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: July 17, 2013

    by Kevin Coupe

    Courthouse News Service reports that a US District Court Judge has ruled that at least for the moment, it will not make a decision on whether products containing genetically modified organisms can be labeled as "natural," and has said that the matter should be decided by the US Food and Drug Administration (FDA), which has jurisdiction over such matters.

    The ruling essentially puts on hold for six months a proposed class action suit against Gruma Corp., which makes corn tortillas and other products that contain GMOs and calls them "all natural" on the label.

    "The FDA has regulatory authority over food labeling," the opinion states. "There are no FDA rules requiring that products containing [genetically-modified organisms] or bioengineered ingredients be labeled as such. The FDA has issued nonbinding industry guidance indicating that it 'is not aware of any data or other information that would form a basis for concluding that the fact that a food or its ingredients was produced using bioengineering is a material fact that must be disclosed.'" However, the ruling also says that there is a "gaping hole" in the regulations that should be addressed by the FDA regarding claims of "natural" by products containing GMOs.

    In other words, the judge punted. (Not that there's anything wrong with that...)

    Now, I'm no lawyer. But a lawyer friend of mine addressed the issue this way:

    "The court dismissed the case based on a doctrine called 'primary jurisdiction.'  In essence, the court ruled that this is not a question that courts and juries should decide, but, rather, that it should be decided by FDA.

    "Here's the kicker.  The Court referred the case to the FDA for decision.  In the past, FDA has chosen not to address the issue and it may decline to address the issue again.  On the other hand, a referral from a federal judge is no small thing, and FDA may decide to resolve the issue administratively.  If they do, it would be a rather big deal.

    "Now, the FDA would have a number of options.  It could, for example, rule that the presence of GMOs in foods must be disclosed on the label.  On the other hand, they could rule that the presence of GMOs needn't be disclosed, but that food containing GMOs cannot be labeled "natural."  They have other options as well."

    To my mind, the notion that products containing GMOs could be called "all natural" seems patently ridiculous. But I understand that there are varying opinions on this one ... and that the arguments on both sides are pretty passionate.

    In the end, the smart move should be to label the damned things. Just say that they're there, let companies explain why, and let consumers make their decisions. I suspect the GMO genie won't be put back in the bottle anytime soon, but transparency and labeling might resolve some of these issues.
    KC's View:

    Published on: July 17, 2013

    Both Politico.com and the Associated Press have stories about the ongoing debate in Washington, DC, about the "living wage" legislation passed by the DC City Council and currently awaiting a signature or veto by Mayor Vincent Gray, who has expressed concerned about the measure.

    Essentially, the "living wage" bill requires non-union retailers of a certain size - occupying more than 75,000 square feet and with national sales of at least $1 billion - to pay a minimum wage of $12.50 an hour, more than four bucks more than the District's minimum wage.

    Walmart has said that if the bill becomes law, it will pull out of three projects it had planned for DC, and may also decide to cancel the other three stores it had slated to open in the nation's capital.

    Politico frames the story this way:

    "What’s playing out in the nation’s capital has all the hallmarks of a classic union vs. business confrontation — with labor organizations, backed by their Democratic allies in office, pulling out all the stops to block what they view as a fiercely anti-union company that victimizes its workers with low wages during tough economic times. On the other side, industry supporters see the D.C. Council’s move against Wal-Mart as yet another example of short-sighted, self-interested unions and elected officials blocking job creation for those who need it most in blighted areas that deserve it most."

    And the AP chimes in:

    "The minimum wage in the nation's capital already is higher than the federal rate of $7.25 an hour. Other cities and states that have sought to raise the minimum wage above what is required have applied the hike to all businesses. San Jose, Calif., recently raised its minimum from $8 to $10 an hour and San Francisco's rate of $10.55 an hour is the highest in the nation.

    "Still, no other city has singled out certain businesses for higher wage rates. The Chicago City Council tried to pass a similar measure seven years ago, but it was vetoed by then-mayor Richard M. Daley. Opponents have suggested the district's bill may be subject to a legal challenge, but those prospects are uncertain."
    KC's View:
    Ultimately, regardless of how you feel about living wage legislation, it will be a shame if those stores are not opened because these are neighborhoods that needed those jobs. What I feel bad about is that DC and Walmart are essentially playing "chicken" with people's futures, and that feeling sort of dwarfs my conflicted feelings about the legislation.

    Published on: July 17, 2013

    The Nashua Telegraph reports that employees and customers are coming to the aid of Arthur T. Demoulas, CEO of Market Basket, who is facing the possibility this week that he could lose his job as a result of a long-term family squabble that now has spread to the company's board of directors.

    According to the story, Market Basket employees and customers at some of the chain's stores are circulating petitions calling for the company to keep the current management to "protect families from paying higher prices and protect thousands of employees and their future." The petitions are only for purposes of persuasion; they have no legal standing in the case.

    The Telegraph writes that "supporters of Arthur T. Demoulas argue that their opponents just want to take more money out of the company at the expense of employees and the stores’ reputation for low prices," while supporters of Arthur S. Demoulas, the CEO's cousin, "say Arthur T. Demoulas ignores the board of directors and has made it possible for his family to be involved in some questionable deals."
    KC's View:
    There are few things in life messier than when things go bad between families in business together. What seems unquestionable is that under current management, Market Basket has grown, has served its communities well, has rewarded its employees fairly, and seems to be doing all the right things competitively. And the more I read about the case, the more it seems like the board is headed down a road that could improve ownership's compensation at the cost of higher prices and margins ... which could screw up the whole enterprise. What they may not realize is that it does not take much to alienate a customer base. Trust, as the Latin proverb goes, never returns once it goes.

    Published on: July 17, 2013

    Reuters reports that "a growing number of retailers, including Target Corp., JanSport and Toys R Us Inc, are popping up this summer in neighborhoods, malls and college campuses across the United States to sell notebooks, clothes, bed sheets and other supplies as students prepare for a new school year.

    "These pop-ups typically open in empty storefronts and sell smaller selections of popular items. They are a good way for retailers to increase shopping options during busy periods, test locations and promote their brand, retail experts say."

    One practical concept of how the premise works: Beth, Bath & Beyond is opening pop up stores on or near college campuses and stocking them with linens and other dorm room essentials. The retailer can save as much as 80 percent of the cost of opening a permanent store, and can shutter the pop up store once it has outlived its usefulness.
    KC's View:
    Love the concept, and think it should be exploited by more retailers. Combined with a savvy use of technology that can create virtual stores, this idea can be a real winner.

    Published on: July 17, 2013

    CNBC reports that market research firm YouGuv is out with its regular list of "buzziest" brands in the US, "based on interviews with 20,000 people each week and (measuring) a brand's buzz, which includes whether people have heard anything positive or negative about the brand in the media or through word of mouth."

    Making the current top 10 list are 1) Ford, 2) Amazon.com, 3) Subway, 4) The History Channel, 5) Lowe's, 6) V8, 7) Walgreen, 8) YouTube, 9) Kindle, and 10) Cheerios.

    The company puts out a list of the 10 brands that have showed the greatest buzz "rebound" in the past six months, and that list includes 1) Goldman Sachs, 2) Bank of America, 3) JP Morgan, 4) American Airlines, 5) Blackberry, 6) Galaxy, 7) Morgan Stanley, 8) Kodak, 9) Bing, and 10) Starbucks DoubleShot Energy Coffee.
    KC's View:

    Published on: July 17, 2013

    • The Seattle Post Intelligencer reports that Starbucks, "having pulled thousands of unsafe, spoiled ham sandwiches from its shelves on three occasions ... now claims its meat vendor owes nearly $5 million." The suit concerns ham that it bought from Wellshire Farms, but that actually came from a Maryland subcontractor, Hahn’s of Westminster, and that customers complained were discolored and appeared to be spoiled.

    According to the story, the lawsuit says that "Starbucks directed its stores to throw out all the warm breakfast sandwiches using the ham. No similar order appears to have been given regarding the cold sandwiches made with ham from the same suppliers. Starbucks investigated the issue but continued buying ham sandwiches using meat from Wellshire and, unknown to the coffee company, Hahn. But as the complaints intensified Starbucks began looking for a new ham seller ... Now, Starbucks contends it lost $4.8 million because of the tainted ham. Wellshire and Hahn have not yet responded to the lawsuit, or requests for comment made Friday."


    • The Associated Press reports that a lawsuit has been filed in federal court in New York City charging that Starbucks discriminates against deaf people, a claim that apparently relates back to a single NYC employee who mocked a deaf patron, and other employees who objected to a group of deaf people meeting it a Starbucks store.

    Starbucks spokeswoman Jamie Riley said the company is investigating: "Discrimination of any kind at Starbucks in unacceptable. We take these allegations very seriously and believe that they are neither in line with our values nor our track record of engaging the deaf community as partners and as customers."
    KC's View:

    Published on: July 17, 2013

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

    Crain's Chicago Business reports that gourmet grocer Fox & Obel remains closed as a result of health code violations. According to the story, "The business failed a July 5 inspection after a suspected food poisoning incident, according to the city's food inspection records. The report details violations including more than 200 fruit flies in a food prep area, a cockroach sighting and failure to keep foods including sausages, eggs, hamburgers and chicken salad at sufficiently low temperatures, both in the deli displays and in coolers used during food preparation ... In a failed inspection last November, the inspector noted two live cockroaches in the coffee area and restaurant's food storage room, as well as 'tens of dead ones'."

    The story notes that Fox & Obel "failed two inspections in 2012, two in 2011 and one in 2010, according to city records." The retailer is not commenting on the closure.

    Yuck. Is there anything else that needs to be said?


    • Weis Markets announced the launch of its 11th round of price freezes, effective in all 164 stores. More than 1,300 products have been reduced in price and will remain at these discounted levels for 90 days. Weis' current Price Freeze program includes name brand and private brand products in grocery, frozen, dairy, meat, health, beauty care and general merchandise. The company says that since the first freeze in 2009, "customers have saved more than $45 million" on various products.
    KC's View:

    Published on: July 17, 2013

    Yesterday, MNB took note of a New York Times report that 16 Democratic US senators are urging a federal inquiry into a growing practice in the US: paying employees by giving them prepaid ATM cards instead of offering paper paychecks or direct deposit. The trend has come under criticism because, as the Times writes, "in the vast majority of cases, using the cards can generate large fees — 50 cents for a balance inquiry and $2.25 for an out-of-network automated teller machine, for example. For part-time and low wage workers, the fees, which can be difficult to escape, quickly devour much of the money deposited on the cards."

    My comment:

    I'm sure that there are plenty of reasons and rationales that banks and companies can offer to make this practice seem like a reasonable way to pay people. But I'd be willing to bet that the only real reason it is taking place is because some banks told some companies that they could reduce their costs by switching to such a program, and the banks knew that it could make money by assessing fees, many of them to people who cannot afford them. These kinds of policies aren't instituted because it is good for the employees. That much seems self-evident.

    From my perspective, companies that use such programs are telling their employees that they really don't give a damn about them, that their own bottom lines are more important than the ability of people in the trenches to make a go of it on their salaries. It symbolizes to me the disconnect that often can happen between the tops of organizations and the people on the front lines. It is a shame, and the policy ought to be halted. Now.


    MNB user Jim Gilliam responded:

    Kevin, as a long term reader of MNB and owner of a small business (300 employees) I have to tell you that you could not be more wrong in your assessment of Pay Cards. I am moving next week to paying my employees with pay cards  for two primary reasons:

    • As a Fraud Prevention measure – My company has had too many instances where an employee went to a Office  Supply Store and bought a check encoding device. They then copied the Routing number and account number from their paycheck and began printing up their own false paychecks. Usually the bank will stand behind me and cover these losses, but not always. This tactic cost my company over $10,000 last year.

    • My employees are asking for the Pay cards for two primary reasons: a) They were with a different employer who had pay cards and they like the convenience of them, b) The banks currently charge them exorbitant fees to cash their checks and any fees they incur on the cards will be significantly less.
     
    I am sure like any industry there are disreputable card vendors out there who are cheating the employees. The vast majority of the Card Vendors (including the one I am using) are very reputable and offer a service that my employees are looking forward to – AT A LOWER COST TO THEM THAN THEY ARE CURRENTLY PAYING with significantly more convenience. I do also offer Direct deposit to my employees and about 25% take advantage of that – I will continue to offer that option.
     
    Bottom Line – Stop with the Bad Guy Greedy Business Owner on this one – most of us want to do the right thing for our employees because we know how much we need them.


    Fair enough.

    I think that if employees want them, and other easily accessible options are available, then using the cards is fine. Sounds like that's the case with your company.

    But I continue to worry that it will not always be the case with every company.

    From another reader:

    One reason that companies move to a payroll card is because of the proliferation of abandoned property laws.  States generate a lot of revenue from abandoned property.  If you pay someone and for some reason they don't cash it (it happens more than you might possibly
    believe), you can't keep it and instead it becomes an administrative compliance nightmare involving up to 50 state governments and their individual regulatory requirements.  What's worse, if you don't get it right, within the required timelines, your company is then subject to
    interest and penalties.  If on the other hand, you pay it onto a payroll card, your responsibilities are over.


    I'm shocked to find out that people are getting paid and then not cashing the checks, to be perfectly honest.




    Regarding the growing electronic surveillance of consumers by bricks-and-mortar retailers, one MNB user wrote:

    Isn't this just another example of technology taking over what sales people used to do?
     
    There are less people on the floor to interact with customers so retailers need the information somehow.
     

    And from another reader:

    Regarding customer surveillance, I'm sure the retailers and people who develop these programs hope it's just the beginning! I'm sure they're dreaming up stuff we can't yet imagine. I hope their lawyers are also considering the liability issues should this data be used not as intended. I personally feel it's already gone too far as outlined in your article. I think something like this should be strictly "opt in." In addition, I think the retailer owes you something for it -- maybe a special coupon or such. (?)

    So it's okay as long as you get compensated for it?

     



    Responding to our story about the move away from loyalty cards by some retailers, one MNB user wrote:

    I like the loyalty program at King Soopers (Kroger) here in CO. The discounts are significant and you do not have to carry the card with you – just enter a phone number – to get the discounts. Each trip earns points for gasoline discounts, and then we get the customized coupons mailed to the house. The coupons are for items we buy on a regular basis, so I go there even more often than I might - to use the coupons before they expire. Their method works on me.
    KC's View:

    Published on: July 17, 2013

    I get requests from time to time, when I'm traveling, to offer a time when interested MNB readers can get together to have a beer or a glass of wine. I've always found these evenings to be tremendously rewarding, because I'm able to put faces and voices to the names of readers with which I have become familiar.

    So, since I'm in the Pacific Northwest for the month, I thought I'd schedule just such an evening in Seattle - on Friday, July 26, from 5-7 pm, at Etta's, located at 2020 Western Ave. I'll be at the bar, almost certainly enjoying a glass of wine while chatting with Morgan, my favorite bartender, and I hope to see you there.
    KC's View:

    Published on: July 17, 2013

    In the Major league Baseball All Star Game last night, the American League defeated the National League 3-0, securing home field advantage for whatever AL team makes it to the World Series this year. And, Mariano Rivera of the New York Yankees, arguably the best closer in baseball history, won the night's MVP award for his flawless performance in his 13th and final All Star appearance.
    KC's View: