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: May 21, 2013

    by Michael Sansolo

    Come gather ‘round people wherever you roam. And admit that the waters around you have grown.

    It’s been almost 50 years since Bob Dylan wrote that line in "The Times They Are A-Changin'." Incredibly, most of the readers of MNB are actually younger than the generation whose growing power he was heralding.

    But the message of understanding and accepting a changing world is every bit - maybe more - important today and yet the discussion is always greeted with skepticism. Even here.

    I found Kevin’s "FaceTime" commentary last week about his son’s alma mater sending him return address labels to be one of those moments…especially when I read some of the e-mails Kevin received. Honestly, I’m torn. I still think the mail is actually good for certain things, which I guess dates me. I love getting a personal letter or greeting card. There, I said it. But, I have never understood why countless charities think the way to get my attention is an endless flood of address labels adorned with flowers and birds.

    But the bigger question is exactly what Kevin posed: why would a university think a recent graduate really wants those labels? Is the alumni affairs office oblivious to what’s going on with the young people at the very university it serves?

    Bonnie Fuller, the editor in chief of Hollywoodlife.com, wrote an interesting article on this very topic last week for Advertising Age. In it, she captured the incredible challenge that today’s marketers are facing: how to balance their budgets to reach older consumers and today’s rising young generations.

    Fuller’s point is that senior marketing executives are largely Boomers who seem to be trying endlessly to believe that the younger Millennial generation wants the same marketing that’s been working since, well, Bob Dylan was cutting edge. She makes two very strong points:

    First the rising generation has to be recognized for the power it represents. She expands the traditional demographic age boundaries only slightly to make the case that there are more than 100 million people in the Millennial group. While their spending power is still weak, now is the time to start building relationships for what’s to come very, very soon.
    Her second point is that marketers must accept that this new generation is never going to consume information the way their Boomer parents did. That means newspapers, magazines, television, radio, circulars, etc. are all becoming increasingly less effective. As she says, it’s time for the marketing community to start putting all its attention to understanding today’s electronic and personalized communication—a job, she argues, is too often farmed out to others today.

    That’s a hard message for many of us to hear. I not only love newspapers and magazines, I spent much of my career in that field. It pains me to read about their waning clout because I think both forms of communication can be some compelling and important, but the reality is that they are fading. I can’t tell you the last time I bought a copy of Advertising Age and, let’s be honest - MNB has never once been published on paper.

    I also have great sympathy for the marketing community as we navigate this new era because today there is no easy path to follow. Today’s marketers, especially in the supermarket community, need traditional media to reach their main shopper base of Boomers and seniors, yet they also need strategies to reach out to the younger population. And since all groups will likely be shopping side by side for decades to come, this balancing act won’t be short lived.

    That’s especially important if supermarkets want to retain their relevance and primacy among those same young shoppers.

    So against that backdrop, the story of Brian Coupe’s useless address labels takes on even more importance. Because a marketing campaign that brings derision from the intended target is one that will never work.

    Remember what Dylan wrote:

    You better start swimming or you’ll sink like a stone.


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

    Published on: May 21, 2013

    by Kevin Coupe

    The Wall Street Journal reports this morning that Stephen King - who has been an aggressive pioneer in the e-book business, even publishing digital-only books - has decided that his next novel, "Joyland," will not be available for the foreseeable future as an e-book. King has held onto the digital rights to the book, and has no plans to sell them.

    The reason? He wants to support traditional booksellers.

    "I have no plans for a digital version," King says. "Maybe at some point, but in the meantime, let people stir their sticks and go to an actual bookstore rather than a digital one."

    The story notes that "Joyland" is an experiment on several levels for King. It is being published by Hard Case Crime, described as "an independent publisher of old and new crime fiction paperbacks that boast the lurid but entertaining cover art that characterized pulp novels in the 1940s and 1950s." His usual publisher, Scribner, also has a book from King coming out in 2013 - "Doctor Sleep," due this fall, is a sequel to his classic "The Shining."

    "Joyland" is to be available on June 3.

    I think this is an interesting experiment, though to be fair, King is one of the few authors who can afford to eliminate an entire distribution option.

    Besides, I'm a big believer in exclusive and proprietary products and services - if he's going to write digital-only novels, it makes perfect sense - especially considering his prodigious output - to also publish print-only novels.

    It keeps the e-book business happy, as well as traditional booksellers.

    When you think about it, this is a canny move by one of publishing's biggest stars.

    But it also points to the ultimate lesson - which is to get people into stores, you have to offer them something that they cannot get elsewhere.

    And so, here's the challenge I would pose to every bricks-and-mortar retailer:

    Look around your stores. How much of what you sell is available elsewhere? How much of what you sell is exclusive? To what extent are you differentiating yourself by promoting the exclusivities, and how are you even finding ways to create differences in the categories that you have in common with the competition?

    I'm just asking...
    KC's View:

    Published on: May 21, 2013

    Bloomberg Businessweek reports this morning that Delaware Chancery Court Judge Leo Strine has ruled that Walmart officials "must turn over more internal files on what directors knew about claims that executives handed out bribes to facilitate Mexican real-estate deals," as well as "documents about how officials set up the investigation of the Mexican bribery allegations and some files the company argued were covered by the attorney-client privilege."

    The ruling involved lawsuits filed against Walmart by investors claiming that management did not exercise the proper oversight over company operations; the suits have been filed by funds that include the California State Teachers’ Retirement System, the New York City Employees’ Retirement System and the Indiana Electrical Workers Pension Trust Fund.

    The judge said that Walmart could not "sanitize" its response to shareholders' requests for documents.

    Walmart has been accused in New York Times stories of spending millions to bribe local Mexican officials as a way of greasing the wheels for growth there. These accusations have been expanded into probes being conducted by the US Congress, the US Securities and Exchange Commission (SEC) and the US Department of Justice. Walmart also has launched an internal probe.

    The accusations of bribery have been widened to also include China, India and Brazil.
    KC's View:
    "Sanitizing." That's probably a good word for what Walmart would like to do in this case ... do whatever it can to slow down the process so that when the facts do come out, they damage the company's reputation and prospects as little as possible.

    We can argue whether this, in fact, makes sense ... whether the company might be better served by simply owning up to what it has done, deal with the consequences, and get past it.

    I'll almost always come down on the side of US Supreme Court Associate Justice Louis Brandeis: "Sunlight is the best disinfectant."

    However, that's a phrase not usually found in the bylaws of public multinational companies.

    Published on: May 21, 2013

    Point of personal privilege...

    My newest Forbes.com column has been posted. The subject: Six business lessons that can be learned from the new Spenser novels being written by Ace Atkins.

    You can access it here.

    I'll be interested to hear what you think.
    KC's View:

    Published on: May 21, 2013

    Sources at Supervalu have provided MNB this morning with a copy of a memo sent out to the company by CEO Sam Duncan.

    The text, in its entirety:

    "Good morning,

    We are well into our first quarter, and I want to thank you for your continued focus as we move forward as a stronger, more efficient company. We still have a lot of work ahead of us, but I know we have a solid team ready to take on the challenges and opportunities ahead.

    "Everyone across our business areas – Independent Business, SAVE-A-LOT and the retail banners – is working hard to drive sales and control our costs. We are building momentum, and have a go-forward plan in place that we believe will deliver results and rebuild our company.

    "As I shared with you during each of our recent employee meetings, I am a strong believer in rewarding performance. I am pleased to announce that our Board of Directors and executive team feel the same way and have approved implementing a bonus program for Fiscal Year 2014. The bonus plan is tightly tied to performance, and we must see results before a bonus payout will be made. Those who are eligible for the bonus plan will be hearing more details from your managers.

    "I recognize that there are some of you in the company who are not eligible for our bonus plan, but I wanted to share this news with everyone because we all have a role in the success of SUPERVALU. As we continue to improve the business and show results at all levels of the organization, we will be able to consider bringing back other incentive programs such as our merit increases and 401k matches for everyone.

    "I am confident in our business plan and in our team to make this happen. Let’s continue to stay focused on driving sales and generating positive results. Thanks."
    KC's View:
    It strikes me, upon reading this email, that a very clear message is being sent here - that it is more important to reward the people at the top who are eligible for bonus programs than it is to spread out the rewards to those who would only be available for merit increases and contributions to 401k programs.

    I'm not sure that this necessarily is the best way to generate loyalty, comity and fellowship in the ranks. And this is proven out by the email I received from the Supervalu employee who wanted the opportunity to respond to the company CEO...

    I have worked for Supervalu for many years (before the Albertsons debacle) and have always been proud to invest the time and effort to perform at 110%. When Sam came on board, I believed he was going in the right direction to turn this company around.  However, as I logged in this weekend to catch up and get ahead for the new week (after having worked 10-12 hour days + weekends for the last several  months)  I was dismayed to read how bonus eligible personnel will be rewarded first before wage increases and the 401K match are reinstated for all.

    We have been told we are “in this together”, yet we have seen Wayne Sales take $16M+ out of the company, we have had coffee, paper plates, and locker room towels taken away; our work off-site days have been limited to two days per week, health insurance costs have increased every year and now only bonus eligible employees will be rewarded for ALL of our hard work.

    Departments have lost key employees because SV can’t pay competitively and the lack of merit increases/401k match. Remaining workers are left picking up the work and are asked to continue to do more with less. As Sam said in the last quarterly meeting, he was concerned about “Optics” (how SV is perceived by its customers) and would focus on cutting out unnecessary expenses, with which I completely agreed. Sam – How is your message going to be perceived by the many (not “some”) employees not bonus eligible?

    Some senior staff and supervisory levels were bonus eligible up until a couple of years ago.  Now those levels will not see merit increases OR bonuses.

    Even while being a whole-hearted capitalist and one who can rationalize executives earning higher salaries and being paid bonuses when they perform, I believe this decision was unconscionable.

    Increased working hours and health insurance costs have led to a net decrease in total pay. These are real costs to the family in both money and time taken and we are nowhere near keeping up with inflation.

    Dear Sam and Board, I was planning on spending several hours of my weekend working on SV tasks. Due to Sam’s message I will now spend those hours working on sending out resumes.

     
    The question is, how many good and hard-working Supervalu employees feel the same way?

    Published on: May 21, 2013

    The New York Times this morning reports that Apple Inc., even as it became the nation's most profitable technology company, "avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen ... Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world."

    Apple maintains that it has done nothing wrong or illegal, but CEO Timothy D. Cook, who is scheduled to testify at a public hearing in Washington, DC, today, is expected to face a hostile bipartisan reception from lawmakers seemingly astounded by the audaciousness of Apple's tax avoidance strategies.

    The entire story - and it is worth reading - can be read here.
    KC's View:
    First of all, the Cook hearing today should be plenty entertaining. (Though it is hard to know how much coverage it will get, since the networks and cable news channels are properly focused on the devastation in Oklahoma.) It is certainly nice to know that the folks in Congress can be bipartisan about something...

    The Times piece makes clear that Apple is doing things that a lot of other multinationals are doing ... and that the real problem is a US tax code that is outmoded, unfair and in many ways, incomprehensible. (Apple seems to agree with this, by the way. It just seems to have found ways to comprehend the tax code in a way that saves it billions of dollars.)

    As a confirmed Apple user, fan and even advocate who would find the world a far less pleasant place without my MacBook pro, iPhone, iPad and various other technological marvels, I must say that I find these accusations to be disturbing, and want to hear the explanations. To me, and, I think, to a lot of other Apple users, the company is more than a tech company ... it represents something better, something aspirational, something democratic (small "d"). Behaving like "other companies" is not acceptable.

    I am an Apple user, fan and advocate. But I will find it hard to be an apologist.

    Published on: May 21, 2013

    NACS is out with its Consumer Fuels Survey, which reveals that 85 percent of Americans taking vacations this summer will be traveling by car, with 82 percent of them stopping at some point at a convenience store.

    According to the report, "Besides gas purchases, 82% of vacationers say that they plan to stop at a convenience store as part of their summer trip, and they cite buying a drink (59%), using the bathroom (59%) and purchasing a snack (55%) as the top three reasons why. Vacationers also are much more likely to buy a sandwich or meal (21%) or use the ATM (20%) in the warmer summer months; only 4% of consumers said that they would go inside the store for either item when surveyed in January."

    The report goes on: "American consumers will likely enjoy their coming vacation more given that they are feeling better about the economy. Consumer pessimism appears to have bottomed out; 54% of consumers say they are 'pessimistic,' the lowest percentage of pessimism recorded all year in NACS’ monthly surveys. Relatively stable gas prices may also play a role, as 84% say that gas prices affect their feelings on the economy."
    KC's View:

    Published on: May 21, 2013

    The Wall Street Journal this morning reports that "the Urban Land Institute ... released the results of a survey showing that members of Generation Y, also called Millennials, prefer dining and entertainment as part of their shopping trips. They often shop online but also frequent discount department stores and warehouse clubs."

    In order to get these young people off their smart phones and into stores and shopping centers, the survey suggests, retailers need to add experience-based venues that offer the opportunity for socializing and entertainment. This can mean restaurants and movie theaters, or fresh-food driven supermarkets, or even dog runs where pet owners can congregate with people of like interests.
    KC's View:

    Published on: May 21, 2013

    • The Chicago Tribune this morning reports that GrubHub, a Chicago-based startup, is merging with Seamless, a similar company based in New York. The two companies will together create "an online food ordering company with more than $100 million in revenue and a combined network of more than 20,000 restaurants across the U.S. Both GrubHub and Seamless connect diners to restaurants that offer takeout and delivery, taking a cut of transactions processed through their technology platforms.

    Terms of the deal were not disclosed, and branding decisions reportedly have not yet been made for the company.
    KC's View:

    Published on: May 21, 2013

    • Walmart said yesterday that Stephanie Wong, senior vice president at Wal-Mart China, is leaving the company "to pursue other opportunities," and that Carol Fung, vice president of hypermarket merchandising, grocery and consumable of Wal-Mart's China division, also is leaving the company, for "personal reasons."

    No other details were provided.
    KC's View:
    I think we all can agree that this is the sort of press release on which none of us wants to see our names.

    However, considering all the stuff going on, it seems at least possible ... maybe even likely ... that we'll be seeing more such releases coming from China, India, Brazil and Mexico.

    Published on: May 21, 2013

    • A.T. Kearney has released its annual Achieving Excellence in Retail Operations (AERO) Study, revealing that "there are many underutilized sources of customer data. While leading retailers were gaining from the use of customer data sources, less than half of the retailers in the study collected social network data from third party domains, and just 8 percent thought it made an important contribution to generating insights.


    Bloomberg reports that McDonald's is eliminating the Angus burger from its menus, and "has also considered axing Caesar salads, the McSkillet Burrito, the Southern Style Biscuit and steak bagels."

    The goal, according to the story, is "to streamline a menu that has expanded by 70 percent to about 145 items since 2007 -- straining kitchen staff, gumming up service and spoiling customers for choice.
    KC's View:

    Published on: May 21, 2013

    • The Fresh Market has named Jeffrey Ackerman, executive vice president/CFO at Sealy Corp., to be its new executive vice president and CFO.
    KC's View: