retail news in context, analysis with attitude

Published on: March 21, 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.

Since I've just spent time at USC, will be at Western Michigan University next week, and am preparing to spend July once again teaching at Portland State University, I've been thinking about students lately and what I've learned about the college experience.

One of the things that I think is so important about the way college educations unfold today is the availability of internships - something that did not really exist when I went to school. On NPR's Marketplace the other day, there was a story about a new survey saying that, in fact, internships are a critical factor when employers evaluate a resume - more important than the college that kids attend, the courses they take and the grades they achieve.

And, the story said, the National Association of Colleges and Employers "found that 63 percent of paid interns in the class of 2012 had at least one job offer when they graduated. Of those who did no internship, only about 40 percent had an offer."

So it's a big deal.

It seems to me though, that there's another value to internships - and that's what businesses can learn from them. After all, these young people represent a generation and a way of thinking with which many business leaders may be unfamiliar ... and so not only can businesses teach them, but it is a great opportunity to learn. Businesses using interns should not miss this opportunity.

Now, a word to some of the college students who read MNB ... and we're lucky enough to have a lot of them, in part because some schools actually make it required reading, and in part because they actually like it. (At my age, this is no mean achievement.)

One of the things you really need to do as you interact with business leaders is not be afraid to ask any question, pose any challenge, or throw yourself into any opportunity. That's how you learn ... and my experience with business leaders - at least the ones you want to work for - is that they appreciate enthusiasm and a little bit of chutzpah.

I'll give you an example. Last year, in my Portland State class, we were lucky enough to have the CEO of a major chain fly into town to spend time with us and engage in a dialogue with the class and me. (I won't name the fellow or the company ... the experience was off the record, and I respect that. Besides, I want other executives to come in this summer and, hopefully, in summers to come.)

During the conversation with the class, one of the kids in the class asked the CEO if he'd be looking at stores while visiting Portland, and the CEO said yes, of course. Which is when this kid asked the million dollar question that nobody else asked:

"Can I go with you?"

The CEO grinned, and then said yes ... and my understanding is that they spent much of the next day together. Talking about a learning experience ... for both of them.

That kind of enthusiasm and willingness to put oneself out there ought not be reserved for college students. Maybe businesses in general would be better off if leaders and employees had that sort of chutzpah. They'd worry less about failing and be more focused on taking the kinds of chances that can build companies and careers.

It isn't just in business, by the way.

The other day, someone sent me a link to a YouTube video that I will pass along here. The scene was Vanderbilt University, where singer/songwriter Billy Joel was doing a class in the music school ... and one of the kids asked if he could come up and play the piano, accompanying him on "New York State of Mind." Joel paused for a bit, then said yes ... and as you'll see in the video, it resulted in a bit of music magic ... and we all learn that this kid, Michael Pollack, has musical chops.

We all need to be a sucker for a learning experience.

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

Published on: March 21, 2013

by Kevin Coupe

The Seattle Times has a fascinating story that may suggest one of the directions that retailing is going - at a Seattle store called Hointer, "designer jeans hang from metal racks attached to the ceiling, their QR code tags easily accessible.

"Shoppers use smartphones to scan what they like, and a robotic system in the back delivers items to their dressing rooms, where they can then send for different sizes and colors via the Internet. To make a purchase, shoppers simply slide their credit cards through a machine and leave without ever talking to a single salesperson." More than 150 styles of men's jeans are available, and the store is designed to be a kind of bricks-and-mortar response to the e-commerce threat; people like shopping online because it is fast, efficient and doesn't have any of that annoying human interaction, but have to deal with the fact that it also does not allow them to reach out and touch, as well as try on, products. Hointer's value proposition is that you get the speed and convenience of an in-store experience, but actually can touch the product.

The Times points out that the store is owned and primarily funded by former Amazon.com executive Nadia Shouraboura, who used to oversee Amazon’s global order-fulfillment technologies, and who happens to be married to Amazon Web Services Vice President Charlie Bell. Shouraboura says her goal is to "expand to other locations and merchandise categories. She recently added a few rows of women’s jeans, as well as a small selection of men’s belts and shirts. Shouraboura said she can be price-competitive by minimizing labor and real-estate costs. An automated stockroom where most of Hointer’s jeans are stored means fewer salespeople and less space for displaying merchandise."

And, she suggests that the store is an “ugly duckling with seriously powerful technology inside," and that it reflects the kind of dramatic change that bricks-and-mortar shopping will experience in the coming decade: “With innovation of the in-store experience,” she says, “we will surpass the bar set by online retailers.”

While Amazon does not have any money invested in Hointer, the Times notes that the e-commerce pioneer is exploring options for same-day delivery and shipments to centrally located lockers rather than to homes and offices ... which means that the Hointer technology could have ramifications for the company. Or, it seems at least possible that other companies competing with Amazon - think Google and eBay - could either invest in Hointer or buy the whole thing outright.

I also understand that some folks will suggest that the Hointer approach - especially getting rid of human interaction - does not "raise the bar" on the shopping experience at all. But that strikes me as a misunderstanding of 21st century consumer priorities and how they are evolving. (This is not the answer to anything. But it could be one answer.

The Eye-Opening lesson is clear - that in the current environment, everything is in play and every business model can be assaulted.

Published on: March 21, 2013

The Chicago Tribune reports on a new survey from Sallie Mae and Ipsos Public Affairs revealing that "a growing number of young adults say they are reluctant to apply for and use credit cards. Thirty-nine percent of undergraduates ages 18 to 24 owned a credit card in 2012, down from 49 percent in 2010."

And, the story said, "Even young adults who do have credit cards are carrying smaller balances: A median of $1,700 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data."

The story goes on to say that "the trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy ... fewer (young people) are building the credit histories that would help them get financing for purchases of the homes and cars that are critical to economic growth." And so, "Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files. As reporting agencies gather data from phone, rent and other payments, some scoring models incorporate that information to help assess candidates' creditworthiness."

Published on: March 21, 2013

CNBC reports that CVS/Caremark has established a new rule for its employees - they have to go through an annual evaluation of their weight, blood sugar, blood pressure, cholesterol and body mass, or pay an annual $600 surcharge on their insurance premiums. And "going forward," the company policy says, "you'll be expected not just to know your numbers - but also to take action to manage them."

In addition, employees have been told that they have to stop smoking by May 1, 2014, or have enrolled in the company's smoking cessation program, or will face potential fines and penalties.

CVS/Caremark says that the information will be kept private and defended the policy. However, critics say the policy is intrusive and coercive.

Published on: March 21, 2013

There are a couple of interesting stories this morning that deal with issues of nutrition and information - which, if you've read MNB for any length of time, I think are inextricably linked. (IMHO, the best way to achieve good nutrition is via transparent and extensive information, not legislation.)

For one thing, National Public Radio reports on a study in the American Journal of Preventive Medicine suggesting that rebates on healthy food purchases - in essence, subsidizing healthy eating rather than trying to legislate it - can have an impact on what people buy.

According to the story, "South Africa's largest insurer, Discovery, in partnership with Vitality Group, that decided to offer 10 percent and 25 percent cash-back rebates to members of its health promotion program on fruits, vegetables, non-fat dairy and other healthful foods at one supermarket chain. (To get the 25 percent rebate, members had to fill out a questionnaire.)

"Researchers at the RAND Corporation then looked at their spending on these foods and found that they increased 9.3 percent (calculated as a ratio of spending on healthy food to total food spending) with the 25 percent rebate. A 10 percent rebate nudged people to buy healthier stuff, too, just a little less — a 6 percent increase."

Published on: March 21, 2013

Got the following email from Starbucks yesterday:

"Today, Starbucks announced the expansion of its popular loyalty program, My Starbucks Rewards, into grocery channels.

"Starting this May, customers will be able to earn a Star in the My Starbucks Rewards loyalty program by purchasing specially-marked Starbucks packaged coffee in the grocery aisle. Those Stars can be redeemed for free food and/or beverages in Starbucks retail stores.

"This expansion includes all specially-marked Starbucks packaged coffee, both whole bean and ground, sold in the aisle across grocery, drug, mass and club channels.  Customers can enter the unique code from specially-marked packaged coffee online at www.Starbucks.com/Rewards to earn Stars in their My Starbucks Rewards™ account.

"First introduced in December 2009, My Starbucks Rewards™ is a personalized loyalty card program that provides members personalized rewards that increase with frequency of use. In addition to perks earned through purchases, My Starbucks Rewards™ offers customers personalized benefits, such as a free beverage (or food item) on their birthday, as well as special offers. Presently, there are 6.04 million active My Starbucks Rewards™ members in the U.S."

Published on: March 21, 2013

• Reuters reports that Walmart "is tripling the number of U.S. stores in a pilot program that lets shoppers scan items with their iPhones and pay at self-checkout counters. Walmart's 'Scan & Go' program will soon be in more than 200 stores, up from about 70. The pilot began near its home office in Bentonville, Arkansas in late 2012, then expanded to Atlanta." The program will now be in a dozen more markets: Denver, Colorado; Phoenix, Arizona; Omaha, Nebraska; Dallas and Austin, Texas; Oklahoma City and Tulsa, Oklahoma; Wyoming; Bozeman, Montana; Seattle, Washington; San Jose, California; and Portland, Oregon.

"While the program is tripling in size," the story says, "for now it will be in only a small fraction of Walmart's more than 4,000 U.S. stores." Walmart says that more than half the people who have tried "Scan & Go" have used it more than once.

Published on: March 21, 2013

• NBC News reports that Amazon.com "appears to be in talks with various music labels about starting a subscription service, adding to its already Amazonian-size empire of offerings," that would build on the popularity of its Kindle tablets.

According to the story, the service would be similar to the Spotify.com digital music service, and would appear to be designed to compete with Apple's iTunes service.

Published on: March 21, 2013

• Bloomberg reports that Tesco "will invest $750 million this year to accelerate the roll-out of digital services and plans to vie with Amazon.com Inc. and Netflix Inc. for U.K. customers."

"To compete in the new area of retailing I believe that Tesco has to be more than a retail company,” CEO Philip Clarke said at a Singapore conference. “We have to become a technology company as well. That’s why, in 2013, we will invest three quarters of a billion U.S. dollars in technology, up threefold in three years."

Published on: March 21, 2013

• Reuters reports that "Starbucks Corp. investors on Wednesday rejected a shareholder proposal to prohibit the world's biggest coffee chain from making political contributions or forming a political action committee," bowing to the preferences stated by the company's leadership.

The proposal had been made by a shareholder who was building on an initiative developed by Starbucks chairman/CEO Howard Schultz, who urged his fellow CEOs to foreswear any political contributions to any party until President Obama and the US Congress came up with a plan to fix the nation's long-term debt problems. (One hundred CEOs signed on.)

However, Starbucks management did not want to be hemmed in by a blanket ban, saying that they needed the flexibility to address issues through lobbying and the support of local candidates.


• McDonald's said yesterday that it is adding Chicken McWraps to its permanent US menu. The McWrap sandwiches will come in three varieties - Chicken & Bacon, Sweet Chili Chicken and Chicken & Ranch.

Published on: March 21, 2013

• It came to our attention yesterday that Art Miller, director of retail operations at Lunds/Byerly's, is retiring from the company after more than four decades of service.

Miller began his career with the company as a night stock clerk at a Byerly's store in 1971, and took on his current role when Lunds acquired Byerly's in 1997.

Published on: March 21, 2013

MNB took note the other day of a Pioneer Press report on the case of Erwin Lingitz, who was arrested when he left a Cub store carrying produce bags full of 1.4 pounds of deli meats he did not pay for - but that he'd scooped up from an unattended sampling table. According to the story, Lingitz was detained by a security guard and police while attempting to leave the store; it took three people to place him in custody, where he was charged with disorderly conducting and misdemeanor shoplifting. Eventually those charges were dropped, but Lingitz says he was injured in the fracas and is now suing the store.

A Supervalu spokesman says that Lingitz "violated societal norms" in taking so many samples. Lingitz's wife tells the paper that the amount is "irrelevant because it was free anyway."

My comment, in part:

The sad reality of this situation is that Supervalu and Cub can't win - the samples were free, there do not appear to have been any signs limiting the number of samples that could be taken (betcha that has changed!), and this clown is going to be able to use his own alleged injury to get sympathy and probably get a settlement of some kind. All perfectly legal.

But come on.

There is acceptable behavior and unacceptable behavior, and this clearly is a case of a person behaving in a way that is unacceptable. It may not be theft in the legal sense, but it is rude, selfish and not very civilized - it is yet another example of what I tend to think of as the gradual unraveling of the fabric of society. (Add it to the list of other ways in which people simply ignore the social compact - going through red lights and not stopping at stop signs are two of my other favorite examples.)

One MNB user wrote:

Let’s see, about $12.00 at retail of meat that was to be given away anyway vs. the commotion on the sales floor and the mess they are in now? Bet that store director wishes they would have just let the customer go. If the  problem persists, just pull said customer aside and deal with him that way. Too bad the $ and resource that will be spent dealing with the situation.

From another reader:

Clearly the intent of sampling a product is to promote sales, not feed the masses.  Even though samples are free to the customer they are not 'free'. A company is paying to promote their product, not to mention the labor cost involved in preparing the samples and the salesperson explaining the benefits. Shame on E. Lingitz for taking advantage of this situation and also for being a pain in the neck when reprimanded.

And another:

Granted there may not have been any laws being broken, but to act this way and sue for injuries…really??  I think this is where a judge should be allowed to utilize what I would like to see passed as the “common sense law”.  Common sense will tell you this man should receive absolutely no monetary settlement as a result of his sad actions.  People will sue for anything these days…it would be great if we could put the “common sense law” into practice to put some of these undeserving, money-hungry people in their place. 

And still another:

This is a result of creating several generations of people who actually believe the rest of the world owes them anything they want.

I actually disagree with this observation. I think there have always been people who think the world owes them. And people who are good and decent and fair. I'm not sure that recent generations have cornered that market.

Then again, I've always believed that the US is made up of two kinds of people - those who believe that the sixties and seventies were the beginning of the end of western civilization, and those who believe that they were an important and ultimately positive time for the US. Count me in the latter group.

Still another MNB user chimed in:

I was very glad to read your comment, "...people simply ignore the social compact..." in the Tuesday item about the Minnesota man detained for cleaning out a store's meat-sample display.  The notion of a "compact" in society can ultimately cover a tremendous amount of moral ground, and the phenomenon of people ignoring compacts, explicit or tacit, seems to be becoming more & more commonplace as time goes on.  And more disturbingly, perhaps, is the seeming growth of "situational ethics" people employ in an effort to somehow morally justify their ignoring evermore long-standing societal compacts.  As if they are thinking "if I can convince myself that Action XYZ isn't absolutely reprehensible, but I stand to benefit from it personally, then it must be okay!"  You are fond of the quote, "just because something can be done doesn't mean it should be done" -- a quote, by the way, I first heard uttered a couple years ago by House Speaker Boehner.  The truth & beauty of this quote, I'm afraid, is increasingly being lost -- or simply ignored -- by a "me first society" ever more bent on personal gratification, at the casual expense of "societal compacts."  Sad.

I thought it was Dr. Ian Malcolm who said it, in Jurassic Park. But maybe I'm mis-remembering...

And finally, one MNB user wrote:

The guy who took all the lunchmeat samples gives me hope.

I hope the lunchmeat goes bad before he can eat it.

I hope the jury that hears his lawsuit against the supermarket awards him two cents in damages, just so he can't refile or appeal -- and so lawyers who take such cases on contingency learn the meaning of loss.

I hope the newspaper publishes his picture so people can tell him what they think when he's in line at the food pantry.

I hope all the supermarkets in the area permanently ban him from their premises, and call the cops if he shows up.

I hope he and his wife have a long, long marriage. She deserves him.