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    Published on: August 17, 2012

    by Kevin Coupe

    Time, apparently, does march on.

    The Los Angeles Times reports that the wristwatch business - left for dead by many because young people were going to their cell phones to get the time - is growing again:

    "The Federation of the Swiss Watch Industry reported that watch exports from Switzerland surged 19.2% in 2011, one of its strongest years of growth in the last two decades. Swatch Group Ltd. said it was cutting back selling watch parts to other companies to meet its own increased demands.

    "Luxury brand Patek Philippe opened its first stand-alone U.S. store last month in Beverly Hills. And in yet another sign of the watch's return, shares ofFossil Inc., a popular brand for teens, leaped 31% in one day last week after reporting a 12% jump in profit in its second quarter." Movado has seen its sales go up "22.5% to $468 million in the last fiscal year after plunging 17.9% just two years ago," the story says.

    And, "the rise of retro fashions has sent Timex designers digging into its extensive archives for classic watches that Don Draper or James Bond might wear, said Amy E. Goodman, fashion trend director for Timex Group USA Inc. Recent designs have featured metal link bands and bezel faces. Goodman said that retailers selling Timex and other brands noticed the rising demand and started giving timepieces better real estate in stores."

    The reason? In many ways, these timepieces aren't just watches anymore.

    "They are bigger and flashier than ever.," the Times writes. "Some do far more than tell time, and many are used as much for decor as to tell time.

    "Industry watchers say that as consumers slowly climb out of the Great Recession, many are hankering to refresh their wardrobes but are unwilling to drop big bucks on entire outfits. A cheap option? Jazzing things up with new accessories — especially watches."

    In addition, watches are being created than can connect to other devices using Bluetooth, which means they have greater functionality.

    It is a great business lesson for any industry. Just because time and culture seems to be working against you, it is possible to rejuvenate a business by rethinking the basic concept, and figuring out where a product fits into people's lifestyles today, as opposed to in the past.

    It's an Eye-Opener.
    KC's View:

    Published on: August 17, 2012

    Walmart yesterday announced that its second quarter sales were up 4.5 percent to $114.3 billion, lower than the $115.8 billion anticipated by analysts, while sales at its US stores rose 3.8 percent to $67.35 billion on same-store sales that were up 2.2 percent.

    According to the Associated Press, "Wal-Mart's international business, which produces more than a quarter of its revenue, has remained strong. The company's international sector increased 6.4 percent to $32.01 billion in the quarter. Even in the United Kingdom, which is struggling with a weak economy, Wal-Mart has seen shoppers flocking to its stores because of its low prices ... But it's scaling back expansion plans in three markets: China, Brazil and Mexico."

    And, the New York Times writes:

    "In a reminder of just how giant Wal-Mart is, William S. Simon, chief executive of Walmart U.S., said in prepared remarks that the United States division’s 0.4 percent increase in comparable-store traffic from a year ago represented 80,000 additional customers each day of the 13-week quarter.

    Still, Wal-Mart’s results suggested that midrange and low-end American consumers were still hesitant about spending money. Customers are responding to marketing that emphasizes cheap prices, Mr. Simon said, and executives said customers here were still living paycheck to paycheck.
    Internationally, Wal-Mart’s sales continued to grow at a quick clip, increasing 6.4 percent to $32 billion. That was a slower increase than usual - in the first quarter, for instance, international sales rose 15 percent. And for the first time internationally, Wal-Mart executives pointed to a 'paycheck cycle' - when customers spend little as their paychecks run out and restock on basics once a new check arrives."
    KC's View:
    It is worth watching a Bloomberg video that features an interview with the always reliable Burt Flickinger talking about the retail sector and what "Walmart's worst nightmare" is. You can access it here.

    Published on: August 17, 2012

    Here is a paragraph from Yahoo Finance this morning:

    "Citigroup believes SuperValu will need to divest assets in order to fund its price investments, leading to a much smaller company in the medium- to long-term. Citi views Save-A-Lot and Jewel-Osco as the company's most attractive large assets, but highlights the challenge of finding buyers at good prices. The firm believes SuperValu's valuation barely covers its net debt and lowered its price target for shares to $3 from $4. Citi keeps a Neutral rating on the name."
    KC's View:
    Now, Citigroup is focusing primarily on the stock valuation and what Supervalu's travails mean to Wall Street, but it probably has the larger issue right - that it will have to sell assets if it is going to survive in any sort of iteration. And the problem, of course, is that the stuff it probably would like to sell (Shaw's?) probably won't generate any serious money, and the stuff it would like to keep may be so damaged that even those assets won't fetch the kind of money it needs.

    Which probably leaves the wholesaling division, which I'm told is in better shape than its retailing assets and probably looks a lot more attractive, whether as a whole or in pieces.

    And here's the other problem. Not surprisingly, Supervalu's competitors are making the rounds of its retail customers, seeing if they can pry away any business. (It would be a lot cheaper than buying Supervalu's assets.) One person told me that the most ubiquitous item in many retailers' offices today is a C&S brochure.

    None of this is good news for Supervalu.

    Published on: August 17, 2012

    Interesting piece this morning from the Wall Street Cheat Sheet which reports that Apple stirred up anxieties among many of its retail employees recently when it tried a new staffing formula - reducing some people's hours by a half-shift once a week - that it hoped would be more efficient.

    The problem was that it looked to many people within the company like a broader staffing reduction was taking place, which would have left some stores under-manned at some periods. And it was confusing, coming not long after the company gave salary increases of up to 25 percent to its retail employees, conceding that many of them were underpaid. To some, it began to look as if Apple was giving raises with one hand while taking away hours with the other...

    When it all hit the fan, Apple responded - by going back to its old staffing formulas and restoring everybody's hours.

    “Making these changes was a mistake and the changes are being reversed,” says spokesperson Kristin Huguet. “Our employees are our most important asset and the ones who provide the world-class service our customers deserve.”
    KC's View:
    They got that right. When Apple forgets that the people who work in its stores are every bit as important as the technology it sells, it will begin going down a dark road from which it will be difficult to return.

    Published on: August 17, 2012

    The Baltimore Sun reports that a new study from the Rand Corporation says that "visits to retail medical clinics increased four-fold from 2007 to 2009. Visits reached 5.97 million in 2009, compared to 1.48 million in 2007."

    However, the story notes, "the clinics still represent a small portion of outpatient medical care when compared to the estimated 117 million emergency room visits and 577 million visits to doctors’ offices made each year."

    According to the Sun, "More than 44 percent of visits to the clinics were on the weekend or other hours when doctor offices typically are closed, according to the study published online by the journal Health Affairs.

    "The clinics may also be attractive to the uninsured and those with high-deductible insurance plans because of the lower and more predictable costs.

    "The study found that the clinics are attracting more older patients with the proportion of patients over age 65 growing from 8 percent to 19 percent."
    KC's View:
    We're all looking for options when it comes to dealing with the high cost of health care. I'm not surprised that we're seeing growth in this sector, despite the statements by some naysayers a few years ago that the trend would dry up and go away.

    Published on: August 17, 2012

    The Seattle Times reports this morning that Apple Inc. is accusing of fueling the fire in the US government's accusations that Apple and a number of publishers were guilty of price fixing in the e-book market.

    When Apple got into the e-book business, it established what is called an "agency model" - it took 30 percent of the sale prices, but let the publishers set that price. The publishers then forced Amazon to accept the same model, which resulted in higher e-book prices on its site.

    According to the story, "The Justice Department announced in April that it was suing Apple and five publishers on charges they conspired to raise e-book prices, while simultaneously disclosing a settlement with three of them to restore discounting authority to Amazon and other e-book sellers.

    "Amazon called it a victory for buyers of its Kindle e-reading devices and announced plans to cut prices on Kindle e-books, the very thing publishers had hoped to prevent when they negotiated a new business model with Apple two years ago.

    "In Wednesday's filing, Apple argues that the proposed settlement is unlawful because it forces Apple to terminate its contracts with the three publishers 'before a single document has been introduced into evidence, before any witness has testified, and before the court has resolved the disputed facts'."
    KC's View:
    Being a writer, I actually have a dog in this hunt. So I checked this morning, and found that our book, "The Big Picture: Essential Business Lessons from the Movies," which normally retails for $14.95, is available from Amazon as a paperback for $10.17 and as a Kindle e-book for $5.95. If you go to iTunes and download it as an e-book, it costs $5.99.

    (It also was good to see that on Amazon, "The Big Picture" is currently ranked as being in roughly the top three percent of all books being sold by the e-tailer. Which sounds great - actually, it is great - except that one has to keep the numbers in context. We are ranked at 203, 061 ... which doesn't sound like much until you realize that Amazon has roughly eight million books in stock. So we're currently selling better than 7,796,939 of them. Not bad.)

    But I digress. I have very little doubt that Apple tried to work a deal with publishers that would avoid some of the tsouris that it went through with music companies. Whether this rises to the level of illegality, I have no idea.

    As a writer, though, I am torn. One the one hand, this is how I make a living. So I like it when the book sells at a higher price. On the other hand, I'd rather sell 100 books for $5 than 50 books for $10. Ideas only have value if they are circulated, exchanged and discussed.

    Published on: August 17, 2012

    The Los Angeles Times this morning reports that the new Eco Pulse survey from the Shelton Group found that "39% of Americans felt the most green guilt for wasting food."

    In addition, the story says, "consumers also felt guilty about leaving the lights on when leaving a room (27%), wasting water (27%), failing to unplug chargers for electronics (22%), not recycling (21%) and forgetting to bring reusable bags to the store (20%). They felt the least guilt about not buying energy-efficient light bulbs (9%), not sticking to an energy-efficient thermostat setting (7%), not being careful about how long or when they watered the lawn (6%) and using chemical lawn or plant fertilizers (6%)."

    Demographically, women "reported feeling far more guilt than men about wasting food, using paper towels, buying cleaning products with strong chemicals, eating meat and other behaviors. Consumers who earn $75,000 to $99,999 per year felt more guilt than others about wasting food, whereas those earning $100,000 or more were more likely to say the felt no guilt at all.

    "Senior citizens felt the least guilt about not recycling, and 18- to 24-year-olds felt the most guilt about taking long showers."
    KC's View:

    Published on: August 17, 2012

    Reuters reports this morning that "an Indiana union pension fund that holds shares in Wal-Mart Stores Inc has sued the company to gain access to thousands of internal documents related to allegations that a Wal-Mart subsidiary bribed Mexican government officials."

    The company said, according to the Times, that "the company had made a 'woefully deficient' production of documents following an earlier out-of-court demand. What documents were produced were 'so heavily redacted,' or blacked out, they were nearly worthless."

    Walmart is dealing with ongoing allegations, first made last April in the New York Times, that its Mexico operations engaged in systematic and systemic bribery of local officials there as it expanded its footprint and sales.

    The retailer has said it is conducting an internal investigation and is cooperating both with the US Department of Justice and the Securities and Exchange Commission (SEC), but has been accused by two members of Congress of not cooperating with their requests for information.
    KC's View:

    Published on: August 17, 2012

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

    • Ahold-owned Martin's Food Markets, the Richmond City Health District in Virginia and Greater Richmond Fit4Kids announced that they "are partnering on a new project to encourage customers to think healthy at the check-out with the launch of Healthy Ideas check-out lanes at eight Martin's stores in Richmond. This project is designed to promote healthy eating by increasing the availability of healthy food choices in grocery store check-out lanes ... The Healthy Ideas check-out lanes contain both national and Martin's brand perishable and nonperishable healthy food items. While the exact selection of products vary by aisle and store, among the items offered include: fruit , nuts, individual snack packs from Martin's exclusive Nature’s Promise natural and organic section, nutrition bars, and 100% fruit juice."

    • Brookshire announced that its dairy plant in Tyler, Texas, recently switched to clear caps on the company’s Food Club milk products.

    According to the announcement, "Officials cite several benefits for the change: reducing the carbon footprint related to packaging materials; leaving a clear product for recycling; increasing efficiency by alleviating cap color changes during production; and ensuring product safety with a visible printed foil stamp underneath the clear cap. All this on top of cost savings made the change to clear caps an easy decision."

    • The New York Times this morning reports that "a German court has ruled against Nestlé, the world’s biggest food company, in its attempt to stop companies from selling generic coffee capsules compatible with Nespresso machines in Germany. Nestlé’s patents for the coffee machine system do not prevent consumers from using other capsules, the Düsseldorf regional court said Thursday. The capsules are not the key component or a “special feature” of the protected invention, the judges said."

    • Coca-Cola announced that it is making a permanent change to its Diet Coke can packaging, shifting to the limited edition design - cropping the letters and highlight the "D" and the "k" - that it introduced last year.

    And thanks to the folks at Coke who kindly sent me a 12-pack to celebrate the change. It looks great in my office refrigerator ... though it won;t be there for long.
    KC's View:

    Published on: August 17, 2012

    Fast Company had an interesting story the other day about the importance of a company "mantra," which is defined as "a Sanskrit term, meaning 'sacred utterance' or 'sacred thought,' depending on the dictionary. Traditionally concentration aids given by Hindu gurus to devotees, mantras are words or phrases repeated to facilitate transformation. In business, a mantra is akin to a motto, albeit more fundamental to a company's internal purpose than simply a marketing slogan. It's concise, repeatable, and core to a company's existence ... Unlike mission statements, mantras are pivot-proof. They transcend current target markets and quarterly quotas."

    Or, to put it another way: "Make it short, sweet, and swallowable," says author Guy Kawasaki.

    Examples cited in the story:

    "Think different." (Apple)

    "Don't be evil." (Google)

    "Make something you love." (Huge, a digital agency)

    "Style to the people." (Stylecaster, a fashion website)

    A mantra, the story suggests, is necessary because it is "the guiding star, not the operating manual." And every company needs a guiding star.

    This has me thinking. While MNB always has been built around the phrase, "news in context, analysis with attitude," it sounds like the folks at Fast Company would define that as a mission statement. Not a mantra.

    Which makes me think it is time for a contest...

    Come up with an original mantra for MNB, and if you create the winner, you get an MNB goodie box, which includes a t-shirt with that mantra printed on it, an autographed copy of "The Big Picture: Essential Business Lessons from the Movies," and an MNB canvas shopping bag and an MNB canvas wine bag.

    We already have close to 200 entries, but the contest will remain open at least until Labor Day. One suggestion ... remember that the mantra is for MNB, which is not a retailer. (Some of the suggestions received to this point would be wonderful retail mantras, but are not really about what MNB does.)

    Let the games continue...
    KC's View:

    Published on: August 17, 2012

    ...will return next week.
    KC's View:

    Published on: August 17, 2012

    The Bourne Legacy is a good example of strategic business thinking.

    The producers of the first three Jason Bourne films - all big hits starring Matt Damon as the amnesiac assassin searching for clues about his past life while trying to avoid being killed by US intelligence agents - had a problem. Damon said he didn't want to do another Bourne film, but they didn't want to end the franchise. They could've rebooted the series by going back to the beginning, or they could've simply recast the part in the way that a half-dozen actors have played James Bond. But none of those options seemed to work.

    Enter Tony Gilroy, who'd worked on the scripts of all three previous films and who had developed a strong reputation as director of Michael Clayton, an excellent thriller, albeit one without the action of a Bourne movie. Gilroy's idea was simple - invent a parallel universe in which there are other Bourne-like spies, and focus on one of them dealing with the repercussions of Bourne's efforts to bring down the agency trying to kill him.

    In other words, use the same source material but create something new that would simultaneously avoid direct comparisons with the earlier work (though comparisons will be made, of course) and create a foundation upon which to launch a new series of movies. (The beginning of Legacy essentially takes place at the same time as the events in The Bourne Ultimatum are unfolding.)

    Hence, The Bourne Legacy, co-written and directed by Gilroy and starring the almost ubiquitous Jeremy Renner as Aaron Cross, who has been turned into a kind of super-spy with the help of chemical engineering. US intelligence wants to wipe out all evidence of the program that created him, which means killing Cross and anyone in contact with him; Cross needs to avoid being killed while simultaneously making sure that he is able to maintain access to the medications that keep him smarter and stronger than anyone else.

    There are a few slow spots in the beginning as Gilroy goes through all the exposition necessary to understand the story, but that's a minor quibble. The movie looks gorgeous, is well-acted - by Renner, by Edward Norton as the government agent trying to cover up various programs that will make the US look good if they come to light, and Rachel Weisz as the scientist to whom Aaron Cross turns for help. (There also are nice turns by Stacy Keach, as well as by Joan Allen, Scott Glenn, David Strathairn and Albert Finney in roles they played in some of the earlier films.)

    There are a couple of scenes late in the movie that give a hint about Gilroy's broader intent. They suggest a far more cynical view of the world that we saw in the first three films (though those hardly gave one a rosy view of the US intelligence community). If the Bourne series goes forward - and I have no reason to doubt that it will - I'll be very interested to see where he takes it. Maybe a trio of films starring Renner, written and directed by Gilroy, all of them focused on his view of the world? And then they can find another actor to play a spy and spin him (or her ... why not?) out of that universe for another trilogy. (I've already got the title: The Bourne Alternative.)

    When I was in Portland, I think I only turned on the television twice - once to watch the Wimbledon and once to look to see if there was a ballgame on. Because the apartment where I was staying didn't have HBO, I never got the chance to watch "The Newsroom," the new Aaron Sorkin series that has been on the last couple of months. Well, I've caught up with all the episodes to-date, and have to say that I have not been disappointed.

    If you don't know, "The Newsroom" is about a fictional cable news program doing through emotional and philosophical upheaval - they've been doing soft news for so long that they've almost forgotten how to do serious, hard news. Sam Waterston, playing a crusty news division president, decides to hire a serious producer played by Emily Mortimer to revitalize the program and its anchor, played by Jeff Daniels. Of course, Daniels' character and Mortimer's used to be lovers, which creates a whole other level of tension.

    The thing about Aaron Sorkin's work is that it is highly distinctive. His movies and television shows - which include A Few Good Men, The Social Network, The American President, and "The West Wing" - are word-driven morality plays. They are about something, and his characters prize intelligence above all else. They don't talk like real people, but that's okay. They just talk like many of us would like people to be able to talk.

    "The Newsroom" has elements of Network combined with elements of His Girl Friday, and that's a good thing. It is still getting its bearings after eight or nine episodes, and I know some people don't like its use of real events as a backdrop for how the news program covers them, but I kind of like the context of it all; rather than create events "out of the headlines," it actually uses the headlines. And the cast is terrific.

    Above all else, though, there is the writing. Sorkin can be an acquired taste for some, and other simply don't like or agree with his world view, and so cannot abide him. But even when I disagree with him, I love listening to the words and hearing the passion with which his arguments are made. In a political season during which intellect and sophisticated debate are in short supply, crushed under the weight of innuendo and cheap shots from both sides of the aisle and fueled by seemingly unlimited amounts of money, I'll take smart talk and passionate beliefs wherever I can find them.

    That's it for this week. Have a great weekend, and I'll see you Monday.

    Fins Up!
    KC's View: