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    Published on: August 19, 2013

    by Kevin Coupe

    The Los Angeles Times has a piece about a new book called "The Leader's Code: Mission, Character, Service and Getting the Job Done," by Donovan Campbell, a former US Marine Corps captain who served in Iraq.

    Here are the passages from the article that grabbed my interest, and that prompted to immediately download a sample of the book to my Kindle app. (If I like the sample, I'll then order the book.)

    "Campbell believes that the military model of servant leadership — in which leaders are the servants of the organizations they lead, not its masters — offers a useful guide. The two key ideas in his conception of leadership are 'character' and 'mission.'

    "Character, as Campbell defines it, means strength of character, but also encompasses virtue — a word that appears often in this book. Leaders must do right by others; they should strive to make the world a better place for everyone, not simply plunder it for what they can get for themselves.

    "That brings us to mission, which can be defined as a broader sense of purpose. One of the best passages in the book recounts how as a young officer in combat, Campbell came face to face for the first time with the idea of his own mortality. The notion that he might die caused him to question his previous beliefs about life and, in turn, put him in touch with a sense of purpose and an understanding of what leadership is for.

    "Throughout the book, Campbell reiterates the same message. Leaders must sublimate themselves to the needs of others. They must remember that their mission is something much larger and more important than their individual needs, and be prepared to sacrifice themselves for the higher purpose."

    In many ways, I think this plays into the broader discussion we've been having here on MNB about the disconnect between the executive suites at some companies and the people on the front lines - a disconnect that sometimes can be seen in pay disparities that reward top execs with opulent salaries and benefits but leave people on the front lines concerned about whether their minimum wages are living wages.

    My argument has never been against appropriately high salaries for people who have worked their way to the top of any organization, nor has it been against the hardest working and highest achieving people in any organization making more money than less accomplished and dedicated peers. But I also think that one of the ways that companies can engender dedication and loyalty is to let the people on the front lines know that they are empowered and valued ... and that companies that favor the lowest common denominator when it comes to pay scales may end up with the lowest common denominator when it comes to employees. Sometimes, that may not matter. But sometimes, it will.

    And leadership that encompasses virtue, character and a sense of a broader mission may define these issues differently than leadership that thinks in in terms of power and self-reward.

    I'm looking forward to reading Campbell's book.

    FYI ... the Amazon page for the book is here.
    KC's View:

    Published on: August 19, 2013

    by Kevin Coupe

    This morning's bonus Eye-Opener has nothing to do with retailing, or even business. But it is simply too juicy to ignore.

    Foreign Policy reports that the National Security Archive has released newly declassified information indicating that Area 51 - the secret Nevada facility that has long been rumored to be the place where alien spacecraft were housed, the existence of which long has been denied by the US government - actually exists.

    According to the story, "In 1955, CIA Special Assistant for Planning and Coordination Richard Bissell, Col. Osmund Ritland, an Air Force officer working on the U-2 project, and Lockheed aircraft designer Kelly Johnson began looking for a location in California or Nevada to test the U-2 prototype. The location had to be remote -- far from the view of the public (or potential Soviet spies). On April 12, 1955, they were scouting locations from the air with the help of Lockheed test pilot Tony LeVier. While flying over the Groom Lake salt flat, they noticed an airstrip that had been abandoned after being used by the Army Air Corps during World War II." And that airstrip became Area 51 - a place where much of the development work on the U2 spy plane was done, which led (the government say) to all the reports of local UFO sightings.

    I sort of prefer the stories told on "The X Files" or in Independence Day. I'm reminded of the great line from The Man Who Shot Liberty Valance: "This is the West, sir. When the legend becomes fact, print the legend."
    KC's View:

    Published on: August 19, 2013

    The Charlotte Observer has a long piece about the future of Delhaize-owned Food Lion, noting that new CEO Beth Newlands Campbell has to provide "clean stores, fresh produce, helpful associates and consistency from store to store," but also has as her primary goal finding ways to differentiate the company from fierce and ubiquitous competitors that include the likes of Whole Foods, Publix, Harris Teeter, Walmart and Aldi.

    “There’s an imperative to set us apart,” Newlands Campbell says. “You can’t be middle of the road ... Am I a change agent? Absolutely."

    You can read the whole piece here.
    KC's View:
    I do think that Beth Newlands Campbell has her hands full. The challenge for Food Lion is the same one that faces a lot of mature businesses. The company long had a specific, defined business advantage - low prices - that has been eroded over time because of competition on the low end, while it efforts to diversify through its more upscale Bloom banner did not work out as planned. (I always liked the Bloom stores, but the recession seemed to be too much for the banner to weather.) Now, Newlands Campbell - a tough and accomplished executive - has to figure out how to recapture the magic, finding a long term differential advantage while shoring up short term sales and profits. Not easy to do.

    I do think it can be done, if Food Lion is ambitious enough and Newlands Campbell is given the room to shape a nimble and experimental culture that chases innovation. It won't be easy. It won't happen quickly. But I think that it can happen. (Analysts suggest in the story that Food Lion has been improving as the economy has rebounded.)

    Newlands Campbell, who I like a lot, simply has to get a sign made that hangs not just in her office, but in every store: Audentes fortuna iuvat.

    Or, if she prefers, the English translation: Fortune favors the bold.

    Published on: August 19, 2013

    The Seattle Times reports that Trader Joe's is suing Michael Hallatt, owner of a Vancouver, British Columbia, store called Pirate Joe's. Hallatt, according to the story, drives across the border into the US each week, buys thousands of dollars worth of merchandise at Trader Joe's, then brings the stuff back to his Canada store and sells it at a profit.

    "The lawsuit," the story says, "filed in federal court in Washington state, alleges federal trademark infringement; unfair competition, false endorsement and false designation of origin; false advertising; federal trademark dilution; injury to business and reputation; and deceptive business practices."

    Hallatt has filed a motion to dismiss the suit, and also has changed the name of his store: he removed the "p," so now the store is called Irate Joe's. The Times writes that "Hallatt says he doesn’t know what law he’s breaking. He says he saw an opportunity to make some money, and Trader Joe’s is profiting as well, and compares his operation to a music store that resells CDs."

    Trader Joe's is not commenting on the lawsuit.
    KC's View:
    So maybe imitation isn't the sincerest form of flattery?

    I suppose that Trader Joe's has to do this. After all, it may want to enter Canada at some point, and trademarks have to be protected.

    On the other hand, maybe Pirate Joe's could be a kind of stalking horse ... I wonder if there is way to turn this situation to the company's advantage, as opposed to just launching a lawsuit.

    Published on: August 19, 2013

    The New York Times yesterday had a long piece about Jeff Bezos, founder of and the new owner of the Washington Post, that details his motivations, defines his priorities, and enumerates the complexities of his various businesses.

    It is worth reading, and can be found here.

    But here are two snippets from the story that I found interesting.

    • Before Bezos decided to call his fledgling e-business Amazon, he considered the name "Relentless."

    • And this passage: "People who have worked closely with Mr. Bezos say he refuses to waste time on anything that isn’t directly about the customer. 'That’s where his ego is,' one former colleague said.

    "As tech companies grow old and big, they strive to keep the energy and boldness of the start-up they once were. They almost always fail. Amazon is the exception ... As an Amazon joke has it, work-life balance is for people who do not like their work."

    Check it out.
    KC's View:

    Published on: August 19, 2013

    United Press International reports that the "United Food and Commercial Workers lost its toehold in Canadian Walmart stores when workers in Weyburn, Saskatchewan, voted to decertify the union.

    "The vote to end their union affiliation came on a 51-5 vote this week ... The union had been the Walmart workers' bargaining agent since 2008 but never negotiated a contract with the U.S. discount retailer, the CBC said.

    "Union officials contended the decertification process was unfair but Canada's Supreme Court dismissed the union's request that it take up the matter, clearing the way for the vote."
    KC's View:

    Published on: August 19, 2013

    • In the UK, the Sunday Times reports that Tesco plans to launch its own tablet computer, designed to help it compete more effectively with both Apple and Amazon.

    According to the story, "The iPad-like device is expected to go on sale in time for Christmas, with pre-loaded books, films and music. It will also have apps for Tesco’s digital grocery and banking products and Blinkbox, its internet film and music service."
    KC's View:
    I was intrigued by two sentences from the story...

    • "Tesco is set to ambush Apple and Amazon with the launch of its own tablet computer as it fights to win back shoppers in its British heartland."

    • "The move is aimed at repelling the advances of Apple and Amazon, which have wreaked havoc with Tesco’s profitable books and DVDs business in recent years."

    First of all, it isn't going to be much of an ambush if Apple and Amazon known about the product introduction three months in advance.

    Second, I'm simply not sure that this is an effective use of resources. When companies wreak havoc on your business model, it does not necessarily make sense to introduce a "me, too" offering. Rather, a company has to find a way to either leap-frog the competition, or come up with something completely different.

    Of course, I could be wrong about this. As long as Tesco doesn't promote its new tablet as being fresh and easy...

    Published on: August 19, 2013

    On National Public Radio (NPR), Marketplace reports on a new Gallup poll saying that "only 36 percent of Americans who drink alcohol say that beer is their beverage of choice -- with wine nipping at its heels at 35 percent and 23 percent preferring liquor."

    But Nancy Koehn of Harvard Business School tells Marketplace that the business remains healthy: "Take the numbers -- beer is a $100 billion market, wine is about $35 billion, and spirits is about $62 billion market. Add it up -- we got $200 billion that we're spending on alcohol. You know, that's two sequesters."
    KC's View:

    Published on: August 19, 2013

    • The Detroit Free Press has a piece about Kroger’s first Marketplace concept in Michigan, describing it as "two to three times the size of the average Kroger store you might know from the neighborhood ... In addition to groceries, the new Marketplace stores offer clothing, furniture - and a jewelry store. The format is an effort to compete with Meijer, Target, Wal-Mart - and even Costco. But it’s focus is still on food and items for the home."
    KC's View:

    Published on: August 19, 2013

    Got the following email from MNB reader Craig Espelien:

    I have read with both interest and dismay the minimum wage discussion/debate over the past couple of weeks on MNB.  As an economist by training and a business person because I need to pay bills, the challenges around minimum wages are broad and varied.  Wages is the single largest controllable expense most businesses have – and forcing an increase in a service environment will simply drive up the cost of the product and likely negate any benefits the new minimum might bring.  The same thing has happened in the production space – we saw it in the meat industry years ago and in the car industry more recently – where labor was able to negotiate (through their unions in the cases of meat and autos) ever increasing wages right up until the companies that agreed to pay those wages could no longer compete.  We made the choice as industries and as a country to encourage and support off-shoring to stay competitive with wages that were below those common in the US (in countries where the standard of living was much lower allowing wages to be lower).  If we go down the same pathway in the services industry, we will put an even greater number of folks at risk in a couple of ways.  Food safety cold be compromised as these retailers turn to ever cheaper sources for ingredients as the next piece of expense they can control (we have seen how well that has worked out).  Also, the move to more part time work with no health care may leave more people worse off than before the minimum wage increases.

    In a free market economy, minimum wages are set to prevent abuse on the low end (see table service restaurant workers and the odd pay low and force wage support onto the customer in the form of tipping – an entire kettle of fish on its own) not provide the right wages to survive.  I have lived in several areas around the country and remember when fast food restaurants in the Minneapolis suburb of Eden Prairie could not fill their ranks at $8.00+ per hour (when the minimum wage was somewhere near $4.50) due to the lack of people available or willing to fill those jobs.  With the economy pushing folks from more full time work in their fields into part time work where minimum wage comes into play, we need to be cautious that we do not mandate a fix to a problem that is likely to be more temporary than not (even though more part time work and fewer really good jobs is likely our new normal without some form of industry coming back to our shores).
    So, this is not a Liberal or Conservative issue (although on this issue our divisive tendencies are obviously coming out) but rather an economic issue.  If the wages are not to your liking – don’t take the job.  Jobs typically command wages commensurate with the amount of workers with similar skills available and the amount of value created by the position.  Artificially mandating what that value is seems somewhat wrong to me as I am a huge supporter of free markets and the freedom to choose your own path.  I have worked minimum wage jobs in my past – and often worked multiple jobs to keep the $$$ flowing in.  I am not saying that is the best choice – but unfortunately it may sometimes be the only choice.
    A final note – if we continue to push up the minimum wage on relatively low value jobs, we run the risk of taking away the aspirational nature of work:  by working hard, showing loyalty and dedication I can advance both in responsibility and compensation (whether inside my current employer or by attracting the attention of a potentially better employer).  An ever increasing minimum wage is another form of entitlement – you get more by bitching and complaining than by actually creating value.
    You may not want to post this – your choice – but wanted to weigh in as I value your insight but also get concerned when emotion over runs reason on some of these issues.

    There is very little in your email with which I disagree. I'm really ambivalent about the idea of forcing up wages through legislation that only impacts certain kinds of businesses (like Walmart in DC), though I disagree with some of the people (I don't think you are suggesting this) who think that even minimum wage laws represent the end of western civilization as we know it. And I agree completely about the aspirational nature of work and rewards.

    My feeling has been that there are plenty of examples of business leaders and companies where there has been a recognition that one way to develop a committed and loyal workforce is to deal with the issue of pay disparities, and to create a rewards system that makes people at every level feel like they have skin in the game ... because employees who feel that they have a stake in the company tend to act as if they are owners, which makes them both more productive and efficient. Is this easy? No. Can it be accomplished quickly? Of course not.

    But if I were trying to build an organization - or re-engineer one that needs a culture transplant - I think that these are some of the issues on which I would focus.

    A friend of mine who is a CEO likes to say that "the more you give, the more you get." I think the corollary to that is "the more you allow people to earn, and empower them to perform, the more powerful an organization is likely to be."'

    And legislation won't be required.
    KC's View: