retail news in context, analysis with attitude

Published on: November 15, 2012

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

About a week and a half ago, I used the word "detritus" in a sentence, as in "clearing away the detritus." In this case, "detritus" is sort of a synonym for "debris." I got some grief about this word from an MNB user who thought I was just showing off my vocabulary skills, but I promise you, this wasn't the case.

However, it makes me think that it may be time for an actual vocabulary lesson - this time, it is a phrase I'd never heard before, but one that I think has a lot of business relevance. I heard the phrase on NPR, when it was used by the conservative columnist David Brooks, and here it is:

"Epistemic closure."

Essentially, "epistemic closure" is another phrase for being closed-minded.

It has at its root the word "epistemology," which is the study of the origin, nature, and limits of human knowledge.

"Epistemic closure," Brooks said, is when you are so hemmed in by your own belief system that you are unable or unwilling to accept anything other than what you believe as being possible or factual ... it is the opposite of "empiricism," which is defined as the practice of relying on observation and experiment.

Now, Brooks was using the phrase in a political context, and suggesting that both political parties, especially in the wake of the recent election, have to be willing to beyond the boundaries of their own belief systems if they are going to govern effectively.

But I think it is a great phrase to apply to business practice. The fact is, businesses and business leaders, especially those that have been successful, do tend to have rigid belief systems and a sometimes irrational adherence to what they believe are core values. But these days, as we all try to cope with radical and fundamental changes brought about by demographic, cultural, political, and economic shifts, it is critical that we not be hemmed in by anything.

It just doesn't make sense.

Not at a time when some competitors are doing their best to make the unlikely normal, and then doing their best to mess around with what's normal.

Mark Twain probably never heard the term "epistemic closure," but he argued against it eloquently when he said: "Sacred cows make the best hamburger."

Businesses simply can't afford bouts of epistemic closure. Because of they indulge in such limited thinking, they may end up surveying the detritus of their businesses.

As Jimmy Malone puts it in The Untouchables, "Here endeth the lesson."

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: November 15, 2012

by Kevin Coupe

Media Daily News reports that the Nielsen ratings show that live television viewing "in the second quarter of 2012 averaged 4 hours and 18 minutes a day, down five minutes a day from the second quarter of 2011," a significant change in a number that it says has "remained fairly constant in recent years."

In addition, the story says, "Averaged DVR playback -- time-shifted programming -- was at 22 minutes a day, up from 20 minutes a year ago. (About 45% of U.S. TV homes have DVRs). Video game use stayed the same, at 12 minutes a day, while DVD playback declined to 10 minutes from 12 minutes.

"Multitasking with video-capable devices also continues to climb. Close to 40% of Americans now use their tablets or smartphones while watching TV at least once a day - 85% at least once a month.

"Drilling down, Nielsen says 29% of people use their smartphone at least once a day while watching TV, and nearly 50% of those younger 18- to-24-year-olds use it while watching TV."

This tells us all something about how marketers have to continue rethinking how they reach out to shoppers.

It is an Eye-Opener.

Published on: November 15, 2012

The New York Times reports on how President Barack Obama yesterday met with a number of corporate CEOs, bringing them into the White House as a way of fostering a more constructive relationship as the nation approaches the so-called "fiscal cliff" at the end of the year.

If a legislative compromise is not found, the "fiscal cliff" - which was created as a way of encouraging the White House and Congress to come to some agreement on revenues and spending cuts - will cause"more than $600 billion in tax increases and spending cuts will go into effect immediately and automatically."

The Times writes: "While Mr. Obama did not present a detailed plan at Wednesday’s meeting or reveal what he would propose in terms of new corporate taxes, he strongly reiterated that he would not allow tax cuts for the middle class to expire. The president, according to attendees and aides, said he was committed to a balanced approach of reductions in entitlements and other government spending and increases in revenue.

"With time running out, many people expect the president and Republican leaders in Congress to come up with a short-term compromise that prevents the full slate of tax increases and spending cuts from hitting in January. That would give both sides more time to come up with a far-reaching deal on entitlement spending, even as they work on a broad tax overhaul later next year.

"One corporate official briefed on the meeting said that the chief executives came away with a sense that Mr. Obama was poised to present a more formal proposal in the next few days, but that he did not press them for support on particular policies."

The story goes on:

"The outreach to business comes as both the White House and corporate America maneuver ahead of the year-end deadline, as well as the beginning of Mr. Obama’s second term. Many executives were put off by what they saw as antibusiness rhetoric coming from the White House in his first term, and many also oppose tax increases on the rich that Mr. Obama favors but would hit them personally.

"Both sides have plenty to gain from a better relationship. Business leaders want to buffer their image after the recession and the financial crisis, while Mr. Obama would gain valuable leverage if he could persuade even a few chief executives to come out in favor of higher taxes on people with incomes over $250,000."

The Wall Street Journal reports that Walmart CEO Mike Duke, who was part of the White House meeting, released a statement calling for the White House and Congress to find a solution to the nation's fiscal difficulties. "In many ways, Wal-Mart’s customers are at the center of this debate," Duke said. "They are shopping for Christmas now and they don’t need uncertainty over a tax increase." The Journal writes that Duke said that "businesses like Wal-Mart need certainty as they head into new fiscal years and make investment decisions and encouraged the White House and Congress to take an approach that includes additional revenue, comprehensive tax reform, spending cuts and entitlement reforms."

Published on: November 15, 2012

The New York Times writes that the US Food and Drug Administration (FDA) has received reports of 13 deaths over the past four years "that cited the possible involvement of 5-Hour Energy, a highly caffeinated energy shot ... Since 2009, 5-Hour Energy has been mentioned in some 90 filings with the F.D.A., including more than 30 that involved serious or life threatening injuries like heart attacks, convulsions and, in one case, a spontaneous abortion, a summary of F.D.A. records reviewed by The New York Times showed."

While the story notes that a report does not equal responsibility of a death, and that it can be difficult to investigate such allegations, it also points out that the FDA has "received five fatality filings mentioning another popular energy drink, Monster Energy."

Published on: November 15, 2012

CNBC reports that the Obama administration yesterday "announced a renewed focus on bribes paid by U.S. companies to foreign officials."

BREAKING NEWS / 9:30 AM UPDATE: The administration's move comes as Walmart acknowledged this morning that not only has it spent $48 million in the third quarter alone reviewing possible violations of the Foreign Corrupt Practices Act (FCPA), but, as Reuters reports, that it "is looking into potential FCPA violations in a number of countries, including but not limited to Brazil, China and India."

According to the CNBC story, "A new set of guidelines issued Wednesday by the Justice Department and the Securities and Exchange Commission comes in the face of complaints by business groups that the crackdown - which began in the Bush administration and accelerated under President Barack Obama - is hurting U.S. competitiveness.

"The U.S. anti-bribery law, known as the Foreign Corrupt Practices Act, has been on the books since the Carter administration. But a series of high-profile investigations has given the law new prominence, as well as given fits to companies that do business in foreign countries."

The most high profile case has been Walmart, which has been accused of systemic and systematic bribery of Mexican officials as it grew its business there. These accusations were first aired in an extensive New York Times piece, and have been taken up by federal investigators even as Walmart has said that it is conducting its own internal probe.

“When business is won or lost based on how much a company is willing to pay in bribes rather than on the quality of its products and services, law-abiding companies are placed at a competitive disadvantage — and consumers lose,” Assistant Attorney General Lanny Breuer and SEC Director of Enforcement Robert Khuzami wrote in their introduction to the guidelines.

Published on: November 15, 2012

Bloomberg reports that it has done an independent analysis and concluded that "Amazon.com has cheaper online prices for toys than Wal-Mart Stores, Target and other major chains as parents begin shopping for the holidays ... In a comparison of 125 randomly selected toys conducted Nov. 8, Amazon had lower prices than Wal-Mart on 44 percent of the items, while Wal-Mart had the advantage on 13 percent. The remaining had the same price tag."

The study also says that Walmart had better prices that Target, Toys R Us and Kmart 80 percent of the time.

Another fascinating note from the story: "Amazon, Kmart and Toys R Us didn't have any toys out of stock online, while Wal-Mart was missing 3 percent and Target didn't have 8 percent."

Published on: November 15, 2012

The Houston Business Journal reports that Fresh Market will enter Texas in 2013 by taking over four Rice Epicurean Market stores there, bringing it into what is described in the story as being "an already hot Houston grocery market, as companies from The Kroger Co. and Wal-Mart Stores Inc. to Whole Foods Market Inc. and Trader Joe's are expanding their Houston presence."

The story says that the Rice Epicurean stores "will continue to operate through the holidays and will close during the first quarter of next year. The Fresh Market stores will open in the second half of 2013."

Published on: November 15, 2012

• Experian Marketing Services is out with projections suggesting that two-thirds of all marketers surveyed are anticipating 2012 holiday sales to be higher or much higher than in 2011.

In addition, "The importance of online shopping is now at a premium for marketers, as 2011 marked the first time Cyber Monday surpassed Black Friday as the biggest online shopping day of the year —  surging from 138 million visits to 177 million visits to Experian Marketing Services’ Retail 500 Index, a custom category of 500 leading retail Websites. Experian Hitwise data also showed significant growth in visits to retail sites on the day after Christmas as consumers took advantage of post holiday discounts and offers."

Published on: November 15, 2012

The Los Angeles Times reports that Starbucks will buy Teavana Holdings - which operates some 300 mall-based stores, selling "more than 100 kinds of premium loose-leaf teas, artisanal tea equipment and other merchandise" - for $620 million in cash.

The story says that Starbucks plans to grow the chain, both in stores and with a high-end neighborhood store concept.

Starbucks already owns Tazo Tea, a brand calculated to be worth $1.4 billion, and has been expanding into the juice business through its development of an Evolution Fresh chain of stores.

The Teavana acquisition, according to Starbucks CEO Howard Schultz, is " a signal that we have moved our plan to fundamentally transform the consumer tea experience in both North American and international markets into high gear."

Published on: November 15, 2012

• The National Retail Federation (NRF) yesterday released a report saying that "for the first time in three months, retail sales ticked down slightly as consumers cooled discretionary spending in the face of inclement weather and uncertainty in Washington ... October retail sales (excluding automobiles, gas stations and restaurants) decreased 0.3 percent seasonally adjusted from September yet increased 3.9 percent unadjusted year-over-year.

“The underlying strength of the American consumer is encouraging but it’s far from definitive,” NRF Chief Economist Jack Kleinhenz said. “Hurricane Sandy will have short-term and long-term reverberations on the economy and will continue to impact consumer spending and retail sales over the coming months in the hardest-hit areas. Even though retail sales declined in October, NRF remains confident in moderate consumer spending nationwide, and expects a solid holiday shopping season.”

• A National Retail Federation (NRF) survey suggests that "up to 147 million people plan to shop Black Friday weekend (Friday, Saturday and Sunday), a slight decrease from the 152 million who planned to do so last year. Specifically, 71 million said they would shop and another 76 million said they would wait and see what retailers have in-store that weekend."

• Weis Markets announced it "will open the Lehigh Valley’s first LEED-certified grocery store in Fogelsville, located off of Route 100, north of Tilghman Street, on Sunday, December 9 at 6 a.m. The 65,800 square-foot superstore is also the first LEED (Leadership in Energy and Environmental Design)-certified location in the 162-store Weis Markets’ footprint.

"To achieve the U.S. Green Building Council’s (USGBC) LEED certification, the new supermarket measurably reduces or mitigates its environmental impact in the following areas: sustainable site development, water savings, energy efficiency, material selection and indoor environmental quality."

• Environmental Leader reports that "Procter & Gamble Co. has committed to use only third-party certified pulp for its tissue-towel, baby care and feminine hygiene products by 2015, as one of several fiber-sourcing goals the company developed with the World Wildlife Fund.

"P&G said all of the pulp in these products will be certified from one of five certification programs used throughout the world, including the Forest Stewardship Council, which the company will try to give preference to. P&G also will used third-party certifications from Programme for the Endorsement of Forest Certification Systems, Sustainable Forestry Initiative, the Brazilian National Forestry Certification Scheme, and Canada’s National Standard for Sustainable Forest Management."

• The Chicago Tribune reports that "Hostess Brands Inc. said it would seek this week to liquidate the company unless enough workers stopped striking by the end of the workday on Thursday and allow the maker of Wonder bread and Twinkies to resume normal operations."

The strike against bankrupt Hostess started on November 9. According to the story, "Hostess said it would file a motion with U.S. Bankruptcy Court in White Plains, N.Y., Friday to close shop and sell its assets if enough employees do not return to work by 5 p.m. Eastern time Thursday. If the motion is granted, Hostess would begin to close its operations as soon as Nov. 20."

• The Charlotte Business Journal reports that Publix Super Markets is "aggressively looking for property in the Charlotte area," as it looks to add to its store footprint in the market. (It currently has one location planned.)

• The Chicago Sun Times reports that Mayor Rahm Emanuel wants to limit the products sold from vending machines in 90 buildings owned by the city "to healthy snacks and lower-calorie beverages, starting in January, when a new vending machine contract takes effect."

According to the story, the city would be very specific about the kinds of products that could be sold in the vending machines, and "the prices for healthier food and drink items could not exceed the prices charged for less healthy food and beverage items, under the ordinance that Emanuel plans to introduce at Thursday’s City Council meeting." The goal of the restrictions would be to have an impact on the city's obesity rates.

Published on: November 15, 2012

• Ahold announced that James McCann has been appointed as COO of Ahold USA, effective february 1, 2013, succeeding Carl Schlicker, who is retiring. McCann, a Brit, joined Ahold in 2011 as Chief Commercial & Development Officer.

Published on: November 15, 2012

The single most vicious - and funny - restaurant review that I have ever read appeared yesterday in the New York Times, when reviewer Pete Wells offered his opinion of a new restaurant opened by Food Network celebrity Guy Fieri in Times Square.

You can read it here. And you should read it. The piece almost demands to be read, especially if you like terrific writing.

Published on: November 15, 2012

Got the following email from an MNB user:

While I am not in the industry anymore, I still get and read morningnewsbeat.com every morning on my personal email (old habits die hard) and thought of you and your readers tonight.  I thought you might like to share this email I just wrote to King Soopers with your readers. It really says so much about the sad state of customer services and what is acceptable work ethics, and what do we really get for paying a premium over Wal-Mart?  In reality, this is becoming the norm not just at King Soopers but many retail outlets – which is why I do most my non-grocery shopping on Amazon.  At least with online ratings and social media we consumers have a voice...

My letter to King Soopers:

This past Sunday evening I was at the King Soopers store on Front Street doing a hurried shop for my wife who was not feeling well.  After a frustrating trip through the store with empty shelves, I get to the checkout...only to wait as the clerk chatted away with the manager on duty - finally I reminded them that I was the customer and wanted to get some attention.  The clerk was polite and apologized, saying he was conveying a customer complaint to the manager (big surprise).  She on the other hand seemed quite annoyed by my comment, and walked off in a huff. The clerk politely went on to check me out as I came to the conclusion that the only one way I was going to speed up this trip was to bag my own groceries.  This was not a major deal for me (7 years at Ralphs as Asst Mgr in early 80’s, so I do know how, as we were expected to work back then) except it was annoying to see five, yes five, King Soopers personnel all messing and joking around in the self-checkout lanes.  Obviously oblivious to any customer intrusion.  Oh, how I wish I had a picture for you!  The manager came back around and I made a comment that it did not seem right for me to be doing the bagging as other played – ok I was tired and just a little cranky. Regardless, she seemed to think this was funny.  Thus I asked, “you think this is funny?”  While trying to unsuccessfully hide her smirk, she said no while trying to hold her hand over her mouth while walking away.  I just shook my head.

So at around 7:30 tonight on my way home from the office, I am once again stopping for my wife who is still not feeling well (but now I realize this is just a ploy to avoid grocery shopping at King Soopers).  This time I am at the store in Stroh ranch.  Well, as I approach the checkout after a long 12 hour work day - I realize I must continue to work, as I am once again ignored not by just the manager and clerk, but FIVE employees who are too busy having play time to pay attention to a customer.  So, I head to the self-checkout lane instead.
 
So as my wife tells me, this is the status quo for the service she gets while being able to pay astronomically high prices for food to feed our family of five.  While we can blame fuel, rising commodities, etc. for the 20 to 30% increases in prices we see consistently on items at King Soopers (it is amazing how the same carton of ice cream can always be $2.50 cheaper at Wal-Mart and Target) - I no longer feel that is the case.  In fact I have solved the mystery of the rising prices!  It is all of the inefficiency and extra labor we are paying for. We are now paying extra for doing without customer service and stocked shelves, instead we are paying the extra couple of bucks for ice cream so we can subsidize the social life and work habits of our local supermarket employees.  Case solved.




Regarding Raley's labor settlement, an MNB user writes:

Raley’s probably was willing to compromise on the healthcare issue as they understand that as the government takes over healthcare they will probably end up going to the government plan anyway as penalties to keep their current coverage will probably cause them to go the cheaper route of the government healthcare.  I am not advocating government healthcare at all, in fact my opinion is the opposite.   But if Raley’s believes that most of their competition will be moving to this in the next few years then giving ground in the healthcare area, especially when it is in the area of Medicare, the playing field will probably even out for them.   They got the wage concession they needed by giving up something that they will be forced to change in the future.  That is a shrewd bit of bargaining.




Had a piece the other day that talked about how we may be entering a new era for the American family, as parents and kids are far better today at talking, texting and emailing each other than many of us were when we were kids.

One MNB user wrote:

The level of communication I have with my college age son far surpasses the communication I had with my parents when I was in college.  My dad (his grandfather) even commented on it when I went to visit them for a weekend. He thought it was great how much my son kept in touch with me and asked me if it was expensive…to which I responded that it cost me nothing other than to have a cell phone and a computer and know how to use both.  It was an “eye opener” for my dad.

He is 83 years old and refuses to have/use a cell phone or computer,  thankfully my mom is just the opposite.  Oh well,  he’s still happy for me that I have great two way communication with my college age son and I think he now sees a benefit to technology that he didn’t see before… he actually will use my mom’s cell phone now if it rings and she’s not around.




Responding to yesterday's Eye-Opener about senior executives who get into trouble for having inappropriate relationships with women who work for them, one MNB user wrote:

Your blog isn’t normally the place I’d go to read an opinion on sex in the workplace, though I recognize you can write anything you so choose.

While I happen to agree with your main point(s), I think they also apply to school teachers, politicians, athletes / coaches and priests too – not just business leaders.  (Though it seems that high profile athletes & coaches seem to score more leniency than the other occupations.)

The forgiving side of me wishes Obama would have said to Petraeus “Thanks for your honesty about the affair; now don’t let it happen again & go back to work, our Country needs you.” (Assuming Petraeus didn’t disclose secrets of any kind.) I realize that a double standard is not acceptable, even if most of us have forgotten the affair by month’s end (latest). Some of the above-listed titles I would find it hard to forgive regardless of the circumstances.

Two things.

One, I like to think we can write/talk about pretty much anything here on MNB.

Two, you are absolutely right about these standards applying to more than just business leaders. In fact, I think that these sins are even more egregious when committed by people like priests, teachers, coaches and scout leaders ... these are people who we entrust with our children, and who violate that trust in ways that are unforgivable.

By that standard, what a politician does really doesn't matter that much ... except, of course, that sometimes the politicians who talk the most about moral rectitude are the ones who stray off the road the farthest.
Another MNB user wrote:

It seems that E-mails last a lot longer than love does!

Scary, huh?

From another reader:

Couldn't agree with you more on your comments about General Petraeus and other people in high power positions. Not sure what the general didn't understand about becoming the head of the CIA. When you are in that position, your entire life is suspect and monitored, as it should be. I find it absurd that a man of his stature got himself into this mess. If he didn't understand that, maybe he's not as smart as people thought he was? I'm no choir boy, but I don't even come close to doing the things the people you mentioned have done and I'm just a manager in a large company. I hold myself and my people to a standard and I lead by example. I don't do anything or ask anything of my people that I don't expect from myself. That's the way I was brought up.

I was born and raised in Bismarck, ND and also lived most of my life there, which is Paula Broadwell's hometown as well. Her dad was one of my social sciences teachers in high school. She is about 12 years younger than me, but it was a small town and I knew who she was, but did not know her personally. I have a relative who is a teacher in the high school she went to. From all the things I was told, Paula is intelligent, ambitious and I have an idea (this is strictly my opinion) that this may be something she engineered to get her name in lights. What's the saying, there's no such thing as bad publicity? Seriously, a person who is a West Point graduate and has top secret security clearance wouldn't be able to figure out that eventually emails between her and the general could be monitored? Even though they may have been from personal email accounts? I'm not usually a conspiracy theorist and may be totally wrong, but  I think there's more to this story.

The one thing you can count on is that there is more to this story. It is like watching a soap opera.

MNB user Jeff Folloder wrote:

In considering the implications of the whole Petraeus situation, I think that there is a very important lesson to be learned that can be expressed in a very straightforward manner:  If the head of the CIA does not have the ability to keep an affair from prying eyes, then nobody can.  Don't even think that the fact that affairs are "part of the norm" influences the reaction of the general public when someone who is in a position of power or authority expresses "human" judgement.  Expectations are higher.  Repercussions are swifter and more far-reaching.

And another MNB user offered:

Regarding the comments on David Petraeus - judging those of high accomplishment on their sexual enjoyment should not be public fodder.  And it is not their judgement problem but the public gaining knowledge of their current affairs.

Do not PONTIFICATE on a man or women's sexual affairs,  just remember that only a fraction of well know men or women's current affairs are discovered and revealed publicly. 

Fortunately most men or women of public interest are never discovered enjoying themselves robustly.

First of all, I pontificate for a living.

And second....Really?

MNB user Mike Franklin wrote:

For these people, it’s not about emotion…it’s about privilege of power…and it’s still wrong…

By the way, I got a couple of emails yesterday asking about the headline, which was "Emotion in Motion." It came from an old Mae West line: "Sex is just emotion in motion."

MNB user Ron Margulis wrote:

Saw your reference to Brendan Behan in the top piece today and it made me think of the Irish Lit class I took in college. The professor, dean of the school if I remember correctly, was friends with Behan in the 50s and told the story of how during his first trip to Canada, someone asked him why he was visiting. Behan said that he was in a pub back home, read a coaster that said Drink Canada Dry and figured he’d give it a try.

I have no idea if it actually happened, but I love the old story about how late one evening, Behan got onto a Dublin bus and was approached by a prim and proper woman, who said, "Mr. Behan, you're drunk. You're very drunk. In fact, you are incredibly drunk."

And Behan turned to the woman and replied: "Madam, you're ugly. You're very ugly. in fact, you;re incredibly ugly. And I'll be sober tomorrow."




On another, familiar subject, an MNB user wrote:

I began my holiday shopping yesterday, placing orders on Amazon. Target, Wal Mart, and the dreaded Toys R Us may narrow the price gap, but have not effectively narrowed the huge assortment disparity. And if time is still money, the 25 minutes spent locating items resulting in $283 spent would have conservatively taken 240 minutes in visits to the three brick and mortar (the online experience at Target.com, Walmart.com and toysrus.com is painful at best) local retail outlets. All done with the confidence born from seven years of personal Amazon transactions and only one (of hundreds  - or so it seems) transaction requiring customer service assistance. and that was for a Kindle download error. Indeed, the ultimate customer service is having no need of Customer Service. No retailer fits my life more than Amazon. And I can forgive the over packaging - for now.

I'm with you.

I said yesterday that I;d rather have a colonoscopy than go to Toys R Us, which led one MNB user to write:

Maybe Toys R Us should offer the colonoscopy as a service?

And another reader chimed in:

But would you rather do the PREP for a colonoscopy than go to Toys R Us?

Yes.

Published on: November 15, 2012

R.A. Dickey, the 20-win knuckleballer for the NY Mets, yesterday was named the National league winner of the Cy Young Award for best pitcher, as David Price of the Tampa Bay Rays won the American League Cy Young.