retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: August 2, 2012

    This commentary is available as text and video; enjoy both or either. Plus, the complete archive of FaceTime videos can be found here.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy, once again coming to you from Portland, Oregon ... for the last time this summer, I'm afraid. It has been one of the best summers of my life, and I'm sad to go.

    So I was at this party a few weeks ago, and I was chatting with a young woman who works at Nike's corporate offices here, and I'm not sure how we got into it, but I mentioned to her that I'm unable to wear Nike sneakers because I have a wide foot - sometimes EE, sometimes EEEE, depending on the shoe. So I've been wearing New Balance for pretty much all my adult life, and am perfectly happy with them.

    Well, she saw in me a challenge - and so she invited me to join her at the newly renovated Nike Store here in Portland, where she wanted me to interact with a computerized system called Nike ID ... she said that they'd be able to customize running shoes suitable for my feet.

    Well, she was sort of right. The Nike ID system is very cool, and can be used to customize sneakers of all kinds either in the store or from home, choosing from a wide range of fabrics, styles and colors. There are some inherent drawbacks for a person like me - the system is a little clunky when it comes to identifying which shoes actually come in EEEE, and I'm not sure I;d actually spend the time doing it. This very nice woman said to me, "They don;t have this kind of system at New Balance," and she's right. But I also had to point out to her that for people like me, they don't need such a system - they have styles I like and sizes that fit me, and the whole process is a lot easier. That said, my 18-year-old daughter would not be caught dead in a pair of New Balance, and she'd love the system, and in the long run, her business is probably more important to Nike.

    However, there was technology at Nike that I did find relevant and that really caught my eye. It is part of a system called Nike Plus, and essentially they've created gadgets like wristbands that measure your running time and distance and then communicate it to your iPad or iPhone so you can track your progress. Or sneakers that allow you to measure how fast you jump rope or how high you jump, which translates into how many calories you burn.

    There's been a lot of this stuff talked about over the years, but I was fascinated to see it in action. I'm a middle aged guy with creaky knees, but I can certainly see the benefit in having one of those Nike Plus wristbands to keep track of what I'm doing - it seems a lot more seamless and lot easier to manage than some of the systems I've seen out there that do everything from measure your heartbeat to make you a cup of coffee for after your run.

    Whether it is customized sneakers or technology that measures every step and almost every bead of sweat, this stuff fascinates me. It all points to a consumer who is going to expect more from every experience, want more from every experience, and is going to search for retailers and products that are relevant to these needs and desires.

    Then, all retailers and manufacturers have to do is live up to those raised expectations.

    Easy, huh?

    Just do it.

    That's what is on my mind this Thursday morning, and as always, I want to hear what is on your mind.

    KC's View:

    Published on: August 2, 2012

    by Kevin Coupe

    The dominant story from the Olympics yesterday had nothing to do with medals and personal achievement. Rather, it had to do with premier athletes who tried to lose.

    "On Tuesday night at the London Games," the New York Times writes, "some of the world’s best badminton players hit some of the sport’s worst shots. Sad serves into the net. Returns that sailed far wide.

    "Howls from the crowd were loud and instant, and the calls for investigation immediate.

    "On Wednesday, four women’s doubles teams — two from South Korea and one each from China and Indonesia — were disqualified. But the circumstances were complicated by the fact that the rules of the sport seemed to give the athletes an incentive to lose.

    "The eight players were found to have tried to lose their matches intentionally, apparently because they had determined that a loss would allow them to play a weaker opponent in the next round ... The disqualifications threw the tournament into turmoil and prompted protests and calls for rule changes. Indonesia appealed the decision and then withdrew the appeal, while the South Koreans had their appeal denied after officials reviewed the matches, interviewed the umpires and spoke to the players."

    It seems an extraordinary development - at a global event built on the notion of achievement, participants discover that not trying their best, not competing at the highest levels, may be the best way to go the farthest and achieve the greatest success. Of course, it didn't work out that way in the end, but let's face it. They were playing by the rules.

    An important lesson, I think. In life and in business, there is no substitute for always trying your best, always working your hardest. Shortcuts, for better or worse, often do not take us to where we need to go, or give us the same sense of satisfaction in the trip. Where one ends up is important, but the process of getting there can have its own rewards.

    But the events of this week also teach us that when we create any sort of infrastructure, it is critical to build something that rewards and recognizes hard work and people of character. To do otherwise is to create something that may not be sustainable.

    Go figure. Badminton ended up being an Eye-Opener.
    KC's View:

    Published on: August 2, 2012 has a piece by Roberta Matuson about dumb company rules, a column prompted by the Olympic rules that had U.S. gymnast Jordyn Wieber not making it to the women’s all-around finals because she came in third in the qualifying round, and the Olympics has a two-per-country rule. "Some might argue that this rule is a good one, as it gives countries who might not have a chance to medal in the all-around an opportunity to do so. But it’s still a dumb, stupid rule, as we know there is a snowball’s chance in hell these countries will beat out those who are truly the best.

    "This dumb, stupid rule reminds me of some of the rules I see in corporate America," Matuson writes.

    First, she says, is "the customer is always right ... I learned about this rule early on in my career when I worked at the service desk at Marshalls. We’d have the regulars who would come in at the end of the season and return clothes that were obviously worn, and I do mean worn. We had to refund their money because the customer was always right. I recall a time when a customer tried to return some crazy item that we never sold in our store. You guessed it. The customer was right and we the customer service personnel had to find a place to store this large object.

    "I also recall many a time when customers were down right rude to store personnel. How this was right I will never know! There are indeed some times when the customer is not right. In fact, there are many."

    Other rules that vex her:

    • "How about the no cell phones at work rule? Companies say they are concerned that employees will take photos of confidential papers or product designs, so employees are required to check their phones prior to going to their work stations. That’s all fine and good until the nurses office at your child’s school tries to reach you and she can’t. How about eliminating this rule and instead hiring people who are trustworthy? Just a thought."

    • "How about the rule that says you can’t use the Internet on company time? Do you know anyone who hasn’t broken this rule, including the person who came up with this rule? I can understand asking people to limit their time, but forbidding it is just plain stupid."

    • "One of my favorite dumb stupid rules is the 'six-month rule.' You have to be in your job six months before you can transfer or promote to another position. This might have worked well in the seventies, when Baby Boomers were so happy to have a job that most just went along with the rules. Today’s workforce is different. Employee loyalty no longer exists. If an employee comes up against the six-month rule, they simply go around it. They do so by playing for another team."
    KC's View:
    I'm with her on everything but "the customer is always right," and that's because I think she misinterprets the rule.

    What it really means is "always act like the customer is always right, because in the long run it is better for business than treating any customer like he or she is wrong." In the end, one never wins an argument with a customer. Even if you do, you lose ... because you've created a dissatisfied customer who is more than willing to communicate that dissatisfaction to others.

    Other than that, I'm with her.

    Published on: August 2, 2012

    Bloomberg has a story about how Walmart "is becoming more sophisticated in its dealings with government, co-sponsoring events with a range of advocacy groups from business organizations to Hispanic elected officials, building a bipartisan Washington presence, and interviewing its customers on political issues. The company will also have a presence in Tampa later this month when Mitt Romney accepts the Republican Party presidential nomination, and in Charlotte next month at the Democratic Party’s convention."

    Walmart is said to be keenly aware of how important its "Walmart moms" are in the electoral process, so they are working to both be in touch with the needs, interests and priorities of this voting bloc and use those issues to further its own political interests.

    For example, Bloomberg writes, "Earlier this week, 10 Wal-Mart moms from the Denver area were assembled for the company’s latest focus group, where they were asked about their top issues and impressions of the candidates. Reporters were allowed to view the discussion online, access that ensured the views were ultimately heard by the candidates.

