retail news in context, analysis with attitude

Published on: October 31, 2012

by Kevin Coupe

Did you feel the disturbance in the Force yesterday?

That would have been the Walt Disney Co. announcing that it is acquiring Lucasfilm from its founder, George Lucas, for more than $4 billion in cash and stock. And simultaneously announcing that under Disney's control, Lucasfilm would produce a new "Star Wars" film to be released in 2015, and henceforth add to the saga every two or three years.

The bad news about this is that the last three "Star Wars" films to be released were, while commercial successes, not up to the quality of the first three. (It needs to be pointed out to those unfamiliar with the canon that the first three films produced were actually the last three in chronological order, and that the last three released were actually the first three. Of course, Lucas has said at various times that he originally had a nine-film continuum in mind, which would have made the last three chronologically actually the middle three. But now, since Disney has not set a limit on how many "Star Wars" films there could be, that whole vision, for all practical purposes, has been tossed. Got it?)

The good news would be that Lucas will only be a consultant on any new "Star Wars" films, and won't be doing any actual writing and/or directing. (He may be visionary, but his story sense has, shall we say, declined over the decades. The evidence of this would be, in addition to the last three "Star Wars" films, a little debacle called Indiana Jones and the Kingdom of the Crystal Skull. I rest my case.)

What does this have to do with retailing?

Well, expect Luke Skywalker, Han Solo and the rest of the "Star Wars" characters to make a resurgence that will be felt in retail stores and product development around the world. (And maybe even in a galaxy far, far away.) According to press reports, Lucasfilm makes about $215 million a year just in licensing fees, but Disney feels that with a little aggressive marketing, this number could be grown. Substantially. Plus, with new product in the pipeline - the last "Star Wars" film came out in 2005 - licensing would almost have to increase.

Plus, Disney is getting all of Lucasfilm's post-productions businesses, such as Industrial Light & Magic, which offer ample opportunity for expansion.

In other words, $4 billion may sound like a lot of money. But it, in fact, could be a steal if Disney handles the transition correctly.

It'll be an Eye-Opener.

Published on: October 31, 2012

There is a good piece this morning in the Washington Post about how, in addition to causing what could be more than $80 billion worth of damage, as well as potentially impacting everything from a presidential election to end-of-year holiday sales, Hurricane Sandy also managed to remind us that "the economy still depends very much on physical highways, not just Internet highways, as well as century-old networks for physically moving people and goods."

The piece is worth taking a look at, and thinking about. It can be found here.

Published on: October 31, 2012

The Sacramento Bee reports that faced with the growing possibility of a strike after it decided to unilaterally impose the terms of its most recent and "final" contract offer on the unionized employees that it could not get to actually vote on it, Raley's has "agreed to hold off for two more days before unilaterally implementing terms of its final contract offer. The West Sacramento grocer will meet instead with union negotiators and a federal mediator Thursday afternoon in what is being billed as a last-ditch effort to find common ground on a new labor contract."

"We are pleased Raley's has thought better of its plans to implement concessions on Thursday," said Jacques Loveall, president of UFCW Local 8 in Roseville, in a memo to his members. "Perhaps the real possibility of a strike will compel Raley's to change course and finally begin negotiating in earnest for a settlement addressing the needs of everyone - both the company and union members."

Raley's management has said that it needs the new contract terms in order to remain financially viable in the face of growing non-union competition, and also has said that it believes that the contract offer is actually more generous than the terms of an offer by Save Mart that already has been accepted by the UFCW.

Published on: October 31, 2012

We've had several stories here on MNB in recent weeks about how companies such as Walmart and Amazon (and even Google) are plowing the same-day and next-day delivery fields, trying to figure out how they can best offer accelerated shipping times and better compete with the instant gratification that traditional bricks-and-mortar operations saw as one of their key advantages.

Well, as noted in the headline, there must be something in the water...

Got an email yesterday from Nordstrom offering next-day delivery for any of 14 different dress shirts that it is labeling as "fast track" products. Different colors, different color styles, different fits ... but all the shirts falling into the kind of "basic" category of products that men might need immediately, and for which they would easily know their size.

No indication from Nordstrom whether this is a short term or seasonal offering. But it is not hard to imagine that if it sees a spike in orders because of the promotion, that next-day delivery could become a bigger part of its online offering.

Published on: October 31, 2012

The Financial Times reports that the dismissal by Apple Inc. of John Browett, the former Tesco and Dixon's executive brought in earlier this year to run the Apple Stores, "marks an abrupt change of fortunes following his appointment just six months ago."

Browett, the story notes, was enormously successful in helping to rejuvenate Dixon's, an electronics retailer in the UK with a plummeting reputation; before that, at Tesco, he was "one of the cadre of young executives who developed key parts of the retailer’s strategy under Sir Terry Leahy, the former chief executive."

He is described by former colleagues as having “a brain like a mainframe," and being "an inspiring person to have in a store."

That said, all the stories about his brief Apple tenure seem to be true - that he was focused on efficiency and not effectiveness, and that he was trying to cut costs and staffing in a division that needed a lighter touch.

The FT concludes that Browett's "departure from Apple leaves him free to pursue another big role in international retail," and that he is expected to be "in demand."

Published on: October 31, 2012

The Nielsen Co. is out with its Global Survey of Consumer Confidence and Spending Intentions, which says that "US consumer confidence in Q3 improved three index points to 90, the second highest U.S index score in four years, while more than 80 percent of U.S. respondents said they believe the country is still in a recession."

Excerpts:

• "Concerning personal finances, 54 percent of U.S. respondents said they expect their situation to be good or excellent over the next 12 months. Almost one third (32%) of respondents said they did not change their spending habits to save on household expenses, up from 27 percent in Q2 2012."

• "US online consumers’ top five strategies for saving on household expenses include saving on gas/electricity (62%), cutting back on out-of home entertainment (57%), spending less on clothes (57%), switching to cheaper grocery brands (53%) and cutting back on take-out meals (52%)."

• "US respondents with extra money listed savings (35%), paying off debt (33%), new clothes, (24%), and vacations or out-of-home entertainment (tied at 21%) as the top five choices. The option 'I have no spare cash' was chosen by 26 percent of U.S. respondents."

“The mix of optimism about personal finances and pessimism about the overall economy is consistent with what Nielsen has been seeing: an uncertain, pragmatic consumer, but one
eager to jump on a good value,” said James Russo, VP, global consumer insights, Nielsen. “As we head into the holidays, it’s possible the tight budgets of the past few years may loosen for the right offer. Also, recent improvements in gas prices and the unemployment rate may help loosen purse strings as well.”

Published on: October 31, 2012

The Boston Globe has a piece about the city's recent second annual "Food Day" celebration, and what experts it polled say America's kitchens will be like in 2050. Among the prognostications:

• "Healthier processed foods. High-sodium foods won’t be a problem because a variety of salt substitutes will have been developed and added to soups, baked goods, and condiments."

• "We’ll eat less meat and chicken. Plant-proteins in fake meat, seafood, and milk will replace three-quarters of the animal products we now consume today. Limited supplies of energy, water, and land will make it too costly to maintain a steady diet of burgers and franks.

• "We’ll have health planners along with financial planners."

• "A single computerized device will replace multiple appliances. If we could streamline our lives with smartphones, why can’t we have a single appliance that juices, cools, cooks, and freezes our food?"

• "Most of us will have a home garden. Aeroponic technologies, where plants are grown in an air or midst environment without the use of much soil, will allow us to have refrigerator-sized box gardens that can produce one-fifth of the vegetables and legumes we need ... We’ll also be more likely to participate in community gardens."

• "We’ll have financial incentives to purchase more nutritious foods."

To be fair, the predictions often reflected the business priorities of the people doing the predicting. David Katz, for example, who helped develop the NuVal nutritional labeling system, believed that there will be financial incentives to purchase more nutritious foods ... which would certainly be good for his business.

Published on: October 31, 2012

There is an interesting think piece from the Hartman Group about why food retailers and manufacturers ought to be targeting a group to-date largely ignored - people who eat by themselves. "Eating alone is fast becoming the new normal," the report says. "The Hartman Group’s analysis of how we eat as a culture shows that today a fairly astounding 46% of all adult eating occasions (up from 44% in 2010) are undertaken alone."

The report goes on to say that "one of the most interesting aspects of the trend toward eating alone is the notion that it represents the dismantling of the communal meal and the way we 'used to eat': historically, eating was something social, and often implied something done with others where stories were told and events of the day might be shared."

And, the Hartman Group continues:

"Rules no longer really apply for eating occasions, especially when it comes to eating alone. Many companies continue to market to family occasions and iconic meals of the past, missing the opportunity to market to the vast number of adults who are increasingly eating alone.

"Consider: Over half of adult alone eating occasions take place in the home, and marketers need not cede the sourcing for alone occasions to QSR or other foodservice channels. Within food retail, significant opportunities exist to develop single-portion-oriented baked, prepared and refrigerated stations that enable those shoppers assembling meals-for-one to mix and match new tastes and cuisines. Prepared foods sections (such as those found in Whole Foods and Wegmans) can be masterfully constructed for this behavior. A caution: we continually see portion sizes creeping upward (e.g., sushi for four) in prepackaged refrigerated meals and snacks, while for solitary diners just a sleeve of sushi (i.e., a portion for one) will suffice."

It is an interesting and thought-provoking piece, because it is looking at cultural shifts as well as eating habits, and you can read the entire report here.

Published on: October 31, 2012

• The Orlando Sentinel reports that "after years with a limited presence in Central Florida, specialty grocers are beginning to grow again," with both Whole Foods and Fresh Market planning new stores there, and Winn-Dixie trying to differentiate some of its units with "fancy amenities and more specialty items."

The story notes that both Fresh Market and Whole Foods have stores in Orlando, but that "hey have stagnated at two stores apiece for several years now." The Sentinel also says that "spreading competition could mean some trouble for Lakeland-based Publix, the region's dominant grocer," which "has recently remodeled some supermarkets."

Published on: October 31, 2012

Got a number of emails responding to yesterday's piece about H-E-B about to encounter more competition than usual in the Texas markets it has long dominated.

One MNB user wrote:

I spent 18 years at HEB.

I think it was Jack Dempsey who said” the best defense is a good offense”.  HEB does not play much defense.  They spend more time on the front side determining what the customers in that neighborhood want and then give it to them.  They believe that just because it ain’t broke does not mean you can’t fix it.  They constantly test and learn.  They take lots of chances.

While most retailers push store brands because they are more profitable, similar to the Wegman’s model, HEB tries to sell more store brands because they are exclusive and you can only buy HEB branded products at their stores creating a key point of differentiation.  They give a tremendous amount back to the community because they can, not because they have to.  They stay on top of or ahead of trends as well as anyone in the business.  They consider Wal-Mart their biggest competitor.  So I am sure they are ready for their new competition.  I wonder if their new competition realizes they will have a tiger by the tail.

As for your quote, some people attribute it to Vince Lombardi. But I get your point.

Another MNB user wrote:

FYI ... the reason that Walmart opened the majority of the first supercenters in Texas was that Sam Walton felt that HEB was the  best food retailer in the US and if supercenter were= going to make it, they would need to be better then HEB.

MNB user Bob Shaw wrote:

Grocery has been slowly losing share of dollar to less "traditional" outlets for years, more rapidly in Pet, Household, etc and more slowly in traditional Grocery. The trickle is about to become a gushing explosion if they don't create better moats and place a higher premium on innovation. And no, "Why don't you run a BOGO" doesn't qualify as innovation. Demographic shifts in age and ethnicity play a role. The Millennials seeming lack of fondness for the Grocery experience also plays a role. The fragmentation of our economy to a smaller "middle class" is yet another factor. The desperation (willingness) of other channels to increase basket size by any means necessary is yet another factor.

The stakes are getting higher for those who choose to remain reactive. The world is moving faster and habits change more rapidly. Change with it - or go away. HEB is one of the better operators and very in tune with their customers. Imagine how this will impact some of the less progressive retailers.

And MNB user Jeff Folloder chimed in:

Regarding your piece on HEB's posture towards perceived competition and market threats on its own turf, I am reminded of Guido's warning from Risky Business: "In a sluggish economy, never ever $@1% with another man's livelihood."  It was strong advice back in 1983 and remains so today.  HEB is not going to let anyone take over.  At least, not without a fight.

As always, extra credit for making a movie reference ... especially one that includes the always-great Joe Pantoliano.

If you want to see the clip, complete with colorful language, click here.




Got the following email from MNB user Daniel LeBoeuf:

Just read Monday's MNB and in it you wrote:

"I also have to tell you that the Target near me - in Stamford, Connecticut - is one of the most depressing, badly merchandised Targets that I've ever been into, and that if I never have to walk through those doors again, it'll be just fine with me.

Sadly, I don't think we'll be getting back together. Ever, ever, ever. "

It was more evidence for me that Target is losing touch with what used to set it apart from Wal-Mart - customer service.

We have two Targets in Lakeland, Florida, one on the north side and one on the south side.  I used to shop at the south side Target (I won't shop at Wal-Mart) until I noticed a very disturbing trend.  Nobody talked to me anymore.  Stockers in the aisles ignored me, to the point where they wouldn't even move their carts out of my way, forcing me to skip aisles and find different ways to get around the store.

Worse were the cashiers.  There was no greeting anymore, let alone a friendly greeting.  Four trips in a row, the first words a Target cashier said to me was the amount I owed her.  Two of them were chewing gum at the register, which always annoys me anyway.  The only bright spot was the pharmacy staff, and that wasn't enough.

A phone call and letter to the store regarding this went unanswered.  I don't know if things have improved, and might never know since I moved all my prescriptions and HBA shopping to the nearby Publix.

The north side store, in contrast, is a friendly place to shop.  Stockers ask if you're finding things, cashiers give you a friendly greeting as you move to the head of the line, and they even open up checkout lanes when the lines get a little long.  It's a long way from Nordstrom, but it's a huge step up from Wal-Mart and the south side Target.  If I didn't live on the south side, I wouldn't be having issues with Target, I suppose.

Variations in service between stores within a chain indicate, to me anyway, that the corporation isn't paying attention to customer service anymore, and is relying on store management to take care of that.  As always, there are good store managers, bad store managers, and lazy store managers.  It's not wise to rely on the good ones to outnumber the bad/lazy ones - they probably don't.




On another subject, one MNB user wrote:

Yes, you are correct and right on. When Cerberus purchased Albertsons stores that Supervalu did not want we turned them around. It was all the employees at Albertsons LLC that made the difference. We look forward to an great future as we have great leadership.




We had a piece the other day about how tablet computers may be turning e-readers into transitional technology.

MNB user Brian Blank responded:

As an Apple loyalist with the Kindle app on my iPad and a Kindle user with a keyboard model and the little light that fastens onto the side, I have to say that neither (for me) is a clear cut winner.  I find the iPad much too heavy to use as an e-reader for an extensive period, however, it has a much easier to use dictionary, and even better, will Google search names and phrases, which can be a real help in understanding the context or cultural references in some books.  The Kindle, on the other hand, handles footnotes infinitely better—the iPad app can be extremely finicky in regards to where to touch for the footnote without highlighting the adjacent word for the dictionary definition.  The sleek screen and fatiguing weight of the iPad conspire to make me flip pages my accident quite frequently.  I also find that my Kindle is much quicker to ask to sync to the furthest page read when I’ve been switching between devices (I take my Kindle to work daily to read at lunch and use the iPad at home more often), and the Kindle will also let you make it sync if it doesn’t ask.  Maybe most importantly, “the single purpose, dedicated technology device” is much easier to concentrate on the book I’m reading.  The iPad is constantly tempting me with e-mail, Twitter, games, Facebook, and on and on and on…
 
But let’s face it:  I’m really holding out for my own Holodeck.

From another reader:

I like the Kindle Reader.  I travel with a Macbook and iPhone, but I prefer to read the Kindle, which is more compact than a paperback and holds plenty  of books, plus a couple of newspapers or magazines.  Since I usually am working on several books at one time, the Kindle allows me to bring the whole library with me on a plane or to the hotel.  And the Paperwhite is easy on the eyes, especially after a day of driving.  I hope it stays a useful device, but then again, I still have a few hundred vinyl record albums.

And another one:

I'm with you.  Kindle app on iPad vs a stand alone e-reader.  It's like one stop shopping instead of having to drive all over town to separate shops.




Responding to our story about how retail is moving more and more to part-time labor, and the implications of this shift, MNB user Erika Shafer wrote:

What a depressing article and whether retailers realize it or not, a very bad way to do business. In any company, you must think of your customer and how you can provide them the best service possible, otherwise, they are not going to come back even for a lower price.

Employees who are treated well and not only satisfied, but engaged with their work, provide a higher level of quality when interacting with customers, leading to repeat customers. Unhappy employees 1) do not provide a great experience for the customers 2) the ones who have the talent and can find other jobs, will and 3) what is the old saying? "Those who have a good experience share it with 1 or 2 people, but those with a bad experience share it with 10?".

Just an FYI for those companies out of the loop, with the new National Labor Relations Board Rulings, there isn't much you can do to prevent an employee from truthfully disclosing anything regarding the terms and conditions of employment or bringing up concerns with management on the social media front. It is "protected concerted activity," even if your staff are not union ... yet. My advice to retailers, analyze your policies and adjust them to make sure you are retaining the best possible talent for your workplace. Saving a few bucks here by employing mostly part-time workers, is going to bankrupt you in the end when you look around your workforce and no longer have the quality needed to bring in the customers you want.

Amen.

Another MNB user wrote:

More ways for companies to save money by eliminating the offering of benefits to their employees and paying a lower rate of pay. We need a stable middle class in this country and we have been losing a strong middle class due to these types of moves. This economy will not survive if companies continue to eliminate full-time positions so people can earn a decent living and take care of their families. Companies are so top heavy that they can no longer afford to pay decent wages and offer benefits to the workers who face their customers day in and day out.

Published on: October 31, 2012

As you read this morning's MNB, I'm getting ready to (finally!) head back to the East Coast; as some of you know, I was "stranded" in Los Angeles when all flights back home were cancelled because of Hurricane Sandy.

If all goes well and United Airlines is able to land at JFK (where some reports say the runways are still under water), I'll be back home tonight. However, as of this moment, both my home and office are without power; I'm hoping that by later today, crews will have restored power to at least one of them.

I tell you all this because there is at least a small possibility that MNB won't get out on time tomorrow ... I'll do my best to find a place with power and internet service, but it could be a little dicey. Thanks in advance for your patience.

(For those of you wondering why I would fly back to a place without power, I can only say that Mrs. Content Guy has been pretty understanding to this point, but would like me home.)