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    Published on: August 23, 2012

    This commentary is available as text or video. Enjoy either, or both. To access past FaceTime commentaries, go to the MNB Channel on YouTube.

    One more story from my trip to the Pacific Northwest this summer...

    As I've mentioned here before, one of the many pleasures that I discovered in Portland, Oregon, was a place called Stumptown Coffee Roasters. It is a wonderful local coffee shop where on weekends you can wait for 15-20 minutes to make your way to the counter, but where the coffee is terrific, the ambience is authentic downtown Portland, and the people-watching can be rewarding.

    I enjoyed going there and ordering both a black coffee and a large nonfat latte - I generally had a lot of reading to do, emails to peruse and some papers to grade, and this combination of drinks pretty much got me through.

    But something happened one morning that I thought I would share with you.

    I ordered the large nonfat latte, grabbed a seat at counter, pulled out my iPad and started going through email. I kept one eye on the barista and noticed when he seemed to start making what was going to be my latte. A couple of emails later, I realized that I had gotten my drink so I took another look ... and he seemed to be starting the process all over again. I didn't think too much of it, and went back to my emails .... but noticed this time when he got almost done, took a look, dumped it out and started over yet again, this time calling over someone to help him.

    The third time was the charm, and when he handed me the latte, I couldn't help myself. So I asked him: "I'm just curious. What was wrong with the first two?"

    The fellow who helped him, who I later learned was named Bo, came over and explained that the barista was in fact just several weeks into training and wasn't certified yet. However, Bo also said that, in fact, a large nonfat latte was one of the hardest drinks to make - skim milk doesn't hold together the way whole milk or even one percent or two percent milk does, and so if they get to the end and they're ready to put a design into the foam and it isn't holding together right, they dump it and start over.

    Now, I was fascinated by this. I've been drinking large nonfat lattes for more than a decade now, and nobody ever told me before that it was a hard drink to make. And then I asked him: If I'd been getting this to go, and you were putting a top on the cup, would you have gone to all this trouble to make sure the squiggle was right?

    Bo grinned. "It's not worth doing if we can't do it right," he said.

    I have to tell you. That was exactly the right answer. And it is just that kind of dedication to excellence that every retailer should be seeking in its employees.

    Because the thing is, sometimes we can see the stuff that matters, and sometimes we can't. But it all matters. Even the little stuff.

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

    KC's View:

    Published on: August 23, 2012

    by Kevin Coupe

    The Pew Research Center is out with a new report saying that the American middle class experienced its worst decade since World War II in terms of income decline, and that the past 10 years has seen a growing disparity between the income levels of the rich and the middle class, the old and the young, and the married vs. the unmarried.

    Indeed, the study confirms a trend perviously reported upon - that the upper class and lower class populations in the US are growing, and that the middle class is shrinking.

    In addition, the report says, it could take another 10 years for the middle class - which controls 45 percent of the nation's income in 2010, down from 62 percent in 1970 - the reverse the losses suffered during the past decade.

    Which means, of course, that retailers that have made a living by catering to the vast middle class have to rethink that approach, simply because the number of fish in the pond is shrinking.

    This is not a short-term phenomenon. It is a long-term problem, with political, cultural, societal and commercial implications.
    KC's View:

    Published on: August 23, 2012

    Bloomberg is out with a study saying that Walmart is losing the pricing battle to Target.

    According to the story, "Target this month had lower prices than Wal-Mart for the first time since October, according to research conducted by Bloomberg Industries. The Minneapolis based chain also led by its widest margin since the monthly study began two years ago. The study examined the gap in average price across a basket of 150 like items at stores within five miles of each other."

    In addition, Bloomberg reports, "Wal-Mart also lost ground on food prices to Bottom Dollar, a grocery store chain owned by Delhaize Group."

    A Walmart spokesperson tells Bloomberg, in essence, that its research is inaccurate - that sometimes competitors make it look like they have lower prices because of deals and promotions, but that Walmart has consistently lower prices on an everyday basis.

    However, analysts tell Bloomberg that in view of Walmart's own promotional activities and much publicized price-match campaign, it is "a real blow" to Walmart to be perceived as losing the pricing battle to anyone.
    KC's View:
    I would never underestimate Walmart, or minimize its ability to change the nature of the retailing game with one big move or lots of little moves. But enough of these kinds of stories - saying or implying that the company is losing ground and maybe a little bit of relevance - have cropped up that one has to wonder what the shelf life is for Mike Duke's leadership, and if he is the guy to lead Walmart at a time when so many of the things that we've all taken for granted are changing.

    Published on: August 23, 2012

    The Retail Industry Leaders Association (RILA) has come out with a statement criticizing the proposed swipe fee settlement and urging class plaintiffs to reject the proposal.

    Announced in July, the proposed settlement stems from lawsuits challenging the anticompetitive swipe fee practices of Visa and MasterCard.

    "While Visa and MasterCard's decision to pursue a settlement affirms the legitimacy of retailers' claims, the flawed proposal upholds the networks' anticompetitive practices and fails to provide retailers and their consumers with meaningful relief from tens of billions of dollars in hidden fees," said RILA President Sandy Kennedy. "We urge class plaintiffs to reject the proposal and send a clear message that a settlement that fails to engender competition and fix the broken electronic payments market is unacceptable."

    Among the other institutions that have come out against the settlement are the National Association of Convenience Stores (NACS), the National Grocers Association (NGA), the National Cooperative Grocers Association (NCGA), Walmart, and Target.
    KC's View:
    I cannot imagine at this point that the settlement is going to be approved. The opposition just seems too stiff...and I don't blame these companies for believing that the settlement does little for them in the long term.

    Published on: August 23, 2012

    The Wall Street Journal reports this morning that the US Department of Agriculture (USDA) will not recall beef from the Central Valley Meat Co. in Hanford, Calif., which has been broadly criticized for inhumane treatment of the animals it was slaughtering.

    According to the USDA, animal cruelty does not make meat unsafe to eat.

    Operations at the slaughterhouse have been suspended because of the allegations. Earlier this week, In-N-Out Burger - which got about 20 percent of its meat from Central Valley - said that it would no longer do business with the company because of the unacceptable practices.
    KC's View:

    Published on: August 23, 2012

    Daymon Worldwide announced that it has formed a new Specialty Brands division, described as being "dedicated to bringing smaller, innovative brands with unique consumer appeal to the retail market. "

    According to Daymon, "The new division’s first venture will be a partnership with Chicken Soup for the Soul, the iconic book publisher known as a world leader in life improvement, inspiration and wellness. Daymon will team up with Chicken Soup for the Soul Publishing to introduce a line of comfort foods under the 'Chicken Soup for the Soul' name."

    “One of our goals is to generate new opportunities for suppliers across a wide variety of categories, and innovative products and brands will do just that," says Carla Cooper, chief executive officer of Daymon Worldwide. "For retailers, adding these brands to the assortment enhances key categories and can help drive store traffic. With strong consumer awareness and established brand loyalty, many specialty brands are poised for immediate success.”
    KC's View:
    I think a line of comfort foods with the "Chicken Soup for the Soul" brand is utterly brilliant ... and I don't know why it has taken this long to come up with this idea. Kudos to Daymon for a notion that I think could be gangbusters.

    Published on: August 23, 2012

    LA Weekly reports while the Los Angeles Planning and Land Use Management Committee has now voted to ban large retail stores from being opened in the city's Chinatown community, it may not matter - because Walmart has all the permits necessary to build a store there.

    The story notes that Walmart foes in LA continue to marshal their opposition to the Chinatown project, but that it all may be too little, too late - simply because they got their ducks in a row after Walmart had secured all the necessary permits.

    • The Wall Street Journal this morning reports that "Walmart will start offering vaccinations for infectious diseases beyond influenza and pneumonia at 2,700 U.S. stores on Monday as the retailer continues edging into health-care services." The story says that Walmart "will offer 10 immunizations recommended by the Centers for Disease Control and Prevention, including shots for shingles, meningitis, hepatitis and the human papillomavirus or HPV, which can lead to cervical cancers.

    "The vaccinations will be available via pop-up kiosks at the front of Wal-Mart stores, under a contract with Mollen Immunization Clinics, which manages a registered-nurse network out of Scottsdale, Ariz., and has been administering flu shots for Wal-Mart over the past few years. The expansion comes as Wal-Mart is trying to broaden its market share in the multibillion-dollar health-care business as it searches for new avenues for growth."
    KC's View:
    I keep waiting for Walmart to either acquire or start up an in-store health clinic division ... at some point, the company is going to determine that by doing it internally, as opposed to contracting with outside companies, it can have better control over costs and how services are delivered.

    Published on: August 23, 2012

    AllThingsD.com reports on a new Canadian startup called BufferBox that is working on installing lockers in a wide range of locations that can serve as pick up depots for customers ordering products online but not wanting them delivered to their homes or offices.

    Yes, that sounds a lot like what Amazon is doing with its Amazon Lockers project.

    The difference is that BufferBox is looking to partner with companies like Google and Walmart, not to mention virtually any other e-tailer that may be looking for ways to blunt whatever Amazon's advantages may be.
    KC's View:
    A tie-up with Walmart is intriguing because it could work a number of ways. Walmart could have products ordered from its online site delivered to BufferBoxes around the country, or could also serve as a host to BufferBox installations.

    Published on: August 23, 2012

    • In the UK, the Independent reports that Tesco is adopting the "traffic light" approach to nutritional labeling that is used by many of its rivals, including Sainsbury and Waitrose.

    According to the story, "The UK's biggest retailer said it had made the U-turn in response to new customer research showing that shoppers would prefer a combination of its long-favoured Guideline Daily Allowance (GDA) system with colour-coded consumption advice used since 2005 by many of its competitors." Tesco has opposed the concept because it said a red light would stigmatize some products unfairly.
    KC's View:

    Published on: August 23, 2012

    The New York Times reports that Barnes & Noble saw its same-store sales for the most recent quarter go up 4.6 percent - at least in part because of sales of the "Fifty Shades of Grey" erotic novel trilogy. Revenue was up 2.5 percent.

    The retailer still saw a loss for the quarter of $41 million, but it was less than the $56.6 million it lost during the same period a year ago.
    KC's View:

    Published on: August 23, 2012

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

    • Interesting piece in the Wall Street Journal about how Delhaize is doubling down on its Greece investments, opening new Alfa Beta stores there despite the country's dire financial situation.

    The reason? According to the Journal, "several factors have allowed the company to prosper amid the current plunge in Greek consumer spending: a local brand identity, a range of cut-price day-to-day products and better access to financing than its Greek competitors." Delhaize's size, the story says, has allowed it to keep its stores stocked while other, smaller competitors suffer from out-of-stocks. Inevitably, this means that Delhaize's sales, customer count and market share all are going up.

    • Bed, Bath & Beyond is about to have a baby. Several of them, in fact, as the company opens what is expected to be a number of Bed Bath & Beyond /Buy Buy Baby prototype stores that will offer a section dedicated to a wide range of baby-related products. The stores will be about the same size as traditional Bed, Bath & Beyond units, but will have a section carved out for the "Buy Buy Baby" offering.

    I think that the idea of a baby-related store-within-a-store could be a workable idea, but I have to say that I think calling it "Buy Buy Baby" seems like one of the worst names I've ever heard. Having babies is expensive enough ... I'm not sure that it makes a lot of sense of focus on the transactional nature of the experience. They couldn't come up with something a little more uplifting and aspirational?

    Reuters reports that Kraft Foods is selling its majority stake in the Back to Nature brand to Brynwood Partners, a private equity group. terms of the deal were not disclosed. Kraft said it was selling the brand because it was not big enough to warrant the kind of attention from Kraft that would enable it to grow.
    KC's View:

    Published on: August 23, 2012

    As is my custom, I am taking the week before Labor Day off. I'm starting a day early because we're taking our daughter off to college tomorrow.

    The MNB archives will, of course, be open. And the MNB Mantra contest will continue taking entries.

    I may post the occasional note or picture on Facebook if something catches my fancy, but for the most part, I'm going to go off the radar until I return on September 4.

    Have a great final week of the summer, and I'll see you soon.

    Slainte! And Fins Up!
    KC's View:

    Published on: August 23, 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.

    I am pleased to tell you that we've received well over 250 entries to this point. I'm going to leave the contest open until Labor Day, at which point I'll go through all the entries, pick what I think are the top 20 or so, and then submit them to a panel of experts for their advice and guidance ... and then I'll get the last word.

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

    Published on: August 23, 2012

    MNB referred yesterday to a Los Angeles Times reports that "major food growers and processors" in California have raised $25 million to spend on the fight against a November referendum vote that, if it passes, would require labels on all foods containing genetically modified (GM) ingredients.

    The debate seems fairly straight-forward. Proponents believe that GM labeling is necessary because shoppers have a right to know what is in their foods, that there could be long-term health effects from GM ingredients, and that there is a reason that a number of European nations have mandated such labels, even in the US has not. (California would be the first state in the union to mandate GM labeling.) Opponents say that such labels will be costly and do nothing to improve the public health, since US regulators have already said that GM products are the same as non-GM products; they also fear that passage in California could have a domino effect around the country.

    I commented:

    To me, the most depressing part of this story is how big money from major corporations is being used to swing elections.

    Best democracy money can buy, apparently.

    If I lived in California, I think I'd vote for this proposition. Not because I am reflexively anti-science - which I'm not - but because I believe in transparency. I get worried when people tell me that I don't "need" to know something.


    One MNB user responded:

    Our only hope here in California to get this proposition passed is MNB.   I sure hope that lots of Californians read your blog and that they are smart enough to understand that we need to know what is in our food.    I work for a small health food chain in Southern California that was very pro-active in helping to put this proposition on the November ballot.  We were just discussing this morning when the “big” companies would start their negative ad campaign and then I read MNB shortly after the discussion and see that they have raised crazy amounts of money and the ad campaign is a secret…………. Please keep up your fight……….. we ALL need to know what is in our food.  I am asking the California readers of MNB to get out the word and help to pass proposition 37!!!

    If I'm your only hope, you've got bigger problems than being outspent by Big Food.

    MNB user Linda Sharlin wrote:

    If the food products are safe, what are these companies trying to hide. I agree and feel there should be proper labeling on ALL food items. Big money buys too many secrets – not good for the consumer!

    From yet another reader:

    I agree with you. If there are no problems with GMO products, why not label them? Let the public make their own decisions. If they sell, then there is no issue. If they don't, back to the drawing board!!
     
    And I agree that it seems like all politics have become offices that simply are bought by people that have huge amounts of money to abuse and pass money to their friend and business interest. I believe we should limit the spending of each national office. $10MM for Congress, $50MM for Senate, and $100MM for president. It should be about the message and not about how many commercials you can buy bashing your opponent.


    Another MNB user wrote:

    I share your dismay that big money is so dominant in elections but please tell me you aren't surprised - it has been that way a long time and getting worse as we go forward.

    I'm not surprised by much anymore. Certainly not by this.

    From another reader:

    Hey I love your newsletter.  I am out of the country now so don’t have what I read in the local paper editorial review of this prop.  The Main problem that the newspaper said and why they would not vote for it is because the devil in the details.  It seems that the trial lawyers helped to writ the bill so the small print always them to go after anyone with very little recourse.   Anyway, when I get back I will scan this for you and you can make your own decision.  What I remember is that the lawyers were going to use this to go after the food industry.

    And from MNB user Gene Hall:

    You can’t do this for one state and it’s more than just labeling.  It will require changes in production and procession, too. The entire industry will have to adjust.  It’s not really about labeling, it’s about ending the practice.  Giving a perfectly safe product the stigma of a label is a really bad idea.  I hate the thought of voters who still have their foot on the gas toward fiscal insanity may decide this important issue for all of us.

    Listen, I understand that if this law passes, it could create problems down the line, including making some companies vulnerable to lawsuits. I agree that some lawyers will be looking at this legislation as a godsend to their bottom lines. And I'd rather it be done on a national basis than on a state-by-state basis.

    But I also think that there always can be reasons cited for not doing these things. Bottom line - I believe that products ought to be labeled accurately and transparently. I believe that GM foods ought to be labeled as such - not because I want to avoid them, but because it will allow me to make an informed choice.

    Transparency will be demanded by consumers as we move forward. To resist now is to be on the wrong side of history.




    Got the following email from reader Mark Raddant in response to yesterday's story about Whole Foods seeking growth opportunities in urban markets:

    I think this story is indicative of an interesting and developing trend: City living as the new Healthy lifestyle.

    Because multi-unit housing can be more efficient, and the costs of transportation can be so much smaller, especially if there is a decent transit system, those pursing a healthy lifestyle are moving into urban areas, NOT out into the outer suburbs.

    As you predict with digital in retail, cities need to be focusing on the key elements of successful urban development: transit, schools, and retail.  Retail can become part of the social fabric of an urban neighborhood in ways not possible with suburban, auto dependent transportation.  When that happens, the idea of digital shopping preempts the social aspect and becomes less of a threat perhaps because the shopping experience is part of the lifestyle experience.

    This is another incidence of the Europeanization of America.  Many of us are looking forward to the transition.


    Count me among them. I cannot wait for the time when I can leave suburbia in my rear view mirror, and move to a city.




    We had an email yesterday from MNB user Steve Sullivan, who wrote passionately about all he had learned at a Kings-owned Packards store in New Jersey. Which led MNB user Gerry Maynes to write:

    It was with great interest that I read a letter from some one who remembers the Kings/Packards in Hackensack New Jersey. I most certainly do know of some one from that Store, My Dad, Art Maynes, who managed it between long stints with First National.for several years.

    It did not shock me that there are people out there who worked for him that were trained correctly and treated right that are still in the business . ( This would include me, and my three sons.) Many have gone on to store management and above in the grocery business.  Some of the department managers were Don Kaplan, Deli Manager. Larry McCan, Grocery Manager. Gene Werner, Dairy Manager. And Bob Toth, Evening Front End Manager.

    The Refreshment stand had great Hot Dogs and drinks and the store was located in an old wallpaper factory.  It was ahead of its time with departments you would find in Walmart today.  Today its is gone and a Target is in its place.

    We have lost Dad, but I could see him smiling over this fellow's letter.


    Great story. Thanks for sharing.

    And a great way to end the summer...
    KC's View: