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    Published on: April 16, 2013

    by Kevin Coupe

    The tragic events that took place in Boston yesterday, and the news reports that are unfolding today, in many ways seem all too familiar, even though it may take days or weeks or even months to find out precisely what happened and who is responsible.

    It was a reminder that we live in a dangerous world, and that our free and open society makes us vulnerable to attacks like the one that took place at the finish line of the annual Boston Marathon, that took the lives of three people, including an eight-year-old boy.

    But as we consider the possibilities and implications, I would suggest that the image that ought to remain with us - when the sound of the explosion and the cries of panic have receded from memory - is that of people who had just finished running 26.2 miles, and who propelled themselves even further, to local hospitals where they offered to give blood. Or who ministered to the injured, despite their own exhaustion.

    That's extraordinary.

    That's what Boston was about yesterday. That's what America is about today.

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

    Published on: April 16, 2013

    by Michael Sansolo

    It’s a fantasy long told in fiction and movies, yet rarely witnessed in real life. A worker far down the organization chart (maybe not even on the chart) meets the boss of his company and gets to channel his inner Donald Trump with the words: “You’re fired.”

    Only this time it happened for real.

    Well, sort of for real. The full story is this: Fred Davidson, the president of Ritchie’s Supa IGA in Australia is a fairly successful guy. His company has 70 stores and is growing.
    Davidson is a good operator and like so many other retail executives, worked his way up through the company. He thought he could do any job in the store until he got the chance. And that’s when he got fired.

    Davidson was selected for the Australian version of "Undercover Boss," a show that disguises top executives and dispatches them into their companies to work on the front lines. For his stint on camera, Davidson, an imposing man standing well over six-feet tall, was given glasses and a beard to conceal his appearance. Then he went to work at his own company.

    I got to meet Davidson and hear the story at the just concluded IGA Global Rally in Chicago. It’s a shame more retailers (IGA and otherwise) didn’t have the chance to hear about his experience.

    In a short video from the show, we watched Davidson badly move a handcart laden with product in the back room. (Well, actually he dropped some of the product.) We watched him interact with employees who didn’t know they were talking with their company’s boss. And we watched him mess up pretty badly in the bakery department, earning him a polite and calm discussion with the department manager who explained that things simply weren’t working out. Then we watched him get fired.

    Davidson said he got many surprises from the experience. First, he came to understand - as other CEOs have surmised in recent times - that the front line jobs he once did have become increasingly complex due to new technologies. Tasks he might have handled with ease early in his career are now foreign to him. Most importantly he got a vivid reminder of just how important front-line staff are to the success of any company.

    Davidson is a good operator and probably knew - intellectually, of course - that the front-line is so vital. But being on the line brought it home.

    Obviously Davidson’s experience isn’t one any CEO or top executive can easily replicate. Most of us don’t have a television crew with make-up and wardrobe to conceal our identities. Certainly, most of us won’t be on a television show that will air nationally. (Davidson said the show somehow was seen in the US and UK in addition to Australia.)

    But this may be one reality show with a really interesting lesson for executives and all team leaders: to try to understand the challenges and realities facing the members of our teams. Granted there are things we can’t possibly correct and no leader can or should know how to do every job inside a company. Yet a trip to the front lines may be stunningly educational, reminding us all of the little challenges that slow productivity, drain morale or, worst of all, chase people away.

    Based on Davidson’s experience, it’s a trip worth making.

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

    Published on: April 16, 2013

    It is fair to say that Kmart is afflicted with a stodgy image that has made it difficult to seem relevant and get profitable in a retailing environment getting more competitive with every passing day.

    But with one video, it may be that Kmart has found a way to address that weakness.

    It is a commercial, currently available online, called "Ship My Pants." You can watch it by clicking on the screen above, or by going here.

    The video is funny. It makes a serious point about Kmart's ability to ship products to shoppers that it does not have in-store (hardly a revolutionary offering, but Kmart is not known even for doing what is expected by consumers). And it has gone viral - as of this writing, it has been viewed by more than 9.6 million people. (It also seems to be getting far more positive response than negative - more than 45,000 people have given it "thumbs up," while just 2,000 gave it "thumbs down".)

    KC's View:
    Good for Kmart, a company I've been extremely critical of over the years.

    I feel like paraphrasing Lou Grant when I say to Kmart, "You got spunk. I like spunk."

    Published on: April 16, 2013 has opened a new online store - the "50+ Active and Healthy Living Store" - designed to cater to customers who have reached the half-century mark and are looking for products in a number of categories - nutrition and wellness, exercise and fitness, health care, medical supplies, travel and leisure, entertainment, and more.

    The store makes it possible for customers to "easily discover hundreds of thousands of items that promote active and healthy living," Amazon said yesterday.
    KC's View:
    The important thing here for competitors to remember is Amazon's ability to drill down into existing data to determine who among its customers are 50+, what they've already bought, and then use algorithms to determine what it can sell to those shoppers.

    I think it fair to say that Amazon may have more information about each individual shopper's habits and purchases than almost any other retailer ... and it intends to use that information to drive sales and profits. The big difference is actionable information ... and it will be the difference between winners and losers in the fast-evolving retail climate.

    Published on: April 16, 2013

    Accenture is out with a new study saying that "retailers that deliver on their customers’ expectations and provide them with a seamless shopping experience – whether they are shopping in a store, online or through a mobile device – will win their loyalty and gain a competitive advantage that drives sales."

    According to the report, "the Accenture Seamless Retail Study found that half (49 percent) of consumers believe the best thing retailers can do to improve the shopping experience is to better integrate in-store, online and mobile shopping channels.  An overwhelming 89 percent of consumers said it is important for retailers to let them shop for products in the way that is most convenient for them, no matter which sales channel they choose.

    "Consumers remain bullish on the in-store shopping experience: almost all survey participants (94 percent) found in-store shopping easy. They are less bullish, however, about their experience with other shopping channels: 74 percent said online shopping is easy, but only one-quarter (26 percent) found the mobile phone shopping experience easy."

    Other findings from the study:

    • "A benchmark analysis by Accenture of the top retailers globally indicated that while 73 percent offer the same promotions online as in the store, only 16 percent offer the same prices online as they do in the store. Additionally, while 43 percent of consumers surveyed expect a retailer to offer the same product assortment online as they do in the store, only 19 percent of retailers actually offer the same product assortment."

    • "Of the consumers who had showroomed in the six months prior to the survey, 41 percent said they are doing that more than they were the year before.  Additionally, the survey found that 43 percent of all U.S. consumers plan to shop more online and 23 percent plan to shop more with their mobile phones in the future."
    • "When asked what kind of information it would be useful to have from their favorite retailers before going to a physical store, 82 percent of consumers selected having access to current product availability as their top choice. However, the Accenture research showed that this is offered by only 21 percent of retailers. The survey also found that 30 percent of shoppers want retailers to provide a crowd indicator that would allow them to know how busy the store is."

    • "81 percent said it is important for a retailer to enable them to pick up or arrange for delivery of their purchase regardless of how they paid for the item ... One-quarter (25 percent) of survey respondents said they would be willing to wait a whole two weeks for free shipping ... 24 percent said it is important for retailers to offer same-day delivery, including 30 percent who are willing to pay $5-$10 and 19 percent who are willing to pay $11-$20 for same-day delivery."
    KC's View:
    No surprises here, but wroth noting. The desire for a seamless experience encompassing physical and virtual stores will only grow greater, and it has to be a high priority for retailers, lest they be viewed as irrelevant.

    Published on: April 16, 2013

    Bloomberg reports that the planned initial public offering (IPO) by Fairway Group Holdings, which values the company at $453.6 million or 15 times adjusted earnings, has a valuation that makes Fairway more expensive than Whole Foods and Safeway.

    According to the Bloomberg, the 12-store chain "said in a regulatory filing that it’s planning to add stores in population-dense metropolitan areas and has the potential for more than 300 new U.S. shops."
    KC's View:

    Published on: April 16, 2013

    The Chicago Tribune reports that "tests on beef products in Italy have found that one in five contain more than 1 percent horse meat, the Italian Health Ministry said on Monday ... Italian police inspected 454 samples of products advertised as beef without any mention of horse meat, and found that 93 tested positive for horse meat traces above 1 percent, which should have been declared, the ministry said."

    According to the story, the ministry said that the products tested were both domestic and imported. And, "the tests found no traces of the horse pain-killing drug phenylbutazone, which has been found during inspections elsewhere in Europe. The drug can be harmful to humans in very high concentrations and is banned from entering the human food chain."
    KC's View:

    Published on: April 16, 2013

    • The Associated Press reports that "several labor unions say more than $400,000 in contributions by Wal-Mart Stores Inc. since 2010 helped bring about the creation of an unusual taxpayer-paid subsidy last month to help employers offset a higher minimum wage in New York."

    According to the story, "In March, the Legislature and Gov. Andrew Cuomo increased the minimum wage to $9 an hour over the next three years, up from the current minimum wage of $7.25. The law also included tax credits for employers who hire seasonal employees ages 16 to 19 who are still in school. That subsidy is estimated at $20 million to $40 million a year with no cap on the payments. The provision is expected to provide millions of dollars to big-box stores like Wal-Mart.

    "Lawmakers never announced the subsidy, but it was discovered in the bill after months of closed-door negotiations. The allegations come as the unions seek public financing of campaigns."

    New York State senate Republicans, accused of having taken the contributions, call the charges "complete and utter nonsense." And Walmart says it played no role in crafting or amending the minimum wage legislation.

    Still, the AP notes that "Wal-Mart has contributed more than $105,000 to Republican senators and Assembly members over the past two years as Democratic support for the issue grew, state election records show. In addition, Wal-Mart provided $400,000 since January 2011, most of it in 2012, to a state Republican Senate account that can be used for several purposes."
    KC's View:

    Published on: April 16, 2013

    • The Associated Press reports that the California legislature is considering a bill that "would ban California grocery stores, convenience stores and pharmacies from handing out single-use plastic bags," and that the bill is being supported by groups that include the California Grocers Association and the California Retailers Association, as well as environmental groups.

    According to the story, "The proposal would ban plastic bags in grocery stores and pharmacies starting in 2015 and in convenience stores and liquor stores by July 2016."

    Reuters reports that "Macy's Inc has filed an appeal challenging a judge's ruling that J.C. Penney Co Inc can sell unbranded Martha Stewart goods in its stores for now -- the latest salvo in a legal war between the two retailers over rights to the domestic doyenne's products."

    The judge in the case had dismissed Macy’s claim of unfair competition against JCP, which came as part of a broader court battle in which Macy's has accused JCP of contract infringement.

    Bloomberg reports that Walmart and Sears "have so far declined to join Li & Fung Ltd. and other companies in voluntarily compensating victims of a fire last year at a Bangladesh garment factory.
    Wal-Mart and Sears also didn’t respond to an invitation to attend a meeting today in Geneva, where companies whose clothing was manufactured at the Tazreen Design Ltd. factory are expected to discuss compensation payments, said Scott Nova, executive director of the Worker Rights Consortium, a Washington-based international labor-monitoring group."

    The November 24 fire killed a dozen people and created enormous pressure on US companies to be more vigilant about monitoring the manufacturing companies with which they do business.

    Advertising Age reports on how registered dietitians have become a marketing tool for major supermarket chains:

    "Once confined to hospitals and offices, the dietitians are a marketing weapon for the chains bringing them aboard to aid shoppers seeking the best foods to drop weight, battle diseases or avoid allergic reactions. The trend is another sign that consumers are demanding more from their food providers as the nation's health-care system puts a premium on preventive care. And it also represents an increasingly powerful constituency for the nation's food marketers to win over.

    "Grocery chains have long had dietitians at the corporate level, but a growing number are now positioned in specific stores. (One-third of stores have a registered dietitian at retail, according to a recent survey by the Food Marketing Institute, which represents food retailers; 86% employ them at the corporate level.)"
    KC's View:

    Published on: April 16, 2013

    • Stater Bros. Markets announced yesterday that Peter Van Helden, most recently Executive Vice President for Retail Operations at Supervalu, and a former president/CEO of Albertsons' California Food Division, has been named the company's new president/COO. He succeeds Jim Lee, who is retiring in June.
    KC's View:

    Published on: April 16, 2013

    MNB took note yesterday of a report from RetailNetGroup that sketched out the scenario through which AmazonFresh is likely to expand, and that the metrics for its success may be different than anticipated because it can offer Amazon all sorts of of strategic advantages that work to its long term advantage. (You can read the story here.)

    My comment:

    This is the argument that MNB has been making for months ... that AmazonFresh may have different metrics for success than other programs that appear to be directly competitive, and that the ultimate battle may be between it and Walmart.

    It seems clear that an AmazonFresh expansion is about to happen, and that it will have impact. Which is why food retailers need to be focusing on how to make themselves competitive in this space, and how to create differential advantages that will short-circuit Amazon's efforts to appropriate their customers.

    And they need to do so now.

    This prompted MNB reader Mike Spindler to write:

    Couldn’t agree with you more Kevin.
    Since day one, the first hurdle that online grocery sales (OGS) has faced is a cautious corporate grocery group.  

    In every case where the grocer has tried OGS, based on my experience at MyWebGrocer, they attract new customers, solidify loyalty from current customers, grow basket size, and make money….good money.

    They have to be smart  (offer store prices, full variety and stellar service) and they have to pay continuous attention to the development of the business (marketing) but a good program, well run is a great offense for any grocer to run against any interloper. 
    The first hurdle needs to be overcome first!


    Full disclosure: Mike Spindler is a former MyWebGrocer senior executive. And MyWebGrocer is a longtime and valued MNB sponsor.

    Yesterday, MNB took note of a Business Insider report that Eric Schmidt, the chairman of Google, is predicting that by 2020 every person on the planet will be connected to the internet.He's getting some pushback on the prognostication: "In other words, he believes that in just seven years, the Internet will be accessible even in the parts of the world with no electricity that are struggling with far more basic things, like clean water," Business Insider writes.And yet, the story suggests, "it's not as far-fetched as it sounds. For instance, Google supports a project called GEEKS Without Frontiers which is creating low-cost technology to bring wireless Internet to places where traditional wired Internet isn't possible.Samsung is working on a project that has turned old shipping containers into solar-powered, Internet connected classrooms for kids in Africa, with the plan of serving 2.5 million students by 2015. And that's only two projects. While it's hard to believe that every person in the world will have access to the Internet by 2020, many more of them will."

    One MNB user responded:

    The real question surrounding 100% global internet availability is heavily influenced by internet affordability.  As pointed out, Samsung and others are working on innovation around connectivity (availability).  However, as one who’s working in the southern African countries these days, it seems unlikely that widespread affordability is likely. Affordability is the main concern.

    The World Economic Forum (WEF) released its Global Information Technology Report 2013 on 10 April, revealing that South Africa’s mobile prices are among the highest in the world. S Africa ranked 117 out of the 144 countries measured. And, mobile, as you know, will be the key access vehicle to the internet. Therefore, the next level of innovation in developing markets needs to be around affordability, if the 100% global availability is to be realized.

    I enthusiastically reviewed "City of Thieves," by David Benioff, the other day, which led MNB user Philip Bradley to write:

    I read "City of Thieves" a couple of months ago and agree fully--what a terrific story, and with a number of complex layers beneath the surface.  A great book--glad you had the same experience.

    MNB user Brendon Cull chimed in:

    Saw your note about “City of Thieves.” It was a wonderful story.

    If you haven’t read it, check out “Billy Lynn’s Long Halftime Walk.” Just won the National Book Award. It is a spot-on look at our society/culture in the years during the Iraq war. Funny and heart-wrenching. 
    And if you like memoir, check out Michael Hainey’s “After Visiting Friends.”  I read it in one sitting and it is still rolling around in my mind.  A great book.

    Thanks for the recommendations.

    I have the Hainey book on my kindle, and will add the other one to my list.

    Yesterday, I wrote about a Washington Post column by Gene Weingarten in which he critiqued a new online section of the New York Times called "Booming," designed for Baby Boomers.

    One passage from the column:

    "I’m here today to make some suggestions to the Times for making 'Booming' even better. First, change the title. 'Booming' is too loud. We boomers prefer a little peace and quiet when we kvetch. Call the section 'Oy'."

    To which one MNB user responded:

    What the hell does "oy" mean?  Something to do with Olive Oyl?

    For that matter, what the hell does "kvetch" mean?  "Throw-up"?

    Let me familiarize you with an online service called Google. Type either of these words into Google - in fact, pretty much any word - and it will instantly tell you that "oy" is a "Yiddish exclamation of chagrin or dismay," and that "kvetch" is Yiddish for "complain" or "whine."

    (Move reference: Sally Field as Norma Rae using "kvetch" when talking to Ron Leibman's New York labor lawyer. It's a classic!)

    I referenced yesterday a David Carr column in the New York Times that was all about the ongoing battle being fought between traditional businesses (in this case, TV networks) and upstart offerings that threaten their viewer base and economic model.

    Essentially, Carr argued that traditional businesses are used to providing content the way they want to - bundling channels and services together, so people pay for things they don't want or need in order to get the stuff they want - which may be inefficient for consumers but is high efficient in delivering profits. But as technology and innovation move forward, the balance of power shifts, giving consumers more options and undermining their economic model. Carr may be writing about TV, but he's really describing a broader trend that affects a lot of industries.

    MNB user Matthew Heinze wrote:

    I did like the quote you included from David Carr regarding the consumers deciding where the media industry, and likely the retail industry, will go.

    That said, Carr’s reference to the Masters app really hit home. With two small children, my available weekend time for events such as the Masters is very limited. In fact, this week, I would not have watched a single hole save for the Masters app/mobile site. I checked the scoreboard every couple of hours over the weekend to see what was happening. I noticed the ‘Live’ button but wasn’t really interested in following any particular group throughout the day. Then, when I saw it was going to a playoff I was more than a little interested. However, out in the backyard with the boys I wasn’t about to run in the house to the television. I pulled up the Masters site and there it was, live coverage of the playoff streaming to my iPhone. It didn’t even seem to have any buffering issues which was great. 

    The balance of power is definitely shifting and I look forward to seeing how the ‘traditional’ media and retail outlets respond. As a consumer, I will continue to ask for what I want not the profitable bundle they want to sell me.

    There's the future, folks.
    KC's View: