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    Published on: September 10, 2013

    by Michael Sansolo

    This is a story that I knew was coming. The basic fact underlying it has been obvious for some time, as were the implications of the change it portends. Yet the moment still feels like something worth sharing and discussing.

    This year’s class of college freshmen class, born in 1995, is the first ever born after the advent of the Internet, as we know it today. In other words, the world of the web is the only world they have ever known.

    Of course, it’s also obvious that the past three to six freshmen classes actually fall into the same bucket since I doubt many of them were reading Encyclopedia Britannica in their jogging strollers. Nonetheless, this is a threshold I think we need to contemplate.

    This is a generation that never thought of using an encyclopedia because Google was always there. They probably never read newspapers in print because all the news they ever wanted was always at their fingertips. They never listened to a record or cassette tape because MP3s have always existed for them.

    And when it comes to shopping, they have always known about a place called Amazon.com.

    This is, of course, hardly the first time this type of generational change has happened. My generation knew nothing about iceboxes, general stores or party lines. But think of how the culture's advances beyond those things signaled remarkable changes in how we shopped and communicated.

    This new shift matters because there are countless habits of these college freshmen that many of us understand and misunderstand. They study differently because nothing else would make sense. They multi-task because they always have and always could.

    They relate easily to each other by devices and don’t use social media or smartphones the same way their parents do. (Ask them about Snapchat, Vine or Instagram to get a glimpse into their world of hyper-fast communication.)

    This also means that as this new class - and all those that follow - emerges into the world, it will challenge the ways we communicate with this generation as associates and shoppers. That means we need learn new ways to market and communicate, and how we recruit and train.

    Some folks born before 1995 might argue that we have important skills to teach, such as how to talk to people while looking them in the eyes. But whatever argument you have about this change, well, get over it.

    Our goal now should be to learn how to merge the best of all worlds and become the marketers and employers that can talk to both camps.

    One other thing to consider: WTOP, the local all-news radio station in Washington, DC, reported last week that older people have finally found a technology that they can learn easily and use to solve real problems. The technology is social media and, according to the radio station, forums like Facebook are helping older people overcome feelings of isolation by giving them an easy link to community.

    Things just keep changing.

    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: September 10, 2013

    by Kevin Coupe

    Advertising Age reports that London drivers at the wheel of a Mini are finding that some billboards are directly targeting them.

    Really directly. And really recognizing that customized marketing appeals that treat customers as individuals - rather than as part of a larger and more amorphous demographic group - can be enormously powerful.

    According to the story, "As they pass digital screens along one of London's main roads, Mini drivers find simple, fun content aimed directly at them. Messages such as 'Hey Cream Mini, what's your secret?' and 'Hello blue Mini driver' flash up on giant screens, thanks to software that recognizes the Minis as they drive by."

    In addition, the story says, "At gas stations along the way, Mini drivers are offered treats -- bacon sandwiches or smoothies in the morning and a tank of fuel or bunch of flowers on the journey home. Drivers can also choose to have their photo taken and displayed with a bespoke message as they approach the digital poster sites. The push is part of Mini's 'Not Normal' campaign, which celebrates the individuality of Mini drivers."

    Blimey. That's an Eye-Opener.
    KC's View:

    Published on: September 10, 2013

    Albertsons LLC announced yesterday that it will acquire Lubbock, Texas-based United Family, which operates United Supermarkets with more than 600 locations in 16 states. Terms of the deal were not disclosed. It is expected to close by the end of October.

    According to the announcement, "United has been family-owned since its founding in 1916 ... United currently operates 50 traditional, specialty and Hispanic  grocery stores under its United Supermarkets, Market Street and Amigos banners, and 7 convenience stores and 26 fuel centers under its United Express banner. United also operates two divisions, R.C. Taylor Distributing and Praters, and one wholly owned subsidiary, Llano Logistics, which operates the company’s two distribution centers in Lubbock and Roanoke, Texas."

    It was less than a month ago that the company announced that it was changing its corporate name from united Supermarkets to United Family, saying that it was "the result of a strategic branding initiative for the entire organization ... reflecting the company’s multiple store brands as well as its rich family history."

    The companies said that "upon completion of the transaction, United will operate as a separate business unit under Albertson’s LLC’s corporate structure. Robert Taylor, United’s CEO, will continue to lead the company as president of the United subsidiary, reporting directly to Bob Miller, CEO of Albertson’s LLC."

    “It’s a great fit between two great companies,” Miller said in a statement. “United runs a fantastic operation, and will maintain its own unique identity.”

    Albertsons LLC is majority owned by Cerberus Capital Management.
    KC's View:
    Strikes me that both United and Albertsons get stronger and more competitive as a result of this deal. The key will be United taking advantage of Albertsons' economies of scale, and Albertsons being able to learn from the things that United does best.

    Published on: September 10, 2013

    The Baltimore Sun has a story about how malls remain relevant to the shopping patterns of a younger generation raised on access to Amazon.com and other e-tailing options.

    "Just as video did not kill the radio star, the Internet won't kill the shopping mall any time soon," the Sun writes. "The shopping habits of Generation Y show why.

    "Buying almost anything online may be as much second nature as texting for many in the first generation to have grown up with e-commerce, but the millennials still do most of their shopping in stores, especially those that keep their offerings fresh and make the experience social, according to research from the Urban Land Institute ... ULI's report, based on an online survey of 1,251 Gen Yer members and a focus group at Columbia University's Graduate School of Business, found that nearly half of Gen Yers enjoy going out shopping, while 37 percent said they love to shop. Only 4 percent said they hate shopping. The research showed millennials are multi-channel shoppers, visiting retailers online and in person, with no real preference for one type of store or shopping center over another."
    KC's View:
    The critical phrase here is "especially (stores) that keep their offerings fresh and make the experience social."

    Stores that create a compelling shopping experience - that actually give people a reason to venture out from behind their computers and put down their smart phones - always are going to be more competitive than those that do not. But it can't be the same old shopping experience ... it has to be relevant, and it can't ignore the advantages that online shopping can offer, especially at a time when companies like Amazon are investing in systems that will make next-day and even same-day delivery possible in many markets.

    Published on: September 10, 2013

    The Washington Post reports that "a meat inspection program that the Agriculture Department plans to roll out in pork plants nationwide has repeatedly failed to stop the production of contaminated meat at American and foreign plants that have already adopted the approach."

    The story goes on to say that "the program allows meat producers to increase the speed of processing lines by as much as 20 percent and cuts the number of USDA safety inspectors at each plant in half, replacing them with private inspectors employed by meat companies. The approach has been used for more than a decade by five American hog plants under a pilot program.

    "But three of these plants were among the 10 worst offenders in the country for health and safety violations, with serious lapses that included failing to remove fecal matter from meat, according to a report this spring by the USDA inspector general. The plant with the worst record by far was one of the five in the pilot program."

    The story is worth reading here.
    KC's View:
    Not sure which is more shaken. My confidence in the beef industry, or my confidence in the regulatory apparatus.

    It's a toss up. Problem is, either way, we lose.

    Published on: September 10, 2013

    The Seattle Times reports on the ongoing battle in Washington, DC, over the Marketplace Fairness Act, which would require the charging of sales taxes on all internet purchases.

    The bill is supported by the likes of Amazon.com, Walmart and Best Buy, and opposed by eBay, the Heritage Foundation and other organizations.

    According to the story, "The Marketplace Fairness Act would override a pair of early Internet-era rulings by the U.S. Supreme Court that have kept states from compelling online and catalog retailers to collect sales taxes on orders from states where they do not have stores or another other physical presence ... The bill cleared the Senate in May, 69-27. But the measure has stalled in the House Judiciary Committee, whose chairman, Rep. Bob Goodlatte, R-Va., has expressed 'serious concerns' about the Senate version."

    The Times notes that the battle has turned into a multi-million dollar conflict between special interests and highly paid lobbyists. The people opposed to the bill appear to be reflexively anti-tax, and at the very least feel that it ought not apply to any retailer doing less than $10 million in annual sales.

    Those in favor of the bill say that it will level the playing field between online and bricks-and-mortar retailers, and would like the exemption level to be set a lot lower.
    KC's View:
    I'm almost getting to the point of not caring. Not because this is an unimportant decision, but because I suspect that the winner will be whichever side spends the most money to hire the most effective lobbyists, and which elected representatives are most malleable to the desires of their biggest contributors.

    Published on: September 10, 2013

    In a mark of how the digital world continues to intrude on traditional media culture, Robert Albritton, the owner of Politico, said yesterday that he has acquired Capital New York, an online news site. Albritton says he plans to make a "substantial financial investment" to turn Capital New York into a more vital competitor.

    "I have very big ambitions for Capital," says Albritton, "to do in New York what we did in Washington with Politico."
    KC's View:
    This is no small thing.

    Since its launching several years ago, Politico.com has redefined national political and governmental coverage, hiring top-notch reporters and evolving into a legitimate online competitor to traditional media. In fact, when the Washington Post recently was sold to Amazon founder Jeff Bezos by the Graham family that owned it for decades, many of the postmortems noted that the decline in fortunes at the Post could be directly traced to the success of Politico.com. Which means that the folks at the New York Times at the very least have to be girding themselves for aggressive and relentless competitive attacks, figuring out how it needs to rethink and reconfigure its content for a new generation of consumers.

    This is not all that different from what every business has to do as the digital culture continues to grow and change and reshape the competitive landscape.

    BTW ... not everybody thinks that what Politico.com has brought to the party has been positive. There are those would would argue that it focuses on speed and covering the "game" minutiae to a degree that would be more suitable to the sports pages, and that politics and government deserve more considered treatment. But this argument is almost besides the point.

    Published on: September 10, 2013

    Ahold USA announced yesterday that Anthony Hucker, president of its Giant Landover supermarket chain for the past two years, has resigned "to pursue another opportunity."

    Hucker will be succeeded on an interim basis by Bhavdeep Singh, Ahold USA's executive vice president of operations, until a permanent replacement can be found.

    Hucker, according to the Washington Business Journal, is a native of Wales who "previously worked for Wal-Mart as a corporate vice president and for international grocery chain Aldi."
    KC's View:

    Published on: September 10, 2013

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

    • The Associated Press reports that a federal judge in San Francisco has ruled that Abercrombie & Fitch was wrong when it fired a Muslim employee for wearing a head scarf. The retailer had said that the scarf violated its dress code and would negatively impact sales, but the judge said the firing violated anti-discrimination laws and that there was no "credible evidence" that the scarf would hurt sales.

    A hearing to determine the company's liability will begin later this month.

    The story notes that "Abercrombie has been the target of numerous discrimination lawsuits, including a federal class action brought by black, Hispanic and Asian employees and job applicants that was settled for $40 million in 2004. The company admitted no wrongdoing, though it was forced to implement new programs and policies to increase diversity."

    Interesting story, and one that suggests so many questions. I'm curious, for example, if the employee only started wearing the scarf after being hired, or whether the scarf was work during the job interview and, if so, why the employee was hired to begin with. Not that I'm agreeing with A&F on this one ... I think that an argument can be made that not only would the scarf-clad employee not hurt sales, but might even signal something important about inclusivity at the retailer. But the big message here is how the demographic world is changing, and how businesses have to think hard, act wisely, and be careful.
    KC's View:

    Published on: September 10, 2013

    • The Fresh Market yesterday announced the hiring of Randall A. Young as its senior vice president Real Estate and Development. Young is the former vice president, Real Estate at Advance Auto Parts, Inc.


    • Recreational Equipment Inc. (REI) named Jerry Stritzke to be its new CEO, succeeding Sally Jewell, who left the company to become the US Secretary of the Interior.

    Stritzke is the former president/CEO of Coach. The Seattle Times notes that in his new job, Stritzke will make considerably less than he made at Coach. However, Stritzke was described by REI as being “an outdoor enthusiast” who "hikes, fly-fishes and summits Colorado’s many 14,000-foot mountain peaks."

    “He’s not doing this for the money,” says REI chairman John Hamlin said. “He’s doing this because he believes in the mission.”
    KC's View:

    Published on: September 10, 2013

    Cal Worthington died yesterday. He was 92.
    KC's View:
    If you don't know who Cal Worthington was, go check him out on YouTube. He was a legendary car salesman in Southern California who at one point had 29 dealerships as far south as Long Beach and as far north as Anchorage. But even more importantly, he was a canny marketer who understood the power of television and the role that a strong spokesman could play in making a business successful.

    There were two consistent elements in his TV commercials, which have been ubiquitous for decades in the markets he served. One was the jingle:

    If you need a better car, go see Cal
    For the best deal by far, go see Cal
    If you want your payments low
    If you want to save some dough
    Go see Cal
    Go see Cal
    Go see Cal...


    The other was the line that introduced him, before he made his on camera pitch:

    Here's Cal Worthington and his dog, Spot!

    Spot, of course, was never a dog. It could be a hippo, or a monkey, or a lion, or a tiger, or even a skunk. But never a dog.

    Ultimately, what came through was that Cal Worthington was a guy with a sense of humor who would do anything to sell you a car, while somehow avoiding the sleaze factor that attaches itself to so many car salesmen. You know that if you bought a car from Cal Worthington, there was a real guy standing behind it. And despite the hokey commercials, that was immensely important ... and a lesson worth remembering.

    Published on: September 10, 2013

    Another comment about my admittedly snarky comment about McDonald's (I said the clean restrooms are the only good thing about the company) from MNB reader Craig Espelien:

    I think the writer on “Your Views” regarding McDonald’s was spot on.  I am sort of on your side – not a huge fan of eating at McDonald’s but more because my palate has evolved past those flavors than because I do not like their business model.  But, from my perspective, McDonald’s – like all businesses that are viable today – serves a segment of the market that wants to buy their products.  They focus on consistency – if you get a cheeseburger in Chicago from McDonald’s you can be pretty much assured that that cheeseburger will be of the same quality as at any other unit in the US or abroad.  A lot of folks select McDonald’s not because it is the best food they ever will eat but because it is consistent, safe and a known commodity.
     
    As I had told a CEO in one of my previous companies – we sometimes need to remember that we are serving consumers that are likely different from us and that our tastes are not always (or ever for that matter) reflective of what our consumers want and/or expect.  We are all free to choose where to spend our hard earned dollars but should remember that everyone else has that same choice – and we cannot color their choice with our preferences.
     
    Is McDonald’s the best food?  Perhaps not – but it is considered quite good by lots of folks.  Sort of like Yellow Tail wine – very popular with many consumers but never part of any party or gathering at my house.  Why?  I no longer have that brand in my choice set – but that does not mean that others do not like it or even love it.  My guess is that you do not prefer Yellow Tail – but have rarely heard you disparage wines you do not prefer – only expound on those you do.
     
    Finally, McDonald’s is not alone is serving food that might not be good for us – the burger joints you love (or the ones I do) probably are no better for you than McDonald’s when you get right down to it.  The key is to not eat every meal, every day there.  Morgan Spurlock showed that doing that at McDonald’s was not good for you – and my guess is that if we ate similar types of food at some of our favorite restaurants we would probably end up in as tough a shape.
     
    Be well my friend and keep pushing the edges of conversation – that is where the really interesting stuff is.





    From another reader, on another subject:

    Is it just me or have you been eerily quite about Roland's departure?  I've been looking forward to reading your thoughts.  Did I miss it?

    I think you did. Click here.

    Yesterday, responding to an email, I wrote:

    I wouldn't write Delhaize's obituary just yet. But the company certainly is facing nine miles of bad road, and having a CEO in Belgium with limited experience as a merchant - arguably the quality that is most important for the company's new CEO - won't make the ride any easier ... If Delhaize thinks it can fix its problems by focusing on the buy, instead of on the sell, then maybe we'll be writing its obituary sooner than expected.

    Another reader responded:

    I read your reader's comments and then your follow-up in relation to Delhaize's decision. Most retailers fail because they don't put enough attention on their supply chain and procurement practices.  A big portion of retailing is about location and ambiance.  It's highly visible, customer facing and it's important but it's actually the easy part of the value chain.  The inventory doesn't magically appear on the shelves at the right price.  If you think about it, most of the companies that are destroying retailers are companies like Walmart, Target & Amazon.  These companies focus on logistics and procurement and then make the retail experience secondary.  If a retailer doesn't want to focus on a critical portion of their vertically integrated business, they should outsource it to someone who does focus on it.  It's highly myopic (and common) to ignore these critical functions.  That's my 2 cents.

    I never meant to suggest that supply chain and procurement logistics are unimportant, or even secondary. Far from it. But I do think that sometimes companies believe that by being effective in those areas, it allows them to put marketing and merchandising functions in a secondary position, and I don't think that is true, either.

    Retailers can only procure better manufacturer terms, for example, if they are able to deliver sales to the manufacturer ... and that requires not just the right prices, but also effective marketing and merchandising strategies and tactics.




    Regarding the outstanding Guinness commercial that we spotlighted yesterday, one MNB user wrote:

    I think that is one of the best ads ever, actually made me feel good about friendship and what it means.

    From MNB reader Dave McCarthy:

    Kevin, absolutely concur!!! Saw this ad last night for the first time, last night along with my son, Devon 15. While I don’t want my 15 yr old drinking Guinness until the appropriate age (with a last name of McCarthy it’s inevitable J), I Loved his response to this ad. “Wow that’s a Great ad about Friendship”! He didn’t even know it was a beer ad until the very end.



    We had an email yesterday responding to a video about the ubiquity of cellphones - and the sometimes negative impact - in which the reader laid out the rules for dating him:

    Clients can get away with it but when it comes to dating,  if a woman texts or gets a call from her kids while with me, its a total deal breaker.  Phones are to be turned off at all times in my presence.  And vice versa.  At family gatherings, dinners, meeting, phones are to be put away and turned off.  Not even vibrate is acceptable.

    My response:

    Now, I haven't gone out on a date with anyone other than the woman to whom I am now related by marriage since 1979 - well before the cell phone explosion - so I grant you that I may be out of touch on this issue.

    But if I were going out on a date with someone, I'm not sure I would make pronouncements like "people who know me know better than to look at their phone, text, or take a call in my presence," and "phones are to be turned off at all times in my presence." I agree that common courtesy ought to be observed, but last time I checked, relationships are hard to develop when one person dictates and the other person has to obey. And one other thing. If I were going out with a woman who had kids, I certainly would never suggest that she not take calls or texts from them ... it strikes me that the wrong place to be would be between a parent and his/her kids.

    But maybe that's just me.


    Well, not surprisingly, since I know who this particular reader is (and his name won't be any mystery to longtime MNB readers), he sent me another email yesterday:

    There are plenty of desperate single moms looking for a meal ticket who will lower themselves to going out with me.  I make it very clear beforehand phones are to be turned off or left in the car.  They know this going in and have plenty of opportunity to opt out.   It might be 2013 but when someone is with me its 1963.  Oddly I've found the worst offenders are the women over 50.  The women under 25 are actually the most obedient.

    With some justification, some people will wonder why I'm posting this moron's comments.

    There's a reason.

    It is important to remember that there are people in business today who think like this, and who say things like this, and who believe things like this. There are people in business today who actually impact the decision-making process who bring this sort of mindset to their work.

    I find this staggering.

    Maybe they do it for the attention. Maybe they think that just having their name published or posted - no matter in what context - is a good thing, or at the very least, an ego boost.

    I cannot help but think that anyone who depends on people like this for business advice or guidance is making a serious error in judgement.

    But maybe that's just me.
    KC's View:

    Published on: September 10, 2013

    In Monday Night Football action...

    Philadelphia 33
    Washington 27

    Houston 31
    San Diego 28




    And, in the US Tennis Open, Rafael Nadal defeated Novak Djokovic in four sets (6-2, 3-6, 6-4, 6-1) to win his second men's singles title.
    KC's View:

    Published on: September 10, 2013

    The Washington Post reports that "a meat inspection program that the Agriculture Department plans to roll out in pork plants nationwide has repeatedly failed to stop the production of contaminated meat at American and foreign plants that have already adopted the approach."

    The story goes on to say that "the program allows meat producers to increase the speed of processing lines by as much as 20 percent and cuts the number of USDA safety inspectors at each plant in half, replacing them with private inspectors employed by meat companies. The approach has been used for more than a decade by five American hog plants under a pilot program.

    "But three of these plants were among the 10 worst offenders in the country for health and safety violations, with serious lapses that included failing to remove fecal matter from meat, according to a report this spring by the USDA inspector general. The plant with the worst record by far was one of the five in the pilot program."

    The story is worth reading here.
    KC's View:
    Not sure which is more shaken. My confidence in the food industry, or my confidence in the regulatory apparatus.

    It's a toss up. Problem is, either way, we lose.

    Published on: September 10, 2013

    The Yucaipa Companies, the private investment firm, announced today that it is acquiring Fresh & Easy Neighborhood Markets from Tesco, the British retailer that launched the chain six years ago to great fanfare but never was able to gain enough competitive traction to make it a worthwhile investment.

    While the official announcement said that "term of the deal were not disclosed," the reports that "under the transaction, U.K.-based Tesco not only won't receive any money, it is essentially paying Mr. Burkle's Yucaipa Cos. to take on the liabilities," to the tune of about $235 million (US).

    The deal is expected to close within three months.

    Philip Clarke, CEO of Tesco, released the following statement: “The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy’s stakeholders. It offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues at Fresh & Easy.”

    Ron Burkle, Managing Partner of Yucaipa, made the following prepared statement: “Fresh & Easy is a tremendous foundation. Tesco should be applauded for giving their customers an affordable, healthy, convenient shopping experience.  Its dedicated employees and great base of customers give us a solid starting point to complete Tesco's vision with some changes that we think will make it even more relevant to today's consumer.  We plan on continuing to build Fresh & Easy into a 'next-generation convenience retail experience,' providing busy consumers with more local and healthy access for their daily needs."

    According to Bloomberg Businessweek, "Yucaipa will acquire more than 150 of Fresh & Easy’s near 200 stores as well as distribution and production facilities ... Those outlets not included in the transaction will be closed in the coming weeks.

    "Fresh & Easy has never made a profit since it was built from scratch in 2007. Tesco has invested about 1 billion pounds ($1.6 billion) in the business in that period. Many analysts saw it as a drag on resources at a time when Tesco is struggling to maintain its dominant share of the U.K. grocery market."
    KC's View:
    Fresh & Easy, despite the expectations of many people (including me) that it would provide a unique and differentiated shopping experience to shoppers, in retrospect seems doomed from the beginning since Tesco totally misread the market and the desires of US shoppers - remarkable since the company's research abilities always have been highly respected, and it said it spent an enormous amount of time and money researching the California marketplace.

    While this won't been seen as a high point in Clarke's tenure, he'll at least get credit for getting Tesco out of a bad situation. Not so lucky will be the reputation of his predecessor, Sir Terry Leahy, who has to take the blame for the whole fiasco.

    What remains to be seen is what Yucaipa will do with the chain. But it seems to me that if they just try to be another small-store shopping experience, it won;t be worth the effort. On the other hand, if they try to do something unique - finding ways to differentiate themselves from the likes of Trader Joe's and Whole Foods and all the other bricks-and-mortar competitors in the western US, at the same time as Amazon is looking to make inroads with e-grocery there, then maybe Fresh & Easy will be worthy of the name.

    And by the way ... y'think it is possible that Burkle is chatting with Jeff Bezos, looking to see if there are ways in which Fresh & Easy's real estate can be turned to Amazon's advantage? It certainly might be worth a phone call...