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    Published on: June 24, 2013

    An MNB reader brought my attention to the following story, suggesting that it is instructive and Eye-Opening. And I agree...

    The story has to do with Kickstarter.com, the crowdsourcing venture that allows entrepreneurs in a wide range of venues to raise money from potential customers, allowing them to begin or complete whatever project on which they happen to be working.

    One such entrepreneur was writing a book about how to seduce women, and his Kickstarter post was aimed at getting enough money to finish the book, but the tone and content raised a lot of hackles. On a public posting last Friday, here's what Kickstarter had to say about the issue:

    Dear everybody,

    On Wednesday morning Kickstarter was sent a blog post quoting disturbing material found on Reddit. The offensive material was part of a draft for a “seduction guide” that someone was using Kickstarter to publish. The posts offended a lot of people — us included — and many asked us to cancel the creator’s project. We didn’t.

    We were wrong.

    Why didn’t we cancel the project when this material was brought to our attention? Two things influenced our decision:

    • The decision had to be made immediately. We had only two hours from when we found out about the material to when the project was ending. We’ve never acted to remove a project that quickly.

    • Our processes, and everyday thinking, bias heavily toward creators. This is deeply ingrained. We feel a duty to our community — and our creators especially — to approach these investigations methodically as there is no margin for error in canceling a project. This thinking made us miss the forest for the trees.

    These factors don’t excuse our decision but we hope they add clarity to how we arrived at it.

    Let us be 100% clear: Content promoting or glorifying violence against women or anyone else has always been prohibited from Kickstarter. If a project page contains hateful or abusive material we don’t approve it in the first place. If we had seen this material when the project was submitted to Kickstarter (we didn’t), it never would have been approved. Kickstarter is committed to a culture of respect.

    Where does this leave us?

    First, there is no taking back money from the project or canceling funding after the fact. When the project was funded the backers’ money went directly from them to the creator. We missed the window.

    Second, the project page has been removed from Kickstarter. The project has no place on our site. For transparency’s sake, a record of the page is cached here.

    Third, we are prohibiting “seduction guides,” or anything similar, effective immediately. This material encourages misogynistic behavior and is inconsistent with our mission of funding creative works. These things do not belong on Kickstarter.

    Fourth, today Kickstarter will donate $25,000 to an anti-sexual violence organization called RAINN. It’s an excellent organization that combats exactly the sort of problems our inaction may have encouraged.

    We take our role as Kickstarter’s stewards very seriously. Kickstarter is one of the friendliest, most supportive places on the web and we’re committed to keeping it that way. We’re sorry for getting this so wrong.


    It seems to me that this is a perfect example of how to be transparent, how to apologize, how to explain, and how to retain and even increase credibility by being honest and acknowledging a mistake. The folks at Kickstarter may have to rethink their processes a little bit, but in general, it seems to me that they've done the right thing, and they've done it right.

    BTW ... I don't want to spend a lot of time on another apology that was offered over the weekend, but compare what Kickstarter did to the anemic apologies offered by celebrity chef Paula Deen, who now has to deal with the fact that she seems to have a history of being racially insensitive. (I'm being nice here. She actually seems like a terrible bigot. I don't care where she grew up or how she was raised or what her cultural influences are.) Now, I realize that she may be constrained in some of what she says because there's a lawsuit involved, but that's no excuse. (I don't care about the excuses, I don't care about the rationalizations.)

    If I recall correctly, this is the same woman who has has long specialized in shows that celebrate Southern cooking and recipes rich in butter and sugar, but when she was diagnosed with type 2 diabetes, only went public years later when she got an endorsement deal with a company that makes a diabetes medication.

    There's only one thing that's transparent about Paula Deen ... and that's the way her actions and words seem to be catching up to her. She's often done the wrong thing, and she's done it wrong.
    KC's View:

    Published on: June 24, 2013

    FastCasual.com reports that "Chipotle Mexican Grill plans to serve more than 15 million pounds of locally grown produce in its restaurants this year, up from its 2012 goal of 10 million pounds, according to a company press release.

    According to the story, "Most produce travels some 1,500 miles from where it is grown to where it is consumed. All of Chipotle’s locally grown produce comes from within 350 miles of the restaurants where it will be served. Chipotle will work with a network of more than 70 local, family-owned farms to provide bell peppers, red onions, jalapeños, oregano, and romaine lettuce for its restaurants. Chipotle restaurants in Florida and California also serve locally grown tomatoes, as well as lemons and avocados in California. Chipotle’s use of locally grown produce is rooted in its belief that local produce arrives at its restaurants closer to the time it is harvested and results in better tasting food. Supporting local farms also creates and sustains opportunities for family farms in rural communities around the country, according to the company."
    KC's View:
    It was just last week that Chipotle said that it will begin labeling all ingredients in its tacos, burritos and other products that contain genetically modified ingredients, saying this is part of its 'Food with Integrity' approach. Not everybody is going to be able to do what Chipotle is doing, but I think it is very smart ... and I think it clearly establishes differential advantages and how it can be defined as something other than your typical fast food restaurant.

    Published on: June 24, 2013

    The Australian reports that Aldi, the discount supermarket chain, "is taking its assault on the dominant Coles and Woolworths to new heights, launching an online liquor store to serve the eastern states ... Aldi Australia managing director Tom Daunt said the move into online retailing on August 1 would be a world-first for the German-owned multinational and could be a precursor to a full-range internet sales offer.

    The paper has previously reported that "Aldi plans to spend more than $500 million to build two distribution centres in SA and Western Australia, where it plans to open up to 45 and 70 stores, respectively."
    KC's View:
    I read these kinds of stories, and I wonder how much one country, Australia, will serve as a laboratory for other countries where Aldi operates. I also think these kinds of developments ramp up the demands that competitive retailers invest in online shopping initiatives ... because that's where the customer base is going.

    Published on: June 24, 2013

    In Minnesota, the Star Tribune has a piece about Hubert Joly, the new CEO of Best Buy, who is trying to revive the troubled company and seems to be having some success: "Sales have stabilized, expenses are down, and the stock price has more than doubled since last December."

    The Joly approach, the story says, is to approach the company's problems with a level of simplicity, "a concise, simple answer that manages to convey both urgency and practical wisdom. In other words, Best Buy may have serious problems, but the solutions to fix them aren’t that complicated ... Joly’s appeal has been his Renew Blue strategy: Best Buy doesn’t necessarily need to re-invent the wheel so much as it needs the wheel to roll more smoothly. The retailer needs to devote more space in stores to higher-growth products and its website needs to convert more visitors to paying customers. The company’s distribution centers need to supply merchandise to both stores and online customers."

    When asked last week at a shareholders meeting what the company was doing to be price competitive, Joly put that simplicity on display: "Our strategy to be price competitive is to be price competitive,” he said. “Just look at the name on the outside of this building: Best Buy.”

    The story notes that Joly's temperament has been so effective that an some initial resistance to his pay package - $20 million in upfront cash and stock - seems to have largely evaporated.
    KC's View:
    I'd still resist that kind of upfront payout, but that's just me. I believe in payouts that come after you've achieved something, as opposed to before you've moved the needle.

    Published on: June 24, 2013

    Bloomberg Businessweek reports that Aurelie Filippetti, France’s minister of culture and communications, announced that she will "introduce legislation to block Amazon from offering free shipping on books already sold at a discount by the online retailer, according to Reuters. France and other European countries have long fixed the price of books to keep bookstores in business. Current laws keep Amazon from offering discounts on books that exceed 5 percent of the sale price as set by the publisher. But even that seems not enough. Last year, the country’s culture ministry also suggested other forms of aid for bookstores, with help from both publishers and the government."

    It was reported about a month ago that Filippetti "has made attacking Amazon for being a 'quasi-monopoly' part of her portfolio of complaints about internet-based companies."

    One interesting note in the Bloomberg story: Filippetti apparently also is a novelist with several books available on Amazon.
    KC's View:
    This is the same country that, if I'm not mistaken, has a 35-hour work week as a matter of law. Add this new proposed legislation to the list of things suggesting that France is not prepared to compete in a 21st century economy where the real go-getters knock off 35 hours by Wednesday, and where you don't try to deny the realities of modern competition.

    Il n'est pire aveugle que celui qui ne veut pas voir...

    Published on: June 24, 2013

    Bloomberg Businessweek reports that despite the fact that Google has spent more than $300 million to acquire startups that were in the digital payments space, and devoted hundreds of developers to its Google Wallet mobile software, consumer reaction has been apathetic. Here's how Bloomberg frames the story:

    "Wallet has been downloaded fewer than 10 million times in the two years since its launch, according to Play, Google’s app store.

    "For Google, the goal wasn’t to generate fee revenue from the transactions, as banks, PayPal, and other companies do. The idea was to collect data on consumer habits and target ads to them. Google pays such high fees to the credit-card companies it works with, though, that it loses money on every transaction, says Osama Bedier, who stepped down as head of Wallet on May 20 and will shortly leave the company.

    "Google declined to disclose how much it’s invested in Wallet, which uses a phone to store credit- and debit-card information. More than half a dozen people close to the company say it’s reconsidering or has abandoned projects designed to broaden Wallet’s appeal."
    KC's View:
    Yikes.

    I'm sure there are folks out there who use and love Google Wallet. But while I've always been sort of aware of its existence, I have to be honest here - I can't remember ever having received an email or any other sort of entreaty suggesting that I use it. (Not that I could; apparently, only Sprint Nextel users can use it on their cellphones, since Verizon, AT&T and T-Mobile block it from their equipment. Maybe that's why.) And nobody has ever made the case for why I should want it.

    Published on: June 24, 2013

    Here's an interesting fact that reinforces the impact that mobile is having on the retail sector...

    According to SeekingAlpha.com, Starbucks CFO Troy Alstead said last week that almost a third of the company's transactions are done using its stored value card (both physical and mobile), with the company's loyalty program accounting for 25 percent of transactions.

    And, he said:

    "Mobile payments not launched all that long ago represents greater than 10% now of our U.S. transaction but significant opportunities to again continue to drive the efficiencies, speed of service, a lower cost transaction within our store, a very sticky transaction by virtue of the fact that people have preloaded their money that we hold for them in anticipation of that coming transaction and increasingly an ability for us to harvest that information and really determine in the most effective ways over time to understand our customer to target products toward them and in the appropriate ways and the appropriate ways reach them with our messages."
    KC's View:
    The Starbucks mobile payment app is one of my favorites. It is fast, efficient, I get benefits (a free coffee after every 10 purchases) and I can track my usage. (So can Starbucks, but I don't care. I get benefits.) From the beginning, Starbucks has made the case for why I should want it and use it.

    Published on: June 24, 2013

    • The Cincinnati Enquirer reports that "Kroger is touting a new number it says is winning shoppers and adding to the grocer's bottom line: A wait of just 26 seconds to start in the checkout lane, down from 4 minutes a few years ago.

    "Getting shoppers through checkout as quickly as possible is key to building customer loyalty – cited by Kroger on Thursday as one reason earnings were up 9.6 percent in the three months ending May 25, compared with the same time a year ago."


    Crain's Cleveland Business reports that Buehler's Fresh Foods, a family-owned grocery chain, is negotiating to acquire Portage Lakes IGA, a move that "would be the Wooster-based grocer's first in Summit County ... The 25,000-square-foot store also interested Buehler's because it fits a smaller format the company wants to develop now."

    • The Associated Press reports that Starbucks "says it’s hiking prices on average by 1 percent nationally starting on Tuesday. But it says the price for many drinks, such as medium and large brewed coffees and Frappuccinos, won’t change in most its 11,000 U.S. cafes. For a small brewed coffee, the price will increase by 10 cents at most. Other drinks could increase by more than that."

    According to the story, "The price hike comes despite falling coffee costs that have boosted the company’s profits. In the last quarter, Starbucks cited lower coffee costs for a stronger operating margin, which represents the money it pockets from sales after subtracting what it pays to keep stores running ... But Starbucks notes that coffee represents just one of its many costs and historically has accounted for less than 10 percent of overall store expenses."


    • The Associated Press reports that Hostess, which saw some of its brands acquired earlier this year by Metropoulos & Co. and Apollo Global Management when it went bankrupt, plans to reintroduce the Twinkie on July 15.

    According to the story, "Based on the outpouring of nostalgia sparked by its demise, Hostess is expecting a blockbuster return next month for Twinkies and other sugary treats, such as CupCakes and Donettes. The company says the cakes will taste the same but that the boxes will now bare the tag line 'The Sweetest Comeback In The History Of Ever'."
    KC's View:

    Published on: June 24, 2013

    • Gary David Goldberg, the creator of a hit TV series called "Family Ties" that launched the career of a fellow named Michael J. Fox, and who later created an acclaimed TV series called "Brooklyn Bridge," and a successful TV series that ran for years called "Spin City," has passed away of brain cancer. He was 68.
    KC's View:

    Published on: June 24, 2013

    Got a number of emails reacting to last week's firing of George Zimmer, founder of Men's Wearhouse, who also served as its on-camera spokesman with the catch phrase, "You're gonna like the way you look. I guarantee it."

    Last week, Zimmer was let go by the company that now owns Men's Wearhouse. There were, apparently, conflicts about how to run the company, with some saying that Zimmer, 64, was having a hard time letting go of the reins as younger managers were brought in.

    There was even some suggestion - though not officially - that a man with gray hair and a beard was the wrong spokesman for a company trying to appeal to men 20 and 20 years younger. One store even implied that Zimmer was no longer relevant ... which may be the worst thing you can say about an executive. Though there was a social media uproar indicating that Zimmer may be more relevant than the company believed.

    MNB user Kathleen Whelan wrote:

    He was the guy  in charge telling us about the lengths to which Men’s Wearhouse would go to make sure that the customer got to the event looking fabulous.  It made it personal, and differentiated Men’s Wearhouse from other formalwear  rental companies.  If that’s not relevant, that’s really too bad ... I believe there’s still something in human beings that wants – or at least appreciates - a personal connection to a brand.

    MNB user Monte Stowell wrote:

    There are darn few Icons in this business world and George Zimmer is an Icon. The young guns who wanted Mr. Zimmer ousted were probably never taught anything about loyalty and respect in their MBA courses they took in their high priced colleges and universities. Instead of ousting Mr. Zimmer, they should know that he is the face of men’s Warehouse and the single driving force that made it what it is today. My bet would be that none of these young guns could ever build their own new business from the ground up and be as successful as George Zimmer has done with Men’s Warehouse, as they do not have the knowhow or the maturity to understand the human interaction that it takes to build a culture to be successful.

    Mr. Zimmer did something right, as his principles of integrity, respect, entrepreneurship, and being focused on the customer were the hallmarks that he knew would help him to grow his business into a major retailer that has name recognition for both himself and his company.


    From MNB reader Todd Loesch:
     
    It’ll be interesting to see how the Men’s Wearhouse situation plays out. Microsoft was (and essentially still is) in the middle of a similar PR nightmare after they announced some of the features of their new Xbox. They refused to listen to their customers leading up to the announcement, and stubbornly tried to force features down their throats that customers specifically said they didn’t want. Then Microsoft dug itself into an even deeper hole by calling out and alienating a good chunk of their own customers. Many loyal Microsoft fans took to Facebook, Twitter, and numerous forums, and were extremely vocal about switching their allegiance to Sony (Microsoft’s main competitor in this space). As you say…shows what happens when you don’t listen to your customers, and it’s a great example of how powerful social media can be. The public firestorm was so bad that Microsoft recently did a complete 180 on the most-hated features, but I’m sure they’re still in full-on crisis mode.

    Anyway, like you said, the George Zimmer story is far from over. But I’m interested to see how Men’s Wearhouse handles this situation. Will they simply ignore customers and hope the issue goes away? Will they actively alienate their own customer and make things worse? Or, can they learn from Microsoft’s PR blunder?


    From MNB user Steven Ritchey:

    For years, when the occasion came that I would need to buy a suit, which is admittedly rare, I would go to the Men’s Wearhouse.  They always  had the styles I looked for, attentive salespeople to advise me and tailors who understood how to fit a suit and alter it.  Now, after the founder has been ousted, I may not be going back there, and it is getting to be time for a new suit.  I’ve not gone on Twitter or Facebook to express my displeasure, but I still probably won’t be back as I don’t want to support the current management.  I wonder how many other people are like me, who just quietly won’t go back.  They won’t miss me per se, since I’m not there often enough to notice, but if enough like me don’t return, they’ll miss that.

    And from another reader:

    I found it humorous that the day after I wrote this blog post Mr. Zimmer was fired.  I share it with you in case you find it useful...

    3 Minutes Changes Everything.

    So I decided to spend some money today and buy a new suit. I have two suits and a blazer which are perfectly serviceable, but I bought the suits at least 13 years ago and the blazer is probably 8 years old. Amazingly they still fit, though not as well as they once did.

    Anyway, I'm feeling good today so I decide I'm going to get a new suit, and that I'm going to get it at The Men's Wearhouse.  I like this company's commercials. I like how the president has a quiet confidence in his brand.

    So I go. I walk into the store with dress shoes in hand - after all, if you're getting fitted for a suit of clothes, you need to have the footwear you usually use along for the fitting.

    There are four people behind the front counter, and one in front of it. One employee is clearly helping the lone customer, and the other three employees are standing there. The female gives me a half-hearted greeting, as if she's embarrassed to say hello to a customer. The two free males ignore me.

    I head over to the racks, shoes in hand and plainly evident. It should be perfectly obvious not only that I'm shopping for a suit, but that I know what I'm about - I have my shoes!

    I select a couple of sport coats first before realizing that the suits are on the other side of the store. Meanwhile, the female has gone behind the back counter, and one of the males is fiddling with the ties on display near her and the other is watching him. The customer and his employee are still together at the front counter.

    So I head back across the store and start looking at the suits. I'm not really sure what size I am, so I start holding them up to myself and looking in the mirror. I'm not really sure what I want, either, but I'm willing to listen. I mean, yeah, it has to be black, but other than that, I'm pretty open.

    Now, all this can't take more than 3-5 minutes, and probably closer to three than five. But during this time NOT ONE of the three free employees approached me. I mean, I can't make it more obvious that I'm wanting to buy a suit - other than approach the employee myself and announce it.

    Which, to be fair, I could have done. If I were really serious about needing a suit, maybe I would have.

    But the fact is, I don't need a new suit. I just decided to buy one. They're in business to sell people like me suits. Should be pretty simple. I presume they work on commission, so if one of them had said those five magic words ("Hi, can I help you?"), I would have bought a new suit today and they'd have made some money.

    They didn't. After a few minutes, I left. I thought about going to one of the area department stores, but I decided against it. After all, I don't need a new suit. I was sad enough at the state of customer service already, and the local department stores weren't likely to improve my outlook.

    You know the really sad bit? How much money did The Men's Wearhouse spend on those commercials over the past decade to get me into that store for those three minutes?


    All excellent points. Thanks for sharing.

    And, by the way, it reinforces a point often made here on MNB - that the people on the front lines are the most important people in any retail organization. Doesn't matter how great the marketing is, how extensive the selection is, or how great the products are. If the people on the front lines don't deliver, all the other investments are for naught.
    KC's View: