to its customers over the weekend, and signed by “Fairway Master Butcher Ray Venezia”:

    Some USDA scientists recently revealed that they strongly believe Lean Finely Textured Beef (LFTB) -- or “pink slime” as it’s been called by the press -- should not be labeled as meat. According to an ABC News source, 70 percent of all ground beef sold at supermarkets contains LFTB. While that may be the case elsewhere, Fairway Market DOES NOT sell LFTB or “pink slime” – WE’VE NEVER SOLD IT AND NEVER WILL! Since this news broke, we’ve received a lot of inquires about it. But you can shop with ease at all Fairway Market stores, knowing that LFTB or "PINK SLIME" ISN’T IN ANY MEAT WE SELL – and you’ve never ever purchased a product like that at Fairway.
     
    ALL of our meat is the highest quality, is USDA certified, is delivered fresh daily, is custom cut by a professional butcher, AND is ground fresh every day and all day. Fairway Market Butcher Shops never cut corners, and the meat that comes into our stores is approved by me, a third-generation butcher. You expect the best, and we have never and would never give you anything less. This is why Fairway is truly LIKE NO OTHER MARKET.

    KC's View:
    Which is why I keep pointing out that the whole Pink Slime issue is one that has been lost from the PR perspective. It’s over. Done. You gotta know when to hold ‘em, and know when to fold ‘em.

    Published on: April 2, 2012

    Reuters reports that the US Food and Drug Administration (FDA) has declined to ban the use of bisphenol A, more commonly known as BPA, despite claims by some that its use in food and beverage packaging could cause developmental harm to babies and children.

    According to the story, “The FDA agreed to rule on whether to ban BPA use in food and beverage packaging as part of the settlement of a lawsuit reached in December with the Natural Resources Defense Council (NRDC). ‘The FDA denied the NRDC petition because it did not have the scientific data needed for the FDA to change current regulations, which allows the use of BPA in food packaging,’ FDA spokesman Douglas Karas said. ‘I cannot stress enough that this is not a final safety determination on BPA’.”

    The story notes that “Canada declared BPA a toxic substance in 2010. Canada and Europe have already banned it in the production of baby bottles, and France banned it in food packaging.”
    KC's View:
    I suspect that this is not a dead issue. I’m no scientist, but it just feels to me like one of those issues that is going to keep coming back, and that eventually - no matter how vociferous the lobbying by the chemical industry - BPA will be found to be harmful and will be banned.

    But there also is a part of me what wonders if there is some sort of public relations equivalency between BPA and Pink Slime. Just wondering.

    Published on: April 2, 2012

    Whole Foods Markets has announced that beginning this Earth Day, it “will no longer carry red-rated, wild-caught fish in its seafood departments ... A red rating indicates that a species is suffering from overfishing or that current fishing methods harm other marine life or habitats; the ratings are determined by nonprofit research organizations Blue Ocean Institute and Monterey Bay Aquarium.”

    The announcement notes that “the move, which comes one year ahead of the company's self imposed deadline of Earth Day 2013, makes Whole Foods Market the first national grocer to stop selling red-rated seafood.”
    KC's View:

    Published on: April 2, 2012

    The Canadian Finance Ministry announced last week that it will end the production of pennies later this year as part of an austerity budget designed to cut costs.

    "The penny is a currency without any currency in Canada, and it costs us 1.5 cents to produce a penny,” said Finance Minister Jim Flaherty.

    While some applauded the move, others said that they were worried that it would allow retailers to sneak through price increases, according to a Reuters story.

    The Canadian government said that pennies already in circulation will remain legal tender until they disappear from circulation. It also noted that New Zealand, Australia, the Netherlands, Norway, Finland, Sweden and others "have made smooth transitions to a penny-free economy."
    KC's View:
    One has to think that as we also try to save money in the US, eliminating the penny would be a natural tactic. On the other hand, the Congressional hearings about the subject would probably take a decade...

    To me, this is such a non-issue ... as long as the Canadians don’t get rid of their “Loonie” and “Toonie” coins. (Only because I love the names.)

    Published on: April 2, 2012

    Internet Retailer reports on how “mobile payments, ranging from transactions through m-commerce sites and apps to taxi credit card readers to smartphone-based mobile wallets, are on the rise,” and that “more than half of the merchants using VeriFone Systems Inc.’s payment gateway are using it for mobile payments, the company announced this week.”

    • Here’s a headline that MNB wish it had had last week in its story about how Best Buy plans to close 50 of its 1,100 stores and lay off 400 employees - a move that many analysts seem to think is too little, if not too late:

    It's Death By Apple For Best Buy
    KC's View:

    Published on: April 2, 2012

    The Wall Street Journal reports that Sears Holdings “has been shopping its Lands’ End division to private equity firms ... as the retail giant aims to raise cash.”

    According to the story, “It isn't clear whether Sears will have much success with its Lands' End plans. Some buyout shops that looked at Lands' End, such as Blackstone Group, have decided against pursuing such a deal, people familiar with the matter said.”

    The story also notes that “Sears bought Lands' End in an effort to attract younger, more affluent shoppers by bringing to its brick-and-mortar outlets the golf shirts and crew-necks that were available in the Lands' End catalogs and on its website.

    “Experts estimated the deal could double Lands' End revenue of $1.6 billion in 2001—the last time revenue was reported—but warned that Lands' End's brand image might be tarnished by an association with the more down-market Sears stores.”

    While Sears does not break out the numbers, analysts estimate that Lands’ End probably generated $1.7 billion in revenue in 2011.
    KC's View:
    Which would suggest that the whole “Lands’ End might be tarnished by Sears” theory was correct.

    I’m not sure - and I cannot find the files because I was then writing for a website that exists only in memory - but I’m reasonably sure that when this happened, I predicted that being anywhere near Sears could only hurt Lands’ End, a brand with a lot of positive equity.

    Chalk up another one for Fast Eddie Lampert.

    Published on: April 2, 2012

    Bloomberg BusinessWeek reports that “a Los Angeles community group has filed an appeal against the building permits granted to Wal-Mart Stores Inc. to build a new store in the city's Chinatown neighborhood.

    “Los Angeles Alliance for a New Economy spokeswoman Allison Mannos said Thursday that the local community feels that the area and local businesses will be disrupted by the large retailer's latest outlet.”

    Walmart got a permit to build the store one day before the City Council voted on a building moratorium on retail chains in Chinatown.
    KC's View:

    Published on: April 2, 2012

    • In Florida, the Sun Sentinel reports on the plethora of food shopping choices available to consumers there as existing retailers have expanded, new retailers have entered the market, and options have become available in both the low-end price-driven category as well as the higher end fresh food-focused segment.

    And it is likely only to get tougher: “Although Trader Joe's has not announced a South Florida location yet, the opening of a store in Naples in February generated a wave of interest from residents in Palm Beach and Broward counties,” the Sun Sentinel writes.

    FreshPlaza.com says that “South African retailer Pick n Pay has been reported to have held talks  Australian retailer Woolworths and Dutch company Ahold, with a view to selling one of them a stake in the business.” Pick n Pay has not confirmed or denied the reports, which began to circulate after Walmart entered the market through its majority investment in Massmart there.
    KC's View:

    Published on: April 2, 2012

    Regarding WinCo’s move into Las Vegas, one MNB user wrote:

    WinCo will succeed in Las Vegas and anywhere else they choose to go because their niche is low price and low price alone. They do not carry many organic or "green" products because that is not their customer. They are slow to add new items as they only want winners. They are employee owned and treat their owners well.  They are consistent in how they deal with all manufacturers. They do not accept credit cards...



    On another subject (albeit one that is regular fodder in this space), one MNB user wrote:

    As a former 15 year employee of Supervalu, I’m shocked that no one talks about the white elephant in the room (or maybe they have and I missed it).

    The reason Walmart and Target can compete on price is quite simple, it's labor in the stores. They are not that much better at supply chain than Supervalu is (SV is actually pretty good at this). The real problem is the price of labor in the stores. When you look at the largely union labor work force that exists in most of Supervalu’s stores, then compare that with what Walmart and Target pays their mostly part time staff, I think you will find the answer.

    Just like the airline industry had to come to grips with this years ago resulting in lower pilot and flight attendant pay, the grocery industry (and the unions) needs to come to grips with this as well. It’s a matter of do you staff and pay accordingly for what the job market is and what your competitors are doing, or do you continue to pay higher salaries that cost you the ability to compete, ultimately leading to your downfall and then employees having no jobs at all.




    On Friday, in our Eye-Opener (which was not an April Fool’s joke - MNB did not have one this year because April 1 fell on a Sunday) we had an Eye-Opener about new uses for bacon. Which prompted one MNB user to write:

    Kevin - you are with increasing frequency becoming like the Sports Illustrated swimsuit edition - -sometimes it's not the editorial, it's the letters that follow that are the most entertaining.

    SO…I'm looking forward to responses to your gentle pun at the end of the Bacon bit (pun intended there), IF you are bold enough to show them...


    If you’ve read MNB for any period of time, you know that not only am I bold enough to post emails the criticize me for my opinions, story choices, jokes and even occasional lapses in taste, but I love it when I get those emails.

    I hate to disappoint you, however ... because I did not get a single email suggesting that I had crossed the line on Friday.

    Not one.

    Which makes me think that either I have to get more outrageous, or that the MNB audience has just gotten used to me.



    Finally, on another subject from Friday:

    You certainly must have felt like stirring the pot this morning by choosing to the publish the user letter regarding a woman's place.  While the views expressed are so extreme and archaic that they are laughable, those views are unfortunately shared by too many who are in political office and at least one candidate for president.  This has lead to many alarming pieces of legislation - including some that have actually become law - that directly attack women's rights.  I personally do not care that much what others believe, and support their rights to whatever belief system they are comfortable with (although in some cases I believe a lot more fact based research is in order). I do, however, definitely care very much when those same people want to impose their belief system on others and limit the rights and freedom of me, my family, an entire gender and others I care about deeply.

    I’ve always said here that if I have a belief system, it can be encapsulated in the title of the old John Lennon song: Whatever gets you through the night.

    To which I would add a New Testament admonition:

    “Judge not, lest ye be judged.”

    (Though there probably would be a number of priests, brothers and nuns who would find the idea of me quoting the Bible ironic, if not downright hilarious....)

    There I go, stirring that damned pot again...
    KC's View:

    Published on: April 2, 2012

    • Yesterday in the NCAA Women’s basketball semifinals, Notre Dame defeated Connecticut 83-75 and Baylor defeated Stanford 59-47, setting up a Notre Dame-Baylor final that will take place Tuesday night in which Baylor will endeavor to complete a 40-game undefeated season.

    • Tonight, of course, Kansas will face Kentucky in the NCAA Men’s finals in New Orleans.
    KC's View: