business news in context, analysis with attitude

Published on: April 9, 2012

by Kevin Coupe

I don’t usually refer to reader emails in this space, but I got one late last week that I thought was worth Eye-Opener attention.

It came from my friend Todd Hale, who was referring to a piece that ran on MNB referencing the fact that the Millennial generation has less money than retailers might hope, and therefore less disposable income than twentysomethings of previous generations had to spend while shopping. It probably was not a coincidence that we also had a piece last week about how more older people than ever - distressingly described as “55 and older” - are holding down jobs and putting off retirement plans.

To which Todd Hale responded:

“We continue to offer discounts to seniors.  I’m now 61 and I get discounts at movies, a 10% discount at my dry cleaners...

“With a widening income disparity in this country, which favors boomers,  why haven’t some retailers and manufacturers figured out that maybe we are giving discounts to the wrong people!”

I read that, and a lightbulb went on over my head.

What a great idea.

Maybe there are some retailers out there that are doing this (and if so, I’ve love to hear about it ... keep those cards and letters coming in!), but imagine what it might do for traffic and sales if a retailer chose a usually slow night of the week and said that for 3-4 hours, anyone with a driver’s license clearly establishing that they are under 30 is eligible for q 5-10 percent discount on all food products (excluding alcohol).

Think that might generate some traffic and sales? And then, if the retailer is smart, it would then create programs that would build on this burgeoning traffic, with samples and meal selections that are seen as relevant to this generation.

In an age when everybody is trying to figure out how to compete with the likes of Amazon.com and Walmart, this might be a way of creating relationships and establishing a kind of loyalty to this generation of consumers, loyalty that might persist as they age, earn more money, get married and have families and turn into the kind of big-transaction shoppers that most retailers covet.

Just a thought...with all props to Todd Hale.

Published on: April 9, 2012

Reuters reports that “the Canadian government has ordered a review of U.S. retail giant Target Corp's plan to move into Canada, examining whether it would be of net cultural benefit to Canada.” According to the story, the “cabinet ordered the review under the Investment Canada Act on the recommendation of Heritage Minister James Moore.

“The review would involve looking at whether the store's ‘cultural’ sales, for example books, will contain enough Canadian content.”

The Reuters piece notes that “Target plans to open 125 to 135 stores in Canada starting in March or April 2013, taking over leases from Hudson's Bay Co's Zellers discount banner, a move which Wal-Mart is trying to counter with its own Canadian expansion.”

Published on: April 9, 2012

USA Today reports that bankrupt Eastman Kodak “is seeking permission to pay about 300 executives and other employees $13.5 million in bonuses to persuade them to stay with the company as it reorganizes under bankruptcy protection,” saying that “the targeted employees have knowledge and skills critical to help the business emerge from Chapter 11 and would be difficult to replace if they left to pursue other offers. They include 119 middle managers who would share $8.5 million of the total.”

According to the story, “Many in line to receive bonuses have seen their workloads increase while taking what amount to significant pay cuts, the court filing said. That's because some of their compensation was tied to Kodak's performance, and no new long-term incentives are being granted during bankruptcy proceedings.”

The story also says that “Kodak told retirees it has withdrawn for now its motion to end supplemental health care benefits for about 16,000 Medicare-eligible retirees. The company will instead create a retirees committee to examine the issues of medical and survivor benefits.”

Published on: April 9, 2012

The Chicago Tribune reports that Kraft Foods has cut ties with an organization called the American Legislative Exchange Council (ALEC), described as “a conservative lobbying group that has recently backed controversial voter ID and so-called ‘stand your ground’ laws.”

According to the story, Kraft followed Coca-Cola in making the movie, saying that it would not renew its membership because of “limited resources,” and saying that its ALEC membership was “strictly limited to discussions about economic growth and development, transportation and tax policy."

Coke’s move, however, was a little more definitive. For one thing, it discontinued its membership. For another, it said that ALEC was focusing on issues that had nothing to do with its business.

According to the story, “The withdrawals pleased ALEC detractors, which includes the Center for Media and Democracy. The liberal-leaning nonprofit said it had launched a protest campaign in tandem with Color of Change opposing what it said were ALEC's efforts to deny climate change, undermine public schools and encourage laws that would require voters to present various forms of identification before voting.”

ALEC says that its mission is "to advance the Jeffersonian principles of free markets, limited government, federalism and individual liberty."

Current members of its board include executives from Walmart, Johnson & Johnson, Pfizer and AT&T, among other major corporations. PepsiCo is reported to have stepped down from its board membership earlier this year.

Published on: April 9, 2012

• The Washington Post reports that Walmart is delaying its plans to open six stores in the Washington, DC, market, and now won’t open its first store there until the end of next year - 12 months later than originally planned.

“While construction time lines are fluid and driven mostly by the developer, we’re using the extra time to further engage with the neighborhoods that surround our stores and build even more support for Wal- Mart,” said company spokesman Steven Restivo.

Read this as meaning that Walmart has met with more resistance and regulatory issues than originally expected, and it is going to need more time to get its construction ducks in a row.

• The Economic Times reports that Walmart “has launched a training and education programme that will benefit about 60,000 women working in its factories in India, Bangladesh and China.”

According to the company, “The 'Women in Factories' programme is a five-year initiative that will be implemented in collaboration with local NGOs and teach "critical life skills" related to communication, hygiene, reproductive health, occupational health and safety and gender sensitivity.”

• Walmart has announced the 10 finalists in its “Get on the Shelf” contest, which it said was entered by more than “4,000 inventors, entrepreneurs and small businesses,” with voting by more than one million consumers casting judgment on which ones should be carried by Walmart.

The 10 finalists:

• “Bios Clinical Acne System is an acne system that uses topical probiotics to treat adolescent and adult acne.”

• “Humankind Water gives 100 percent of its net profits to provide clean drinking water for some of the one billion people in this world dying without it.”

• “Mr. Spritz Mysterious Shirts are entertaining t-shirts containing hidden images that appear when the garment gets wet and disappear when dry.”

• “Plate Topper transforms dinner plates into airtight food storage containers to save meals, leftovers and snacks. They are dishwasher-safe, microwave-safe and 100 percent BPA-free.”

• “Sola-Bag Forever Carry Refrigerator is a lunch bag that stays cold forever by generating energy from solar power and indoor lighting.”

• “Soleeze Spring Loaded Insoles are spring-loaded insoles and shock absorbers that fit into any shoe or boot and last for years.”

• “SnapIt Eyeglass Repair Kit is an easy way to fix your sunglasses or eyeglasses in 30 seconds.”

• “SUSIE Magazine is a bimonthly Christian print magazine and online sisterhood for teen girls promoting healthy relationships, good role models and positive self-image.”

• “Veterans Farm Datil Pepper Salt is a datil-infused kosher salt created at a Veterans Farm, where disabled combat veterans are taught farm skills to help them overcome physical and mental barriers and get jobs.”

• “We the People Bracelet features silver sterling beads with ingrained detailed descriptions of the Amendments to the Bill of Rights.”

Walmart said that the three winning products will have the opportunity to be sold on Walmart.com and the Grand Prize winner will get the chance to be carried in select U.S. Walmart stores after the final round of voting is completed at the end of the month.

Published on: April 9, 2012

The New York Times reports that “federal food safety inspectors said a proposal by the Agriculture Department to expand a pilot program that allows private companies to take over the inspections at poultry plants could pose a health risk by allowing contaminated meat to reach customers ... Under the planned expansion, the agency would hand over these duties to poultry plant employees, while the inspectors would spend more time evaluating the plant’s bacteria-testing and other safety programs. The department has run the pilot program in 20 poultry plants since 1998.”

Some inspectors say, according to the Times story, that “the proposal puts consumers at risk for diseases like those caused by salmonella. About 1.2 million cases of food poisoning are caused by salmonella each year, according to the Centers for Disease Control and Prevention.” The problem is that the proposal speeds up the assembly lines to the point where federal inspectors no longer will have the time or the positioning to detect diseased birds.

Published on: April 9, 2012

• The UK Press Association reports that Richard Black of Legal & General Investment Management, Tesco’s third-biggest shareholder, has called for the company to pull out of the US and sell its Fresh & Easy chain in the western part of the country.

Black also says that he thinks that Tesco should get out of the banking business in the UK and refocus its efforts on the core grocery business.

"Strategically, the business needs to think about its capital allocation and return on capital,” Black says. "It needs to think long and hard about what it wants to be - can it be everything to everyone, or should it focus on its gem, the British grocery business? Of course, this is likely to raise questions about other areas of the business, such as America and the bank."

Published on: April 9, 2012

CNBC reports on an interview it did with Eddie Lampert, founder of ESL Partners, majority shareholder in the financially troubled and marketing-challenged Sears Holdings, which, as the story notes, he has had trouble reviving for the more than seven years he has owned it.

Lampert - who would not discuss Sears in any detail - suggested that some online retailers are generating a lot of sales without making any money, which creates an enormous challenge to traditional retailers to survive.

“You’re going to have to try new things,” he said. “If you’re unwilling to try new things and to fail and learn, you don’t have a shot. That doesn’t mean you are going to be successful, but you have to try to change.”

“A lot of businesses will have profitless prosperity and we’ve got to adapt, and I think that companies like Amazon, eBay, they’ve turned this into a big opportunity, and we have to be able to compete with them, not just Wal-Mart, Target, etc.,” Lampert said.

Published on: April 9, 2012

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

• The Los Angeles Times reports that the LA City Council is moving forward with a proposal “to end the use of paper and plastic bags at supermarket checkout lines, saying such a move would spur consumers to switch to more environmentally friendly reusable ones.”

The bill passed the Energy and Environment Committee last week, and now goes to the full council for a vote.

Under the proposal, if it passes, “the council would still need to draft an ordinance and initiate an environmental review of the bag phaseout. Once the ordinance is in effect, city officials would provide six months' warning to stores - including supermarkets and other retailers that sell food - that plastic bags would no longer be permitted, city officials said.

“Once the plastic bag ban is in place, supermarkets would be required to charge 10 cents for each paper bag. Six months later, paper bags would be prohibited as well,” the Times writes.

• The Associated Press reports that “a San Francisco judge has dismissed a proposed class-action lawsuit that sought to stop McDonald’s Corp. from using toys to market its meals to children in the Golden State ... The suit had claimed that the world’s biggest hamburger chain was violating consumer protection laws and exploiting children’s vulnerability by using toys to lure them to eat nutritionally unbalanced meals that can lead to obesity.”

Listen, I think that Happy Meals are a pretty sad commentary on what people eat in this country. But I also think that parents need to have enough gumption - to use an old-fashioned word - to limit how many their kids eat, and to expose them to better food whenever possible.

• JC Penney may be reinventing itself in the marketplace, but that does not mean that management is able to avoid hard operational decisions.

Reuters reports that the company is laying off a thousand people, at its Plano, Texas, headquarters and its Pittsburgh customer call center, “as part of its previously announced cost cutting measures.”

I’m guessing that we’re not going to hear Ellen DeGeneres talking a lot about that...

But I have to say that I love it when a company more than a century old starts talking about acting like a “nimble startup. Not sure it is possible, but I like it...

• The Oregonian reports that “Zupan's Markets plans to open its fourth grocery store on April 18 in Lake Oswego.”

According to the story, “The new Zupan's replaces a former Wizer's Lake Grove Market that closed in 2010. Zupan's has three other locations in Portland. Zupan's was also previously located in West Linn at 19133 Willamette Drive before eventually closing. That building is being turned into a Wal-Mart grocery store.”

I love Zupan’s. I visited one of their stores for the first time last year, and was extremely impressed ... it spoke well of the company and its ability to cater to the food culture of the area. And if I lived there, it is certainly one of the stores I would try to patronize on a regular basis. Glad to see that it continues to grow...

Published on: April 9, 2012

• Mike Wallace, the longtime “60 Minutes” correspondent who turned a talent for interrogation into a television art form, died over the weekend at age 93 after a long illness.

Wallace once said that he had to walk “a fine line between sadism and intellectual curiosity,” and his interviews helped to turn “60 Minutes” into the top-rated show in America.

Published on: April 9, 2012

Got the following email from an MNB user responding to some discussion here about how Amazon treats its vendors:

As a principal of a small organic novelty food manufacturer we have experienced the same tactics w/ Amazon. We attempted contacting them by email w/o success for two months. We already know attempting to speak to an actual human is almost impossible.

We are out and ironically our other web partners sales have increased so no real loss for us. We originally felt there was a value in the “Web Presence” they gave our product. Ironically I noticed your product stays online w/ a “We will notify you when product becomes available” notice. A competitor discontinued their line over a year ago yet their product profile remains.

Who loses? Not us… They still find us on Amazon yet once its determined the product is not available customers find us elsewhere. Overall volume has decreased a bit but Amazon was never a large portion of our overall business just a nice name to hang our hat on. Unfortunately the bank does not accept hat racks as legal tender.




Got the following email from MNB user John Domino:

I sympathize with your feelings of being part of the “older worker” generation(I am just a couple of years behind you), and I too am happy that those of us with many years of experience are finding new opportunities. However, what really scares me about this, is what it says about the prospects/condition of opportunities for younger works.  If more than half of the job gains are going to people over 55, does that mean that all of those younger people entering the job market (the kids that those 55 years old just put through college) are going to struggle to find any employment and long for their days as teenagers when they could get a job at the local mall or Starbucks?

Maybe. Unless the economy grows.

However, I must admit that I feel absolutely no obligation to get out of their way.

From MNB user Mark Raddant:

Nice catch on this statistic!  I think that the recession, older workers are pricing themselves down to younger workers’ wage scales.  So employers get more maturity at the same price as the younger worker.  There is also a perception they are getting a better work ethic.  It would be interesting to track the effect on Health Care plan costs, though.

On “raging against the dying of the light”, I would refer you to another Dylan, who sang “those not busy being born are busy dying”.  As an individual who preaches the gospel of reinvention regularly, I think you’re pretty well covered there.

Thanks.

From another reader:

Maybe it’s because I have a 24-year-old daughter who cannot seem to get into a “career” right now (although she is holding two interesting part-time jobs).  But, the statistics around workers staying put longer and longer, often because of financial concerns (including needing health care coverage), bothers me tremendously.  Certainly, it is wonderful when people are able to contribute their skills, knowledge and insight for as long as they wish or need to.  However, I can’t help wondering how much this is affecting the younger end of the spectrum. 

My father was with the same company for about 40 years when he was offered one of the very first “55 and out” packages.  So, at 58, he retired with a very healthy pension and plenty of places to expend his energy—home, church and our community.  However, after two people failed at filling his position, he was called back as a consultant for about two years.  After that, the company realized they needed to split his responsibilities among three people.  Those people moved up and I can only imagine the ripple effect it caused in additional advancements and also hiring. 

So, yes, it’s great that we can stay in the workforce for as long as we like.  But, there are so many ways we can use our skills, knowledge and insights—there are hundreds of non-profits begging for help—and there are so many people trying to get into and move up through their careers.  I just wonder if we’re creating a “gray ceiling” that younger workers cannot possibly hope to break through.

Unfortunately, I have a feeling I’ll be contributing to it.  I can’t imagine being able to retire any time soon.

Still another MNB user wrote:

I feel your pain and I am not quite to the “older” worker age group yet. But most of my co-workers are at least 10 years younger than me, okay most are my daughter’s age or closer to her age than mine. There is a line from a Barbara Streisand movie “The Mirror has Two Faces” (I think), and I won’t pretend to quote it exactly, but her mom says “I don’t feel old. In my head I am still 30.” That sums it up for me. You can put me in an age category, but remember always that in my head, I am still 30.




On another subject, MNB user Jill M. LeBrasseur wrote:

You can count me in for burgers at breakfast too! I just prefer the typical “lunchtime” foods. I don’t think restaurants would need to develop special “breakfast-y” burgers with egg or sausage or serve them on a biscuit either. Just make the lunch menu you already have, or certain selections from it, available for me to purchase at 7am as I’m driving in to work. I also hope this trend doesn’t stop at burgers. I know how you feel about the place, but if the Taco Bell near my home would sell me a bean burrito or crunchy taco supreme at 7am I’d join the drive-thru line there too!

MNB user Brian Carpentier wrote:

I too love the idea of a burger for breakfast. Since I am in the food business and an early riser, I have always had a hard time understanding why McDonald’s (not that I particularly like their burger) cannot get past the idea of selling burgers only after 10:30 in the AM. To watch someone frustrated with that policy, please treat yourself to a rental of the older Michael Douglas movie “Falling Down”.

P.S. One of my favorite burgers is at a pub that has remained unchanged since the 70’s, located in Portland, ME. It has an egg on the top of an already great burger. If you find yourself in the area, they also have many taps of great beers, the place is called the Great Lost Bear. Enjoy!

I will. Thanks.

Published on: April 9, 2012

• In Augusta, Georgia, at the Masters golf tournament, Bubba Watson defeated Louis Oosthuizen in a playoff round.