business news in context, analysis with attitude

Published on: October 21, 2013

by Kevin Coupe

Two interesting birthdays have recently been celebrated, each of which speaks volumes about how the world has changed in recent years.

• History.com takes note of the fact that on October 19, 1985, the very first Blockbuster video rental store opened in Dallas, with 8,000 videotapes on its shelves. "By 1988, Blockbuster was America’s leading video chain, with some 400 stores," the site says. "By the early 1990s, Blockbuster had launched its 1,000th store and expanded into the overseas market."

• Last week, the Food Network celebrated its 20th birthday with a star-studded Manhattan party: "In many ways, the event was not just a party, but also a mini museum, with exhibits tracing the history of the network from its earliest days, when the focus was on culinary education, to its glitzy and glamorous present."

It seems to me that these two companies reflect very different attitudes about business evolution.

In so many ways, Blockbuster seems like the poster child for being unable or unwilling to adapt to changing times - the company's business model was being attacked on various sides by the likes of Netflix, Redbox, and iTunes, but it seemed to stick too long with a marketing approach that consumers gradually - and then quickly - deemed to be irrelevant.

The Food Network, on the other hand, has evolved. Serious foodies might take issue with its direction, but the folks in charge understood that in a reality television world, the product had to become more entertaining, more reality television-like, even sexier. (Especially because so many other networks seem to be jumping into the cooking show pool.)

Lessons worth paying attention to, I think. And Eye-Openers, both.

Published on: October 21, 2013

The Seattle Post Intelligencer reports that Washington State Attorney General Bob Ferguson has announced that the Grocery Manufacturers Association (GMA) has agreed to provide the names of the companies that have helped to finance a $7 million campaign designed to defeat a state initiative that would mandate the labeling of products that contain genetically modified organisms (GMOs).

The GMA decision means that the state will not have to go ahead with a lawsuit that was filed with the intention of forcing the trade association to disclose the names.

According to the story, "The GMA board voted to register as a political committee and file the required documents on their effort to oppose Initiative 522. Initiative 522 is a measure requiring labeling of genetically engineered foods, seeds, and seed products in Washington. The GMA will create a separate political committee, register it with the state’s Public Disclosure Commission, and file reports indicating who contributed, how much they contributed, and how the money was spent to oppose I-522.  When the reports are filed, the public can view them on the PDC’s website."

“The people of Washington demand transparency in elections,” Ferguson said. “I’m pleased the GMA board recognized their responsibility to disclose the names of companies who contributed to opposing Initiative 522, and the amount of their contributions.”

And GMA released the following statement: “In the spirit of continuing cooperation and in an effort to provide Washington voters with full transparency about GMA’s funding for the ‘No on 522’ campaign, the association has decided to voluntarily establish a Washington state political committee and to file reports with the PDC disclosing the source of all funds used in connection with Washington state elections."

Published on: October 21, 2013

The New York Times over the weekend had a story about how Walmart is battling Amazon, "frantically playing catch-up by learning the technology business, including starting @WalmartLabs, its dot-com headquarters. The two retail behemoths, one the king of the physical store and the other the conqueror of the online world, are battling over e-commerce — competing for the most talented engineers, trying to gain the upper hand in the new frontier of same-day delivery and warring over online pricing."

You can read the whole story here.

What's interesting about the story is the way it frames the competition as not just being on the technology, marketing and human resources fronts, but also in the cultural arena - with Amazon's west coast cool at odds with Walmart's Arkansas mettle.

"Although the fierce competition between Walmart and Amazon is occurring in all areas, to get the technological edge Walmart has to succeed in San Bruno," the Times writes. "The company has had a small presence near Silicon Valley for more than a decade, but until recently, engineers in the area barely knew it existed. It signed a lease three years ago for the San Bruno office, north of the valley — and across the street from YouTube — and is opening another this fall in Sunnyvale, home of Yahoo, in the heart of the valley. It is trying hard to prove it is one of the cool kids."

The Times continues: "The changes are more than cosmetic, though. This year, @WalmartLabs has gone on a start-up shopping spree, buying four companies — Torbit, OneOps, Tasty Labs and Inkiru — that build things like tools to crunch data and speed up Web sites. The acquisitions included some of the start-ups’ founders and engineers, the time-honored way for Silicon Valley companies to hire the talented employees they need to build better Web and mobile tools ... The company’s pitch to engineers is that Walmart moves quickly and has huge problems to solve, even if it is not a nimble newcomer or a buzzworthy start-up."

And more than that, the story says, Walmart.com understands that to appeal to the kinds of people who can make it competitive with Amazon, it needs to adjust its culture a bit: "For example, at press events in Bentonville, Ark., Walmart’s headquarters, the menu tends to be ham sandwiches, chips and iced tea. At a recent event in San Bruno, it was white asparagus panna cotta with house-smoked salmon tartar, morel mushroom macaroons and charcuterie from a whole pig. Borrowing a page from Google and Twitter, the company offers hack days when engineers can work on whatever they want."

Published on: October 21, 2013

As part of its Sunday "Corner Office" series, the New York Times has an interview with Val DiFebo, CEO of Deutsch NY, the advertising agency, in which one of the questions asked was about key leadership lessons learned over the years.

The answer was instructive:

"Donny Deutsch (the company's founder) taught me a lot about giving direct, sometimes negative, feedback. He might say, 'This doesn’t make any sense at all,' but it was never a judgment on your skills or your intellect. It’s just a reaction to work you put in front of him. Then he would come by two minutes later and ask about something else: 'Can I ask your advice? What do you think I should do about this?' So he’d give you a big reinforcement that he didn’t think any less of you than he did five minutes ago; it’s just that he didn’t like what you put in front of him. That was a great lesson, because having people believe that you respect their opinion is really important."

Published on: October 21, 2013

• Walmart said over the weekend that it has changed its mind about the firing of a Michigan employee who went to the aid of a woman who was being attacked in a Walmart parking lot there.

According to a variety of stories, Kristopher Oswald was sitting in his car early Sunday morning while on a break from his $8.70 an hour overnight stocking job when he saw a woman being attacked by a man (who ended up being identified as her ex-boyfriend). He went to help her, and ended up being pummeled by the man and several of his friends while the woman drove away.

Oswald suffered only minor injuries, but also suffered the indignity of being fired when the store's assistant managers said they were required by company policy to let him go.

(The ex-boyfriend was arrested on suspicion of drunken driving, malicious destruction of property and domestic violence.)

After the story went viral, with Walmart being widely criticized for firing a man who was acting only as a Good Samaritan, the company has decided to offer Oswald his job back.

"We looked into the situation, reviewed the facts, talked to witnesses," says Brooke Buchanan, a spokeswoman for Wal-Mart Stores Inc. "While Mr. Oswald broke a policy of ours — a policy put in place to protect our associates and our customers ... we realize Mr. Oswald's intentions were good."

Oswald reportedly has not decided whether to accept Walmart's offer.

Published on: October 21, 2013

Minnesota Public Radio reports that Target is asking the vendors of some 7,500 cleaning, health and beauty and baby care products to score those items for environmental and the health effects, "based on factors such as the presence of ingredients linked to cancer and the use of environmentally friendly packaging and animal testing. Each product will be assigned up to 100 points."

According to the story, "Kate Heiny, who leads Target's sustainability effort, said the ratings - which initially will not be shared with shoppers -- will help provide manufacturers incentives to drive innovation and produce more sustainable products."

Published on: October 21, 2013

The Wall Street Journal reports that McDonald's continues to have serious problems - that while it remains the biggest fast food chain, "its growth has lacked luster and its stock has underperformed in the past year." The reason seems to be that it has not had a blockbuster new product introduction since 2003 (McGriddles), and the healthier foods it has introduced simply have not captured people's imaginations or any significant business.

To put that in perspective, rivals Wendy's Co. and Taco Bell "have recently scored hits with the Pretzel Bacon Cheeseburger and Doritos Locos Tacos. Taco Bell has sold more than half a billion Doritos Locos Tacos - which have about 50 more milligrams of sodium than its regular tacos - since March 2012, making it one of the company's best-selling products ever. Analysts and franchisees says Wendy's pretzel burger - boasting 130 more calories than a Big Mac - has been a hot seller since it made its debut in July, and some predict Wendy's could make the limited-time offer a permanent menu item."

The question is whether McDonald's recent efforts, while they may have won plaudits from nutritionists, have muddled its message, confused its core customer base, and instead of making it all things to all people have made it a company that stands for nothing in particular.

Published on: October 21, 2013

• Reuters reports that "Germany's antitrust watchdog accused Amazon of undermining competition when dealing with third-party merchants and said it would impose reform unless the Internet retailer changed its rules ... At the heart of the watchdog's complaints about Amazon's Marketplace is a requirement that third-party merchants must offer their cheapest price when selling their products over the platform."

The story notes that Germany is Amazon's second largest market, and this adds to the company's problems there; it also has been involved in a pay dispute, with unions threatening a strike during the upcoming holiday season.

Published on: October 21, 2013

• The West Seattle Herald reports that three union locals have served notice to Safeway, QFC, Albertsons and Fred Meyer that the 20,000 employees they represent will go on strike tonight unless a new contract can be agreed upon. The unions say that they will begin setting up picket lines, and the retailers have said they will begin hiring replacement workers.


• The Chicago Tribune reports that the Illinois Supreme Court has ruled that a state law requiring so-called "affiliate companies" that did online business through Amazon.com to collect sales taxes at checkout is unconstitutional. The story says that the invalidation of the Main Street Fairness Act, which affected as many as 9,000 small businesses in the state, "is another shot in the highly contentious nationwide battle over who should collect online sales tax and how."

Published on: October 21, 2013

• Walmart announced that Adrian Blake will join as senior vice president of business development for Wal–Mart China; he previously was a consultant specializing in property and construction, the company said.

And, Rob Bray, currently senior vice president of real estate design, construction and store planning for Wal-Mart U.S., will become senior vice president of real estate in China, the company said.

Published on: October 21, 2013

On the subject of the anti-GMO labeling battle in Washington State, one MNB user wrote:

I normally read MorningNewsBeat behind the scenes without adding public commentary. However the topic regarding the WA ballot issue on GMO labeling is typical of many others that the bigger issue is important to reflect on.  As a WA resident, who ironically doesn’t watch much TV nor read the newspaper (most information comes through conversation or selective internet reading), I’ve still been inundated with the campaign-spend of the ‘no’ on GMO-labeling ballot issue.  Regardless of which position I hold, the monies available to spend on this issue are extremely unbalanced, with little transparency even though it’s obvious if you pay attention. Like many other campaigns, it is clear that the money being spent is to confuse versus educate.

What do most people do when they get confused? Withdraw. In turn, I expect many will actually not vote on the GMO issue, a few will be passionately clear in their vote, and the rest will likely ‘just pick one’, not knowing why they voted one way or the other, other than a reactive, in-the-moment-vote to simply stop the confusion….though only temporarily.

Although there are varying definitions of what ‘educate’ means, unless we remove personal agendas and efforts to ‘convince’ others to support our agenda, campaign monies being spent will never serve the greater whole. Wouldn’t it be fascinating if each ’side’ were required, or only able, to spend $xxxxx with the monies pooled together to collaboratively discuss core issues to the initiative? What if the outcome was to provide Socratic debate to be ultimately shared with the public if public vote was even needed after their efforts? Theoretically this is was the content of the voter’s pamphlet is to provide, though so much of the public either doesn’t read, nor understand the legal-speak it’s written in. For once I’ve found myself asking various people I’m running into where they stand on the issue. Most every person has said they are confused and don’t even know where to turn to get helpful information.

From another reader, re: my call for transparency in campaign contributions made in this debate:

I couldn't agree more Kevin. This corporate/union/special interest money (it comes from all sides) is one of the drivers(along with corrupt redistricting practices) of the dysfunctional tendencies in todays government. At the national level, I say let's give the candidates a set amount to spend i.e. $30 million for President, $10 Million for Senators, and $3 Million for Congressmen. They can't spend anymore than that. That would stop them from "buying" the office through obscene amounts of commercials and force them to stay on point about the message they want to get out and less on the negative adds. Since that money would come from taxpayers, there would be no "promises" to have to back up from a big cash contribution. Just a thought.

I've always been in favor of strict campaign finance laws and public financing of campaigns, so that special interest money from either side is not a factor. But that does not seem to be the way things are going.




In my coverage of the Starbucks petition to get the government reopened and get the budget battle settled, I said that I signed the petition. Which led one MNB reader to write:

So by signing this you agree that Washington should keep right on spending money it doesn’t have. You do realize that at some point all this money will have to be paid back. That will be the problem for the next generation though, right. This is all about kicking the can down the road. Washington is drunk on tax dollars and power.

I don't think that's what the petition calls for. This how it read:

To our leaders in Washington, D.C., now’s the time to come together to:

1. Reopen our government to serve the people.

2. Pay our debts on time to avoid another financial crisis.

3. Pass a bipartisan and comprehensive long-term budget deal by the end of the year.




From another reader, on another subject:

Yesterday I received a letter from Amazon Prime (I’m an existing and frequent customer, including Subscribe & Save). Actual paper in an envelope through the U.S. Postal Service. So that was weird enough.

Turns out the purpose was to let me know that Prime members can stream videos at no charge. It  encouraged me to look into their selection and try it out.

Here’s where the people worried about Amazon’s databases knowing scary amounts about everyone can relax a little. We stream via Amazon Prime daily and have been doing so for at least six months. How many other customers did they pay to send a pointless letter to when a couple extra tweaks of the list could have filtered us out?

I was surprised at their clumsiness.

Me, too.

Published on: October 21, 2013

In Week Seven of the National Football League...

Tampa Bay 23
Atlanta 31

Chicago 41
Washington 45

Dallas 17
Philadelphia 3

New England 27
NY Jets 30

Buffalo 23
Miami 21

San Diego 24
Jacksonville 6

St. Louis 15
Carolina 30

Cincinnati 27
Detroit 24

San Francisco 31
Tennessee 17

Houston 16
Kansas City 17

Baltimore 16
Pittsburgh 19

Cleveland 13
Green Bay 31

Denver 33
Indianapolis 39



And, in Major League Baseball...the World Series begins on Wednesday night, with the Boston Red Sox facing off against the St. Louis Cardinals.

Published on: October 21, 2013

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Wholesome Sweeteners is the #1 Organic Stevia Brand in both conventional and natural channels. What’s even better is Organic Stevia had been driving double and triple digit growth for the past 3 years while non-organic stevia’s growth is slowing.

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Source: SPINS, Latest 24 weeks ending 07-06-2013