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    Published on: August 21, 2013

    by Kate McMahon

    "Kate's Take" is brought to you by Wholesome Sweeteners, Making The World a Sweeter Place.

    For a timely assessment of the social media domino effect, we turn to Domino’s.

    The giant pizza chain unintentionally made headlines twice this month, with a Facebook flub and a political fish feud. Both occurrences offer object lessons on how to deal with social media realities.

    Domino's, of course, is a company with some history when it comes to the internet. Back in 2009, when two employees posted a prank video that involved mucous, pizza prep and eventual felony charges, Domino’s was criticized for its slow response to a real-time public relations crisis. (The company's first response was to ban all cameras from its stores. Had it been smart, it would have tried to engender transparency and trust by encouraging people to bring their cameras. These days, however, Domino's gets high marks for its innovative social media strategies from in places like the Mintel Social Media Trends report.

    The flub I referred to above occurred on Domino’s Facebook page, when customer Jeaneth Manzaniita Tavares of Mexico posted a picture of her pizza and added "Best Pizza Ever! Keep up the good work guys!"

    To which a member of Domino’s social media team responded "So sorry about that! Please share some additional information with us … so we can have this addressed."

    Oops.

    The Facebook post went viral, followed by social and mainstream media critiques, snarky headlines and allegations that Domino’s has computers – not humans – automatically responding to Facebook posts.

    It ain’t so, said Dominos, adding that the employee thought the pizza didn’t look up to its usual standards when she apologized and hit send before reading the words. The follow-up comment was "No, we meant we were sorry it took Jeaneth so long to enjoy the best pizza ever.”

    That explanation seems a little convoluted and not terribly convincing, but what I find noteworthy is Domino’s said, hey, the employee made a human mistake, everyone has learned from it and it is time to move on. This is what you've got to say in this situation, and you've got to say it quickly.

    Domino’s took it one smart step further, posting online a photo of its six-member “customer care team” and a pledge that going forward each response will include a “signature” from the author. Establishing a personal connection will clearly generate a closer link with the consumer, even a disgruntled one complaining about the taste or timing of their pizza delivery.

    Smart.

    The more tongue-in-cheek fish issue was sparked by a new “Powered by Pizza” ad campaign touting pizza – not halibut - as the food that fuels world-changing innovators working late into the night. It even shows an actor spitting out a piece of fish.

    Firing back was Alaska’s Democratic Senator Mark Begich, asking Domino’s CEO J. Patrick Doyle why he was “hatin’ on halibut.” This being American politics, he was photographed sending Doyle a sample of “this staple in Alaskans’ diet and the bedrock of Alaska’s coastal economies” to educate the pizza honcho’s “uninformed palate.”

    Domino’s apologized, and Doyle tweeted back a photo wearing an “I (heart) Halibut” polo shirt saying “usually it's pizza for Friday lunch. Today, Alaskan Halibut. It's 'ofishal' - I love it!"

    Clearly a mix of political correctness and bad puns, but effective. Because in the social media environment, it is critical that you move fast, move surely, and always have a sense of humor.

    Comments? Send me an email at kate@morningnewsbeat.com .
    KC's View:

    Published on: August 21, 2013

    by Kevin Coupe

    Bloomberg reports that Amazon "is stepping up a warehouse building spree, signaling the urgency of getting products to customers more quickly amid rising competition from eBay and Walmart."

    What does this spree look like?

    Amazon has spent almost $13.9 billion on 50 new warehouses since 2010, more than it spent since the company was founded. Amazon had 89 warehouses around the country at the end of last year, and will have five more operating at the end of 2013.

    And here's perhaps the most important paragraph in the story:

    "If Amazon can place fulfillment centers nearer to the top 20 U.S. metropolitan areas, the company could reach 50 percent of the U.S. population with same-day delivery, compared with 15 percent now, according to supply chain consultants MWPVL International. That would require only opening another 12 warehouses beyond those built and announced, the firm said."

    Bloomberg continues: "The warehouse strategy carries risk. Fulfillment has become Amazon’s top operating expense, squeezing profit margins and contributing to a $39 million loss at the Seattle-based company last year. Yet Chief Executive Officer Jeff Bezos is under pressure to move more quickly as rivals including eBay and Wal-Mart devise their own faster ways to deliver products."

    High risk, high reward. And same-day delivery to half the US population - including, quite possibly, groceries and even fresh food - has the potential of being a game changer.

    At the very least, it is an Eye-Opener.
    KC's View:

    Published on: August 21, 2013

    Advertising Age reports that Amazon.com has come to an agreement with Conde Nast, the magazine publisher, that will allow Amazon to begin managing the publisher's print and digital subscription process.

    According to the story,"the program, called 'All Access,' is meant to simplify the subscription process by sending potential subscribers from the magazines' websites to Amazon.com, where they log in to their Amazon accounts in order to subscribe. Amazon will handle the transactions and provide readers with immediate access to magazine content on Kindle Fire, iPad, Android tablets and phones. Conde Nast will continue to handle the delivery of print orders through the Postal Service, the company said."
    KC's View:
    I hate to use the overworked phrase, but this feels like a paradigm shift to me, as Amazon becomes a greater part of the connective tissue between traditional media outlets and readers. That's part of the game ... become not just part of the connective tissue, but to actually be the connective tissue. It simplifies the process, it enables the shift to digital consumption, and suddenly a traditional industry has ceased to exist. Maybe not today, maybe not tomorrow, but soon ... until the next paradigm shift takes place.

    Y'think maybe this is what CEO Jeff Bezos was thinking when he bought the Washington Post?

    Published on: August 21, 2013

    The Sacramento Bee reports that the City Council there has voted 6-2 to erase "most of a 2006 ordinance that required superstore chains to conduct wage and benefit studies of nearby businesses before being permitted to build new facilities. Complex economic impact studies will also be waived for stores seeking to expand, or open in 'food deserts' or some major planned developments."

    The vote significantly eases the imposed restrictions on big box stores in the city. It was opposed, according to the story, by labor leaders, small business representatives and neighborhood activists" who wanted to keep the restrictions in place. The story notes that "the City Council chambers were packed for the hearing, with those who opposed easing the restrictions outnumbering those who advocated for easing the restrictions by a 2-1 margin."
    KC's View:

    Published on: August 21, 2013

    Reuters reports that Bi-Lo Holdings, the ninth-largest traditional supermarket chain in the United States, is planning an initial public offering later this year and has tapped banks to lead the deal." The IPO follows a time of fast expansion for the company.

    The story notes that "Bi-Lo operates 206 grocery stores throughout the southern United States under its own banner ... In late 2011, it bought supermarket chain Winn-Dixie Stores for $560 million. Winn-Dixie's 480 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi continue to operate as a Bi-Lo subsidiary under the Winn-Dixie brand. In May, Bi-Lo bought 165 stores from Food Lion parent Delhaize Group for $265 million in cash."
    KC's View:

    Published on: August 21, 2013

    The National Grocers Association (NGA) has released its 2013 Independent Grocers Financial Survey, saying that "independent grocers capitalized on the improvements in the economy and posted an average net profit before taxes of 1.65 percent in fiscal year 2012, up from 1.12 percent in 2011. They also grew inflation-adjusted same-store sales and improved gross margins across key store categories.As unemployment, consumer confidence and other key economic indicators improved, so did the financial results of independent grocers."

    Some key findings:

    • Fiscal year 2012 same store sales were +1.46 percent before adjusted for inflation. Inflation-adjusted same-store sales were +0.2 percent, up from -2.2 percent in 2011. Fewer independent grocers reported sales gains below the rate of inflation at 49.2 percent versus 72.7 percent in 2011."

    • "Many retailers improved margins in key categories leading to a slight increase in the total store margin to 26.48 percent."

    • "The net profit for all companies increased to 1.65 percent from 1.12 percent in 2011. Additionally, only 1.9 percent of companies reported negative profit numbers versus 13.5 percent in 2011."

    • "On the cost side, healthcare costs continued to increase at a rate of 7.6 percent in 2012, with 81.8 percent of retailers expecting higher costs in 2013. With lower energy prices, utility costs did come down as a percentage of sales, as did rent expenses."
    KC's View:

    Published on: August 21, 2013

    The Wall Street Journal reports that Overstock.com has made permanent its pledge to match Amazon.com on book prices.

    According to the story, CEO Patrick Byrne says that Overstock has "hired a firm to trawl Amazon’s site once daily to ensure the prices match ... Overstock had offered to beat by 10% Amazon’s prices for a limited time in July. Byrne said that promotion cost it $11,000 daily in revenue from book sales. He estimated that the promotion would have cost Amazon between $500 million and $1 billion in lost revenue annually as it cut prices on its books to keep up ... Sweetening the price matching deal, Overstock will give 15% rebates on book purchases to members of its $20-annual free-shipping loyalty club. The rebates are good for future Overstock purchases, Byrne said."
    KC's View:
    We're going to see a lot more of this, because as Amazon tries to expand, companies are going to try to undermine its fundamental value proposition.

    Though I find it interesting that Overstock is trolling Amazon once a day. Because it seems to me that Amazon is trolling its competitors constantly.

    Published on: August 21, 2013

    • The New York Times reports that a federal bankruptcy court judge has given the Eastman Kodak Co. permission to emerge from bankruptcy protection, which it entered in January 2012. Kodak, which "was for years synonymous with household cameras and family snapshots," had been weighed down by excessive costs and an unwillingness to embrace digital technology as quickly as its competitors. The story says that "Kodak has sold assets, including its consumer operations, and will now focus mainly on commercial products like high-speed digital printing technology and flexible packaging for consumer goods."


    • In North Carolina, the News & Observer reports that "Lowes Foods is closing two of its Triangle stores, including one in west Cary near where Publix plans to open its first grocery store in the region next year ... After the closings, Lowes Foods will have 11 stores in Garner, Cary, Raleigh, Clayton and Apex."
    KC's View:

    Published on: August 21, 2013

    Elmore Leonard, the prolific novelist who began by writing westerns, but then evolved by creating a genre almost all his own that might be called the "urban comic crime thrillers filled with idiosyncratic characters and crisp, evocative dialogue," has passed away. He was 87, and was suffering from complications related to a recent stroke.

    Leonard wrote 45 novels and was working on his 46th when he had the stroke several weeks ago. His books have been turned into 20 movies and several TV series, including the current and much-lauded "Justified." A movie based on his book "The Switch," entitled Life of Crime, is scheduled to close the 2013 Toronto Film Festival.

    KC's View:

    I'm a devoted Kindle user, but there are a few authors who, when they come out with new books, I pick up the physical version. They're the books I love, in the genre I like best. And Elmore Leonard always has been one of those guys - I have most of his novels on my bookshelf, plus his "10 Rules of Writing," which I keep on my desk next to my laptop," as well as on my iPad. (In fact, even when teaching marketing, I talk to my students about the importance of good writing and suggest that they buy "10 Rules.")

    Leonard wasn't just a great American crime novelist. He was a great novelist - a stylist who, when he wrote a sentence that sounded like writing, would rewrite it. One of his rules of writing: "Try to leave out the part that readers tend to skip."

    When he signed books, Leonard inevitably would write "Take it easy" before signing his name. Which somehow seemed to reflect the level of cool that seemed to cling to both his work and his persona.

    Want to get a sense of the Leonard patois? Watch the clip above, a few moments from the movie Out of Sight, starring George Clooney and Jennifer Lopez, a film generally considered to be the best adaptation of Leonard's work. (Some would vote for Get Shorty.)

    But I think the thing I liked most about him was the thing that I liked about Robert B. Parker (with Leonard at a seventies book signing, left). They were writers. They got up in the morning and they wrote, because that's what they knew how to do, and that's what they liked to do. And, when they were done, they wrote the kinds of books that people loved to read.

    Can't think of higher praise.

    Published on: August 21, 2013

    The following four emails vividly define the discussion we've been having here on MNB about living wages, minimum wages, and corporate responsibility.

    MNB reader Donna Hekker wrote:

    You have not a clue do you. Another Marxist journalist writing about the have’s and the have nots. Ive worked since I was 13 years old and you don’t pay an entry level person in the work world 15.00 an hour . You have to work your way up start at the 8.94 . You’ve never run a business and probably have never worked in an industry where you have incentive to earn more. You have no business even weighing in on this.

    Write an article about the crony capitalist that the Imperial President wastes our tax dollars on.


    Really? I'm a Marxist? (Next thing you know, someone will be accusing me of having a Kenyan passport.)

    For the record, I started working when I was 13 years old, too. I think the minimum wage then was about $1.45 an hour. And I don't think I've suggested legislation mandating that entry level workers get $15 an hour. What I have suggested is that companies making big profits ought to find ways to reduce wage disparity and share the profits with the people on the front lines, rather than trying to find ways to pay people as little as they can ... and that such a strategy actually could lead to greater effectiveness and efficiency.

    However, my sense from the tone of your email is that no matter what I say, you are going to assume that I think a certain way, and that anyone who disagrees with you is a Marxist.

    With all due respect, this is a crock.

    From MNB reader Carol Elliot:

    Please do not  let your readership dictate what is in your conscience.  You're smarter than that; that's why I'm a loyal reader of your column.

    Frankly, with the average wage disparity between those in the C suite vs. the "average Joe" being at approximately 440 times, something needs to be done.  I believe that the second country on the planet with the next largest disparity is the UK at about 40 times.  (You may want to fact check me here, but, I think I'm close.)


    Content Guy's Note: Best I can tell, this isn't exactly true. But both the US and the UK are in the top 10 when it comes to income disparity around the globe.

    For some reason, probably the abject greed of the few, it is deemed somehow "ok" for this disparity to remain in place.  A short read of history will show that anytime  oligarchy is the structure of a society, it fails, usually spectacularly.  Think France in the late 1700s, Russia in the early 1900s, some might even point to Egypt today, with it's widespread unemployment and lack of opportunity.

    I'm reminded of that great capitalist, Henry Ford, no quoted enough here from my perspective.   The concept of paying your workers a livable wage, which, $15 an hour could be argued is barely minimal, can actually be profitable.  Henry doubled his workers salaries, after they staged a walkout.  He then discovered that those workers actually "returned the favor" by buying his cars.  Just amazing what happens when people are paid a decent wage for decent work.  If the fast food workers of today have to stage a walkout to get some attention, then I say, more power to them since it will be for the ultimate good for all, including the fast food corporations.

    However, there will and will always be, those unenlightened few who will focus on short term gain to the ultimate detriment of their businesses.  For those, we need a realistic minimum wage law in place.  Not everything can be left to "market forces" as if they're some "magic elixir" we've all been told to swallow.  After all markets are made up of people and we're all fallible.

    If you don't agree, show some courage on this issue instead of "walking the fine line"  you have been. That's why you've built a loyal following.  It's frankly disappointing to see you "waffle" on such a fundamental issue.  Pick a side and stick to it. That's what leadership is all about, especially journalist leadership.


    I appreciate your confidence in me. I'm not trying to walk a fine line here, or to waffle because of my readership. (I think Donna Hekker would support me on this.)

    I think it is possible to believe that companies ought to invest (and it would be an investment, not just an expenditure) in higher wages for employees without believing that living wage legislation - especially selective legislation that only affects certain industries - is a good idea.

    Which leads, quite naturally, into an email from reader Chuck Jolley:

    You wrote, “I keep saying that if companies do the right thing in this case, they'll render any proposed legislation irrelevant. And I keep getting email from people suggesting that I am calling for living wage legislation, and castigating me for it. Which is not what I'm doing.”

    I’ll be glad to do it.  When “C” level execs fee free to write themselves ever increasing personal checks and major corporations report near record profits, it’s time to ask where that money comes from and why are people in top management and so many working Americans supporting a pay scale imbalance that has become wider every year?  A corollary question might be why does Costco enjoy a better profit margin than Sam’s Club even though Costco pays their employees significantly more? 

    Or do Sam’s Club and Walmart get a free pass on dipping into what amounts to corporate welfare to help pay their employees?


    Finally, here is an email from a reader that does not deal with the same issue, but that I think is relevant because it expresses a mindset that is consistent with those who oppose not just living wage legislation, but also minimum wage laws:

    Discussing with a co-worker the item on the 20 Alliance for Bangladesh Worker Safety companies, and their 5-year, $45 million commitment to upgrade safety issues at local factories just now, noted your comment, "...shallow support would be worse than no support at all."

    Co-worker comments (paraphrasing here): "Let me get this straight; these 20 companies that source product from these factories in Bangladesh take it upon themselves to make this commitment, put up their own money to try and make things better, AT SOMEBODY ELSE'S FACTORIES, and Kevin snarkily suggests they're 'showing shallow support'?  THESE AREN'T EVEN THESE COMPANIES' FACTORIES!  Remind me to never donate $45 million to Morning News Beat.  I wouldn't want to be accused of cynical, gratuitous tokenism."

    You wouldn't like my co-worker.


    First of all, let me be clear. If someone wants to invest $45 million in MNB, I promise not to be snarky or cynical about it.

    But let's get serious here.

    A $45 million commitment by 20 companies over five years amounts to about $450,000 a year apiece, or a little more than a thousand bucks a day per company. For some, that's a rounding error. Or a mediocre bribe to a foreign official. (Sorry. That was a cheap shot. Couldn't help myself.)

    Let's get beyond the money for a second.

    True, these factories don't belong to these US retailers. But these factories are making products that these companies are selling to US consumers, at cheap prices that may be at least in part enabled because the companies that do own the factories pay people poorly and have less than effective safety measures.

    I think that these retailers do have a responsibility here. A $45 million commitment is hardly tokenism, but I also think that sometimes it is easier for companies to simply write a check and say that this is enough. I'm not saying that this is what they are doing, but I'll repeat what I said yesterday: Shallow support is worse than no support at all. Because shallow support will give the false impression that often intolerable situations are being dealt with, an illusion that will persist until the next foreign factory collapses on top of the people who are working there.

    I don't dislike your co-worker. I'm not a fighter, I'm a lover. (Extra credit if you get the movie reference.) But I believe that this is all part of a larger continuum, and that if companies don't do the right things, it has the potential to spin out of control.
    KC's View: