retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 26, 2012

    This commentary is available as text or video. Enjoy both, or either.

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

    The question of the day: Who or what do you trust?

    The answer, increasingly, seems to be very few and very little.

    People don’t seem to have much faith in government anymore. There is not much confidence in the White House and a lot less in Congress. In part this is the arguing that seems to take place back and forth, inhibiting or downright preventing compromise and productivity. in part, a lot of people cannot get out of their minds images of people on rooftops being abandoned by the government they thought would save them during Hurricane Katrina. I actually think lack of faith in government goes back to the Nixon White House and the Watergate scandal. We thought we could trust them, but we couldn’t.

    People have less faith in organized religion than ever. Some of this has to do with secularization of society, but I think a lot more blame can be laid at the feet of the pastors who lined their own pockets at the expense of their flocks, and the clergymen who exploited young people for their own carnal pleasures. We thought we could trust them, but we couldn’t.

    Big business? Give me break. Enron taught us that major corporations could not be trusted, and Bernie Madoff cemented the lesson. The financial services industry has done nothing to convince anyone that they are to be trusted, as they created exploitive mechanisms that seemed designed to help their own bottom lines with no thought of what it would do to their customers. It won;t surprise anyone if things get worse on this front; I’m reminded of the lines from “The Merchant of Venice.” The villainy you teach me I shall execute, and it shall go hard, but I will better the instruction.

    Just this week, we found out that Walmart - which likes to paint itself in God-bless-America red, white and blue, and where certain executives can be holier than thou - may be guilty of systemic bribery as it worked to grow its Mexican business, and guilty of covering it up when internal investigations revealed the extent of the problem. We thought we could trust them, but we couldn’t.

    Unions? Well, it often looks like they are out of touch with the current economic climate, with leadership that is more interested in wielding power than helping businesses and membership find profitable and sustainable models that will serve both sides.

    The Secret Service? Need I say more?

    The food business? You don’t think that issues like pink slime or contaminated peanuts or other food safety problems have hurt its image?

    The media? Hate to say it, because I’m a member, but mass media outlets - from networks to newspapers to magazines - often in lowest common denominator one-upmanship, if such a thing is possible. We thought we could trust them, but we couldn’t.

    Sports? Well, the biggest stars sometimes are found to be using steroids to enhance their play. Entertainment? Do we have to detail the cases of alcohol and drug abuse that derail the careers of talented people, or the ways in which the industry seems to embrace the notion of spending the most money on the least innovative ideas?

    We thought we could trust them, but we couldn’t.

    So, what’s got me in this dour mood?

    There is a fascinating and incredibly sobering piece in the current National Journal entitled “In Nothing We Trust,” that details in both micro and macro terms the extent of the problem.

    You can read the complete piece here.

    “With few notable exceptions,” the story suggests, “the nation’s onetime social pillars are ill-equipped for the 21st century. Most critically, they are failing to adapt quickly enough for a population buffeted by wrenching economic, technological, and demographic change.”

    I think that’s true.

    I think the people who talk about so-called “American exceptionalism” have no idea what they’re talking about.

    Trust is earned, as is the notion that we as a people, as a country and a set of institutions are exceptional.

    This includes the retail business.

    Retailers, because they represent the idealized notion and, sometimes, the ghost of Main Street USA, need to may close attention to the concept of trust.

    I suspect it is no longer there to be lost. Too many things have happened at all levels of the culture to assure that, and I have a suspicion that the next generation of consumers and citizens may be the least trusting in our history.

    Why should they trust anyone? Or anything?

    That said, trust can be gained. Through honest, transparent dealings with our customers, our employees and our business partners.

    But I fear it is an uphill battle these days. Much damage has been done, and it seems like a pretty good bet that headlines in coming days will only make things worse.

    But it can be done. There are no shortcuts to be taken, no magic pills to revive people’s sense of trust. It has to be real. As George Washington Carver once said, “Veneer isn’t worth anything.”

    We need people to say the following:

    “We wanted to trust them, and we could.”

    That’ll be the beginning.

    That’s what is on my mind this Thursday morning, and as always, I want to hear what is on your mind.

    FYI...You can see all of the FaceTime video commentaries done by Kevin Coupe on the MorningNewsBeat Channel on YouTube, by clicking here.

    KC's View:

    Published on: April 26, 2012

    by Kevin Coupe

    My dad used to say that if you talk to yourself, it means you either are crazy or have money in the bank.

    Which may be true. But according to a new study from the Universities of Wisconsin and Pennsylvania, as reported by Business Insider, talking to yourself also may be a way to achieve more and stay on task.

    Speaking the name of the target out loud apparently helped a study group get things done faster. Researchers, the story says, “theorize that it works because hearing a familiar word stimulates your brain and helps to process the information faster.

    “So next time you lose your wallet, keys or phone, repeating these words to yourself could speed up when you find them.”

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

    Published on: April 26, 2012

    There are continuing developments 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.

    Among them:

    • The Washington Post reports that the two Congressmen conducting an inquiry into the bribery scandal - Rep. Henry Waxman (D-California) and Rep. Elijah Cummings (D-Maryland) - have written letters to the US Chamber of Commerce and the Retail Industry Leaders Association (RILA) requesting information about their ongoing lobbying efforts aimed at watering down the Foreign Corrupt Practices Act (FCPA).

    “In their letters,” the story says, “the lawmakers expressed concern that there might be a conflict of interest if Wal-Mart was backing a campaign to soften enforcement of the statute at the same time corporate executives were examining their own corruption allegations in Mexico.”

    The Post reported earlier this week that “a top Wal-Mart official sat on the board of the Chamber’s Institute for Legal Reform as that organization sought to change the FCPA,” and that “a senior Wal-Mart executive also serves as a director at the Retail Industry Leaders Association.”

    Walmart denies any role in those lobbying efforts.

    “Wal-Mart has never lobbied on FCPA,” David Tovar, vice president for corporate communications at Walmart, tells the Post. “Simply because Wal-Mart is a member of an organization does not mean we agree with every position they take.”

    • The New York Times reports that Walmart’s timing could not be worse because the federal government is ramping up enforcement of the FCPA.

    “Criminal enforcement under the act has soared,” the Times writes, “from just two enforcement actions in 2004 to 48 in 2010. The dollar amount of fines imposed by the Justice Department and the Securities and Exchange Commission has increased even more, including a record-setting $800 million paid by Siemens in 2008. There are currently at least 100 open investigations, specialists estimate.”

    Reuters reports that “Mexican President Felipe Calderon said on Wednesday that allegations the Mexican unit of Wal-Mart Stores Inc (WMT) sought to bribe officials in Mexico to grow its business there had made him ‘very indignant’.” He went on to say, “The company has certainly generated many jobs in Mexico and done good things, but what's not right is doing business on the basis of bribes.”

    • There is an analysis piece on Business-Standard.com suggesting that making the legal case against Walmart may be tougher than some think. “U.S. law prohibits companies from making under-the-table payoffs to get new contracts from foreign officials,” the piece says. “But the mega-retailer's Mexican unit allegedly greased only low-level palms to grow an existing business. That's arguably not covered, and the feds should beware bending an already controversial law to punish what may technically just be unethical.”

    The analysis suggests, however, that even if Walmart is able to make this argument in court, “ It could face prosecution under Mexican law or provisions of the FCPA or the Sarbanes-Oxley law that require accurate accounting for payments.”

    • The Chicago Tribune reports this morning that Walmart’s board of directors and several executives are being sued by one of the company’s shareholders.

    According to the story, “The ‘illegal payments have and will continue to irreparably damage Wal-Mart's corporate image and goodwill and jeopardize its ability to do business in foreign countries,’ said the lawsuit, which was brought by Henrietta Klein.

    “The complaint was filed as a derivative lawsuit, which seeks to recover money on behalf of the company rather than shareholders. “
    KC's View:
    I’m sorry, but the argument that Walmart had no influence in the lobbying efforts by the Chamber of Commerce and RILA does not pass the credibility test. Walmart is the biggest and most influential member of both organizations - it is impossible to imagine that its opinions were not solicited and factored into any decisions made either of them.

    I’d also like a list of positions taken by either RILA or the Chamber on which Walmart had a significant disagreement. Just out of curiosity.

    And I’ll bet that President Calderon is indignant ... at least in part because shining a spotlight on these kinds of practices could have the impact of slowing down investment in his country by outside corporations.

    I’m going to steal a line from an email I got yesterday from an MNB user ... noting that such protestations are reminiscent of the scene in Casablanca when Captain Renault (Claude Rains) says that he’s “shocked, shocked to find gambling” going on at Rick’s .... just as he receives his gambling 'winnings'.”

    (Gosh, I love it when readers send in life and business lessons from the movies.)

    As for lawsuits against Walmart and its executives and board ... it is a pretty safe bet that this will be just the first of many. And that does not even include the possible criminal prosecutions.

    Published on: April 26, 2012

    The Wall Street Journal reports this morning that the US Department of Agriculture (USDA) “is searching for possible offspring of a California dairy cow that contracted mad-cow disease, saying these animals also could have been infected with the brain-wasting ailment.”

    USDA said earlier this week 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.”

    USDA Chief Veterinarian John Clifford said that a key to the investigation is finding out where the cow was born and then removing animals from the same herd for testing. Officials are trying to determine whether the BSE was transmitted to the cow by feed, or whether it was what is called a “rare spontaneous case.”

    The Journal goes on to note that “some consumer advocates argue that the agency's testing is inadequate, pointing out that the number of cattle tested every year is now far below the number at the height of mad-cow concerns last decade. The USDA tests about 40,000 cattle a year, out of nearly 34 million cattle slaughtered in the U.S. annually.”

    The Washington Post writes this morning that the new BSE case “reignited a long-running debate about what has been described as a weak link in the U.S. beef supply: the lack of a mandatory system to trace the path a cow takes from farm to fork ... The United States is one of the few beef-producing countries that does not have a mandatory animal identification system that enables it to trace a cow from birth through the slaughterhouse and beyond, though a proposal has been in the works for years.”

    In other related new, the Associated Press reports that “Indonesia became the first country to suspend imports of U.S. beef Thursday following the discovery this week of an American dairy cow infected with mad cow disease.”
    KC's View:
    I believe that it is totally unacceptable that we do not as a nation have the kind of traceability system in place that would allow us to test far more cattle and have a much faster response to cases like there.

    But I suspect that one won’t be coming along anytime soon. This does not strike me as the kind of thing that a lot of people in DC will want to fund.

    Published on: April 26, 2012

    The Organic Trade Association (OTA) is out with a new economic study suggesting that “producing US foods organically creates thousands more jobs than if that food were produced using conventional agricultural methods.” The report, “which shows the organic food industry generated more than five hundred thousand American jobs in 2010, builds on data released by OTA earlier in the week revealing the overall U.S. organic market in 2011 surpassed $31 billion for the first time.”

    The report goes on to say that “for every $1 billion in retail sales of organic products, 28,000 more jobs were created throughout the economy. In addition, the use of organically produced ingredients resulted in the creation of 21 percent more jobs than would have been generated if the food industry had relied solely on conventional farms for its ingredients. The study compared labor and input use on a wide range of conventional and organic farms, and attributed the job-creation differences largely to greater labor intensity on organic farms, smaller farm size, the need for an organic certification industry, and reliance on smaller retail outlets.”
    KC's View:

    Published on: April 26, 2012

    USA Today this morning reports on a new study suggesting that people who are “foodies” - or, put more pejoratively, food snobs - may actually have a different palate than most people.

    Such people, the story says, “favor three distinct flavor characteristics above all others: bitter, such as radicchio or kale (62%); umami (a Japanese word meaning pleasant savory taste), such as soy sauce and miso soup (61%); and sour, such as plain yogurt and sourdough bread (59%), according to a new, national online survey of more than 500 consumers by the research firm Culinary Visions Panel.

    “Foodie flavor preferences are in stark contrast to that of the general population, whose favorite flavor characteristics are far more familiar: sweet (81%) and salty (67%).”

    According to the story, “The survey also revealed big differences in flavor preferences among the age groups. Gen X, Baby Boomers and seniors preferred salty and sweet more than Millennials. Millennials ranked the more adventurous flavor profiles such as bitter, sour and umami higher than other age groups.

    “But mainstream consumers were mostly thumbs down on foodie favorites. Only 19% liked umami, 18% liked bitter and 16% preferred sour.”
    KC's View:

    Published on: April 26, 2012

    • Hy-Vee announced that it “is celebrating Earth Day this week with the launch of two initiatives that underscore its commitment to sustainability as a part of a healthy lifestyle.

    “Hy-Vee 360, a new website devoted to sustainability and healthy living, provides customers and the public with a behind-the-scenes look at Hy-Vee's efforts to become a greener company. The latest of these efforts is Hy-Vee's partnership with FishWise, a non-profit organization that helps retailers develop and implement sustainable seafood policies.”

    • The Los Angeles Times reports that Burger King pledged yesterday that it will switch to only cage-free eggs and pork.

    According to the story, the fast feeder “said it would phase out cages for its chickens and gestation crates for breeding pigs by 2017 – making its pledge among the most sweeping of many such vows made recently by competitors such as McDonald’s and Wendy’s.
    Changes in animal welfare practices have swept the food service and supply industries in recent months, as undercover investigations by animal rights activists and concessions from major companies created a domino effect.”

    CNN reports that Costco has begun selling mortgages, “rolling out a full-service mortgage lending program on its website in partnership with First Choice Bank, a New Jersey-based community bank, and 10 other lenders.

    “Costco's partners have issued more than 10,000 mortgages to members under the program. But Lauren Kutschka, Costco's manager of financial services, expects that number to swell as the warehouse retailer markets the service more aggressively to millions of members.”
    KC's View:

    Published on: April 26, 2012

    MNB was informed late last night of the passing of E. Dean Werries, the former CEO of Fleming Companies, who retired from the post in 1993, at which point he became chairman of the board until 1994. Werries subsequently served as Secretary of Commerce for the state of Oklahoma, and more recently had served as director emeritus for Sonic Drive-In.

    Werries, who also served as chairman of the Food Marketing Institute (FMI) and the National Grocers Association (NGA), was 82 at the time of his death.
    KC's View:

    Published on: April 26, 2012

    Yesterday, MNB took note of a Seattle Times 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.

    However, in writing about “Record Store Day,” I used the wrong tense - the piece said that it would be celebrated this coming Saturday, when it fact it happened last Saturday.

    I fixed it in short order, but some of you may have seen the original version. I goofed. Sorry about that.
    KC's View:

    Published on: April 26, 2012

    No emails this morning, I’m afraid. Yesterday I spent more than two hours in the dentist chair, which would not be so bad except for the fact that I am deathly afraid of the dentist. I happen to have a really good one, but the phobia persists ... I require massive amounts of medication and then an enormous dose of nitrous oxide just to be able to sit in the chair. This is going to be an ongoing problem, since I have two more such sessions scheduled for the next month or so. (I trace this phobia back to earlier treatments by one dentist named Goldman and another named Stein, both of whom, I’m convinced, are somehow related to a fellow named Szell.) So I was not in great shape to be reading emails yesterday afternoon...

    That said, I did want to address a question raised by an MNB user earlier this week. It concerned the emails run in this section and why certain readers are identified and others are not - this person questioned whether the practice was somehow exploitive. (I’m not sure how, but let me go on...)

    I’ve explained my policy a number of times over the past decade, but sometimes it is worth doing so again, especially in view of the fact that MNB gets between 50 and 75 new subscribers every week (and sometimes many more than that).

    I have always had two basic reasons for not using a name.  One is that the person asks me not to.  The other is that when I read the letter, I worry that if it runs with their name, it might somehow harm their career. That’s how I make the decision. Very simple.

    Some people write about their employers and/or customers without asking for anonymity, but I've always thought it is part of my job to protect people from themselves sometimes.  It doesn't do me - or my audience - any good if their participation on MNB gets them fired.

    In all my years of doing this, I have only twice used names that people asked me not to use … something that I feel terrible about, and a mistake I am vigilant about not making again. I get hundreds of emails each day, and so it is not always an easy task.

    My overall goal is simple. MNB is designed to be a forum where people can share their ideas, opinions and feelings on a wide variety of subjects - industry and business issues for the most part, but also movies, religion, politics, even sex from time to time. I want people to feel like they can trust that MNB will be used as a responsible forum for civil, illuminating, provocative and even entertaining discussion. That’s why I read every email, moderate every discussion, and make editorial choices about which emails will appear based on both content and whether they use the reader’s time well.

    I hope you’ll trust me to keep making these decisions.
    KC's View: