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    Published on: October 15, 2012

    by Kevin Coupe

    Electronics retailer Best Buy said on Friday that it plans to match the prices offered by online competitors - including Amazon.com - and will offer free delivery of items that are out of stock in its bricks-and-mortar units but available at BestBuy.com.

    The Wall Street Journal notes that this position would seem to be at odds with the stated opinion of its CEO, Hubert Joly, who has said that he believes that reports about the impact of online retailers and so-called "showrooming," in which people go to physical stores to check out products and then buy them online for less, is overstated.

    According to the story, "Best Buy's seemingly contradictory stance underscores the conundrum facing executives at many big-box chains. Aware that they need to adapt aging business models to the realities of mobile- and computer-aided shopping, they don't want to overreact or lose sight of what made them successful - that is, selection and service."

    Well, at least this is better than the Toys R Us policy, which the company says is to match prices offered by bricks-and-mortar stores but not those of online competition - a policy, it seems to me, that falls into the category of wishful thinking.

    The Journal points out that different retailers have different takes on "showrooming."

    Walmart CEO Mike Duke says, ""Let's be the best showroom ... Let's be best place where customers want to go and get the experience."

    "Toys R Us Chief Executive Gerald Storch," the Journal writes, "adamantly denies that the toy chain has suffered due to showrooming, even as he has ramped up the number of private-label products by 30% since 2006, partly to discourage comparison shopping."

    And then there is the Best Buy approach - deny that showrooming is taking place to any great extent, but match prices with everybody as a way of being competitive.

    The position here is not that bricks-and-mortar retailing is in danger of being made obsolete by online competitors. I think that in the end, it will be the retailers that offer consumers a variety of compelling options that will have the best chance of surviving ... and if they only offer physical shopping or online shopping, their offering has to grab the shopper in some sort of fundamental way.

    My feeling has always been that showrooming becomes an issue for retailers when the most interesting thing for a shopper to look at in any store happens to be their smartphone screen. (Mike Duke has this absolutely right ... not that he needs me to tell his this.) More and more, the shopping experiences that work are the ones that are focused and differentiated, whether they are physical or virtual.
    KC's View:

    Published on: October 15, 2012

    The Associated Press reports that 10 out of the 19 retailers and trade associations that were part of a coalition suing MasterCard and Visa for alleged fee fixing will try to block a proposed $6 billion settlement that they perceive as woefully inadequate. They will be joined in that effort, the story says, by a number of retailers and trade associations that were not part of the original lawsuit, but that see the settlement as a negative.

    According to the story, "Under the settlement, stores will be allowed to charge customers more if they pay with a credit card. The settlement covers only U.S. transactions. But the plaintiffs says that the settlement will not stop swipe fees from continuing to rise."

    The settlement is expected to be submitted to the US District Court in Brooklyn this week, and the dissident plaintiffs will have 30 days to file their objections. They will say that the settlement, as currently constructed, does little to stopping the indiscriminate rise of swipe fees, which hurts both retailers and shoppers, while at the same time preventing future legal challenges to the credit/debit card companies.

    The story notes that there are companies that support the settlement, believing it to be the best deal they will be able to get, and believing that if the settlement is not approved by the courts, the credit/debit card companies are likely to increase swipe fees almost immediately.

    In a statement supporting the announcement by the coalition, Peter Larkin, CEO of the National Grocers Association (NGA), said:

    "NGA is strongly opposed to the proposed settlement  because it does not the achieve the objectives NGA set out over seven and half years ago when it entered the class action litigation to represent the best interests of its independent retail members and the other merchants in the class.  Rather than bring fundamental reform to credit card swipe fees and the anticompetitive rules set by the credit card companies it will further entrench their market power and restrain merchants' rights - even those that don't yet exist - to challenge anticompetitive practices in the future, especially in the face of merchants attempts to use technological solutions to offer competitive payment options to consumers."
    KC's View:
    You'd think that if more than half the plaintiffs object to the terms of the settlement, there would be no way it could go through ... and at the very least, companies that refuse to sign onto a settlement that prevents them from suing in the future ought not be prevented from suing in the future.

    But I'm no lawyer. Who knows how this will turn out? But purely as a matter of common sense and fairness, the judge ought to toss out the settlement and send everybody back to the bargaining table.

    Published on: October 15, 2012

    The Huffington Post reports that it has obtained an internal memo from Walmart that "is intended for salaried employees only, and contains instructions on how to respond to strikes by hourly workers that spread to 28 Walmart stores in 12 cities earlier this week. The strikes were the first by Walmart retail employees in the company’s 50-year history.

    "The memo makes clear that Walmart, the world's largest private employer, views the labor protests as a serious attack, a message that runs contrary to the company's public comments that the strikes are mere 'publicity stunts,' as Walmart's vice president of communications David Tovar told The Huffington Post Tuesday.

    "'As you know,' the memo opens, 'activists or union organizers have been trying for years to stop our Company’s growth and to damage our relationship with our customers and members. One of the activists’ or union organizers’ tactics is to try to disrupt the business by urging our associates to participate in a walkout or other form of work stoppage.'

    "The majority of the memo is aimed at instructing managers not to violate workers' legal right to engage in concerted activity, or non-union labor organizing. Managers are directed not to 'discipline' employees who engage in walkouts, sit-ins or sick-outs.

    "Legal experts said the confidential memo shows an unprecedented level of caution from a company that has taken harsh stances towards employee attempts to organize in the past."
    KC's View:
    The bigger potential problem is the threat of a Black Friday walkout that would affect Walmart stores all over the country. Betcha there are a bunch of internal memos out there about how to deal with that possibility...

    Published on: October 15, 2012

    The Associated Press reports that "the American Beverage Association, the National Restaurant Association, a soft drink workers union and groups representing interests ranging from movie theater owners to Korean-American grocers" have banded together to sue New York City in an effort to block new rules that would restrict the sale of jumbo, sugary soft drinks in certain venues.

    The rules were put into place by the city's Department of Health, and will take effect in March 2013. The city says that by putting limits on drink sizes, it can affect the rising obesity rates that plague the metropolitan area.

    "For the first time, they're telling New Yorkers how much of certain safe and lawful beverages they can drink. … It's unfair, it's inequitable and it's illegal," said Caroline Starke, a spokeswoman for the plaintiffs.

    The plaintiffs say that the new rules will hurt small businesses and are reflective of a nanny state that has gone too far.

    A spokesman for NYC Mayor Michael Bloomberg, who initiated the new rules, responded that "this predictable, yet baseless, lawsuit fortunately will help put an even greater spotlight on the obesity epidemic."

    The Mayor's spokesman also noted that the city already has "won fights over outlawing smoking in bars and offices and forcing fast-food restaurants to list calorie counts on their menus."
    KC's View:
    The real issue for the beverage companies is the real possibility that the NYC regulations could be a template for a lot of other communities dealign with obesity issues. Think about it - just a few years ago, NYC was being sued for forcing fast food companies to post their calorie counts, and now McDonald's is doing it nationwide of its own accord. The game changed, and NYC led the way.

    I'm against the jumbo soft drink regulations - I think they are a bridge too far in terms of regulation - but this debate is not just about NYC.

    Published on: October 15, 2012

    Reuters reports that Amazon sent emails to Kindle owners in the US over the weekend telling them that they may get refunds of between 30 cents and 1.32 per e-book purchased, if a judge approves a lawsuit over price fixing.

    Here is the text of the email:

    We have good news. You are entitled to a credit for some of your past e-book purchases as a result of legal settlements between several major e-book publishers and the Attorneys General of most U.S. states and territories, including yours. You do not need to do anything to receive this credit. We will contact you when the credit is applied to your Amazon.com account if the Court approves the settlements in February 2013.

    Hachette, Harper Collins, and Simon & Schuster have settled an antitrust lawsuit about e-book prices. Under the proposed settlements, the publishers will provide funds for a credit that will be applied directly to your Amazon.com account. If the Court approves the settlements, the account credit will appear automatically and can be used to purchase Kindle books or print books. While we will not know the amount of your credit until the Court approves the settlements, the Attorneys General estimate that it will range from $0.30 to $1.32 for every eligible Kindle book that you purchased between April 2010 and May 2012. Alternatively, you may request a check in the amount of your credit by following the instructions included in the formal notice of the settlements, set forth below ...

    In addition to the account credit, the settlements impose limitations on the publishers’ ability to set e-book prices. We think these settlements are a big win for customers and look forward to lowering prices on more Kindle books in the future.


    The story notes that "the settlements came about after the Justice Department in April accused Apple Inc and five publishers of illegally colluding on prices as part of an effort to fight Amazon's dominance of e-books. Three of the publishers - News Corp's HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc and Lagardere SCA's Hachette Book Group - decided to settle."

    Some context from the story about the state of the e-book market:

    "Electronic books more than doubled in popularity in 2011, with e-book sales making up 15 percent of the market last year, up from 6 percent in 2010, according the Association of American Publishers and the Book Industry Study Group. While e-books increased in sales power, bringing in more than $2 billion in 2011, the majority of publishers' revenue still came from printed books, at $11.1 billion in 2011."
    KC's View:
    The text of the email comes from the message I got on Saturday. I'll let you know if and when I get an actual credit.

    Published on: October 15, 2012

    It is worth reading a long piece written for the Boston Globe Sunday Magazine this weekend, which looks at the food shopping experience and identifies two important trends - the ways in which stores have diversified to cater to a broad range of shopper interests and needs, and in how marketing has become more customized as stores try to do a better job of targeting specific shoppers.

    You can read the whole thing here.
    KC's View:

    Published on: October 15, 2012

    Tyson Foods said Friday that it "is launching a program to personally audit the treatment of animals at the livestock and poultry farms that supply the company. The effort is in line with the company's core value to serve as a steward of the animals entrusted to it ... The audits - called the Tyson FarmCheck(TM) Program - have already begun on a trial basis on some of the 3,000 independent hog farms that supply the company. Auditors are visiting the farms to check on such things as animal access to food and water, as well as proper human-animal interaction and worker training.

    "The FarmCheck program has been under development since early spring 2012. Although Tyson personnel have been conducting the audits so far, the company plans to ultimately involve independent, third party auditors. It also intends to expand the program to include chicken and cattle farms by January 2014. The audits are being developed by experienced veterinarians and animal welfare experts and are expected to include measures that build upon current voluntary farm industry programs."

    "Our company is made up of ethical, responsible and compassionate people, and we believe the family farmers who supply us share our values," said Donnie Smith, president and CEO of Tyson Foods. "We know more consumers want assurance their food is being produced responsibly, and we think two important ways to do that are by conducting on-farm audits while also continuing to research ways to improve how farm animals are raised. Here's what I want people to know: at Tyson, we care enough to check on the farm; and we're determined to help find better ways to care for and raise healthy animals."
    KC's View:
    Human treatment of animals has become an enormous top-of-mind issue in a lot of places and for a lot of people ...and companies have to respond.

    Published on: October 15, 2012

    • The Los Angeles Times reports this morning on a new City Target store that opened over the weekend in downtown Los Angeles, "a fraction the size of a SuperTarget and carries goods geared for city dwellers. Think more air mattresses, less patio furniture." At least at first blush, the store seems to have a target shopper base - there were a hundred or so people lined up to enter when the store first opened, though the story notes that at least some of them were out early anyway to watch the Endeavour space shuttle get hauled through town on its way to its new permanent home in Exposition Park.

    • The Chicago Tribune reports that as the impact of the summer's drought is seen in the cost of commodity items, "food rivals labor as the top expense for most restaurants. Restaurateurs are revamping menus, reducing portion sizes and even considering staff cuts. In the months to come, they say, watch for smaller steaks, fewer tortillas per entree and maybe even menu-wide price increases ... Analysts expect overall food costs to rise 5% to 20% by the end of the year - a painful squeeze for businesses that, even in the most prosperous times, operate on tight margins with little room to maneuver."

    • The Kroger Co. said that associates working at Kroger stores in Central Ohio have ratified a new labor agreement with UFCW Local 1059. The contract covers more than 11,000 associates working in 85 stores in the Columbus and Central Ohio area.
    KC's View:

    Published on: October 15, 2012

    • Arlen Spector died yesterday at age 82, of complications from non-Hodgkin's lymphoma, just the latest in a series of health battles waged by the former Senator.

    To some, he was a principled independent; to others, he was an opportunist without a philosophical core. (It probably depended on whether you agreed with him on any given issue.) Spector was a five-term US Senator from Pennsylvania who left the GOP and became a Democrat in 2009, saying that he felt that the Republican party had moved too far to the right and was inhospitable to a centrist like him. (He based this, at least in part, on the fact that he was being challenged for the Republican nomination by a more conservative candidate.) Of course, he also found the Democratic party to be inhospitable - he lost in a subsequent Democratic primary and retired from public life.
    KC's View:

    Published on: October 15, 2012

    We had a story last week about the enormous number of US teens who say they own iPhones, which led one MNB user to write:

    I am one of the “spoiled” parents you talk about in your teens with iPhone example, as I upgraded to iPhone 5 and gave my iPhone 4 to my teenager. However, it works with her $25 a month AT&T go phone plan with unlimited texting and limited voice minutes, and no data. I fill it each month only if she follows rules and is good about her texting habits. She has to be on wireless for data to work. 70% of the students at her public high school have iPhones, one reason could be that they have switched to text books on iPad for many classes and also use iPhones for some apps in some classes example – vocabulary in English, translation in World Language. Also for logging on to school portal, submitting assignments etc. And several textbooks are available on iBooks which can be read on the phone if needed. Even her assignment grades are now announced over email as are other school announcements.
     
    So many kids are now sporting smartphones not because they’re spoiled but because these phones are now increasingly cheaper and almost necessary for the technology driven lives they lead. I know some middle school kids who have developed iPhone apps – giving kids smart technology can bring positive results.
     
    One other reason parents may be giving iPhones in particular to their kids, is the ability to track their whereabouts in real time through “Find my iPhone” app. In lost mode it captures everywhere the iPhone has been. And it can be restricted so kids can’t turn off that feature. Also iPhones allow parents to turn off downloading apps, or put age restrictions on games, movies etc. Smartphones are almost a necessity in this age!


    For the record, it was not me who was referring to these iPhone kids as being spoiled. I was quoting from a story. All my kids have iPhones. And iPods. And Mac computers.

    In my view, they are not spoiled. This is equipment for life.




    Got several responses to last week's piece about an app called RunPee. Essentially what this app does is provide a database of almost every movie currently in the theaters, offering hits about when it is best to leave to go to the bathroom. You know, the sections of the movie when it won't really matter if you are out of the theater.

    Not only does RunPee provide this service, but it also offers a time. You can choose the movie you are seeing, and hit the button when it starts. When the movie gets to one of those points when you can miss a couple of minutes, it vibrates ... letting you know that you can run pee.

    MNB user Tom DeMott wrote:

    Kevin, this is priceless and with this app I may go to more movies!

    MNB user Chris Utz wrote:

    I wish they had an app like that for business meetings…

    From another MNB user:

    At my age (54) I need to know where the closest bathroom is when you go out, this is the best idea since sliced bread.  Looking for the  “NICHE” A never ending quest in retail.

    Another reader wrote:

    As someone close to your age, I would suggest that this app needs a way to input one's age, so that they can adjust the required time to run pee accordingly.




    Last week, we noted that Allstate, the insurance company, is saying that overweight Americans are causing the vehicles they drive to get less fuel efficiency - amounting to more than one billion gallons of wasted fuel each year ... Of course, one billion gallons is "less than 1 percent of  the total fuel used by passenger vehicles annually," the Tribune notes. But now that this data is in the public domain, expect New York City to start weighing drivers at toll booths before they drive into the city, and increasing their toll charges depending on their BMI; the same could go for taxi fares, which are likely to be synched to how overweight passengers happen to be.

    Which led one MNB user to write:

    I understand the problems with obesity and the costs involved. But...how efficient is it to weigh people at toll booths and before they take taxis? How much fuel will be wasted at toll booths with cars are idling waiting for everyone to get weighed. Not to mention the labor it will take for toll booth or taxi operators to weigh these people.What about privacy issues? Are they going to make people get weighed in the middle of the line? Or are they going to waste more time and energy taking people to a private area to get weighed. Who seriously comes up with these ideas?

    Actually, that would be me.

    I was joking.

    Though if the Bloomberg administration were to serious offer such proposals, I would not be surprised...




    Finally, in my movie reviews on friday, I mentioned that I had gone to a couple of movies that I did not expect to like, which led one MNB user to write:

    I have got to ask, why go to a movie you don’t expect to enjoy? I understand being surprised when you enjoy it, but $11 is a lot to spend reluctantly. I am glad you were pleasantly surprised. And I appreciate your spending your time and money and sharing your thoughts on which movies to see and which to avoid, but when I am iffy, I wait for cable or stream it later. That way I have some control as to when I can stop watching it without feeling guilty for leaving in the middle. And one more thing, thank you for the Monty Python reference the song is now stuck in my head...

    Part of the reason I go to movies I'm not sure I am going to like is that I want to review them here on MNB - it is part of what I do each week, and so I have to see the new stuff.

    But I also just love movies, and am willing to see stuff I might not like because I'm hoping to be surprised. There was one year in my life that I saw 150 movies - that's about three a week. I'm nowhere near that anymore, but I like to see between 30 and 50 movies a year, and would be thrilled if I could see twice that. (I keep hoping to get some of the studios to invite me to critics screenings, but haven't been able to work that out yet.)

    Keep in mind, you are reading someone who was a college newspaper film critic, and who has several unproduced screenplays in his drawer. (And other couple on his laptop.) And who co-wrote a book about the movies.

    That answer your question?
    KC's View:

    Published on: October 15, 2012

    In Week Six of National Football League play...

    Indianapolis 9
    NY Jets 35

    Cincinnati 24
    Cleveland 34

    Oakland 20
    Atlanta 23

    St. Louis 14
    Miami 17

    Buffalo 19
    Arizona 16

    New England 23
    Seattle 24

    Minnesota 26
    Washington 38

    Kansas City 10
    Tampa Bay 38

    Detroit 26
    Philadelphia 23

    Dallas 29
    Baltimore 31

    NY Giants 26
    San Francisco 3

    Green Bay 42
    Houston 24


    And, in Major League Baseball playoff action...

    The Detroit Tigers have taken a 2-0 series lead in the American League Championship Series, with 6-4 and 3-0 defeats of the New York Yankees, a team that suddenly looks old and vulnerable (51 strikeouts in their last five games), and that has lost Derek Jeter for the remainder of the season to a fractured ankle.

    The St. Louis Cardinals, a team that almost nobody thought would go to the National League Championship Series as the ninth inning began in the fifth and deciding game of their Divisional series against the Washington Nationals (which it improbably won 9-7), has taken a 1-0 lead against the San Francisco Giants with a 6-4 win.
    KC's View:

    Published on: October 15, 2012

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    KC's View: