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    Published on: May 1, 2012

    Notes and comment from the Content Guy...

    DALLAS - The first two general sessions of the FMI 2012 Show here offered an almost jarring comparison of styles and content. One guy was dressed in a t-shirt and jeans, and he punctuated his points about optimism and creating community with customers by flinging Frisbees into the audience. The other was a gray-suited consultant who punctuated his points about macroeconomic trends with detailed and often unreadable slides and charts.

    That said, they both made good points around a common theme - that consumers are increasingly in control of the shopping experience and brand equity, and that marketers used to being in control will need to adjust to this new reality.

    Let me see if I can boil down some of their comments...

    • Bert Jacobs, CEO (chief executive optimist) at Life Is Good, spoke movingly about how his brother and he grew a t-shirt business from one that generated $87,000 the first year to more than $100 million annually today. But the emotion came not from the business growth, but from the way the company has invested both human and financial capital in charity work focused on helping children in peril. Life is Good does no traditional advertising, but rather uses charity-oriented events ranging from music festivals to pumpkin carving contests to create a theme for the company.

    Here are the most important things that Jacobs said:

    - “Consumers have taken over. We don't make brands. Consumers create brands.”

    - “Consumers will build your brand with you if you will build community with them.”

    - “Optimists will take you somewhere that is not yet there. Realists ask to see the data ... Optimism is the most important tool we have.”

    Jacobs also said, by the way, that he is looking to build relationships in other industries - including the food business - that will allow him to extend the Life is Good brand in a way that will further its charitable work.

    • Dan O’Connor, president/CEO of RetailNet Group, basically made the following points...

    - Expect to see a retail revolution over the next eight years that will equal the tumult created by Walmart’s getting into the food business.

    - Digital marketing allows small retailers and manufacturers to look big, and creates consumer expectations that relevant brands will be available everywhere that people want them to be.

    - E-tailing is basically a deflationary influence because it creates transparency about prices that drives them down, reducing companies’ ability to generate profit, and hence requiring both retailers and manufacturers to redefine how they work together.

    - “Personalization of price” is going to be one of the next great trends, because technology will make it possible for marketers to customize prices for best customers. Shelf price, he said, will become just “a point of reference.”

    - He also said that “marketing down the middle” may be a thing of the past, as segmentation of the consumer population and cultural trends will demand that retailers, in their desire to be relevant and compete with the likes of Amazon, create more segmented shopping experiences.

    In other related news...

    • FMI announced that its 2014 show will return to Chicago after a number of years in Las vegas and this year in Dallas. The move to the Windy City will involve a date change - it will now take place from June 10-13, instead of in its traditional early May time slot.

    The 2013 event - FMI’s every-other-year education-oriented Future Connect, which does not include a trade show - is slated to take place from April 30 - May 2 in Orlando, Florida.

    • FMI announced a strategic business partnership with TopSource LLC, a sourcing company and wholly-owned subsidiary of Topco Associates LLC. This partnership, FMI says, “will provide FMI members the opportunity to support the foundations of their growing businesses with significant savings related to costs in not-for-resale areas ... FMI and TopSource will work together on program initiatives to help food retailers and wholesalers identify business opportunities and better serve the needs of their customers.  More details on the partnership will be announced in the coming months.”
    KC's View:

    Published on: May 1, 2012

    by Michael Sansolo

    As the Food Marketing Institute (FMI), United Fresh and the American Meat Institute (AMI) gather in Dallas this week for their co-located conventions, there’s one food VIP almost guaranteed to be absent. Yet in many ways Houston mom Bettina Elias Siegel is the person everyone should want to meet. Siegel personifies our era’s changing balance of power better than almost anyone - and the funny thing is, I just heard her name for the first time the other day. (And I am willing to bet that her name is unfamiliar to many if you.)

    Siegel is the author of a small blog who popularized a simple phrase - “pink slime” - that no doubt will be widely discussed throughout the halls of the Dallas Convention Center.

    A recent article in the Washington Post chronicled the incredible impact of this one mom and how her use of that phrase changed all perception of what had previously been referred to as “lean finely textured beef.” If anyone doubts the power of a catch phrase, consider the incredible impact of this one mom with a blog on supermarkets, restaurants, institutions and suppliers. As the Post reported, prior to the blog “This beef byproduct was nothing more than a mild-mannered staple.” It was never remotely blamed for any food-safety issues, in fact it was widely praised. Now it’s gone.

    Even groups usually critical of the food industry like the Center for Science in the Public Interest could never get traction against lean finely textured beef. As the article reported, CSPI is studying what Siegel managed to accomplish.

    But that’s the world we live in today, where power resides everywhere and nowhere thanks to tweets, blogs and social media posts that resonate like never before. It’s a world where social media helps topple regimes in some of the most totalitarian countries on earth and where a Houston mom can change the way tacos are made at schools across the country.

    For months now I’ve been writing about the growing power of social media and the importance of the new study I’ve been a part of through the Coca-Cola Retailing Research Council. The findings of that study are being presented this morning at 10 central time at the FMI show, along with feedback from three of the retail participants. Even if you aren’t in Dallas feel free to follow the discussion on Twitter @CCRRC.

    There’s an element to the planned discussion that I believe strikes at the core of why social media matters so much and it really has nothing to do with the enormity of Facebook or the immediacy of Twitter. It has everything to do with what’s in your mind.

    Jerry Golub, CEO of PriceChopper, one of the council members, plans to talk with the audience about mindsets - the attitude we take toward things like social media. As Jerry explained in our preparation for today’s discussion, social media forces top executives to take an entirely new approach to how information is shared, spread and controlled. In many ways that is the biggest challenge that comes from social networking—the loss of control.

    Yet that is exactly what the Internet has done all along: shifted control and power. Not that long ago when you bought a car it was the dealer who had all the information. Now you walk into a dealership knowing anything you want. The same pertains to buying a house, clothing, and a restaurant meal; finding a dentist a plumber or, well, you name it.

    (This is the same point , in many ways, made by Bert Jacobs and Dan O’Connor in their FMI 2012 general session presentations yesterday.)

    Today the power of information resides wherever it wants, even at the kitchen table of the Houston mom who is concerned about the ingredients in a school lunch. You may not like it, but it’s the way it is.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: May 1, 2012

    The New York Times reports this morning that “leaders of New York City’s pension funds said Monday they would vote their 4.7 million company shares against five directors standing for re-election to the retailer’s board at its annual shareholder meeting next month.” Two of the directors opposed are Mike Duke, Walmart’s CEO, and Lee Scott, his predecessor.

    The move comes in reaction to the Times piece of more than a week ago that 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. Both Duke and Scott, among other senior executives, were implicated in the story and identified as both knowing about and covering up the bribery.

    According to this morning’s Times piece, “Officials at the New York City pension funds said they were taking action against the Wal-Mart directors because their previous efforts to persuade the board to increase its oversight of legal and regulatory practices at the retailer were unsuccessful. In 2005, for example, after reports that Wal-Mart had hired undocumented immigrants and violated child labor laws in three states, a group of institutional investors including the New York City comptroller asked the company’s board to hire an independent firm to review its regulatory controls and report findings to shareholders. Although Wal-Mart directors met with the investor group, the group’s request for a review was rebuffed.”

    It is unknown at this point whether other pension funds will follow the New York City lead.

    The New York Times also reports this morning that while Walmart “has adroitly used millions of dollars in campaign contributions, charity drives, lobbying campaigns, and its work for popular causes like childhood nutrition and carbon emissions to build support in Congress and the White House,” those expenditures may not be enough to help it avoid accusations and intense examination of its business practices at home and abroad,and that “its political priorities could now be jeopardized.”
    KC's View:
    I don’t even know what to add at this point, except to say that the dominoes will continue to fall...

    Published on: May 1, 2012

    This story has nothing to do with business, but everything to do with the worldview here at MNB.

    The piece is by Michael Rubens, a former field producer at “The Daily Show with Jon Stewart,” and it appears on Salon.com, looking at how surprised he was by how much he liked the people he covered, even when those people held beliefs radically different from his own. That’s a worthy sentiment, especially in a time of polarized opinions and uncivil discourse.

    “We can disagree,” Rubens writes, “over the best way to provide healthcare, or what optimal tax rates are, without assuming that the person on the other side of the argument emerged steaming from Satan’s fundament.”

    It is a good and thoughtful - and even funny - piece. (Which is what one would expect from a “Daily Show” alumnus.) Be warned ... it uses some language that I can’t use here on MNB (much as I’d like to sometimes). I just thought it was worth passing along, and you can read it by clicking here.
    KC's View:

    Published on: May 1, 2012

    “Consumers’ confidence in their personal finances is returning to levels seen in Q1 2011,” according to SymphonyIRI Group’s latest MarketPulse™ survey. However, the survey says, “consumers remain cautious about their financial future and will continue to ramp up and/or maintain their conservative shopping behaviors this year. In addition, the recent survey uncovered that the nation’s 85 million moms have a sunnier outlook on the future compared to the general population.”

    The report goes on to say that “consumers’ confidence about their personal financial situations is rebounding in Q1 2012, after slipping in Q2 and Q3 of 2011 and inching up slightly at the end of last year. Today, 19 percent of consumers feel their financial position has improved during the past year, 40 percent feel it has remained unchanged and 41 percent feel it has deteriorated. While these are not glowing statistics, it is the most optimistic outlook seen since Q1 2011.”

    In terms of looking for bargains, the report says, “Shoppers are still looking for a good deal and are putting the time and energy needed into finding the right product for the right price. For instance: 71 percent of shoppers in Q1 2012 are still make shopping lists at home versus 67 percent in Q1 2011 ... 56 percent of shoppers in Q1 2012 are choosing stores based on lower prices offered versus 52 percent in Q1 2011 ... (and) 62 percent of shoppers in Q1 2012 look at store circulars before entering the store versus 56 percent in Q1 2011.” In addition, “7 percent of shoppers are using retailer Web sites to make lists ... 9 percent of shoppers are using the Internet to make lists ...  42 percent of shoppers are making lists based on coupons ... (and)  49 percent of shoppers are making lists based on circulars.”
    KC's View:

    Published on: May 1, 2012

    Microsoft announced yesterday that it will invest $605 million into Barnes & Noble’s Nook e-reader business, a move that gives it a 17.6 percent stake in the new subsidiary.

    The Wall Street Journal writes that “the deal catapults Microsoft into a high stakes battleground whose combatants include Amazon.com Inc., Apple Inc. and Google Inc., and also gives Barnes & Noble a lifeline to continue investing in its fast growing digital-book business ... The tie-up with Barnes & Noble also furthers Microsoft's strategy to move beyond its Windows and Office software franchises and invest its growing cash pile in businesses—some $60 billion at the end of March—that it failed to capitalize on in recent years.”

    According to the Journal story, “By taking a minority stake in a new subsidiary that will market the Nook, Microsoft gains several footholds in e-reading. For starters, Barnes & Noble committed to creating a Nook e-reading app for Windows 8 - a forthcoming Microsoft operating system that will be used in tablet-style hardware and PCs - and for smartphones powered by Microsoft software. The Nook, like Amazon's Kindle Fire, runs on Google's Android software ... Another possible benefit for Microsoft is that its software may power devices designed for electronic books, magazines and newspapers. Executives of the two companies didn't rule out the idea that future Nook devices could run Microsoft operating systems, and their contract also cites the possibility Microsoft could make e-readers.

    “The deal comes as technology continues to transform the book retailing landscape and the habits of readers, with devices like Amazon's Kindle and Apple's iPad offering book buying as well as reading.”

    The Nook currently has a 27 percent market share in the e-book market, compared to 60 percent for Amazon’s Kindle.
    KC's View:
    When this news broke yesterday, a friend of mine sent me an email that said...

    Our world has changed so much that the two hated monopolists of the 1990s - Microsoft and B&N - must cling together to even stay relevant.

    I’m not sure that this is entirely fair, but the broader point he is making is a good one - that sometimes, in order to maintain relevance, companies do need to forge new alliances and find new opportunities. I think that it is likely we will see new, Microsoft-driven functionality in the Nook at some point, which will broaden and sharpen the competition.

    Published on: May 1, 2012

    • In the UK, the Grocer reports that “according to new figures from Kantar Worldpanel, Tesco’s share of the video, music and games market crashed from 11.3% in the first three months of 2011 to 9% in the same period this year.” Walmart-owned Asda Group, with a 9.3 percent market share, now is the UK’s leading supermarket retailer of entertainment products, the story says.

    The Kantar analysis suggests that “the decline was primarily a result of Tesco pulling away from deep discounts on new entertainment launches – particularly movies – in the first quarter of this year.”
    KC's View:
    I have a couple of reactions to this story.

    One is that in some ways, I wouldn’t worry too much about this if I were Tesco. After all, the simple reality is that in the long term, nobody is going to go to any physical store to buy this kind of stuff. It is all going to be ordered and downloaded over the internet, so I’d avoid making major investments in a dying business sector.

    Second, it strikes me that Tesco may be suffering the same fate as Walmart these days...and may rewrite the popular phrase this way: Too big not to fail. These won't be fast failures and they aren’t even inevitable. But you have to wonder...

    Published on: May 1, 2012

    HealthDay News reports on new studies from Children's Hospital at Dartmouth-Hitchcock Medical Center suggesting that “kids who recognize fast-food advertisements on TV are more likely to be overweight, and those familiar with TV ads for alcoholic beverages are more likely to drink.”

    According to the story, “After being shown 20 images from the most popular TV ads for alcohol and 20 ads for fast food, with the brand names removed, the participants were then asked if they remembered the ads, liked the ads and knew about the products being advertised. The researchers found that 59 percent of kids drank and 49 had engaged in binge drinking at least once the previous year. Familiarity with TV alcohol advertising was much higher among the drinkers than nondrinkers, and having alcohol-branded merchandise or having a favorite alcohol ad was linked to more hazardous drinking.”
    KC's View:

    Published on: May 1, 2012

    • Kroger employees working at Smith's Food and Drug and Food 4 Less in Las Vegas, Nevada, have ratified a new labor agreement with the United Food and Commercial Workers Local 711 that covers 3,657 Smith's associates and 801 Food 4 Less associates. It includes 32 Smith's stores and 14 Food 4 Less stores operating in the Las Vegas area.

    Fox Business reports that  Yum Brands, the parent company of KFC, Pizza Hut and Taco Bell, “is selling hundreds of its U.S. restaurants to franchisees in an effort to further distance itself from the volatility of the owner-operated restaurant business.” The story says the company, “ which now earns the majority of its profits internationally, plans to reinvest the money from sales of its domestic restaurants in building new ones in countries such as China and India, where economic growth is stronger.”
    KC's View:

    Published on: May 1, 2012

    • The Pantry Inc. announced that CFO Mark Bierley has resigned, effective May 25, to take a job in his home in Michigan. Corporate Controller Berry Epley will handle CFO duties until a search for a successor is completed.
    KC's View:

    Published on: May 1, 2012

    Just a reminder ... since so many members of the MNB community are aficionados.
    KC's View:
    I’m certainly going to do my part.

    Published on: May 1, 2012

    Lots of reaction to yesterday’s piece referencing the New York Times story about how Apple - and other companies - avoid paying taxes.

    One MNB user wrote:

    I can't blame Apple for doing legally whatever the could to minimize their tax liability. Any straight thinking honest person does the same. You are quite right - this story merely emphasizes the absurd tax code that went from 400 pages in the 1940s to over 23,000 today.

    Another MNB user wrote:

    Just because they reported they paid $5 billion in taxes am I supposed to feel good they didn’t pay more ... They may have followed all the laws, put maybe morality isn’t on their side.

    And, from another reader:

    I'd say the only logical conclusion is that the U. S. needs to modify our uncompetitive tax rates.

    Good luck with that.

    Another reader chimes in:

    Since the story says Apple's tax minimization strategies are legal, not sure that there is a story here. The headline pretty much is " Major Corporations Don't Pay More Taxes Than They have To". Not sure that is earth shattering. The flip side of this story is more interesting. Why can Nevada get along with a far lower tax bite than California ? I think the multinationals are shining a light on inefficient and corrupt governments. The practice of raising taxes to pay big contracts to government unions that contribute to the politicians' campaigns  may be under stress. It may be that Nevada, Texas, Florida, Louisiana and Arizona may become the government model of the future and not the free spending class warriors of states like California, Connecticut,  and New York.



    On another subject, MNB user Jessica Tepas wrote:

    As a quick follow-up to your point on Record Store Day, I thought that some perspective from a millennial may be useful.

    While I agree that CDs are absolutely on a downturn, I also think that there is a small resurgence in the popularity of classic vinyl and record players in my generation.  I have a record player from the 1960s (with updated speakers) that I use on a daily basis and I love the sound of vinyl much better than digital for most songs, whether it is Bob Seger’s Live Bullet or Jay-Z’s ‘The Black Album’.  I have also found that this interest in vinyl has become more and more popular over the years with my generation and I would say that the majority of my friends collect records for both regular use and display (I have everything from the first Beatles album to the Superbowl Shuffle to Village People framed on my wall… it’s hard to beat those wind-blown locks!)

    Thanks for the great pieces of knowledge every day!





    Regarding the Kashi controversy, MNB user Lisa Malmarowski wrote:

    The whole Kashi debacle is the tip of the iceberg and it's not that simple. The sad fact of the matter is that GMOs pervade our food system. Even farmers that don't want to use these types of organisms, may find their crops contaminated by 'drift'. Natural used to mean natural, but it's a brave new world we're living in. 

    What we need is legislation forcing companies to label their products. But big chemical and biotech companies have very deep lobbying pockets. 

    What long term natural product consumers are up in arms about are companies like Kashi and Silk quietly changing their lines from organic to non-organic thus opening the door to GMOs and pesticide residue. 

    That's why the organic label matters. That's why it's tiring after 20+ years in the natural foods industry I'm still hearing 'organic costs more'. Yeah, it sometimes does. But if you care about what you put in your body, if you care about our environment and the longevity of our food supply and if you care about supporting agriculture over biotech, you'll find a way to afford it. 


    And, from another reader:

    Kellogg's, which bought Kashi Brand, totally messed up here just like Silk did when they switched from organic to non organic soy - and didn't reveal till they got caught!

    I was a loyal Kashi customer, for years. Once Kellogg's  bought the Kashi brand, I continued to buy my favorite cereals, but watched to see if they would dilute it.....and they did. Silk and Kashi lost me as a customer, and I am not alone. They can ramp up and join the non GMO project, but the damage is done. Integrity, honesty, are all we have at the end of the day and the end of our lives. Most of what you write about daily circles around that fact.

    Regardless of anyone's opinion, or whether the science will be resolved in our lifetime, there is a solid and strong sentiment towards genetically modified foods. The promoters of GMOs state there is no biological difference, "corn is corn, soy is soy' - and those against GMOs refer to them as frankenfoods, untested and concerned that releasing them into the food chain opened a Pandoras box of mutant chain reactions, leading to digestive issues, autism, depression, and more.

    Whatever your view, JUST LABEL THEM AND LET THE MARKET DECIDE. Over one million signatures were delivered to the FDA urging them to do just that.




    And finally, MNB user Bob Anderson wanted to refute an email from yesterday that was a little critical of former Walmart executive Don Soderquist:

    To the person who wrote the email about Don Soderquist, I would like to add this to the record. As a person who worked for WalMart for 18 years and knew and worked with Mr. Soderquist, I would tell you that there is no finer a Christian person than he. If you talk to people within WalMart, they will tell you that he is and was the moral compass for the company. He was picked by Mr. Sam Walton, who everyone know was “a by the book” person.

    While some in Walmart having given the company a black eye, and many well earned, Mr. Soderquist is NOT one of them, and please, let’s not throw him under the bus. He may in fact get paid to speak to WalMart associate on the values of good business and ethics,  The fact that a few were not listening, is their fault not Mr. Soderquist’s.

    KC's View: