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 17, 2012

    by Kevin Coupe

    Yet another way in which technology is finding new on-ramps into our lives...

    The Boston Globe reports on how technology may be changing the insurance business, with "more than a dozen insurers, seeking better ways to reward safe drivers and weed out riskier ones, are testing or marketing technologies to monitor driving habits, betting that customers are willing to give up privacy for the promise of lower bills." Essentially, what they are doing is "offering drivers a tantalizing deal: Sharply lower rates in exchange for permission to install a device that tracks when, where, or how you drive."

    The story notes that insurance companies "have signed up 1.5 million US customers, according to industry analysts, and that total could easily rise into the tens of millions within the next five years."

    However, the Globe reports that privacy advocates "worry that the proliferation of usage-based insurance could open up a Pandora’s box of concerns, possibly leading companies to require all customers to install monitoring devices to obtain insurance. Worse, some fear the devices could someday be equipped to track drivers’ every movement or eavesdrop on conversations - data that could eventually be sold or obtained by law enforcement authorities."

    Last weekend, when I was in Chicago, I went to the prototype AT&T store on Michigan Avenue, and one of the things they were demonstrating was a Nissan Leaf automobile that included the ability to track where and how your teenagers are driving. (I supposed this is easier than actually providing better cell service nationwide.) This struck me as a good idea, and made me receptive to the concept raised by the Globe story.

    Now, I think the privacy advocates have a point. And I certainly think that it seems possible that insurance companies, if they don't require such monitoring, could impose a financial penalty on those who will not allow their driving habits to be tracked.

    And then ... maybe they'll put weight sensors underneath the driver's seat, so they can tell how heavy the driver is, and then charge them more for health insurance...

    Next thing you know, we'll all find ourselves being watched while living in a place that resembles Hotel Portmeirion, near Penrhyndeudraeth in North Wales...
    KC's View:

    Published on: September 17, 2012

    The Los Angeles Times reports that Whole Foods has officially endorsed California's Proposition 37, a referendum that would require the labeling of all foods containing genetically engineered or modified ingredients, though it is not putting its money where its mouth is.

    The company said that it supporting the referendum, scheduled to be voted on by California residents on November 6, because "it has long believed its customers have the right to know how their food is produced." However, that support does not extend to financial contributions; the Times reports that "Whole Foods has not contributed to the Yes on 37 campaign, according to filings with the California secretary of state."

    The Times notes that Whole Foods has reservations about several components of Prop 37. For one thing, it says that "a 0.5% threshold was too low for exempting a product containing a small amount of genetically engineered content from the labeling requirement. The company also objected to a provision that would allow private attorneys to sue on behalf of the state, alleging a violation of the labeling mandate, should it become law."

    As reported on MNB last week, California Grocers Association President Ronald K. Fong has said that if approved, Proposition 37 would create a litigation nightmare for grocery retailers. The initiative, he said, isn't "really about the ‘right to know,’ but is about the ‘right to sue.’ And when it is time to sue, grocery retailers will be on the front line."
    KC's View:
    I absolutely understand the concerns about litigation. But I also continue to believe that accuracy in labeling ought to be a basic requirement of anyone selling food.

    Published on: September 17, 2012

    The Wall Street Journal reports that Walmart was unable to reach a deal with a Brooklyn real estate developer that would have led to the first of its stores being opened in New York City. Instead, the Journal writes, "a ShopRite grocery store struck a deal Friday morning with developer Related Cos. to anchor the 630,000-square-foot Gateway II shopping center planned for the East New York area of Brooklyn.

    "Unions and labor-backed candidates cheered the decision and vowed to continue to block nonunion Wal-Mart stores from opening in New York City. ShopRite is a New Jersey-based cooperative with union employees."

    "ShopRite will bring quality food to this area of Brooklyn as well as good jobs with an economic impact that will be felt throughout the five boroughs. I welcome this company's newest location with its history of responsible business practices, supporting its workers and the communities they serve," said City Council Speaker Christine Quinn, who has been critical of Wal-Mart in the past, and who is expected to run for mayor next year.

    Walmart's failure to get a deal reportedly was over financial terms.

    "We were unable to agree upon economic terms for a project in East New York," said Steven Restivo, Wal-Mart senior director of community affairs. "We remain committed to bringing new economic development and shopping options to New York City, especially in the neighborhoods that need them most."
    KC's View:
    I think it is disingenuous to suggest that Walmart lost out only because of financial concerns. Politics almost had to play a part; I'm sure the developer didn't want picketers on this project from the moment that it broke ground.

    But it also means that maybe Walmart is able or willing to cut the deals it has to or needs to in order to open in NYC.

    Published on: September 17, 2012

    The Indian Express reports that the government of India said last Friday "announced a relaxation of the Foreign Direct Investment (FDI) norms in the retail sector, allowing up to 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail. The move enables global retail firms such as Wal-Mart Stores, Tesco and Carrefour to set shop with a local partner and sell directly to consumers for the first time. "

    According to , "Global retailers may need to invest at least $500 million over three to five years in the world’s second-most populous nation to expand retail operations across the country."

    This shift, the story says, "could transform India's $450 billion retail market" - a market that some believe could expand to $725 billion by 2017.

    Until now, foreign companies were only allowed in wholesale stores and joint ventures.

    Walmart's existing cash-and-carry wholesale joint venture with Bharti Enterprises in India expects to open between three and five new stores by the end of the year, though it is unknown if this new shift could change its priorities.
    KC's View:
    Let's see if it sticks this time. The Indian government tried something like this once before, and had to back down because of political opposition.

    Published on: September 17, 2012

    USA Today reports that 1962 was the year that, for all practical purposes, mass discount retailing was born: "That was when Walmart, Target and Kmart were born, each with their distinctive style of low-price retailing. As the three celebrate their 50th anniversaries this year, they can take credit for much of the way bargain-obsessed America now shops."

    The story goes on:

    "Oddly enough, companies founded by Sam Walton, George Dayton and Sebastian Kresge all gave the concept of a high-volume store with lower-price merchandise a try in the same year. Odder still, it was S.S. Kresge's Kmart -- the now-beleaguered of the trio -- that set the standards for discount retailing that the others built upon.

    "Kmart expanded the fastest of the three, growing to hundreds of stores by the mid-'70s, vs. a few dozen Targets and Walmarts. Kmart's rapid growth and hugely popular Blue Light Specials made it an early leader."
    KC's View:
    The amazing thing is that when Kmart opened its first supercenter, that store was vastly superior to the supercenters being opened by Walmart. The difference is that Walmart stuck with it and got better, while Kmart collapsed under the weight of mismanagement and poor infrastructure.

    Published on: September 17, 2012

    In South Africa, Business Day reports that Pick n Pay's negotiations with Ahold, which would have had the Dutch company acquiring the retail company founded by Raymond Ackerman in 1967, appear to have fallen apart over price.

    The story says that while Pick n Pay's chairman, Gareth Ackerman, continues to maintain that there are no negotiations and no plans to sell the company, sources tell the paper that Ahold "has been conducting a due diligence for about three months with the intention of doing some sort of deal with Pick n Pay."

    Business Day also reports that "though it still has a prominent brand, Pick n Pay has been losing market share to rival Shoprite and has been without a CEO since February, when Nick Badminton resigned." In addition, Walmart has bought it way into the South African market, upping the competitive ante there.

    And, the paper says, analysts say that the company is "particularly vulnerable," as one analyst says, "They don't have a CEO, they don't have an international partner, they don't have a strong balance sheet and they don't have a good strategy."
    KC's View:
    I've gotten numerous emails from insiders in South Africa telling me that negotiations to acquire all or part of Pick n Pay indeed have taken place ... so it is important to take Gareth Ackerman's denials with a grain of salt. (Denying that negotiations are taking place often is SOP in companies up until the moment that a deal is signed.)

    While the time may have passed for Pick n Pay to remain an independent, family-controlled company, it is important to remember exactly how important this retailer has been in South Africa's evolution. I've been to South Africa, I've seen Pick n Pay's stores in Johannesburg and Cape Town, and I've interviewed Raymond Ackerman, who was hiring black employees and managers for his stores even while apartheid was the government's official policy. Raymond Ackerman stood up for human rights in South Africa at a time when it was not politically popular or even commercially advisable to do so.

    Published on: September 17, 2012

    • Published reports say that a number of employees at a warehouse in Mira Loma, California, walked off the job last week and embarked on a six-day, 50-mile march to downtown Los Angeles designed to draw attention to what they say are poor working conditions.

    The march, the Los Angeles Times reports, was "organized by the union-backed labor group Warehouse Workers United," and while the warehouse is operated by NFI Industries, the union group is focusing its attention on Walmart, which contracts with NFI, "alleging that the company sets standards in the industry because many of the warehouses service the discount giant."

    "Part of the union playbook is to drag the Wal-Mart name into the discussion because it gets you guys in the media to pay attention," Walmart spokesman Dan Fogleman tells the Times, which writes that "Wal-Mart had contacted its contractors and visited the warehouses, including the one in Mira Loma, and determined that the workers' claims were 'either unfounded, or if they are legitimate, have been addressed'."
    KC's View:

    Published on: September 17, 2012

    • The Milwaukee Journal-Sentinel reports that "Piggly Wiggly Midwest and employees at the company's unionized stores throughout Wisconsin have signed a new contract, ending a labor dispute that threatened to close the chain's flagship Sheboygan store." terms of the settlement were not disclosed.

    However, a statement from the two sides said that "all unfair labor practice charges against Piggly Wiggly pending before the National Labor Relations Board and in federal court have been resolved."

    • The Associated Press reports that Teamster-represented employees working for Hostess Brands have "narrowly approved new contract terms, raising the possibility that the maker of Twinkies and Wonder Bread will stay in business."

    However, other employees represented by Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and other smaller bargaining units rejected the contract terms accepted by the Teamsters. And so, Hostess Brands says it will go to court to try to force these contract terms on the other unions, which is necessary if it is going to emerge from bankruptcy protection.

    Forbes reports that in the Wake of Walgreen acquiring 45 percent of Alliance Boots for $4 billion plus stock, Alliance Boots is now turning around and spending more than $90 million "to buy a 12 percent stake in China’s Nanjing Pharmaceutical Company Ltd.," which is described as "the fifth-largest drug wholesaler in China with a network of nearly 350 pharmacies."

    • Beginning in November, Walt Disney World's Magic Kingdom will have a restaurant selling alcoholic beverages - the first time that booze will be available there in the park's 41-year history.

    Disney has long offered alcohol at other parks, including the adjacent Epcot, but the Magic Kingdom has long been considered off-limits. However, with the opening of a new French restaurant called "Be Our Guest," after the song from Beauty and the Beast, the company decided to rethink its position for that venue.
    KC's View:

    Published on: September 17, 2012

    MNB reported last week about the decision by Beef Products Inc. (BPI) to sue ABC News, saying that the network engaged in "false and misleading and defamatory" journalism about lean, finely textured beef - better known as "pink slime" - that it says created the illusion that the filler was unsafe, which then resulted in the company losing 80 percent of its business, closing three of its four US plants and firing 700 employees.

    MNB user Paul Gillis responded:

    I think that BPI have every right to go after the new agency that chose to slant the view of this product and develop the report for the sensationalism of the circumstance.  As you said, BPI was doing nothing wrong, illegal, immoral or deceptive.  They were using a patented, scientifically approved, endorsed and proven procedure that actually made the product safer for the consumer.  It was approved by the government and was accepted industry wide.

    That is until someone decided to assign it a repulsive name and then misrepresent it as hunks of "old meat" that were "bathed" in ammonia and other chemicals to disguise the product and slip it into our meat supply. THAT is what ABC was doing.  BPI explained the procedure but the media continued to pound on the story with no reflection on the company's standpoint.  If the media is not held accountable to present a story with both sides when it is available then that is just wrong.  Who's next in line for the media to crush.

    I don't think most people want to know the nitty gritty of how a product is made or how the ingredients are manufactured as long as it has been deemed safe through thorough testing and approval processes.  If they do maybe we have to begin attaching a pamphlet (sort of a pharmacy approach) to every product sold in the world explaining exactly how it was made, how he ingredients were made, how it was produced, how it was shipped and handled, what the potential side effects can be and possible interactions with other foods as well.    As they say on ESPN....COME ON' MAN !!!!!


    Another MNB user wrote:

    This is a perfect example of news trying to be entertainment.  No one was hurt by the stuff.  It was just a good story that made an “evil corporation” look bad.  How many people lost their job over no one getting hurt?  It is amazing to see the big networks falling to Fox News.  My grandfather a lifelong viewer of ABC has even made the switch to Fox.  He said he is tired of the same old thing.  Funny my 80 year old grandfather saying he is tired of the same old thing.  This is why they have to try to entertain and not report the full news.  The BPI side of the story was not as sexy because in ABC news’ eyes they were the evil corporation even though they employed those 700+ people.

    Hmmm... it never occurred to me to think that ABC - which is, after all, owned by Walt Disney - would have such antipathy for big corporations and think of them reflexively as being evil.

    I may have to rethink my whole world view.

    MNB user Glenn Cantor countered:

    In reference to Beef Products Inc. losing 80% of its business because they let outsiders name their product “pink slime,” we often get so caught up in internal perceptions of our business, including our own terminology and acronyms, that we lose sight of how outsiders perceive our business.  People, in general, have a tough time seeing outside themselves.  In this case, outsiders identified an unknown additive that was best described as pink slime.  It was, indeed, hidden from consumers.  If it wasn’t hidden, we would have all been pleased that beef producers were doing something to kill bacteria in meat.

    In today’s world, it is necessary to understand, recognize, and define perceptions.  Otherwise, it will be done for you.  Quite frankly, if you are in the business of making “pink slime” that people eat, you’d better have a back-up.


    I wrote last week that regardless of whether "pink slime" is safe to eat or not, BPI's real problem is that it allowed - by not disclosing the existence of and rationale for lean, finely textured beef - other people to define it.

    Which led one MNB user to write:

    That strikes me as being terribly naive.  No matter how you "define yourself," you're still always vulnerable to being demonized by some nut who creates anxiety among the ignorant. California's attempted attack on GMOs is a perfect example.

    Well, of course you are. That's not the point.

    The point is that if you are upfront about your ingredients and everything that goes into your products, you leave less room for others to maneuver and define you. Transparency is not a cure-all or a magic bullet, but it is both a strong offense and effective defense.

    MNB user Linda Allen chimed in:

    I am in Milan and reading your newsletter, along with the news from Libya and around the world re rioting, death and destruction in the name of showing "disapproval of an action of the USA."

    With no disrespect to MNB, you will agree these events are at quite different levels of gravity for us all. However,I could not help but be struck by your opinion that the problem for the beef industry was failing to define itself/a product (or one's country.) And that as a result, others will do so in a negative manner.

    As so many reports have indicated, the USA has been making monumental efforts to define ourselves positively: both in words and in deeds. We are both "good and bad", of course.

    However, what is the answer to making this effort and then to be confronted with "receivers of the definitions" who, for reasons of their own, prefer to see only the negative. And worse, to hypocritically turn an event or subject to serve their own selfish interests.

    To me, this is an increasing problem in both something such as the beef incident, and far more tragically for the damage done (using the video "definition" instead of another more positive one) to millions in need in these countries and the Americans working to try to assist.


    We all spend a lot of time wringing our hands over the disagreements that typify US politics, but I think if nothing else, the tumult that we've seen overseas over the past week or so puts it all in context.

    In this case, I do think you are comparing apples and oranges. It may be that no matter what the US does, it will never be able to define itself effectively and positively to some cultures. But that is a far harder task than food companies simply saying - completely, accurately and transparently - what is in their foods.




    On the subject of the NYC jumbo soft drink ban, one MNB user wrote:

    God, don't we have more important things going on in the world then to worry about what size drink I decide to buy.  I agree that it is education at an early age but it is also parental responsibility to teach children the right way to eat.  And it they aren't taught at home or decide to ignore their parents (although we know that never happens) at an early age and they develop the negative habits, then we all have a mind of our own and can learn and make informed decisions.  Ultimately, I choose what to put in my body.  When do we all take responsibility for what we do and the actions that we take.  And what about the things in our life that we know kill us....liquor, cigarettes and the like.  Cigarettes have been proven to kill us but no one has the guts (I really wanted to say balls here but it's your column) to take on that beast.  Why not fine someone $200 for selling cigarettes.   Mr. Bloomberg, take the money that you spent thus far and will waste on enforcing an ignorant law and spend it in the schools to teach nutrition and basic healthy eating   That's what we need done.

    I need a drink....a 32 ounce Diet Coke sounds good about now!


    I think you're okay with that ... Diet Cokes are not affected by the ban.




    I marveled last week about how Citibank now is emailing ATM receipts to customers, which led one MNB user to write:

    Wells Fargo has been e-mailing receipts for both deposits and withdrawals for quite a while. Also, their ATM’s remember your last withdrawal transaction, so if you want to withdraw the same amount of cash all you do is enter your PIN and press the last transaction and you get your cash and the receipt is e-mailed.

    So, apparently the Citi does sleep sometimes?

    And responding to my suggesting that all retailers need to offer emailed receipts to customers, one MNB user wrote:

    Kmart offers email receipts, and has for over a year now if memory serves me correctly.  Of course, you’d have to shop at Kmart to know that.

    Point taken.




    On another subject, one MNB user wrote:

    I've been harassing you for years about GMOs and it's one battle I chose to focus on. We may not be able to fight every battle, but this one affects potentially every body and it's planetary, not just national.

    I see the seductive argument that this should be a national, not state, issue. BUT! If we were to wait until the federal government takes up the standard on GMOs , it could be years - even decades! And meanwhile, the USDA and the FDA are approving and allowing genetically modified alfalfa, soybeans, salmon, tomatoes, potatoes, patented seeds , and much more, to permeate the food chain, to the point if no return.

    So I say, GOOD FOR YOU, CALIFORNIA, for adding Prop 37 to the November ballot! Sympathies are overwhelming for its passage regardless that opponents may end up spending ten times -Not twice the amount, ten times the amount - that prop 37 proponents will spend!

    And I say, shame on you, Whole Foods, take a stand and walk your talk!

    I do have a mild concern, that it opens the door for a legal feeding frenzy, similar to what has happened Prop 65, intended for water purity and avoiding excess lead. The greedy legal profession has found loopholes to make themselves rich, that have nothing to do with safety, and everything to do with money. But just simply labeling foods that have ingredients with GMOs is informing the consumer, and the consumer and market will decide.




    Finally, I have to say that I love getting emails like this one, from MNB user Lindy Bannister:

    You make me laugh at least once during the morning news! What a great change from reading or listening to mainstream media!! You are good for the heart!
     
    Then my work here is done.
    KC's View:

    Published on: September 17, 2012

    In Week Two of National Football League action...

    Tampa Bay Buccaneers 34
    NY Giants 41

    Cleveland Brows 27
    Cincinnati bengals 34

    New Orleans Saints 27
    Carolina Panthers 35

    Washington Redskins 28
    St. Louis Rams 31

    Tennessee Titans 10
    San Diego Chargers 38

    Oakland Raiders 13
    Miami Dolphins 35

    Houston Texans 27
    Jacksonville Jaguars 7

    Kansas City Chiefs 17
    Buffalo Bills 35

    Baltimore Ravens 23
    Philadelphia Eagles 24

    Arizona Cardinals 20
    New England Patriots 18

    Minnesota Vikings 20
    Indianapolis Colts 23

    Dallas Cowboys 7
    Seattle Seahawks 27

    NY Jets 10
    Pittsburgh Steelers 27

    Detroit Lions 19
    San Francisco 49ers 27

    KC's View: