retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 22, 2013

    by Michael Sansolo

    A few years back my wife sent a really nice care package to our son in college. It was the kind we always loved getting back in the day: some needed clothing and assorted sundries, plus a wonderful batch of homemade cookies.

    Then she did something more important. She sent him a text alerting him to the package. Because without that he would never check his mail because checking the mail was something that didn’t happen very often.

    Go figure: it’s gotten worse.

    The New York Times recently reported on a college professor who slammed into this rapidly changing era of communications when he realized his class was completely unprepared for test. The problem wasn’t that the students hadn’t studied, it’s that they simply didn’t know about the assigned reading.

    The professor sent the assignment by e-mail and in that one episode he learned that the evolution of communication has jumped yet again.

    As the Times article detailed, college students (and presumably, their younger siblings) are abandoning e-mail in droves, and relying on text and social media. A social media expert at one retailer told me about this trend a few months back, offering his hypothesis that younger generations are moving inexorably to ever-faster communication.

    So forget all the criticism of snail mail with its roots in antiquity. Instead, think about how recently you became reliant on e-mail and remember it wasn’t all that long ago. Remember how annoyed you get with spam and all those other e-mails that come to you in endless “cc’s” or just clutter your day with uselessness. Now understand that the younger generation is rejecting it.

    In other words, text beats e-mail; Twitter is faster than Facebook; and keep an eye on Snapchat with its less than 10 second lifespan of photos.

    One professor did a study that found college students spend an incredibly small percentage of their computer time on e-mail these days. In fact, the only less used computer service is the search engine.

    The real challenge from this shift is that marketers need to find ways of evolving faster than ever. After decades of reliance on ROP newspaper ads and circulars we’ve gone careening into an era of change, requiring communication through seemingly every method possible with new media seemingly arriving every day.

    So if your hope is to reach the younger audience—and Millennials are an increasingly important segment of shoppers—you have to change with them, which is why these glimpses from college campuses are so important.

    The Times article offered repeated examples of the challenges. It detailed the annoyance college students felt when text was used to remind them to read e-mail; and it detailed the discomfort professors felt about “friending” students on Facebook to communicate through the social media channel. As one professor said, “I don’t want to learn things about them I can’t unlearn.”

    Businesses might not have that challenge, but need to understand that the level of connection that worked in a circular is a far cry from what succeeds on Twitter. New skills and new approaches are essential.

    Remember the words of one student quoted by the Times. “School is a boring thing. E-mail is a boring thing. It goes together,” the student said.

    For marketers the message couldn’t be simpler: stay on top of this stuff. Otherwise, you’re boring too.

    Michael Sansolo can be reached via email at . 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: October 22, 2013

    by Kevin Coupe

    Netflix Inc. issued its third quarter results yesterday, and here was the number that seemed most noteworthy - that as of September 30, it is likely that Netflix had more subscribers (almost 30 million) than HBO (about 28.7 million).

    It is a remarkable turnaround for a company that not that long ago, reeling from a public relations debacle created by pricing changes that seemed to annoy virtually every customer it had, was being relegated to the "irrelevant" and "arrogant" files by many pundits and analysts.

    What seems clear is that the company's leadership has always known what Netflix is about - content, not a distribution system. While others saw those familiar red envelopes as being reflective of the Netflix business model, CEO/founder Reed Hastings has long said that he didn't care about DVDs or streaming or whatever technologies developed. He was interested in being a company that provided entertainment. About technology, he was relatively agnostic.

    In pursuing that goal, Netflix also understood that it was not competing with the likes of Redbox and Blockbuster, but rather was competing for customer attention with companies like HBO, Lifetime, and the ABC/CBS/Fox/NBC universe. To do so, Netflix knew it needed to have proprietary and differentiated content ... which it created, with names like "House of Cards" "Orange Is The New Black," and the revival of "Arrested Development." And now, Netflix reportedly is negotiating with cable providers about the creation of a Netflix cable channel that could further extend its reach.

    In this competitive battle - which, it seems to me, has parallels in other industries - it is all about constant innovation, persistent forward movement, and absolute fealty to the strategic vision.

    It is the prototypical Eye-Opener.
    KC's View:

    Published on: October 22, 2013

    The New York Times has a good piece about, in which it frames the story this way:

    "Nearly every day, Amazon announces a new venture.

    "It just bought an online education company and introduced a payment mechanism for Internet retailers that competes with PayPal. It started selling wine for the first time in New York, updated its line of tablets, gave the go-ahead to three new comedy pilots and began a design competition for its fashion division. It is setting up mini-warehouses inside suppliers like Procter & Gamble to ship goods faster.

    "But one thing it will not be announcing this month: a significant profit.

    "Who cares? Amazon lost money in 2012, and analysts are anticipating another loss when the company releases its third-quarter results on Thursday. Yet the stock is at a record high.

    "Amazon shares are up around 150 percent since mid-2010, which perhaps not coincidentally was the last time the company had sizable profits. In other words, investors really decided they loved the company only when net income began to slide."

    The debate right now seems to be about Amazon's immediate future - whether the company will begin raising prices as a way of generating profits, or whether CEO/founder Jeff Bezos will continue to play what appears to be a market share game, without the kind of regard for profits that most analysts seem to think he ought to have.
    KC's View:
    I could be wrong about this, but it has been my feeling for a long time that Amazon and its CEO are absolutely disciplined enough to continue playing the market share game, that Jeff Bezos believes that the technological and cultural shifts of the past 15 years play to his company's strengths, and he understands that as bold as the company has been, any deviation from its image as a place where pricing is sharp could be fatal. (I'd bet that he went to school on Netflix's public relations problems of a few years ago.)

    Sure, profits are an issue. But Bezos also understands that a lot of retail companies have gotten into trouble when they started worrying more about Wall Street than Main Street.

    Published on: October 22, 2013

    CityWire reports that Walmart in the US is using HEB as a benchmark for how it wants to be better at fresh foods, with Jack Sinclair, executive vice president of the grocery division at Walmart US, saying that "HEB is the best food retailer in the world, particularly on fresh.”

    According to the story, Walmart has opened a store in San Antonio "to work with HEB vendors to learn how to do fresh better, specifically meat and produce."

    The story notes that HEB are very different retailers: "HEB isn't always the least expense grocer in its market, but it is a strong favorite throughout south Texas, rolling out hot baked bread every hour for 99 cents a loaf. Many stores have a fresh sushi bar and cooking center with chefs on staff that provide hot meals to go. The produce department at HEB offers a wide range of fresh fruits and vegetables, locally sourced including a broad assortment of organically grown items."
    KC's View:
    While HEB takes Walmart very seriously - and should - I think that the company also has a kind of secret sauce that Walmart never will be able to approximate.

    But I also think that while HEB is a legendary and iconic retailer, the folks there are smart enough to know that they were only legendary and iconic yesterday. Today, they have to earn it all over again.

    Published on: October 22, 2013

    • The International Business Times reports that British eyebrows have been raised and stiff upper lips made to tremble by a report that "half of all bakery goods, 40 percent of apples, one-quarter of grapes, one-fifth of bananas and two-thirds of produce grown from salads are either thrown out or go to waste every year in Britain. The scale of wasted food in the United Kingdom came to light in a report issued by grocery retail chain Tesco PLC and the Waste and Resources Action Program, a British non-profit that seeks to cut waste in the food supply chain.

    According to the story, "Tesco admitted that some 28,500 metric tons (almost 63 million lbs) of food were wasted inside its own supermarkets and distribution centers in just the first half of this year. Wasted food is also believed to cost the average British family some £700 ($1130) annually, according to Tesco."

    Tesco has pledged to address the problem, "including a cessation of its 'multi-buy offers' on big bags of salad, removing the 'display until' dates on fresh fruits and vegetables, and re-arranging its bakeries to cut down on the amount of bread displayed for public viewing. Tesco added, however, that food it could not sell was donated to poverty charity FareShare, or was converted into animal feed for livestock, or recycled into renewable fuel."
    KC's View:

    Published on: October 22, 2013

    The Boston Globe reports that Staples has conducted its fourth annual Flu Season Survey, which concludes that close to nine out of 10 employees are so worried about keeping their jobs that they will go to work even when sick - up from 80 percent who said the same thing a year ago, and 60 percent who said so in 2011.

    “Flu season poses a big problem for businesses - each year it causes an estimated 70 million missed workdays and billions in lost office productivity. It’s critical that both employees and employers take notice and promote healthier habits,” says Lisa Hamblet, vice president for facility solutions at Staples Advantage.
    KC's View:
    I think the fragile economy plays a role, but I also think that management at some companies plays a role in this. The people who come to work when sick - even if it hurts productivity overall because it gets other people sick - often are the people who feel like they are a cost to the company, rather than assets. You feel like an asset, you feel like the company has invested in you, and you think long-term and strategically.

    Published on: October 22, 2013

    • The Seattle Times reports that the three unions representing 20,000 employees reached a tentative agreement with four chains - Safeway, QFC, Albertsons and Fred Meyer - just two hours before a strike deadline. Details of the agreement were not disclosed.

    • The New York Times this morning reports that JC Penney and Martha Stewart Omnimedia have "scaled back" a merchandising agreement that was at the center of a court battle between Penney and Macy's, which said the deal violated the exclusivity terms of an arrangement that it had with Martha Stewart.

    The move by JC Penney was termed "a complete surrender" by Macy's. The two companies had been urged by the judge in the case to negotiate a settlement before he had to issue a ruling.

    According to the story, "Under the revised agreement, J. C. Penney will not sell kitchen, bed and bath products designed by Martha Stewart that were sold under the label 'JCP Everyday.'

    "But it will continue to market other Martha Stewart merchandise, including window treatments, lighting and rugs under the label 'MarthaHome.' J. C. Penney will also return 11 million common shares that it acquired in the initial agreement and it will give up its two seats on the Martha Stewart board, according to the terms announced on Monday."

    • Dollar General announced the introduction of its first fuel station, as part of a test pilot project. The new fuel pumps are located at the Dollar General Market in Hanceville, Alabama. This pilot project is part of an agreement with Mansfield Oil, and the two companies will evaluate the results of the pilot project over the next year and jointly assess expansion opportunities.
    KC's View:

    Published on: October 22, 2013

    • Bev Mo!, which describes itself as a "leading alcoholic beverage-lifestyle specialty retailer in the western US," announced that it has hired Douglas J. Ratto, Safeway's former senior vice president/general manager of Alcohol/Tobacco, Home Care/General Merchandise & Family Care, to be its new executive vice president, chief merchant.
    KC's View:

    Published on: October 22, 2013

    Yesterday, for about five minutes, MNB had a brief story about Supervalu closing stores to reduce debt; it was a piece that we picked up off the internet. The problem was that it was a year-old story that for some reason popped up on some search engines.

    The mistake was pointed out very quickly by MNB readers, and I took the story down. But I wanted to make sure that, for the people who might have seen it, the mistake was noted here so that there would be no confusion.

    I goofed. Sorry about that.
    KC's View:

    Published on: October 22, 2013

    ...will return.
    KC's View:

    Published on: October 22, 2013

    In Monday Night Football, the New York Giants finally won their first game of the season, beating the Minnesota Vikings 23-7.

    And in Major League Baseball, Jim Leyland, who managed the Detroit Tigers to two American League pennants in eight years and just got the team to the AL Central Division title, announced yesterday that he is stepping down.

    "I'm going to be 69 years old," he said at a press conference. "I'm not ashamed of that. I'm proud of it. The fuel's getting a little low."

    The Tigers were Leyland's fourth and most successful managerial stop. Previously, he managed the Pittsburgh Pirates, Colorado Rockies and Florida Marlins. Leyland said he plans to stay with the Tigers, but in an off-the-field role still to be determined.
    KC's View: