business news in context, analysis with attitude

Published on: January 16, 2013

by Kevin Coupe

Marketwatch reports that "the number of Americans using Facebook fell by nearly 1.4 million in early December, according to new data from social media monitoring company SocialBakers. While Facebook has more than 167 million users in the U.S. and 1 billion worldwide, the recent drop in monthly active users is still akin to losing the entire population of San Antonio, Texas."

Yikes. Now, that's what I call an Eye-Opener.

Some say that new revenue and advertising models being tested by Facebook may be testing the patience of some of its users, leading them to try other social media options. Others suggest that given the rate of Facebook's ascent, a leveling off was inevitable.

I think both may be true.

Here's my "cranky old guy" take on the situation, which I need to put in context - I think that social media is incredibly important and will remain so, as new companies find innovative ways to connect people and ideas. So I'm hardly predicting the demise of social media.

But ... I do think there may come a point at which people will stop documenting every moment of their lives, and accept the notion that not everything they and their children do is worthy of media coverage. There is a kind of narcissism about some posts on sites like Facebook that I find amusing on those days when I actually read them. (I am a casual Facebook and Twitter user ... I post MNB's headlines there daily, I scan postings occasionally, but quite frankly, I have other things to read and do.) And I say this with some level of irony, since I've spent the last eleven years mining my personal life for anecdotes that I can use to illustrate business lessons. But I like to think I know where the line is. (My wife and kids may disagree.)

So I'm not wildly surprised that Facebook is seeing some usage decline. I understand that Facebook needs to find ways to make money, but it also has to be sensitive about its users. And maybe, just maybe, it has crossed that line...

It is a lesson about which every retailer and marketer needs to think.

Published on: January 16, 2013

A new survey sponsored by IBM and released at the National Retail Federation (NRF) convention in New York City suggests that consumers "are diversifying the way they shop for and acquire goods, becoming increasingly open to buying both online and in store depending on their needs at time of purchase. While more than 80 percent of shoppers chose the store to make their last non-grocery purchase, only half are committed to returning there next time they buy.

"IBM’s research finds that consumers are in a transitional state. According to the study, 35 percent are unsure whether they would next shop at a store or online. Nine percent are ready to commit to making future purchases online. Of all eight product categories tracked in the survey, the two most popular categories chosen by consumers for an online shift are consumer electronics and luxury items, including jewelry and designer apparel."

The survey also found that "nearly half of online purchases in studied categories resulted from 'showrooming,' a burgeoning trend in which consumers browse goods at a store, but ultimately buy them online. Significantly, nearly a quarter of these online shoppers intended to buy their item in the store, but ultimately purchased online – primarily due to price and convenience."

Published on: January 16, 2013

Bill Simon, the president/CEO of Walmart US, said yesterday that the company has committed to "buying an additional $50 billion in U.S. products during the next decade," according to a story from Bloomberg Business Week. "He said the company will increase what it already buys, including sporting goods, apparel basics, storage products, games, and paper products.  And it will help manufacturers in such 'higher potential' areas as textiles, furniture, pet supplies, some outdoor categories, and higher-end appliances."

The New York Times put the commitment into context: "The company did not disclose the value of the American-made products it already sourced. In its most recent fiscal year, Walmart spent $335 billion buying and transporting merchandise globally. (It does not break out figures for the United States and Sam’s Club, which represent about 70 percent of over all sales.) The $50 billion commitment - $5 billion a year - represents about 1.5 percent of that annual total."

And, the Times writes, "Walmart has been under pressure concerning its overseas sourcing because of a deadly fire in November in Bangladesh that killed more than 100 people at a factory used by Walmart suppliers."

In addition, the Bloomberg Business Week story says, Simon said that the company's "part-time employees would receive more information about full-time job openings and have the first shot at those jobs," a move designed to address concerns that part-time employees are treated as second-class citizens, with schedules that "change too frequently, making it difficult to hold a second job or go to school or care for families." "We’re all tired of retail jobs being put down, as if retail workers can’t judge for themselves what a good job is," Simon said, adding, "We will also bring more transparency to our scheduling system so part-time workers can choose more hours for themselves."

The comments came at the annual meeting of the National Retail Federation (NRF), in New York City, and were included in remarks where the company formally announced that it will hire every US military veteran that wants a job, provided that the veterans have left the military in the previous year and did not receive a dishonorable discharge.

Simon suggested that the moves are not a series of public relations ploys: "Everything could have just remained the same. Instead, we decided we could move the rock. … We can just decide to do this."

Published on: January 16, 2013

Internet Retailer reports that eBay-owned PayPal says that "23 national retailers now accept PayPal  payments inside their stores ... PayPal says consumers can pay through it via payment terminals inside some 18,000 retail locations.  Consumers pay by either entering the same login and password they use for PayPal online.  Shoppers also can swipe one of three payment cards co-branded by PayPal and MasterCard."

In addition, the company says, it has launched a "new mobile ordering test involving a California store operated by beverage retailer Jamba Juice" that will "enable consumers with iPhones to use their PayPal apps to place orders for pickup at the Emeryville CA store in the San Francisco bay area ... Consumers can use the app to select a pickup time and to pay through their PayPal accounts; those consumers can bypass the line inside the store when picking up their orders."

Published on: January 16, 2013

Bloomberg Business Week has an interesting piece about Krispy Kreme, suggesting that "after falling victim to headlong expansion and America’s obsession with low-carb diets, Krispy Kreme Doughnuts Inc. has revived itself by moving beyond its sugary signature product and adding fruit juice, oatmeal, smoothies and coffee to the menu. Quarterly sales have risen for more than two years, and fiscal 2013 sales are forecast to match pre-recession levels."

As the story notes, in the late nineties "the doughnut seller’s pell-mell expansion caught up with it ... and by 2005 the company’s board had ousted its CEO and several executives amid an accounting scandal. The stock plummeted, the company was forced to close half its stores and 14 quarters of losses ensued."

In addition to broadening its menu, Bloomberg Business Week writes that "Krispy Kreme also added a digital flourish to its retro 'Hot Now' signs: a 'Hot Light' app for smartphones that alerts customers when the sign is lit at the closest local store. The app has been downloaded 250,000 times since its debut in December 2011, according to the company."

Published on: January 16, 2013

• Marketplace, on National Public Radio (NPR), reports on how Walmart is "getting ready to open the smallest Walmart in the country -- 2,500 square feet -- on the campus of Georgia Tech in Atlanta ... The location is set to open this spring in a former ribs joint.  It’s not clear what items will stay and what will go as Walmart shoe-horns its big-box sensibilities into a convenience store."

The move, Marketplace notes, "is part of Walmart’s efforts to penetrate retail niches outside the big box, and its renowned buying power could challenge other players in the pharmacy and convenience store sector."

Published on: January 16, 2013

In the UK, the Daily Mail reports that hamburgers sold at four chains - including Tesco, Aldi and Lidl - have been found to contain horsemeat.

According to reports, about a third of beef burgers tested by regulators were found to contain horsemeat; the percentage of horse in the meat ranged from trace amounts to 29 percent. The affected meat was said to have been made at two sides in Ireland and one in England.

The companies have apologized, and pulled potentially affected burgers from their store shelves.

Published on: January 16, 2013

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

• The National Retail Federation (NRF) said yesterday that December retail sales (excluding automobiles, gas stations and restaurants) increased 0.8 percent seasonally adjusted from November and  increased 2.1 percent unadjusted year-over-year.
Total holiday retail sales increased 3.0 percent, below NRF’s projected forecast of 4.1, to $579.8 billion. Additionally, non-store holiday sales grew 11.1 percent. Shop.org in October forecasted a 12.0 percent growth in online sales in the months of November and December.

• Delhaize-owned Food Lion announced that its customers "can now receive additional savings by accessing in-store coupons through the company's Facebook page, powered by an app Valassis launched on Facebook Platform. The new Facebook application also gives consumers the opportunity to share their coupons with "friends" on the social media network. The app provides Food Lion an innovative social media tool to offer exclusive offers on a variety of items," including private brands.

• The Los Angeles Times reports that Jerry McDougal, the vice president of retail at Apple Inc., has resigned "to spend more time with his family."

The Apple Stores, which have come to stand for the technological and design mindset of the company, have been going through their own transition in recent months. Ron Johnson, who helped to create the division, resigned to become CEO of JC Penney. He was replaced by John Browett, formerly of Tesco and Dixon's, but Browett - who seemed to be focused more on cutting costs than delivering high service levels - lasted just nine months. And now, McDougal.

Apple says that McDougal will be replaced by Jim Bean, who has been serving as the company's vice president of finance.  No executive has yet been named to the company's top retail position.

Once again, we have to ask the question: Does McDougal's family want to spend more time with him?

All this tumult in the Apple Stores division comes at a time when there is at least anecdotal evidence that customer service levels have fallen off there (though, to be honest, I have not run into that personally). I also have to wonder whether the former vice president of finance is the right guy to focus the division more on effectiveness and less on the numbers.

The Apple Stores need a strong leader. I have some suggestions, if they'd like to give me a call.

• Forbes reports that there are more than 200 "eco-labels" available on many supermarket shelves, but that a new report from Organic Monitor says that the plethora of labels is causing consumer confusion: "What a label means and the criteria behind it are not clear," the story says. In addition, "Food producers too may also be shying away from such labels because the cost of becoming certified by many groups at once is overwhelming."

"Organic Monitor says the question remains if a single eco-label umbrella will eventually emerge to help integrate many existing certifications," according to Forbes.

Published on: January 16, 2013

• Sales and marketing services company Crossmark has named Joe Crafton to be its new CEO, succeeding John Thompson, who now will serve as the company's chief strategy officer. Crafton began his Crossmark career in 1988, and became president of the company in 2010.

• The National Grocers Association (NGA) announced that Aileen Dullaghan Munster, the organization's Director of Education and Research, has been promoted to Vice President, Education and Research.

In addition, NGA said that Matthew R. Ott, Director of Membership and Information Technology, has been promoted to Vice President, Membership and Information Technology.

Published on: January 16, 2013

Here it is, from the New York Daily News:

18 human heads discovered in package at Chicago's O'Hare Airport

Published on: January 16, 2013

Here it is, from the New York Times:

New Dan Brown Novel Coming in May

Published on: January 16, 2013

Regarding Monday's story detailing all the executive and organizational changes taking place at Delhaize America and its various chains, one MNB user wrote:

I've thought about your Monday article regarding Delhaize.

I'm pretty surprised you chose to post large segments of an internal memo in that manner. I understand you indicated that it would have been difficult to summarize, but I feel that was in poor form.

Sure - you can feel comfortable that it was somehow out there for public consumption. Various opinions on these types of things exist I'm sure.

Your commentary references to Atlanta burning and the Titanic provided an inflammatory impact to an already difficult situation, regardless of how they were couched.

Your outline also seems to miss the idea that perhaps these changes are long overdue and the organization perhaps was suffering and at risk by the fact that they have not been made.

While difficult, many of us here are encouraged by the changes being made and having someone with the stones and intellect needed to be decisive and keep us moving forward.

"My view" from a seat in the roller coaster at least.

This is an entirely fair criticism.

When I posted so much of the internal memo, I did so - and I said this at the time - because I thought that the tone and detail of the memo defied easy characterization. I thought that it made sense to simply post much of it, and let people draw their own conclusions and inferences.

I also wanted to be completely fair to Delhaize. I've been hearing from people on both sides of the issue, though many called me on the phone because they did not want to be quoted. So I wanted to lay out the facts and both sides of the argument, in part because I was not prepared to make a judgement either way on all the moves. I tried to make that clear in the commentary.

I will also say this. Since the Monday piece ran, I've continued to get emails and phone calls. Here's one that I can quote:

Can you imagine being a young, energetic, talented and eager to be promoted employee at Delhaize America? I’d start looking for another gig, based on the changes Roland Smith just made. Maybe he should change the names of the banners too. And all of this without announcing the new top dog in HR. This is will make a lot of the younger talent in the organization look at themselves and say, “that could happen to me”. Smith diluted the sense of cultural belongingness, which isn’t healthy for any organization.

But the vast majority of messages I've gotten have taken the opposite position - that Delhaize America was desperately in need of new leadership willing to make hard choices, and that these changes - while seeming to be radical - are absolutely necessary.

I don't get the sense that this message is being communicated by people who are toeing the company line. Rather, it seems to be from people who love their company, who have devoted years of their lives to the company, who are wounded by the fact by so many of their friends and co-workers are leaving the company, but who think that in the long run, Delhaize will be a stronger more viable company for the moves.

Their passion is positive, not negative. I always find positive passion to be persuasive.