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    Published on: November 27, 2012

    by Michael Sansolo

    Necessity, as we know, is the mother of invention and more often than ever, differentiation is the path to success. With that in mind we need to consider a real odd couple - domestic diva, Martha Stewart and Grinnell College basketball coach David Arseneault each of whom have defined interesting routes to success.

    Most of us had never heard of Arseneault or possibly Grinnell College basketball until one week ago when Grinnell player Jack Taylor racked up an incredible 138 points in a single game. (If you aren’t a basketball fan this is all you need know: most entire teams don’t score that many points in a game!) It’s likely that many might have shared my first reaction, which was why would a team do this to an opponent. But my concerns about a college team running up the score quickly changed.

    Jay Hart, a columnist for Yahoo! Sports explained the scoring outburst and Arseneault’s coaching differently and provided the business lesson. Apparently, when Arseneault took over the Grinnell program in 1989, he found a team more likely to disappear than make the national news. The Division 3 school was a constant loser, student-athletes had little interest in playing and fans were scarce.

    Like many small business owners, Arseneault knew he needed to change the status quo. So he settled on a frantic style of basketball that features pressure defense, an emphasis on rapid-fire offense and near constant substitutions to keep his players able to sustain the pace. Since making the shift Grinnell has become a consistent winner and the team frequently draws crowds nearly equal to 50 percent of the student body for home games. (Granted, Grinnell only has 1,700 students, but that’s still a fantastic rate of success.)

    As Arseneault told Hart, “Once we became more different, we became competitive." That’s a line many successful businesses would happily offer.

    Against that backdrop, Taylor’s prodigious effort isn’t quite so obscene. (In fact, it was more remarkable that he had the stamina to do it.) The scoring outburst was a logical extension of a philosophy that has produced success in every way the coach wanted: in winning, attendance and player involvement. Sometimes the path to victory requires a turn in a very different direction.

    Martha Stewart might agree. According to an article in the New York Times, Stewart has found a large new following in a very unexpected place: the heavily tattooed denizens of New York’s hipster community. Although these new fans are unlikely to read any print magazine including Stewart’s or won’t follow her on television, they still find her lessons in crafts, baking and more both useful and compelling.

    In staggering numbers Stewart is reaching her new following on line, with videos and on smartphones. She has inspired groups that meet to discuss her ideas and has found an entirely new following. In turn, Stewart’s magazine and website feature more stories about start up businesses using her ideas.

    This new fan base has an especially takes a different perspective on Stewart’s brief time in jail for lying about a stock sale. While many of her traditional fans abandoned her after her sentence, the new followers forgive it and, in fact, believe it gives her street cred. As one fan said, “She’s such a Suzy homemaker and also did some time in the joint. That helped cement her iconic image. Before she was someone your mother would follow.”

    Now obviously, jail time is hardly the traditional recipe for success. What’s more, like many businesses Stewart’s struggles with how to monetize all this on-line attention. But Stewart, like Arseneault, reminds us that many businesses need to constantly look for new paths to success, need to constantly reinvent themselves and find ways to reach the emerging audience.

    The results can be surprising.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: November 27, 2012

    by Kevin Coupe

    A sign of the future, courtesy of the Man in the Yellow Hat.

    The Boston Globe reports that "venerable publisher" Houghton Mifflin Harcourt "is releasing two special iPad versions from the Curious George book series that enable readers to enjoy old stories in new ways ... Augmenting the text are embedded slideshows and animation as well as touch-responsive puzzles and digital mazes ... The first two multi-touch iPad versions in the series, 'Curious George Says Thank You' and 'Curious George in the Big City,' are now available in the Apple iBookstore and priced at $3.99 for a limited time.

    "Two new titles in the Curious George Multi-Touch Storybook and Activity Series will launch every month for the next six months, Houghton Mifflin Harcourt said in its release."

    “The interactive multi-touch format features embedded tools that allow children to enjoy an immersive reading experience by playing an active role in George’s adventures,” the publisher said in its announcement.

    There will be some who will decry this evolution, who will say that somehow our kids will lose something if they don't pick up a physical book and read it the old fashioned way.

    ButI I don't see it that way. I love books - I read both old-fashioned books and e-books, but I'm generally agnostic about the format.

    There is a wonderful passage from "The Real Thing," a play by Tom Stoppard, in which his protagonist, a writer named Henry, says the following:

    "Words ... They're innocent, neutral, precise, standing for this, describing that, meaning the other, so if you look after them you can build bridges across incomprehension and chaos. But when they get their corners knocked off, they're no good any more... I don't think writers are sacred, but words are. They deserve respect. If you get the right ones in the right order, you can nudge the world a little or make a poem which children will speak for you when you're dead."

    I'm not sure that format is sacred ... but as Stoppard writes, words are. And these Curious George e-books will have words. And more. Which will make them even more compelling to young readers.

    It is a pattern that will continue as they get older and become shoppers ... which is why retailers and marketers need to accept the idea that their world is being nudged. More than a little. (Which is what our next story is about.)
    KC's View:

    Published on: November 27, 2012

    The Wall Street Journal this morning reports on the clear generation gap between Baby Boomers and the Millennial generation when it comes to shopping, a difference likely to be clearly delineated during the current end-of-year holiday shopping season, as Baby Boomers prefer to visit bricks-and-mortar stores and younger shoppers turn to their smart phones and computers to research and purchase presents. "Technology plays an increasing role in the generational shopping split," the Journal writes. "Millennials are 2½ times more likely to be early adopters of technology than older generations, serving as a leading indicator for retailers of what is likely to become mainstream, said Christine Barton, a partner at Boston Consulting Group. Millennials are more likely than older shoppers to check out brands on social networks (53% versus 37%) and use mobile devices to read reviews, research products and compare prices while shopping (50% versus 21%), according to a recent BCG/Barkley report."

    Here's how the Journal frames the broader issue:

    "Retail chains are struggling with how to ... capture the attention of the so-called Millennial generation, ages 16 to 34, but fearful that moving too fast will alienate baby boomers.

    "The 79 million people who make up the Millennial generation wield $200 billion in annual spending power. While that is only a sliver of the $3.4 trillion that baby boomers spend each year, analysts say, retailers need to try to nab those younger shoppers now, because their spending is likely to rival the boomers' as early as 2020 and they already exert a disproportionate influence on their parents' spending decisions.

    "Moreover, during the holidays, shoppers age 25 to 44 plan to spend the most of any age group, about $820, according to the NRF. But shoppers aged 45 to 64 are also heavy spenders, planning to spend about $760."
    KC's View:
    There is no question that retailers have to adjust their approaches to cater to the next generation of shoppers as that group increasingly becomes the center of the demographic target. And, as the Journal makes clear, a lot of retailers are concerned about becoming JC Penney, which many see as moving too far too fast in changing its approach (though I think there was a pretty good argument that moving far and fast may have been the retailer's only option).

    I do think that things are not as cut-and-dried as the Journal suggests. There are a lot of Baby Boomers who are conversant with these newfangled smart phones and tablet computers, even able to do some shopping on them. (I would be one of them.) There is a family profiled in the Journal piece that resides in Columbus, Ohio, and both parents come from the educational community. And yet, the mom professes to have no idea what a Kindle does ... which I find a little hard to believe. (She is a 54-year-old teacher, for goodness sake. I would worry about having my children taught by a 54-year-old teacher who doesn't know what a Kindle does.)

    Published on: November 27, 2012

    The San Jose Mercury News reports that yesterday's Cyber Monday sales appear to have hit $1.5 billion, a 28 percent increase over last year, based on preliminary numbers compiled by research firms.

    Perhaps most important to the e-commerce segment, the story says, "new taxes collected on online sales could not slow the roll of the Cyber Monday phenom..."

    In addition, the Mercury News writes, "Based on Thanksgiving Day and Black Friday online purchases, more online customers (76 percent) were probably making their Cyber Monday purchases on PCs or laptops, but a growing number are using iPads (10 percent), iPhones (8.7 percent) and Androids (5.5 percent)."
    KC's View:
    Sales taxes matter less to people shopping online than the broader shopping experience. Retailers who have been thinking that the imposition of online sales taxes would level the playing field and shift the momentum have been, sad to say, kidding themselves.

    Published on: November 27, 2012

    There is a fabulous story in Fast Company about the e-revolution taking place inside Walmart, as the company invests in considerable efforts that will not just defend its turf against Amazon's incursions, but reach out effectively to Americans who increasingly are using the internet to do their shopping.

    Here's how the story begins:

    "Jeremy King was ignoring the largest retailer in the world. For a month, he'd been getting calls from a Walmart recruiter. King was used to being wooed, since he was well known in Silicon Valley as an engineer who built key parts of eBay's infrastructure. The calls kept coming. Finally, he picked up the phone and let Walmart know exactly what it would take to get him to interview. 'I was like, Why don't you get the CEO on the phone - let him talk to me and then maybe I'll come in?' recalls King, who didn't even know who the CEO of Walmart was. 'I was being cocky. The CEO of the world's largest retailer wasn't going to meet with me just so I'd do an interview.'

    "The next thing King knew, Walmart arranged for him to join a videoconference with CEO Mike Duke ... Over the next 45 minutes ... Duke made what King calls an irresistible pitch. After years of seeing his company lag online, Duke swore that digital was now a priority for Walmart. Duke had restructured the company, placing e-commerce on equal footing with Walmart's other, much larger divisions. He had made serious investments in high-tech talent, acquiring several startups.

    One, a 65-person social media firm called Kosmix with expertise in search and analytics, was the impetus for Walmart rechristening its Valley operations '@WalmartLabs.' Duke was looking for people who would revive the company's sites and services, and energize its entire culture. He hoped to turn a company famous for rigid, coldly effective business processes into one that's flexible, experimental, and entrepreneurial. In other words, Duke wanted to inject a bit of Silicon Valley into Bentonville, Arkansas.

    "In the summer of 2011, King signed up as CTO of Walmart.com."

    And it gets more impressive from there.

    You can read the entire story here.
    KC's View:
    And you should read it. Really.

    Now, plenty of questions can be asked about whether Walmart can remake its culture to the point where it can effectively compete with Amazon's "today is day one" culture; Walmart has so many legacy issues with which it must deal, and so many competing constituencies that may see online sales as a threat rather than the future.

    But the story is highly instructive about how a 21st century Walmart is trying to remake itself.

    BTW...Wired has an interview with Walmart.com president/CEO Joel Anderson in which he says not only does Walmart accept the notion of showrooming, but it "embraces" it.

    “You’ve got to go where the customer wants you to go," he says. "We live in the age of the customer."

    The story goes on:

    "This doesn’t mean Anderson would be happy if you bought from Amazon or eBay instead. And that’s always an option. But Anderson and Walmart have recognized the reality that no one leaves their smartphones in the car when they come in to shop. Since that’s the case, Walmart has decided not to fight the phone, but to leverage it as one more way to make a sale.

    "The key to Walmart’s strategy is to give you reasons to use Walmart’s app while you’re in a physical store. Walmart’s stores are 'geo-fenced,' which means the location-aware app enters 'store mode' when you walk through the door. Once in store mode, you have access to an interactive version of the weekly on-sale circular for that store. You can see what’s new in the store. You can scan bar codes with the phone’s camera for prices and keep a running list of everything you’re buying so you’ll know the total cost when you get to the register.

    "If you find these features handy, and get into the habit of using the app in the store, Walmart has effectively lured you into two stores at once. In a slick touch, the Walmart app interface lets you 'flip' between the two stores - physical and digital - with a single tap. If the item you’re looking for at the store is out of stock, you can 'flip' over and order from Walmart.com while you’re still in the store. Either way, it’s a sale for Walmart."

    This doesn't sound like your father's Walmart.

    I've been saying here since the word "showrooming" was first coined that retailers had to stop whining about it, but rather had to find a way to embrace it and make it work for them ... or be sure that their customers' smart phones were the least interesting things to look at in the store, not the most interesting.

    This seems to be what Walmart is aiming for.

    Published on: November 27, 2012

    Yahoo! News reports on the story of retailer Joe Lueken,who has two stores in Minnesota and one in North Dakota. Lueken is retiring at age 70, and "instead of selling his stores to the highest bidder ... he will transfer ownership to the stores' 400 or so employees.
    The employees will participate in an employee stock ownership program, receiving shares of Lueken's Village Foods based on length of service and salary -- and at no cost to them. The program to transfer ownership from the Lueken family to the employees will begin on January 1, 2013."

    The reason? Lueken explains: "My employees are largely responsible for any success I've had, and they deserve to get some of the benefits of that."

    Lueken says he received offers for the company, but decided that employee ownership would be better for the communities he serves.

    The story goes on: "Lueken will be leaving his employees in trusted hands: Last week, he named longtime employee Brent Sicard as the company's new president and CEO. Sicard started out as an overnight janitor at Lueken's Village Foods in 1998 and has worked his way up."
    KC's View:
    Good for him. Good for them.

    Published on: November 27, 2012

    • The Associated Press reports that the US Food and Drug Administration (FDA) has "halted operations of the country's largest organic peanut butter processor Monday, cracking down on salmonella poisoning for the first time with new enforcement authority the agency gained in a 2011 food safety law.

    "FDA officials found salmonella all over Sunland Inc.'s New Mexico processing plant after 41 people in 20 states, most of them children, were sickened by peanut butter manufactured at the plant in Portales and sold by Trader Joe's grocery chain. The FDA suspended Sunland's registration Monday, preventing the company from producing or distributing any food.

    "The food safety law gave the FDA authority to suspend a company's registration when food manufactured or held there has a 'reasonable probability' of causing serious health problems or death. Before the food safety law was enacted early last year, the FDA would have had to go to court to suspend a company's registration."

    • Employee-owned Price Cutter Supermarkets announced an agreement to acquire Summer Fresh Supermarkets. Price Cutter, which operates 46 supermarkets in Missouri, Oklahoma and Arkansas under numerous banners, including Price Cutter, Country Mart and Bistro Market in southwest Missouri, plans to acquire all 10 stores owned by Summer Fresh Supermarkets. These include eight Summer Fresh Supermarkets and two Save-A-Lot stores.

    Terms of the deal were not disclosed.

    • Published reports say that the owners of Shake Shack, the upscale hamburger restaurant that has grown from a kiosk in a Manhattan park to a small but expanding chain, have their eye on a Chicago outpost, on Ohio Street just off Michigan Avenue.

    The move would expand on the block's New York food footprint - Eataly also is building a store in the same neighborhood.
    KC's View:

    Published on: November 27, 2012

    • David Lessard, director of produce at Ahold USA, has been promoted to vice president of produce and floral, responsible for strategically leading, directing, designing, and approving category management business plans and portfolio plans for the produce and floral teams.
    KC's View:

    Published on: November 27, 2012

    I love this email from an MNB user who wanted to weigh in on all the discussion of Walmart being investigated for violating US law for bribery of officials in places like Mexico, India and China:

    Are you aware of the incredibly stringent policy Walmart has for its employees with regard to receiving gifts, gratuities, etc. Although I’ve never attended one, I’m told that every vendor must attend, in person, an annual briefing on their policy. I also believe that each vendor must send a high-level executive to these briefings and sign a statement acknowledging the policy and their agreement to adhere.
     
    Even a simple vendor-paid lunch, is grounds for dismissal.
     
    The Walmart culture is to never accept gifts or entertainment from any supplier, potential supplier, government, or any person the associate has reason to believe may be seeking to influence business decisions or transactions. Associates also may not accept a gift or gratuity from a customer for work performed by the associate in a store or club, except as required by local or national policy ... Imagine the gall of a company that says you can be fired for accepting a t-shirt at a conference while they go around the world bribing public officials to the tune of millions!


    This is an excellent point. Thanks for making it. And it is a rejoinder to the folks who say that Walmart is just doing business the way business is done.




    A week or so ago, we had a story about how some businesses were trying to figure out how to pass on the cost of Obamacare. One example - John Schnatter, CEO of Papa John’s, estimated that the ACA could cause him to tack a few cents onto the price of his pizzas. Another talked about putting the surcharge on the receipts for his restaurants.

    I wrote:

    I am absolutely sympathetic about the costs of Obamacare. I've never been sure that this is the best solution to the nation's health care problems, but it is the law of the land, so we'd better get used to it. (I was amused the other day when I heard a retailer who was anti-Obamacare say that he would prefer a single-payer system ... because he would have assiduously opposed such a system before Obamacare was passed.)

    I will say this. If I order a pizza from Papa John's, and they want to indicate on the receipt that the pizza costs 15 or 20 cents more because they want to provide health care to their employees, I am happy to pay the extra money. I might even choose to patronize restaurants that say they are providing health care to employees and are up front about how much it costs, and what the customer has to pay for it.

    I'm realistic. Health care is important, and the costs have to be paid by someone. Better to be transparent about it than to just increase prices. (My wife is a teacher, and we have health care as part of her contract. The cost of health care for teachers in the system is a matter of public record, and is published in the newspaper once a year. I'm okay with that.)


    Later, responding to some heated emails, I pointed out that Schnatter, CEO of Papa John’s and one of the loudest anti-Obamacare voices, makes $2.7 million a year: I'm not suggesting that he isn't worth it ... but the optics of someone making that much money complaining that he'll have to either lay people off or charge 11-15 cents more per pizza to cover health care costs just strike me as a little odd.

    One MNB user responded:

    When did making money become such a bad idea for business? Why shouldn’t Mr. Schnatter make $2.7mil? You point out on the Hostess story that management may be at fault for not making changes so that they would be profitable. Agreed. But even if the current targeting for a tax increase of the “rich” (those making $250K, which in my neck of the woods is not “rich”), the increased taxes to the federal govt would only fund it for about 8 days. That is an ineffective political solution, not a common sense solution for the American people. Again, we should expect more.

    First of all, I never said Schnatter should not make $2.7 million a year. I just suggested that the optics are a little off ... and in the current transparent environment, optics matter.

    I also think that when all is said and done, it seems likely - or at least possible - that the people who are supposed to govern may come up with a reasonably equitable solution to the whole fiscal cliff situation. They'll make cuts in entitlement programs, they'll figure out a way to raise revenues (probably more through changing tax rates on capital gains than earned income), and maybe even start a long-term initiative that looks to address tax code inequities.

    Maybe I'm a cockeyed optimist, but I'm feeling confident. Or at least hopeful. Sane heads will prevail, and people will see that governing requires compromise, and the nation requires governing.

    I heard a great line over the weekend, in which someone said that the one time that the nation's leaders were unable to compromise, it resulted in the Civil War. Despite all the secession movements developing around the country, I cannot believe that we've reached that level of stupidity as a nation.

    From another reader:

    I can understand John Schnatter being bitter about the increased cost due to the health care but isn’t this the process of all businesses?  For any number of reasons there are countless items that cause a cost increase and the business owners are forced to make concessions or pass the costs on to the consumer.

    MNB user Jessica Duffy wrote:

    I like your idea about patronizing those businesses that respond to Obamacare by raising the price of their product a bit to provide healthcare for their employees. I would gladly pay a little extra to buy my products or services from a company I know is providing a living wage and health benefits to full time employees rather than a company that operates  with less-well-paid (and probably less-well-trained) part-timers. If everyone is participating, then theoretically the overall costs will come down for companies and individuals. I’m hoping that will lead other companies that already provide benefits but have reduced their full-timers in response to rising costs, to be able to increase their percentage of full-timers again.

    BTW ... I have a son who lives in Chicago, is an actor/writer, and works at Starbucks. Where he gets health benefits. Which, as far as I am concerned, earns the company a lot of points in my book.




    A shopping anecdote from an MNB reader:

    I recently moved into a new apartment, and Lowes sent me a 10% off coupon as a “Welcome to your new home” incentive- I’m assuming they pair with the USPS to get address changes- good marketing on their part.

    In any case, I am planning on purchasing a Dewalt Cordless Drill for my significant other this Christmas, and thought the coupon would be a great way to support my Brick & Mortar retailer, Lowes. Before doing so, I did some comparison shopping on three websites- Lowes, Home Depot and of course, Amazon. Each had the product in stock- with Amazon, it would be delivered, with Lowes and HD, I could either pick up in store, or have delivered. However, as is the case for most of us, price was the real determining factor.  Amazon had the product for $109, a savings of $39, as advertised on their website. Home Depot- $199, and Lowes $189. That’s right- the Brick & Mortar retailers were at least $40 over Amazon’s regular price, and almost $100 over their sale price. Amazed that this could be the case, I checked out Black Friday ads for Lowes. Sure enough, the same drill will be “on sale” for $99 on Black Friday- only $10 less than Amazon’s everyday price.
     
    For the record, I refuse to go out on Black Friday, and will be working anyway. Looks like Amazon wins this round.





    On another subject, an MNB user wrote:

    An interesting note that Carrefour seems intent upon divesting of its operations in less developed global markets yet still has a complete absence here in North America.  I wonder if the French ever contemplated another run at North American grocery, and if so, what they might do with SUPERVALU - the croissants would certainly have to be better:). Bon chance...

    Hard to imagine.

    I cannot remember whether it was an executive with Carrefour or Auchan - two French retailers attempting US incursions a number of years ago - but a senior executive at one of the companies told me that he was not concerned that their stores seemed counterintuitive for a US consumer. "We will teach Americans how to shop," he said in a French accent that fairly dripped with contempt.

    Besides, the Tesco experience here in the US may not say "go west, young man" to the folks at Carrefour. They have enough problems.




    Regarding the Hostess debacle, one MNB user wrote:

    There is a lot of blame to go around for the financial plight of Wonder Hostess. Certainly Executive salaries and the investment companies which have run the company have not been good for them. But, blame also has to be placed with the union. The union fought for many years to keep the cake and bread routes separate. Hence you had two trucks pulling into every grocery store with $100 worth of product each when one truck could have delivered the goods much more efficiently. Stupid.

    It seems evident to me that there is more than enough blame to go around.




    Finally, I defended the right of critics and pundits to opine, and suggested, in a response to an MNB user who commented that "dimwitted TV anchors" would appreciate such license, that critics and pundits are "a far cry from hiring someone to deliver the news just because they have a pretty face."

    Which led MNB user Blake Steen to write:

    I’m assuming and I know I shouldn’t that your pretty face comment about news anchors is a stab at Fox News anchors who are very pretty.  I would encourage you to look up the degrees and accolades of all the Lady Fox News anchors.  It is mind blowing.  Almost as mind blowing as their pretty faces. 
     
    If this is not who you were talking about then I’m sorry for assuming wrong.


    Let's be clear. Fox News anchors never even entered my mind when I made the "pretty faces" remark.

    And I cannot even imagine why you thought I was.

    I was thinking William Hurt in Broadcast News ... one of the best movies ever made about how the TV news business does not to its job.

    FYI...Fox News was launched in October 1996. Broadcast News came out in December 1987.

    To paraphrase Shakespeare in "Hamlet" ... perhaps you doth protest too much.
    KC's View:

    Published on: November 27, 2012

    In Monday Night Football, the Carolina Panthers defeated the Philadelphia Eagles 30-22.
    KC's View: