retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 10, 2013

    by Kate McMahon

    "Kate's Take" is brought to you by Wholesome Sweeteners, Making The World a Sweeter Place.

    Much has been written about legendary film critic Roger Ebert since he passed away at age 70 after a valiant battle with cancer. He has been aptly described as a visionary, a master of all mediums, an inspiration and an icon.

    I would like to add one word: Genuine.

    I had the great privilege of working with Roger in the early 1990s, when his syndicated reviews and articles ran in the New York Daily News, where I was the entertainment editor. I was nervous about meeting and “editing” copy filed by the nation’s most influential film reviewer until he arrived at the News offices on East 42nd Street. (You've probably seen the building - it doubled as the Daily Planet in the 1978 movie Superman).

    In person, he was the Ebert of “At the Movies” – a bespectacled burst of energy in his standard navy blue blazer and shock of silver hair, eager to engage in conversation and share his knowledge and passion for film with any and everyone. When New York passersby gave him a “thumbs up” he cheerfully returned it in kind.

    He was beyond prolific, and the 200 movie reviews he wrote each year since 1967 were just a starting point. I recall his raw copy from behind the scenes at the Academy Awards and the Cannes Film Festival – lightning quick, thoughtful and witty on deadline. He also wrote interviews, columns, and 17 books, including his 2011 autobiography, “Life Itself.”

    Roger loved the movies, newspapers, Chicago, his extraordinary wife Chaz, submitting entries to the New Yorker caption contests, and food. Not necessarily fancy food – but cheeseburgers from his childhood go-to Steak ‘N Shake, root beer, Haagen-Daz vanilla ice cream, and his rice cooker.

    Even after he lost his jaw – and his ability to eat and speak – following cancer surgery in 2006, Roger wrote a book entitled “The Pot and How to Use It: The Mystery and Romance of the Rice Cooker.” That book resulted from his blog and Twitter, which he credited with keeping him vitally connected after losing his speaking voice.

    No surprise, as Roger was an original new media pioneer. He was online and interacting with readers in 1983, years before the worldwide web, and was constantly creating new ways to connect through syndication, television, and all forms of online communication, literally 24/7. He loved tweeting, though he refused to use the abbreviations favored by younger Twitter types.

    His ability to parlay his authenticity into expanding his global reach reveal why he was more than just a film critic. Or as summed up in the headline in Monday’s New York Times business section: “Roger Ebert as a Builder of an Empire.” There’s a business lesson here for all of us – his unbridled passion and energy, and his willingness/compulsion to embrace new media rather than lamenting the good old tabloid days, were the cornerstones of the Ebert "empire."

    (You can read David Carr's excellent assessment of Ebert's "killer business instincts" by clicking here. Carr writes, among other things,. that Ebert "not only survived endless tumult in the craft, he thrived by embracing new opportunity and expanding his franchise at every turn ... He used technology to reiterate and reinvent time and again." Sounds like a template for people in a lot of businesses...)

    In July of 1990, I went a critic’s screening of Ghost with Roger. We picked up sandwiches wrapped in wax paper, sodas and settled into our seats in a small, no-frills Chicago screening room.

    In his subsequent 2 ½ star review, he criticized the film and other Hollywood ghost stories for “limited imaginations” – assuming a spirit would be looking back to unfinished business on earth rather than being “aghast with glory and wonder.” He challenged the comfortable cinematic cliché of “our dear ones up there on a cloud, eternally ‘looking down’ on us, so devoted that they would rather see what we're cooking for dinner than have a chat with Aristotle or Elvis.”

    Not Roger. I believe he is already engaged in those chats and looking for ways to tweet about them.

    Comments? Send me an email at kate@morningnewsbeat.com .
    KC's View:

    Published on: April 10, 2013

    by Kevin Coupe

    Go figure. Kids actually pay attention to their parents. Sometimes.

    There is a story on Media Post about how there are at least some teens who think it is "cool to share a passion for a brand with mom or dad." Conversations with a number of teens revealed that a) "buying from the most well-known brands—everything from Chanel to Gap to Clinique—passes down from parents to children"; b) "inter-generational shopping influence is a two-way street. Teens, who are out in the world trying new things, expose their parents to newer brands"; c) "loving the same brand as a parent (can be) a bonding experience"; and d) there are some boundaries that teens don't want parents to cross, especially youth-driven fashion retailers.

    But the broader lesson, I think, is a good one, especially for retailers looking to maintain long-term sustainability for a retail experience. These marketers should be thinking about ways to encourage cross-generational shopping (parent-child cooking schools? coupons that encourage parent-child referrals?), and to do it in a way that encompasses both the bricks-and-mortar experience and online shopping. Each side has stuff they can teach the other, and savvy marketers ought to be taking advantage of the opportunity.

    It could be an Eye-Opener.
    KC's View:

    Published on: April 10, 2013

    Advertising Age reports that Walmart is plowing more of its TV commercial budget than ever into local spots, producing "price-comparison ads against local retailers in 60 markets this year, up from 50 last year. It's part of a plan that will see Walmart produce an eye-popping 1,500 TV ads in 2013. That's more than double the 615-plus it ran in all of 2012, which itself was up substantially from a year earlier, when new local ads up 79%, according to Advertising Benchmark Index."

    According to the story, "the thrust of Walmart's local TV ads is comparing the cash-register receipts of consumers who shopped at a competitor to what they would have paid at Walmart (rather than looking at some artificially concocted market basket). And according to Advertising Benchmark Index consumer panels, the ads work. Walmart's local price-comparison ads average around 130 on the index, which factors in such things as likability and purchase intent, or around 30% above average for industry ads."

    The Ad Age story notes that "a study on 70 items in January and February by Consumer Edge Research found Walmart beat Kroger and Safeway most of the time on prices, though Kroger beat Walmart on beverages and Safeway tied Walmart on dairy.

    "While Safeway's prices were 19% higher than Walmart's overall, Dollar General actually beat Walmart in the study, while Family Dollar, Kroger and Target were all within 2% to 3% of Walmart's prices. Target beat Walmart for people using its RedCard and getting 5% savings.

    "A Kantar Retail survey found Walmart prices to be on average 4% lower than Target's in January, with edible grocery 14% lower than Target nationally. That was Walmart's best performance on those metrics since the survey began in 2009 -- though RedCard users still would have spent slightly less on the items than at Walmart."
    KC's View:
    This full-court press by Walmart suggests that most companies competing with the Bentonville Behemoth have to make sure that they are emphasizing products and services that clearly differentiate them. Most have to do what Billy Beane did in "Moneyball" - play a different game than the Yankees do.

    Published on: April 10, 2013

    In this case, it is exactly like comparing apples to oranges.

    The Washington Post reports that with a massive food safety system overhaul being engineered by the US Food and Drug Administration (FDA) has come a conflict with the nation's tree-fruit farmers, who believe that they are being treated in a nonsensical way.

    According to the story, FDA "drew a line this year when proposing which fruits and vegetables would be subject to strict new standards: Those usually consumed raw would be included, while those usually cooked or processed would be exempt."

    The Post goes on to say that "growers subject to the new rules could face a variety of new responsibilities, including regular testing of irrigation water, sanitizing canvas fruit-picking bags and keeping animals away from crops.

    "Many tree-fruit farmers worry about the cost of such measures and say they would offer few safety benefits. They argue the FDA should focus more on foods that have caused deadly outbreaks, such as spinach and cantaloupes, and less on fruits that have a virtually flawless safety record, grow above the ground and, in some cases, have protective skins or rinds."

    The Post also writes that the FDA is open to making changes - though nothing has happened yet.

    "It’s complicated. It’s a big, transformational thing that we’re doing ... We’re creating a whole new food-safety system here, so we accept that it will take some time to get the rules right," says Michael Taylor, the FDA’s top food-safety official. "The point is, we want to target our standards where they will make a practical difference."
    KC's View:
    Few things in life are as frustrating as seeing a problem, seeing a common sense solution, and then running into a government bureaucracy that makes resolving the problem difficult or impossible. It'd be nice if legislative processes could be streamlined so that situations like these could be addressed without all the tsouris.

    Published on: April 10, 2013

    There is a story worth reading in The Nation about how Walmart has been accused in a federal lawsuit of manipulating inventory levels in a way that could have artificially inflated the company's profit margins and stock price, and how the accuser - who once managed logistics at the company's Bentonville headquarters, oversaw human resources management in a five-state region, and once received the the Sam M. Walton Hero Award - now says he was fired because he was black.

    Sylvester Johnson's case, the story says, "seeks to prove that he was treated differently than his white counterparts. He argues that while white district managers were manipulating inventory counts to make their stores appear more profitable, he refused to engage in such a practice and was fired on false charges of doing so."

    Walmart denies any such wrongdoing.

    It is a fascinating story, based on six hours of interviews. You can read the whole thing

    here.

    The case is scheduled to go to trial on April 22 in a North Carolina federal district court.
    KC's View:
    This will be a fascinating trial to watch - a former Walmart golden boy goes up against the Bentonville Behemoth, with a lot more than one discrimination suit at stake. In view of some of the other issues that Walmart has been dealing with, can you imagine how bad it would be if it were found guilty of essentially juggling the books to make things look better?

    I'm not saying Walmart is guilty. But the accusations certainly sound plausible. Now, we have to see if they are provable.

    Published on: April 10, 2013

    As expected, there are an enormous number of articles out there about the situation in which JC Penney finds itself - having hired Ron Johnson, who helped to create the Apple Store, to reinvent the iconic but troubled retail chain, it fired him 17 months later because his efforts - especially going from a promotion/coupon pricing approach to EDLP - resulted in lower sales, massive losses and diminished traffic. They have replaced him with his predecessor, Myron E. Ullman III - who now finds himself running as company where many of his former underlings have moved on to other jobs, replaced by executives handpicked by Johnson, and having to deal with a strategy vastly different from the one he was pursuing a year and a half ago.

    The JC Penney debacle will be the subject of case studies for years to come, but some of the stories immediately following Johnson's dismissal are particularly interesting.

    • The New York Times writes that from the moment that Johnson arrived at JCP headquarters in Plano, Texas, "some there believed he would not last long ... He blew into Plano a star, a man who helped build the juggernaut Apple Stores. But his Silicon Valley ways — evident from a showy party in early 2012 that he threw to celebrate himself and his plans, replete with a light show, fake snow and flowing liquor — jangled from the start."

    One excerpt: "No sooner had Mr. Johnson been named as chief executive in 2011 than he began poking fun at Penney’s way of doing business ... Mr. Johnson dismissed most of the top executives from Mr. Ullman’s reign and brought in his own team, largely from Apple and Abercrombie & Fitch. Mr. Johnson commuted from California, and employees said he was a hard worker, decisive and responsive to even late-night e-mails. But few of the top executives he had hired relocated to Texas, instead working there a few days a week, staying 'quarantined,' as a veteran put it. Penney hands used the acronym AAPLE to refer to the newcomers — Apple & Abercrombie Paid to Lose Earnings.

    "Mr. Johnson liked to tell employees that there were two kinds of people: believers and skeptics, and at Apple, there were only believers. He wanted the same at Penney: when employees pushed back on Mr. Johnson’s strategies, they got nowhere, according to several former executives."


    Forbes reports that it may be that the only way for JCP to survive is for it to follow in the footsteps of J. Crew - go private, which would allow the company to make the necessary strategic and infrastructure adjustments without the constant scrutiny of the media and the investor/analyst class.


    Advertising Age reports this morning that "Sergio Zyman, the polarizing former Coca-Cola marketer, has been entrusted to begin charting a new path for the retailer ... To many, it will seem a surprising choice, given Mr. Zyman was part of one of the biggest marketing blunders in history: New Coke."


    Reuters reports that one of the biggest individual financial losers in the JCP situation is, in fact, Ron Johnson: "Johnson is out at least $37.6 million so far, excluding his salary and fringe benefits, according to regulatory filings reviewed by compensation consultants Equilar.

    "Johnson, who incorrectly bet Penney shoppers would take to his no-coupons, no-discounts strategy, put in $50 million of his own money to buy 7.26 million warrants in 2011. That gave him the right to buy shares at $29.92, a way to show investors confidence in his plan for Penney.

    "The only problem for Johnson is that shares, which were worth $35.37 when he bought the warrants, fell 55 percent between then and Monday, when his ousting was announced. Under the terms of his agreement with Penney, Johnson was not allowed to exercise the warrants unless he was terminated from his job, in which case they would be exercisable immediately.

    "With shares at $13.93 on Tuesday afternoon, hovering just above 12-year lows, the warrants are deep underwater and unlikely to rise to profitable levels for him any time soon."
    KC's View:
    If I were a shareholder, I'd be more concerned that the board has shown absolutely no vision by hiring back the guy it fired because he didn't have the right vision for the company.

    This makes no sense at all. And if they fire him in six months to bring someone else in, what does that mean?

    Published on: April 10, 2013

    The Produce News reports that two Democratic lawmakers - Sen. Sherrod Brown of Ohio and Rep. Chellie Pingree of Maine - have introduced the Local Farms, Food & Jobs Act of 2013, which is described as seeking "to make fresh, healthy food more accessible to consumers and to support the farmers who grow it," including "a comprehensive package of cost-effective policy reforms that would boost farmers’ and ranchers’ incomes by helping them meet the growing demand for local and regional food."

    One critical component of the proposed legislation would "increase support for local food production, aggregation, processing and distribution so that farmers can more easily sell healthy food, including locally raised and processed meat, directly to schools, hospitals, stores and restaurants." It also would "enable schools to use more of their federal food funding to buy fresh, local foods," and make it easier for food stamp recipients to use them "to purchase healthy fresh fruits and vegetables at farmers markets, community-supported agriculture programs and other direct food marketing services."
    KC's View:

    Published on: April 10, 2013

    Reuters reports that Walmart "is making its biggest push yet to try to improve conditions at factories that produce its clothing after a fire at a Bangladesh factory last year killed 112 people," saying that "it would donate $1.6 million to help start a new Bangladesh training academy," and outlining "its efforts to regain control over the complex and far-flung web of factories that make its products."

    Walmart, which has said it did not know that its products were being made at the factory where the fire took place, has been demanding that its suppliers must "disclose which factories they work with," and has pledged that it will not do business "with those that subcontract work without telling Wal-Mart."
    KC's View:

    Published on: April 10, 2013

    ZDNet.com reports that Amazon.com "has started a pick-up service in Shanghai via a partnership with 24-hour convenience store chain FamilyMart ... Chinese customers will also be able to pay via cash, or credit cards at the store. There will be nearly 100 pick-up sites will be launched in the first wave, covering most areas in the city."
    KC's View:

    Published on: April 10, 2013

    • In Maine, the Portland Press Herald reports that "a federal judge has denied a motion that would have made a class action of the case against Hannaford Bros. for a 2007-2008 data breach in which customers' credit card and debit card data were stolen." The judge ruled that the plaintiffs had not sufficiently demonstrated that they "could prove total damages on a class-wide basis."

    The Press Herald goes on to say that "four plaintiffs had moved for certification of a class to pursue claims for fees to obtain new cards, fees paid to expedite delivery of new cards and fees paid for identity theft insurance and credit monitoring."
    KC's View:

    Published on: April 10, 2013

    One MNB user writes:

    The JC Penney situation is fascinating to me.  I’ve shopped the brick & mortar and online locations recently and have found really pretty, high quality dresses at great prices.  They have an American Living line of dresses similar to Ralph Lauren’s “Lauren” brand.  American Living dresses go for $50-$60 at JCP, and Ralph Lauren’s go for $120-$140 at Macy’s or Dillard’s.  The Sephora stations within JCP are a nice touch too.  There were years when I would never shop at JCP because the styles seemed dated, but now, with my recent experiences and purchases, they are high on the list.
     
    I have no affiliation with JCP or the garment industry in any way, but thought it was worth chiming in because at least one person noticed a significant improvement in some of JCP’s offerings.


    One of the questions I have - and we'll probably never know the answer - is whether Ron Johnson's strategy would have worked if he'd more time and less pressure.

    From another reader, another experience:

    The firing of Johnson was inevitable, but I agree hiring back the guy who was fired so Johnson could come in seems strange. I recently visited a Penney’s with my twenty something daughters. The younger didn’t even bother to look for clothes, the older looked but didn’t find anything she couldn’t live without. I spent around $60 on clothes. Not sure I am the demographic they are shooting for, but they did get some of my cash. I also was approached at check out time by a wandering clerk, unfortunately since I was paying with cash (I know, I know, but that is how I save for clothes shopping), I had to go elsewhere, she could only handle plastic. I though the store looked nice, it was busy, but not crowded. I do hope they can recover.




    On the subject of the Zero TV trend, one MNB user wrote:

    I was a little surprised that the comments about Zero TV revolved solely around the money individuals have saved by not subscribing to cable or satellite tv services.

    I think people should be thinking more about the way cable and cellular companies have been allowed to divvy up the online access and media content markets in a noncompetitive way.  A campaign was started last year to encourage HBO to offer their HBOGO streaming service as a separate subscription service (right now you can only access it if you are an HBO subscriber through your satellite or cable provider).  HBO has declined, primarily because of the nature of their agreements with the providers – they can’t do anything to undercut subscriptions for the bundles of content offered by the cable and satellite companies.

    You may have read the book "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age," by Susan Crawford. This book posits that the government has been asleep at the switch and the cable companies in particular have been allowed to pick and choose where and at what price they will offer “high speed” internet (unlike telephone companies who were required from the start to offer service everywhere at nondiscriminatory prices).  The ownership of content by cable companies in particular has allowed them to stifle competition where they choose to operate by forcing other cable companies to buy bundles at high prices.
     
    Google is doing its own digging to offer internet at blazing speeds – people in other countries get these speeds, often at prices below what Americans typically pay.  They are creating an environment, at their own expense, where we can wake up and have this discussion ... All of this is a lot to tell you that I think this is a huge deal, and as retailers want to offer mobile checkout and other services in their stores, how are they going to get the bandwidth to do this?  How much will it cost?


    You're right. The shift we're seeing could have broad implications across a broad swath of business, society and culture.
    KC's View:

    Published on: April 10, 2013

    In the NCAA women's college basketball championship game last night, the University of Connecticut Huskies defeated the University of Louisville Cardinals 93-60.
    KC's View: