business news in context, analysis with attitude

Published on: January 3, 2013

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.

I really enjoyed my Christmas vacation. It was 10 days with the family, including a brief visit from our Klingon son, who flew into town from Chicago on Christmas Eve and then went back home the day after Christmas because he had a Thursday night performance. I love having a working actor in the family.

Among the pleasures of the time off was the ability to go to four movies and read three books ... and I'll write about some of these tomorrow on "OffBeat." I also had a chance to watch some of the the new DVD set I got - the eighth and final season of "Mannix," the detective series that ran on CBS during the late sixties and early seventies. I was an enormous "Mannix" fan, as I've said here before, but I've never seen the eighth season episodes before - the show had been moved to Tuesday nights, I was in college in Los Angeles, and I just never got to watch it.

Viewing these episodes is like going back in time a bit ... the production values are very rooted in the period, and the haircuts and clothing are awful. But, needless to say, I've found a business lesson therein...

Movies and television shows generally have a person on the set who is in charge of continuity. That's not always an easy job, because movies and TV shows are almost never shot in sequence. Two scenes that go together might be shot on Monday and Friday, and so the continuity person has to make sure that everything matches.

Well, I don't think they had a very good continuity person on the "Mannix" set, because as I watch the show, there are all sorts of mistakes. Joe Mannix will kick down a door wearing a plaid sport coat, enter the room wearing a tweed jacket, and then leave the room back in the plaid sport coat. Or he'll be driving a car and on one trip will be wearing a variety of different outfits. In one episode, he parked a Dodge Challenger, and then when he returned to the car, it was a blue Camaro. (The car issues, I think, had more to do with budget than anything else ... the producers constantly used shots from previous seasons as a way of saving money. In one segment, the bad guy got into a red Jaguar, and I immediately knew that he and the car were going off a cliff, because I'd seen that car do so before on an earlier "Mannix" episode.) Such are the unique charms of watching a TV show from one's youth.

Here's the business lesson.

I'm pretty sure they were aware of the continuity gaffes on "Mannix." But I'd also be willing to bet that back in 1974, the producers looked at each other and said, "The show is going to be seen once, maybe twice. It will be seen a fairly small screens, and many of them are still black-and-white. And even if people notice the problem, they'll have no way of going back to see if they're right. So let's save a few bucks and move on..."

The producers had no way of knowing that some four decades later, I'd be watching those same episodes on a big, high-definition flat screen television, using a blu-ray DVD player, and able to pick out every little mistake or miscue.

That's an important lesson. These days, you can't just plan and execute for the moment. The reality is that as technologies change and the culture evolves, we have to think long-term as well as short-term. We have to plan not just for what is possible today, but for what may be possible tomorrow, and next week, and next year...

Obviously, that's not always possible. And even when you calculate with the future in mind, you won't always be right. But you have to try ... because to do otherwise is to engage in some kind of marketing malpractice.

You can never say, "They'll never know." Today, they'll always find out.

Here's a little irony, by the way. The very first season of "Mannix," which not many people have seen or remember, had the private eye working for a massive company called Intertect, where there was a natural conflict between the computers that pretty much ran the place and Mannix, who figured that two fists and a gun were the best way to solve any problem. In the second season, the producers went to as more traditional private eye setup ... because they figured that there was no long-term future in a man-vs.-computer scenario.

Little did they know.

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

Published on: January 3, 2013

Steve Burd, who has served as CEO of Safeway for almost 20 years, yesterday announced that he will retire, effective May 14, 2013.

According to the official company announcement, "The Board of Directors will begin a search for a successor, and will consider both internal and external candidates for the job.  Mr. Burd will help with the search and will continue to assist the Company after he transitions out of his leadership posts."

Bloomberg reports that there are at least two internal candidates: Robert Edwards, Safeway’s chief financial officer, and Larree Renda, executive vice president.

In his prepared statement, Burd said, "I feel this is the right time to move forward with a transition plan. The Company is gaining market share with each passing quarter.  We have developed the most sophisticated digital marketing platform in retail, we are implementing the most comprehensive and personalized fuel loyalty program, and we will be rolling out a wellness initiative that has the potential to transform the Company.

"While I still have the high level of energy and enthusiasm I brought to the Company 20 years ago," Burd said, "I need more personal time and, given my extensive work in health care, I want to pursue that interest further."

In its story, the Wall Street Journal notes that Safeway, like many other supermarket chains, "has seen its sales and profit margin squeezed by high fuel prices, increasing food costs and weak consumer confidence." But the company says that Burd met these challenges by establishing "a culture of thrift and capital discipline at the company."

Published on: January 3, 2013

by Kevin Coupe

Yesterday, MNB reported that Zipcar, the pioneering car-sharing company, will be acquired by Avis Budget Group for about $500 million. The deal is expected to close this spring.

And I commented:

I love Zipcar, and I hope that Avis doesn't screw it up. I am skeptical that this move is a good thing for Zipcar, and fear that what Avis really would like to do is kill a business model that threatens it. I hope I'm wrong.

Well, Scott Griffith, Zipcar's chairman/CEO, seems to be aware of such skepticism ... because yesterday morning, I received the following email from him:

Dear Kevin,

Zipcar is ringing in the year with a bang! We're thrilled to announce that we've entered into an agreement to be acquired by Avis Budget Group.

We'll skip the legal mumbo-jumbo and get right to the point, since we assume that what you really want to know is what this means for you.

Simply put, this is a major win for Zipsters around the world. With the global footprint, backing, and talented leadership of Avis, we're going to step on the gas. We believe that you'll see more Zipcars in more locations (especially during times of peak demand!); that you'll see new service offerings that make Zipcar more flexible and fun for you; and that you'll continue to experience the most advanced and sophisticated technology to keep you zipping along your merry way.

Some things won't change at all -- from the Zipcar team in your local office to the great brand, to our relentless enthusiasm for making the user experience the best it can be.

You can read more about the news in the press release but we wanted to tell you personally (ok, it's an email, but close enough) and let you know how excited we are to make a good thing even better!

Now, I will admit that I am not totally persuaded. It is my experience that when big companies acquire small/pioneering companies, it is a better than even shot that the big company will screw it up. (I would urge Avis and Zipcar to look to Amazon's acquisition of Zappos as a prime example of how to do it right - it provides efficiencies where it counts, learns from Zappos where it can, and has not screwed up the brand.)

But this email was an important branding step, in that it communicated quickly and clearly about a valid consumer concern. In the end, it strikes me that the folks at Zipcar understand that they will only be successful if they can continue to keep people like me happy with the product and expand its customer base.

That's the most important bottom line. And it is an Eye-Opener.

Published on: January 3, 2013

USA Today reports this morning that Starbucks, long criticized for the sheer bulk of disposable cups that it sends into the nation's dumpsters, landfills and garbage dumps, is introducing a $1 plastic reusable cup.

According to the story, Starbucks "will start selling the plastic cups, bearing its logo and resembling the paper version, at all its company-owned stores in the USA and Canada in a bid to get customers to kick their throwaway habit. It will give a dime discount for each refill so the cup pays for itself after 10 uses."

And, the paper writes, "Starbucks' Jim Hanna says the company, in addition to working with paper mills to get more of its disposable paper cups recycled, has long sold reusable tumblers but expects the low price of its new one will prompt change. He says its test-marketing in 600 Pacific Northwest stores boosted the number of reusable cups 26% in those stores last November, compared with the same month a year earlier."

Despite the new offering, USA Today points out, Starbucks has reduced expectations about what it can achieve in this area - the company has also "reduced its goal of having 25% of its cups be reusable by 2015 to 5%."

Published on: January 3, 2013

The Columbus Dispatch reports that Coinstar is testing a new kiosk called Alula that "will make you a cash offer for your unwanted gift cards ... Using the kiosk is straightforward: Enter your gift cards (Alula takes more than 170 types); accept Alula’s offer, which ranges from 60 to 85 percent of your card’s face value; and take your voucher to a check-out line or customer-service desk at the grocery store to get your cash."

The story notes that Giant Eagle is testing the Alula kiosks at 21 central Ohio stores.

Published on: January 3, 2013

Bloomberg BusinessWeek reports on how a National Retail Federation (NRF) survey suggests that "return fraud cost retailers an estimated $8.9 billion in 2012, with nearly 30 percent occurring during the holiday season alone. Overall, the survey shows that about 4.6 percent of holiday returns are fraudulent ... Of the 60 retailers surveyed, 96.5 percent reported being ripped off by criminals who collected refunds for stolen items this year, and almost half said they’d received counterfeit receipts. Nearly two-thirds of the retailers said customers had returned items they’d worn or used."

Published on: January 3, 2013

Salon.com reports that "scientists at Yale University have used scans of the human brain to show that fructose, a monosaccharide found in everything from fruit to chicken nuggets, can trigger brain function that leads to overeating. According to the study, research subjects given a fructose beverage were less likely to feel 'full' than subjects given a glucose beverage."

The story goes on: "While the study does not prove that fructose causes obesity, researchers believe their findings show a strong link. According to Dr. Jonathan Purnell, an endocrinologist at Oregon Health & Science University, 'It implies that fructose, at least with regards to promoting food intake and weight gain, is a bad actor compared to glucose'."

Published on: January 3, 2013

...with brief, occasional, italicized and sometimes gratuitous commentary...

• Publix Super Markets says it has signed the lease for what will be its second store in Charlotte, North Carolina. The 55,000 square foot unit is expected to open in late 2014 if everything falls into place.

• Wegmans said yesterday that it is freezing prices on 53 seasonal items - in the meat, seafood, produce, grocery, dairy, bakery, frozen foods and deli categories, and largely private brands- until April 6.

• The Seattle Times reports that "Starbucks is among seven bidders for Tully's Coffee, and its offer is for roughly half of the smaller chain's stores, according to sources familiar with the process who spoke on condition of anonymity. If Starbucks were to win the bidding, the other stores apparently would be available for others to buy, although it's unclear who might want them, and it is possible that some might close."

Tully's declared bankruptcy last October, and the company currently is being auctioned off.

The Times writes that "other bidders - some could be shell companies acting on behalf of better-known parties - are Tully's Acquisition Group, Direct Media Systems and Big City Ventures doing business as Coffee Group. It is unclear if any represents a chain of six local coffee drive-thrus that earlier expressed interest in buying Tully's."

• The Sacramento Bee reports that the Sacramento Coca-Cola Bottling Co., the sixth-largest independent Coca-Cola bottler in the United States, has been acquired by the Coca-Cola Co. Terms of the deal were not disclosed.

• The Associated Press reports that Wendy's is redefining its value menu, no longer offering all of the items in that category for 99 cents.

According to the story, Wendy's "has replaced its 99-cent value menu with a beefed up array of options called 'Right Price Right Size,' with items ranging from 99 cents to $1.99. At a time when costs for meat, cheese and other ingredients are rising, the revamped menu is intended to give budget-minded diners more options, while giving Wendy's more flexibility on pricing."

• CurrentTV, the liberal - and pretty much obscure - cable news channel founded by former Vice President Al Gore, has been acquired by Al Jazeera, the Qatar-based media company.

According to reports, Al Jazeera's previous efforts to gain a media foothold in the US with a service called Al Jazeera English, has garnered it even fewer viewers than CurrentTV. (To be fair, Al Jazeera has a broad global reach, with its content available in over 250 million homes in 130 countries.) The acquisition means that CurrentTV will be rebranded as Al Jazeera America.

Terms of the deal were not disclosed.

Hard to imagine Gore and his CurrentTV co-founders made much of a profit from the sale, since CurrentTV has been unsuccessful in making much of a mark on the media landscape. And it is equally hard to imagine that Al Jazeera America will be very successful, since Al Jazeera has an image in this country as being the place where terrorists send their press releases and videos if they want to be sure of global distribution.

There's one thing that I'm sure of. This sale will be a punch line in the conservative entertainment establishment, and won't do much for Gore's reputation among folks who already think he's a radical.

Published on: January 3, 2013

MNB took note yesterday of how Concord, Massachusetts, has become the first community in the United States to ban the sale of plastic water bottles that are 16 ounces or smaller.

There are ways around the ban, we wrote. One is to simply refill existing bottles. Another is to buy the bottles at nearby towns. Or, you can just buy a plastic water bottle that is larger than 16 ounces, since those are not banned.

But MNB user Brian Blank chimed in:

Kevin…you missed one:  switch to a sugary soft drink.  (The law of unintended consequences strikes again—d’oh!)

Good point.




Not surprisingly, we got a fair number of emails regarding yesterday's story about how the Gannett-owned Journal News - which covers Westchester and Rockland counties, bedroom communities near New York City - decided to post on its website a map showing the name and addresses of every pistol permit holder in the counties. (The map is being constantly updated as the paper gathers information that is in the public domain.) The New York State Rifle & Pistol Association then called for a nationwide boycott of all companies advertising in any Gannett paper.

You can read the original piece and my extended commentary here.

One MNB user responded:

Nice commentary on the gun issue.  I agree with most of your observations and don’t want to start a gun control debate.  The only thing I would privately challenge is your thought/comment about the type of weapons our founding fathers envisioned.  You said;  "I take the Second Amendment very seriously, though I think that it is clear that the founders did not envision the kinds of weapons now available when they wrote it."

I would say that our founding fathers didn’t care about the type of weapons available.  The 2nd amendment makes no mention of any type of weapon.  It is however, very clear about maintaining freedom....  It states: “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.”   Our founders were not thinking small, they didn’t envision weapons, they envisioned threats of force.   They simply desired to preserve the right of the population to remain armed to discourage future tyranny.  Note that our founders did not limit the right to the military (militia) but specifically said “the people”.   After all, they had just finished fighting the “militia” of their own previous government.        
 
The right of gun ownership is meant to be a deterrent.   If any threat to our security is posed we should have the right to counter that threat with equal deterrence.   Don’t get me wrong, we do need regulation.  Background checks, registration, etc are fine.  After all, the second amendment also says a ….”well regulated militia…”.   My point is simply that  today, any enemy of the population will have advanced weapons.  If we limit responsible individual gun ownership to hunting rifles and handguns with less than 10 round magazines we don’t have much chance of preserving our rights against any type of imposed tyranny.
 
Keep up the commentary though. I have been around the industry long enough to see many of your comments borne out in reality.

I keep wondering who, exactly, these "tyrants" are who are going to try to take away our freedoms.

MNB user Andy Casey wrote:

I agree with you that posting this is probably not the right thing to do but couldn't help but think a silver lining is that bad guys might use it as some kind of "do not rob" list.  Of course, I suspect there are far more unregistered guns in the US than registered ones.

From another reader:

Your article raises many questions, most with reasonable answers depending on ones point of view. However, in today's debate mode "reasonable compromise" is one side requiring the other to accept their demands or vice-versa.

The gambit runs from a United States Senator saying "Mom and Dad, we're coming for your guns" to "The only thing that can stop a bad guy with a gun, is a good guy with a gun". Where is the reasonable compromise in that chasm?

Like you, I didn't grow up in a gun culture. I also used the phrase "I never have owned one and never will". Never is a long time. Like you also, my wife and daughter are teachers. Both, unfortunately have been subjected to "Lock downs" in both drill and reality - real threats. In both, the safety lapses are astounding. Fortunately some have improved, but some haven't. Our "Never" came this season after several years of debate in our household. It came after many - too many instances of the reality in which we live, not the reality of which we grew up in. It is unfortunate, but we do, regardless of our background and history, live in a new reality. We are now each owners that are licensed and well trained by professional courses.

Proper and legal gun ownership is really not the debate or the issue.

Sure, what the newspaper did was wrong. However, we live in that reality also. There is little sense of right and wrong in journalism - let alone much else.

I, along with you, agree, that a gun purchase should be the most difficult purchase. We followed the rules. We received extensive training. We have locked them appropriately. Yet, our "never" is now a reality.

The other reality is that we leave our children vulnerable.  We can no longer leave them unguarded and unprotected. Worse, we can immediately stop advertising and marketing that fact to all those that wish a vulnerable target to carry out evil.

The entire focus of the debate should be solely focus on protecting them. There are certainly differences enough in how that can be done, however it should and must be done without delay - immediately.

A newspapers actions or an association's misguided call for boycotts are distractions from what we do know. We know our children are vulnerable. As it is, we value them less than our money. We guard that. We value them less than most patients in hospitals, we guard those. We value them less than airline passengers, we put them through intense security and guard them with Air Marshals. Even now, the newspaper in question is guarded by armed guards. We worry more about how they will feel being exposed to a friendly officer than explaining the horror of what happened in Newtown.

All of the factors of the "why" surrounding all of the cultural and political issues could take up volumes. None change the fact that our children, our teachers, and administrators are vulnerable and we market that fact to those wishing to carry out evil. That is the marketing that needs to change - both in marketing their vulnerability and the reality of their vulnerability.

All of the other is simply noise distracting from the fact that we care so little about our kids that we chose not to protect them.

I certainly wish we could all harken back to a time when there wasn't a second thought about it. Nevertheless, as long as we continue to allow the distractions to devour the real issue, our children remain vulnerable and the next time the horrific occurs we will have ourselves to blame.

Every community can certainly decide their own solution. The solution should be protecting each child immediately - every day.

I think there are both short-term and long-term approaches to security. Short-term, I think that there is a good case to be made for a heightened police presence at schools, just because it is something that can be done quickly. But long-term, it strikes me that reasonable people ought to be able to agree that maybe tighter gun regulations and an assault weapon ban is an intelligent approach.

I continue to believe that an idiot or a paranoid person with any sort of gun is more dangerous than an idiot or a paranoid person without one. One way to deal with this situation is to have a more sophisticated and enlightened approach to mental illness, so that troubled people are getting the help they need, but I also think that greater gun regulation should not be on the table.

From another reader:

What if the paper published a list of those citizens drawing government entitlement checks, free cell phones,…to name only a couple things people might not want publicized.

True, these are also legal activities, yet it would be seen as an invasion of privacy. I can only imagine the outrage.

How is this different from a privacy perspective?

It is clearly meant by the newspaper to make gun owners feel ostracized because of the recent shooting incident.

Shame on them.

I said it yesterday, and I'll repeat it here.

I think the Journal News did this because it could. But just because you can do something does not mean you should do something. It does not make sense to abuse the First Amendment to point out that you think there may be abuses of the Second Amendment.

From MNB user David Sibert:

I know you didn’t want to necessarily have this debate on MNB, but I do believe that the 2nd amendment debate is important from a retailer’s perspective.
 
First, there is issue of retailer’s creating “gun free zones”.   I don’t understand the motivation of retailers who take a position on this (such as Starbucks).   At worst, it feels like they are trying to take advantage of a tragedy to improve their corporate image.  At best, it politicizes a place of commerce, and causes them to lose a portion of their existing customer base.  A retailer declaring a position either way seems to create a lose-lose situation.
 
Second, the discussion of a potential tightening of gun laws has been one of the best marketing campaigns I’ve seen.  Based on an informal sampling of gun stores from North Carolina to Missouri (as I traveled this holiday season), it seems that fears of impending regulation has caused a spike in the sale of high capacity handguns and rifles.   AR style rifles in particular have sold out, and are specifically sought after. 
 
Personally, I think the nation needs to look at the facts.  The data I have seen suggests that there are over 300 million firearms currently in the US.  None of the proposed legislative measures would address that.  Furthermore, cities with the most restrictive gun laws, such as Chicago and Washington DC, have not seen an improvement in their violent crime statistics.  The series of shootings in Chicago this past summer are a good example. 
 
Every time there is a gun related shooting, the perpetrator has broken multiple existing laws.   The recent shooting of the firefighters in New York is an example.  Existing laws denied the shooter, a felon, from possessing a firearm, but did not prevent the tragedy.   From a more comprehensive perspective, murder is outlawed in pretty much every jurisdiction, and is forbidden in most religions, but neither did this sway the ex-con.  Those who choose to kill have already made the decision to go beyond the rules of our society.  I would hope we could focus on helping people live within all of our societies’ rules.
 
I think we need to address the motivations of people who would commit violence with any tool.  Improvements in our mental health programs would be a good place to start.  Our culture’s glamorization of violent and criminal activity in the entertainment industry (movies, songs, video games – Grand Theft Auto being a great example) would be another productive conversation. Focusing our political leadership on stimulating the nation’s economy, and thus reducing the level of desperation and stress in our population would be an even better exercise.
 
As far as the newspaper publishing the names and addresses of registered handgun owners, I really question their motives.  To your point, a map with non-labeled pins would have described the scale of handgun ownership.  Providing personal information seems to be a bullying tactic against those who have decided to exercise their legal right.  This should not be tolerated.
 
Keep up the good work – I truly appreciate your insights.

Listen, I believe that nothing ought to be off the table in this discussion - not how we treat mental illness, not violence in movies and video games, and not the nation's gun laws.

To take anything off the table is to make a serious mistake, in my opinion.

BTW ... I'd be entirely in favor of laws that say that a) anyone in possession of any sort of gun in the commission of a crime ought to go to jail for a minimum of 15 years, and b) anyone who fires a gun in the commission of a crime ought to go to jail for a minimum of 25 years - no debate, no negotiation, no plea-bargaining. (And while they are in jail, I'd give them a steady diet of books, music and carbohydrates, and I'd take away the exercise equipment. But that's a different issue...)

I also believe that - evidence to the contrary - the nation's political leadership ought to be able to figure out what to do about the nation's economy while still dealing with other issues. (We can hope, right?)

From MNB user Philip Herr:

Like you I didn’t anticipate diving into the gun debate, but nevertheless, here goes. I have been thinking quite a bit about the publication of names and addresses of registered gun owners. And like you, I really can’t see much point beyond the fact that the paper can. And therein lies the twist. It is something that can be done to get the attention of the gun lobby. Let’s face it, gun-control advocates have been so “out-gunned” by the NRA and the arms manufacturers, that we (gun-control advocate) feel powerless. And in a season where the political environment has been contaminated with anonymous billionaires supporting conservative causes, this is just one way to create some degree of transparency. Admittedly a strange one, but nevertheless, a “shot across the bows.”  
 
If it has to come down to the first versus second amendment, I believe the first has precedence (not that either are likely to go away). Here’s praying for some sanity in 2013.

I'm with you. But we all have to keep in mind that none of our constitutional rights are absolute ... which is why we have to hope that sanity and probity rule in the public discourse. At the moment, we seem to be stuck between a rock and a hard place, and down on our luck....