business news in context, analysis with attitude

Published on: October 26, 2012

by Kevin Coupe

There is interesting research out from Loyalty One, a provider of loyalty analytics, and Northwestern University and The University of Western Ontario's Ivey School of Business, which says that there is "empirical proof that social media interaction between a customer and a brand drives immediate and long-term sales increases."

Among the conclusions:

• "The mere act of writing a short public statement on a social media site spurs significant lifts in transaction activity. However, longer, more elaborate posts dealing with redemption experiences (travel, entertainment) created higher lift than shorter, product-based posts."

• "The higher the level of participation in a social media event, the greater the impact on a consumer's purchasing activity."

• "Brands can use social media as a tool to raise the value of lower-volume, high-potential consumers who have more room to increase their spend."

• "Events that encourage participants to recreate the core benefits of a brand have higher lift effects than more generic posts - resembling a 'co-creation effect'."

I would agree ... and think that interactivity - "the mere act of writing a short public statement on a social media site" - can be enormous factor in forging connections.

I have some small experience with this. I know how MNB grows in terms of subscribers each week, and I think much of this has to do with the hundreds of emails I get each day responding to stories ... people tend to feel a connection to MNB, even to the point of feeling that it is their site. Which is great. And humbling. And just a small example of what brands big and small can do if they engage with consumers in a truly interactive way.

And by the way...

This engagement was demonstrated by the hundreds of recommendations I received recently when we sponsored an "MNB Mantra" contest here ... with people making fabulous suggestions about what MNB's mantra should be. There were so many diverse suggestions that it has taken me some time to work my way through them all, with the list of finalists developed by a crack team of friends and associates.

The winner will be announced in this space on Monday.

Published on: October 26, 2012

Walmart yesterday announced a series of initiatives that it said will make its "supply chain in the United States, China and around the world more sustainable ... Walmart said the company will use the Sustainability Index to design more sustainable products, make its global supply chain more socially and environmentally accountable and responsible, and incentivize merchants to make sustainability a bigger part of their day-to-day jobs."

In the announcement, Walmart said it would:

• "Buy 70 percent of the goods it sells in U.S. stores and in U.S. Sam's Clubs only from suppliers in the United States, China and around the world who use the Index to evaluate and share the sustainability of their products. This change will involve suppliers who produce goods in categories where the Index is available."

• "Beginning in 2013, Walmart will use the Sustainability Index to influence the design of its U.S. private brand products."

• "Walmart will change the way its key global sourcing merchants are evaluated so that sustainability becomes an even more important part of buyers' day-to-day jobs. Beginning in 2013, these buyers will join key buyers in Walmart U.S. and Sam's Club who already have specific sustainability objectives on their annual evaluations."

• "The Walmart Foundation will grant $2 million to fund The Sustainability Consortium (TSC) and assist in its efforts in launching TSC in China. TSC is an independent research organization. Using the Walmart Foundation grant, TSC China will engage industries, universities and other experts to form a global network of leaders improving sustainability in consumer goods, and will provide tools and resources to help suppliers become more sustainable and competitive. Walmart will use the results of TSC's independent work to refine its Sustainability Index for use in China."

The announcement was made at an event in Beijing with government officials, nongovernmental organizations (NGOs), academics, suppliers and company associates.

"We will drive progress faster and scale our work to make factories more socially and environmentally sustainable, reduce energy and water usage, and eliminate harmful emissions into rivers and the air. We will also have deeper insight into how we can make manufacturing more sustainable for people and communities in China," said Walmart CEO Mike Duke said at the event.

Published on: October 26, 2012

Marketing Daily reports on a new study from Deloitte that "finds a sharp rise in optimism with 50% of those in its survey expecting the U.S. economy to continue to improve next year, up from 33% in last year’s survey. And the percentage of those who say they intend to spend less on Christmas this year than a year ago fell to 37%, the lowest level since 2006."

The Deloitte study also points to the importance of mobile: “Smartphone users will contribute 5% to store sales this year,” says Deloitte vice chairman Alison Paul, who adds that consumers will insist on connectivity. "They will leave stores if they don’t have it. And they’re not just checking prices -- they’re also reading reviews, and photographing potential purchases to share with friends. And overall, 68% of the survey’s smartphone users say they intend to rely on them in some manner while shopping this holiday."

That doesn't mean that consumers are going to cast caution to the wind during the upcoming end-of-year holiday shopping season. The report also says that "shoppers are saying they intend to be careful, and plan to spend $386, down slightly from $395 in 2011. Omni-channel shoppers are likely to be the biggest spenders, and say they intend to spend $600, 71% more than store-only shoppers. And the trend toward fewer gifts continues: This year, shoppers say they will buy 12.8 presents, down from 14.7 last year, and almost half of the 23.1 gifts planned for back in 2007."

Published on: October 26, 2012

The Wall Street Journal reports that Amazon.com "reported its first loss in more than nine years, as the retail giant's revenue growth slowed while it continued to spend heavily on product development for devices such as the Kindle tablets and e-readers, as well as on new warehouses.

Amazon said it had a quarterly loss of $274 million, compared a profit of $63 million during the same period a year ago. Quarterly revenue was up 27 percent to $13.8 billion.

According to the Journal, "Despite persistently razor-thin margins and heavy spending, Amazon has maintained the faith of investors by promising greater profits down the road as its investments in new hand-held devices, fulfillment centers, cloud storage and other projects pay dividends."

The story notes that "it was the first quarter in which Amazon began collecting sales tax in the largest two U.S. states - California and Texas - as well as in Pennsylvania, which some observers were concerned would impact revenue." But Amazon said that the sales tax issue was not having any demonstrable impact on sales.

Published on: October 26, 2012

Fortune is out with its annual list of top companies to work for, with a number of retailers and food companies making the list, which is topped this year by Google.

Among the companies on the list, in order:

Wegmans (4), Zappos (11), The Container Store (22), Whole Foods (32), Nugget Market (34), Nordstrom (61), General Mills (63), Deloitte (67), Starbucks (73), Publix (78), and Accenture (92).

Published on: October 26, 2012

The 2012 Independent Grocers Financial Survey, from the National Grocers Association (NGA), is out, and it says that "independent grocers express a great level of concern over the financial impact of the changes to healthcare insurance mandated by the Patient Protection and Affordable Care Act (PPACA)." The other top-three issues include the budget deficit and deficit spending, and swipe fee regulation.

The top concerns are:

• Healthcare reform
• Budget deficit and deficit spending
• Swipe fee regulation
• Job stimulus/unemployment policy
• 2012 Presidential election
• Energy policy
• Estate (death) tax
• Immigration reform

Published on: October 26, 2012

Cerberus-controlled Albertsons LLC said yesterday that its online services are now being powered by MyWebGrocer, with the focus on an "integrated online solution for all of its stores that will personalize the shopping experience for customers, with access to planning tools, digital circulars, online advertising, social media, coupons and mobile apps."

Albertsons customers now can "access digital circulars for weekly specials specific to their local store. These circulars are available on multiple platforms, whether the shopper is surfing the Web, using a mobile app or viewing the store’s Facebook page. Planning tools have been integrated throughout these platforms, which include online recipe builders, coupons and shopping lists."

The goal, according to Karl Meinhardt, Albertsons' Vice President of Social & Digital Marketing, was to "bridge the gap between the digital world and their local store."

Albertsons LLC is now part of a network of 130 other grocery retailers nationwide that use MyWebGrocer services.

Full disclosure: MyWebGrocer is a longtime and valued MNB sponsor, one of the companies making it possible for you to get MNB each morning free-of-charge. For which we here at MNB are supremely grateful.

Published on: October 26, 2012

• Bizrate Insights, a consumer tracking firm, says that "15 percent of online buyers intend to purchase the iPad Mini immediately after its launch ... The top reason cited for not purchasing is a lack of a defined need, as reported by over 39% of respondents."

• The Los Angeles Times reports that "the market for gluten-free foods and beverages is booming, with double-digit growth over the last four years as more consumers find themselves diagnosed with celiac disease and food allergies ... Some 18% of adults are going gluten-free, according to Packaged Facts, up from 15% in 2010."

"The market for products without the gluten protein — found in wheat, barley, rye and some other grains — is valued at $4.2 billion this year, according to a report from Packaged Facts. Since 2008, it has grown at a compound annual rate of 28% and is expected to exceed $6.6 billion by 2017."

Published on: October 26, 2012

On Monday, MNB had an "Eye Opener" piece about the growth of the medical marijuana industry in California, and the unexpected impact it has had on the state's environment. Part of the problem has been the speed of growth, and the degree to which the state has struggled to keep up with it.

Well, I got a number of emails from folks who watched "60 Minutes" last Sunday, which, as it happened, featured a piece about the highly regulated and controlled Colorado medical marijuana business, which seems to be doing all the right things to provide quality product to patients while being carefully transparent about how the marijuana is grown, packaged, and marketed. It is, these readers seem to suggest, a model for how states should handle the medical marijuana business.

Having now watched the story, I agree ... and if you'd like to watch it, you can access it here.

Published on: October 26, 2012

Responding to yesterday's story about a new Eataly opening in Chicago, one MNB user wrote:

Could you please provide some reference(s) in support of the reported $165 million 2-year sales volume from this single-unit operation?

Sorry - I didn't cite the source on this and I should have.

The number came from ownership, and was quoted in the New York Times story about Eataly.





I got a lot of email yesterday about my "stuff that bugs me" rant on "FaceTime." here are some of them:

A barber can`t cut his own hair! The bad haircut is to demonstrate that the only other barber in town does a horrible job! (could say the same for plastic surgeons......)

MNB user Mike Jadrich wrote:

Not sure I agree with your opinion about plastic surgeons.  They can’t really work on themselves and if they did, wow, I wouldn’t want them to work on me!  If they looked good, I would want to know their surgeon and get a referral.  But then, why mess with nature in the first place?

MNB user Jackie Lembke wrote:

I had a similar experience as the non-existent iPhone case, but it was a digital camera and batteries. Many years ago digital cameras didn’t necessarily use easy to find batteries. Not being at all camera literate (if it takes more than point and click I won’t mess with it), I bought a camera at Christmas as a gift for my then tween daughter. She used it, she even liked it, then it needed new batteries. I went back to the store where I purchased the camera and surprise, they didn’t carry the batteries used by that camera. In fact no one in town, even the store which dealt only in batteries carried this size. Luckily, I was able to order replacements from the battery store. It is one of the few times I wrote a letter to a manufacturer complaining. I also wrote to the retail outlet where I bought the camera. Neither one ever responded and I still have not purchased another camera from that company. That was 10 years ago. I eventually forgave the retail outlet, but have not bought cameras from them again. Including the disposable ones that generally got sent on trips to summer camp. Sometimes, the experience after the initial sell is even more important than the experience before the sell.

MNB user Donna Brockway wrote:

I love an opportunity to gripe ...

So I bought my mother a sweater as a gift at a local department store (Lloyd & Taylor).  Said sweater did not fit, and she didn’t like it, so I returned it about 2 weeks later.  Here’s the interaction:  I came prepared with the receipt, even though this transaction should be somewhere in their system (like on line transactions).  The Sales clerk asked where the tags were, and I explained it was a gift and I removed them.  She sternly let me know that you should never remove tags if you wanted to return items, and it was their policy not to take returns without tags.  However, she was making an exception this time.  I told her that I did so little shopping in store anymore, and had not had any trouble returning my online purchases without tags or receipts, that I guess I just forgot.  Interestingly enough, she didn’t seem to get the sarcasm in my comment.

If retailers are getting smarter about what consumers want and demand, then they are not explaining it to their front line people – who have so much to lose, like their jobs!

From another MNB user:

Your story of the barber with a bad haircut reminded me of an old riddle.
 
If you go to a town with 2 barbers, one with a really nice haircut and one with a bad haircut, which barber should you go to?
 
Answer: You should choose the one with the bad haircut because he would have gotten it from the other barber.

And another reader chimed in:

I agree with you completely – the sight of store employees smoking outside just doesn’t depict a “clean store image” – especially when I wonder if those same folks are working in food prep. It is just better to not see them smoking and maintain the illusion. I’ll go one step further though. In my town, the big go-to supermarket that is part of a strip mall presents a gauntlet scenario. Not only do you continuously see a pack of their employees smoking while sitting on a bench just feet from the doorway next to their outdoor soda machines, but you have to walk through their smoke – breathe it in and wear it on your clothes for the rest of the day. How management can’t see that these people should be doing this on break behind the store as a benefit to customers is beyond me. It boggles the mind.

And from another MNB user:

I couldn’t agree with you more on that article on how companies / people can miss the obvious stuff…….

In Reference to this portion…..
 
“Another thing ... there's a Whole Foods not far from me, and every once in a while I see guys in Whole Foods uniforms outside grabbing a smoke. Really? Is that the message they want to send? Consistency means something. or ought to.”
 
Ever go by a Hospital / Care Clinic / etc…………yup, the Nurses and Doctors smoking……  A vast minority granted…..but more than zero….

MNB user Elizabeth Archerd wrote:

" Another thing ... there's a Whole Foods not far from me, and every once in a while I see guys in Whole Foods uniforms outside grabbing a smoke. Really? Is that the message they want to send? Consistency means something. or ought to."

That comment jumped out at me. I work at a natural food co-op, and we too have staff members smoking outside (because the MN Clean Indoor Air Act mandates no-smoking in public buildings or workplaces), usually in the alley behind the store.

Back in the 1970s when the natural food movement was starting, it was expected that co-op "workers" (never call them staff or employees!) would  exemplify some kind of natural living "purity." Heaven forbid a co-op worker be seen (anywhere) taking a swig of Coke or eating at McDonald's. Co-op women were not supposed to shave their legs, wear make-up or coif their hair, either. Such deviants came in for loud public criticism for veering off the narrow path. (You call that liberation? I don't.)

And yet, a frequent reason for disliking natural food stores (co-op or otherwise) has been the perception that the workers think of themselves as better than most people and are judging customers for their lapses from the true and natural path. Even now, if I tell someone I've just met at a party or reception that I work at the co-op, they are as likely than not to look at their plate guiltily and say some version of "I usually eat better than this" even if I'm holding a plate of exactly the same food from the buffet table.

Go figure.

Whatever else you may think, employers who sell great organic natural food and products don't control their employees' personal lives or break time habits, which can include smoking or eating processed junk food - or even using and throwing away plastic cutlery!

Consider what you are projecting on the folks who work for Whole Foods, and why. Working for that company does not mean taking on a mantle of lifestyle purity.

Submitted, as Rod Serling would say, for your consideration.

Still another reader offered:

I don't understand what is so objectionable about the Whole Foods employees smoking outside.  As much as I like Whole Foods for their great cheese selection, it is ultimately a pretentious grocery store, not a health clinic or an American Cancer Society outreach center. Did you also see cars powered by something other than solar panels in the parking lot?  This observation would seem equally inconsistent with the value system that you are ascribing to Whole Foods.

Another MNB user wrote:

I wouldn't go to the barber that cut that guys hair. Maybe the barber that has a great looking haircut had his done by the barber with the bad one. Many years ago, I was told to never go to the barber with a great haircut, find out who cut his hair and go there!

And from another:

Wow!  I guess you were a wee bit cranky - - I could almost hear your eyebrows growing from here.   All valid whining I suppose, except the comment on attractiveness of plastic surgeons seemed a bit unkind.  Following that line of reasoning, imagine the screening process for selecting a surgeon for a few other cosmetic procedures…

I feel like I'm the only guy on the planet who never heard that story about barbers.

But here's the thing. There are a lot of guys out there who cut their own hair. (I wish I were one of them.)

And don't you think that a guy who cuts hair for a living would want to be able to look in the mirror and see a decent haircut?

I do.




On another subject, MNB user Jeff Beliveau wrote:

You started today with things that “sort of annoys” you. Apparently it’s the theme of the day because the next section hit one of those things that sort of annoys me – duh moments from people who ought to know better. Not you Kevin, I’m looking straight at  “analytics” firm Jirafe and this statement you quoted: “The study also found that ‘people in California make up a whopping 13.3 percent of all online spending in the U.S.’
 
Whopping??? Really???  So let’s see…CA has about 12.1% of the US population. But even better the gross state product is 13.3% of US GDP. Hmmm, that’s a familiar figure, where have I seen that number before? So it’s not at all “whopping”, it’s exactly where one would expect it to be.
 
More useful from an analytics firm would be about what is missing. Why are some of the large population and large income states missing? Their list includes states we’d expect to see - CA, FL, IL and PA. But Texas ranks #2 in GSP and population; NY ranks #3; OH ranks #8 in GSP and #7 in population. Even a small upward change in behavior in these states could reap serious rewards due to their large size.

And from another MNB user:

It always intrigues me when articles about studies make statements like The study also found that "people in California make up a whopping 13.3 percent of all online spending in the U.S."

If I'm not mistaken, California makes up approximately 12% of the total US population and represents a little over 12.7% of total US income.  Therefore, I'm not surprised that those people make up 13.3% of the total online spending.  "Whopping"?  Really?

I got a lot of email along these lines ... almost as much as I got about barbers.

And you are absolutely right. Not only does the number seem self-evident, but I should have caught it and made the same point. I was writing really early because I had a 7:30 am flight to catch ... but that's only an explanation, not an excuse.




Finally, an MNB user wrote:

Hey you seem a little cranky this morning.....

Did we tell you today that we love you?

Are you kidding? I get more positive reinforcement from the MNB community than any single person has a right to expect.

And MNB user Joe Dahm wrote:

Your Face Time rant had the flavor of a young George Carlin today. Not that it was bad, actually funny, but out of the norm.

Keep it coming.

I can do that.

Published on: October 26, 2012

• The San Francisco Giants defeated the Detroit Tigers 2-0 in Game Two of the best-of-seven World Series, giving the National league Champions a 2-0 lead as the series moves to Detroit on Saturday.

• And, in Thursday Night Football action, the Tampa Bay Buccaneers defeated the Minnesota Vikings 36-17.

Published on: October 26, 2012

Ben Affleck continues to prove that he is having one of the best second acts in American movie history.

Affleck, of course, is the medium range actor who made a big splash years ago with Matt Damon when they co-wrote and co-starred in Good Will Hunting. But while Damon seemed to take George Clooney-type care in choosing his projects, Affleck seemed a lot more indiscriminate, and seemed to spend as much time getting into the gossip columns as in crafting a career.

Then, he got a chance to direct, and turned out the first rate Gone Baby Gone, and then the heart-pounding The Town, which is one of those movies that, whenever I'm flipping the channels, if I come upon it, I tend to stick around and watch.

Now, he's gone one better with Argo, a terrific movie that shows a sure-handed feel for style and content. is based on a true story; in 1979, when workers at the US Iranian Embassy were taken hostage by militants, six of them managed to take refuge at the Canadian Embassy. The challenge was how to get them out, and there seemed to be only bad ideas. Enter Tony Mendez (played by Affleck), an "exfiltration" specialist, who comes up with the best of the bad ideas - create a cover story about a movie company shooting a Star Wars-type movie in Iran, and smuggle the US workers out posing as members of the Canadian film crew. All this is true, though it only became declassified a few years ago.

To make the scheme work, Mendez had to actually create a movie company, find a script, and even open a Hollywood office, take out ads in Variety. Which he did. And then, it was off to Iran, where the workers were assigned cover identities and plans were laid for their escape.

Affleck makes all this work incredibly smoothly. The tonal shift are seamless - he moves from historical docudrama to Hollywood satire to edge-of-your-seat thriller without pausing for breath, and it ends up being a roller coaster ride that is an absolute pleasure for the audience. And he gets the seventies touches right - everything from the wardrobe (awful!) to the typography of the Warner Brothers logo at the beginning of the film to the presence of actors like Adrienne Barbeau, Michael Parks and Barry Livingston in the cast. Affleck has a wonderful cast - John Goodman and Alan Arkin as the old Hollywood pros who help him create the cover story and anchor it in reality, and Bryan Cranston as Mendez's CIA handler.

There are those who are carping about the fact that some of Argo is fictionalized - especially the final 20 minutes or so. But I think this is silly. In the end, Argo is a movie, a thriller, and Affleck is perfectly within his rights to make it more heart pounding than real life. That's the point of movies - they're supposed to be a heightened experience. If we wanted real life, we'd stay home.

The business lesson? Sometimes, we are faced with bad options and worse options. in those cases, you have to choose the best of the bad ideas ... and then make a full commitment to making it work. Because if you waver in your commitment, that may be the single most critical factor in derailing your plans.

Go see Argo. It's terrific.




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

Slàinte!