business news in context, analysis with attitude

Published on: August 1, 2012

by Kate McMahon

Once again, I am trying not to be so yesterday.

A recent report by Catalog Spree, a leading catalog shopping app, confirmed what my tech savvy daughters preach and practice – the hottest way to online shop is on an iPad. As the last in the family to get a lap top and a smart phone because someone always needed my upgrade, I am now finally turning my over-50 attention span to a tablet, namely the iPad.

I am clearly not alone. Apple last week announced it had sold a record-setting 17 million iPads in the second quarter of this year. Apple’s share of the tablet market is 68%, with Android devices in second place with 29%, according to the research firm Strategy Analytics.

While Catalog Spree clearly has skin in this game, its report included convincing data from a number of sources. Consider the following: Mobile share of e-commerce shopping more than doubled from 7% to 15% between December 2011 and April 2012 -- with iPads accounting for 50% of those sales and iPhones 25%.

Other interesting stats include:

• More than half of iPad shoppers – 62% -- are female, and 38% male.

• The average age of the mobile shopper is 25-54 and approximately one-third of all 25-44 year olds will use a tablet in 2012.

• Shoppers do most of their online browsing after dinnertime, with 6-9 p.m. Pacific time the peak hours, and Sunday the most popular shopping day.

• Shopping by iPad occurs most frequently in densely populated areas of the U.S., led by New York, Chicago, Houston and Los Angeles. But the longest browsing sessions come from Hawaii and sparsely populated rural areas such as West Virginia, Alaska and Wyoming.

• Most significantly, the average order value per device netted out at the following: Smartphone - $80, computer - $102, and tablet -$123.

(Research has found that consumers frequently utilize their smart phones for comparison shopping, often while in a brick-and-mortar store, but are more likely to execute a purchase on a computer or tablet.)

For retailers and marketers, it’s important to recognize that the emerging technology is changing behaviors and shopping patterns. The tablet combines the mobile accessibility of the smart phone with the graphics and navigational ease of a computer. In fact, flipping “catalog” pages or zooming in on product a touch screen tablet is easier than on a computer. And with mobile coverage you could literally order your groceries over your morning coffee, during your lunch hour or on the train home from work.

There are thousands of shopping apps on iTunes, and I was curious to see how many retailers had iPad specific apps. The results on the Most Popular Lifestyle apps page were as follows: Walmart, Target, Sam’s Club, Walgreen’s, eBay and Gilt.

Clearly forward thinking. To not incorporate tablet shopping into a retail business strategy would simply be so yesterday.

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

Published on: August 1, 2012

by Kevin Coupe

The London Olympics have generated a number of controversies, not least of them the ongoing criticism of NBC Sports to delay the airing of what it sees as premier events, even though the internet and social media make it possible for people all over the world to know the results in real time. Even NBC has stepped on its own toes; in a commercial for "Today," it mentioned the result of an event that it had not yet aired. (To be fair, NBC is seeing record viewership for the Games. So there may be a method to its madness.)

But here's an Eye-Opening problem that perhaps nobody saw coming.

The Boston Globe reports on how "after heavy use of smartphones interfered with live television coverage of cycling races, the International Olympic Committee on Sunday asked fans attending the Games to avoid sending text or Twitter messages. The surge of cellphone traffic had overwhelmed signals from GPS location transmitters attached to the racers’ bicycles, and TV commentators could not receive real-time information on the contests, including the locations of many riders. The committee did not return a request for comment, but a spokesman told the Reuters news agency that it was asking smartphone users to 'please kind of take it easy'."

One commentator said that the inability to compensate for the high smartphone usage was inexplicable, given the fact that we are living in 2012 and, well, it isn't like smartphone usage was unexpected.

But if that is inexplicable, this may be more so. The Globe notes that NBC's "recently hired chief digital officer, Vivian Schiller, irked many Twitter users when she retweeted a message from CNN producer Jonathan Wald that seemed critical of those who complained about NBC’s coverage. 'The medal for most Olympic whining goes to everyone complaining about what happens every 4 yrs., tape delay,' the message said."

Really? That's where you want to take the conversation? You want to use social media to criticize the people who are using social media to complain about the fact that social media makes it possible for them to get information before you give it to them?

It is a new world order, and it takes some getting used to. But highly paid executives probably ought to figure out answers rather than whining about complainers.

Published on: August 1, 2012

There is a terrific column in the Star Tribune about the leadership deficits that have hurt two of Minnesota's biggest companies, Supervalu and Best Buy.

The columnist, Lee Schafer, writes that "while these companies are in different industries, they are both in markets undergoing fundamental changes that require a corporate leader to do nothing less than reimagine the business -- and bring employees and other stakeholders along with him."

While Supervalu CEO Craig Herkert and Best Buy CEO Brian Dunn left their companies under vastly different circumstances, Schafer writes that they do share one common characteristic: "neither one took anything other than incremental action, even as the need for fundamental change became more and more apparent."

"It is the job of the leader," Schafer writes, "to relentlessly focus the organization on the customer and what he or she is doing, and foster a culture that rewards employees for innovations that serve the customer. And, most importantly, move fast." And he quotes Rohit Deshpandé, the Harvard Business School professor who says that retailers get in trouble when "they are product-centric and not customer-centric, and they just don't see the change coming."

Published on: August 1, 2012

Bloomberg BusinessWeek reports that Richard Schulze, the founder of troubled Best Buy who is trying to take the company private, is recruiting current and former company executives to help him run the retailer if he is successful.

The story notes that Schulze "has been exploring taking the world’s largest electronics retailer private after stepping down as chairman last month, a person familiar with the matter has said. An internal probe found he failed to tell the board about allegations that then-CEO Brian Dunn was having an inappropriate relationship with a female employee. Schulze said when he resigned that he would consider all options, including selling his 20 percent stake in the Richfield, Minnesota-based company."

According to the piece, in addition to talking to executives Schulze has been spending a lot of time talking to private equity groups and other potential sources of funding. He'll need the money; experts say he'll need "to raise $1 billion to $2 billion from a private-equity firm and $7 billion to $8 billion in debt" to be successful. And, these same experts say, investors are wary about spending that kind of money on Best Buy, thinking it may be anything but.

Published on: August 1, 2012

• Various published reports say that Amazon is expanding its locker program - the initiative which has lockers installed in selected 7-Eleven locations so people can pick up their orders there rather than having them delivered at their homes or offices. (When you order from Amazon, you get a code. When you type the code into a terminal at the 7-Eleven, a locker door pops open and you retrieve your merchandise.)

Originally, the locker program was being tested in Seattle and London. But now, according to reports, the test has been expanded to New York, Washington, DC, and the Silicon Valley.

Published on: August 1, 2012

• The San Diego Union-Tribune reports that Walmart has "unveiled its 100th California rooftop solar array Monday at a store on College Avenue in San Diego," which is seen as critical for the retailer as it pursues its ultimate goal of becoming "100 percent supplied by renewable energy."

Published on: August 1, 2012

Reuters reports that today is the day. August 1, 2012. Today is the day that the US Postal Service (USPS) is expected to default because it cannot make a $5.5 billion payment for future retiree health benefits, a payment mandated by the US Congress.

A second payment, due at the end of September, also is expected not to be paid.

While the defaults are not expected to have any impact on deliveries - indeed, many experts say that whatever its shortcomings, these mandated payments put the USPS in an untenable position that virtually no other organization faces - the story notes that "trade groups, mailing industry lobbyists and some business owners said the approaching default raises questions about the Postal Service's financial stability and Congress's commitment to helping remedy the agency's money woes.

"Eroding confidence in the Postal Service's future adds incentive for mailers to explore alternatives to traditional mail, they said - a shift that would only deepen the agency's troubles."

The USAPS lost $5.1 billion in 2011.

Published on: August 1, 2012

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

• The St. Louis Post Dispatch reports on the opening of a new Dierbergs supermarket there, designed to go head-to-head with a nearby Schnucks flagship store that is "equipped with a beer cave, cooled wine and cheese room, Kaldi's coffee shop and state-of the-art cooking school." At the new Dierberg's, customers "can hold a bridal shower, listen to live music, or get a nurse to look at their child's earache. They can participate in a wine-tasting with a celebrity chef via Skype, or sample a glass of Pinot noir as they push their cart through the aisles. They can sit down on a couch – then buy it."

• Bloomberg reports that Valero "plans to sell or spin off its network of fuel stations, a business that may be worth as much as $5 billion." The move would create a separate chain of more than a thousand company-owned and branded gas stations in the US and Canada, and is seen as a way of enhancing shareholder returns.

• Time has the same story that a lot of other publications have run - that a number of big box retailers (including Walmart, Best Buy and Cabela's) "are realizing that the enormous, one-size-fits-all approach doesn’t work for all shoppers," and are coming up from smaller versions of their stores that not only will be attractive to more shoppers, but also that can fit into locations previously unavailable to them.

Nothing new here. But it is worth noting that the mainstream media is all over this "story," which means that more customers may be expecting to have this option.

Published on: August 1, 2012

• Paula Price, Ahold USA executive vice president/CFO, has been recognized by the Boston Business Journal with the 2012 CFO of the Year Award in the public company category.

Published on: August 1, 2012

• Gore Vidal, the irascible and iconoclastic American writer and political observer who produced novels ranging from "Burr" and "1876" to "Myra Breckenridge," as well as one of the best plays ever written about politics, "The Best Man," died yesterday of complications from pneumonia. He was 86.

Published on: August 1, 2012

One MNB user wrote:

I'm a first time emailer and +15 year Supervalu employee.

I attended the all-employee meeting today held by Wayne Sales. He did a very nice job of laying out the challenges in front of us with sincerity. People are cautiously optimistic, however, we're all wondering why he didn't do something sooner given that he was/is the Chairman of the Board- so there's a bit of cynicism in the building, consistent with what you said in MNB. We also don't understand how Craig Herkert was given a raise a couple of months ago, with a bonus and 500,000 stock options with a 3 year vest. Then most recently (one week ago) awarded another stock option block for retention, but then fired one week later. There's a definite credibility gap for most employees. Wayne does however have a great track record and really connected with the team today so there's hope- if the whole place doesn't get sold or broken up.

I also wanted to address someone's comments in the mailbag today- talking about the head of merchandising and supply chain, Janel Haugarth. The person mentioned that she's well thought of and might become the CEO. An overwhelming number of my peers, employees and senior leaders in merchandising (on her team) find this to be laughable. She had this reputation of making her numbers in the wholesale world (where banners and vendors are held hostage) then was given the reins of retail merchandising. The stock was $7-8 dollars when she took over and you know where it is today. She's clueless about retail and has presided over an accelerated decline in sales, market share, margin dollars and rate. She's a good politician and understands the wholesale world but has no business overseeing retail. Consequently, a banner president (from a tiny banner) was brought in to manage merchandising a couple of months ago, Tim Lowe. Very nice man but who is equally clueless. In typical Supervalu tradition, we layer up - trying to cover up one problem and creating two more. The blind is reporting to the blind. So what happens to Janel for presiding over a total collapse of banner results? She keeps her job and is awarded an end of the year bonus, gets a raise, gets a 3 year stock vest and another set of retention money with stock options. Some in my gender community wonder if it's because she's a woman. This is every bit as bad as the Craig situation.

We will be watching what you do Wayne. We're counting on you to make all the tough decisions that weren't made before, wondering if you'll do the right things when you didn't do them as the Chairman. We hope you do and we will rally behind you.

Sounds to me like the fires of hope are burning low...

To be honest, I've never before heard a bad word about Janel Haugarth, and there are folks who think very highly of Tim Lowe. I've certainly never heard either of them described as "clueless."

I was a little uncertain about posting this email - it struck me as a bit personal - but decided to because it illustrates the depth of feeling in some quarters of Supervalu. People like Janel Haugarth and Tim Lowe, assuming they stick around, have a big job in front of them. Earning the loyalty of people who work for them is an important component of that job.

From another MNB user:

After reading the letter that Wayne Sales wrote to the Supervalu employees, I was able to sum it up in three words – blah, blah, blah.  This is the same rhetoric that has been spewing from SV Corporate since Herkert was hired. The executives at SV are empty suits completely out of touch with reality. They do not have the pulse of the front line, they do not have a desire to provide a good product with exceptional service and the goal is (obviously) to sell off whatever banners they can, other than Save-A-Lot. That overwhelming silence you hear is the support that the employees are offering to the new (?) leadership.

To quote Kevin Spacey in “Margin Call” – “This is what the beginning of a fire sale looks like."

You get extra points for the movie reference.

Another MNB reader offered:

I am confused: Wayne Sales is now going to accelerate change at SV? Hasn't he been on the Board since 2006, approving the hiring of executives (including Herkert), retention bonuses, and intimate financial knowledge behind the scenes....yet, he is now in charge and "has a plan"? Funny that he has let this circus go on and now is being regarded as a turnaround specialist from Canadian Tire many moons ago? He should have been doing a better fiduciary duty being not only a board director but the non-executive chairman since 2010 and stepped up to the plate long before now...did he just wake up from a deep sleep?

All legitimate questions.

Still another reader chimed in:

Here is my simple suggestion for Mr. Sales...

I think the most productive day he could possibly spend would be to call in a mix of front line people and have a good old fashioned operations listening session.

The mix should include the best of the best in store managers, district managers, area managers.

He could consider doing that with each functional part of the business, marketing, distribution etc.

He may discover that he doesn't understand the issues as well as he thinks he does.

Hopefully a group of people as suggested would speak out to improve their business.

And another reader wrote:

Re: Supervalu, JC Penney's or Sears, the problem is that they all linger around like dusty, old Sylvania TV sets from the 1980s. You can bring in so-called "leadership" teams and try to replace the cathode ray tubes with LCD panels. And you might try and retrofit the clunky channel changing mechanism with a remote control. But the consumer will still find more enjoyment- and get more value from--heading over to Costco and buying that new 60" Plasma, Internet ready TV. Don't get me wrong, I realize they (management) have to try and save these organizations. The problem is that these retailers have long since past the point of no return. And while leadership must try to fool themselves for the sake of the stockholders, management and team members, we would be fools to pretend such transformation is possible.

This is going to become my new mantra...

In an world where fundamental changes are taking place, incremental action almost never suffices.




Responding to my piece last week about cork closures in wine bottles, one MNB user wrote:

You could simply accept that there is sometimes many to accomplish something in multiple ways…none of which must be mutually exclusive…

I never suggested that everybody needs to use cork. I was relaying something I didn't know - that rather than being in short supply, there appears to be ample cork out there.

I continue to believe that the sound of a cork being removed from a wine bottle is one of the most romantic sounds on earth, and sue me ... I believe in romance.

But I get that not everybody wants to use it.




Finally, reacting to yesterday's piece decrying the fact that Jonah Lehrer was found to have made up portions of his bestselling book, "Imagine: How Creativity Works," MNB user Krag Swartz wrote:

"Imagine" was a book our company gave to Russell T. Lund Scholarship recipients in June at a scholarship reception held in their behalf.  Jonah Lehrer was someone I was promoting as a guest speaker for FMI Future Connect next spring.  I was impressed with his writing and used his interviews on Youtube to put him in the running for a speaker in the Strategic track of the Future Connect Leadership Conference.   I shared 'Imagine" with colleagues.

What a trust-busting mess.

I know. I'm not sure why I feel so betrayed, but I do.

And the problem is, it throws the shadow of doubt on everything he has ever written.

What a fool.