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    Published on: May 30, 2012

    "The Future" - Part 10 in a 12-Part Series

    Today: What the "showrooming" trend means to traditional retailers - and what they can and should do about it as e-commerce grows.

    This morning, MNB continues a series of videos culled from a presentation that I did at the recent Food Marketing Institute (FMI) 2012 Show in Dallas. The session, entitled "From Amazon to Zipcar: Innovations from the E-Revolution," featured an extended conversation with Tom Furphy, CEO of Consumer Equity Partners and the guy who helped Amazon.com get into the grocery business.

    This series is made possible by MyWeb Grocer, the leading provider of digital grocery and CPG solutions.

    KC's View:

    Published on: May 30, 2012

    by Michael Sansolo


    When everyone is turning in the same direction, it’s interesting to examine those doing the opposite. After all, there are countless business models - from the iPod, to the Prius or Southwest Airlines - where success came from a special company taking steps no one else was willing to take or able to see.

    Last week it happened again, thanks to Warren Buffett, whose every move deserves attention. Yet this one seems especially interesting for retailers who wonder about community power and the future balance of stores vs. Internet based shopping.

    In a letter to the editors of the newspapers owned by Buffett’s company, Berkshire Hathaway, Buffett announced plans to invest strongly in the newspaper industry. Buffett plans to buy new publications and give them the financial support they need to succeed, without imposing his personal political views on their editorial pages.

    Think about that: the nation’s most successful investor is announcing his interest in an industry that seems more threatened by the Internet than any. Overall, newspaper readership is down and among young people it is practically disappearing. Either Buffett has lost his mind or he sees something others simply can’t imagine. Bet on the latter.

    Buffett makes two critical points in his letter that merit the attention of every business because they outline the realities of competition in today’s world. First he addresses the issue of Internet by calling for newspapers to rethink their approach to web-based content. Placing content on line for free is unsustainable, he says, and needs to be replaced by a “blend of digital and print that will attract both the audience and the revenue we need.”

    But his second point looms larger. Buffett explains that his optimism for newspapers comes from the strength of community. He writes:

    “I believe newspapers that intensively cover their communities will have a good future. It’s your job to make your paper indispensable to anyone who cares about what is going on in your city or town. That will mean maintaining your news hole - a newspaper that reduces its coverage of the news important to its community is certain to reduce its readership as well - and thoroughly covering all aspects of area life, particularly local sports. No one has ever stopped reading when halfway through a story that was about them or their neighbors."

    That’s a powerful statement. (Also ironic, considering that it comes at the same time as the New Orleans Times Picayune - a newspaper that distinguished itself in its coverage of the devastation of Hurricane Katrina - announced that it will now be published in paper form just three days a week.) Buffett makes it clear that he isn’t interested in the entire industry, just those newspapers that understand the changing world and approach it with a goal of excellence and importance. It is an important lesson for any retailer of any size.
    Retail - like newspapers - at its best can be a supremely local experience. Shoppers aren’t thinking about ownership when they pick up a gallon of milk. They think about price, value, convenience and taste. The best stores are those that, like a great local newspaper, understand the community. A good owner or manager can do that in so many ways, whether it means having the right mix of locally loved products or hanging banners saluting the local high school sports team (something I’ve seen done very well even in Walmart Supercenters).

    Community is at the heart of a great supermarket and though the nature of community constantly changes it always matters. Likewise, while we all talk about the importance of understanding competition from players like Amazon.com we need to heed Buffett’s advice. Retailers need find creative and unique ways to use on-line selling to improve rather than detract from what they do in stores. Otherwise the store become showrooms for Internet purchases (the Best Buy problem) or become drab fulfillment centers giving the customer no compelling reason to visit. (Check out the MNB TV video above for a discussion of precisely this issue.)

    One last item, from a personal point of view: I began my career at a small community newspaper where everything was local. We ran national and world news, but in an area served by the New York Times, my editor knew our limitations and our edge. Trust me, no one covered the school board meetings like we did.

    Years after I left that newspaper its parent company - Gannett - combined the area’s nine local papers into a single regional paper for efficiency. It was a great move in theory, except the combined papers still couldn’t compete with the Times and now the local edge was diluted. Circulation, as you might expect, is a fraction of what it once was.

    If only Warren Buffett had sent them a letter, things might be different. Consider this a letter to you too.


    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 30, 2012

    by Kevin Coupe

    Here's a story that opened my eyes this morning.

    Bloomberg reports that the Toyota Prius, "a niche oddity when it went on sale 15 years ago, jumped to the world’s third best-selling car line in the first quarter as U.S. demand and incentives in Japan turned the hybrid into a mainstream hit."

    Furthermore, "the Prius surge, after two years of recalls and production disruptions, propelled the Toyota City, Japan-based company back into the global sales lead for the first three months of the year."

    “It proves Prius wasn’t a fluke, that there’s a long-term market for hybrids,” Eric Noble, president of the Car Lab, an automotive consultancy, tells Bloomberg.

    He's right. And this shift makes this more than a story just about cars. It also is a story about shifting consumer priorities ... something to which every marketer should pay close attention.
    KC's View:

    Published on: May 30, 2012

    • The Boston Globe reports that "the board of the Massachusetts state pension fund, which has $60 million invested in Walmart Stores Inc. stock, voted against the re-election of seven corporate directors at the giant retailer."

    Walmart is hosting its annual meeting in Arkansas this week, and is facing dissent from some shareholders. Similar decisions have been announced by the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System.

    The moves come in response to an April New York Times story that provided an inside look at Walmart’s Mexico division, suggesting that its fast growth 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 current CEO Mike Duke and former CEO Lee Scott, among other senior executives, were implicated in the story and identified as both knowing about and covering up the bribery.
    KC's View:
    It is going to be an interesting week down in Arkansas. I suspect that Walmart will do its best to stage manage the issue so that it does not distract from the central messages that it wants to get out there. But it may not be easy ... and the company could find that too much stage management adds to the perception that it is willing to manipulate and cover up the facts.

    Published on: May 30, 2012

    Fast Company has a piece by athlete/firefighter/author Robyn Benincasa, in which she looks at six different leadership styles and when to use them.

    "Not only do the greatest teammates allow different leaders to consistently emerge based on their strengths," she writes, "but also they realize that leadership can and should be situational, depending on the needs of the team. Sometimes a teammate needs a warm hug. Sometimes the team needs a visionary, a new style of coaching, someone to lead the way or even, on occasion, a kick in the bike shorts. For that reason, great leaders choose their leadership style like a golfer chooses his or her club, with a calculated analysis of the matter at hand, the end goal and the best tool for the job."

    Some excerpts from her analysis, based on research done by Daniel Goleman for the Harvard Business Review:

    • "The pacesetting leader expects and models excellence and self-direction. If this style were summed up in one phrase, it would be 'Do as I do, now'."

    • "The authoritative leader mobilizes the team toward a common vision and focuses on end goals, leaving the means up to each individual. If this style were summed up in one phrase, it would be 'Come with me'."

    • "The affiliative leader works to create emotional bonds that bring a feeling of bonding and belonging to the organization. If this style were summed up in one phrase, it would be 'People come first'."

    • "The coaching leader develops people for the future. If this style were summed up in one phrase, it would be 'Try this'."

    • "The coercive leader demands immediate compliance. If this style were summed up in one phrase, it would be 'Do what I tell you'."

    • "The democratic leader builds consensus through participation. If this style were summed up in one phrase, it would be 'What do you think?'"

    You can read the whole piece here.
    KC's View:

    Interesting piece ... but she forgot the dictatorial leader, who has a style that would be summed up as "if you don't do what I want you to do right now, I'll eviscerate you, kill you, eat your spleen and then fire you." Or the conniving leader, who shuts down the company in which you have an ownership position, and then restarts it as a new venture in which he doesn't have to share ownership with anyone. Or the Jeffrey Katzenberg model (he is the former Paramount and Disney studio chief who now runs Dreamworks Animation); he famously used to tell his minions, "If you don't come in on Saturday, don't bother coming in on Sunday."

    Published on: May 30, 2012

    • The Sacramento Bee has an interesting story about how some area restaurants are complaining that citizen reviewers for Yelp.com website are practicing a kind of extortion - "customers threaten to write a bad review if the restaurant does not offer some sort of benefit, such as a gift card, free meal or preferred seating."

    The story goes on: "Kristen Whisenand, public relations manager for Yelp, said in an email that the website allows for users and business owners to flag reviews that violate the website's terms of service. If it is determined the review is fake, biased or malicious, it will be taken down. She also said Yelp is different from other review websites because it has an automated review filter that attempts to remove reviews that are biased, malicious or phony. The system is not perfect and sometimes removes legitimate reviews and leaves up bad reviews, she said."
    KC's View:
    Wow. I had no idea that, as a blogger, I had that kind of power.

    I would suggest that anyone who is targeted by one these extortionists tell them what Woody Allen tells a US Senate committee at the end of The Front, or what Richard Dreyfuss tells the FBI agent looking for a fugitive in The Big Fix.

    Published on: May 30, 2012

    The Cleveland Plain Dealer has a story about how Giant Eagle is testing a new format called Valu King that aims "to appeal both to budget-minded shoppers as well as those who like fresh produce and other perishables."

    According to the story, the seven-store Valu King chain has an edited grocery selection, carrying both private label and national brands, but not in all sizes and flavors. Giant Eagle has been putting them into locations abandoned by other retailers, like Tops or Rite Aid, as it looks to create a viable alternative to the likes of Aldi, Save-A-Lot and Walmart.

    The stores require people to bag their own groceries in bags that they've either brought from home or have paid a nickel apiece for.

    The always reliable Burt Flickinger III, managing director of Strategic Resource Group, tells the paper that Giant Eagle is engaging in a "checkmate chain retail strategy" by opening them near Walmart Supercenters "where they can appeal to fixed- and limited-income shoppers who don't want to shop big-box stores and wait in long lines to check out."

    Giant Eagle says that it has plans for at least three or four more Valu King units in Ohio, though it will not say precisely where.
    KC's View:

    Published on: May 30, 2012

    • Sprouts Farmers Market and Sunflower Farmers Market announced the completion of their merger, creating a 144-store company with project 2012 revenues of close to $2 billion.

    According to the company, "The addition of the Sunflower stores expands Sprouts’ geographic footprint to Nevada, Utah, New Mexico and Oklahoma and further extends its presence in the states of California, Arizona, Colorado and Texas.  All of the Sunflower stores will be re-branded under the Sprouts banner.  The conversions will begin in July and occur in phases through the end of the year. The stores will receive new interior and exterior signage, updated fixtures and an expanded merchandise mix.

    "Sprouts will remain headquartered in Phoenix, and Sunflower’s corporate headquarters in Phoenix and Boulder will be consolidated into the Sprouts office."

    USA Today reports this morning "ground beef producers are hoping the summer grilling season will provide a bounce-back from customer revolt this spring over a product dubbed 'pink slime' but known in the beef industry as 'lean, finely textured beef'."

    The story notes that some already have benefitted from the pink slime controversy. "Dave Carter, the executive director of the National Bison Association, said demand for fresh ground bison pushed the average price to $5.06 a pound in April, up $1.75 in two years." And, "the controversy has also widened the customer pool for meat shops that grind their own beef."
    KC's View:

    Published on: May 30, 2012

    Patrick E.Roche, co-founder of Massachusetts-based Roche Brothers supermarkets, died Saturday. He was 83, and was celebrated in the Patriot ledger as a philanthropist who, with his wife, Barbara, gave $20 million to Boston College to help train teachers for Catholic schools and universities. The school named its Center for Catholic Education after the Roches.
    KC's View:

    Published on: May 30, 2012

    Got some reaction to yesterday's piece about how United Airlines is being sued by one of its Million Mile fliers because of reduced benefits that he says amount to a breach of contract; there is also some perception that United thinks that some of its frequent fliers feel "over-entitled."

    One MNB user wrote:

    I am one of the "over-entitled." I began flying Continental 10 years ago when I lived in Vermont. I moved back to Texas in 2006, and to within an hour or less of Bush Intercontinental. I actually had some loyalty to Continental because, among legacy carriers, I felt like the employees cared the most about their company, enjoyed their jobs and for the most part that was reflected in the service I received. By contrast I had found United employees, through years of ownership and management turmoil, to be stiff, distant and I vowed never to fly that airline again. So, imagine my feelings when the merger was announced. I was top tier with Continental, which was 75,000 miles. Effective Jan. 1, 2012 they made top tier 100,000 miles and up. I wasn't paying attention and "only" hit 98,000 miles so fell into second tier. I notice the difference. The comments by the United exec about me, and others, being "over-entitled" may have some merit but it nonetheless is an insult to the Continental side of the passenger list which already is chafing over the loss of "their" airline. One of the largest hurdles to any merger is not system related, but cultural. Which culture wins out? It appears in this case the United culture is winning out. Since I fly Bush, I have no choice but to fly United as a practical matter. That is the only sense in which United is "entitled" to my business at this point.

    From another MNB user:

    It always cracks me up when I see bundles of (dis)loyalty card packed on the person’s key chain.  Most loyalty programs are simply was to manage promotional costs, planning for less than 100% redemption.  I too got “dis-entitled” by the United “merger” (a VERY unpopular event here in Houston, Continental’s former main hub).  I had become an advocate for Continental, and now I am clearly just another curmudgeon in the crowd for United, bemoaning the pre-merger glory days .

    And, from yet another reader:

    Agree with your comments and insights. The way they treat those of us who are long-term and highly loyal travelers reminds me of the movie Dog Day Afternoon. Perhaps you recall the opening dialogue during the confrontation scene outside the bank between the characters played by Al Pacino and Charles Durning.

    Love the movie references....




    I want to go back to something that came up yesterday, just to make sure that we're all on the same page.

    Or try to.

    We had an email yesterday that criticized a Washington Post column by Katherine Tallmadge, author and registered dietician, in which she talked about seven foods often described as bad for you that actually have health benefits. Included in the list was gluten and wheat, which she said "are vital for good health, and are associated with a reduced risk of diabetes, heart disease, cancer and excess weight."

    An MNB user wrote:

    Thanks for the laughable list  and  your view.   My wife has Celiac Disease,  an autoimmune condition caused by gluten.  Even consuming minute amounts result in  side effects that can last for several days.   Her mother was diagnosed with it much  too late before the gluten caused irreversible damage. She died a slow and agonizing death from complications from Celiac Disease.   No sense in expounding any  further. We continue to run into people with similar viewpoints. We’ve discovered it’s a waste of time to attempt convince otherwise…like writing this note.

    In addition to expressing my sympathy for the misfortunes suffered by this writer's wife and mother-in-law, I wrote:

    I don't think that Katherine Tallmadge was suggesting that gluten and wheat are good for everyone - just that people should not have a knee-jerk negative reaction to them. Of course, if you are allergic to gluten you should not eat it. Just as if you are lactose-intolerant you should not consume dairy, or if you are an alcoholic you should not have a glass of red wine.

    Gluten is not bad. But it can be bad for you if it causes medical issues. There is a difference.

    The enemy here is not Katherine Tallmadge, who I thought was making a legitimate point about moderation and contextual thinking. Or even MNB. (I sense a certain resentment in your email.) The enemy is absolutism, which is sort of like ideology ... practicing it can become a substitute for actual thinking.


    Well, I did get some email who liked that last line - The enemy is absolutism, which is sort of like ideology ... practicing it can become a substitute for actual thinking.

    (BTW...I should have credited half of it to the great Pete Hamill, who once expressed similar sentiments.)

    But the original emailer got back to me:

    Laughable again.  Read the article and your viewpoint again.  The absolutism originated from you.  I mentioned my mother-in-law and wife’s Celiac Disease  to contradict the absolutism in your viewpoint and inferred in the article.  I could care less if people can eat gluten with no ill effects.   It’s a DNA hand we’ve been dealt and we deal with it.

    And with classic narcissist behavior, your last sentence today regarding this attempts to flip it around to accuse me of the absolutism.


    But what do you really think about me?

    Listen, I don't want to make too big a deal about this...but I do want to make sure that my intentions are not misunderstood and that my statements are made clearly. And, because of the way this whole thing is structured, I get to have the last word.

    I don't think the original article was absolutist, and I don't think my interpretation was, either. The only point was being made was that some foods often said to be broadly unhealthy for everybody have their health benefits.

    I don't think the original article, or my reference to it, implied anything else.

    I do think that you inferred something else.
     
    KC's View: