business news in context, analysis with attitude

Published on: April 1, 2013

From the MNB Newsroom....

• Walmart, which has been looking for new ways in recent weeks to shrink or adjust the so-called last mile between the store and the shopper - announcing a program that will test the use of lockers in six stores that will allow consumers to pick up online orders, and considering a delivery system that will actually compensate customers for dropping off products to other shoppers who live in their neighborhoods or on the way home - said over the weekend that it has developed a new delivery initiative that will offer unique environmental and economic advantages to the company.

"In certain rural markets, we plan to use horses rather than trucks to deliver products to the customer," said Wilbur Post, the company's newly hired VP- equine strategies. "This will offer us all sorts of competitive advantages. For one thing, the price of gasoline has gotten out of hand, and when we did a competitive analysis, we discovered that hay and carrots are far less costly. Second, this pushes us father along in terms of meeting some of our environmental goals of cutting down on truck and car related exhaust, though there is some concern that federal regulators may force us to install monitors to track horse flatulence and the impact on the ozone layer.

"And finally," Post said, "we believe that this will help us with the NGOs that constantly are pushing us to be more environmentally responsible, though we are hearing rumors of picketing by PETA. However, we're pretty sure that we can assuage animal rights activists on this, since while we may be using horses to deliver goods, other companies and countries are using horses as filler in meatloaf and meatballs."


• The US Postal Service, seeking ways to cut labor costs at a time when it has been informed by federal regulators that it cannot unilaterally eliminate Saturday deliveries, said yesterday that it will instead save money by eliminating 50 percent of its workforce, replacing them with drones that will be charged with delivering mail across the country.

According to the story, the move was inspired by the French post office, which has contracted with a drone manufacturer named Parrot to develop quadricopter drones capable of delivering mail in the French province of Auvergne, beginning this summer. Indeed, there have been reports that FedEx also wants to be able to use drones to transport packages, rather than having to rely on passenger planes.

However, there already has been some pushback on this concept from the US Congress, with one lawmaker quoted as saying that "I'm not crazy about drones flying in the US to begin with, but to put drones in the hands of postal workers ... well, let's just say that this strikes me as a recipe for disaster."

Published on: April 1, 2013

by Kevin Coupe

Last Thursday, you may remember, FaceTime with the Content Guy was devoted to my recent experiences with Timex. My problem was simple - it was impossible to order a replacement watch band over the internet. The customer service was, to say the least, lacking - both from the company and the public relations firm that represents it.

And I wrote, in part:

"Companies these days have numerous potential touchpoints at which they can have an impact on the shopper experience. You have to exploit every one that you can, and manage the experiences to be the best they possibly can be. When you drop the ball, and I think that's what happened at Timex, the sound is a resounding 'thud,' and can be heard very clearly in a lot of places."

You can read - or watch, on video - the entire piece here.

But an interesting thing happened on Friday.

I got a call from a fellow named Gary Cohen, president/CEO of Timex. And he was not happy with how the company responded to my initial customer request (all I wanted was a watchband!), nor with the way the company dealt with me when I donned my pundit's hat and started making phone calls.

Good guy, Gary Cohen. We must've spent a good 20 minutes on the phone, and while he was upset that the company's shortcomings in this areas had been made so public, he recognized that this gave him the opportunity to light a fire under his troops and get them to be more e-commerce focused.

Cohen assured me that dragging Timex into the 21st century (my phrase, not his) had been a major project since he took the reins about two years ago. There are some natural obstacles, like the large number of SKUs made by the company ... but it also is my sense that there are some legacy/cultural issues that he's facing. (The company that is now Timex, after all, was founded back in 1854.)

One of the things I told Cohen is that my experience was not an isolated one - that I'd gotten numerous emails from MNB users suggesting that they'd had the same problem and that they believed it was part of the Timex master plan to make it so hard to get watchbands that people would just buy a new watch. He emphasized that this most assuredly is not the case - the company just hasn't gotten its act together in this area, though he expects the online interface to be a lot more consumer-friendly, with a lot more product available, in just a few months. So stay tuned.

Timex and Cohen have no choice but to be timely, of course. We live in a era when a lot of people use their smartphones as their timepieces, and every watch company has to find ways to be relevant to its target audience, and perhaps even redefine itself with new technologies, new functions and nee benefits. (I also got a lot of emails last week from MNB users who wondered exactly why I was wearing a watch in 2013. Why didn't I just use my iPhone? But the thing is, I've been wearing a watch for more than 50 years. I feel naked without one. And I love my Timex Intelligent Quartz .... I just wanted an easy way to order a watchband online.)

Cohen and I agreed that while Timex may have been unlucky enough to have run into someone like me who has both an attitude and a soapbox, the reality of competing in the 21st century is that everyone has a soapbox. Most of us have laptops or tablet computers or smartphones, and we're willing to use them. Which creates enormous pressure on every company to understand that when they please or displease just one customer, the odds are pretty good that the experience will be shared with hundreds, thousands, or even millions of people.

In the case of Timex, Cohen conceded, the movements had been running a little slow in this area. But I think he is the guy - with a background at Gillette, Procter & Gamble, and Playtex, and a strong understanding of the CPG business - to lead the company forward.

To steal from the company's old ad and paraphrase a bit, Timex may have taken an MNB licking...but hopefully, they'll learn from the experience and keep on ticking.

I'm glad that Gary Cohen and I had a chance to chat. It was an Eye-Opener. And I look forward to seeing how Timex continues to evolve in a timely fashion.

Published on: April 1, 2013

In the UK, the Telegraph reports that Tesco CEO Philip Clarke is headed to the US this week for what are believed to be negotiations that could result in the company finally being able to end its disastrous Fresh & Easy Neighborhood Market venture in the western US.

Among the companies said to be interested in all or part of Fresh & Easy are Aldi, Trader Joe's and even Walmart.

After having invested more than $1.5 billion in Fresh & Easy, Tesco put the business up for review last year, saying that it was possible that it could break it up and sell off parts, could take on a partner, sell off the whole thing, or just close the division. It is expected that Tesco will announce where the process stands - and even a final disposition - by April 17, when it posts its annual results.

Published on: April 1, 2013

Reuters reports that after several months of testing, Google has launched a same-day delivery service, working with retailers such as

Companies taking part in the test include national retailers such as Target, Office Depot, Staples, and Toys 'R' Us, as well as a number of smaller, local San Francisco retailers, all of which are looking for ways to compete with Amazon.com.

According to the story, "Shoppers who sign up will get six months of free, same-day delivery of online orders placed with select retailers in the area. Google plans to charge for the service in the future, but it has not decided how much yet ... Google Shopping Express is the latest sign the company is expanding from its online search roots into e-commerce, where it is competing more with Amazon, the world's largest Internet retailer."

Published on: April 1, 2013

The New York Times has an interesting story this morning about companies that are using the internet to disintermediate traditional retailers and go direct-to-consumers, offering premium products at reduced prices.

An excerpt:

"When the founders of a start-up that sells eyeglasses online, Warby Parker, began investigating why designer glasses cost several hundred dollars, they discovered that everyone in the process was taking a cut: designers, manufacturers, brands, wholesalers and retailers.
"But what if they left out most of those people? 'I had been to the factories and knew what it costs to manufacture glasses and knew the cost didn’t warrant a $700 price tag,' said Neil Blumenthal, a founder of the company. Inspired by glasses they found in their grandparents’ attics, the founders sketched a few frames, hired the same Chinese factories that make designer glasses and started selling directly to consumers online. By doing so, they eliminated enough of the cost to charge customers just $95 a pair.

"Warby Parker is part of a wave of e-commerce companies that are trying to build premium brands at discount prices by cutting out middlemen and going straight to manufacturers. They make everything from bedding (Crane and Canopy), to office supplies (Poppin), nail polish (Julep), tech accessories (Monoprice), men’s shoes (Beckett Simonon) and shaving supplies (Harry’s)."

Published on: April 1, 2013

A couple of weeks ago, MNB reported on a new initiative from CVS and how the company has 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, employees have been told that they have to stop smoking by May 1, 2014, or be enrolled in the company's smoking cessation program, or they will face potential fines and penalties.

Well, there must be something in the water ... because the New York Times reports on a Colorado company called Datalogix that has begun offering fitness classes to its employees. The classes, part of a system called CrossFit.

"CrossFit," the Times writes, "gained early popularity among law enforcement officers and military personnel, but lately, both large and small businesses — judging that fitness programs can bolster employee morale, improve productivity and reduce health insurance premiums — have taken an interest. This fast-growing fitness trend combines weight lifting, gymnastics and endurance training and has attracted more than 10 million practitioners around the world, according to the company, about 60 percent of them women."

While there are some downsides - injuries and the fact that people who do not participate can feel excluded - the upside is a fitter and more engaged group of employees that come from a variety of areas within the business, allowing for a kind of silo-busting that benefits the business long-term.

You can read the entire piece here.

Published on: April 1, 2013

• Bloomberg Business Week has a piece about the Peapod-FreshDirect battle in New York City, where FreshDirect has an 80 percent market share of the e-grocery business, and where Peapod is now looking to make inroads.

"To catch up," Bloomberg writes, "Peapod is offering free delivery and cheaper prices on everyday goods like coffee and milk. That approach lured enough shoppers to deliver sales gains above 10 percent in 2012, with a similar increase forecast this year. The growth will help Ahold reach its goal of tripling online sales to 1.5 billion euros ($2 billion) by 2016. Closely held FreshDirect, displaying a haughtiness New Yorkers are famous for, isn’t worried. It expects shoppers will remain loyal to the pricey fresh foods and ready meals that helped push sales to about $400 million last year."

Here are some comparisons: "Peapod’s plan to win over Manhattan residents hinges on lower prices. A 12-ounce bag of Dunkin’ Donuts original blend ground coffee sells for $6.99, 30 percent cheaper than from FreshDirect. A half-gallon of Farmland Skim Plus fat-free milk is $3.29 on Peapod’s website, a buck cheaper than FreshDirect. Evian water, Skippy peanut butter, and Frosted Flakes: all also less expensive ... New Peapod customers get free delivery during March. After that, they’ll pay $9.95 for orders under $100 and $6.95 for bigger orders. FreshDirect charges $5.99 to deliver in Manhattan, and frequent customers can pay $60 for six months of unlimited deliveries."

Published on: April 1, 2013

Salon.com reports that "Corey Braun, the owner of a Rancho Cucamonga Chick-fil-A, handed out coupons for free chicken to dozens of marriage equality supporters at a California rally this week, breaking with the company’s national profile as a corporate opponent of gay marriage. 'There were a lot of things said over the past year,' Braun told the Inland Valley Daily Bulletin. “I wanted to show that Chick-fil-A doesn’t discriminate against anybody. We serve everyone. We’re happy to serve the community and this was an opportunity to have this group come in and show them our hospitality regardless of their beliefs, sexual orientation, or whatever.' Adding: 'Chick-fil-A has never been about hate'."

Chick-fil-A earned the enmity of same-sex marriage and gay rights supporters, and the vocal support of cultural conservatives, when the company's CEO, Dan Cathy, was quoted last year as saying that he supported only the "Biblical" definition of marriage. Chick-fil-A also was found to have donated money to groups perceived as anti-gay.

However, in the wake of the controversy, Chick-fil-A has done its best to back away from the debate, stopping donations to anti-gay groups.

Published on: April 1, 2013

Forbes reports that Amazon is acquiring Goodreads, described as "an online book-sharing site with 16 million members." Terms of the deal were not disclosed.

The deal is said to provide Amazon with the following benefits:

"Goodreads succeeds because it has become an enormous social network for active readers.  While Amazon has busy discussion forums, it has not approached Goodreads scale or significance as a social network ... Goodreads is one of the primary tools on the Internet for book recommendations, particularly for active readers.  While both Amazon and Goodreads’ engines use collaborative filtering (recommendations based on the comparing what you rated highly to what others similar to you have enjoyed), Goodreads offers a rich new stream of recommendations ... This may add a new and more credible review source to Amazon’s internal reviews.  The average book review score is lower on Goodreads, and the variability is wider, making Goodreads reviews more useful to readers."

The acquisition also is described by Forbes as giving Amazon access to even greater amounts of data that will allow it to identify influencers and then influence them, especially with self-published books that could gain a lot of juice from being recommended on Goodreads.

Published on: April 1, 2013

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

• USA Today has a story this morning about how "the benefits of the Made-in-the-USA marketing tagline now apply to stocks as well as shoes, SUVs and software ... With Europe hobbled by debt, white hot China cooling and emerging markets slowing, stocks of U.S. companies that get most of their revenue from U.S.-based sales are performing better than companies that do 50% or more of their sales abroad, where things aren't going as well ... In the past 12 months, U.S. stocks that generate all sales at home are up an average of 18.6%, vs. a gain of 6.2% for American firms that get more than half of their revenue from abroad."

I was saying this long before MNB got a sponsor that specializes in certifying Made in the USA products and services ... I firmly believe that this is going to be a growing segment, and that more companies need to focus on it.


• The Los Angeles Times reports that "beer has passed wine as the beverage of choice for women ages 18 to 34."

According to the story, "Julia Herz, craft beer program director for the Brewers Assn. trade group, said women in their 20s and 30s are in 'the sweet spot' for craft beer consumption. They're the same quality-minded people who are buying artisanal cheeses and fair-trade coffees and who don't mind waiting for a bartender to shake a craft cocktail."


• The Chicago Tribune reports that Toys R Us has withdrawn its proposed initial public offering (IPO), deciding "not to pursue" the IPO "at this time."

The decision is not likely to rock the market - the company had filed for the IPO in May 2010 but continued to postpone it because of poor market conditions. Toys R Us originally went public in 1978, then, the story notes, in 2005 "was taken private by KKR & Co LP, Bain Capital and Vornado Realty Trust in a $6.6 billion deal."


• "Well@Work,”  Price Chopper Supermarkets’ wellness program managed in partnership with MVP Health Care, has won the Gold Level Worksite Wellness Award for 2012 from the Vermont Governor’s Council on Physical Fitness and Sports.

Published on: April 1, 2013

• Ahold USA has named Paul Scorza, a 30-year veteran of IBM, as its new chief information officer, overseeing information management functions, with a focus on the development and implementation of systems and business processes to improve efficiency, effectiveness, controls, and operations across the company.


• Weis Markets announced the promotion of Paul M. Stombaugh, CPA, to Vice President/Corporate Controller. Prior to his promotion, Stombaugh was the company’s Corporate Controller.

Published on: April 1, 2013

• Charles A. Rini, Sr., the former president of Stop-n-Shop and president/COO of Riser Foods, has passed away after a long battle with lung cancer. He was 74.

Published on: April 1, 2013

Interesting email from MNB user Catherine Storer:

I was in Lowes this past week a lot after just purchasing a home. While there we couldn't find a specific drill bit and had to ask for assistance.

The very nice worker guided us to a clearly marked section, grid, bin, etc  (very similar to a warehouse)  and then said that eventually the entire store will be accessible via GPS on my smartphone.

The concept , the way he briefly explained it, would be for me to access the app, list what it is I need and it will tell me where to go to get it.

Which I thought was really cool .  And a great time saver walker around in a New Home Daze. I'll be going back I'm sure and I hope one day I can use this app.




Regarding the use of lockers by Amazon and now Walmart, one MNB user wrote:

I found this story intriguing (convenient pick-up locations only make sense, and will foster customer loyalty) but even more intriguing was your insight:

"I continue to believe that the enormous number of US Post Offices out there could be the mother lode of locations ... to use them as delivery depots."

Not only could this be a "game-changer" for retailers, but it could be a game-changer -and maybe even a saving grace- for the US Post Office. If the US Post Office were to charge the retailer even a small amount, say a 25c fee, for every order held there, the revenue could dig them out of the grave into which they've been slowly but surely sinking ... provided, of course, that said revenue was handled properly... Here, I hold my tongue.




Re: Walmart's consideration of a plan that would have its shoppers actually dropping off products and packages to other customers, as a way of saving money on delivery services, I wrote last week:

admire Walmart's willingness to consider ideas that certainly appear to be "out of the box." But in this case, I have real questions about this is a good idea or even workable.

Maybe this is my cynical, Northeastern, urban-oriented self speaking, but I don't want some stranger to have my stuff in his car or truck, and I certainly don't want him or her coming up to my door. And I'm not sure that it makes sense for Walmart to entrust products - for which they bear responsibility until I take ownership of them - to people they don't know and have not vetted.

This strikes me as a nightmare waiting to happen on all sorts of levels.

One MNB user responded:

You know, picking on Walmart is sort of like shooting fish in a barrel. It seems as though once they built their logistics empire, little else has gone well. They tried to be like Target in fashion and failed miserably. They consistently rate amongst the worst in-store experiences--at least from the consumer's perspective. And somehow they managed to show same-store sales losses throughout the "great recession". So I was not surprised to learn yesterday of their attempt to compete with Amazon by allowing online customers to pick up their orders at their retail stores. So much for convenience. Instead of the merchandise arriving in two days, or available close by in a locker, they expect their internet customers to drive to their giant, loud, cluttered stores and wander around looking for their stuff. BUT, I must say that today's news of Walmart tinkering with letting their customers deliver internet orders to other customers almost instantaneously does solve for the very complex logistical challenges that Amazon has been working on. It truly could be a case of disruptive innovation. Then again, I'm not so sure that I'd want to be interacting with the Walmart demographic that is desperate enough to deliver packages for a buck or two.

From another MNB user:

I don't shop at Walmart because the stores are poorly merchandised-at least the one by my house, and I've never had a pleasant experience in one of them. I sure as heck wouldn't entrust a complete stranger nor do I want one knocking on my door to deliver an online purchase. I'll stick to my two day free shipping from Amazon delivered by my guy in brown.

From another reader:

So I'm supposed to deliver stuff for Walmart, but I'm hung over, so I give the address to my halfwit cousin, Earle, who has no delivery training, but excellent experience as a part-time burglar. He's big and a strong, and certainly could carry a flat screen TV up three flights of stairs to the live-alone single woman who ordered it. What could possibly go wrong?

Walmart's legal department must be having conniptions over this ridiculous idea.

But another MNB user offered:

In many areas of the country suburban life is still a trust based way to live.  In the burb I am in, it would be great for my trusted neighbor Anne to pick up my “package” of things and Walmart after she is done shopping.  At the Scottsdale Walmart – a parking lot full of mercs, jags, and vettes – many trustworthy people shop and the store team is great.  The store is spotless with nice wood floors.
For the right region this is a great idea.

And another MNB user wrote:

I think it's a good idea -- but it needs some tweaking.  Have customers sign up to make deliveries for other customers, but background check and badge them first.  Then allow and post reviews from the customers receiving the deliveries. And I would start with a program for transportation challenged customers (disabled, elderly, etc.) to kick off the program with a value-to-society angle before broadening it out.  With that approach, you could have charitable organizations doing the deliveries in the first phases of the program.

And MNB user Ken Fobes wrote:

Shame on you, Kevin J. Don’t know if Walmart’s latest initiative will fly or not, but your negative attitude is not like you. They are thinking “out-of-box” and we’ll never know if that will work or not as long as people immediately dismiss ideas without giving them due diligence and the “old college try.” I’m sure that there were doubters about Apple focusing its efforts on developing the iPad, iPhone ... but thanks to Steve Jobs and his willingness to step out front with new ideas and risk failure, Apple is the most valuable company in world.

Yeah, but he didn't have the guy down the road deliver his ideas. He created Genius Bars.

MNB user Barb McLaughlin wrote:

This isn’t your April fools story, are you trying to get us early?

Nope.

MNB user Tal Vance wrote:

"Maybe this is my cynical, Northeastern, urban-oriented self speaking, but I don't want some stranger to have my stuff in his car or truck, and I certainly don't want him or her coming up to my door."

I think you "nailed it" about your problem with this idea…

I yam what I yam....




MNB took note of a couple of studies last week that focused on women, and commented:

I do think many women make better leaders. And I have to wonder if the reason men feel intimated by them is that they know it ... and that's why many women live in a kind of fear that society will find a way to put them down again.

Which led one MNB user to write:

Very perceptive on your part Kevin.  By the way, am I the only one who noticed that the newly named executive team for Albertson's LLC has only one woman?

Hmmm....




Finally, MNB last week had a piece about the consequences that companies can face when their CEOs take political/cultural positions that can be seen as polarizing. This led to a discussion of gay marriage, and one long email defending traditional views of marriage by MNB user Steve Kneepkens.

One MNB user responded:

Thanks for presenting Mr. Kneepkens’ point of view.  It was hilarious the way he stated the “exceptions” for marriage without children to be OK for a definition of marriage, but only for heterosexuals.  So Mr. Kneepkens gets to become the arbiter of rights to the “exceptions” only he deems acceptable?

Your second offered opinion (from an MNB user) was far more interesting, since they related the historic expansion of inclusion to be the dominant force of history as liberal thought progressively assigns rights to those previously excluded.  I AM a liberal, and as such I will be interested to see how history continues this expansion beyond gender equality to the expansion of some sorts of rights to those unable to speak for themselves since they aren’t born yet.  The issues are substantially different, and yet history’s trend is obvious: those excluded are destined to be considered, and finally someday, included.

From another reader:

While I enjoyed your commentary, the "second email" responder yesterday may have been the perfect response to the Steve Kneepkens diatribe and those that fall into his camp. I do not want to assume what Mr. Kneepkens position on sociopolitical issues would have been at different points in history but certainly his view of fairness and equality regarding marriage would raise the question of how he would have responded, having lived in the appropriate time without the evolved history as a guide, to the Suffrage Movement, Civil Rights, Emancipation et al. I would hope he would be offended by the suggestion that he would not have supported those struggles and in that offense a sense of perspective might be gained, but I do not hold out much hope in that regard.

MNB user Chuck Jolley wrote:

You might respect his position but I cannot.  He represents a narrow and small-minded attitude that inhibits progress.  I suppose he's entitled to his opinion but I have to exercise my right to condemn it.

And then, there was this wonderful email:

Busy, busy day.  I hate when I can’t read MNB until the end of the day.  At least I didn’t have to skip it all together.  As always, so much good information and perspective.

Then, I get to the Your Views section and “whoop, there it is!” some more back and forth on gay marriage.  Have been thinking about my dad a lot today and this exchange brought him even closer to me.  Dad was a good man.  But, as he would have been 92 this June, he was raised with a host of prejudices.  God bless him, though, he was open to new ideas.  Now, he didn’t lose all of the misconceptions. Still, he came a long way.  I watched him gain respect for African Americans as they became part of his workplace.  Same thing with women—and especially as I decided to essentially follow in his footsteps (we even worked together for two years). 
 
Then, the last transformation.  My first marriage ended and I came back home (not their home; just my hometown) with my 8-month-old daughter.  At the same time, our church hired gay partners as our choir director and accompanist.  Over time as my ex was pretty crummy as a father and my dad saw how wonderful these guys were with their children (from previous “straight” marriages when they were trying to fit in), my dad told me, “I’d rather see them take care of your daughter than her own dad.”  He died just after the elections in 2004.  He had my daughter (then 16) help him fill out his absentee ballot as she sat next to him in his hospital bed.  When they got to the amendment to ban gay marriages, he told her to be sure to mark that “no” and said, “that’s a very bad thing.”  Unfortunately, it passed.  But, after that amazing moment, I knew it was going to be only a matter of time.  The amendment will be overturned here.  Sooner or later.  I hope it’s sooner.

I talked with a lot of people about this issue over the weekend, and there seems to be a general agreement that the gay marriage debate is changing from a cultural argument to a civil rights argument with almost unprecedented speed. It reminds me of when the Berlin Wall fell ... one day it was there, and then, suddenly, it was gone in a sweep of geopolitical momentum that could not be stopped.

I know this is a hard issue for a lot of people, because this is one of those places where there seems to be a conflict between civil rights that would seem to be guaranteed by a democratic society and the tenets of many religions.

But I cannot help but think that the people fighting the battle against same-sex marriage on legal terms are sort of like those guys who found themselves on an island after World War II, not knowing that the war was over and still engaging in battles and skirmishes irrelevant to how the world really is.