    "Participants, whose full names were kept confidential, used words like dissatisfied, frustrated, deceitful, unhappy and personable to describe how they feel about Obama, 50. Uncertain, greedy, slick and businessman were some of those used to describe Romney, 65.

    "Those gathered said they were most concerned about jobs and the economy, health care, education and women’s rights. One of the women shared her frustration about her three adult children still living with her because they can’t find jobs that pay a living wage, while others talked about being under-employed or having family members who are out of work."

    Indeed, Bloomberg suggests that Walmart's ubiquity around the country, especially in battleground states for the presidential election, could mean that its shoppers will help to determine who wins in November ... and the numbers at present indicated that Obama's 2008 advantage is shifting to Romney.
    KC's View:

    Published on: August 2, 2012

    After having spent the past month in Portland, Oregon, it was interesting to read a study on the food truck economy prepared by the Urban Vitality Group (UVG) in partnership with the City of Portland's Bureau of Planning.

    Among the conclusions:
    • "Food carts have positive impacts on street vitality and neighborhood life in lower density residential neighborhoods as well as in the high density downtown area."

    • "When a cluster of carts is located on a private site, the heightened intensity of use can negatively impact the surrounding community, primarily from the lack of trash cans."

    • "A cart’s exterior appearance does not affect social interactions or the public’s overall opinion of the carts; seating availability is more important for promoting social interaction than the appearance of the cart’s exterior."

    • "The presence of food carts on a site does not appear to hinder its development. "

    • "Food carts represent beneficial employment opportunities because they provide an improved quality of life and promote social interactions between owners and customers."

    The study goes on to recommend that the city should a) "identify additional locations for food carts.," b) increase awareness of informational resources for stakeholders in the food cart industry by connecting them with existing programs.," and c) "promote innovative urban design elements that support food carts."
    KC's View:
    I had a long conversation with a retailer in Portland who has real problems with the food truck culture, feeling that it is unfair to people and companies trying to build more traditional and sustainable enterprises. I get that, and am sympathetic.

    But I have to tell you, in visiting and patronizing several food trucks during my time in Portland, I've found that they represent a kind of entrepreneurial fervor and food-driven culture that I find to be refreshing. Whether it was pulled pork or beignets, the food was good, affordable, an the people in the trucks were enthusiastic about what they were doing. I was impressed.

    Published on: August 2, 2012

    • In Wisconsin, the Journal-Sentinel reports that the first Walmart Neighborhood Market in Milwaukee opened yesterday on the city's west side.

    According to the story, "The 39,900-square-foot store, south of W. Main St. and west of S. 70th St., is among a series of smaller format Walmart supermarkets that are opening in southeastern Wisconsin. Other locations include 3850 N. 124th St., Wauwatosa, which opened earlier this summer, and Menomonee Falls, where a store is under construction south of Main St. and east of Pilgrim Road."
    KC's View:

    Published on: August 2, 2012

    The Star Tribune reports that Supervalu has announced that it is eliminating 50 IT jobs at its corporate offices in Eden Prairie, Minnesota.

    According to the story, "the reduction is part of an IT restructuring and comes in addition to about 200 local white-collar job cuts that Supervalu announced in February."

    The staff cuts do not include the firing of Supervalu's president/CEO, Craig Herkert, which was announced earlier this week.
    KC's View:

    Published on: August 2, 2012

    • The US Senate Commerce Committee met yesterday to consider the Marketplace Fairness Act (MFA), legislation that would, if passed and signed by the President, close the sales tax loophole and leveling the playing field for all retailers. reports that the MFA, "first introduced by Sen. Michael Enzi (R-Wyo.) in November, will close what the senator frequently deems a 'tax loophole' ... According to a statement released by the Democratic Press Office, 'local retailers who compete with online companies are at the mercy of a 6-10% price disadvantage,' a discrepancy that the MFA’s authors hope the legislation will correct."
    KC's View:
    I continue to think of this as the Briar Patch legislation, because I think that once Amazon begins collecting sales taxes, it will free it up to open distribution centers in a wide variety of places, and then offer same-day or next-day delivery. Which will change the game yet again, and at least some traditional retailers will yearn for the day when all they had was a sales tax disadvantage.

    Published on: August 2, 2012

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

    • The Lakeland Ledger reports that Public Supermarkets made $381.6 million during the second quarter, down 0.2 percent from the year before. Sales increased 3.2 percent annually to $6.8 billion, on same-store sales that were up 1.9 percent. "It was the first year-to-year profit decline for Publix since the first quarter of 2009," the Ledger writes.

    • Costco reported July revenue that was 9 percent to $87.71 billion from $80.18 billion, on US same-store sales that were up seven percent.
    KC's View:

    Published on: August 2, 2012

    Yesterday's MNB included an email from a 15-year Supervalu employee who, while guardedly optimistic about new CEO Wayne Sales, was less than complimentary about senior execs Janel Haugarth and Tim Lowe.

    Which led MNB user Tom Herman to write:

    I think the comments about Janel Haugarth were way off base.  I no longer work for Supervalu, but worked directly for Janel as well as worked alongside her for many years.  I can tell you first hand that Janel is one of the brightest and most committed people I have ever worked with.  Although she had limited experience on the retail side, she has worked with successful retailers and deeply understands the business.  She was asked to move over to retail merchandising all the while working under Craig Herkert.  I have absolutely nothing good to say about Craig.  The only thing I can fault Janel for is sticking with Craig, but she was both committed and deeply vested in the company she help build.  Supervalu may not be a great fit for her right now, but she would make a fine CEO!

    As I said yesterday in this space ... 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 that 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.

    Regarding Supervalu's broader troubles and the many emails that we've posted here about the company, the old CEO and the new CEO, Wayne Sales, one MNB user wrote:

    I hope Mr. Sales reads MorningNewsBeat.

    There is some excellent information for him to consider. His team sure seems willing to help him if he requests their help. Time to step away from the board room for a few weeks, Mr. Sales.

    From your lips...

    I wrote yesterday in several places that in an world where fundamental changes are taking place, incremental action almost never suffices.

    MNB user Ken Wagar disagreed:

    You are the last person in the world I would want to debate regarding word usage or forward thinking slogans but I have real issues with your new mantra of “In a world where fundamental changes are taking place, incremental action almost never suffices.” I think a closer inspection of the rapid and fundamental changes we see in the world are rather a result of almost constant, regular and frequent incremental actions!

    Very few things including business models are created from whole cloth, rather they are incubated, hatched and develop over time incrementally. Granted their DNA or the vision that helped them develop in the egg may have been a “new” vision but they incrementally develop into a growing and sustainable business. We have been through 4 models of I-Phone because of incremental advancements, 3 models of iPad, Amazon has grown through a continuing series of incremental actions etc, etc. The problem as I see it is that most companies don’t initiate a continuous series of incremental actions, they fail to change on a constant and regular basis and instead stop and rest or believe they have done enough and then they unfortunately begin to incrementally fail.

    The fact is that Supervalu’s purchase of Albertson’s was bold and anything but incremental and in fact was designed to be transformational. However the thinking, the strategy, the vision and the due diligence were all a disaster.

    I think the reality is that “In a world where fundamental changes are taking place almost constant incremental actions backed by a clear vision of a customer relevant experience is almost always required.

    Just MHO.

    I get your point, and it is a good one.

    I guess I would suggest two things.

    One is that while you are right that companies like Apple and Amazon continue to excel because of incremental changes and improvements, they are able to do so because at the beginning of the process, they made a fundamental leap. Apple recognized that consumers were changing in a way that made the iPod, iPhone and iPad relevant; Amazon recognized that the internet was going to change the way people shop. So they both created fundamentally new business models, which they then could build on to create sustainable enterprises.

    Second, my premise depends on the fact that the fundamental insight that a business has is both good and correct. If they make a fundamental business change based on a flawed reading of where consumers are going, then all bets are off.

    Fair enough?
    KC's View: