business news in context, analysis with attitude

Published on: June 20, 2012

by Kate McMahon

Soda Jerk or Waistline Savior?

That online headline summed up the debate bubbling on the internet over New York Mayor Michael Bloomberg’s controversial proposal to ban the sale of jumbo sugary drinks in city restaurants, fast food chains, delis, movie theaters and street carts.

“Nanny State!” read a plethora of blog posts – with writers railing about government intruding on personal choice and asking, “What’s next, popcorn?” Proponents of the progressive public health measure echoed chef-author-New York Times columnist Mark Bittman, who countered with the obesity-increases-health-care-costs argument: “Your right to harm yourself stops when I have to pay for it.”

As has been chronicled here on MNB, with plenty of spirited commentary resulting, Bloomberg put forth the proposal to ban the sale of sugary drinks in servings larger than 16 ounces (the size of a small soda at McDonalds), saying it is a way to fight obesity in a city that spends billions of dollars a year on weight-related health problems.

Anyone with an opinion can share it with the NYC Board of Health, which will hold a public hearing on the measure next month. It is a mark of the modern world that the board has an online link for city residents to weigh in with just one click - they don't have to wait for the hearing to make their opinions heard. Or at least known.

Here in the New York area, Bloomberg’s plan has been fodder for the late-night comics and even a New Yorker cover. Two recent polls show a slim majority (on pun intended) New Yorkers oppose it – between 51 and 53 percent. By contrast, a recent national poll showed 64% of Americans thought government was going too far in regulating people’s diets.

Obviously, the city’s restaurant lobby and beverage industry representatives are adamantly opposed and the possibility of legal action looms. Among the arguments: the local ordinance is infringing on state and federal authority, and would impose burdens on free flow of commerce between states.

Certainly, there is much about the proposed ban that is nonsensical. You can still buy a Big Gulp or a 20-ounce bottle of soda at 7-11 (convenience stores and supermarkets are exempt). Nor does it outlaw a large Caramel Frosty at Wendy’s at a whopping 1,000 calories (because it is milk-based) or multiple free-refills of your 16-ounce soda. The fate of the Starbucks Frappuccino under the proposal remains unclear.

(Of course, the Frappuccino lost much of its appeal for many under another Bloomberg initiative that required chain-restaurants in New York to publish calorie counts on menus. Four-hundred calories per drink? No thanks.)

But whether Bloomberg is seen as an annoying nanny or a dedicated health advocate, here's an interesting piece if information to add to the debate. A just-released study found that life expectancy in New York City has increased by 10 years in Manhattan since 1987, bucking a national trend. The researchers largely attribute that rise — the fastest in the nation — to a crackdown by the New York City health department on unhealthy behaviors through aggressive policies regarding smoking, banning trans-fats and posting calorie counts.

I had been on the fence about the effectiveness of Bloomberg’s soda ban, but that study persuaded me to support it. I care little about adults ranting about the Nanny State. If subtle changes can help our nation’s young people, in particular, live healthier lives, then I’m all for it. This is a start.

Comments? Send me an email at kate@mnb.grocerywebsite.com .

Published on: June 20, 2012

by Kevin Coupe

Good piece in the Wall Street Journal this morning about how some companies are trying to clean up their employees' language. Not the use of vulgarity, but the use of improper grammar that they see as hurting their businesses in the long term.

"Managers are fighting an epidemic of grammar gaffes in the workplace," the story says. "Many of them attribute slipping skills to the informality of email, texting and Twitter where slang and shortcuts are common. Such looseness with language can create bad impressions with clients, ruin marketing materials and cause communications errors, many managers say.

"There's no easy fix. Some bosses and co-workers step in to correct mistakes, while others consult business-grammar guides for help. In a survey conducted earlier this year, about 45% of 430 employers said they were increasing employee-training programs to improve employees' grammar and other skills, according to the Society for Human Resource Management and AARP." And there's even one consultancy that requires potential employees to pass a spelling and grammar test before being hired, and mandates that every important piece of correspondence be copy-edited before being sent.

This is a terrific piece, and the whole thing can be read here.

I think that proper use of language is enormously important, and companies are right to demand that employees are literate to a minimal degree. I think that emailing and texting have done a lot to diminish people's skills - or at least their discipline - when it comes to language. (Personally, when I text or email, I try to use full words and sentences.)

I'll tell you what made my heart sing the other day. I was in the Trader Joe's in Redondo Beach, California, and I stopped at Trader Joe's to pick something up. I got into the express lane, and noticed that the sign said, "Fifteen items or fewer."

Not "Fifteen items or less," as such signs commonly say.

Great to see that Trader Joe's gets it right. And I think that every retailer in the country with an express lane ought to go out - right now - and make that change. Or at least ensure that from this day forward, all new express lanes use proper language.

Anything else is pure laziness. And, contributes to the slow decline of western civilization.

Published on: June 20, 2012

Time, as part of its "Future of Retailing" series, has a fascinating piece about Zeynep Ton, a Professor of Operations Management at MIT’s Sloan School of Management, who argues that "viewing retail labor as an expense to be cut, rather than as an asset to be invested in, is unsound," and that "by underinvesting in their employees, retailers are actually making their operations much more inefficient, and therefore much less profitable."

According to the story, Ton has found after a decade of study that "companies that buck the status quo and invest heavily in their workforce actually are able to not only compete with their competitors on service but on price too."

Ton recently wrote in the Harvard Business Review that "highly successful retail chains - such as QuickTrip convenience stores, Mercadona and Trader Joe’s supermarkets, and Costco wholesale clubs - not only invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors."

"In my field visits," Ton writes, "I consistently found that with so many products, promotions, and storage areas, a task that ought to be simple - such as shelving toothpaste - is not. Such a surprisingly complex operation requires something uniquely human: judgment. Poorly paid, poorly trained, and poorly motivated employees have to monitor which products have sold, decide what to keep on the selling floor and what to move to and from backrooms, and remember which backrooms contain which items.” And the simple reality seems to be that when employees feel like they are a cost, not an asset - because the companies for which they work treat them and view them as such - they are less invested in maintaing appropriate priorities, more likely to follow a connect-the-dots approach to business, and have little commitment to the critical importance of customer service.

Borders, she says, was a classic example of such a scenario - highly lauded for strong IT and inventory systems, but a place where studies showed that one in six items was in the wrong place. Employees didn't care about things being in the right place, which meant that customers couldn't buy these things, which perpetuates a kind of vicious cycle: "Cutting labor costs will help in the short run, but when poorly paid, unhappy employees then promote those same operational mistakes; profits fall, starting the whole cycle over again."

The story goes on:

"When workers are well trained and a retail operation is fully staffed, operational failures like missing merchandise are severely mitigated. And when employees are paid and trained well, they are much less likely to leave. Indeed, turnover at all the stores Ton studies in her report are much lower than the industry average, which reduces the need to invest in training new employees ... While investing in human resources may have always been a good strategy, it is one that is more important now than ever for brick-and-mortar retailers. The headlong rise of e-commerce has put extreme pressure on retailers to become more efficient, and to justify their existence to customers. Those who want huge selection, low prices, and no service can find that online, without the hassle of leaving their living rooms."

Published on: June 20, 2012

• The Boston Globe reports that Cambridge, Massachusetts, Mayor Henrietta Davis is saying that she would like the home of Harvard University to follow the lead of New York City and limit the size of sugared soft drinks sold in restaurants.

Davis tells the Globe that after two decades working on a children's health task force, "she is frustrated that many obesity prevention initiatives to boost physical activity and consumption of fruits and vegetables have produced tepid results. It is time, she said, for bolder action."

Not surprisingly, the story suggests that the proposal is generally supported by people in the public health business, and opposed by the soft drink and restaurant industries.

• In the UK, the Guardian has a piece has a story about what makes British people fat - and it blames the food.

"Why are we so fat?" the story asks. "We have not become greedier as a race. We are not, contrary to popular wisdom, less active – a 12-year study, which began in 2000 at Plymouth hospital, measured children's physical activity and found it the same as 50 years ago. But something has changed: and that something is very simple. It's the food we eat. More specifically, the sheer amount of sugar in that food, sugar we're often unaware of."

The detailed, 2,700-word piece suggests that the main culprit is high fructose corn syrup (HFCS), which is "pumped into every conceivable food," and that all this sugar creates a kind of "tsunami" with an enormous impact on body function: "The effect this has on different organs in the body is only now being understood by scientists. Around the liver, it coalesces as fat, leading to diseases such as type-2 diabetes. Other studies have found that sugar may even coat semen and result in obese men becoming less fertile. One researcher told me that, ultimately, perhaps nothing needs to be done about obesity, as obese people will wipe themselves out."

Published on: June 20, 2012

• The Denver Post reports that Walmart plans to open five Neighborhood Markets in the Denver area this month - three today (in Arvada, Centennial, and southeast Denver), and two on June 29 (in Littleton and northeast Denver). There are at least three more Neighborhood Markets scheduled to be opened in the region before the end of the year.

The story notes that Walmart has opened almost 200 of the format since 1998, but that these are the first to be unveiled in Colorado.

Published on: June 20, 2012

The Chicago Sun Times reports on a new American Consumer Satisfaction Index (ASCI) saying that McDonald's got the poorest customer satisfaction rating - 73 percent - of any fast food chain in the survey. The rating was up one point, but continues a three-year tradition of McDonald's having the worst customer service perception of fast food chains.

The story notes that "Papa John’s earned the highest customer satisfaction rating — 80 percent — followed by Subway; Little Caesar; Dunkin’ Donuts; Wendy’s; Pizza Hut; Domino’s Pizza; Taco Bell; Starbucks; KFC, and Burger King."

Starbucks saw its customer satisfaction drop five percent, the biggest decline in this year's survey.

Published on: June 20, 2012

Bloomberg reports that Walgreen is acquiring a 45 percent stake in Alliance Boots - the Switzerland-based drug store chain with more than 3,200 stores - for $6.7 billion in what it calls "an attempt to create a global chain of pharmacies."

According to a joint statement by the companies, Walgreen will pay $4 billion in cash and the rest in stock, and has an option to acquire the rest of the company in three years.

"The combination gives Walgreen and Alliance Boots, the U.K.’s largest drugstore-chain company, more than 11,000 stores in 12 countries and 370 distribution centers," Bloomberg writes.

Published on: June 20, 2012

• Bloomberg reports that Rite Aid Corp. has agreed to pay almost $21 million "to resolve allegations that it misclassified certain managers as being exempt from laws requiring they be paid for overtime. The accord, which is subject to court approval, resolves claims for damages dating back as far as 2002 and covers more than 6,000 current and former associates, the company said in an e-mailed statement. The company faced 15 lawsuits."

• Sunflower Farmers Market, the natural and organic grocer that describes itself as selling “serious food at silly prices,” will open its first store in the San Jose, California, market today. A second San Jose store is slated to be opened next month.

• FastCasual.com reports that Chipotle says that "it has reached an important milestone in its efforts to serve sour cream and cheese made with milk from pasture-raised dairy cows. Beginning this month, 100 percent of the sour cream served in its restaurants is produced with dairy from pasture-raised cattle."

Published on: June 20, 2012

...will return.