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    Published on: July 24, 2012

    by Michael Sansolo

    There's an old marketing saying that may be going the way of pagers, dial telephones and eight track tape players:

    You can get the job good and fast, but it won’t be cheap.

    You can get it good and cheap, but it won’t be fast.

    And you can get it fast and cheap, but it certainly won’t be good.


    The Rolling Stones put it this way:

    You can’t always get what you want.

    Except these days, shoppers are finding that they can.

    I got a glimpse of this new reality a few weeks back while attending the Private Label Manufacturers Association (PLMA) international trade show in Amsterdam. Everywhere I looked, the offer to shoppers was clear: you can get everything you want.

    For instance, I saw products clearly aimed at healthy eating that talked about taste. Or quick serve items that claimed both taste and quality. And, of course, there was a common theme that these private label items are both inexpensive and offer top-notch quality. That’s not a message limited in any way to private label. Everywhere you look now you see the same promise: high quality, great taste, ease of preparation and low cost rapidly are becoming the norm.

    It’s all part of the new value equation consumers demand these days. While they are willing to spend more for certain products, services and experiences, in many cases they want the whole package. It may seem like too much to ask for, but if competition can supply it, the promise can be met.

    That’s an emerging industry reality that brings no comfort, especially as the drought in the heartland starts a process that we know will result in higher food prices at exactly the time when consumers reject paying more for anything. What makes the challenge in 2012 so different is that emerging competitors are making this new reality more possible than ever.

    You’ve read plenty here on MNB about Amazon.com and the emerging force of on-line shopping and rapid delivery that we all know is coming fast. Yet there’s more.

    Consumer Reports online ran an interesting article last week about the new realities of dollar stores, long the destination for extreme bargains and, in many cases, a less than stellar shopping experience. (You can access the article here.)

    In summary, Consumer Reports found that dollar store shopping has become significantly better, making it a wonderful alternative for a growing number of shoppers. The article highlighted both realities myths of dollar stores.

    For instance, dollar store shopping is seen as fun, convenient and frugal. Consumer Reports says shoppers can find a product mix that readily matches their needs, including key fresh products. All those attributes might explain why 76% of the shoppers surveyed said they have visited a dollar store in the past year.

    In addition, the article finds vastly improved store and shelf conditions, better product safety and ample variety of both national brands and private label. That in turn may explain why an increasing number of upscale shoppers are giving dollar stores both a look and a try. The article makes a point that even a casual visitor to dollar stores can make these days: newer units are better lit and more inviting than ever.

    In other words, there is a way to get it cheap, fast and good, but that’s what competition has always done. Which in turn means the only way to keep winning is to keep getting better at everything you do. Especially when shoppers believe they can always get what they want.

    And what they need.

    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: July 24, 2012

    MarketWatch reports it this way:

    "A week after Supervalu suspended its dividend and said it was considering a sale, its board of directors approved issuing non-qualified stock options and retention agreements to certain executives, according to a regulatory filing Monday.

    "The struggling supermarket chain disclosed in its 10-Q that the board approved non-qualified stock options to  'retain and motivate key employees' as the grocer attempts its business turnaround."

    The story goes on:

    "The filing shows CEO Craig Herkert was awarded 346,875 options. CFO Sherry Smith got 150,000 options, while executive vice president Janel Haugarth was allotted 156,250 options and EVP Andrew Herring, 125,000.

    "The retention agreements call for full payments if the executives stay with the company for the next two years. The payments do vest, meaning 10% of the total amount will be paid January 16, 2013. Another 20% vests July 16, 2013, 30% January 16, 2014 and 40% July 16, 2014."
    KC's View:
    I don't know how else to put this, so I'm just going to come out with it...

    You gotta be freakin' kidding me!

    If there has been one overriding message that seems to be coming out of many Supervalu offices over the past few weeks, it is that a lot of employees with the company feel that top execs are out of touch with reality, that they have no idea of what the problems are on the front lines, nor how to solve them - other than making cuts and preaching efficiency. By offering retention bonuses to four top executives at this precise moment, the company's board of directors has only cemented the perception that Supervalu has a bifurcated culture, and the only one that is valued is the one in the executive suite.

    I am gobsmacked.

    It was just a couple of weeks ago that an MNB reported to us that "Supervalu used to provide its corporate employees with free coffee, tea, paper plates and plastic eating utensils, the new policy is that you pay for it or you bring your own from home. Whereas Supervalu used to provide a wastepaper basket and a recycle basket for each cubicle, now employees have to take their trash and recycles to a central location.  These are the hard hitting decisions corporate is making to save this company..."

    They've stopped offering free coffee to the employees, and they're giving retention bonuses to the executives who, one could argue, at least have had some hand in driving the company into the ditch, or not being able how to get it back on the road, to the point where all or part of the company is now up for sale?

    Really?

    How tone deaf can these people be?

    Supervalu's board thinks that in order to "retain and motivate" top executives, they need to pay them more money and hold out a series of financial carrots? I did a little checking, and according to Bloomberg BusinessWeek, Craig Herkert gets an annual salary of $850,000 a year, and when you add up all his other forms of compensation, his annual take is more than $3 million.

    That's not enough to retain and motivate him?

    How about the possibility that if Supervalu collapses and goes the way of Fleming, he might have a hard time getting another job? Y'think that might motivate him a little? (Unless, of course, the conspiracy theorists are right and the day after Supervalu folds, they throw a parade for him in Bentonville...)

    But no, the board seems to think he needs more.

    Shut the front door!

    Ironically, of course, they announced this within days of the revelation that the CEO of Lenovo decided to give $3 million of his $5.2 million bonus to some 10,000 employees of the company, sending a powerful message about where he thinks value resides in his company. This is not an apples-to-apples comparison, of course, but the difference in priorities is striking.

    There are a lot of smart, dedicated, hard-working people in the Supervalu universe, and I can only imagine how they must view this news. Staff is being laid off, "organizational efficiency" is being preached, and so many people there feel like the guys on the boat at the end of The Perfect Storm - no matter what they do, the waves keep coming, the winds keep blowing, and they can't seem to get a break. Except that the folks at the top of the food chain ... they seem to have another mode of transportation. One without room for the people on the front lines.

    Unbelievable.

    Hell, even now the Idaho Business Review is reporting that there are concerns at the company's regional, 1,000-employee Albertsons Store Support Center in Boise that it could be closed down as a cost-saving measure. How do you think they feel about top execs getting retention bonuses?

    Here's what I think. Those smart, dedicated, hard-working people on the front lines are going to keep doing their jobs and keep doing their best, even under the most trying of circumstances. They're going to do it for their hourly wages or their annual salaries, and because it is their job to do so. Even if the folks at the top do not deserve that level of front line dedication.

    Published on: July 24, 2012

    Since I am currently spending the month in Portland, Oregon, team-teaching a course at Portland State University, I've gotten a number of requests from folks asking if I would have one of those casual get-togethers of MNB readers that I do around the country from time to time.My answer: Absolutely!

    Tonight, at about 6 pm, I am going to be sitting in the open courtyard at Nel Centro, located in the Hotel Modera at 515 SW Clay St in downtown Portland. (You'll know me because I'll be wearing the smile of a guy who is living the dream...) I'll buy the first couple of bottles of wine, and will hang out as long as anyone wants me to ... or at least until I have to head back to my home-away-from home to get MNB done for Wednesday.

    I hope I see you there...
    KC's View:

    Published on: July 24, 2012

    by Kevin Coupe

    Did you see the story about the Tony Robbins seminar in San Jose over the weekend, where the motivational speaker urged his audience to walk across hot coals as a way of demonstrating that they can overcome their fears and achieve their goals?

    Well, Robbins must be a pretty good motivator .... because at least 21 people reportedly ended up being treated for second and third degree burns on their feet.

    Now, according to Slate.com, "The self-help expert has praised the activity as a way to conquer fears, and his coaching company has stressed it has safely provided the experience for more than three decades." And the story says that many of the some 6,000 people who attended who did the fire walk did so unscathed.

    A representative of the local fire department, Slate writes, "said it discourages people from walking on hot coals."

    In this case, I'm going with the fire department. I'm sure that Robbins is a very charismatic, persuasive speaker. (So was Elmer Gantry, for that matter.) But there is nothing - absolutely nothing - that he or anyone else could say to get me to walk across hot coals in my bare feet.

    The folks who work for Robbins may like to say that the hot coal experience is a metaphor for releasing one's hidden power. But sometimes - in life and in business - experiences aren't metaphorical. Sometimes they are what they are.

    Hot, searing coals that cause second and third degree burns.
    KC's View:

    Published on: July 24, 2012

    AdWeek reports on a new study by Harris Interactive suggesting that consumers trust Amazon.com more than they do Google or Facebook.

    "According to the report," the story says, "66 percent of consumers (who were aware that data is generally employed by platforms to target them) said Amazon using their buying behavior data to pitch offers was 'somewhat to very acceptable.' Just 41 percent said they were comfortable with Google leveraging their search data for ad targeting. Only 33 percent said that Facebook's using profile data to target offers was 'somewhat to very acceptable'."

    In addition, "eighty-one percent of adults surveyed said they were OK with a grocery store using purchase data to tailor coupons for them." And, "Harris Interactive’s research also found that 38 percent of those surveyed were comfortable with a local merchant sending them offers on their phones. Not surprisingly, young adults were more open to mobile marketing, with 51 percent of those between 18 and 34 saying they are fine with location-based data being used as advertising fuel."
    KC's View:
    I suspect that this may be a case of Amazon having a proven track record of relevant use of data ... I never get emails from Amazon that are not a reflection of past shopping trips. I never complain about that, because sometimes these things come in very handy. I think there may be less certainty about how Google and Facebook are using their data...

    Published on: July 24, 2012

    • The Bergen Record reports that Walmart plans to open its first neighborhood Market grocery store in New Jersey with a 42,000 square foot unit in Hawthorne that it hopes to have open in about a year.

    The paper suggests that the opening of the store "will dramatically change the competitive landscape for ShopRite, A&P and other supermarket chains," especially if it just the first of a broader rollout across the state.

    Walmart has about 200 Neighborhood Markets operating in the US at present, and plans to open 30-40 this year.
    KC's View:

    Published on: July 24, 2012

    Amazon.com announced yesterday the creation of the Amazon Career Choice Program, described as "an innovative new program designed to expand the choices available to its employees in their future careers, whether at Amazon or in another industry. Many fulfillment center employees will choose to build their careers at Amazon. For others, a job at Amazon might be a step towards a career in another field. Amazon wants to make it easier for employees to make that choice and pursue their aspirations ... The program is unusual because unlike traditional tuition reimbursement programs, Amazon will exclusively fund education only in areas that are well-paying and in high demand according to sources like the U.S. Bureau of Labor Statistics, and the company will fund those areas regardless of whether those skills are relevant to a career at Amazon."

    “At Amazon, we like to pioneer, we like to invent, and we're not willing to do things the normal way if we can figure out a better way,” Jeff Bezos, founder and CEO of Amazon.com, wrote in a letter posted on the site. “It can be difficult in this economy to have the flexibility and financial resources to teach yourself new skills. So, for people who've been with us as little as three years, we're offering to pre-pay 95% of the cost of courses such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, nursing, and many other fields.”
    KC's View:

    Published on: July 24, 2012

    The Wall Street Journal reports that Peet's Coffee & Tea has "agreed to be taken private in a nearly $1 billion cash acquisition by German investment group Joh. A. Benckiser."

    However, in the wake of the announcement, shares rose above the $73.50 that Benckiser agreed to pay, leading to speculation that another entity could step in and launch a competitive bid. The prominent name in the speculation is Starbucks, described as "a logical suspect for a potential third-party bidder. Besides having the financial heft to be relevant in a $1 billion deal, Starbucks has close roots to Peet's. It was the inspiration for Starbucks's founders, one of whom worked at the company to learn the business, and Peet's was a supplier to the nascent chain in its early years."

    Starbucks is not commenting.
    KC's View:

    Published on: July 24, 2012

    • The New York Times this morning reports that Cargill has voluntarily recalled almost 30,000 pounds of lean ground beef that has been linked to several cases of salmonella poisoning.

    According to the story, only Delhaize-owned Hannaford Supermarkets is believed to have sold any of the beef, and Hannaford is calling on customers to return any of the meat that they have in their freezers for a full refund.

    QSR Magazine reports that two foodservice manufacturers are getting into the restaurant business with quick-serve concepts:

    "Smithfield Foods, synonymous with Virginia ham and pork, and yogurt company Dannon defied the traditional supply chain and started carting product from their manufacturing facilities to proprietary quick-service storefronts. Taste of Smithfield opened in the company’s hometown of Smithfield, Virginia, while Dannon unveiled the Yogurt Culture Company on Park Avenue in Manhattan. Both restaurants were conceived for the purpose of enhancing their brand’s mission, not necessarily to compete head-on with other quick serves, say representatives from each company."
    KC's View:

    Published on: July 24, 2012

    • Michaels Stores CEO John Menzer reportedly has resigned so he can focus on recovering from a stroke he suffered in April. The company has launched a search for a new CEO.

    It was back in April that the New York Times, in a story about widespread bribery by Walmart's Mexico division, noted that Craig Herkert - now CEO at Supervalu - and John Menzer - then the CEO at Michael’s - both knew about the bribery six years ago when they were senior execs at Walmart.
    KC's View:

    Published on: July 24, 2012

    • Sally Ride, who in 1983 became the first US woman ever to go into space, died yesterday at age 61. She had been suffering from pancreatic cancer.

    Ride followed her distinguished NASA career - she went into space twice, and had a third trip cancelled because of the Challenger disaster, and served on commissions looking into both the Challenger and Columbia shuttle disasters - by joining a think tank at Stanford University and later becoming a physics professor at the University of California at San Diego. She also created an organization called Sally Ride Science, designed to motivate children to pursue careers in science and technology.
    KC's View:

    Published on: July 24, 2012

    Yet another email about Supervalu, following up on our taking note of a SeekingAlpha.com piece pointing to in-store problems the company needs to deal with:

    There was another article that came out that discussed that SVU is going to address the pricing as well.

    The same article quotes Craig Herkert as saying he doesn't believe it's too late and an analyst talking about the condition of the company prior to Herkert taking over - he was dealt a tough deck of cards, and the original pricing strategy in '09 didn't work as well as they expected but this time it will be more broad based, etc..

    SVU knew the pricing was an issue - the operators in the field kept telling them, the local merchants at the banners kept telling them and they didn't listen. In addition, Craig's theory that the name on the front of the store didn't matter with regard to "synergy" and "centralization" - and made comparisons to Walmart - that approach in addition to pricing put the nails in the coffin… it's not just like Walmart because the signs on the front doors are NOT THE SAME so you don't expect to see the same things when you shop in Albertson's in CA as Jewel in IL as Shaw's in MA as Acme in PA…. I travel a lot and even Kroger in TN is different than Kroger in KY or IN - not huge but there is a local relevance; but Kroger anywhere is very different from Fry's in AZ….yet, they find a way to appreciate the buying and distribution benefits of being a large company.

    Herkert is right - Walmart is Walmart anywhere but so are my expectations of Walmart no matter where I am.

    When SVU banner presidents say "their hands are tied in so many areas that could make a difference" it's not an excuse, it's a fact. How do they expect the store associates to engage the customer more when they know the store isn't stocked, merchandised or priced appropriately for the customers they are servicing. It's very deflating to be asked to sell individuals something when you, yourself, don't believe in it.


    Another MNB user sent me a picture of Thomas' Bagels with a $4.69 price tag and wrote:

    This is from a Shaw’s store that is in the lowest price zone in the chain…..That exact same item can be bought for under $3 everyday shelf price at the Wal-Mart and newly renovated PFresh Target stores which are both within an easy mile or two away……..  THAT is why SVU is unfortunately going down……

    And, connecting this story to the one about the CEO of Lenovo deciding to give $3 million of his $5.2 million bonus to some 10,000 employees of the company, one MNB user wrote:

    CHEERS for Yang Yuanqing for sharing the wealth! There may be some hope for this country yet with people like him who give credit where credit is due – to all employees. Now if he would just get to the root of this and set up an actual bonus program that allows everyone to share in the profits without wondering each year if they will get a share or not.

    I appreciate your point that some CEOs (and I fear this is the majority), are under the delusion that they and their top management teams are completely responsible for their companies’ success. Unfortunately for those of us at SUPERVALU, top management has been able to take us to the crapper all on their own.


    Ah...but apparently the executive crapper - at least - is lined with gold.




    I suggested yesterday that I'm not sold on Walmart's small store expertise, which led MNB user Mark Heckman to write:

    I suspect, as you do, that Walmart is really good at being big, bold and cheap....but not so good morphing into other formats and sizes that do not have the same consumer chemistry or financial model as the the mother ship.  Walmart may be the world's largest "one trick pony", but with a "horse" that size, they can still afford to make some mistakes with these new ventures and live to screw up another day.

    True. And if things don't go right, the top folks in Bentonville may be seen by members of the board as resembling one specific end of the horse...
    KC's View:

    Published on: July 24, 2012

    The NCAA yesterday came down hard on the Penn State football program in the wake of a jury trial declaring former assistant coach Jerry Sandusky guilty of 45 counts of child sex abuse, and a subsequent report commissioned by the school revealing that the late, legendary coach Joe Paterno knew about Sandusky's actions as far back as 1998 and did nothing to stop him, apparently believing that it would soil the reputation of his football program.

    The university was hit with a $60 million fine, a ban on post-season bowl appearances for four years, and the vacating of all wins by the school dating back to 1998. Penn State also lost 20 scholarships per year that it could have offered students over the next four years, and is being put on probation for five years. And finally, any football player attending Penn State was given the right to immediately transfer and compete at any other university.

    "In the Penn State case, the results were perverse and unconscionable," NCAA President Mark Emmert said. "No price the NCAA can levy with repair the damage inflicted by Jerry Sandusky on his victims."
    KC's View:
    "Perverse and unconscionable" only begins to describe the actions of many Penn State officials in this case. The damage that has been done - especially to the lives of the boys victimized by Sandusky - is incalculable.

    I remember that late last year, when Paterno was fired by Penn State, one MNB user - who shall not be named - wrote in to say that "if he was wrong morally its not good for business and is going to hurt ticket sales.  Poor move by Penn State.  Firing Paterno was like firing God."

    He may want to rethink that attitude.

    Y'know what's bad for business? Turning away when you know something is wrong. Putting emphasis on the wrong priorities. And generally thinking that business is the most important thing.

    It isn't. And the Sandusky-Paterno-Penn State case will remind us all for a long time of what happens when you think that business priorities trump everything else. And what happens when you close your eyes to evil.