business news in context, analysis with attitude

Published on: February 25, 2013

by Kevin Coupe

You may have picked up on the fact that around here, we like to use pop culture references - especially, but not limited to, the movies - whenever possible. It may have something to do with a book that Michael Sansolo and I wrote ... but it has more to do with the fact that I think cultural myopia can be the downfall of any businessperson. It results, I think, in Epistemic Closure ... which is when you are so hemmed in by your own belief system that you are unable or unwilling to accept anything other than what you believe as being possible or factual.

But I digress...

Because of my preoccupation with pop culture, I was fascinated with a piece I read in Bloomberg Business Week about a Penn State professor who "uses scenes from movies and TV shows to explain basic economic principals."

Boy, does that sound familiar.

One example: An episode of "I Love Lucy" in which the Ricardos and the Mertzes run rival and adjacent burger joints, attempting to compete by lowering their prices. When Ethel finally lowers her price to one cent per burger, Lucy tries to put her out of business by giving a customer $1 and telling him to go to Ethel's stand and buy 100 burgers.

Once again....boy, does that sound familiar. (How many times have we discussed in this space the notion that only competing on price gives one limited bandwidth with which to make a lasting and sustainable impression on the customer, and that there always is the risk that anyone can undercut you on price?)

Terrific little story ... terrific concept for a college class ... and you can read more about it here.

Published on: February 25, 2013

Advertising Age reports that Safeway CEO Steve Burd, in a conference call with analysts, suggested that the company's digital Just for U online loyalty program could help it get out of the print advertising game.

"As people become more digital, there's an opportunity, which we're working hard at, [to] actually get out of the paper ads and make the ad itself personalized for every household," Burd said.

According to the story, Just for U now accounts for "5.4 million U.S. households, or 45% of Safeway's sales base. That number could reach 55% by year's end and ultimately max out at about 65%."

Ironically, Ad Age has another story about CPG companies, and suggested that the trend seems to be toward more targeted ad spends, with a focus on promotions and continued shifts into online and social media, as a way of being both more efficient and effective.

Published on: February 25, 2013

We often talk here on MNB about how retailers with the most actionable data - and that actually act on that information - will be the ones most likely to be winners in the current competitive environment.

The New York Times amplifies on this theme this morning with a column by media writer David Carr, who talks about "House of Cards," the Netflix-only TV series that we've also talked about a lot in this space.

An excerpt:

"In any business, the ability to see into the future is the killer app, and Netflix may be getting close with 'House of Cards.' The series, directed by David Fincher, starring Kevin Spacey and based on a popular British series, is already the most streamed piece of content in the United States and 40 other countries, according to Netflix. The spooky part about that? Executives at the company knew it would be a hit before anyone shouted 'action'.

"Netflix, which has 27 million subscribers in the nation and 33 million worldwide, ran the numbers. It already knew that a healthy share had streamed the work of Mr. Fincher, the director of The Social Network, from beginning to end. And films featuring Mr. Spacey had always done well, as had the British version of "House of Cards." With those three circles of interest, Netflix was able to find a Venn diagram intersection that suggested that buying the series would be a very good bet on original programming."

And it goes on:

"Netflix is commissioning original content because it knows what people want before they do ... Netflix has always used data to decide which shows to license, and now that expertise is extended to the first-run. And there was not one trailer for 'House of Cards,' there were many. Fans of Mr. Spacey saw trailers featuring him, women watching Thelma and Louise saw trailers featuring the show’s female characters and serious film buffs saw trailers that reflected Mr. Fincher’s touch."

Carr makes the point that Amazon - especially through its Prime service - also sees the compilation and use of data as being a prime (pun intended) advantage. And while Carr is talking about it in the media content arena, the fact is that this is the face of future retailing.

It is a terrific column ... and worth reading because the metaphors are apt and specific. You can read it here.

Published on: February 25, 2013

The Associated Press reports that "years of drought are reshaping the U.S. beef industry with feedlots and a major meatpacking plant closing because there are too few cattle left in the United States to support them. Some feedlots in major cattle-producing states have already been dismantled, and others are sitting empty. Operators say they don’t expect a recovery anytime soon, with high feed prices, much of the country still in drought and a long time needed to rebuild herds ... For consumers, the impact will be seen in grocery and restaurant bills as a smaller meat supply means higher prices."

Published on: February 25, 2013

The New York Times reports that Barnes & Noble is likely to report even more extensive losses than expected in its Nook Media division, which leads the company to believe that it must "move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers." The company is likely to "emphasize its commitment to intensify partnerships with other tablet producers like Microsoft and Samsung to make deals for content that it controls."

This would be would be "a 180-degree shift for a company that as late as last year was promoting the Nook as its future," the Times notes. Now, "the threat is large enough that Barnes & Noble executives are working hard to determine a strategy that focuses on core strengths like content distribution."

Published on: February 25, 2013

The New York Times reports on the success of Delish, a new food magazine published by Hearst and only available at Walmart that "did well enough with its first issue in November ... that it is being expanded this year to quarterly frequency. It will publish issues dated February, May, August and November. Delish’s performance was cited as a high point of last year in an annual review by Hearst Magazines’s parent company, the Hearst Corporation."

Magazines in the food category, the Times reports, are "doing better than many others in publishing as marketers of packaged foods seek to reach budget-conscious consumers who are eating at home rather than dining out."

However, "in addition to being part of a trend, there may be another reason Delish is in demand: it is free to any Walmart shopper who buys one of six Hearst magazines — Country Living; Good Housekeeping; House Beautiful; O, the Oprah Magazine; Redbook; or Woman’s Day — at the regular single-copy price."

Published on: February 25, 2013

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

• Fox News reports on Carrie and Sarah Jones, an Oregon mother and her 31-year-old daughter, who have been convicted of trying to scam Coca-Cola.

According to the story, "During the promotion, which ran from May to August 2011, customers could text a code found underneath the cap of their Coca-Cola product to see if their code was a winner. Winners then emailed their winning code to Coca-Cola to receive a prize code, redeemable for things like concert tickets.

"Prosecutor Coleen Cerda said the odds were against the city of Albany -- let alone one family -- getting so many prizes. Contest rules also specified that a person could win only twice and a household only five times during the four-month promotion. To avoid the limit, it was alleged that the Joneses' manufactured email addresses using other people's identities. The prize codes were then grouped together and sold online on eBay."

The Joneses "never divulged where they got the winning prize codes," the story says. They have been sentenced to probation and must pay back almost $50,000 in prize money to Coca-Cola.

On the bright side, it is always nice when parents and children are able to find a common activity, and when parents can pass down critical skills to their kids.


• Reuters reports that in the latest development in the European food safety scandal, "Czech inspectors have found horsemeat in meatballs made in Sweden for IKEA Group."

The good news, though, is that before they were slaughtered for use in meatballs, the horses were housed in modernistic, highly functional barns full of ready-to-assemble furniture.


• Reuters reports that as Office Depot acquires OfficeMax, they will - at least for the time being - maintain dual headquarters and will have the heads of both companies as co-CEOs.

Sure. Because that always works.


• The Indianapolis Business Journal reports that Marsh Supermarkets "will close a store in Marion and another in Columbus rather than renew their leases," saying that management "is committed to improving operating results and strengthening the company’s position in our marketing areas."

After the closings, Marsh will have 91 stores in Indiana and Ohio, with about half of them in the Indianapolis area.

Published on: February 25, 2013

• The Indianapolis Business Journal reports that Marsh Supermarkets has hired Michele Pascoe, most recently the CFO at Fashion Bug, to be its new chief financial officer.

Published on: February 25, 2013

• Paul C.P. McIlhenny, chairman/CEO of the 145-year-old McIlhenny Co., which makes Tabasco sauce, passed away on Saturday of heart failure. He was 68.

Published on: February 25, 2013

On Friday, commenting on a story about how Walmart is expanding its Scan & Go mobile scanning test to the Denver market, I made the following offhand remark about Walmart's strategic priorities:

I've also seen one estimate that Walmart spends something like $12 million per second on wages for checkout personnel, so it certainly sees Scan & Go as a way of saving some money.

Well, I ought to have a rule that I ought not make offhanded remarks that require any math skills at all when I'm finishing up MNB at 2 a.m. ... because, as was pointed out to me in several emails, this would mean that Walmart is spending trillions of dollars on cashier wages. Which it is not. Obviously.

So thanks to all of you who wrote in to point out my mathematically challenged statement and who probably, in the back of your minds, were thinking one thing:

"What a dope."

Published on: February 25, 2013

Got the following email from Lauren E. Hefner of the National Grocers Association (NGA):

Thanks for the great coverage of our press release re: Visa/MC settlement.
 
Curious, would you be willing to link to our page on the settlement options? We want grocers to be able to have access to their options (and of course, our reasoning for why they should choose opting out/objecting so that they understand why the settlement is so limiting.)The site is www.nationalgrocers.org/settlementoptions

Done. My pleasure.




We had a piece last week about how Tesco is forcing employees to "wear electronic armbands that managers can use to grade how hard they are working ... The armbands are worn by warehouse staff and forklift drivers, who use them to scan the stock they collect from supermarket distribution points and send it out for delivery."

I suggested that one person's efficiency is another person's intrusive behavior, and suggested:What is interesting to me about this story is that it really is about one of those issues that are a product of our 21st century, technology-driven culture. People can wax rhapsodic about the notion of wearable technology - I've done it myself, most recently about the concept of an iWatch - that will allow us all to be more connected, more effective, more efficient, breezing through life as if with an EZ-Pass strapped to our foreheads, an iPod implanted behind our ears and a computer/TV screen wired into our eyeballs. No muss, no fuss.Except that being so wired does mean that not only do we move through life with greater ease, but people and organizations are able to track us with greater facility. Fact of life. And we have to think about whether these trade-offs are worth it.

One MNB user responded:

These days it's common to place devices on employees and/or equipment that communicate work assignments and  manage labor and report on productivity. Those that have the most success using this technology are the ones who offer their associates a win-win reward system. Typically it establishes a reasonable expectation and then rewards those that exceed that expectation in proportion to their efficiency. In this way a company can share with employees the productivity increases they generate. The best of these programs are voluntary.
 
If approached correctly, employees like the technology because there is something in it for them. This does not take the place of leadership (influencing people based on your personal relationship). Appreciation for work, being "in the know" and caring and responding to an employee's personal issues are still the "big 3".

MNB user Peter H. Grimlund wrote:

The occasional use of electronic wristbands to collect accurate data for use in improving operations seems like a modern replacement for the stop watch and clip board used in earlier times for time and motion studies by industrial engineers.  That is a good use of the technology, but as an everyday tracking tool for individual employees – ugh, another few feet down the slippery slope to total surveillance.  Besides employers don’t need to monitor the people, they can “tag” the equipment being used by the employees to get at the information they need.

And from another reader:

Concerning your most recent post about how we are being tracked - it came just after the news Disney plans to give us all bracelets with chips that will track our every move within a park, even allowing the car parkers to call us by name. I think we are reaching the "whoa" point. When does the quest for personalization and customer service get just plain creepy.

To me, it will all be about how relevant and useful the tracking seems to be. I am reinforced in this opinion by the parents who actually like the Disney concept because they feel like their kids will be safer, not more exposed.

Though I certainly don't want to end up living in a village where we all have numbers instead of names, and where we report to some called "Number Two." Which seems like a possibility...




I referenced the other day a New York Times piece on the science of making junk food addictive, which prompted one MNB user to write:

I believe that what is really behind this problem is the continuous growth model that all corporations have espoused. Once your marketing department has seen to it that every man, woman, and child on earth is eating/drinking your product, the only way to make the TONS more profit that your vultures/vampires/bloodsuckers/shareholders demand is to make everyone drink or eat TWO bags or bottles a day...and then THREE..and then FOUR. Of course you scour the earth for new communities (linear expansion), but once you have them hooked, the only way to get double digit profits is to get them to eat/drink more and more - while cutting the costs of production. Too bad the robots that have displaced human workers can't be programmed to eat and drink the products, too.

I see this philosophy in action every single day.  And you said it a long time ago, when talking about what CEO Indra Nooyi needs to do to satisfy the Analysts and Sharesuckers.




We continue to get email about the Maker's Mark brand equity blunder:

I am not a whiskey (or whisky) drinker, let alone Maker's Mark, but was surprised to see a Maker's Mark TV :30, I believe this past Sunday or Monday.  High production values, no mention of the recent scandal (just a commitment-to-quality message), so my guess is they pulled this one from storage and started airing in an attempt to support the brand.  At some point, though, the Company might reach a point where they doth protest too much, methinks.




On another subject, MNB user Christina Harrison wrote:

LOL when I read your article about Amazon’s virtual currency work.  Good for them, but let’s be honest about where they got the idea from…movie fans should get this…it’s from the “Mom Bucks” idea in the Diary of a Wimpy Kid: Roderick Rules movie where Mrs. Heffley gives her sons, Roderick and Greg, this type of virtual/quasi-money to spend more quality time together.  You have to love how they get an advance on the money and then blow it on slurpies at a convenience store!




Regarding the possibility of clothing that will become transparent when people get aroused, MNB user Debra Topham wrote:

Couple thoughts on transparency clothing—What if people wore these at the airport security lines?  Or the bank?  Or Shoplifters?

Would we catch more criminals because of their elevated BPM?

Depends, I suppose, on what turns them on.

In the piece, I commented:

I was interested, by the way, to see that while the company is focusing for now on women's frocks, there is at least the possibility that the company could design a suit for men made out of such materials and computer chips.

Of course, if I wore one, it'd be really embarrassing. Because it probably would go transparent whenever I looked at a container of Graeter's Black Cherry Chocolate Chip ice cream. Because that's one of the things that get me aroused these days...

Which led MNB user George Denman - who happens to be the VP of sales & marketing at Graeter's - to write:

That and a bottle of 2003 Duckhorn merlot and who needs the dress...

Boom!




I wrote the other day about how, if found guilty, the guys responsible for knowingly distributing tainted peanut butter - because they were more concerned with making numbers than selling safe food - ought to be forced as part of their punishment to eat said peanut butter.

Which led one MNB user to write:

I completely agree that people who taint the food supply need to go to jail, and "oops" should not be a defense. Under the current approach, the victim is to blame -- for eating raw cookie dough, or not cooking meat to whatever temperature kills the lethal bacteria that the producer has allowed to infect the food. The producer shrugs and walks away.

We impose strict liability on people who handle dangerous and hazardous materials -- "accidental" release of toxins and "inadvertent" dynamite explosions are not tolerated. If you cause either, and you go to jail. We should impose the same standard to those involved in food production and distribution. Sentence a few of these guys to jail terms, and see how fast salmonella disappears from the food supply.

And another MNB user sent in this line from "The Mikado":

My object all sublime
I shall achieve in time
To make the Punishment fit the Crime.

Just amazing how relevant Gilbert & Sullivan remain!




And finally, from MNB user Mark Raddant:

Your Oscar reviews had some of your most astute and profound writing that I have read.

The best was your comment about the torture scene in Zero Dark Thirty: "What it did was make us face the fact that sometimes we make ethically questionable decisions for the right reasons, and ask ourselves whether that is good enough."

I think that as long as we DO continue to air our debates and question our ethically challenged decisions, there is hope for us as a society and world.  Well said!

That, coupled with your related comments about Judi Dench’s role in Skyfall and her status as perhaps the ultimate Bond Woman, made this one of my favorite postings of all.

Thanks. This means more than you know.

Published on: February 25, 2013

The Academy Awards were last night, and as usual, my predictions were almost all wrong.

The Oscar winners were:

Best Picture: Argo
Best Actor: Daniel Day-Lewis, Lincoln
Best Actress: Jennifer Lawrence, Silver Linings Playbook
Best Supporting Actor: Christoph Waltz, Django Unchained
Best Supporting Actress: Anne Hathaway, Les Miserables
Best Director: Ang Lee, Life of Pi
Best Original Screenplay: Django Unchained
Best Adapted Screenplay: Argo
Best Song: Skyfall

Published on: February 25, 2013

Cooking videos can be a little dry: someone behind a counter talking through the steps of a recipe.  Food can be both fun and sexy, so why shouldn’t the video be?  Wholesome Sweeteners is heating up the kitchen with its new Rapturous Red Sangria video.

Sweeten Your Date Night is the first in a video series that taps into the more aspirational side of cooking. As a pair of tango dancers slink across the floor to the seductive sounds of the famous Argentinian song, “Por Una Cabeza,” the Rapturous Red Sangria recipe is slowly revealed. Part how-to video and part mini-movie, Wholesome Sweeteners has produced an emotion-evoking cooking video that transforms the viewing experience and tempts home chefs.

The video cleverly features Wholesome Sweeteners Fairtrade Organic Agave Syrup which continues to grow by double digits in profitable sweetener category sales year over year.  To add the full Wholesome Sweeteners Agave assortment to your store, please contact CS@OrganicSugars.biz.