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    Published on: April 25, 2012

    The Washington Post this morning reports that Walmart “has participated in an aggressive and high-priced lobbying campaign to amend the long-standing U.S. anti-bribery law that the company might have violated.

    “The push to revisit how federal authorities enforce the statute has been centered at a little known but well-funded arm of the U.S. Chamber of Commerce where a top executive of Wal-Mart has sat on the board of directors for nearly a decade.”

    The revelation was just one of the events unfolding yesterday in the Walmart bribery scandal, which first came to light over the weekend when the New York Times provided an inside look at Walmart’s Mexico division, suggesting that its fast growth over the past decade was fueled by bribes, and that top management was more concerned with details not being revealed and investigations not being allowed to move forward than it was with stopping the systematic corruption and adhering to US law that forbids American companies from bribing foreign officials.

    You can - and should - read the entire story here.

    The Post story says that Walmart’s efforts to water down the anti-bribery law “has intensified in the past two years, drawing on the backing of several large companies and trade groups such as the Retail Industry Leaders Association, where one of Wal-Mart’s top executives serves as a director. It also has involved high-powered lobbyists, including former attorney general Michael B. Mukasey.”

    The Post notes that “in a speech last month, Secretary of State Hillary Rodham Clinton reiterated that the Obama administration has no intention of allowing a scaled-down FCPA.
    ‘We are unequivocally opposed to weakening the Foreign Corrupt Practices Act,’ Clinton said. ‘We don’t need to lower our standards. We need to work with other countries to raise theirs. I actually think a race to the bottom would probably disadvantage us’.”

    Among yesterday’s other developments:

    • The New York Times reports that Walmart said yesterday that “it had beefed up its internal controls to make sure it was complying with the Foreign Corrupt Practices Act, which prohibits American companies from bribing foreign officials to secure business. In a newly created position, a top-level compliance official will be responsible for ensuring that the company abides by the law and will oversee five regional compliance directors based in international markets.

    “In Mexico,” the Times writes, “the retailer said it had bolstered its training, auditing and internal controls to ensure better compliance with laws against bribery.”

    • The Wall Street Journal reports that the company’s soon-to-retire vice chairman, Eduardo Castro-Wright, who was prominently mentioned in the Times story as sanctioning and even orchestrating the bribes, yesterday resigned from the Met Life board of directors, attributing the move to “recent events” and “outside distractions” that he predicted “will be resolved favorably within the next several months.”

    Bloomberg reports that Walmart’s audit committee “has hired New York law firm Cahill, Gordon & Reindel LLP as legal counsel in its probe of bribery allegations.”

    • The New York Times has a piece this morning about how bribery is a fact of life in Mexico.

    “It is an article of faith here that the fastest way to resolve difficulties with a health inspector, traffic police officer or nettlesome ministry functionary is to pay a sum under the table,” the Times writes. “A baroque bureaucracy, something economists have long warned slows the potential for growth here, and low pay for public servants leads to peso-greased shortcuts for the simplest transactions ... Fiscal watchdogs chafe at the way bribery and other forms of corruption are taken in stride here. Studies have found it costs the economy upward of $114 billion — 10 percent of its gross domestic product — and dampens potential investment.”

    In many ways, the Times reports, the Walmart bribery scandal was not an enormous surprise to people who know how business is done in Mexico. “What raised eyebrows were the amounts involved — more than $24 million — and that the surreptitious behavior, which Mexicans are confronted with on a much smaller scale in their everyday lives, was so publicly revealed.”

    However, the Times also reports that while investigations are being launched in the US into Walmart’s behavior south of the border, there is no evidence yet that the Mexican government plans to initiate a probe into the alleged pattern of bribes - apparently because the bribery had taken place “at the municipal and state level, outside federal jurisdiction, and did not indicate involvement of federal officials.”

    The Times also notes that “a spokesman for Enrique Peña Nieto, the front-runner in the Mexican presidential race, set to vote July 1, said the candidate was in favor of a government investigation of the allegations against Wal-Mart, echoing lawmakers from his party. Another major party candidate, Andrés Manuel López Obrador, who has often criticized Wal-Mart’s practices, said Sunday that the case showed the government was ‘rotten’.”
    KC's View:
    I continue to be amused by the defense being made by Walmart spokesman David Tovar, who keeps saying that the allegations are all six years old and not a fair representation of the company’s culture.

    Which would be fair, except that the real problem here is not the pattern of bribery - which is bad enough - but the cover-up that was engineered at the highest levels of Walmart’s leadership, by many of the same people who have been running the company for the past six years.

    This is an important paragraph from this morning’s Times story:

    “In late 2011 the Justice Department opened a Foreign Corrupt Practices Act investigation into Wal-Mart — apparently after the corporation had learned of The Times’s reporting and disclosed the problems to the government. Wal-Mart said at the time that it was conducting an internal inquiry, a person with knowledge of the matter confirmed.”

    In other words, Walmart only moved when it had to.

    And the Post story about Walmart contributing to a lobbying effort designed to gut the law - though not everyone would put it that way - does not exactly do much to help the retailer’s sullied image.

    The question remains: What did you know and when did you know it?

    Tovar won’t be able to take the heat in early June at the Walmart annual meeting, when top management would typically meet with investors, analysts and the media. The blades are already being sharpened in many media outlets as reporters look for an opportunity to cut to the chase.

    Casto-Wright’s resignation from the Met Life board is, I suspect, just the first of several such moves. The dominoes will continue to fall.

    Published on: April 25, 2012

    The US Department of Agriculture (USDA) yesterday said that a case of bovine spongiform encephalopathy (BSE), better known as mad cow disease, has been discovered in a single California dairy cow in the state’s Central Valley.

    It is the first confirmed case of BSE since 2006 to be found in the US. One was a Canadian-born cow in 2003, one was a Texas cow in 2005, and the third was an Alabama cow in 2006.

    However, USDA officials said that the cow “was never presented for slaughter for human consumption, so at no time presented a risk to the food supply or human health.”

    Ranchers said that the discovery proves that the current screening program is effective. "This clearly illustrates the firewall is working. This is only the fourth case in nine years and none of them were headed for the food supply," Mike Smith, a projects manager with Harris Ranch Beef in Coalinga, tells the Los Angeles Times.

    "This is a big deal. People have a lot of fear over mad cow disease and for good reason," Stevie Ipsen, director of communications for the California Cattlemen's Assn., tells the Times. "But our country's meat is still the safest in the world. We're confident people will carry on eating beef."

    The Times writes that “Michael Hanson, a senior scientist with Consumer Reports and a longtime critic of U.S. mad cow disease policy, said the discovery could be alarming.

    “In 1997 the U.S. changed the rules for cattle food. Until then, rendered cows could become part of cattle feed. The strategy was to get the disease out of the food chain and then the disease would eventually disappear.

    “‘If it turns out this cow is less than 14 years old, it proves my biggest concern: Cattle feed is still not protected from mad cow,’ he said.

    "’We still allow risky practices. You can't feed cows to cows directly. But you can feed cows to pigs and chickens and then feed them to cows.’”

    However, the Times reports that “officials believe it is a rare spontaneous case and not linked to contaminated food.”

    There has not been a broad international reaction to the discovery, but one South Korean retailer - LotteMart - immediately pulled all US beef from its shelves.

    Reuters writes that “the cow, which was from California, was found at a rendering plant, the USDA said, adding it was still tracing the exact life of the infected animal. Rendering plants process diseased or sick animals into non-edible products that are used in such things as soap, glue, solvents, shoe polish, and anti-freeze.”
    KC's View:
    If indeed there have only been four cases of mad cow disease in the US, then they’re right - the screening system is working.

    Though I have to admit that the fact that only 40,000 cows a year are tested by USDA doesn’t inspire an enormous amount of confidence in my mind.

    I also have to wonder how this revelation, coming on the heels of the recent pink slime controversy, affects how people feel about eating meat .. especially at a time when the cost of beef seems to be skyrocketing. Ultimately, it is all about trust.

    And trust, to use the oft-quoted Latin proverb, like the soul, never returns once it goes.

    Published on: April 25, 2012

    by Kevin Coupe

    The Seattle Times has an interesting story about an annual celebration that took place around the country last Saturday that simultaneously tried to bolster a dying retail segment while acknowledging how the world has changed.

    “The occasion is Record Store Day, a five-year-old promotion that has exploded into the single biggest sales day of the year for music retailers. In Seattle, it's become a fizzy festival, with bargains, deluxe limited-edition releases and live performances.

    “Yet for all the hoopla, Record Store Day may also be the death rattle of a retail industry. Since 2007, CDs sales have plummeted 18 to 20 percent per year (except for 2011, when the bleeding was stanched at a 5.6 percent). Last year, for the first time, digital sales surpassed physical discs, taking just over 50 percent of the market. The great record store chains of yore — Tower, Peaches, Discount, Virgin — are gone.

    “And while 900 U.S. independent stores are participating in this year's Record Store Day - four major ones in Seattle that still deal in new releases - business has turned more and more to used product, accessories, books and clothing. Perhaps the most vivid writing on the wall is that tablets - and the next generation of laptops - do not have CD drives ... Though rumors of the CD's demise are premature, with the rise of streaming and ‘the cloud’ - accessing music online from a digital pool - the format is probably doomed.”

    If you don’t believe this, think about it. What was the last CD you bought, and when?

    And then ask your kids - when was the last time one of your kids bought a CD?

    Nothing is as it was. Get used to it.
    KC's View:

    Published on: April 25, 2012

    • The Wall Street Journal reports that has created a new B2B website that opens “a battlefront against traditional retailers like Home Depot and Staples.”

    The online pioneer has “launched, a site that sells such products as radiation detectors for environmental testing, industrial cutting tools, janitorial and sanitation materials and office supplies ... AmazonSupply, which the company calls a beta site, is the retailer's latest push to grab more of the online-retail market it already dominates.”
    KC's View:

    Published on: April 25, 2012

    The Boston Globe reports that Samuel Adams beer owner Boston Beer Co. plans to expand nationwide with an initiative designed to help local small businesses.

    According to the story, the company began its “Samuel Adams Brewing the American Dream” in 2008, working with micro-lender Accion “to help small businesses with mentoring support as well as with loans that generally run in the range of $1,000 to $20,000.

    “Boston Beer founder Jim Koch has said that his own experience persuaded him to launch the program. When his company started out in the mid 1980s, banks turned down Koch’s loan requests on the grounds that a chap armed only with a family beer recipe was not a safe bet. One goal of the American Dream program is to help small businesses that traditional banks deem as too risky.”

    The story notes that “the program focuses on small businesses with a connection to the food, beverage, and hospitality industries. Since the launch, there have been 74 New England beneficiaries of the program, Boston Beer said. Last year, the program was expanded outside of New England to include New York, Ohio, Pennsylvania, and Greater Chicago.

    “In its Tuesday announcement, Boston Beer said the American Dream program will now be eligible to small businesses across the country, and the goal is to target at least $1 million in new loans.”
    KC's View:
    I love stories like this, and companies like this.

    And as a bonus, they make great beer.

    Published on: April 25, 2012

    Internet Retailer reports on the continuing smartphone revolution:

    “Of 49.6 billion visits to the top 500 e-retailers in 2014, 26.4 billion, or 53.2%, will stem from smartphones, predicts mobile commerce technology vendor Branding Brand in a new study.

    “There will be 41.0 billion visits to the top 500 e-commerce sites this year, 10.1 billion, or 24.6%, coming from smartphones, the study predicts.”

    The increase in mobile traffic has a dramatic in-store implication, too, says Chris Mason, co-founder and CEO of Branding Brand. “Mobile is the only online shopping touch-point you can bring with you offline. The question is, how do you better serve customers with mobile devices in stores?” he says. “You need to be there studying to see how this affects your brand. In today’s highly mobile environment, you have to follow your consumers as they change right in front of you.”
    KC's View:

    Published on: April 25, 2012

    • According to the National Retail Federation (NRF) Mother’s Day consumer spending survey conducted by BIGinsight, the average person celebrating the holiday is expected to spend $152.52 on gifts, up from $140.73 last year. Total spending is expected to reach $18.6 billion.

    According to the survey, “Consumers will spoil mom with special meals and/or outings, clothing, electronics, flowers and more. Two-thirds (66.4%) will buy flowers, spending a total of $2.2 billion, and nearly one-third (32.8%) will treat mom to a new blouse or sweater, spending $1.6 billion on clothing and accessories. Those buying electronics (12.7%) will shell out a total of $1.6 billion on tablets, digital cameras and more, and over half (54.3%) of all celebrants will treat mom to a nice dinner or brunch, spending $3.4 billion.  Additionally, consumers will shell out $1.8 billion on gift cards and $1.3 billion on personal services such as a trip to a day spa.”

    • Casey’s General Stores announced that it will break ground on its first site in Tennessee in June. The store, to be built in Dyersburg, will be the 13th state in which the company operates with more than 1,600 units.
    KC's View:

    Published on: April 25, 2012

    • John Dumais, President & CEO of the New Hampshire Grocers Association (NHGA) since 1974, has been presented with the National Grocers Association (N.G.A.) Association Leadership Award for his dedication and continued service as a true community focused state association executive. 

    • The National Retail Federation (NRF) announced that Bill Thorne has been named the association’s Senior Vice President of Communications and Public Affairs. He will join NRF on June 1 to oversee the organization’s industry and public affairs communications strategy.

    Thorne currently serves as Senior Director, Community Affairs at Walmart.  
    KC's View:

    Published on: April 25, 2012

    ...will return next week.
    KC's View:

    Published on: April 25, 2012

    Continued reaction to the Walmart bribery scandal.

    One MNB user wrote:

    Great point regarding the implications for other companies. Let's face it, Mexico doesn't exactly have a reputation for clean sheets where various levels of corruption are concerned. This can't be any different. It's all a matter of how far American entities ride that wave.

    From another MNB user:

    What's more troubling than the reports of wrongdoing and malfeasance at Walmart, Lehman Brothers--and probably 75% of other corporations--is that we are all tasked with the chore of pretending that American capitalism is some sort of ideal that everyone in the world should aspire to. In addition to having worked with many Fortune 100 firms, I've taught college kids in business school and I can guarantee you that the vast majority of folks out there know that the idea of the free market reigning supreme is simply that--an imagined ideal perpetuated by our culture that we are supposed to pretend to worship. Free markets work well until they don't, at which time it's necessary to cheat, bribe, conspire, fix prices or figure out some other creative means of destroying the competition.

    Anyone who has taken an introductory course in economics should know that the only way a human could ever beat a monkey or a rooster in equities markets would be via insider information. Yet we continue to regard stock-brokers and investment bankers as honorable professions. But this is all okay because we have little choice in these matters. That's just the way things are. It's when these big incidents happen that we get depressed and rant because we are loudly reminded of the fact that we are forced to live a regular life of delusion. And if you don't think Millennials understand –and believe—this, you don't know Millennials.

    From another MNB user:

    Couldn't help thinking about the irony of your earlier comments in MNB about Wal-Mart giving gift cards to the Democratic National Committee and the NYT's article where Wal-Mart de Mexico also used gift cards as a form of their alleged bribes.

    If I were at the DNC, I would turn down that particular donation. Immediately.

    From still another reader:

    You pay roughly five bribes to get into the airport in Kabul. We bribe people we are supposedly helping. Since we have such high regard for our soldiers perhaps we should have asked some tough questions once we had to pay the first bribe.

    Do you honestly believe we are not paying bribes in China? Thats why we have business "partners".

    I gather you are not aware of Congressional business "breakfasts" at $15k a pop.

    And from another MNB user:

    Since I live in Mexico about 6 mo. out of the year and have built two home down there I know it is not the US and one cannot use our supposed values there as they do not apply .... Mexico is like the wild west and a lot of the world really is. Everyone cheats and steals as much as they can until they get caught. We had to pay off politicians to get permits to build a house, everyone has to, it is all a matter of how much you can negotiate or how good your connections are. Politicians spend their last two years in office taking as many bribes as possible to pad their retirement since they cannot get reelected. There is evidence of roads being blocked and sold the the construction of a big hotel that is now bankrupt and a stark skeleton, and a bankrupt condo project on the ocean, or 4, 5, and 6 story buildings when the previous limit was 3. Funny how all these things happen and get accomplished, like Carlos Slim owning the telephone company and building a HUGE RESORT and Marina.

    Since when did we become such saints here in the US? How many instances can we name?

    The whole world is full of crooks with their hands out for money and if you want to do business there you have to play the game.

    I have to be honest here.

    These emails - and others I have received - represent a level of cynicism about how the system is supposed to work that I find alarming. It seems that perhaps they are willing to accept value systems that are selective, and ethics that are conditional and convenient.

    Does rule of law mean nothing? Do the idealized virtues of capitalism mean nothing? Have we gotten to the point where graft and corruption are simply accepted as a cost of doing business?

    If so, how exactly do we speak of “American exceptionalism”? How do we trumpet American values?

    And if this is how the adults feel and think, what the hell are we teaching our children?

    We had a piece yesterday reflecting on the tough economic times and rough job prospects being faced by the class of 2012.

    To which MNB user Renee D. Thorne responded:

    I have a 22 year old as well.  Luckily she worked a paid internship last summer – and was hired by the same company this year.  When she graduates in May – she’ll have a full time job with a national employer and excellent benefits.  Pay is decent/fair at $35K for the Midwest.   I think all the media doom and gloom doesn’t help these kids.   My daughter isn’t an A student – didn’t attend a large university (rinky dink school in the Midwest no one has heard of) mom and dad are not linked to the “right people” . But, what she does have is a very positive attitude, she’s neat and clean w/ great people skills.   I  think employers are just as tired of employee attitudes of doom and gloom or “woe is me” …and looking and waiting for people that are baggage free.  My number one rule for all my girls has been “be still mentally …stay outta’ the muck. Be happy and the rest will fall into place.”  “What you focus on expands”…  Amazing how something so simple can become so complex.

    Another MNB user wrote:

    Given the government obstacles to hiring in the private sector (regulations, Obamacare, taxes , etc) the situation probably won't change anytime soon in the US. There also seems to be a sense of entitlement to unemployment payments. I've heard several instances where people have been offered jobs and they asked to defer the start date to " use up" their 99 weeks of unemployment insurance. 

    One answer is to work in Asia. My 23 year old niece teaches English in Viet Nam . She didn't know Vietnamese when she started but that didn't matter. Her job is to teach " American style" English . Apparently the Vietnamese government has mandated that all workers know English or they won't have jobs. That has created a lot of demand for English teachers.

    From another reader:

    Having graduated in 2004 with a business degree, I now work in information technology,   doing work I never imaged I would do while in college. The problem with today's graduates is the fact that they get their mind so focused on their major they don't fight for other job opportunities. Being a young work requires flexibility, willingness to learn, and desire to work in areas outside of your comfort zone. A word of advice for 85% of graduates who think they will get a job within their major.....the world only needs so many people with BA's in Ancient English Literature or BS's in Film Studies.....if you are in an impractical "career" major, get used to the following phrase..... "Would you like fries with that"?

    MNB user Connie Montgomery wrote:

    Interesting subject.

    I am a boomer, as I've mentioned before.  I am a stubborn one, too.

    At age 48, the company I worked for suddenly thought I needed to get a degree, or some college in finance, although at that age, I had been doing financial work since my late 20's. When I went to the classes, the professor did not understand why I was there; I knew it.  He instead left me in charge of the class to assist other students when he had to leave, and I did not go to classes at all for the last 3 weeks, until finals; which I aced. No, I do not have a degree, but 40+ years of experience is the best education I believe I could have received. I've started at the bottom 3 times only to move up as I proved to the employer what I knew; the last time in 1997 when I came to my current job. I now have a good job that I intend to retire from in 6-7 years, provided the economy does not get any worse than it is now and my job does not get eliminated.

    The problem I see with today's graduates:  just because they have a degree, they expect to start at the top.  That "piece of paper" does not buy them a job or even guarantee a job.  They have to prove themselves to earn it.  Something I believe our Educators do not instill into their students.  They do get paid at a higher rate, but usually not at the rates they are expecting.

    I believe everyone should have a good education.  "We" were fortunate to grow up in an age in which "public schools" actually taught something.  Schools now only work to teach students towards the "Taks" or whatever local areas are using for "a test they believe shows a student's knowledge".  What happened to the good old IQ tests we took in the 60's & 70's?  Those were tough.  Common sense and real life situations need to be taught not only in 1-12 but also in college.  What I saw and experienced in college, was not a substitute for "real life experience".  I have nothing against those who have degrees; but I do when they have never worked a day in their life and believe they now know more than those who have done the job for years and have experience. The younger generation of workers I have met, have little or no respect for their elders in the work environment.

    When you work towards a goal; it will come as it is earned.  

    Do not expect it to be given to you because you had the opportunity and the means to get a "piece of paper" that says you should know it.  It must be proved.

    One note. The vast majority of young people I have met in the workforce, or ending their college careers and looking forward, are hard-working, respectful, ambitious, tech-savvy ... and a little anxious about their futures. But they are by and large good people with great ideas.
    KC's View: