retail news in context, analysis with attitude

Published on: January 21, 2013

by Kevin Coupe

When is a foot not 12 inches long?

Apparently when it is used to measure bread at Subway, the sandwich chain.

The company currently finds itself in the middle of a controversy, created when an Australian teenager ordered one of Subway's "footlong" submarine sandwiches, and then pulled out a tape measure to see if it was, indeed, 12 inches long.

Which it wasn't.

It was just 11 inches long. The teen took a picture, posted it online, and the debate went viral, with pictures and measurements being posted online from Subways all over the world.

Now, Subway's response has been muddled, to say the least. First, it said the problem was just Australian, and it blamed the metric system. Then, it said that "footlong" was just a creative term not meant to represent an actual measurement (even though it has had commercials specifically referencing the length of a footlong sandwich).

What a crock.

This is the kind of stuff that makes me nuts.

If you say something is a "footlong," the damned thing ought to be what you say it is. Dissembling, excusing, rationalizing ... all these things manage to do is show that you're pretty good at not telling the truth.

It cannot be that tough to make a 12-inch roll as opposed to an 11-inch roll. Subway should have made sure that its footlong subs were actually a foot long, and then, when caught an inch short, should have copped a plea. It might even have been able to use the moment to create a new marketing campaign, maybe around a new 13-inch footlong sub.

But no, that's not what it has done.

Life ought to be simple. Say what you are going to do, and do what you say. Be specific, be accurate, be transparent. And be aware that if you do not do these things, you may be exposed on the internet and held up to ridicule, which could damage your brand.

Published on: January 21, 2013

SCOTTSDALE, Arizona -- This year, the Grocery Manufacturers Association (GMA) is co-locating its Chairman's Reception, Lecture and Dinner with the Food Marketing Institute (FMI) Midwinter Executive Conference, and the event began over the weekend with several awards...

• GMA presented its 2013 Industry Collaboration Leadership Award to Frederick J. Morganthall II, President and COO of Harris Teeter, Inc. The award recognizes an industry leader "who has demonstrated excellence in fostering collaboration among trading partners and programs throughout their career that better serve the consumer."

• GMA also presented its Hall of Achievement Awards to Tim Smucker, chairman of the J.M. Smucker Company, and Danny Wegman, CEO, Wegmans Food Markets. The Hall of Achievement Award represents the highest honor given by the more than 100 year-old association.

• And, GMA awarded E. & J. Gallo Winery and the Campbell Soup Company with the 2013 CPG Awards for Innovation and Creativity. The award is given annually to companies that have demonstrated creativity, innovation, and have made a significant impact on the industry knowledge base.

More tomorrow...

Published on: January 21, 2013

Fortune has an excerpt from "Conscious Capitalism," the new book by Whole Foods co-CEO John Mackey and Raj Sisodia, in which they write about the importance of hiring smart and building teamwork.

Some excerpts from the excerpt...

"Conscious companies take great care in the initial hiring. It's much harder today to remedy hiring mistakes than it used to be, so companies should invest a great deal of time and effort to make sure they hire people who are a good fit with the organization—those who believe in the purpose of the business and resonate with its values and culture. For example, The Container Store puts candidates through eight interviews with eight people. The company primarily looks for good judgment and sound integrity; everything else, it believes, is a commodity or can be taught.

"At Whole Foods Market, everyone is hired into a particular team on a probationary basis for 30 to 90 days, at the end of which a two-thirds positive vote by the entire team is required before a new hire is granted full team member status. The logic is simple: anyone is capable of fooling a team leader for a while, but it is much more difficult to deceive the entire team ... It is no coincidence that many conscious businesses organize their people into teams. Working in teams creates familiarity and trust and comes naturally to people. Humans evolved over hundreds of thousands of years in small bands and tribes. It's deeply fulfilling for people to be part of a team, where their contributions are valued and the team encourages them to be creative and make contributions. A well-designed team structure taps into otherwise dormant sources of synergy, so that the whole becomes greater than the sum of the parts. The team culture of sharing and collaboration is not only fundamentally fulfilling to basic human nature, it is also critical for creating excellence within the workplace."

This is the opposite approach from one espoused by some other companies...

"An employment practice based on fear became quite well known over the last two decades, with the financial success that Jack Welch experienced as the longtime CEO of General Electric until 2001. Rooted in its rating system for team members, GE's policy was to fire the bottom 10 percent of its workforce every year (Enron had a similar policy). The rationale is that people are so scared of being in the bottom 10 percent that they work really hard to make sure they're not. But even if people are working hard and think they are doing okay, they can't be sure. People can be so afraid of being in the bottom 10 percent that they begin to see coworkers as rivals rather than as fellow teammates."

Published on: January 21, 2013

The Wall Street Journal has an interesting story about how some magazine publishers, having dealt with discounted subscription prices for years, are using new digital editions on tablet computers as a way of raising prices, often charging more for digital subscriptions than for paper versions. The interesting thing about this is that in the book business, digital e-books are almost always cheaper than hardcover and paperback editions.

"So far, consumers don't seem to mind the higher digital prices," the Journal writes. "Earlier this month, Hearst said it had amassed nearly 800,000 digital subscribers, short of its year-end target of a million but still the largest digital-only subscriber base in the industry. And that is despite the fact that its average digital subscription price of $19.99 annually was twice that of its average introductory print subscription price of $10."

Hearst is not alone: "Hearst isn't alone in seizing this opportunity. Bonnier Corp. magazines like Popular Science and Field & Stream cost more to subscribe to on the iPad than in print, while the Economist recently unbundled its print and digital subscriptions and bumped the price of the two together to $160 from $127.

"Over the past 12 months, Condé Nast, publisher of high-end titles like Vogue and the New Yorker, also raised prices on its bundled print and digital subscription offerings, effectively making print subscribers pay more for digital versions they previously received as a free extra."

The story notes that "not everyone is hopping on the price-increase bandwagon. The country's biggest magazine publisher, Time Inc., whose magazines include People and Sports Illustrated, sells digital editions, print editions and print-and-digital bundles for the same price."

Published on: January 21, 2013

Fox Business has a piece about a new book entitled "Think Like Zuck: The Five Business Secrets of Facebook's Improbably Brilliant CEO Mark Zuckerberg," by Ekaterina Walter, in which she outlines what she believes are the five business "secrets" that made Zuckerberg and Facebook successful.

The five secrets are:

• Passion - "Keep your energy and commitment fully charged at all times by pursuing something you believe in."

• Purpose - "Don’t just create a great product, drive a meaningful movement."

• People - "Build powerful teams that can execute your vision."

• Product - "Create a product that is innovative, that breaks all the rules, that changes everything."

• Partnerships - "Build powerful partnerships with people who fuel imagination and energize execution."

"These principles can even be used in your personal life," Walter writes. "Everything we do (personally or professionally) needs to have purpose. And if our purpose is based on our passions, we are more motivated to achieve our goals. We persevere, we don’t take no for an answer. We take risk. We find the right partners. We act! The lessons outlined in the book can be executed by any small organization if its leadership is prepared to drive change."

Published on: January 21, 2013

• Interesting fact from the San Francisco Chronicle: during the recent end-of-year holiday shopping season, Amazon.com sold 306 items per second, which is a record for the e-tailer.

The story goes on: "Morgan Stanley recently predicted that the global e-commerce market will hit $1 trillion by 2016, with Amazon poised to capture nearly a quarter of that. The company, which is opening fulfillment centers and ratcheting up its video-streaming service, still sees e-commerce as a land grab and is unnerving rivals as it puts cash flow before profit."

Published on: January 21, 2013

• In the UK, The Independent reports that Tesco has opened a a fifth "dark store," this one in West Sussex, which serves as a location where it can pick groceries that have been ordered online and that will be delivered to shoppers.

Normally, Tesco picks groceries for online orders in-store, with customers able to see the pickers wearing vests that remind them of the internet shopping option. But business apparently is strong enough that opening these dot com-only stores has become a necessity.

According to The Independent, the move is seen as ratcheting up the pressure Tesco is placing on Ocado, the online grocer.

Published on: January 21, 2013

• The Washington Post has a piece about how "an increasingly crowded field of big-box supermarkets is squeezing out many of the smaller do-it-all grocers that tried to compete directly with the national chains." The story uses local independent grocer Magruder's, which is being sold off in pieces, as an example, but suggests that "some suspect that it’s simply becoming too difficult for small, sell-everything stores to stay afloat when surrounded by enormous chains that can purchase much larger inventories at much lower rates."

The story goes on: "Barry Scher, a former spokesman for Giant who is now a principal at the local government relations consultancy Policy Solutions, said there are now too many big-name chains with more modern stores, wider varieties of products and lower prices for the Magruder’s of the world to retain their customers. 'It’s just an outdated model, and it’s time has come and gone,' he said."

• Costco has announced, via its Costco Connection member magazine, that it is getting into the Pharmacy Benefit Management (PBM) business. The new business, called Costco Health Solutions, is being marketed to small business owners.

A PBM is a third party that administers prescription drug programs and negotiates better prices with drug companies through what theoretically is greater buying power arrived at through a network of contracts.

The move brings Costco into direct competition with the likes of Walmart, CVS and Walgreen, all of which are in the PBM business, though in the announcement, the company says that it will "keep a tight rein on expenses, take lower markups and pass discounts and rebates from manufacturers to our members at time of purchase."

• The Wall Street Journal reports on what some think could be a long-term decline in US soft drink sales, as "shoppers increasingly reach for water, coffee, and other drinks." The story notes that "as U.S. consumption steadily slipped over the past eight years, the beverage giants typically were able to raise prices enough to keep soda revenues from America's favorite drink growing. But soda sales at U.S. stores declined in the second half of last year—including during the holidays, when partygoers normally pay up to gulp more.

"Now industry analysts wonder if the downturn in sales is here to stay," and if the trends indicate entrenched behavior by shoppers who are influenced by concerns about issues like obesity as well as the existence of a plethora of options.

Published on: January 21, 2013

Major League Baseball lost two legends over the weekend...

• Stan Musial, a revered gentleman of the game known as "Stan the Man," passed away at age 92. Musial was a remarkable figure of consistent achievement - with the St. Louis Cardinals for his entire career, he won seven batting championships, played on three World Championship teams and was named Most Valuable Player three times. He hit 475 home runs, including five in one double header. Musial also got 3,630 hits in his career - 1,815 at home and 1,815 on the road. He scored 1,949 runs and had 1,951 RBIs. He struck out fewer than 700 times in almost 11,000 at-bats ....and was never ejected from a game in 22 seasons.

Musial was elected to the Hall of Fame on the first ballot, and, as the New York Times writes, "went to the White House in February 2011 to receive the Medal of Freedom, the nation’s highest civilian award, from President Obama, who called him 'untarnished, a beloved pillar of the community, a gentleman you’d want your kids to emulate'."

The Times writes that Musial "had little of the glamour of the other stars of his era — from the World War II years to the early 1960s — when baseball was the undisputed king of sports. He did not have the mystique of Joe DiMaggio, the tempestuousness of Ted Williams, the electrifying presence of Willie Mays, the country-boy aura of Mickey Mantle ... He simply tattooed National League pitching."

On one of two statues of Musial outside Busch Stadium in St. Louis, there is the following inscription: “Here stands baseball’s perfect warrior. Here stands baseball’s perfect knight.”

• Earl Weaver, one of the most effective and influential managers in Major League Baseball history, passed away over the weekend while on a themed Caribbean cruise featuring a number of Baltimore Orioles stars. He was 82.

The Washington Post wrote about him this way:

"A hot-tempered bantam who screamed curses at umpires and sometimes at his own players, Earl Weaver made the Baltimore Orioles into a baseball powerhouse during his 17 years as manager.

"He was infamous for his explosive diatribes, which got him thrown out of almost 100 games, and for nervously smoking cigarettes throughout games, but no one could deny that the 'Earl of Baltimore' was one of the greatest managers in baseball history ... Known as the 'little genius,' Mr. Weaver had an inventive baseball mind and used every imprecation in his colorful vocabulary to inspire his players ... He was a crafty strategist who preached a simple formula for baseball success — good pitching, solid defense and three-run homers."

Weaver was inducted into the Hall of Fame in 1996.

Published on: January 21, 2013

Got a lot of email the other day responding to the story about Facebook losing some users.

MNB user Brian Cook wrote:

Funny story….so I ask my son, Saige (17), how come I haven’t seen him on Facebook recently. He said that he barely goes on anymore, so I obviously had to know why. He goes on to tell me that he and his friends would use FB mostly for sharing pictures so they have now moved on to Instagram.

Seems our future consumers of America like new things. At least, they are looking for certain things and quick to jump ship when they find it. If this is any indication of produce buying decisions innovation/staying tuned to what’s next will be keys to success.

Of course, Instagram is owned by Facebook.

Another MNB user wrote:

As a father of two teenage daughters, no surprise that Facebook numbers dropped.
Teens have deserted Facebook as they go to other instant chat and picture share services like Instagram and Tumblr.

These other apps do not have the "permanence" and public and "parental snooping" implications like Facebook.

From another reader:

Facebook is a place my wife puts up the family pics and I will on rare occasion go to look at her pics and therefore other pics that I do not really care to see. Not being a tech savvy person and NOT interested enough to take the time to "figure" out Facebook's  operational system I finally turned everyone off so I would stop getting notifications via email on everything every one was doing too many times a per day.

Therefore I rarely find myself anywhere near Facebook. Linked in I use occasionally and it is great to contact or review status of former contacts without having to sort through a "gazillion" things I don't want to see. Why would anyone use Facebook for a search engine? I am now retired and have plenty of time but not Facebook time. I really don't know any productive people who spend a lot of time on Facebook but I bet some people find a way to make a good living on it. Just not for me.

MNB user Mark Raddant wrote:

It would be interesting to know the demographics of the users who either quit or reduced their frequency of use of Facebook.  My bet is when kids, who drove the growth, realized their parents began using FaceBook, it became less interesting.  And when marketers began driving the process, it quit being cool for the most part.  I use FaceBook more than my kids (14-30) do anymore, and I use it less than I used to as well.  You are correct, between narcissism and floods of ads, it’s just not that much fun anymore.

And from still another reader:

Count me among the people who no longer use Facebook.

I originally set up a profile as a way to follow our teenaged sons and track their usage of the website and the appropriateness of their posts.   In the beginning, it was kind of fun to “find” people that I hadn’t seen or heard from in years and learn what they had been doing in the time period since we had last seen one another.   At the same time, I could sense unease on the part of my spouse as she perceived that I had too much interest in getting in touch with childhood friends and wasn’t paying my fair share of attention to her.   In addition, I became frustrated with the restrictions that my employer placed on my personal Facebook profile and account usage…to the extent that they would not even let me acknowledge where I worked, nor discuss my employment in any way.     Add to that the choices of some of my “friends” to either use their posts as a constant stream of useless drivel (“I did eight loads of laundry today”) or as a rabid political platform of one type or another, and it became easy to say that spending time on Facebook wasn’t the best use of my day.

Most of all, after I deleted my Facebook profile no one outside of my immediate family said anything about no longer being able to reach me…….which tells me that I wasn’t leaving a lasting impression on anyone else either. 

Because of Facebook’s lack of consideration for its users in an attempt to make money, it has become nothing short of creepy.

Another MNB user chimed in:

The announcement that Facebook was going to sell the photos you posted on Instagram was a huge turnoff.  Today they announced Search Graph where you can search for information that your network has shared.  I think people in general are starting to wake up and realize that the information that they were sharing on Facebook can and may come back to haunt them later in life.  We don’t truly know what can be done with the data we share.
 
I am very close to becoming one of those people that disconnects….

And from another reader:

As a fellow old guy and occasional FB user, I've alerted my friends that when they eat a jelly sandwich, they should alert me by snail mail to make sure I don't miss their status update.

Surprisingly, I have yet to receive such a letter, and the volume of narcissistic jelly sandwich updates on FB has significantly declined (except for the woman with three fur ball  lapdogs, who reports their every move).




There has been some anecdotal evidence lately that Amazon may be losing some business because of the requirement in some states that it collect sales taxes, which led MNB user Steve Mowcomber to write:

I’m not surprised that Best Buy, Target or Wal-Mart would see on-line sales increases in states where Amazon loses its pricing advantage due to sales tax collection.  If the price is the same, I would always purchase on-line products from a retailer that has brick and mortar near me simply for the logistical advantages IF a return or exchange is necessary down the road.  The brick and mortar experience may be overrated on the purchase side, but it can’t be underappreciated on the return/exchange side.

Regarding the ongoing debate about e-tailers collecting sales taxes for online purchases, MNB user Leo Martineau wrote:

I think we all know that it is only a matter of time before all e-retailers are required to pay sales tax, including the little guys but I believe in the philosophy that one person’s disadvantage is another person’s advantage.  Yes the e-retailers will need to process all of the paperwork to each of the states and that will be an extra burden on the little guys, possibly putting them at a disadvantage.  But I can see a company like Intuit or one of their competitors coming up with another Quickbooks type application to simplify or possibly automate the process, giving them an opportunity for a new market.
 



We had a story recently about a report saying that the FDA had warned two egg producers that they were not doing enough to prevent pests and wildlife from entering barns housing laying hens, which amounts to a violation of rules designed to prevent salmonella outbreaks. I was disgusted, but one MNB user wrote:

Somethings I find outrageous and this may be one of them. Chickens are wild animals, they live in barns, chicken coops and structures of this sort.  Does anyone really care that some insects and other wild animals (birds), find their way in!?!  I would think that insects are plentiful in all wild life/food animal habitats, and would they be very evident in the eggs laid by “free range” chickens.  Asking/making farmers of egg laying chickens to keep these out of their egg laying areas is like asking bears not to go in the woods!

Really?

I thought the reason we had things like chicken coops was to prevent this kind of stuff.




On another subject, an MNB user wrote:

Regarding your story on the return of Dunkin Donuts to California and the resultant competition with supermarkets, I think you miss a key point: we are entering an omni channel retail era. Shoppers will want to buy the brands that they like whenever and wherever they choose.
 
Supermarkets cannot afford to not stock popular brands, not can they take the approach that they can get shoppers to buy only what they prefer to sell them.
 
Any supermarket operator who thinks branded manufacturers are not actively developing their direct to shopper capabilities has their head in the sand. It will be a reality within the next several years because it is the next natural evolutionary step in the shopper experience…just as home delivery will emerge as a major new component of the shopper value proposition because shoppers will want it and demand it!
 
The shopper is ultimately in charge and will purchase goods when, where and how they prefer to. Retailers who think they can force shoppers to buy their own brands or deny them access to national brands they really prefer will become universal donors of market share.

But from another reader:

I just want you to know that your one person jihad against selling products that compete with retailers is appreciated!

If you were to evaluate the coffee category, you would find that it is one of the weakest center store categories as measured by percent of sales in the grocery and supercenter channels.  While candy, gum and nuts have a logical strength in the convenience store channel, the coffee migration is primarily purchases of bagged coffees at coffee shops!  Almost ¾ of a billion in revenue is lost each year!




I expected to get some grief on this one, as an MNB user wrote:

On the story that a reader praised the experience of a Disney Cruise you wrote:
 
“I have to be honest here. Being on a Disney Cruise is my idea of one of the circles of hell.”
 
Having taken one of the Disney Cruises as a precursor to visiting Disney World, it was a fantastic experience. As you frequently point out the challenge for retailers to continue to work on their “in-store experience”, Disney delivers big time on their cruises. Now, I would say that you may be more apt to enjoy if you are with kids/grandkids as it is geared for families, but if you would enjoy the theme park, you would enjoy the cruise. The attention to detail and “on-ship experience” was second to none!

Just not my thing. Been on one cruise, and it will be a long time before I go on another. (I chronicled it here.)




And finally, responding to my note Friday about the third anniversary of the passing of Robert B. Parker, MNB user Steven Ritchey wrote:

What I loved most about Parkers writing was his wit, and his ways of describing things.  In  Pale Kings and Princes, he described a rattan chair by saying, “it was ugly, but it was uncomfortable”.
 
I also appreciated that  his characters, Spenser, Jesse Stone and Sunny Randall always tried to do the right thing, even when it was more difficult, even when no one else was looking.  They may not have always known what the right thing was, but always attempted to understand It and do it.

Agreed.

Published on: January 21, 2013

The combatants are set for Super Bowl XLVII in New Orleans, as the San Francisco 49ers, coached by Jim Harbaugh, will face off against the Baltimore Ravens, coached by John Harbaugh.

Yesterday, in the conference championship games, the 49ers defeated the Atlanta Falcons 28-24, while the Ravens beat the New England Patriots 28-13.

Super Bowl XLVII is scheduled to be played on Sunday, February 3.