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    Published on: August 9, 2013

    by Kevin Coupe

    An MNB user sent me a link to the video at left, which is a 1981 news report by San Francisco's KRON about a primitive version of an online newspaper ... which seems quaint when one thinks about how things have evolved, and how the Washington Post has now been acquired for $250 million by an e-commerce entrepreneur.

    It is an Eye-Opening piece of video ... especially when they say that it takes two hours to download the paper onto a computer ... that pictures, ads and comics are not included ... and that there is little concern that this experiment will put the local newsstand out of business anytime soon.

    Enjoy. And think a bit about how different the world will look 32 years from now.

    KC's View:

    Published on: August 9, 2013

    Business Insider reports that Robert Peck, an analyst with SunTrust Robinson Humphrey, is saying that Amazon Fresh may be targeting the New York City metropolitan area for its grocery delivery service.

    "Our belief stems from a planned and financed expansion into renovated warehouse facilities in NJ," Peck writes. "The previous tenant of the facility was C&S Wholesale Grocers. The facility will be less than 50 miles from all five NYC boroughs, southern Westchester, and most all of central NJ ... "We believe, based on our research, that a developer partner of Amazon has purchased ~1m square feet of warehouse space in a prime NJ location and raised capital to renovate and improved the facilities. Amazon is the planned tenant for the larger ~526k sq ft. facility, while the remaining ~ 401 k sq ft. complex, which houses refrigeration capabilities, remains vacant. It is our opinion that Amazon will be the tenant for the second building as well following the large capital raise by its partner to refurbish this unit capable of storing perishable goods (previous tenant was C&S Wholesale Grocers), and serve as its center for Fresh in the NY metro area."

    Amazon has been testing its Fresh service in Seattle for five years, and recently brought the concept to Los Angeles, with plans for San Francisco later this year, leading some analysts to believe that it has figured out the economics of making it work.
    KC's View:
    Included in the economic calculations is the fact that Amazon doesn't need to make money on Fresh ... because it has discovered that when people use this service, they tend to buy more from Amazon overall.

    Published on: August 9, 2013

    • The Financial Times reports that "hopes are fading" that Tesco will be able to sell its US venture, Fresh & Easy Neighborhood Markets, and now the most likely outcome is seen as a "closure or break-up of the California-based operation."

    According to the FT story, "Tesco had been thought to be close to a sale of Fresh & Easy to Yucaipa, the investment vehicle of US billionaire Ron Burkle. However, the talks have stalled, several people familiar with the situation said. The sticking point in conversations with buyers has been Tesco’s desire for a clean break from the US. The company wants to avoid it or its shareholders retaining liabilities for Fresh & Easy after an exit.

    "The current situation is thought to be fluid, however, and it is possible it could yet change."

    Bloomberg reports that Tesco, seeking to "revive its hypermarket business " in the UK, is making some changes with a new prototype in Watford that it will open on August 12 and that it hopes will provide some scalable initiatives.

    The Watford store, according to the story, "is a test site to see how customers respond to new ideas ... Fresh produce and delicatessen counters are front of store while gourmet coffee as well as tapas are on sale from upmarket chain Harris & Hoole and the Giraffe restaurant. A former bay for shopping carts is now an outdoor eating area. Local children’s playgroups, back-to-work programs, yoga and Zumba dance groups are being offered surplus space in the store for free."

    Tony Hoggett, managing director of Tesco's Extra chain of 250 stores, says that the challenge is to make the hypermarkets “exciting, relevant and convenient."

    Reuters reports that Tesco "will slash its China exposure by taking just 20 percent of a new venture with a state-run company, a deal that underlines the travails foreign retailers have had in the Chinese market and allows the British retailer to focus on turning around its domestic business."

    The story says that Tesco will "team up with China Resources Enterprise Ltd, ceding control but bringing their combined market share close to market leader Sun Art Retail Group Ltd ... The joint venture would create a business with some 10 billion pounds ($15.6 billion) in sales. Last year, Tesco's China operations generated sales of 1.43 billion pounds ($2.2 billion). CRE's Vanguard unit operates 2,986 stores, mainly hypermarkets or supermarkets, across China and Hong Kong, while Tesco has 131 outlets."
    KC's View:
    All three stories reflect what is being referred to as Tesco CEO Philip Clarke's more "disciplined" approach to running the business - get out of the stuff that doesn't work, double down on the home front, and find partners to reduce the downside potential in some foreign markets.

    Published on: August 9, 2013

    Activist shareholder William A. Ackman reportedly is pushing his fellow JC Penney board members to find a new CEO to replace current CEO Myron Ullman, a suggestion that the rest of the board apparently is pushing back on, believing that Ullman has stabilized a badly listing organization.

    JC Penney has, of course, had more than its share of leadership issues. Ullman was the CEO when he was replaced by Ron Johnson, formerly of the Apple Stores, who was brought in to reinvent the department store chain and move it away from its discounts-and-promotions approach to marketing; Johnson, as it happens, was championed by Ackman. When that didn't work out - sales, traffic and profits plummeted - Johnson was fired and Ullman was rehired.

    But Ackman reportedly remains dissatisfied, and he released a letter to the media in which he said that a new leader should be found within a matter of months, but that a search committee and headhunter firm hired by the board "have barely begun their work."

    "We need a CEO with extensive, ideally department-store retail experience, strong operational skills, and a strong public company track record," he wrote. "When non-competes, geographical considerations, and other personal and timing issues are considered, the number of potential CEO candidates is quite limited."

    The response from the board reads, in part: “The board of directors strongly disagrees with Mr. Ackman and is extremely disappointed that his letter was released to the media at the same time that it was sent to the board. Mr. Ackman has been integrally involved in the Board’s activities since he joined two years ago. This includes leading a campaign to appoint the company’s previous C.E.O., under whose leadership performance deteriorated precipitously. His latest actions are disruptive and counterproductive at an important stage in the company’s recovery.”
    KC's View:
    There's no question that JC Penney and its surrogates are looking around for a new CEO to lead the company, which continues to have enormous problems - tons of square footage of brick-and-mortar sales floor, a dispirited employee base, and no real vision of where the company needs to go.

    The problem, as I see it, is that they need to find someone of real accomplishment and specific vision ... but I'm not sure who would want to take the job. You'd have to be nuts to think you could turn around this beached and bloated enterprise with any sort of speed, and the clock is working against you as other retailers - physical and virtual - continue to improve their offerings.

    And by the way, I love it that Ron Johnson now is all Ackman's fault. Like the rest of the board members didn't get a vote...? This doesn't strike me as a board with any sort of backbone, and is certainly not to be trusted.

    Published on: August 9, 2013

    Excellent and thoughtful piece in The New Yorker by James Surowiecki in which he writes about the living wage debate that has been spreading throughout the country, from Washington, DC, where Walmart is embroiled in a hardball debate with the City Council over wages, to cities throughout the country where fast food workers have been engaged in wildcat one-day strikes over treatment. But it really isn't about jobs and wages, he suggests - it is really about something much bigger.

    "We really need the economy as a whole to grow faster, because that would both increase the supply of good jobs and improve the bargaining power of low-wage workers," Surowiecki writes, adding, "It isn’t enough to make bad jobs better. We need to create better jobs."

    You can read the whole column here.
    KC's View:

    Published on: August 9, 2013

    Bloomberg Businessweek reports on how, over the past year, Walmart "has focused as never before on beer -- a U.S. category worth about $45 billion -- and has moved aggressively to grab market share. The company has doubled the number of alcohol buyers to 12 and offered discounts on a range of brands, from mainstream Coors to such craft beers as Deschutes. It ditched slow-selling products to make way for beer and is even selling it in garden centers. New stores are designed to put the suds front and center."

    The irony? "Founder Sam Walton frowned on drinking to excess, and Wal-Mart has said little publicly about its latest ambitions. Unlike initiatives to expand produce or steak sales, the beer push has been so discreet that some analysts who cover Wal-Mart haven’t even heard about it. Inside the company, attitudes are changing. Wal-Mart now promotes alcohol in its circulars, reversing a previous ban. Two Walton grandsons even spearheaded a successful campaign to overturn a ban on retail alcohol sales last year in Wal-Mart’s home county of Benton."
    KC's View:
    The reality is that beer is a good fit with Walmart's locations, demographics, and image. It can make money in the category and drive traffic with promotions.

    It is all about redefining core values.

    Published on: August 9, 2013

    • Danone SA, the French dairy company, is acquiring Connecticut-based YoCrunch, which makes yogurts with a variety of toppings. Terms of the deal were not disclosed.

    Danone said the acquisition will "advance Danone's ambition to further develop yogurt consumption by notably expanding the various ways in which Americans can enjoy yogurt."
    KC's View:

    Published on: August 9, 2013

    • Wegmans Food Markets has promoted Carl Salamone, the company's vp of seafood merchandising, to be vp of seafood sustainability, a new position.
    KC's View:

    Published on: August 9, 2013

    It has been interesting that in all the coverage of the decision by Ireland's Musgrave to rebrand all of the Superquinn stores that it owns and combine them with its SuperValu chain, one of the big questions that consumers have had is whether Superquinn's sausages will stay the same.

    That's because Superquinn, which was founded in 1960 and became an iconic retail brand in Ireland, prided itself on making its own sausages. As the Irish Times reports this morning, founder Feargal Quinn (who sold the company in 2005), decided that sausages could be a place where the retailer could differentiate itself - and they became a symbol of the overall quality of products sold by the chain.

    As the Irish economy went south after Quinn sold the company in 2005, Superquinn changed hands yet again ... and even as Musgrave was announcing that it would eliminate the banner, customers were looking for reassurance that the sausages would still be sold, and Musgrave was issuing said reassurances.

    Except for one thing. The Irish Times reports this morning that for some time now, the sausages have not been made in-store or even by Superquinn ... but rather have been outsourced to a local company, ABP Meats.
    KC's View:
    Presumably from the same recipe. But hard to imagine that they're made with the loving care that Superquinn lavished on the category.

    Published on: August 9, 2013

    Karen Black, who was a movie fixture in the seventies in films like Five Easy Pieces, Easy Rider, and Nashville, has passed away after a long battle with cancer. She was 74.
    KC's View:
    This kind of stuff makes me feel old.

    She doesn't have a line in it, but Karen Black was in one of the most famous scenes in movie history ... and you can watch it here.

    Published on: August 9, 2013

    ...will return.
    KC's View:

    Published on: August 9, 2013

    It's been a while since I've been to the movies, but I've been catching up a bit and have three to report on this week...

    I was completely taken by surprise by World War Z, the new zombie movie produced by and starring Brad Pitt. I'm not a zombie guy. Don't go to those sorts of movies, and have never watched "The Walking Dead" on TV. (Though I hear it's great.) But for some reason, World War Z intrigued me, and I was rewarded for my interest - it is one of the best movies I've seen this summer, and is a genuinely suspenseful thrill ride of a movie with something serious on its mind.

    The set-up is simple. Some sort of virus is turning people into zombies, the plague is highly contagious, and Brad Pitt is the former UN investigator tasked with finding out the origin of the virus so that an antidote can be found. But the first 20-25 minutes of the movie, I have to tell you, provide nail-biting, edge-of-the-seat anxiety ... and World War Z hardly lets you down from there as Pitt's character travels the world under increasingly treacherous conditions to find a solution. It is a really, really good movie...and one that uses special effects for narrative reasons, not just to create bigger and bigger disasters.

    The ending is a little pat for my taste, but I think that's because they were unsure if they'd have a chance to make a sequel. But that is a small caveat. Go see World War Z on a big screen. It's worth it.

    I am less enamored with The Wolverine, the latest in a series of movies featuring Hugh Jackman as the Marvel Comics mutant with big claws and the power of immortality. This one takes place almost completely in Japan, and it has a samurai thing going for it that made it sort of interesting to me.

    It is actually the best super hero movie made this summer, in part because it actually has a kind of small scale to it - no cities are destroyed, and Jackman manages the feat of making this totally unreal character anchored in a kind of real world angst. In the end, it is sort of silly, and the bad guy is totally predictable. But it is better than most movies of this ilk, that is saying something.

    Finally, I saw The Way, Way Back which is a wonderful little comedy/drama made by Nat Faxon and Jim Rash, who scripted The Descendants, one of my favorite movies of this and any year.

    The Way, Way Back essentially is a coming of age story ... the main character is Duncan (Liam James), a sullen 14-year old who is dragged on a beach vacation by his divorced mother (Toni Collette) and her obnoxious boyfriend (Steve Carrell). There are scenes that are actually hard to watch, as these two actors convincingly two of the poorest excuses for adults and parents that I've ever seen.

    But Duncan finds some solace at a local water park, where he meets up with Owen, the carefree owner played by Sam Rockwell in an outstanding comedic performance. Owen hires Duncan to do odd jobs, and Duncan begins to define himself and gain some confidence, little by little. On the face of it, this isn't anything special - except that it is delivered with charm, savvy writing, expert acting, and a real sense of place. I liked it enormously. And Rockwell ought to be a much bigger star than he is.

    I do have to say that I'm looking forward to the fall movie season ... the movies will get a little more serious, and maybe there will be less of the comic book stuff.

    Here are two trailers of movies I'm really looking forward to:

    Monuments Men, directed by and starring George Clooney.

    Captain Phillips, starring Tom Hanks.

    Can't wait.

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

    Fins Up!
    KC's View: