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: September 4, 2012

    by Kevin Coupe

    Longtime readers of MNB know that we're fond of the notion of change around here. We spend a lot of time pointing to the inexorable changes that affect and link business, culture and society, and tracking how they seem to be happening faster than anyone expects.

    So it is was this in mind that two stories this weekend came to my attention.

    The Associated Press reports that Voyager 1 is on the verge of breaking through the giant plasma bubble that envelops our solar system, becoming the first manmade object to venture into "the other side" of space. This really is where no one has gone before; the story notes that "Voyager 1 is in uncharted celestial territory. One thing is clear: The boundary that separates the solar system and interstellar space is near, but it could take days, months or years to cross that milestone." (Once it does so, we can only hope that it does not return to Earth seeking its creator ... but I digress.)

    The story points out that Voyager 1 was launched 35 years ago this coming Wednesday. (Voyager 2 was launched in a different direction, and is 9 billion miles behind its older sibling.) And here's the passage about both that I found to be most revealing about how far we've come:

    Each only has 68 kilobytes of computer memory. To put that in perspective, the smallest iPod - an 8-gigabyte iPod Nano - is 100,000 times more powerful. Each also has an eight-track tape recorder. Today's spacecraft use digital memory.

    That's remarkable. But even more remarkable is that these spacecraft keep on moving, keep on sending back new and revelatory information about the universe in which we live, forever changing the way in which we view it.

    And then, there was another story about technological change that caught my eye. The Chicago Sun Times has a piece this morning about how the use of voice mail - which not that long ago seemed like such an enormous improvement over the old-fashioned answering machine - seems to be on the decline.

    According to the story, "With the rise of texting, instant chat and transcription apps, more people are ditching the tool that once revolutionized the telephone business, displaced armies of secretaries and allowed us to eat dinner more or less in peace. The behavioral shift is occurring in tandem with the irreversible fading of voice calls in general, prompting more wireless carriers to offer unlimited voice minutes."

    Vonage, for example, says that the number of voice mail messages left for users was down eight percent during July compared to the same month a year earlier; retrieved voice mail was actually down 14 percent in the same period. And Vonage, the story says, is responding to the shift by offering "a new service that converts voice messages for delivery as email or text."

    Anyone with kids won't be entirely surprised by this story; we've known for a while that young people prefer to send text messages and not actually talk on the phone and/or leave messages.

    But it is a constant reminder of how things change. Voice mail seemed like such a major tech leap just a few years ago, but now, it may not even have the life expectancy of a 35-year-0old spacecraft.

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

    Published on: September 4, 2012

    Reuters reports on how Walmart has been testing an iPhone "Scan & Go" application that "would allow shoppers to scan items using their iPhones and quickly pay at a self-checkout counter ... shoppers can scan products with their phone and put them in bags while they shop, and then pay at a self-checkout counter. It is unclear whether shoppers could pay directly with the iPhone or whether they would need to use cash or a credit card."

    According to the story, Walmart has been testing the system, using employees and their friends ands family members with iPhones who shop at a supercenter in Rogers, Arkansas.

    Reuters notes that "the test comes months after Wal-Mart said that it would add more self-checkout lanes at its Walmart and Sam's Club stores as it continues to look for ways to lower costs and prices for its shoppers.

    "Pushing more shoppers to scan their own items and make payments without a cashier has the potential to save Wal-Mart millions of dollars, Chief Financial Officer Charles Holley said  March 7. For every 1 second in average transaction time at the Walmart U.S. chain, the company has said that it spends about $12 million in cashier wages."
    KC's View:
    It seems to me that this is one of those great initiatives that is a win-win. Consumers who are comfortable with the technology - and this is a group that expands every day - will like it and use it. And the retailer, if Walmart's numbers are to be believed, can save money by instituting such programs.

    One thing, though. I do think that retailers making the decision to move in such a direction purely as a money-saving opportunity risk making the shopping experience even less personal. I think some of the money savings should be plowed back into people who can make the aisles more friendly and accessible, and, in the end, more differentiated. The technology can certainly be a differential advantage, and should be. But this is not an either-or matter.

    Published on: September 4, 2012

    The Los Angeles Times reports on how "many older Americans are delaying retirement and being added to the workforce in record numbers. Nearly 1 in 5 Americans ages 65 and older are working or looking for jobs — the highest in almost half a century."

    The story notes that "the labor participation rates for other age groups have slid since the recession began at the end of 2007, most sharply for younger adults but also for people in their prime working years, their 30s to 50s. The contrasting employment paths of seniors and other age groups reflect a long-term population and lifestyle shift intensified by the recession. And the trend has significant implications for the broader economy."

    The upside of the trend: these older Americans are paying into Social Security, as well as paying income taxes, instead of just taking money out of the system.

    The downside is that when these older Americans get and keep jobs, that prevents their younger counterparts from landing those same jobs. Since the economy isn't growing at the pace that everyone would like it to, with too few jobs being created, this contributes to continuing unemployment and underemployment problems.
    KC's View:
    I know that there is a sentiment out there that people of a certain age need to get the hell out of the way so there are more jobs for younger folks. (I know this because I've gotten emails from folks who feel this way.) But maybe because I'm of a certain age, I have no intention of getting out of anyone's way.


    I also don't think that this is a black-and-white situation. I know plenty of middle-aged folks who are finding it tough to get back into the job market, or who have been laid off with little regard for their experience and expertise. Just as I know young people who have had trouble breaking into the workforce despite their brains and energy.

    No question, the real solution is an economy that grows faster and stronger and provides more opportunities to everyone. (This is not a cue for political diatribes or platitudes from either side of the aisle.)

    Published on: September 4, 2012

    The New York Times reported last week that New York State Attorney General Eric T. Schneiderman "has subpoenaed three large makers of so-called energy drinks as part of an investigation into whether the companies are misleading consumers about how much caffeine the drinks contain and the health risks they could pose."

    According to the story, the AG's office is also investigating whether the three companies - Monster Beverage, Living Essentials, and PepsiCo - "violated federal law in promoting the drinks as dietary supplements rather than as foods, which are regulated more strictly. State authorities are also concerned about whether all of the ingredients that go into the beverages are properly disclosed, according to an official briefed on the investigation who spoke on the condition of anonymity.

    "The state investigators are also examining whether some additives, like black tea extract and guarana, may contain additional caffeine that is not reflected when the drinks are labeled.
    The subpoenas were issued in July, and the official said more companies could face requests for information as the investigation progresses."

    The three companies are not commenting on the investigation. A spokesman for the American Beverage Association (ABA) said that the ingredients in the drinks are fully disclosed, regulated, and completely legal.
    KC's View:
    I have long felt - and written here - that the energy drink sector was ripe for investigation. The whole concept has always seemed slimy to me ... and vulnerable to charges that the claims are being inflated and the ingredients are being fudged.

    Published on: September 4, 2012

    Bloomberg reported last week that even as Supervalu is asking potential bidders to consider buying the entire business, as opposed to just acquiring pieces of it, the company's new CEO is shaking up the executive suite.

    Wayne Sales, the former CEO of Canadian Tire who took over from the embattled Craig Herkert earlier this summer, announced that Kevin Holt, the former Sears and Meijer executive who joined Supervalu last May has head of operations, has been named president of retail and will be responsible for overall strategy for the company's traditional retail and pharmacy divisions.

    Michael Moore, the company's CMO, now will report to Holt.

    Janel Haugarth, a 35-year company veteran, has been named to the newly created position of executive vice president of business optimization and process improvement, responsible for identifying and executing strategies to streamline the company.

    Fred Boehler, senior vice president of distribution, has been named senior vice president of supply chain and will report directly to Sales, who said that all the moves were designed to "quickly ... reinvigorate" the company.

    Meanwhile, the Bloomberg story says that "Cerberus Capital Management LP is examining a possible deal involving the Albertsons unit ... Royal Ahold NV, the Amsterdam-based parent of Giant Food Stores LLC, is interested in the Shoppers chain, which operates in Maryland, Virginia and Washington."

    However, the story also says that because of the breadth of Supervalu's holdings, it may be impossible to find a single buyer, unless it ends up being a private equity group that purchases the whole company and then sells off pieces were appropriate.
    KC's View:
    Tough to run two races at once, which is what Sales is trying to do. He has to see if he can sell the company while simultaneously trying to hold the place together just in case he can't find a buyer willing to offer acceptable terms.

    I have a sense that Wayne Sales is getting the benefit of the doubt within Supervalu ... if only because I have not been getting emails from folks there excoriating him for the new executive changes.

    One word to the wise, however. Whatever he does, he absolutely must not give out any more retention bonuses or stock options to the executive team. Because that would undermine any efforts to reinvigorate and create trust within the organization.

    Published on: September 4, 2012

    The Austin Business Journal reports that Whole Foods is in negotiations to acquire six Johnnie's Foodmaster stores in the Boston area, a move that would increase its presence there by 30 percent.
    KC's View:

    Published on: September 4, 2012

    Bloomberg BusinessWeek reports on how Tesco is rolling out some 150 pick up stations at stores throughout the UK, allowing customers to order online and then collect their purchases rather than waiting for them to be delivered.

    The story says that "Bryan Roberts, an analyst at Kantar Retail in London, said click and collect will give shoppers a reason to choose Tesco over its competitors. Among the top four grocers in the U.K., only Wal-Mart Stores Inc.’s Asda, the No. 2 chain, has a similar service for groceries, and it’s just in a trial stage. The service also helps Tesco stand out from online retailers."
    KC's View:
    Offering this option will, for most retailers, become part of the normal portfolio of services, I believe. Customers will expect the option, and will turn away from retailers that do not provide it.

    Published on: September 4, 2012

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

    • The Associated Press reports that two New Jersey Pathmark store employees, Cristina LoBrutto, 18, and Bryan Breen 24, were killed last week when one of their fellow employees, Terence Tyler, 23, gunned them down early Friday morning and then committed suicide.

    Tyler, an ex-Marine, is said to have had a troubled past and was emotionally disturbed.

    Pathmark is said to be planning on reopening the store on Wednesday, if possible.

    • The Buffalo News reports that "Wegmans will again freeze prices on a list of items it says families buy most during the fall.

    "The grocer revealed its seasonal, consistent low price list for fall Thursday, which includes 60 products. Wegmans vows to keep the prices on those items in place until December 31, even if Wegmans' costs on those same items rises ... This is the supermarket chain's fourth frozen price list for groceries and the third seasonal frozen price list since it started offering the price freezes a year ago."

    Pacific Business News reports that Safeway "has changed the label on packages of Kona coffee blends sold in its stores on the Mainland to say '10 percent minimum Kona blend'," as per an agreement reached last year after the Kona Coffee Farmers Association complained that the retailer was degrading Kona Coffee's image by diluting it.

    We're going to see more of these kinds of stories, I believe. Companies have to be 100 percent accurate and transparent about the products they sell. if not, they will get called on it, and may even find themselves to be legally and culturally vulnerable.

    • The Baltimore Sun reports that McCormick & Company has opened its first retail store - McCormick's World of Flavors - in Baltimore's Inner Harbor area, and that shoppers can go there to "stock up on Old Bay and grilling marinades, learn their personal 'flavor profile' and discover an array of international spices."

    The company says that this is a one-of-a-kind unit, and that it does not plan to open any more retail stores.

    • The St. Louis Post Dispatch reports that "eighteen former employees at Schnuck Markets' grocery stores and fuel centers in Memphis are suing the chain and seeking back pay and damages related to the sale and closure of stores. The former employees allege the chain committed fraud, deceit and intentional misrepresentation related to Maryland Heights-based Schnuck Markets' 2011 sale of nine Schnucks stores and eight fuel centers in the Memphis area to Cincinnati-based The Kroger Co. and the closure of a few other stores. Several of the stores sold to Kroger were ultimately closed."

    According to the story, "Schnuck Markets plans to file a response to the lawsuit with the court next week denying the allegations, said Lisa Krupicka, an attorney with the Memphis law firm of Burch, Porter and Johnson, who is representing Schnuck Markets."

    • Ahold announced today that it is "exploring strategic options" regarding its 60% holding in ICA, the market-leading Scandinavian retailer. Ahold and Hakon Invest AB of Sweden jointly share controlling interest over ICA.

    • The Associated Press this morning reports that Toys R Us has begun the end-of-year holiday shopping season by waiving the service fee and minimum purchase requirements for its layaway program. However, the no-fee program only lasts until Halloween; after that, Toys R Us says, the $5 service fee will be reinstated.

    The story notes that Toys R Us hopes this will position it favorably against Walmart, which last month "said it was expanding its own layaway program after seeing high customer demand for layaway during last year's winter holiday season. Its new program will last a month longer than last year's and will include more items than the toys and electronics featured last year. But there is still a minimum purchase requirement and a $15 fee for an open account."
    KC's View:

    Published on: September 4, 2012

    • Delhaize America announced that with the planned retirement of its CEO, Ron Hodge, it has named Roland Smith, the former president/CEO of Wendy's/Arby's, to be its new president/CEO.

    • The Grocery Manufacturers Association (GMA) last week presented the 2012 Industry Collaboration Leadership Award to Joe Sheridan, President and COO of Wakefern Food Corporation. The Industry Collaboration Leadership Award is described as recognizing "an industry leader who has demonstrated excellence in fostering collaboration among trading partners and programs throughout their career that better serve the consumer."

    • Roundy's, Inc. announced that Don P. Hamblen and Jessie W. Terry will join the company as Chief Marketing Officer and Chief Human Resource Officer, respectively, effective immediately.

    Hamblen, mot recently Senior Vice President Customer Marketing for Family Dollar Stores, will replace Ronald Cooper, formerly Group Vice President of Marketing.

    Terry, most recently Senior Human Resource Leader at Oscar Mayer, a Kraft business unit, will replace Colleen J. Stenholt, formerly Group Vice President of Human Resources.
    KC's View:
    A quick note about Ron Hodge ...

    I first met Ron when I was shooting my very first story in upstate New York for the old "Supermarket Insights" video series. It must have been 1987 or 1988, and Ron was running the upstate New York division of Hannaford. My recollection is that we were both pretty nervous that day - we had never met, and the whole video thing was new to both of us.

    Since that day, Ron has been a friend, and he's pretty much the same guy that I met in that Hannaford store - frank, funny, and utterly without pretension. And the only thing I find to be appalling about his retirement is that he's way too young ... which means, I hope, that the next adventure for him will be an even better one.

    Published on: September 4, 2012

    • Hal David, who wrote the lyrics that went with Burt Bacharach's melodies for songs that included "Do You Know the Way to San Jose," "Raindrops Keep Fallin' on My Head," Close to You," "That's What Friends Are For," "I Say A Little Prayer," ''What The World Needs Now Is Love," and "This Guy's in Love with You," has passed away of complications from a stroke. He was 91.

    • Michael Clarke Duncan, who earned an Oscar nomination with his portrayal of an immense and psychic death row inmate in The Green Mile, a Frank Darabont adaptation of a Stephen King novel, died over the weekend. He was 54, and apparently never recovered from the myocardial infarction he suffered back in July.

    • Rev. Moon Sun-myung, better known as the Rev. Sun-myung Moon and a kind of religious entrepreneur who founded the controversial Unification Church, not to mention being found guilty of tax evasion by a US court, has died at age 92, reportedly of complications from pneumonia.
    KC's View:

    Published on: September 4, 2012

    ...will be posted on Wednesday this week.
    KC's View:

    Published on: September 4, 2012

    Today is the final day on which entries will be accepted for the MNB Mantra Contest, which began on a whim a few weeks ago and has generated more than 300 suggestions to this point.

    The contest began with a Fast Company story 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."

    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 suggested, is necessary because it is "the guiding star, not the operating manual." And every company needs a guiding star.

    This got 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.

    So I started 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'm going to go through all the entries, will pull out a couple of dozen of my favorites, and then will send them along to a small panel of friends and associates for their input. They'll tell me what their favorites are, and then I'll make the final decision....
    KC's View:

    Published on: September 4, 2012

    Got the following email from MNB user Todd Hale regarding my story about how Tony Kornheiser - an avowed technophobe - understands how audience have changed, and why media companies (like retailers) have to adapt to those changes:

    I am a big fan of Mr. Tony too and relative to your lead story, check out how U.S. teenagers use Google’s YouTube as their most important source for music – radio is number two – just above iTunes.
     
    “According to Nielsen’s latest “Music 360” report, 48% of consumers in the U.S. still see radio as the dominant way to discover new music. For almost two-thirds of U.S. teenagers, however, Google’s YouTube is now a more important source of music than radio (54%), iTunes (53%) and CDs (50%).”


    Point taken.




    And on the subject of service initiatives taken by some retailers, one MNB user wrote:

    I wholeheartedly agree that returning back to “service” will pay off handsomely for most retailers with the guts to build a culture that supports this initiative. The challenge for many of these retailers is that they pay lip service to the concept, but don’t fund the essential training needed to make employees successful. Myopic views of operational budgets quickly take precedence over properly educated store personnel that can better serve customers. Is ‘action’ a verb?

    No. But "act" is.
    KC's View: