retail news in context, analysis with attitude

Published on: May 7, 2012

by Kevin Coupe

Maybe you saw it this weekend on Saturday Night Live, but if you didn’t, you should check out the faux Amazon.com commercial they did for potential Mother’s Day presents available from the e-commerce site. Let’s just say that it involved the best-selling novel “Fifty Shades of Grey,” a wide range of items available from Amazon, and some unspoken maternal enthusiasms.

Let’s be clear. Some will find it to be off-color. But I thought it was hysterical. (So, by the way, did Mrs. Content Guy.)

You can check it out here.

Published on: May 7, 2012

Three months after Ahold-owned Peapod brought virtual supermarket shopping to Philadelphia-area train stations, allowing people to use their smart phones and a Peapod application to scan QR codes and purchase products that can be delivered to their homes or offices, the company is now using that same technology in Chicago’s State and Lake Station. For the moment, the interactive billboards features just 70 SKUs.

The concept is similar to one that Tesco originated in the Seoul, South Korea, subway system and now is expanding, and that Sears, Kmart, Ocado and even Procter & Gamble have been testing. (you can see the original MNB story, plus a video here.

According to the Peapod announcement, “Commuters can get orders started on the platform, manage shopping lists and schedule deliveries - for next day or even several days or weeks in advance--during their train rides to or from the office ... For a limited time, mobile shoppers can enter promotional code ‘CHICAGORAIL’ for $20 off their first order, and 60 days of free delivery for subsequent orders.”

Peapod says that the Philadelphia campaign was a success, that 90 percent of those consumers who scanned products in the train stations returned to Peapod to shop and order again.

According to the Chicago Tribune, “Other Chicago locations might be added, as well as locations in other cities, depending on what happens during a 12-week run at the station, which averages 17,640 commuters each weekday.”

Published on: May 7, 2012

The Seattle Times reports that Costco wants to become a bigger online force, and plans “to introduce new mobile apps this month in an effort to significantly expand its online business.” In addition, it is expected that Costco will improve its search engine optimization efforts as one way of getting on people’s computer screens.

Here’s how the Times frames the story:

“It's a curiosity of how the Internet works that a shopper using a search engine to find a flat screen TV probably will not turn up Costco Wholesale, a major television vendor and the country's largest retailer after Wal-Mart.

“Costco.com is not built to attract online hits, but it does decent business — about $2 billion in sales a year. It does so by offering everything from caskets to an 18.88-carat diamond, while attracting customers even more affluent than the average shopper at its warehouses.

“Now the chain based in Issaquah, less than 20 miles from the offices of online Bigfoot Amazon.com, wants to up its game online — and experts say it's about time.”

Published on: May 7, 2012

The Los Angeles Times reports that a California state senator is calling for a US Department of Agriculture (USDA) investigation into transglutaminase, described as “an enzyme in powder form that brings protein closer together – permanently.” It also apparently is known as “meat glue,” because it is “served up by food suppliers, restaurants and others who use it to patch various pieces of meat into a single steak or some other amalgamated chunk.”

According to state Sen. Ted W. Lieu, “Better labeling is necessary for meats that have been bound together with the product because outer meat portions that are more easily contaminated may end up in the middle of a larger piece.

“The glue, he said, may cause allergic reactions and could also make tracing potential food-borne illnesses more difficult when different parts of different animals are combined. In the meantime, authorities have drawn up an attack plan for another meat-based concern:E. coli.

Published on: May 7, 2012

• Bloomberg reports this morning that “billionaire Warren Buffett, whose Berkshire Hathaway Inc. is among Wal-Mart Stores Inc.’s largest shareholders, said the retailer may have botched how it dealt with allegations that the company bribed Mexican officials.”

“It looks like they may well have made a mistake in how that was handled,” Buffett said at his company’s annual meeting last week.

Buffett also said that the ongoing investigations into Walmart’s actions will create “a huge diversion of management time,” but also said, “I don’t think the earning power of Wal-Mart five years from now will be materially affected by the outcome of this situation. It may result in a significant fine, but I don’t think it changes the fundamental dynamic.”

This is the latest response to the recent New York Times piece 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.

Published on: May 7, 2012

There was a fascinating story in the Los Angeles Times over the weekend about people - specifically Steven Rothstein and Jacques Vroom - who spend hundreds of thousands of dollars with American Airlines to buy unlimited first-class tickets for life ... but who then found themselves targeted by the airline, which came to the conclusion that the passes were costing them millions of dollars in revenue and wanted to revoke the paid-for privileges.

“Passes in hand, Rothstein and Vroom flew for business,” the Times writes. “They flew for pleasure. They flew just because they liked being on planes. They bypassed long lines, booked backup itineraries in case the weather turned, and never worried about cancellation fees. Flight crews memorized their names and favorite meals.

Each had paid American more than $350,000 for an unlimited AAirpass and a companion ticket that allowed them to take someone along on their adventures. Both agree it was the best purchase they ever made, one that completely redefined their lives.”

The story goes on: “But all the miles they and 64 other unlimited AAirpass holders racked up went far beyond what American had expected. As its finances began deteriorating a few years ago, the carrier took a hard look at the AAirpass program.

“Heavy users, including Vroom and Rothstein, were costing it millions of dollars in revenue, the airline concluded.

“The AAirpass system had rules. A special "revenue integrity unit" was assigned to find out whether any of these rules had been broken, and whether the passes that were now such a drag on profits could be revoked.

Rothstein, Vroom and other AAirpass holders had long been treated like royalty. Now they were targets of an investigation.”

You can read the entire piece here if you’re interested in the details.

But what the piece comes down to is an interesting discussion about how a business ought to act when it finds out that it made a decision that, while good for customers, ends up being bad for the business.

Published on: May 7, 2012

The New York Times Magazine had a 4,000+ word piece over the weekend entitled “How McDonald’s Came Back Bigger Than Ever.”

Here it is in just 88 words:

McDonald’s, while an enormous global power, has been under attack in recent years for the quality of its food ... its impact on global obesity, especially in children ... and its homogenized, plasticized, lowest-common-denominator presence.

And so, it has been fighting back. With a more diversified menu. Better food. Healthier options. Nicer restaurants. And by using social media as a way to spread the word.

The goal has not just been to keep its current customer base and attract new customers, but also to prove the skeptics wrong.

If you want to read the while piece, click here.

Published on: May 7, 2012

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

• The GlobeGazette.com reports that four Iowa communities in which Hy-Vee operates - Mason City, Cedar Falls, Spencer and Waterloo - have been designated “Iowa Blue Zones,” which means they “will receive assistance from national experts to develop and implement a blueprint for making permanent environment, policy and social network changes that transition people into healthier behaviors.”

Hy-Vee has been highly supportive of the Iowa Blue Zone movement, which has as its goal making Iowa the healthiest state in the country by 2016. It currently ranks 16th.

• Reuters reports that PepsiCo is being sued by the heirs of Richard Ritchie, who developed the formula for Pepsi-Cola back in 1931.

The Ritchie family is looking for undisclosed damages and assurances that they can "tell their father's extraordinary life story without interference or the threat of litigation" from Pepsi; the story says they want to be able to share his documents “with historians, collectors and film producers.”

PepsiCo has not commented on the lawsuit.

• Advertising Age reports that Cee Lo Green - known lately for appearing on NBC’s “The Voice” with his cat, has re-recorded the old Meow Mix jingle ... and you can listen to it here.

According to the story, “Meow Mix is pledging to donate one pound of cat food for each download to PAWS/LA, a group that provides assistance ‘to low-income seniors and people disabled by a life-threatening illness, in order for them to keep and care for their pets’.”

• The Miami Herald reports that Prestige Lager, from Haiti, won the Gold Award for American-Style Cream or Ale at the 2012 Brewers Association World Beer Cup competition in San Diego.

I’d just like to point how that almost two months ago, I wrote about having a fabulous roasted duck sandwich at a bar in Cambridge, massachusetts, and washing it down with Prestige, which I raved about. If you don;t believe me, check it out.

• Meanwhile, the Denver Post reports that “Colorado breweries on Saturday night brought home 27 medals - 13 of them gold - at the World Beer Cup ... Longtime Denver brewery Bull & Bush had an outstanding showing, getting called to the podium four times. The brewery and pub, which has been brewing since 1997, won gold in the English-Style India Pale Ale category for its Man Beer and gold in the field/pumpkin beer category for Turnip the Beets.

“The 9th annual competition included 799 breweries from 54 countries and 45 U.S. states entering 3,921 beers in 95 beer style categories...”

• The New York Times has a piece about Bend, Oregon, which like a lot of communities has been enduring its share of economic problems: “Just four or five years ago, Bend was a New West boomtown, one of the fastest growing municipalities in the United States, luring Californians and others rich with real estate equity to buy relatively inexpensive homes here. Then it all fell apart. The housing market collapsed, employment plummeted. People who had been wealthy enough to live off investments and rental income no longer could.”

What has helped bend survive the troubles, the Times suggests, is beer - a large number of craft breweries is a magnet to tourists, and the environment has proven to be a magnet to entrepreneurs. Jobs get created ... beer gets brewed, bought and consumed ... and the circle of life rolls on.

“While places like Seattle and Denver and Brooklyn and Delaware can claim impressive craft brewing scenes, and a weirdly large number of people nationwide now speak of hop fetishes and beer crushes, Bend is a per capita powerhouse. With 80,000 people surrounded by not much of anything - with no Interstate, no university, and the closest major city 160 miles away across steep and snowy mountains - beer has had room to make a difference.”

Last Friday, when I mentioned that I was moving to Portland, Oregon, for a month this summer to teach at Portland State, I almost immediately got an email from an MNB user who invited me to come to Bend. After reading the Times piece, I may have to take him up on his offer...

Published on: May 7, 2012

• Tesco reportedly is moving Jeff Adams, who has been serving as chief retail officer for its US Fresh & Easy operation, to Turkey, where he will become CEO of its Kipa business.

At the same time, Tim Ashdown, who has been CEO of Tesco’s China business, will move to the US to succeed Adams at Fresh & Easy.

Tim Mason, Fresh & Easy’s CEO, reportedly remains in place.

Published on: May 7, 2012

• Alan Dickson, co-founder with his brother Stuart Dickson of the company that acquired the Harris-Teeter grocery chain and grew it into a multi-billion dollar chain, passed away last Thursday. He was 81.

Published on: May 7, 2012

We keep getting email about the Walmart Mexico bribery scandal.

One MNB user wrote:

In Walmart’s defense—there has never been this large of a company with as many employees.  There are going to be some questionable things done by employees.  We are all under pressure to get our jobs done a drive results.  Sometimes we do stupid things we can’t seem to manage or turn around once started.  What starts off as a small fire, (couple small bribes here and there) quickly grows into an all out inferno (which is where it’s at now).

Except that if the original New York Times story is correct, this wasn’t a matter of a few employees going rogue. Rather, it was systematic and systemic ... and covered up by the people at the highest levels of the company.

From another reader:

What a good time for Shelly Broader to be in Canada, away from the turmoil at Walmart US. Let's hope they realize the treasure they have there and bring her back to the US in a higher leadership role.

Regarding the Don Soderquist connection to Walmart, on e MNB user wrote:

It will be interesting to see how Don Soderquist responds to Mike Duke's transgressions.  Don co-founded the Northwest Arkansas Mega Church- Peoples Fellowship.  It was on Don's watch Mike's star rose at Walmart and Mike was elevated to a senior member of Don's Peoples Fellowship Church.  Don likes his WMT stock to go up in value and preaching the moral high ground to the worker bees in Bentonville is just one of Don's tools to help that happen. 

Another tool is to find others, like Mike Duke, to follow his footsteps. Its no secret in Bentonville a smart career path includes joining Peoples Fellowship Church.  That includes one’s wife attending the week day Bible studies held by the wives of Walmart executives in their homes.

I am not passing judgement on what makes a good Christian.  I am just describing what goes on and how it appears to those of us standing on the sidelines.

Responding to our story suggesting that some folks think that Walmart probably will get off with a fine in this case, one MNB user wrote:

I must say, isn't coming to a big settlement with our government avoiding prosecution, similar to a bribe?

MNB user Andy Casey wrote:

 We need to return to the ethics - both corporately and personally - which understands that not getting caught just isn't the same as being good.  To paraphrase a line from Jurassic Park, we need to quit thinking so much about whether we can do something and spend more time on whether we should.




Responding to my piece last week about executives who are responding to e-challenges with some level of reluctance, MNB user Jarrett Paschel wrote:

To the extent that retailers are only "reluctantly" dealing with the digital/e-commerce thing, that is indeed a very big problem. As you quite correctly point out, a forced hug is never as good as a real one...And I would argue it is worse than no hug at all.

Which raises a larger point that rarely gets addressed in these dialogues. If you believe there is a need for digital or e-commerce in certain very specific contexts, occasions or categories, then do it and do it very well. Conversely, depending upon your model of retailing, there may not be so much of a need to focus on these issues. Some of the best grocery stores in America here in Seattle--Metropolitan Market and Central Market--haven't had much of a need for digital or e commerce solutions. Those things aren't as important as keeping a razor sharp focus on super high quality products, experiences and food related activities. But when they have dabbled in the digital world, they've nailed it with nothing more than a simple, but very effective website. In their case they've used the website to highlight all of the specialty products and food related activities that make their stores so distinctive. And that's where most of their dabbling in this arena stops--so they can get back to what it is they do best. The lesson is to 1) identify where these technologies and tactics make a logical fit--which may not be that often or ever present 2) Dive in and execute well with precision and clarity and 3) stay focused on the bigger picture. Just like their models have always demonstrated, a few high-quality things are better than across-the-board mediocrity.

MNB user John Miller wrote:

The comments regarding leaders knowing they need to go along with the digital world and utilize social networking vs. taking the reins from others and leading/steering direction reminded me of an experience I had with one of our large customers.  I took over a large account a few years ago and this customer was all about change.  Change came at a rapid pace compared to most others.  Not surprisingly this customer was a leader in their area and was taking market share at a rather rapid pace.  Our results with that customer were less than stellar.  When I held my first discussions with each of our leaders there was one theme in common – If the customer would just stop changing and get out of our way we could provide the service they are asking for.  My thoughts were that we should be careful of what we wish for.  The next change may be to replace us with someone else as it is the customer determines the playing field.

To make what is already a long story short, I began discussions regarding how we get ahead of the changes.  How we can look for signals of what may come next and get out in front of it and help forge the path spending more time in the space of proactively leading vs. begrudgingly complying.  The results were nothing short of amazing.  Not only did the customer notice and begin involving us in some of their initial planning meetings but the morale of our teams working this account became much more positive.  Also, the financial results for the account followed the same path.  Those at FMI 2012 need to learn this lesson again.  (I am sure they learned it before with some other change).  Being the leader is fun, exciting, energizing, and creates a very dynamic workplace. 




MNB reported last week about how Supervalu that Pete Van Helden, executive vice president of retail operations, will be leaving the company this spring, to be succeeded by Kevin Holt, described as “a former Meijer, Inc., executive who has significant experience leading teams in similar turnaround environments.”

I commented:

This could be a case of CEO Craig Herkert continuing to clear the decks and install his own people as he tries to remold Supervalu to his own vision. Maybe van Helden simply did not fit the mold.

It could be a case of Herkert trying to buy time. People one step down from the CEO’s office often are most vulnerable when a company and a CEO are in trouble ... by firing them, they can create the illusion of change when what’s really happening is the big stall. (This could be even more important now that Herkert has been implicated in the Walmart Mexico bribery scandal - since he got the Supervalu job at least in part because of his work for Walmart in Mexico.)

Or, it could be a case of simply getting rid of executives with Albertsons pedigrees. Over the years, one of the consistent complaints I’ve heard is that in the wake of Supervalu’s acquisition of many Albertsons stores, it was the Albertsons people who ended up in control of the company. So maybe Herkert is trying to rectify that problem.

Or...it could be some combination of all three.

Regardless, one has to wonder if Herkert is simply rearranging the deck chairs on the Titanic.

One MNB user wrote (apparently hating the Titanic cliche):

So, now "I have a bone to pick," because your article on Supervalu stirred up "the bees in my bonnet," "ruffled my feathers," and angered my idioms with the reference to Albertsons executives.  Hmmmmm ... I must be getting more sensitive in my older age, however, I will speak up and ask you to make sure you are delineating between "original" Albertsons folks (I call 'em classics) and the group that are not (I am sure you have the time for that).

I would venture that if Supervalu (remember American Stores? did anyone learn from that?) had let the original Albertsons folks run the stores and the company (with the exception of the faux Albertsons CEO who pulled the trigger on the appliance) there may have been a different result. As it is, will the path that SV is on lead them to bankruptcy?  Maybe that would be a good thing.  So, as I try to take the "burr out of my 'basement'" and "avoid being driven up the wall" by my self provoked irritation a  "real" Albertsons original would not have ever allowed the ego trip that they went on when they bought the failing American Stores debacle back in 1998-9. "Make no bones about it," I imagine Joe Albertson would have never have been a fan of this.  In addition the "real" original Albertsons folks would have never hired a certain someone from the major appliance division to run their stores.  Look at their history, it never happened before. They were one of the most successful chains because they grew conservatively and, for the most part, hired from within and attracted good loyal steady smart people. This scenario never happened because that "expert" with a resume of refrigerators and toasters put the company in a position where they had to sell out or go bankrupt themselves.  I would be "fit to be tied." 

Well, I must have a "stick in my craw" now (note to self  - google "craw"). Go back to the American Store deal.  Albertsons purchased American Stores??  This was not how it went down in the go-forward reality of operations. These misfits (I am talking the corporate folks here, please) are the ones who made Lucky stores "fouled up beyond repair" after buying them because they did not know how to run Alpha-Beta.  Albertsons should have purged all of the American Stores execs who created the fiasco, and then they should have fired themselves for purchasing this "Titanic" of a grocery chain.

Now coming back to present, here you go Supervalu, someone put some "lipstick on the pig" and then said, here buy this company that "glitters but is all pyrite?"   Well now you have a pig or a piece of "fools gold" for that matter.....  I guess I should get "off of my high horse" so I can "get my knickers untwisted," because this is all "water under the bridge....."   Just make sure you don't lump the "classic" Albertsons person in with the hybrids from the American Stores fiascos.  Look around the industry, many of these folks are doing great things and are very dedicated, tenacious and loyal. Sorry to "jump down anyones' throat," but I was a "little hot under the collar."

And from another reader:

The thing is, Herkert spent many years at Albertsons prior to Wal-Mart.  It seemed to me he was culling the SV higher-ups from the herd to make the place more like Albertsons.  Now the pendulum seems to be swinging the other way.  Is he firing them (whether they be legacy SV or Albs) or are they opting to leave?  The wording on the announcements is predictably vague…to pursue other interests, mutually beneficial, etc.

I’ll keep showing up as long as my key works or I get a phone call telling me not to bother.  I’m certainly not feeling as though my input is wanted/needed, so whaddya gonna do?  During the last quarterly meeting his demeanor seemed oddly different. He looked tired and wasn’t as animated or confident as he seemed before (my opinion).  I think he’s getting a lot of static with the stock price tanking, among other things and it’s starting to take a toll.  Still hanging on to my deck chair.

So I’m wondering if there’s a way for me to make money writing a column for cynics and work from home. Cynicism seems to be a growing trend and hey I consider myself a leader in that area...




Finally, thanks to all of you who sent your congratulations for my coming gig at Portland State University. As I said on friday, it’s only for July, but I’m excited about it ... and hoping that the experience will lead to a longer-term Pacific Northwest move once Mrs. Content Guy retires.

Published on: May 7, 2012

In the 138th running of the Kentucky Derby, I’ll Have Another - originally a 15-1 choice - became the first horse to win from the No. 19 post position.

The horse now goes on to the Preakness in Maryland, where it will attempt to win the second leg of the Triple Crown.