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: June 25, 2013

    by Michael Sansolo

    Truth be told, I’m not entirely certain what to think of Big Data largely because I still have a lot to learn. Certainly it has the ability to let every type of business know more things about more things then ever. Yet, while knowledge can be power, two questions nag at me:

    • Can anyone manage all this information properly?

    • Can data driven decisions go awry?

    I’m thinking the answer is yes to both of these questions, but it’s going to require the same magic ingredient technology and data have always needed: smart humans who know the difference between data and information.

    Since that day in the 1970s when the first pack of gum was scanned by the first checkout, the world of data changed forever. Suddenly we could know more about inventory management, product location, shopping patterns, pricing sensitivity and more.

    Yet what drove the improved use of that data was the most human of conditions: competition and the need to keep up. And truth be told, decades into the data movement there are still many things businesses don’t know, there is still too much inventory in the system and there are still mysteries in everything we do.

    I’ve had the great experience of swimming in oceans of acronyms from DPP (direct product profit) to ABC (activity based costing) to…well it just keeps coming. In the meantime we’ve all gotten more connected, exchanged more information and still the need for improvement goes on.

    In other words we’ve learned more and more yet still have a long way to go to get as smart as we need be.

    Which is why the human element behind good decisions will never, ever go away.

    There’s an interesting data story playing out right now in the culture of professional tennis. Rafael Nadal, the incomparable Spanish star who recently romped to another French Open title, provides a great study in what happens when data trumps wisdom.

    Nadal recently sat out for a few months to recover from injuries. On his return, he immediately returned to the form that has made him one of the most successful players in history.

    Yet the computer rankings didn’t include his history, his injury or even his return to championship form. It simply measured numbers and determined that Nadal’s ranking should drop because of the all the time he missed, even though his skill didn’t diminish. (Ironically, the player he beat in France jumped over him in the rankings.)

    Given that the rankings impact the draw at the next big tennis event - Wimbledon - and that the rankings are used to ensure the best possible match-ups, the tennis world on line is pitching a fit. The rest of us can just consider the lesson in data management.

    Because in truth, the computer is both right and wrong and that happens in business too. Business decisions need understanding of the complexities and realities of the real world to explain why some products are less profitable than others, yet remain essential on the shelf. Similar challenges can arise in almost every aspect of business.

    Data - especially Big Data - can measure a lot of things; but intelligence isn’t limited to understanding the data. Big Data becomes Big Understanding only if we take the time to learn what it’s telling us and what it cannot.

    And then again, we might have to learn that the unbiased computer at times will see things that our human eyes cannot. Nadal was eliminated from the tournament yesterday in his first round match. Wimbledon’s grass courts haven’t always been kind to him, and this is the second consecutive year he’s failed to get to the finals, much less win a championship.

    Maybe the computer knew something all along.


    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: June 25, 2013

    by Kevin Coupe

    The meatball saga may be coming to a close, but lessons remain.

    Last week, in my FaceTime commentary, I talked about a disappointing experience I'd had in try to track down frozen Italian meatballs made by a company called Rosina's that happen to be my teenaged daughter's favorite comfort food. Since I'm going to be out of town for all of July, I wanted to have plenty of them in the freezer. Stew Leonard's, where we've always bought them, doesn't carry them during the summer, and while they were willing to special order them for us, I also reached out to the manufacturer to find out what other local retailers might carry them. The response there bordered on the dysfunction, and if you missed it you can learn about the whole saga here. My complaint, in general, was that Rosina's risked turning an enthusiastic, long-time consumer of its products into a ticked-off shopper more than willing to share his negative experience.

    While I got a lot of email about this commentary last week, including from a number of retailers and manufacturers offering meatball alternatives, the one company that I never heard from - despite several phone calls and my very public scolding - was Rosina's.

    Well, that's changed.

    I've had a very nice conversation with Darcy Schlee, marketing manager at Rosina's, who, I think it is fair to say, dismayed by the way this story took on a life of its own. She apologized several times, told me that the company stands behind its products, and promised to send me a case of meatballs by way of apology. (We're going to be rolling in meatballs, since we're also getting a case through Stew Leonard's.)

    Which is very nice of her. By way of concluding this episode, though, I'd like to make the same points here that I made to her...

    First, sending me meatballs was not necessary. This was not about extorting meatballs out of Rosina's or anyone else. This was about using a specific customer service experience to illustrate what I suspect is a much broader problem at a number of companies.

    Which brings me to my second and larger, more Eye-Opening point.

    What Rosina's did wasn't malevolent, or mean-spirited. It was dysfunction, plain and simple, because the folks in customer service seemed not to be paying attention, and didn't realize how important one customer can be in affecting a company's brand equity and reputation. I'm still not exactly clear - and I'm not sure that Darcy Schlee understands - exactly what happened, why the customer service department answered a question by rote, rather than actually listening and responding.

    It almost doesn't matter. What matters - for Rosina's and every other company - is that the lesson is learned. And the mistake not repeated.
    KC's View:

    Published on: June 25, 2013

    The Los Angeles Times reports that Aldi USA, the German-owned limited assortment/discount store chain, is headed for Southern California, but unlike most of its competitors, it's skipping Los Angeles and aiming for the Inland Empire. The company, which runs more than 1,200 stores in 32 states from the Midwest to the East Coast, is planning a $55-million Moreno Valley complex that will serve as its regional headquarters and distribution center, according to city documents." Analysts suggest that the plans indicate that Aldi is planning a major expansion into California and the Southwest US.

    According to the story, "The company's facilities will total 935,000 square feet and will include at least 200,000 square feet of refrigeration and a 24-hour warehouse situated between Eucalyptus Avenue and the 60 Freeway, according to officials. Aldi is looking to invest at least $55 million in the project, which would create 200 new jobs, according to the memorandum."
    KC's View:
    I have to believe that this development is particularly worrying to the folks at Stater Bros., a chain that could be particularly vulnerable in markets where customers can be cash-strapped and looking for alternatives that will save them a little money on their weekly grocery bills.

    That said, companies in the Inland Empire - such as Stater Bros. - would be well advised to start competing with Aldi right now, and not wait until their stores and distribution facilities are up and running. And whatever you do, don't bring a knife to a gunfight.

    Published on: June 25, 2013

    Reuters reports that Carrefour, the second biggest retailer in the world, "is exploring a sale of its businesses in China and Taiwan, including a possible initial public offering in Hong Kong or a combination of some of those assets with another company." And IPO, the story says, could generate as much as $1 billion, which would seem to fit Carrefour's most recent strategy, which has been to get out of non-core markets and reduce debt.
    KC's View:

    Published on: June 25, 2013

    George Zimmer, the founder of Men's Wearhouse who last week was fired by the board of directors from his roles as executive chairman and spokesman for the company, yesterday announced that he has resigned from the board, though he remains a stockholder owning 3.5 percent of company shares.

    Zimmer said that the company had succeeded because of a “guiding principle of servant leadership” that put a greater premium on employee satisfaction and customer service, rather than share price.

    “It is clear from the board’s decision to terminate me … that the directors have determined to avoid addressing my growing concerns with recent board decisions and the strategic direction of the company I founded and successfully led for the past 40 years,” Zimmer wrote in a resignation. He added, “I still care deeply about the company and its future,” and that he retains “a deep sense of pride for what the company has done.”
    KC's View:
    To be fair here, we're really only hearing one side of the argument. The board's rationale for firing Zimmer has gone largely unexplained, with analyst explanation focusing on several scenarios. It is seen as possible that Zimmer was unable to loosen his hold on the company he founded, or as possible that he was seen as being irrelevant to the much younger demographic to which Men's Wearhouse is trying to sell suits.

    But if the owners of Men's Wearhouse indeed are so focused on Wall Street that they are not paying attention to Main Street realities, then it seems likely that they will be sadly disappointed by the results of their moves.

    Published on: June 25, 2013

    • Seattle-based PCC Natural Markets said yesterday that it has teamed with Chinook Book, described as a provider of coupons for natural and organic products, to offer a mobile application that will make coupons available to consumers on their smartphones.

    Chinook Book started as a provider of print coupons, and now has more than 100,000 users in five metro markets. PCC and Seattle are a test market for the new application.

    Eleven coupons on the mobile app are valid through August 31, 2013 and are redeemable initially only at the nine PCC Natural Markets stores in Seattle.
    KC's View:

    Published on: June 25, 2013

    The Food Marketing Institute (FMI), the Grocery Manufacturers Association (GMA), and the National Restaurant Association (NRA) have released what is described as "the first-ever analysis of food waste data collected directly from food manufacturers, retailers and wholesalers," which found that "food waste generated through manufacturing tends to be unused ingredients, unfinished product, or trimmings, peels and other unavoidable food waste.  The large volume of food and relatively few manufacturing sites create economies of scale that allow manufacturers to recycle waste at a high rate.   Conversely, food waste at the retail level tends to consist of finished products more suitable for donation.  Numerous locations and diverse product offerings make food waste diversion a significant logistical challenge for many retailers."

    Key findings from the retail/wholesale sector:

    • Food donation and composting were retailers’ and wholesalers’ primary diversion methods (representing 32 percent and 43 percent of diverted food, respectively).

    • Retailers/wholesalers donated 670 million pounds of safe food that would have otherwise been disposed.

    • The retail/wholesale sector diverted the majority (55.6 percent) of food waste generated from landfills to higher uses.

    Key findings from the manufacturing sector:

    • Food manufacturers diverted 94.6 percent of food waste generated from landfills to higher uses, such as donation and recycling.

    • Nearly three-quarters (73 percent) of food waste diverted by manufacturers went to animal feed.

    • The manufacturing sector donated 700 million pounds of safe food that would have otherwise been disposed.
    KC's View:

    Published on: June 25, 2013

    • The New York Times reports that Unilever-owned Dove has been rebuked for making disparaging and inaccurate comparisons in its ad campaign for Dove Deep Moisture Body Wash, which suggested that the competition's body wash was as gentle on the skin as barbed wire.

    The story says that "the Dial Corporation, another company in the body wash category, filed a complaint over the campaign with the National Advertising Division, the investigative arm of the ad industry’s voluntary self-regulation system, which operates under the aegis of the Better Business Bureau.

    "In a written decision released on June 19, investigators ruled that the advertising with barbed wire should be discontinued because 'while consumers may not literally believe that body wash is as harsh on skin as barbed wire, such imagery nonetheless communicates an unsupported and disparaging message that competing products can seriously damage the skin.'

    "The investigation also concluded that Dove lacked evidence 'to support its unqualified claim' that competing body washes were harsher, and to assert in advertising and packaging that it had 'proven best care,' and should discontinue both practices."

    The Times reports that "Unilever is appealing the decision to the National Advertising Review Board, which also is administered by the Better Business Bureau."


    • The Boston Globe reports that it isn;t just Twinkies that will be returning to store shelves next month: Drake’s cakes which were acquired from bankrupt Hostess by McKee Foods, should start returning to supermarkets in late summer or early fall.

    As reported yesterday on MNB, Twinkies - one of the Hostess brands acquired earlier this year by Metropoulos & Co. and Apollo Global Management - are expected to start hitting store shelves on July 15.


    • Smithfield Foods announced yesterday that it will not renew its contract with Paula Deen, the celebrity chef and restaurant owner who is embroiled in a lawsuit and PR controversy fueled by a history of racially insensitive behavior and the use of racial slurs. Deen already has seen her 11-year relationship with the Food Network ended.
    KC's View:

    Published on: June 25, 2013

    • Rite Aid said yesterday that it has promoted Ken Martindale, its senior executive vice president/COO, to be president/COO., effective immediately. According to the announcement, President and CEO John Standley will continue as the company’s chairman and chief executive officer. 
    KC's View:

    Published on: June 25, 2013

    • Richard Matheson, the accomplished novelist and screenwriter who had a major influence on the genre with stories that captured the national imagination for decades, has passed away. He was 87.

    Among his best known work: "Nightmare at 20,000 Feet," a classic episode of "Twilight Zone" that featured William Shatner. The "Star Trek" episode called 'The Enemy Within." The classic TV movie called "The Night Stalker." The novel "I Am Legend," which was adapted for film several times. The cult classic cilm Somewhere In Time. Plus episodes of TV series that include "The Alfred Hitchcock Hour,” “Rod Serling’s Night Gallery,” and “Amazing Stories."
    KC's View:

    Published on: June 25, 2013

    ...will return.
    KC's View:

    Published on: June 25, 2013

    • The Chicago Blackhawks last night defeated the Boston Bruins 3-2, winning the sixth and final game of the Stanley Cup finals and earning its second NHL championship in four seasons. The win was said to be one of the most dramatic and improbable in hockey history, with the Blackhawks scoring two goals in the final 76 seconds of the game to take the lead and the championship.
    KC's View:
    Don't know anything about hockey, but it seems to me that even a moron can see the business/life lesson here. The Blackhawks could have played the last 76 seconds of the game like it was already over, figuring that they'd come back the next night and earn their championship. But they didn't. They played the whole game. Because that's what you do.

    Published on: June 25, 2013

    The Food Industry Executive Program focuses on leadership development, team management, marketing strategy, and economic theory. Participants who complete this 4 day program will return to their positions inspired and equipped with the tools to better lead their organizations.

    Who should attend:
    Senior managers from food retailing, wholesaling, and manufacturing companies, as well as companies that support the food industry.

    Now offered in two locations for FIEP Fall 2013
    Los Angeles, CA
    September 9-12 2013
    Click here to register.

    Chicago, IL
    October 14-17, 2013
    Click here to register.


    USC Marshall Food Industry Management 3600 Trousdale Pkwy ACC 216 - LA - CA -90089-0442

    KC's View: