retail news in context, analysis with attitude

Published on: March 26, 2013

by Michael Sansolo

It was one of those headlines that just grabbed my attention: "7 Habits of the Ultra-Wealthy." Since that’s a group I’m always up for joining, I started to read and the article from Inc. didn’t disappoint.

Of course, most of the tips hit areas I can’t act upon. Yes, I know the importance of equity positions and sharp business dealings, but those aren’t always things I can readily do, at least this week. A few of the points were much more relevant, such as the importance of doing a few things really well, instead of many things just okay; or the need to learn from mistakes.

But two of the points stood out as issues that impact me and, I’m betting, every business leader and manager. First, there’s the importance of hiring people smarter than you. Sounds easy (I’m pretty sure there are many people smarter than me) but it takes a strong ego and sense of purpose to follow this one.

And second, there is the need to understand the motivations of business associates.

This point really hit home this week because I just had the opportunity to speak at the wonderful Food Industry Management Program at the University of Southern California (USC). I’m always delighted to meet the bright young people in programs like that and other schools across the country. (Yes, this is the same program that Kevin Coupe spoke to a week earlier; ask either of us to walk onto a college campus and into a classroom, and we're pretty much there.) Talking to these students, I know the industry’s (and nation’s) future lies in good hands. But honestly I think they have their hands will be really full.

Tomorrow’s managers are going to face all the same challenges as today and yesterday with all new wrinkles. Managers and leaders always live in a spotlight, with subordinates gauging and grading their moves and motivations. But these future leaders, living as they are in the age of non-stop information sharing, know their actions will be under greater scrutiny.

We see it already with websites like GlassDoor. Today’s associates can share their feelings about companies and leaders as freely as students can now post about teachers and schools. Tomorrow’s leaders will need to master the world of unwanted attention, needing to learn how to listen to all that chatter to understand what really matters, what doesn’t and what requires action or change.

That’s also one of the reasons I’m so glad the Coca-Cola Retailing Research Council will have an opportunity to talk about social media at our special session kicking off FMI’s Future Connect program, April 29 in Orlando. Every aspect of social media that is transforming customer communication, marketing and community promises to do the very same for associates. Our panelists at that session will be Tim Massa, vice president of talent acquisition for Kroger, and Mark Irby, vice president of marketing at Publix.

Armed with the tools of the social web tomorrow’s leaders will have incredible opportunities to communicate with their teams—from five to 500,000 if necessary—with greater speed and intimacy than ever. It’s one more reason why the social web is so important and one more reason why the Council’s study is so important. (To download a copy of the study, "Untangling the Social Web," click here.)

And that brings us back to the ultra-wealthy. If understanding associate motivations is so important, the power of the social web has just received yet another powerful endorsement. In the past, understanding motivations required mind reading. That’s no longer the case.

In today’s world, people share. They talk about the good, the bad and the ugly. When it comes to marketing and shopper communication, good listening can provide incredible insights into motivations and decisions. The same is true for associates and a manager or leader can listen and understand those motivations like never before.

Listening may not make you ultra-wealthy, but it’s certainly a better strategy than turning a deaf ear to all that information.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: March 26, 2013

Notes and comment from the Content Guy

KALAMAZOO, Michigan -- As I watched the opening session of the 48th annual Western Michigan University Food Marketing Conference here, one word kept coming to mind...

Promise.

Perhaps it was I thought about the potential of online shopping when Tim Dorgan, vp/managing director of Peapod, that that while the recession had affected the way people shopped online, it meant that mostly it was the size of individual orders, not the business as a whole. Or that the mobile segment of the business now amounts to one-third of the whole, with mobile orders on average $10 bigger than orders placed from PCs. That, it seems to me, holds the promise of bigger and better business down the road.

Or perhaps it was when Alex Hartline, executive vice president of merchandising at Spartan Stores, said that the company's demo program had evolved from "Mabel with a table" to something more sophisticated called "Temptations," that was having a real impact on store sales. That suggested to me that when retailers really pay attention to differentiating the bricks-and-mortar experience, it holds the promise of being more competitive.

Or maybe it was the promise of greater and improved competition. Tom Zatina, president of McLane Food Service, talked about how quick service restaurants are focusing ever more closely on the notion of day-part marketing, and defining that concept to a degree far more intricately than just breakfast, lunch and dinner. The restaurant business recognizes how important the snack business has become, and so it wants to compete for those dollars and share of stomach. It never gets easier.

In fact, maybe it was the discussion of price personalization, and the potential of social media, and the implications of improved shopper data, or the potential of inner city stores, that made me think about promises made by various technologies or implied in various strategic visions ... promises that require not just commitment, but action.

But it was Zatina, in fact, who underlined the notion of what a promise is when he pointed out that when retailers make promises to consumers,telling them that they are special, it creates the potential for what he called "a danger zone" if the retailer does not live up to that promise. "If you are going to tell consumers that they are special, then you;d better make sure that they'r special," he said. "You can't break that promise."

Which, of course, doesn't mean that retailers should not make promises. Just that each day, in myriad ways, the pressure is on them to deliver on commitments made, and then to identify new promises that will be relevant to shopper, and to raise the bar yet again. And then again.

Strangely enough, in considering these promises, I thought about the words of Robert Frost:

The woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep, And miles to go before I sleep.

No sleep for the retailers on the stage and elsewhere. The competitive woods remain dark and deep and threatening. And there will be no sleep, not even for the weary.

Published on: March 26, 2013

by Kevin Coupe

Last week, we had a story that created a fair amount of conversation - about how CVS decided to establish 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.

Many of the dissenting voices focused on what appeared to be CVS's focus on the negative - instead of rewarding people for positive steps in a healthy direction, the policy seemed to be penalizing people for what is perceived as negative behavior.

If this is true, then perhaps an example of how to do it differently can be found in Fast Company, which has a story about a Palo Alto, California-based messaging company called Imo ... which a few years ago "began offering a $500 monthly housing stipend to employees who chose to live within five miles of Imo’s office. Today, of Imo’s roughly 20 employees, all but one or two have taken up" the company on its offer.

The rationale for the policy had more to do withy not wasting time than health: Fast Company writes that "the average commute time in America is 25 minutes, per the Census Bureau (with great variation by region). Double that and multiply it by five, and then by 50, and you’re looking at 208 hours per year spent strap-hanging, bus-riding, or car-driving, all in an effort to get to and from work." That time, Imo's leadership realized, could be spent a lot more productively by employees who live nearby.

And, there is the health advantage: "A five-mile radius (plus Palo Alto’s climate) makes active commutes, via bike or foot, more likely. Employees find they’re able to pop home during their lunch break to take care of a few quick chores. Those who have dogs are saving on doggy day care or dog-walker fees, since they can run home to let Fido out for a spell." Or, they can go home to have lunch with their families. "And when your employees work near one another, it necessarily makes them neighbors, strengthening social bonds among your workforce. Three of Imo’s employees live in the same apartment complex, and a number of the company's interns wind up rooming together."

BTW ... There is, according to the story, a technical term for the positive reinforcement approach: "libertarian paternalism," which is described as "creating incentive structures towards healthy behavior, while allowing the freedom to eschew it."

Which is a little different from imposing fines on people who do not measure up.

It's an Eye-Opener.

Published on: March 26, 2013

SeekingAlpha.com has a terrific story about the next arena in which flexible pricing is likely to gain some traction - the movie theater business. "The same 'name-your-price' solution that has revolutionized the hotel, airline, insurance and yard sale industry is coming to your local theater," the story suggests.

In essence, the theory is the same as it was for airlines and hotels, each of which understood that once a plane took off or a night passed, unfilled inventory was going to waste. If they can fill seats or beds, even at a reduced price, it can at least generate some revenue; if they don't, that opportunity is lost forever.

The same goes for movie theaters - which on average see 88 percent of their seats sit empty. Putting fannies in those seats, even at reduced prices, makes sense.

Of course, SeekingAlpha.com puts it a little more scientifically:

"Why ... do theaters let 88% of their seats sit idle? The reason is simple, they have a price floor set for tickets that is above the market's equilibrium price, thus creating a surplus. This surplus is necessary however because of the blockbuster nature of the business. When a movie is released, people rush to the theater to be the first to see it. Theaters only have a limited time to capture ticket sales before the demand is gone, therefore they over-build their theaters to accommodate the spike in demand associated with blockbusters. People are willing to pay the high ticket price initially, and the seats will be packed, but after the Friday and Saturday night rush is over, the theaters sit empty until the next weekend or blockbuster comes to town. That creates a huge deadweight loss that can be captured with the right pricing strategy. People will only pay the peak price for so long, and then the price has to drop or the theater will sit empty."

There are, of course, potential barriers to making such a plan work: "The main obstacle is to get the theaters and studios to agree on a system, or to get the studios to agree at all. The current system of revenue sharing between the studios and theaters is too diverse and complex to cover in this article, but the important point is that it exists. Right now, unless a studio agrees to participate, the only part of the movie ticket that is 'flexible' is the part the theater keeps; the studio's portion acts like a 'reserve' price or price floor for the ticket. The economic solution therefore is relatively simple, the studios and theaters simply need to define what their marginal costs are, combine the two, and that becomes the agreed to 'reserve' price. Both the studio and theater would be ensured a pricing level that would cover their costs and reach a profit maximizing level of supply for a given demand."

Published on: March 26, 2013

Advertising Age reports that McDonald's, in an internal memo, essentially concedes that it does not have a message and menu that appeals to millennials, a demographic group that is described by the company as both "huge and influential" (59 million strong) and valuing "choice and customization."

The memo, as quoted by Ad Age suggests that the company's new McWrap sandwich was introduced as a way of attracting that audience because it "affords us the platform for customization and variety that our millennial customer is expecting of us."

And, because McDonald's also refers to the McWrap as a "Subway buster," it is clear which chain it sees as being most competitive for the Millennial generation's fast food dollar.

Ad Age quotes Gary Stibel of New England Consulting Group as saying that one of the reasons it is critical to grab the Millennial generation is that they will influence following generations: "Mr. Stibel said there are three reasons reaching young adults is important, two of which are not new: Marketers want to reach young consumers as they start earning more money and forming families, and younger generations have been the source for trends in fashion and food. But the third reason -- the new one -- is that older consumers are increasingly learning from their children, such as how to use apps on smartphones."

Published on: March 26, 2013

There is an instructive blog post on LinkedIn.com by Martin Varsavsky, an Argentina-born technology entrepreneur, that looks at "why the laptop eco-system is dying and smartphones are thriving."

You can read the whole piece here - and it is worth doing so - but the argument essentially is that not only are smartphones designed for content consumers, but they also change consumer behavior in ways that ultimately are better for content producers.

Go figure.

And if Varsavsky is right, mobile platforms - especially those accessed via smartphones - will become so important that it is critical for marketers to think about the trend he describes, and then act on it.

Published on: March 26, 2013

The Associated Press reports on a Beverage Digest study about US soft drink consumption, which says that "Americans’ consumption of fizzy soft drinks, on the decline since 2005, fell last year to its lowest level since 1996. If it weren’t for increasingly popular energy drinks like Monster and Red Bull, the decline would have been worse."

According to the story, "the pace of decline for carbonated beverages has sped up. Sales volume fell 1.2 percent last year, compared with a 1 percent drop in 2011 and a 0.5 percent drop in 2010. Without energy drinks, volume would have fallen 1.7 percent. A 3 percent soda price hike helped revenue rise 1.8 percent to $77.1 billion." And, the story says, "Total drink sales rose 1 percent to 15.4 billion cases."

Published on: March 26, 2013

• Reuters reports that Walmart has filed suit against the United Food and Commercial Workers (UFCW) and several individuals involved in protests at a number of its Florida stores, in what the story says is its "latest salvo in its legal fight to stop 'disruptive' rallies in and around its stores by groups seeking better pay and working conditions." The suit seeks "to help protect our customers and associates from further disruptive tactics associated with their continued, illegal trespassing," says spokesman Dan Fogleman.

According to the story, "Wal-Mart alleged that the defendants violated Florida law through coordinated, statewide acts of trespass in several Walmart stores over the last eight months. It has asked the court for a legal ruling that would prevent future trespassing."

In response, Denise Diaz, executive director of Central Florida Jobs With Justice Corp and a defendant named in the suit, said, "This is another attempt on Wal-Mart's behalf of ... silencing their employees and also the communities that support them."

The story notes that "Wal-Mart filed an unfair labor practice charge against the UFCW in November, asking the National Labor Relations Board to halt what the retailer said were unlawful attempts to disrupt its business in several states including protests that were planned for Black Friday, the busy shopping day right after Thanksgiving. In January, labor groups said that they would stop much of their picketing against the chain, while still trying to push the company to improve working conditions."

Published on: March 26, 2013

• Reuters reports that the US Senate has "approved a mostly symbolic measure on Internet sales taxes and showed that legislation allowing states to tax businesses beyond their borders has strong bipartisan support in an often politically fractured Congress.

"Senators from both parties, including Republican Lamar Alexander of Tennessee and Democrat Dick Durbin of Illinois, approved an amendment to the Senate's budget resolution that would clear the way for states to collect the so-called 'Amazon tax' ... the approval should reassure states and 'bricks and mortar' retailers that Congress will come together to pass a bill soon."

Published on: March 26, 2013

• The Boston Globe reports that "Wegmans Food Markets is close to a deal to open its first Boston store in the Fenway neighborhood, in what could be the beginning of a battle with Whole Foods Market Inc. for supermarket supremacy in the city.

The story notes that Wegmans "launched its first Massachusetts store in Northborough in 2011. The 138,000-square-foot food emporium’s grand opening attracted huge crowds, setting a record for the company. Wegmans, which operates 81 stores in six states, plans to open a large supermarket in Burlington, and a scaled-back, 70,000-square-foot version in Chestnut Hill."


• The Tampa Bay Business Journal reports that Publix, having been the target of comparative item-price advertising by Walmart, now is fighting back with "billboard and radio ads to show that some items can be purchased cheaper at its stores. Its buy-one, get-one free deals are particularly emphasized."

The billboards are being used in Florida, Georgia, Alabama, South Carolina and Tennessee.


• WYFF-TV News in South Carolina reports that approximately 130 BI-LO employees are being laid off "due to the stores' recent merger with Winn-Dixie," which will centralize headquarters operations in Jacksonville, Florida. The company reportedly will continue to have offices in Mauldin, SC, where Bi-Lo has been based, but the staffing levels will be reduced.


• In Minnesota, the Star Tribune reports that "Roundy's, the parent company of Rainbow Foods, will close its Plymouth store on Rockford Road on May 8 ... his is in addition to the Robbinsdale store closing April 10 and The Forest Lake store that closed in January. Currently, the supermarket retailer has 31 locations in the Twin Cities area ... According to Roundy's director of public affairs, Vivian King, the Plymouth store was profitable, but they lost their lease and a Kohl's will replace the supermarket."


• In the UK, the Telegraph reports that Tesco is highly focused on its internet businesses: "The company is the largest online food retailer in the world and already has an internet business in most of the 14 countries where it has stores. In the next few months it will launch online businesses in Bangkok, Turkey, and Shanghai, where Tesco also has stores. Tesco will officially launch its online food business in Bangkok, Thailand, next month and start taking online food orders in Shanghai in June or July."

Published on: March 26, 2013

• Family Dollar Stores announced that it has promoted Scott T. Zucker, VP - IT Solutions, to the newly created position of SVP - Merchandise Operations, responsible for driving the strategy and execution of merchandise initiatives, category management, merchandise planning and replenishment.

• The California Grocers Association has announced the hiring of Dane Hutchings, formerly with Ogilvy Public Relations Worldwide, as Government Relations Manager, effective immediately.

Published on: March 26, 2013

Got the following email from an MNB user who works at Supervalu:

The tension in the air here at Supervalu is so strong, its very hard to not think about what our fate will be. Why the delay?  That is what everyone wants to know.   We are professional adults here, we have families, mortgages etc…

We need to know what is happening.  We know nothing.  Rumor is tomorrow is the “big” layoff day.  If that is true, be honest with us and tell us so.  As far as valuing the employees, I don’t think SVU employees have felt valued since the used car salesman – Craig Herkert - took over.  That mentality was nothing ever seen here before.

Bring back Jeff Noddle. At least he was straight with us and made us feel like we were a contributing factor to the company.

One of the things that was interesting about this email was that it came at the same time as I got another email citing the same name:

Does the Supervalu meltdown responsibilities fall on the Jeff Noddle regime?

In all fairness, I have to think that with all the problems that Supervalu has encountered since the tenure of Jeff Noddle, most people would argue that his efforts to grow the company were, in retrospect, misguided.




MNB yesterday took note of a Chicago Tribune report that Barnes & Noble, which has said that its Nook e-reader business has been so soft that it may try to sell it, plans to give away Nook Simple Touch e-readers to anyone who buys a Nook HD+ tablet, a sign, the story says, " it may still be grappling with excess inventory of the unpopular e-reader."

My response:

Y'think?

One MNB user responded:

Had to chuckle at your story of the B&N Nook.  I bought a Kindle the week they first came out.  I bought a Nook color the week it came out – also bought the iPad 2 the week it came out (seeing a pattern here?).  I still use my original Kindle almost daily and of course cannot live without my iPad.  The Nook???  Never made it past the 3rd week.  It arrived with problems and getting customer service to exchange it was very similar to a bad trip to the dentist.  Got the second one – same problem with both the technology and the customer service.  Finally got the 3rd one but by then had stopped putting books on it therefore never used it.  I have given (not loaned – but given) that Nook Color to 4 different people over the years as a way for them to see if they liked the idea of an eReader.  Three of the 4 returned it to me after buying a Kindle of some sort, usually the Fire HD; the 4th person still has it but is leaning heavily towards the mini iPad or full size iPad.  So once again, I’ll be getting that Nook back – can’t even give the damned thing away!




Got another email chiming in on the ongoing Fresh & Easy discussion:

While Fresh & Easy is an object lesson in how NOT to establish a US presence, I wouldn't want to discourage any foreign supermarket chain or retailer to set up shop here. Tesco and others could have learned a lot from J. Sainsbury's experience running (and growing) Shaw's in New England from 1987 until they sold the thriving chain to Albertsons for nearly $2.5 billion in 2004. Sainsbury's stewardship of Shaw's stood the conventional wisdom about foreign ownership of US supermarket chains on its proverbial head. They were pioneers in areas we take for granted these days, such as premium private label and self-checkouts. They even lent their iconic "Good food costs less at Sainsbury's" slogan to Shaw's. Sometimes U.S. consumers are only too willing to do things the British way. It took two successive American owners to bring Shaw's to the brink of extinction.