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 27, 2012

    by Kevin Coupe

    Yet another sign that the way the world works is changing, as Yahoo! has announced new online-only programming that features mainstream media personalities such as Katie Couric and Jeff Goldblum (each of whom is doing a new weekly talk show), and Tom Hanks, who will star in a new science fiction series that he created.

    At the same time, AOL also is launching new original video programming, creating 14 different online channels to offer shows about food, travel and other lifestyle issues.

    And Google, according to a story in the Wall Street Journal, also “has committed hundreds of millions of dollars to develop original content for its online channels.”

    What this all adds up to is new competition to mainstream media outlets, which already have been suffering because there are so many alternatives to traditional television viewing. These new options, it needs to be pointed out, all can be seen on the viewer’s schedule and at the viewer’s convenience, not when the networks decide to program them.

    Of course, the networks have already pretty much conceded that old programming methods are obsolete. That’s why you can see so many programs “on demand,” depending on your cable system, can watch them on Hulu.com, or can get them via iTunes or Amazon or Netflix.

    Current consumers - whether of television programming or food or pretty much anything else - are getting used to the notion that they should be able to get what they want, when they want it, how they want it, where they want it, at a price they they deem appropriate. This is a reality that all marketers need to factor into their strategies.

    It is yet another Eye-Opening example of how the balance of consumer power is shifting.
    KC's View:

    Published on: April 27, 2012

    There is more news 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.

    Reuters reports that Mexico’s federal comptroller has opened a probe into Walmart’s business practices there, “checking the federal paperwork and permits that Wal-Mart de Mexico, known as Walmex, obtained to open and operate its stores in Mexico ... The comptroller's office said it would ask U.S. authorities for information on the case in order to carry out its investigation and that the federal government would take action if wrongdoing by public officials was detected.”

    As the story notes, “Wal-Mart already faces a criminal probe by the U.S. Department of Justice over potential violations of the Foreign Corrupt Practices Act (FCPA), a U.S. law that forbids bribing foreign officials.”

    Forbes reports that the Mexican government yesterday “approved the nation’s first anti-corruption law. The move appeared orchestrated to coincide with the Mexico comptroller’s office announcement 24 hours earlier that it will investigate the widening bribery case, caving into international and local anti-corruption officials and politician’s pressure that it must get to the bottom of it.”

    The consensus seems to be that the Mexican government has to confront the Walmart case head-on, because “failing to do so will scare foreign investors away from  the country, which is already suffering from heavy drug-related crime.”

    Bloomberg Business Week has a piece suggesting that Walmart’s Mexico problems could put its broader international plans “in peril,” which could great other issues for the retailer, which has been using global growth as a way to compensate for stagnant sales in the US.

    Indeed, it isn’t Mexico creating global headaches for Walmart. It also has had issues in China, where the government shut down 13 stores for two weeks because they mislabeled pork, and there have been other criticisms about selling out-of-date merchandise. In addition, the Indian government recent bowed to populist pressure and reversed a ruling that would have allowed Walmart to open stores there.

    Furthermore, Walmart had to pull out of Germany in 2006 after it was unable to get any traction there, and Japan has never been the kind of runaway success that the company hoped it would be.

    Bloomberg Business Week also reports that dealing with the bribery allegations could end up costing Walmart hundreds of millions of dollars, especially if the investigation spreads to other countries where Walmart has expanded or is trying to expand.

    • Here’s one from the Department of Irony...

    Salon reports that Walmart senior executive Eduardo Castro-Wright, who has been implicated in the Mexico bribery scandal, had an interesting role when he served on the board of Met Life (from which he stepped down this week amid all the controversy.).

    Castro-Wright last year was paid more than a quarter-million dollars as “a member of MetLife’s Governance and Corporate Responsibility Committee,” Salon writes, which had as its responsibility overseeing “the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards.”

    • And another one from the Department of Irony file... One MNB user sent me a note yesterday pointing out that down in Arkansas, as part of the ‘Doing Business in Bentonville” speaker series, former Walmart senior vice chairman/COO Don Soderquist will be speaking on May 16.

    Soderquist is the founding executive of The Soderquist Center for Leadership and Ethics,and one of the promotional lines about his speech says:

    Don firmly believes that business ethics are not a luxury, but an essential element in creating high-performance organizations; he also knows that the responsibility for creating an ethical organization belongs to its senior leaders.
    KC's View:
    Maybe it is time to bring Soderquist out of retirement to restore a little luster and ethical credibility to a tarnished brand.

    This drumbeat of news is going to continue for the foreseeable future, and Walmart is simply going to have to deal with it. The question is when the drumbeat gets so loud - and the costs to its reputation and bank account so severe - that the only way to stop it is to start making wholesale changes at the top of the executive ladder.

    Published on: April 27, 2012

    There is news this morning about how a case of bovine spongiform encephalopathy (BSE), better known as mad cow disease, was 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.

    Reuters reports that “the California dairy cow found to have mad cow disease had been euthanized after it became lame and started lying down, federal officials revealed in their latest update on the discovery. The U.S. Department of Agriculture also said Thursday that the animal was 10 years and seven months old.”

    • The Wall Street Journal reports this morning that “US officials offered new reassurances that the nation's beef-production system was safe after Indonesia on Thursday suspended imports of American beef following the first reported case of mad-cow disease in the U.S. in six years.”

    The story notes that “any move to restrict imports is sensitive to the U.S., which saw beef exports plunge after the first known case of mad-cow disease in the country was discovered in 2003, prompting bans by Japan and other countries that American officials and industry representatives spent years working to roll back.

    “U.S. Trade Representative Ron Kirk, speaking Thursday to reporters in Singapore, said ‘there is no reason for any consumer to be concerned about the consumption of U.S. beef,’ and echoed statements by the Agriculture Department that there is no sign that any meat from the affected animal has entered the meat supply.”

    So far, the reaction has not been overwhelming. The story says that “Indonesia accounts for just 1.4% of U.S. beef exports, and the broader reaction has been muted. The top four U.S. beef buyers—Canada, Mexico, Japan and South Korea—haven't moved to curb imports, thanks in part to a rapid response by the federal government and beef-industry groups to assure foreign governments that U.S. beef is safe.”
    KC's View:
    I just hope that when I go lame and start lying down that they don’t decide to euthanize me...

    Published on: April 27, 2012

    The Tampa Tribune reports that “Publix Super Markets is quietly testing a new discount initiative for grocery shoppers that could thrill coupon clippers: Offering digital, paperless coupons that can be redeemed at the register the same way other chains use membership cards.

    “Publix is a long way from launching the system regionwide and may ultimately skip it altogether, but seeing such a major grocery explore the idea has the coupon industry buzzing.”

    Here’s how the system works:

    “Customers would go online to the coupon publisher SmartSource.com or Publix.com, log in with a new Publix ID or other membership code, then choose and digitally clip coupons. SmartSource then would digitally credit the customer's account. When Publix shoppers reach the checkout, they would enter a phone number in the credit card swipe terminal, and the register would automatically deduct the coupon value from their total purchase.”
    KC's View:

    Published on: April 27, 2012

    Walmart yesterday announced the launch of its “Pay with Cash” offering for online orders at Walmart.com in the United States, saying that it will “help millions who rely on cash transactions, as well as those who are wary of using credit cards online, to shop Walmart’s affordable and expanded online merchandise.”

    Here’s how it works: “Customers go to Walmart.com from any Internet-connected device to select an item and place an order. During checkout, the customer selects the ‘cash’ option and their shipping preference. Customer immediately receives an order number on the order confirmation page and an email receipt with their order number. The item is reserved in the system. The customer has 48-hours to take the printed order form to any cash register of any Walmart store or Neighborhood Market. Once cash payment is completed in the store and received, shipping then occurs via Site to Store or to their preferred address.”

    Walmart says that “the majority of transactions are paid for in cash or cash equivalent, including debit cards” at its stores, and that just 15 percent of transactions are paid in the form of credit. Furthermore, the retailer notes that “according to the FDIC, one in four U.S. households fall into the unbanked and underbanked categories where they don’t have a bank account or credit card or have limited banking options, and often rely on cash as a form of payment for purchases. However, many of them are online, with 81 percent of the unbanked and 63 percent of the underbanked having Internet access.”
    KC's View:
    No surprise that Walmart would want to move in this direction. After all, recent revelations about its mexico operations suggest that the retailer is very comfortable with the notion of cash payments. Especially, it seems, if the transaction is made under the table...

    But seriously, folks...

    I have two observations about this.

    One. By targeting people who do not use traditional banking services but want to shop online, Walmart is both targeting its sweet spot and going after a customer demographic that I’m not sure is on Amazon’s radar. So this makes sense. Now, I’m not sure if Amazon will fashion a response, or whether it will just allow Walmart to have this part of the online shopping demographic, preferring to market to people with bank accounts, debit cards and credit cards.

    Two. It strikes me that this is a perfect example of how tone-deaf the folks in Bentonville can be. Sure, this is a good news story, but if I were in the PR department there, I would have urged the company to avoid for a couple of weeks generating any headlines that put the company’s name and the word “cash” in the same sentence, in part because it allows wisenheimers like me to make jokes like I did above.

    Published on: April 27, 2012

    CNBC reports on a new study from Chitika Insights reflecting a couple of specific realities about the new iPad. One is that most users of the newest iPad “are confined to wealthier, coastal states,” which suggests that it has become a status symbol purchased only by the most affluent. The second finding is that the new iPad “already accounts for 9 percent of all iPad traffic,” which means that the most affluent also are using the technology, not just buying it for appearances’ sake.
    KC's View:
    The study concludes - and I agree - that retailers looking to appeal to these affluent consumers would be advised to develop mobile platforms that take advantage of the technology - they are savvy shoppers and technology users, and they want to patronize equally savvy retailers.

    Published on: April 27, 2012

    • In the UK, the Telegraph reports that on a new study from WorldPay saying that “Britons do 25 per cent of their spending online, while one in six buy using a smartphone.

    “WorldPay said the high amount of money spent online was due to the ability to shop while away from the computer. Over half of Britons purchased items while watching TV and 3 per cent did so in the bathroom.”
    KC's View:
    Charming. I just hope they wash their hands and sanitize their iPad screens after doing so.

    Published on: April 27, 2012

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

    • The Associated Press reports that the US Senate has “rejected a Republican attempt Tuesday to overturn new regulations designed to give unions quicker representation elections in their effort to organize more workplaces.

    “The 54-45, largely party line vote against a resolution of disapproval leaves intact National Labor Relations Board rules that are scheduled to take effect April 30 ... Unions had sought the rules changes while business groups opposed them.”

    • Weis Markets said yesterday that it has earmarked $125 million for its 2012 capital investment program, a 25 percent increase over 2011.

    David J. Hepfinger, the company’s president/CEO, said at the annual shareholders’ meeting that the budget “includes two new stores and 18 major remodels. In addition, we expect to soon complete the purchase of three Genuardi’s units near Philadelphia which we hope to reopen later this summer.”

    Advertising Age reports that “Anheuser-Busch, a major sponsor of Ultimate Fighting Championship, has reprimanded the mixed-martial arts organization for remarks made by some fighters. Advocacy groups have criticized the fighters comments as sexist and homophobic.”

    "We've communicated to the UFC our displeasure with certain remarks made by some of its fighters, and they have promised to address this. If the incidents continue, we will act," A-B said in a statement.

    Last weekend, there was nothing much going on, so Mrs. Content Guy and I decided to spend the evening at home with our 22 year old son, who planned to watch UFC bouts. I’ve done some boxing training, but never have watched mixed martial arts, so I was sort of curious.

    And all I could think to myself when it was over was that those were two hours of my life that I’m never going to get back. I mean, I enjoyed hanging out with my son, but that kind of legitimized brutality just isn’t for me.


    • The Rochester Democrat and Chronicle reports that “Wegmans Food Markets plans to renew a company-wide price freeze on 62 food items ... The new list, geared to summer shopping habits, replaces a price-freeze list that expires on Saturday. The new list takes effect Sunday and will be in place through Aug. 25.”

    • The Business Journal reports that Meijer “is looking to break into southeastern Wisconsin with a nearly 200,000-square-foot store in Franklin, bringing a well-established new player to compete in an already-crowded local grocery market.”
    KC's View:

    Published on: April 27, 2012

    • Albertson’s LLC announced that it has hired technology and social marketing expert Karl Meinhardt to lead the company’s newly created Social & Digital marketing team.

    The announcement notes that “Meinhardt’s history in the technology side of grocery retail extends back to the first launch of Albertsons.com in 1998, where he was responsible for developing a first-ever Fortune 50 grocery eCommerce solution for Albertson’s, Inc. Meinhardt went on to found several start-up companies in the foodservice and social gaming markets after leaving that role. He is a key member of the Idaho technology community and a partner of Leadership Advisors Group in Boise.”
    KC's View:

    Published on: April 27, 2012

    Not surprisingly, we continue to get lots of email about the Walmart bribery allegations...

    MNB user Mark Raddant wrote:

    This is still more evidence to support a different legal status of citizenship for corporations.  Corporations, especially when functioning in groups, can mass far greater resources to effect legislation and elections, but can not be held personally accountable; corporations cannot go to jail.  Corporate “speech” needs to be limited to reflect their degree of accountability; since they cannot go to jail—which is for most citizens more severe than a monetary judgement—they should not have the same unlimited freedoms of a citizen.

    Agreed.

    From another reader:

    Walmart never should have bribed lower level government officials. That's morally and ethically wrong.  Instead, Walmart should have spent that money making campaign contributions to to top level Mexican government officials in order to obtain rapid approvals for local actions.  Political contributions clearly aren't covered under the FCPA and in this way, the US (at Secretary of State Clinton suggests) can model the behavior that demonstrates a race to the top instead of a race to the bottom.

    If you want to be accurate, I’m not sure there is an enormous difference between political contributions and bribery, at least not the way the system works in the US.

    Another MNB user wrote:

    Sure does make one wonder why Wal-Mart’s fiercest competitors, including Costco and H-E-Butt have experienced far less store count growth in Mexico over the last few years. Each company has less than 40 locations in Mexico. Wal-Mart has more than 2000.

    Still another reader chimed in:

    I’m just returning from South Africa, where the topic of “Wal-Mart activities in Mexico” is being watched pretty closely. There is increasing concern that some of Wal-Mart’s tactics will be used there, particularly as Shoprite, Pick n Pay, Spar and Massmart compete for store sites. For any number of reasons, I doubt this will happen – but there is no doubt that Wal-Mart will have more scrutiny than before since they have been viewed as honorable in the way they apply the gratuity policy and other (COBC) Code of Business Conduct principles.

    As one who’s been involved on many levels to “sell more” with / through Wal-Mart since 1987, I can’t help but wonder how many Wal-Mart associates – and vendors – have grave concerns about the uneven enforcement of COBC & gratuity policy violations. One has to wonder if some lawsuits against Wal-Mart won’t be brought by former employees (who were terminated because of violating this supposed global policy).

    This sage confirms an old truism: “What gets measured, gets done”.


    From another reader:

    We’re exposed to it daily with stories of insider trading, corruption of elected officials and other more sinister activities inside US business.

    In my opinion that is why our US Government needs to play cop and regulate business and commerce inside our borders and try to influence business practices with our trading partners.

    Each citizen in our country is entitled to conduct commerce w/o fear of being ripped off…and if they are ripped off to have legal recourse to recover the losses. I know regulation is a dirty word in the pro business world but it is necessary and that is proven every day with a new news headline of corruption in our country.


    Another MNB user offered:

    Describing Mexico and much of the world as the “wild west” is probably very accurate.

    Following that up with the question about how much cheating, stealing and corruption occurs in the US is a great question to ponder and a nice equalizer.


    And, still another email:

    Your article Wed relating to the Walmart bribery situation brings up another very important action in of today's political environment - that of companies' lobbying efforts whereby companies, with their vast finances, numbers and time, are now running (or attempting to run) our government. We the people no longer have a voice because big corporations' voices are "heard" much more loudly than the general public. What is good for these companies is not always best for this country. But they continue to push their weight around and unfortunately, politicians (George Bush as a good example) too often do what's best for the companies because it's in the politicians' best interests also. I commend Hillary Clinton for taking the stand she has taken to not water down FPCA regulations in the interest of a company who puts greed at the top of it's agenda.

    Unfortunately, WalMart isn't the only company today who lobbies government to put their best interests ahead of America's and until this practice is stopped, the United States isn't going to move forward. While corporations and their taxes are very important to this country, too much of their lobbying is based around how they can eliminate paying taxes and doing what's needed to contribute to a healthy economy - and that I find is scary!


    And I love this email:

    Can you tell me the difference between bribery and trade dollars?

    Excellent point.




    Responding to yesterday’s “Who do you trust” commentary, MNB user Mark Dixon wrote:

    I really enjoyed your article this morning, very insightful. I think you captured what most people feel today, that we really want to trust our business partners, the government, etc, but they continue to give us cause to not trust. Great food for thought.

    Hopefully they really do want to do the right thing and with that action, they can regain our trust, one positive experience at a time.


    From another reader:

    While I would agree today’s younger generations will have less trust in others than prior generations, I do challenge your apparent premise that it is an institutional problem—i.e. government/religion/business/etc.    In many ways, I believe those institutions to be more trustworthy, relatively speaking, than in prior centuries.  Reading any history re any of these institutions will bring forth countless scandals and episodes that are, frankly, mind blowing.  I think the only difference between now and then is that we hear about it all w/surround sound news media and that we hear about it in real time (or close).

    What I do find trending downward re trust, though, is in personal circumstances, and, in my opinion, this is much more sad and terrifying.  What I remember most about all of my grandparents was the very basic goodness in them.  None of them would have ever even considered cheating someone else or lying to one’s own advantage.  They worked hard and were thankful for what they had.  They could revel in simple pleasures.

    My grandfather, to this day, is my role model.  He was the oldest of 4 boys who lost their dad when just children.  Their mother could not afford to keep them so placed them w/uncles, all of whom were farmers.  So, my grandfather basically had no childhood; that time was spent working hard on the farm to justify his keep.  He graduated as valedictorian from a high school class of 10 and then borrowed $700 from the uncle who had raised him and used that money to matriculate to Bucknell University, where he graduated 4 years later w/a degree in electrical engineering. As soon as he got a job, he paid the uncle back.  He was one of the most modest people I ever knew.  Impossible to buy for because he didn’t want/need anything.  When he died, his drawers were full of shirts that had been presents but never worn.

    My point is that, growing up, my world was full of people who, very simply, had my back, and it was very comforting to know that.  And these were good people that had my back.  It may simply be a perspective that is distorted now that I am that generation, but I just don’t get the same vibes.  It may be that life is just becoming too complicated; needs (or wants) are too great; people are pulled in too many directions.  I don’t have any answers.  I just feel that institutions will always be tainted by those for whom the power corrupts, but, as long as those around you can be trusted, life will be okay.  It’s when you begin to question those around you that you lose traction.  If you have ever read “Lord of the Flies”, that is the expression of what I think younger generations may fear in today’s culture.  And that should be terrifying.


    One MNB user was very kind in writing:

    I’ve come to the conclusion you are the only one we can trust!

    While another wrote:

    Well written article, which points to the only One we can ultimately trust in yesterday, today, tomorrow and forever and that is The Creator of the universe and every living thing that has breath, and that is in God alone.

    It is rare that my name and God’s would be mentioned by two people writing in about the same commentary. My name and God’s sometimes get mentioned in the same sentence, but there is usually a “damn” in there somewhere...
    KC's View:

    Published on: April 27, 2012

    This week, let me wax rhapsodic about a new burger place I went to last Friday night. And more.

    The restaurant is called Burger on Smith, located in the Cobble Hill section of Brooklyn, NY. To be clear, I have a vested interest here - my nephew, Kyle Huebbe, won a prize for creating what has become the place’s “Trademark” burger, and helped design both the menu and the restaurant.

    Mrs. Content Guy and I have been meaning to travel out to Brooklyn to see the place for some months now, but last Friday was gorgeous, the afternoon was reasonable free, so we jumped on a train and a subway and made it out there in fairly short order. And let me tell you, it as worth the trip.

    The “Trademark” burger is phenomenal - made with a special grass-fed ground beef made locally, and topped with tomato, lettuce, and this amazing horseradish-chive aioli, and served on a soft and sweet Portuguese muffin imported from Cape Cod. It was one of the best burgers I have ever eaten - juicy and flavorful and just about perfect. On top of that, Burger on Smith has extraordinary spiced french fries, a jalepeno margarita to die for, and a great beer list. (I had the Yuengling Lager, always a great choice.) The restaurant itself is quirky and fun - glass windows and doors on two sides that offer lots of natural light and a great view of the Brooklyn street scene.

    I didn’t know we had this kind of talent in the family ... and I walked away from Burger of Smith not just full, but immensely proud of Kyle.

    And then, just to complete a perfect evening, Mrs. Content Guy and I did something neither of us ever had done before ... we walked back to Manhattan over the Brooklyn Bridge, which felt like something out of a Woody Allen movie.

    (It might even get me off the hook for missing our 29th wedding anniversary ... it’s next Tuesday, at which point I’ll be at FMI in Dallas.)

    It may seem obvious to say so, but it is nice to be surprised. It could have just been an ordinary Friday. Instead, it was somewhat magical - an evening in the city, great food and drink, and a romantic walk with the girl of my dreams.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Slainte!
    KC's View: