retail news in context, analysis with attitude

Published on: April 16, 2012

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Published on: April 16, 2012

by Kevin Coupe

David Pogue, technology columnist for the New York Times had an interesting story the other day about how five big magazine publishers — Condé Nast, Hearst, Meredith, News Corporation and Time Inc. - are collaborating on a new computer application called Next Issue that is described as Hulu or Netflix for magazines.

Here’s how it works, according to Pogue: “For $10 a month, you can read the latest full issues of 27 magazines on your tablet, and back issues to the beginning of 2012. Each downloaded issue includes the full, colorful design, all articles and even the ads that you’d see in the printed edition.

“There are some great magazines in this collection: Better Homes and Gardens, Car and Driver, Condé Nast Traveler, Elle, Esquire, Fitness, Fortune, Glamour, InStyle, Money, Parents, People, Popular Mechanics, Real Simple, This Old House, Time and Vanity Fair. There are also some slightly less mainstream magazines: All You, Allure, Coastal Living, Cooking Light, Essence, Golf, Health, People StyleWatch, Southern Living, Sports Illustrated Kids, Sunset.

“Most of those are monthly magazines. For $5 more a month, or $180 a year in total, you can get the Ultimate plan, which adds a nice set of popular weeklies: Entertainment Weekly, People, Sports Illustrated and The New Yorker. By year’s end, the company hopes to double or triple the number of magazines in its catalog.”

Pogue says that while the concept is intriguing, the interface can be clumsy, depending on the magazine. And, it isn’t even necessarily a good deal, depending on how many magazines you read in a given week or month. Plus, there are some bugs in the interface, even though it seems relatively simple.

That said, the initiative does serve as a reminder of several things that all marketers should keep in mind.

One is that they need always to be looking for new ways in which to present old products - ways that could make old products more timely and relevant for the next generation of shoppers. Cost may be less important than convenience - it will depend on the product and the target customer.

That said, you have to do it right. Clumsy is never a word that should be applied to a computer application; you might as well give it the kiss of death.

Still, the one thing you have the think - no matter what you are selling - is that there may be another way to sell it, another way to present it, another way to conceptualize it. If you think not - no matter what “it”is - then you are probably making a mistake.

It’s an Eye-Opener.

Published on: April 16, 2012

Strong piece in the New York Times yesterday about the travails that Sony Corp. has been facing. If you read it thinking of the bigger picture, and imagining the competitive battles and inevitable disruptions being suffered by other companies in other industries, it is extraordinarily instructive.

Some excerpts:

“ Sony, which once defined Japan’s technological prowess, wowed the world with the Walkman and the Trinitron TV and shocked Hollywood with bold acquisitions like Columbia Pictures, is now in the fight of its life. In fact, it is in a fight for its life — a development that exemplifies the stunning decline of Japan’s industrialized economy. Once upon a time, Japan Inc., not to mention Sony itself, seemed invulnerable. Today, Sony and many other Japanese manufacturers are pressed on all sides: by rising Asian rivals, a punishingly strong Japanese yen and, in Sony’s case, an astonishing lack of ideas.”

“Sony’s gravest mistake was that it failed to ride some of the biggest waves of technological innovation in recent decades: digitalization, a shift toward software and the importance of the Internet.

“One by one, every sphere where the company competed — from hardware to software to communications to content — was turned topsy-turvy by disruptive new technology and unforeseen rivals. And these changes only highlighted the conflicts and divisions within Sony.”

“Both publicly and privately, Sony’s top management shows a deep understanding of many of these fundamental challenges: the need for different sections of the company to work better together, for a more unified user experience, for innovation. But Sony’s recent leaders have had trouble wielding authority over the sprawling company. Sony remains dominated by proud, territorial engineers who often shun cooperation ... Executives complain privately of recalcitrant managers who refuse to share information or work with other divisions. One executive said he was startled to discover that a manager whose position had been eliminated had been rehired under a different title.”

Ironically, when Howard Stringer was named CEO in 2005, he gave a press conference at which he said that he would “accelerate cross-company collaboration, thereby revitalizing the company and promoting creativity.”

It hasn’t exactly worked out that way.

As a case study, the entire piece is worth reading here.

Published on: April 16, 2012

In the UK, the Telegraph reports that “after two decades of aggressively buying up land and building stores, (Tesco) is understood to be keen to scale back on opening new, large, out of-town hypermarkets in favour of using the capital to invest in its existing store portfolio and expand its Express network of convenience shops.

“It also wants to grow its click-and-collect service, which allows shoppers on the Tesco website to pick up goods, especially non-food items, from their local supermarket. At the last count just 500 of its 2,800 shops were able to offer the service.”

These moves are said to be part of an announcement next week by new CEO Philip Clarke, who is scheduled to lay out his strategic imperatives for the company. Clarke also is expected to announce “a significant investment in higher-quality fresh produce and packaged food,” as well as a major renovation initiative designed to make Tesco’s stores ”warmer” and more shopper friendly.

Published on: April 16, 2012

The Detroit Free Press reports that in a speech to the Detroit Economic Club last week, Whole Foods co-CEO Walter Robb said that the store his company is building in the economically troubled city will represent the retailer’s “A game.”

"This is not going to be a half Whole Foods store ... you're not going to get anything less than our very best,” he said.

Robb said that “obviously, we're stretching a bit" with the location - it is said to be the first that Whole Foods is building in a distressed location - but that he believes that the store will be profitable.

"We see a city at an inflection point," Robb told his audience. "We see citizens with determination and resiliency and spirit the likes of which we haven't seen around the United States." And, he told journalists after the speech, “We're going to make it work. We've made commitments, and we're going to see them through.”

Published on: April 16, 2012

Adweek has an interesting interview with retail strategist Laura Davis-Taylor in which she talks about “how technology is changing the shopper experience both online and off.

Some excerpts:

• “We have a new generation of shoppers because of technology. It’s changed the fundamentals of the marketing we were raised on: product, price, place and promotion. Consumers now have participation with brands and personalization; we no longer have those linear, traditional paths to purchase anymore. It’s based on who you are, the type of shopper you are, the technology you like, what’s going on at that moment of purchase. People now create a different shopping experience every time. They buy what they want, where they want, at the price they want—and it’s not just in stores, it’s across home, life and stores.”

• “As shoppers, we don’t see a difference between virtual and physical now that we have all this technology in our hands. We have really good experiences shopping online because we’re able to pick something and immediately get information which is often curated just for us. What we need to do to blend the physical and digital is to create an experience across all channels that’s equally good, equally curated. The No. 1 thing is how do you make it easier for people and frankly the expectations are higher when you have an awesome experience buying something at 1 a.m. on mobile or have someone send an email that has the perfect jeans for you. People want more, they want to have it made easier for them and they want to love the experience wherever it happens.”

• “You have to find a reason for people to break away from focus on price. There are certain products that have found really great ways to do it. Think about an ecologically sensitive brand—people aren’t shopping for price there because it represents something bigger. The packaging may be really cool, there’s something about it that makes you love having it on your counter ... We need to give people a reason to believe in the brand and continue to buy it and love it. We have to be so close to the insight process that will make people irrationally love that brand so it’s not about how am I going to get it cheaper?”

Published on: April 16, 2012

In the Los Angeles Times over the weekend, columnist Michael Hiltzik had a piece over the weekend about how Best Buy can be saved. The company, which has been facing a series of troubles over the past few years - tougher competition from the likes of Apple and Amazon, the consumer trend toward “showrooming,” and lackluster leadership that seemed to culminate in the resignation of CEO Brian Dunn, who reportedly is being investigated for unprofessional and inappropriate personal behavior.

Here are four excerpts - all of them worth paying attention to if you are in any kind of retailing - from Hiltzik’s terrific piece (you can read the whole thing here):

• “Best Buy under Dunn's leadership was moving backward. The stores have been looking more forlorn and less like the teeming shoppers' carnivals of years past, and the inventory choices shrinking. Meanwhile the sales staff comes off as less knowledgeable and more indifferent. Former customers of the extinct Circuit City and Border's, the last big retailers to go down this road, must be feeling a sense of deja vu.

“Best Buy once was one of my favorite retailers. There was a period when I lived in virtually an all-Best Buy household; the chain sold us our flat-screen TV, most of our stereo equipment, desktops and laptops, even a high-tech vacuum. My frequent-buyer account got me cash-back coupons and longer grace periods on returns.

“The last time we bought a refrigerator, however, we got a better price and payment terms from Sears for a comparable unit. Here's a retailing maxim: If you're losing sales to Sears, you're in trouble.”

• “Nothing is stopping Best Buy from picking out the best ideas in the field and adapting them to its own space. At least that would be an improvement over its current strategy, which seems to be to pick out everyone's worst ideas and try to take them to the bank. These include its shift toward smaller, mall-based storefronts with limited merchandise.”

• “So what are the best ideas?

“One is that expertise sells. The first Apple stores opened in early 2001 — believe it or not, this was before the iPod. Since then, they've built on the company's reputation for hip design and first-class technical service. The products are laid out on tables to encourage the touchy-feely experience. Employees are ubiquitous but unobtrusive.

“The techs at the Genius Bar seem trained in Apple technology to the last brain cell. The hard sell is so deeply submerged in the store experience that you may not even know you've been sold until you're out the door with a MacBook in hand. But you'll think the staff has identified your need and found a way to meet it.”

“Another retail lesson worth internalizing is that a chain doesn't have to be pitched toward the affluent to offer good service.

“Nordstrom, which occupies a high-end market segment, is known for its attentive sales staff. But walk into a Men's Wearhouse and you don't have to chase after a salesperson with a butterfly net — typically you're greeted promptly by someone in full command of the inventory on the floor ... Put these two notions together, and you might just have a new Best Buy paradigm. As our lives become more enslaved by technology, the need for expert help sorting out how best to integrate every Bluetooth- and Wi-Fi-enabled thing grows greater.”

Published on: April 16, 2012

The Santa Barbara Independent reports that Scolari’s Food & Drug Company has announced that it will close four stores within the next two months - units in Santa Barbara, Pismo Beach, San Luis Obispo, and Paso Robles, which the story says will erase “its presence on the Central Coast,” leaving it with “14 remaining markets in northern Nevada.”

“This was a gut-wrenching decision,” said co-owner Joey Scolari in a prepared statement. “The economic downturn hit us hard as far back as 2009, but we put off taking this action as long as we could because of the negative impact on people’s lives.”

Published on: April 16, 2012

The New York Times has a piece about how a company called the Educational Development Corporation (EDC), which publishes children’s books, decided earlier this year that “it was fed up with Amazon’s scorched-earth tactics” and removed all its titles from Amazon’s site, an act that “eliminated at a stroke $1.5 million in annual sales, a move that could be a significant hit to the 46-year-old EDC’s bottom line.”

“Amazon is squeezing everyone out of business,” Randall White, EDC’s CEO, tells the Times. “I don’t like that. They’re a predator. We’re better off without them.”

The story goes on: “Amazon was buying EDC’s books from a distributor and discounting them to the bone, just as it does with everything it sells. This might have been a boon for readers, but it was creating trouble with other retailers who carry the company’s titles, as well as with EDC’s network of independent sales agents, who market its books from their homes ... Amazon is generally reluctant to explain its business practices and declined to comment for this article. But its executives say it is shaking up an antiquated business model by eliminating middlemen and passing the savings on to consumers. Publishers that try to cling to the past, they have said, will die.

“The retailer’s growing list of critics, however, argue that Amazon has $48 billion in revenue but hardly any profit, proof that its approach is opportunistic and unsustainable. When traditional publishers, booksellers and wholesalers are destroyed, these opponents say, Amazon will be left with a monopoly that will be detrimental to the larger health of the culture.”

Here’s the interesting part: “Somewhat to Mr. White’s surprise, EDC is doing better without Amazon, at least for the moment ... Sales in March rose, in part because of new accounts like a toy store in Round Rock, Tex., that placed an initial order for 61 books. And colleagues in the business have been congratulating the publisher, or at least expressing their admiration for Mr. White’s guts.”

Published on: April 16, 2012

• The Seattle Times reports that Starbucks has announced that while it hoped to have 25 percent of its drinks served in reusable cups, including mugs and tumblers brought into stores by consumers, by 2015, it now has “the much humbler goal of serving 5 percent of drinks” in reusable cups by that date. While that is a more modest goal, the story notes, it is higher than the 1.9 percent of drinks that were served in tumblers at Starbucks' company-owned stores in the United States, the U.K., Canada and Ireland last year,” which itself was a 55 percent increase over three years.”

• The Associated Press reports that “Dole Food Co. said late Saturday that its fresh vegetables division is recalling 756 cases of bagged salad, because they could be contaminated with salmonella. The bags of Seven Lettuces salad are stamped with a use-by date of April 11, 2012, UPC code 71430 01057 and product codes 0577N089112A and 0577N089112B, the company said,” and were distributed “in Alabama, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, Mississippi, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and Wisconsin.”

• Advertising Age reports that Anheuser Busch InBev is slated to introduce its Budweiser flagship brand as part of “its push to turn the classic American brew into a global powerhouse on the scale of Coca-Cola.”

According to the story, AB is taking pages from the Coke playbook in rolling out the brand in new markets around the world, essentially using the same marketing approach and slogans and treating Budweiser as a global brand. This goes against the typical beer positioning, the story says, in which a more regional approach has been favored.

• The Wall Street Journal reports this morning that chicken dark meat is becoming all the rage, leading poultry suppliers “that spent decades breeding top-heavy birds to satisfy America's craving for chicken breasts ... hunting for solutions as consumers cluck for more dark meat.”

Part of the reason for the shift away from white meat, the article says, is the popularity of cooking shows showing how to use dark meat.

Published on: April 16, 2012

On Friday, we took note of a San Francisco Chronicle report on a study published in Social Science Quarterly saying that there is “a stronger correlation between the number of Walmart stores in a county and local hate group activity than other factors such as unemployment, crime and low education.”

“Walmart has clearly done good things in these communities, especially in terms of lowering prices, but there may be indirect costs that are not as obvious as other effects,” says Stephan Goetz, Penn State professor and the study’s lead author.

However, Goetz emphasizes that he is not picking on Walmart: “In this study, Wal-Mart is really serving as a proxy for any type of large retailer,” he says.

Not surprisingly, we got a lot of reaction to this story...

One MNB user wrote:

One phrase I remember from my statistics class, oh so many years ago...."correlation does not imply causation." There is a correlation between increased ice cream sales and boating accidents in New Hampshire in the summer, but that certainly doesn't mean eating ice cream causes boating accidents! I suspect the same is true in this "study." I wonder who sponsored this study...

I knew I should have taken statistics...

MNB user Philip Herr wrote:

I was always taught (and continue to teach) that Correlation does not equal Causality. I am sure you will hear from many researchers on this. My guess is that we are tapping into an underlying factor that explains both – WM tends to be in C and D counties where poverty in more prevalent. This MAY be the cause. But just one more hypothesis.

Methinks the San Francisco Chronicle is being irresponsible in this story.

MNB user Ben Ball wrote:

Can you say “spurious correlation designed to support a preconceived notion”? This is worthy only of being ignored. Unless of course some other media outlet might want to hold it up for scrutiny as a shining example of bad journalism.

Spurious correlation designed to support a preconceived notion? Who do you think you are, Spiro Agnew?

That said, I don’t agree that it is irresponsible to take note of these kinds of studies. That’s silly, in my view.

Just because a study says something we don;t like, or reports something in which we do not believe, is no reason for a newspaper or magazine to ignore it. Because eventually, that same news organization will not report something which which we do agree, and then we’ll start screaming about media bias.

MNB user Rich Barle wrote:

Last time I went to my local skin head meeting, all the buzz was about the new Walmart store opening up….really?   I would say that’s a bit of a stretch to link WMT/Big Box to hate groups.  I’m sure you can link ignorance, but WMT???

From another reader:

Well, who do you think thinks of these studies? Unions and other WM haters. University studies don’t come from a “well wouldn’t that be interesting to find out” mindset, they come from money – someone pays them to do it. I’d put my money on the unions, in this case.

Yet another MNB user wrote:

A correlation exists between the number of Walmart stores and local hate group activity and the number of William-Sonoma stores correlates to the depth of Romney support- Romney has won every state that boasts at least one Williams-Sonoma store for every 1 million residents.  Where would you rather live?

However, there was one lone voice of dissenting opinion:

Big box retailers DO drive away small businesses.   And, in smaller communities,  that does erode community values and social bonds.   Not something to ignore.

In the end, I’m not quite sure what to make of this study. I get and can agree with the whole “correlation does not equal causality” logic. That said, I think it is certainly worth considering whether the breakdown of certain community institutions is somehow connected to a disenfranchising of certain people, which leads to hate speech and fringe behavior.




We continue to get email about book banning.

One MNB user wrote:

Completely agree that banning/challenging as a whole is completely ridiculous.

Having said that, I'm a father of three daughters ... and my middle daughter (9 years old) really wanted to read/watch The Hunger Games.  I've read the book ... I watched the movie, and I told her that she wasn't allowed to read the book ... yet.

When she gets a little older, yes I think it would be a fine book for her to read.  But I think the content is too much for her now.

I believe as long as parents are actually parenting their kids, they should be able to pick and choose what is appropriate for their kids.  My problem are the parents that want to be friends with their kids.  Just because a kid "wants" to read/watch a book/movie, doesn't mean it's appropriate.  Parents need to take the time to research and decide for themselves what is best for their child.

I absolutely agree with you. But parents guiding their kids in their reading choices is very different from calling up the local school and/.or public library and trying to get books removed from the shelves.

MNB user LuRene Dille wrote:

I wish there was a rating system for books like there is for movies. There are some books that I wouldn’t read if I knew the content.




On the subject of e-book pricing, MNB user John Rand had some thoughts:

Personally I love e-books. Was an early adopter of the Kindle and wore out my first one and using my second.

But there is no excuse for the pricing. I know a touch about publishing (admittedly a fair sized lifetime ago, but still...) and believe me the authors are not the reason for a $9.00 e-book price. A $20 hardcover generally doesn’t generate $2 for the author – unless it is a well established author who can negotiate something different from the usual terms.

An e-book has virtually no cost (pun intended). No paper, no ink, no transportation, no inventory, no display space (other than a web site which is trivial compared to brick-and mortar). No stock clerks.  And in most cases these days, not a lot of marketing either, other than on that same digital platform.

They don’t even have to “create” a digital version. It is almost impossible to imagine any modern printing process that doesn’t have a digital text created first.

They produce $7 paperbacks – anyone ought to be ashamed to charge more than the lowest physical price for any e-book. There is a ton of profit left to be made even at half the price e books are currently sold at. Heck, they are making money on digital copies of ancient books with no copyright at prices that are literally a tenth of a first run book.

I suspect we know why prices are high for e-books. They want to preserve the validity of the hard copy in the remaining market, which means not allowing a larger price differential than can possibly be sustained.

Few things in this world are as important as the flow of learning and information associated with books. Few things are as pleasurable, or as important, as the skill of reading.  It is a shame to have there be any hesitation at all about moving to a lower cost structure for reading as soon as possible. Sure it’s kind of tough on cover artists, delivery trucks, and bookstores. They join the compositors, pressman, and hosts of other jobs in newspapers, magazines and publishing in general that are going to disappear, if they haven’t already.

But I don’t want to continue to pay as though their salaries were still part of the cost structure.