business news in context, analysis with attitude

Published on: May 10, 2013

by Kevin Coupe

I don't know about you, but one of my least favorite retail stores out there is Abercrombie & Fitch. There's just something off-putting about the store - all those perfect-looking young people who work there, and all those wall-sized pictures of people with sculpted abdominal muscles.

Well, it turns out that they don't really want me in there, and they certainly don't want me wearing their clothes.

Business Insider has been running a story that's been getting a good deal of exposure on the internet, with A&F CEO Mike Jeffries quoted as saying that "in every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely."

Sex appeal, Jeffries said, is "almost everything. That’s why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that." And, in fact, they don;t even make large sizes, because they don't want large, unattractive people wearing their labels on their large, unattractive bodies.

There are a couple of lessons to be learned from this story.

One is that even if you think something and believe something, sometimes it does not make sense to actually say it out loud. Especially not to a reporter. And if you are asked a question that forces you to address such issues, it is critical to have crafted a less obnoxious way to say it that won't offend people.

To be fair, A&F is only doing something that a lot of retailers do: niche marketing. (After all, is A&F being any more exclusionary than, say, Casual Male XL?) But there are ways to say something, and there are ways not to say something. (Besides, sometimes not-so-attractive people actually buy stuff for attractive people, and A&F has just become a less appealing option. I'll just wander over to J. Crew.)

But here's the other lesson:

Mike Jeffries' comments were made in an interview conducted in 2006.

That's right. Seven years ago. But they've surfaced to the top, because that's what can happen on the internet.

When I was a young newspaper reporter back in 1978, a local politician was annoyed by something I'd written. But, he said, he wasn't going to worry about it because today's newspaper would be used to wrap tomorrow's dead fish. (Of course, he called me into his office to yell at me about how much he didn't care about it.)

But things have changed. Today's news now can be tomorrow's news. Or next year's news. Because nothing goes away. Ever.

Published on: May 10, 2013

MarketWatch reports that Whole Foods co-CEO Walter Robb said in an interview that the organic grocery chain plans to take a “good hard look” at parts of the 199-store Fresh & Easy chain that Tesco is divesting in California, Nevada and Arizona.

Tesco has said that it has received "lots of interest" in the chain, which never seemed to get any traction in the markets it served, despite the fact that the UK-based retailer said it did years of research into American consumer behavior before it began rolling out stores.

According to the story, "Whole Foods, bolstered by its healthy cash flows and no debt, plans to open 32 stores for its September fiscal 2013 year. In 2014, Whole Foods intends to open 33 to 38 stores.

"Robb said Whole Foods is energized by the customer reception for new stores the company has opened in Iowa and other midwestern states where Whole Foods previously hadn’t set up shop."

Published on: May 10, 2013

There is a fascinating piece in the UK's Daily Mail that is based on a book entitled "What I Eat: Around the World in 80 Diets," by Peter Menzel and Faith D’Aluisio, which looks at what 80 people in 30 countries eat on a regular basis, and vividly illustrates the "food gulf" that exists between people of different nations.

Essentially, the pictures show families with the products they buy on a weekly basis, and the comparison between what they eat and what they spend is remarkable.

And I just found the story fascinating, and plan to buy the book.

You can check out the story here.

Published on: May 10, 2013

On National Public Radio (NPR), The Salt reports on how there are concerns that "he regional rules and traditions that have defined top winemaking regions like Champagne, Burgundy and Chianti for centuries could melt away as climate change takes effect.

"The main concern is that grape varieties that have brought renown and reputation to certain appellations — the syrah grapes of the French Rhone Valley, or the cabernet sauvignon of Bordeaux — may no longer thrive in those places several decades from now. Some people say there is little reason to fear, but others are already thinking ahead about which grape varieties will work best in their regions under forecast temperature changes. And it's possible that old wine standards and definitions, revered like religion for ages, could be rewritten as winemakers adapt to a warmer future."

The thing is, these decisions have to be made now - because winemakers have to begin planting grapes now for wines that will be in prime production in decades.

Published on: May 10, 2013

• The Wall Street Journal reports that Quidsi, the online retailer acquired by Amazon.com for $500 million three years ago that operates Diapers.com and Soap.com, "is offering its own version of the popular Prime shipping service that will allow users to get two-day shipping on many orders. For now, it is offering the service free to users for 90 days, though it will later introduce a paid annual membership."

The service will be known as "Familyhood Plus."

Published on: May 10, 2013

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

• The Detroit Free Press reports that Meijer Inc. plans to open its 200th store next week, in Swartz Creek, near Flint, Michigan. It is one of six planned for this year.


• The Newark Star Ledger reports that "the owner of four dollar stores in Essex and Union counties has been charged with money laundering and other crimes after investigators determined more than $5 million in fraudulent food stamp transactions took place at his stores, authorities said today. Muhammed Farooq, 49, of Somerset, was charged with money laundering, theft by deception and food stamp fraud when he was arrested..."

The story says that "Farooq was allowing patrons to buy non-food items, such as electronics, with food stamps ... The purchases totaled roughly $5.2 million and went on for nearly 2 1/2 years ... A search of Farooq's Somerset home turned up $150,000 in cash, six computers, electronic food stamp machines and detailed business records."

Y'know what I've never understood? How come crooks keep detailed business records of their misdeeds? You'd think that if they were going to rip people off, they'd try to do a good job of making it hard to track through lousy paperwork...


• Buffalo Business First reports that Rite Aid has converted the majority of its stores in the western New York region to its "wellness format," a move that has cost the company millions of dollars.

According to the piece, "Wellness conversion is designed to go beyond just furnishings: Rite Aid stores now carry an enhanced selection of wellness products and resources, advanced clinical pharmacy services. The stores are also staffed with 'wellness ambassadors,' who will provide personalized customer product guidance intended to bridge the front end of the store with services provided by pharmacists on the back end."

Published on: May 10, 2013

We continue to get email on the subject of internet sales taxes...

one MNB user wrote:

I’m baffled by some of the responses to your piece on taxing internet sales. If our country and states charge taxes on the sale of goods, then ALL sales of goods should be taxed. Is that such an odd scenario? I find preparing and filing my personal income taxes a tedious job too, with a lot of record keeping, etc. but because I not only work as an employee but run my own small business, I need to hire an accountant. I don’t get to use that as a reason or excuse to get out of paying taxes. And neither should anyone else. Cutting down on taxes doesn’t equate to taxing certain individuals or businesses, but not others. Well… maybe it does because there are quite a few corporations who pay little or no taxes at all, along with some of the richest Americans, while the rest of us pay the majority of income taxes as a percentage of our earnings…. Hmmmm… As Roseanne Roseanna Danna would say…. “Never mind…”

From another reader:

The internet sales tax is not about "fairness" between online and brick-and-mortar retailers. It's about misery loving company. It's a bout whining because you haven't brains enough to compete. It's about government strong arm tactics because state legislatures don't have the guts to force their own citizens to pay the taxes the enact. It's lazy, sleazy, underhanded, and poorly conceived -- like so much Congress does.

And, from yet another reader:

The reader who appears to be a business owner and wrote the long response to the proposed internet tax has a huge flaw in his argument.......South Dakota has no income tax, but has a substantial sales tax.   Last time I purchased something in Sioux Falls, I believe the sales tax rate was approaching 10%.

The five states with no sales taxes are:  Alaska, Montana, New Hampshire, Delaware, and Oregon.   Once again....it highlights why it would be a good idea to live north of the Columbia River when you move to Portland as there is no income tax in Washington and no sales tax in Oregon.  

You might be surprised how often I have this conversation with clients who are attempting to establish a new home (or a new second home) in retirement and are looking for the most tax-friendly places to live.

I have to admit that while I'm no fan of paying higher taxes, I think I'd feel guilty about living in Washington to avoid income taxes and shopping in Oregon to avoid sales taxes. Because while doing so, I'd be using the roads, riding public transportation, going to museums and doing all sorts of other things that survive because people pay taxes to support them.




On the subject of Hointer, the computers-and-robots jeans store in Seattle that I talked about yesterday in "FaceTime," one MNB user commented:

I am someone that hates having to find the right size.  I go to the dressing room only to discover that my mind is skinnier than my body, thus having to exit the dressing room in a semblance of a small depression over my eating habits.  I then have to find the right size and shamefully go back to the dressing room in a walk comparable to a waddle (because I tend to walk the way that I feel).  And let’s face it, once married, guys rarely go shopping by themselves so the “fatter than I thought” walk occurs in front of my wife most of the time.  And at the end of this experiment, I don’t have to be embarrassed the skinny sales clerk ringing me up isn’t secretly judging me.   For all these reasons, the “Jeans Wizard” (or the whole system behind the big white wall) allows me to order up the next larger size (or two sizes up) without the embarrassment,  depression, admittance of “fatittude,” and with less energy and time…  this seems like a no brainer.  I am surprised all guy focused retailers have developed their own “wizard” behind the wall.  Good for Hointer.  I believe the Big Box Vending machine idea will be successful in many arenas in the future.




Regarding Walmart's food safety efforts in China, one MNB user wrote:

You closed the post with this comment: "Does it strike anyone else that $16.3 million to address food safety issues in China over three years seems like a drop in the bucket?"

Prior to that I was thinking, kudos to Walmart for stepping into a responsibility they don't directly own. But your snarky add-on (and I do appreciate snarkiness) spurred me to ask more questions:

How much do other grocers/retailers spend on food inspection? In China?  In the other countries they serve?

$16.3 million may be a drop in the Walmart total $470B bucket, but what percentage is it of Walmart's margin in China?  If they did this worldwide what would that "drop" become?

And then there is economic scale.  Maybe $16.3 million will go a long, long way in China.  Who else spends more than that in China on food inspections?

Is Walmart leading or lagging with this move relative to other retailers?   

So do you give Walmart credit for changing the requirements as a retailer, protecting their growth as a business, being socially responsible OR do you poke them with a stick because 16.3 million seems puny relative to a $470B company?  Seems like a little more information would help justify the snarkiness or maybe...possibly...allow you to give a rare small gold star to the big kid on the block.  

Your comment felt like a quick jab just "cuz it's Walmart" and they are the easy punching bag vs. being amply justified as I've seen in some of your other posts.

Full disclosure: I work for a vendor selling to Walmart.

Actually, I thought I was doing both - giving them some credit and poking them with a stick.

I think that one question you ask, however, is irrelevant. How the food safety expenditure affects their margins doesn't really matter if the food they are selling is not safe, or is not what they say it is. You spend what you have to spend to maintain credibility and transparency, and if that means you can't make money, then you don't do business there. Because if you sell tainted food, it won't matter what your margins are, because you'll be out of business anyway.

Published on: May 10, 2013

Spenser, the iconic Boston private eye who has been the protagonist in a staggering 40 novels, is back in a new book by Ace Atkins, "Robert B. Parker's Wonderland," and I am happy to report that he's in great shape - jogging, cooking, letting fly with the sardonic observations, and even finding time to resolve one of the more densely plotted cases in the series.

As you may recall, Atkins - the author of a number of excellent novels - took over the Spenser series after Parker passed away in 2010. Last year, he produced "Lullaby," which I thought represented a excellent take on the character, capturing the flavor of the character without seeming too imitative. "Wonderland" is even better, in part because I think he felt free to stretch his writer's muscles a bit more.

The plot centers on Henry Cimoli, the boxing trainer who has been a friend to Spenser since his fighting days; up to now, Henry has been a peripheral character, but Atkins gives him some more dimensions without losing the essence that Parker gave him. The condo where Henry lives is being threatened by a heavy-handed developer who wants to turn it, and the area surrounding it, into a lavish, Vegas-style casino. But things are not always as they seem, and Spenser - as he often does - excels at pulling on strings to see what develops. He is aided in this by Zebulon Sixkill, the native American he has taken on as an apprentice, who first made an appearance in Parker's last Spenser book, "Sixkill."

One of the nice things about "Wonderland," I think, is that Atkins allows the story and characterizations to breathe a bit, actually going back to the style of book that Parker wrote earlier in his career, before he became a master minimalist. He's also allowing Spenser to age, gracefully, and just a bit. There are references to the fact that he's getting older, and since he's been around since "The Godwulf Manuscript" was published in 1973, it seems entirely comfortable. Spenser remains plenty vital and virile, but this injects some needed reality into his existence.

Spenser also is on his own quite a bit in "Wonderland." His longtime love, Susan Silverman, makes just a few appearances, and she adds to the plot as opposed to be simply worshipful. Hawk, the enforcer who is Spenser's best friend, does not appear, but this has the effect of forcing Spenser to be even more autonomous than usual. Which is fine.

Atkins has the voice and the musicality of the prose right, he's able to riff on the notes a bit, he gets the characters, and I love the way he brings back people from earlier books.  (I have a petty good memory for this stuff, but I'd completely forgotten about Jacky Wax - I had to thumb through some old books to find him.)  And I suspect he'll only get better and better.

To make this continuation of the series work, Ace Atkins has to make Spenser his own, without forgetting that for many of us fans, he's our Spenser … a character to which we have a longtime and deep commitment.

If you're a Spenser fan, or even if you're not, go get "Wonderland." It is a first class entry in a mystery series that 40 years ago began to redefine the genre, and continues to engage and enthrall readers.




While traveling to Chicago last week, I had the most amazing breakfast - chorizo hash, made with jalapeños, cheese and fresh tomatoes, and served with over easy eggs - at a place called Hash House A Go Go, that specializes in what they call "twisted farm food." There apparently are about a half dozen of these Hash Houses around the country, and the food is both excellent and plentiful ... and to be honest, I've had dreams about the chorizo hash. Lovely dreams.




Iron Man 3 was loud, boisterous and reasonably entertaining. But the more I think about it, Iron Man 3 represents a lot of what is wrong with movies these days. The special effects are designed to blow you away, but somehow there is very little magical about them. The characterizations are broad-stroke, with very little subtlety. And the script, while it has some unexpected twists and turns, just seems thrown together.

Here's the Iron Man 3 metaphor that stays with me. At various points in the story, it is shown that Tony Stark (Robert Downey Jr.) doesn't need to be in the suit for it to work. The suit can, in fact, be empty and still be effective - it is all technology, and no heart and soul. Which pretty much describes the movie.

On the other hand, maybe I'm just getting too old to find this stuff to be anything but empty entertainment.




That's it for this week. Have a wonderful weekend, and I'll see you Monday.

Slàinte!