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    Published on: January 29, 2013

    by Michael Sansolo

    In today’s times each of us are subject to a torrent of words and thoughts each and every day and most are forgotten as quickly as we read/hear/see them. So it’s hard to actually catch it when something truly profound comes out. Today, I want you to pay attention to a line Kevin wrote in MNB one week ago.

    Harvey Hartman, founder of the Hartman Group, suggested that food retailers should begin acting as "curators," helping shoppers to make intelligent and relevant choices. "Those who understand consumers ... and understand food culture ... have the greatest opportunity to succeed with consumers," he said.

    In that short paragraph, Hartman, who was speaking at the Food Marketing Institute (FMI) Midwinter Executive Conference, completely summarized the changing nature of business - no matter what that business is. He was quoting a valuable study study into food culture shifts that was conducted by Daymon Worldwide and the Hartman Group, though the changes being described probably can be seen in other industries as well.

    And it all comes down the word curator.

    It has to be 40 or 50 years ago that FMI's leadership positioned the supermarket industry as serving as "the purchasing agent of the consumer.” It was a brilliant line, perfectly summing up the challenge that supermarkets (and all businesses) truly have. To sift through the choices and determine which are the ones that matter and which don’t to the specific audience served by that retailer.

    In so many ways, that single line explained the challenges of efficiency and effectiveness that face every supermarket.

    Now consider the difference in the words purchasing agent and curator and you get a clear sense of why business is so different today. Simply put, being efficient is no longer enough.

    A curator has to make difficult choices too, including many of those made by a purchasing agent…and then a curator does more. A curator has to set the tone, create the environment with a sense of interpretation, history, culture and more. Curators of a museum, the traditional place for the term, have to figure out how to balance the traditional exhibits with the new, to advance the value of the institution through the knowledge it imparts to its visitors/customers.

    Now think about that in the world of retail. A curator has to fundamentally understand the needs and culture of the shoppers in the store to make certain the correct products are on the shelf. Then a curator must go further. A curator has to add products and services while understanding culture, history, environment and more.

    A curator needs to think about how those new products and experiences enhance that history. A curator needs to enhance the customer experience and educate the shopper to understand and make new choices. All of that is an increasingly important task in a world of constant information and opinions.

    A curator provides guidance on nutrition, meal preparation, tastes, products and so much more. A curator even understands the same challenges face us as managers looking to build the best, most motivated staff possible.

    (As a side note, this exact challenge is what we actually face here daily—or weekly, in my case—on MNB. Obviously you have countless choices about where to find industry/business news on line. As curators we try to enhance your experience with our choices, our commentary and even our discussion of movies, bottles of wine and restaurants.)

    To paraphrase Lincoln, it is possible that the business world may little note nor long ponder this singular observation from the Daymon/Hartman study. But that would be a mistake, because in one word, it sums up the changing challenge of today’s world for any business.

    What was once good enough is no longer even close. Efficiency is essential, but it’s only a piece of the puzzle. Today, like it or not, you have to do more. Much more.

    Today you must enhance.

    Michael Sansolo can be reached via email at . 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: January 29, 2013

    by Kevin Coupe

    Time has an interview with actor Patrick Dempsey, who plays the doctor nicknamed "McDreamy" on "Grey's Anatomy," but who more recently has become better known for leading an investor group that outbid Starbucks to acquire the bankrupt Tully's coffee chain.

    Some excerpts...

    Why he did it... "I always wanted to have a business, and I thought Tully’s would be a great opportunity. It’s a nice challenge. It’s different. And it’s an excuse to go and spend more time in Seattle. It takes the pressure off my day job so I can go and do something else if I want to ... I think being an actor is very much like running your own business. You’re running a private business. I don’t have all the answers. But I know enough to get the right people that do. I’ll make some mistakes, and I’ll learn from them. And, you know, I have a passion towards this. Hopefully that will attract the right people to make it happen."

    Tully's problems... "I think obviously mismanagement is one. Overexpansion. And I think confusion on the message of what they wanted to do. I think they were trying to compete too aggressively with Starbucks. Tully’s could never decide where it wanted to be positioned in the marketplace. They had no clear vision. Tully’s was too myopic in focusing on Starbucks, and the company’s strategy of opening a store across the street from every Starbucks was flawed from the start. The company expanded too quickly and got way beyond the tips of their skis ... We will take a more measured approach. We have no desire to be Starbucks. We want to appeal to consumers that do not want Starbucks. I think there’s a great opportunity for expansion. But I think you have to stabilize what you already have and understand that model first before you can go on."

    How much coffee he drinks... "I drink quite a bit ... Probably about six to 10 cups ... But now I’m drinking more because I’m trying different beans out. And I really want to be certified as a barista."

    Just in case, I suppose, the day job falls apart.

    You can read the whole piece here.
    KC's View:

    Published on: January 29, 2013

    Various press reports say that a Kroger store in Charlottesville, Virginia, had a situation to deal with on Sunday - a man who walked into the store carrying a semi-automatic rifle.

    Police were called, and they drew their guns on the man - only to find out that he owned the gun legally, was not a felon, had a permit, and, in fact, wanted to carry the gun into the store as a way of demonstrating his Second Amendment rights.

    There are no restrictions on carrying unconcealed firearms in the state of Virginia; permits are required to carry a concealed weapon.

    Kroger has banned the man from its store, the stories say. Kroger Mid-Atlantic released the following statement:

    "Our policy in regards to guns in our stores is to comply with the state and local laws. The safety of our customers and our associates is always first and foremost as we run our business.

    "We treat each situation individually, based on the circumstance. In this case it was alarming and frightening to our customers and associates due to recent events.

    "Several of our customers dialed 9-1-1 and our store team's reaction was reasonable and understood."
    KC's View:
    Even local National Rifle Association (NRA) folks seem to think that this guy was misguided in his efforts to demonstrate the importance of the Second Amendment ... especially because he had a note in his pocket that explained his rationale, which suggests that he expected to be shot by police.

    I'm not sure what he was demonstrating for - Virginia has some of the most relaxed gun laws in the country.

    I've said it before, and I firmly believe that in view of recent events that there ought to be room for reasonable discussion about gun laws in America while still respecting the spirit of the Second Amendment. But I read stories like and I cannot help but think that this is completely nuts - that innocent people are going to continue to be hurt or killed. I also think that retailers ought to be concerned about this issue - because while so many incidents of mass violence have taken place in schools, it seems entirely possible to me that supermarkets and mass merchandisers are ripe to be victimized. Then what will they think?

    Of course, someone will probably suggest that the best approach is to arm the checkout personnel.

    Published on: January 29, 2013

    The Los Angeles Times reports this morning that an analysis of 2001 tax documents filed by Chick-fil-A show that the company made no donations to groups that oppose gay marriage - a reality that may come as a surprise to some considering the company's public position on the subject. That position, as stated by the company's president, Dan Cathy, had enraged gay marriage supporters who called for a boycott of the fast feeder; conversely, anti-gay marriage forces had coalesced around a grass roots campaign calling for people to eat more Chick-fil-A, not less.

    The Times writes that "according to gay rights group Campus Pride, the 2011 IRS 990 filings for Chick-fil-A's charity arm WinShape Foundation show no sign of gifts to organizations such as Family Research Council or Exodus International, which advocate against same-sex unions and other privileges for lesbian, gay, bisexual and transgender people.

    "The documents, filed Nov. 15, instead exhibit nearly $6 million in funding to beneficiaries supporting youth, education, local communities and what Campus Pride called 'marriage enrichment'."

    Chick-fil-A says that its 2011 corporate charitable donations reflect its real priority, which is "not to support political or social agendas."

    The Times also notes that "on Monday, LGBT advocacy group Human Rights Campaign said major companies including Marriott International Inc., Aetna Inc., Bristol-Myers Squibb Co. and eBay Inc. were backing a repeal of the federal Defense of Marriage Act. It said the businesses formed a coalition to oppose the law, which denies federal benefits to same-sex couples."
    KC's View:
    One of the nice things about this story is that it talks about how one of the top people from the Campus Pride organization actually has developed a personal relationship with Dan Cathy, even being invited to attend with Cathy the college football bowl game sponsored by the retailer.

    Apparently, good and decent people, if they try hard enough, can find ways to connect even if they disagree on some issues. It gives one hope.

    Published on: January 29, 2013

    The New York Times this morning reports that Japan is easing "its decade-old restriction on imports of American beef," noting that "a Japanese government council that oversees food and drug safety cleared a change in import regulations that would permit imports of meat from American cattle 30 months old or younger, rather than the current 20 months.

    "The change is set to take effect on Friday for American beef processed after that date, and shipments could start arriving in Japan in mid-February, according to the Japanese Ministry of Agriculture, Forestry and Fisheries."

    The ban was originally put in place in 2003 because of concerns about a single case of bovine spongiform encephalopathy (BSE), better known as mad cow disease, found in Washington State. It was relaxed a bit in 2006, but the new move is expected to be at least of some benefit to ranchers who have been hit hard by rising feed prices and changing consumer tastes that have adversely affected sales.
    KC's View:
    This is good for everyone, but it has to be remembered that the new policy will remain in place as long as there are no mad cow cases in the US to spook the Japanese. If there's another case, there will be another ban.

    Published on: January 29, 2013

    Bloomberg this morning reports that Walmart's Mexican business unit "used a current state governor there to facilitate $156,000 in bribes meant to help open stores, an ex-lawyer for the retailer told company officials in 2005, according to documents released by members of the U.S. Congress.

    "The payments were negotiated by Graco Ramirez Garrido Abreu, who at the time served as a federal lawmaker for the state of Morelos, a Wal-Mart summary of the accusations stated ... The accusations by attorney Sergio Cicero Zapata, who alleged Ramirez was 'the main contact person' to speed needed permissions from the Urban Development Ministry, came in a summary of an Oct. 13, 2005 meeting with the retailer’s officials. Cicero, a 28-year veteran of the company, told them he set up the bribery scheme while employed by Wal-Mart. He was forced out in 2004 after colleagues questioned his oversight of payments to consultants in company-related real-estate deals."

    The documents were released by Rep. Elijah Cummings (D-Maryland) and Rep. Henry Waxman (D-California), who have been spearheading a Congressional investigation into Walmart bribery allegations first made in a New York Times story. The also are probes being conducted by the US Department of Justice and the US Securities and Exchange Commission (SEC).

    Bloomberg writes that Governor Ramirez is denying the charges, while Walmart is saying that "there is nothing new in these documents," and that the charges have been out there for more than a year.
    KC's View:
    It strikes me that there is some grandstanding going on here by the congressmen, but that's almost irrelevant, except in terms of the news cycle.

    It will be when the SEC and the Justice Department release their reports that the dominoes will fall and maybe, just maybe, heads will roll.

    Published on: January 29, 2013

    Bloomberg reports bankrupt Hostess Brands is getting initial bids for parts of its business, with McKee Foods, maker of Little Debbie snack cakes, offering $27.5 million for Drake's, which makes Devil Dogs, Ring Dings and Yodels.

    At the same time, the story says, "United States Bakery Inc., also known as Franz Family Bakery, is expected to bid about the same amount for Hostess bread brands including Sweetheart, Eddy's, Standish Farms and Grandma Emilie's ... Earlier this month, Hostess chose Flowers Foods Inc to start the bidding at $390 million for its bread brands including Wonder, Butternut, Home Pride, Merita and Nature's Pride."

    All of these bids are considered to be "stalking horse bids," setting the level at which bidding will begin for these Hostess business segments.

    Still to be sold: Hostess's iconic Twinkies brand.
    KC's View:

    Published on: January 29, 2013

    NBC News has a story about how as of this week, merchants that accept Visa and MasterCard credit cards are allowed to add a service charge of up to four percent that is designed to "equal the actual cost of processing the credit card transaction" ... The surcharge can vary based on the type of card. For example, it could be higher for a rewards card or premier card. Merchants still cannot add a surcharge to debit card transactions."

    Not that it seems to matter.

    According to the story, Craig Shearman, a spokesman for the National Retail Federation (NRF), said, "We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge." In addition, "NBC News contacted some of the country’s largest retailers. Wal-Mart, Target, Sears and Home Depot said they have no plans to add a credit card surcharge."
    KC's View:

    Published on: January 29, 2013

    Internet Retailer reports that "in a survey of 600 small retailers that almost all sell online, nearly half—49%— say they plan to create a new web site this year and 14% say they will start offering free shipping on all purchases, catching up to the 42% reporting that already do."
    KC's View:

    Published on: January 29, 2013

    • A group of 137 IGA retailers serving communities in the western United States announced that they have partnered with JDRF, the leading global charitable supporter of type 1 diabetes (T1D) research working to discover, develop and deliver advances that cure, better treat and prevent T1D. The IGA retailers are kicking off their new relationship with JDRF with an education and sales campaign that runs from Wednesday, Feb. 6 through Tuesday, March 26, 2013 in their local independent grocery stores.

    • The San Francisco Chronicle has a story about how a number of venture capital groups are investing in "clean food businesses." According to the story, "Over the last year, two of Silicon Valley's most esteemed VC firms, Kleiner Perkins Caufield & Byers and Khosla Ventures, have backed nearly a dozen startups trying to engineer healthier and cheaper alternatives to eggs, chicken, cheese, salt and candy."

    There is, of course, a potential downside: "The so-called clean-food movement follows in the wake of the high-tech industry's disastrous bet on clean energy, which resulted in a crop of solar, wind and fuel-cell companies whose fortunes fell dramatically amid the proliferation of cheap natural gas and low-cost competition from the Chinese."
    KC's View:

    Published on: January 29, 2013

    Yesterday, in a story that I filed under the "Executive Sweet" section, I took note of stories in several places about how Wayne Sales, the CEO of Supervalu for all of eight months (during which time he engineered the sale of the company to Cerberus), is walking away from the job with $12.8 million, and that a trio of executives with the company - who already got retention bonuses - have been given a total of $9 million in golden parachutes "that would be made when those executives are terminated from their positions within two years of the date the sale of the company closes."

    I commented that even before I got a chance to post the story on MNB, I was getting emails from Supervalu employees that can be summed up in three letters: "WTF?"

    Here are some of the emails I've gotten.

    From one MNB user:

    This change of control deal is the crowning jewel celebrating six years of mismanagement by the “Country Club” in the executive suite.  SV employees have been denied bonuses, minimal if any salary increases, have had every benefit of working in the office (no coffee!) taken away in the spirit of reducing costs.  Mr. Sales was chairman of the board overseeing this debacle since the purchase of Albertsons, was contributing factor to the hiring of Mr. Herkert, and then broke the company up. 

    What did he do to earn $12.5 million?  This is unconscionable.  He reminds me of Chainsaw Al Dunlop.  He even had the audacity to tell us when asked what he would do next (after Sam Duncan takes over as CEO), he said he “hoped to be hired back on the board."

    We have spent millions and millions of dollars on consultants doing what the executives were hired to do.  And what do the employees get for the sacrifices we made carrying his business on our backs?  Absolutely nothing.  What does the “Country Club” get?  Millions of dollars for doing absolutely nothing.

    As a shareholder I am outraged.  If a suit were to be brought by shareholders against Mr. Sales, the key executives and the board, aka the “Country Club”, I would gladly join.  In fact, I am so pissed at all of this, I may want to initiate the suit myself.

    From another reader:

    And they ain't through yet. Wait until the board members resign to make room for Cerberus' board members. You can be pretty sure they will reward themselves handsomely.

    You would never know that company was in trouble.

    The front line people get screwed again.

    And another:

    I agree with those ‘WTF?’ emails you may be getting.

    As a former employee – I can’t imagine how my family and friends still working there are feeling.  I know for a fact that they were told a few months ago that there would not be any pay increases, bonuses (if eligible) or 401K matches this year (not to mention those who lost jobs due to ‘cost efficiencies’).  But it’s okay to pay out MILLIONS to people who ran the company to the ground, followed by selling it off?!?!?!?!?!   Guess we know where all those ‘cost savings’ went!

    And still another:

    As a rank and file employee of Supervalu, I have a lot more to say than WTF.

    Words that I was taught not to say because I am a lady. And nice people don’t say those words.

    I mean I understand the concept of paying top executives good money to keep good people. But what the every living blue bloody blazes did Wayne Sale do for Supervalu that any monkey in a nice suit couldn’t have done? And for the price of a barge of bananas.
    I guess we all know where our 401K match went. Right into Mr. Sales pocket. Enjoy our retirement money Mr. Sales, we may all just end up camping out on your doorstep.

    From another MNB reader:

    It’s comforting to know that my eliminated 401(k) match, any bonus and pay increase for this year went to our top executives once again. No, we’re not in this together!

    And still another:

    So sad to think this could even be true!  I’ve been with the company for 12 years and can't even get an annual raise!  We keep getting told there’s no money for this or that, these people made more money in 6 months than I will in a life time!

    Thanks for publishing MNB and making me laugh or smile each morning!

    And maybe even cry sometimes, I'm guessing.

    Let's be specific about this.

    On November 19, 2012, MNB posted the contents of an email circulated to Supervalu employees. It said, in part:

    There will be no 2013 merit pay increases for salaried team members. "Additionally," he wrote, "hourly team members in our corporate, banner, region and distribution center offices will not receive a merit pay increase. This does not impact store hourly or store pharmacy positions, or hourly operational distribution center roles. Promotions and job changes will continue to be recognized with pay changes where appropriate."

    "Subject to any applicable laws, the frequency at which some team members are paid will change in early 2013. Today, all team members are paid on a weekly basis. Next year some salaried team members will transition to a bi-weekly pay schedule and others to a monthly schedule. If the frequency of your pay changes, we will give you advanced notice as to when this takes effect."

    "Our service anniversary awards program (years of service pins and PRO points for milestone awards), as it exists today will be discontinued. We will look for meaningful ways to recognize service and performance for our team members."

    And now, all the people who were asked to take the hit, to be patient and dedicated as leadership sought to straighten out the business, have to read that the top folks are getting millions while they have to remain patient and dedicated.

    Not to overstate it, but this is disgusting.

    I'm not against people making money, and I'm not against top executives being rewarded handsomely for their efforts. But this just seems so out of proportion, and such a smack in the faces of people who often are struggling to make a living, that it is hard to find any justification for it.

    This seems like such an obvious case of people feathering their own nests without any regard for the front line personnel who are charged with making the business work on a day to day basis. It strikes me as unconscionable.

    I am not a litigious person by nature. But I read about these bonuses and I think about the threat made in one of the emails I received. I have to concur.

    Maybe they should sue the bastards.
    KC's View: