business news in context, analysis with attitude

Published on: October 17, 2013

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

Now that Apple has announced that Angela Ahrendts, the CEO of Burberry, will be joining the company as the senior vice president in charge of all Apple's retailing initiatives - online and the Apple Stores - it makes sense to figure out what her priorities are.

Well, as it happens, FastCompany has a piece in which it quotes from comments Ahrendts made in an interview with the magazine last summer...

Here's one passage that makes it seem like Ahrendts already has Apple DNA coursing through her veins:

"The thing is, I don’t want to be sold to when I walk into a store. I want to be welcomed. The job is to be a brilliant brand ambassador. Everybody is welcome. Don’t be judgmental whatsoever. Look them in the eyes. Welcome them. ‘How are you?’ Don’t sell! NO! Because that is a turnoff ... What we have wanted to do is build an amazing brand experience and an amazing way that people can engage with the brand. Then it will naturally happen. And then I don’t care where they buy. I only care that they buy the brand.”

Does that sound like an Apple Store, or what?

I think this is an interesting approach, because it also reflects something that Jeff Bezos likes to say about the Amazon experience - that the site isn't designed to sell people stuff, but rather to make it easier to buy stuff.

In reflecting on her Burberry experience, she says:

"In our mind, everyone in the world should have a trench coat, and there should be a trench coat for everyone in the world. It doesn't matter your age; it doesn't matter your gender."

But not, of course, the same trench coat. Because different people have different needs.

I've never owned a Burberry, though I have to admit that I've always secretly wanted one. One of the lines I remember best from Kramer vs. Kramer is when Dustin Hoffman's character describes how his hand shook when he wrote a check for his first Burberry, but that, when "you make your first money, you get yourself a Burberry coat."

It seems to me that one of the things that Ahrendts brings to Apple is a sensibility that goes beyond traditional technology positioning ... she's going to think in terms of lifestyle functionality, lifestyle enhancement, and how people think differently about how design reflects and connects to their own lifestyles. In many ways, there are two kinds of retailers - the kind that sells products, and the kind that somehow envisions the role that the products they sell in the lives of people who own them. There's nothing wrong with being one or the other, but the latter, I think, has the advantage of being both inspirational and aspirational.

This isn't new for Apple. It is in the company's DNA. But kudos to the company for understanding that perhaps they need a fresh set of eyes and some new energy to keep the company moving forward.

And I think, by the way, that it is really smart that the eyes and energy are coming from a woman.

That's what's on my mind this Thursday morning. As always, I want to know what is on your mind.

Published on: October 17, 2013

by Kevin Coupe

A new study done by researchers at Connecticut College has concluded that Oreos may be as addictive as cocaine.

The research was being done into the proposition that foods high in sugar and fat content could be severely addictive, and the study discovered that at least for lab rats, eating Oreos activated the brain's "pleasure center" to a greater extent than either cocaine or morphine.

"Maybe we can approach obesity the same way we address people addicted to drugs, because neurologically, it's the same," researcher Jamie Honohan, a neuroscience major, tells the Hartford Courant. "Oreos and other high-fat, high-sugar foods have this potential to be just as addicting as drugs of abuse."

Honohan said in some ways junk foods may "be more dangerous to society than drugs because you don't have to go behind into a dark alley to buy them. You go into any grocery store or bodega and they are highly available and affordable. They target kids and families on a budget."

I have two reactions to this.

One is that I'm not really surprised. Sure, some folks will find the notion of linking Oreos and cocaine to be offensive, but are any of us really shocked that they share addictive properties?

Second, I have to think that there are a bunch of lab rats in Connecticut that have been having a pretty good few months. Sure, they're paying for it now as they go through withdrawal, begging for just a little taste of some creamy filling ... but for a while there, they were riding a pretty good high.

It's an Eye-Opener.

Published on: October 17, 2013

There were two interesting stories yesterday about the possibility that Kroger might acquire some of the Dominick's stores in Chicago that Safeway has put on the market with the goal of unloading them by early next year.

The Cincinnati Business Courier writes that "Kroger is the leading candidate to buy most or all of the 68 Dominick’s stores that are now up for sale there, according to two analysts based in Chicagoland. That move, if it took place, would get Kroger into a huge market where it doesn’t have stores now."

Analysts tell the Courier that Kroger has the economic and management wherewithal to make such an acquisition work, though the feeling seems to be that buying Dominick's would be a very different proposition that buying Harris Teeter; with the latter, Kroger is getting a strong, well-managed company, while there is a lot more that needs fixing at Dominick's.

However, the San Francisco Business Times - a sister publication to the Courier - suggests that it is dubious that Kroger would want to buy all of some of Dominick's, since it would mean "navigating the Windy City's high labor costs and intense competition that sent Safeway packing."

The story puts it this way: "Kroger is on a roll, so why take on Safeway's headaches?"

Published on: October 17, 2013

The New York Times this morning reports that Washington State Attorney General Bob Ferguson has filed suit against the Grocery Manufacturers Association (GMA), charging that the trade association "illegally collected and spent more than $7 million while shielding the identity of its contributors," an effort that would be in violation of campaign finance laws.

The campaign in question is GMA's quest to defeat a ballot initiative in Washington that would mandate the labeling of products that contain genetically modified ingredients.

According to the story, GMA "is the largest donor to a 'No on I-522' campaign, and the attorney general’s office said the group set up a 'Defense of Brands Strategic Account' within its organization and asked members to pay assessments that would be used to oppose the labeling initiative. The association then financed opposition efforts while shielding contributors’ names from public disclosure, the attorney general said.

"The attorney general’s office said it would seek a temporary restraining order asking for a court order requiring the association to immediately comply with state disclosure laws and said it would seek civil penalties."

“Truly fair elections demand all sides follow the rules by disclosing who their donors are and how much they are spending to advocate their views,” Ferguson tells the Times.

GMA responded to the suit by saying it was surprised, adding that it takes care to comply with all election and campaign finance laws.

Published on: October 17, 2013

The Chicago Tribune reports that "Jewel-Osco confirmed Wednesday that it will offer employment to some 450 workers at four Dominick’s stores it has acquired from the closing grocery chain. The stores are expected to become part of the Jewel chain and parent company New Albertson’s Inc. early next year."

Published on: October 17, 2013

• The Wall Street Journal this morning reports that India's Finance Ministry has cleared Walmart of charges that it "illegally put money into a local supermarket chain despite a ban on foreign direct investment in the sector."

According to the story, "the decision removes one thorn in Wal-Mart's side as it looks for ways to expand its presence in India, the world's second-most populous country and one which has a growing urban middle-class with money to spend." However, Walmart still is calculating what its best next moves should be in India, having announced a week ago that it would bail out of its joint venture with Bharti Enterprises there. Walmart, for the time being, only will focus on wholesale operations in India.


• Walmart said yesterday that it will invest $450 million in its business in Brazil, where it will "shut some small and medium-sized stores while opening 22 new ones and revamping 40 others."

Published on: October 17, 2013

• Amazon.com announced yesterday that it is extending its wine business to four new states - New York, Michigan, Arizona and Louisiana - bringing the total number of states where it sells wine to 20 (plus Washington, DC), facilitating the availability of wine from more than 700 wine sellers and more than 5,000 labels.

Published on: October 17, 2013

• The New York Times reports that "legislators on the island of Kauai in Hawaii have approved a bill that would restrict the use of pesticides by companies developing genetically modified crops there.

The story explains that "because its warm weather allows for three corn harvests a year, Hawaii has become a hub for the breeding of new varieties of corn and other genetically modified crops, and for the production of seeds that are shipped to the mainland ... But the operations have aroused opposition from critics of genetically modified crops and from residents who say they have been bothered by dust and dangerous pesticides.

"The ordinance requires the seed companies to disclose which pesticides they use and establishes no-spray zones around schools, medical facilities, homes, public roads and waterways. The original bill would also have limited the planting of genetically modified crops, but those provisions were removed during deliberations."


• Reuters reports that Loblaw Co., "facing increased competition from foreign-owned and domestic retailers, is cutting about 275 jobs as part of its drive to improve operations. The company said that the cuts will come from the management and administrative ranks and the main office, not the stores. The layoffs follow cuts of about 750 positions a year ago.


• In California, the Santa Barbara City Council has passed a law banning the handing out of free single-use plastic bags by supermarkets and other food stores, requiring that retailers charge shoppers 10 cents per bag.

Stores larger than 10,000 square feet have 180 days to comply. Smaller stores get a year.


• Reuters reports that Costco said yesterday that "it will cooperate with the U.S. Drug Enforcement Administration in its ongoing investigation of prescriptions for controlled substances, after receiving subpoenas and warrants from the DEA. The DEA has targeted large pharmacy chains and distributors to stem the flow of prescription drugs where abuse is suspected."

Published on: October 17, 2013

• Toys R Us said yesterday that Antonio Urcelay, its interim chief executive officer, now can remove the "interim" from his title. Urcelay has been interim CEO since last May, when Gerald Storch resigned from the job.

At the same time, Toys R Us said that it has hired Hank Mullany, most recently CEO of ServiceMaster Co, to be president of its US division.

Published on: October 17, 2013

• Ed Lauter, one of Hollywood's most prolific character actors - according to IMDB, his first role was on "Mannix" in 1971, and one of his last was as a baseball scout in 2012's Trouble with the Curve, which starred Clint Eastwood - has passed away. He was 74, and suffered from mesothelioma, a rare form of cancer most commonly caused by asbestos exposure.

Published on: October 17, 2013

MNB reported earlier this week that Walmart would expand its grocery delivery test from San Francisco to Denver, which prompted reader Matthew Heinze to write:

I will be curious if Walmart is able to make any inroads either through home delivery or small formats in San Francisco. I hadn’t internalized that they had been testing home delivery in San Francisco while you can’t actually shop at a Walmart in San Francisco. The closest Walmart is across the bay in Oakland. The closest Supercenter is about 30 miles away. Will the San Francisco shopper, whose political leaders have kept Walmart out of the city, vote with their wallet by having groceries delivered to their home? I doubt it, but if Walmart wants to adjust strategies and tactics and beta test in a challenging location, they have it. I wonder if there have been any protests of the Walmart To Go trucks parked in the city?



Regarding Walmart's decision to start using big stores as distribution depots for its smaller stores, one MNB user wrote:

MVI (now part of Kantar Retail) first discussed the idea of Wal-Mart using its large stores as a “DC” for small stores, some 8 years ago. Not only can small stores benefit from online, but also from managing bakery, deli and other high cost departments across these stores.  It will require additional WMT logistics discipline to manage shrink and other cost centers not to mention food safety tracking. In my mind, it’s a way to quickly gain some cost competitive advantage in markets where Wal-Mart has strong store saturation.




We had a piece the other day about wage disparity, pegged to a study into how many fast food employees also are on some kind of public assistance.

One MNB reader wrote:

I was at a major grocery chain late last night.  As I was walking to my car I noticed a guy working on his car. He asked me to give him a jump. After a fruitless 30 minutes I offered to give him a ride home.

During the 20 minute ride he told me he had been out of work for 1.5 years and was trying to catch up. He said the car breaking down was distressing because he had to go to his second job delivering newspapers. Then be back at the store to open in the morning. His car was about 20 years old.

Appreciate what you have. It's tough out there.

MNB reader Scott Wagner wrote:

I think you miss the key point in the entire study…68% of the fast food workers are now single or married adults.  The economy has shifted to the point that these are the only jobs available to working adults.  This is the area of the economy that we should be working to fix and not to artificially inflate wages beyond what the market will demand.  Wage increases through a robust economy will lower entitlement spending, increase economic activity and generally lead to prosperity.

No matter which side of the argument you are on there is one indisputable fact…every time government creates new regulations, business looks for ways to implement them in the most efficient manner possible.  Let’s go back to the housing bubble.  Government created rules to encourage home ownership for as many people as possible.  Lending requirements and rules were eased and a new economy boomed.  Jobs were created, housing starts were at historic highs and more people than ever were experiencing home ownership.  Banks were extremely efficient at this since it led to record profits.  The only problem was, this was not sustainable.  Increasing prices and high default rates led to the bubble bursting, the economy imploding and record unemployment.   So the admirable goal of increasing home ownership had the unintended consequence of nearly sinking the economy and ultimately led to this shift in the workforce where we find 68% of fast food workers are now adults.

We are seeing similar things with the Affordable Health Care Act as business begins to move employees to part time and cancel company health plans to move employees into the government exchanges.  These are unintended, but very real consequences of this law and the people getting hurt the most are the workers.  They are losing hours as business seeks the most efficient solution to working in this new environment.  And to make matters worse, they are also being mandated by the federal government to buy health insurance or they will be fined by the IRS.  So the worker ends up with less money and more expense and is, therefore, penalized for working in order to help pay for those who are not working at all.

In the end economics will prevail.  The more we try to legislate a working wage, the poorer we will become.  All you need to do is look at any socialist or communist country and compare the standard of living.  I agree that we need to improve the wages of our workers, but I just don’t believe that artificially increasing the wages is the answer.  Are you prepared for the unintended consequences that could accompany such a new law?  I recall reading stories about some restaurants outsourcing their drive through order taking to India.  Could you have ever believed it would cheaper to take your order from India?  In the internet age, almost anything is possible and business will continue to find the most efficient way and it will always be at the expense of the middle and working class.

I don't think I've called for legislating a "living wage." (You said "working wage." That's an interesting slip of the tongue.) I think wage disparity is an enormous problem, but I'm also pretty sure that living wage bills only address the symptoms, not the illness.

I wrote in commenting on this issue:

There is no easy solution to this, but I do think that it points up a continuing and growing problem in America - wage disparity that is creating a kind of underclass that works hard, works long, tries to raise families and impart solid values to their children, and yet cannot support itself even while doing honorable jobs. That's not just bad for this underclass, but for the retailers and manufacturers that would like to sell it products and services that they cannot afford.

MNB reader Christine Walsh responded:

Couldn't agree with your more.

It seems today, we lack insights and foresights about the ramifications of our decisions.  There is a connection here -- that if we do not pay hard working people a livable wage they cannot afford to take care of their families.  Even in this nation that expresses the virtues of a family values we should surely see the cause and effect of low wages on the family, the business, the community and the nation at large.

This is a socio-economic issue in that we are only as strong as our weakest link.  If we continue to provide opportunities - and livable wages - to the smallest percentage of Americans we leave the rest to fend for themselves which in turn will require support from the rest of society.  A successful nation (and company) should raise all ships for long-term prosperity.

As the great George Carlin stated…

People say if you don't give the rich more money, they will lose their incentive to invest. Then they say, as for the poor, they've lost all incentive because we've given them too much money.




Regarding ongoing management instability at Delhaize, one MNB reader wrote:

This is a dead company walking.  I tired to tell you that months ago.  How long it will take to fall over is anyone's guess, but the pace seems to be picking up.

At least in the case of Hannaford, the Belgians managed to screw up what was once a great company.  Food Lion is its own challenge, but blaming Cathy Green for the mess there was misguided at best.  But Smith needed to find someone to blame.

Glad to be watching this ... from the outside now.  I feel sorry for my friends in both Scarborough and Salisbury who are having to endure the constant turmoil, but there are fewer of them remaining as each week goes by.

Once the Sweetbay/Harvey's/Reed's sale is consummated, there will be another round of layoffs that will sweep through the organization again.  I actually wouldn't be surprised to them sell off Hannaford as it is one of the few remaining properties Delhaize has where some value could be realized.

The saga will continue.

CONTENT GUY'S NOTE: Because of an editing error that is entirely my fault, an obscenity that was in this email made it into an earlier version of this copy. I cannot apologize enough for this ... and will address it again tomorrow.




Differing opinions from MNB readers about comments I posted yesterday from a reader who I labeled as being misogynistic.

One reader (a male) wrote:

Question: How many times can he put his foot in his mouth?

Answer: Every.

Another reader (also a male) wrote:

Can’t believe you still take this guy seriously. He’s a troll. A professional troll. And he laughs his head off every time you get bent out of shape when you publish his latest drivel. Nobody can be that stupid and serious at the same time.

Just FYI ... It takes a lot more that this clown to bend me out of shape. And it is not that I take him seriously. I just think that sometimes the venom and drivel he spews reflects the thinking of more than a few people, and is worth training a spotlight on.

And still another reader (a female) wrote:

Don't stop using his e-mails.  I love reading what he has to say.  I envy his self-confidence!  But it's not entirely fair to compare him to my beloved  Don Draper, who, while horrible at times, also provided great mentorship and support to Peggy as she developed in her career. 

I had the opportunity to work with, and for many men, in my 30 years in this industry.   For sure, I have encountered many (people like him), but I always grew as a person as a result of encountering those individuals.   I wouldn't change a thing about the experiences I had.  And I'd rather deal with his overt discrimination, than much of the covert discrimination I dealt with in these 30 years.  Oh, the stories I could tell...

Which is exactly why I think that sometimes it is worth exposing certain kinds of opinions to sunlight and fresh air.

BTW...this fellow didn't much like the way he was characterized by me yesterday.

He wrote me an email in which he accused me of "trying to kiss up to the girls to win them over.  Every man has a different way of showing off for the girls.  Some is with athletics, some by making lots of money, and others appealing to their feelings.  And if it helps you score with the ladies -- go for it."

Accusation that are both funny and pathetic ... and define precisely how certain kind of people think.

I think my work here is done.

Published on: October 17, 2013

In the American League Championship Series, the Detroit Tigers defeated the Boston Red Sox 7-3, tying the best-of-seven series at two games apiece.

In the National League Championship Series, the Los Angeles Dodgers beat the St. Louis Cardinals 6-4, but the Cards retain a 3-2 game series lead.