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    Published on: October 24, 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...

    So, I've just had an experience that I think speaks to ways in which retailing has changed ... not just for retailers, but for consumers.

    Like a lot of guys, I've always carried around a wallet that is sort of big - not because I have a lot of money, but because it tends to be stuffed with receipts, credit cards, bank cards, frequent flyer cards, insurance cards, and the like. I would try to clean it out from time to time, but it was just one of those efforts that never seemed to accomplish much.

    But then, through a random chain of events, things sort of changed.

    Last summer, when I was interviewing the novelist Ace Atkins, I noticed that he was wearing a shirt with a small logo that I did not recognize. I wanted to add some color and specificity to the piece, so I did a little research and found out that the company that made it was called Ball and Buck, and it specializes in a variety of leather goods and men's clothing made in the USA. Well, when I was checking out the site, I noticed that Ball and Buck was advertising a new leather wallet that it said was incredibly thin, made with "the finest leather in America," that would hold all the cards I needed. I was intrigued, and what grabbed my attention even more was the fact that this wallet, which would retail for $88, had not been manufactured yet ... the company was running a Kickstarter campaign, and wouldn't make the goods until it had $10,000 worth of orders - at $48 a wallet.

    Now, this was interesting to me. A company that wouldn't make the product until customer acceptance was guaranteed. And I might get a product that would make my old, bulky wallet obsolete. So I signed up, and ordered a wallet.

    Over a six week funding period, Ball and Buck got $61,255 worth of orders, well in excess of the $10,000 worth it was looking for.

    That was about two months ago. This week, the new wallet showed up ... and I love it.

    But not only do I feel sort of invested in the purchase because of the way the transaction took place, but I've also had another sort of revelation ... and that is how many of the cards I was carrying around in my old wallet simply are irrelevant.

    I carry two debit/credit cards, one for personal and one for business. A business credit card. My driver's license. And my health insurance card. My Zipcar card. And a Costco card, because it does not appear that one can use the Costco app instead of carrying a card around with me.

    But that's about it.

    Because the reality is that pretty much every other card I was carrying can be replaced by an app on my iPhone.

    And it isn't hard to imagine that at some point, most of these cards are going to go away, replaced by biometrics or apps or some other technology that I'm not smart enough to think of by myself.

    Because we're connecting ourselves to specific retailers and/or service providers in all these ways - whether through helping to fund the creation of a product, or using technology to create shortcuts and convenience - this is an enormous opportunity for the retailer to reach out to the customer in new and different and increasingly relevant ways.

    If you don't, it is an opportunity missed. But if you do ... well, the rewards on both sides could be enormous.

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

    KC's View:

    Published on: October 24, 2013

    The issue of pay inequality and wealth distribution in America continues to be a story that has legs...

    The Los Angeles Times reports that McDonald's employee hotline, "McResources," has now taken to suggesting to struggling employees that they take advantage of federal assistance when they find themselves in trouble.

    This particular story concerns a woman named Nancy Salgado, described as a 10-year McDonald's employee who "struggles to support her children with a wage that keeps her under the poverty line." She used McResources "in hopes of finding help making ends meet," but was told that she should "try food pantries, federal food stamps and Medicaid."

    The Times notes that the conversation between Salgado and the McResources representative was recorded, edited and released to the media by a labor advocacy group called Low Pay Is Not OK, "and could not be independently verified." The advocacy group, which has been part of a national effort to draw attention to low-pay workers in the fast food business, says that McDonald's is taking advantage of these employees and then expecting taxpayer-funded programs "to pick up the slack."

    McDonald's immediately fired back, saying that the recording was not an accurate representation of what happened: "The fact is that the McResource Line is intended to be a free, confidential service to help employees and their families get answers to a variety of questions or provide resources on a variety of topics including housing, child care, transportation, grief, elder care, education and more."

    To be fair to McDonald's, the scenario seems to suggest that Salgado may be an employee with an agenda. Albeit a poorly paid employee with an agenda. That said, the way this has played out does not mean that her agenda is wrong. Attention, I think, should be paid ... if only because it seems inarguable that there are an awful lot of people in the US who are working at perfectly respectable, full-time jobs and yet are unable to support themselves and their families. This is an issue with enormous economic and cultural implications

    This clearly is an issue that is high on the radar at the Times, which had a piece the other day in which it focused on a proposed Securities and exchange commission (SEC) rule that, as mandated by the Dodd-Frank financial reform legislation, would require "most large public companies to calculate the ratio of the pay of their chief executive officer to the median pay of all their employees."

    Unlike most SEC rules, which are designed to affect investors, this rule is "designed to provide information for the larger community — for society, if you will. Its aim is to provide ammunition for the argument that the share of corporate profits going to top management, and by extension corporate shareholders, has gotten out of control.

    "That's a sound argument, shared by many management experts and economists who argue that the diversion of corporate resources from workers to executives and shareholders is a major contributor to rising income inequality in the U.S., as well as to other social and economic ills."

    I'm a big proponent of this rule, not because I'm against corporate executives making a lot of money, but because in public companies, there should be this kind of transparency. I simply don't think most people understand how vast the disparities are.

    Check out the video at left. To me, it is a striking description of the situation we face. And at the very least, an Eye-Opener worth discussing.

    KC's View:

    Published on: October 24, 2013

    Reuters reports that Starbucks, which views the tea business as "a $90 billion market opportunity," is scheduled today to "open its first Teavana tea store and bar on Manhattan's Upper East Side. The debut comes as Starbucks expands its reach with new shops focusing on everything from premium tea to pressed juices ... Its new Teavana store will have a tea bar serving hot and cold drinks, including tea lattes and sparkling tea-based drinks. It also will sell food ranging from sweets to salads and flat breads as well as loose-leaf teas and merchandise such as teapots."

    Starbucks bought Teavana last year for $620 million; the company had some 300 mall stores that sold loose leaf teas and teapots. The company is considering whether to add tea bars to some or all of those locations.

    And...

    Salon.com reports that Starbucks is working on a program that will connect its in-store coffee machines and refrigerators to the Internet, believing that it will improve productivity.

    According to the story, "The firm is busy installing its cloud–based Clover coffee machines which connect via CloverNet to tell off–site maintenance staff when the equipment is under–performing, keep tabs on customer demand for certain items and update recipes digitally. There are even plans to hook up the firm’s fridges so that they know when, for example, the milk is going off."

    The story notes that Starbucks has tended to embrace technology faster than many other companies, such as offering WiFi to customers and enabling payments via smartphones.
    KC's View:
    Just two more examples of how Starbucks continues to be aggressive, spreading its bets across the table on the one hand and looking for ways to be both more productive and efficient on the other.

    Published on: October 24, 2013

    The Chicago Tribune reports that FedEx is predicting that this year's Cyber Monday - the Monday after Thanksgiving, traditionally a busy day for online gift shopping - will be the busiest in its history.

    According to the story, "The company said it expects to move more than 22 million shipments on Cyber Monday, which falls on Dec. 2. That's an 11% increase over last year's Cyber Monday ... FedEx also projects it will handle more than 85 million shipments between Dec. 1 and Dec. 7, its busiest week of the year. That's up 13% from the same period last year."
    KC's View:
    I'm already building my online shopping list for the holidays. The fewer crowds, crowded stores and packed parking lots I can deal with, the better.

    Published on: October 24, 2013

    There is a fascinating must-read in Fast Company this month about a company called 23andMe, a genetic testing startup founded by the company CEO, Anne Wojcicki,
    that specializes in at-home DNA testing.

    An excerpt:

    "Wojcicki has been thinking deeply about this for years. A former Wall Streeter with a degree in biology, she has parlayed a personal interest in wellness into a thriving, potentially groundbreaking business. Since founding 23and­Me in 2006 - with the backing of an impressive list of investors including her husband, Sergey Brin, and the company he then ran, Google - she has been working toward two goals: bringing the power of genetic testing to everyday consumers so they can better manage their own health care, and using the aggregated data from those tests to help doctors, scientists, hospitals, and researchers discover new cures for diseases that emanate from troublesome genetic mutations."

    "We're not just looking to get a venture-capital return," Wojcicki tells Fast Company. "We set out with this company to revolutionize health care."

    You can read the whole story here.
    KC's View:
    This is a terrific piece of reporting on a number of levels.

    For one thing, it isn't just a profile of the company ... it is an exploration of the legal, legislative, ethical and privacy issues that must be considered as such technologies take hold and become popularized.

    It also is intensely personal. The writer of the piece (who uses a pseudonym) has an adopted daughter from Ethiopia, and she used the test to identify potential genetic problems that could cause her child significant problems as she gets older.

    I've always thought that this is the potential game changer for the food business. How one eats obviously can have an impact on one's long-term health, and if people have a clear picture of their genetic map, they can make intelligent and informed decisions about their diets. Imagine food stores with their own versions of "genius bars" designed to help people integrate genetic knowledge into the shopping experience.

    There were a couple of companies that tried to do this a decade or so ago, but the timing seemed to be wrong and they didn't get traction. But the last 10 years have seen some enormous changes, and I have a feeling that this easily could be a big idea, and as Victor Hugo once wrote, "Nothing is as powerful as an idea whose time has come."

    Published on: October 24, 2013

    CNN reports that Walmart is hoping to capitalize on Apple's release of a new iPad line by announcing that "customers can now trade in their old tablets for new at any of its 3,600 stores nationwide ... Wal-Mart said shoppers can get up to $300 for their current tablet, depending on the model. The credit can then be used toward the purchase of a new device ... The new tablet plan echoes a smartphone trade in program that Wal-Mart launched last month, soon after Apple unveiled the IPhone 5S and 5C models."


    Bloomberg reports that Walmart "plans to add as many as 110 stores over three years in China," but also expects "to shutter up to 30 under-performing outlets over the next 18 months."

    The story notes that Walmart "faces several hurdles in China including intense competition from local chains and a lack of scale that makes it harder to offer lower prices than wet markets."
    KC's View:

    Published on: October 24, 2013

    Wine Spectator reports that the French Senate "is considering a bill that would impose new restrictions on wine ... the proposed law—pushed for by the National Association for the Prevention of Alcoholism and Addiction (ANPAA)—is being touted as a public health measure. Sin taxes on wine would rise, and warning-label language would change, from 'the abuse of alcohol is dangerous for health' to 'alcohol is dangerous for your health.' Suddenly, even moderate drinking is dangerous."

    The story notes that French winemakers are fighting back, though the bill seems to be making some progress through the legislative system.

    The irony is that "the image of French wine has arguably never been stronger, especially in young markets like China," though "the French don't drink nearly as much as they used to. Part of this is healthy: For centuries, the average French farmworker drank a few liters a day because it was safer than the water. But lifestyles have changed in other ways; the French don't linger at long meals with a bottle or two like they used to, and young people don't see wine as a staple."

    And, since wine is no longer seen as intrinsic to French life, it is being seen as "just another alcoholic beverage," which makes it more vulnerable to the kind of legislation that is now under consideration there.
    KC's View:
    The end of western civilization is at hand.

    I can understand it when the French government tries to slow down the march of time by putting restrictions on online retailers; I don't agree with it, but I understand it. But when the French start to put restrictions on the wine business ... well, there's just something wrong with the universe.

    Published on: October 24, 2013

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

    Forbes.com has an interview with Campbell Soup president/CEO Denise Morrison in which she says, “I believe women need to take charge. I don’t know if it’s unique to women or not, but I do know that women think that they join a company, and the company will take care of them, as opposed to taking charge."

    According to the story, "Morrison often reminds young women that 'networking is working ... I don’t know if women really appreciate how important that is. But if you step back and you say, ‘Yes, we’re strategic about brands, and we’re strategic about companies, now is the time for women to be strategic about themselves.’  And I believe that they’ll have much better outcomes in terms of advancement.”

    “People talk a lot about work life balance, “ Morrison adds.  “I always thought that set up a false expectation, because life is a balancing act.  What I talk to younger women about is the importance of work life integration.”


    Crain's Chicago Business reports that "Kraft Foods Group Inc. is in advanced talks to open a 30,000-square-foot office on North Michigan Avenue, continuing the trend of suburban corporations looking to open downtown outposts to attract younger employees ... Kraft would lease the top two floors of the 35-story tower at 401 N. Michigan Ave., where its marketing team and employees would sometimes work, according to people familiar with the transaction ... If completed, the deal would give Kraft's marketing team close access to advertising and marketing firms, many of which are based in River North or along North Michigan Avenue. More important than the convenience, commercial real estate brokers say, it would create a downtown hub for recruiting."

    This is interesting, because it speaks to how companies have to behave in order to attract young employees who want something different out of their careers.
    KC's View:

    Published on: October 24, 2013

    Responding to our stories about McDonald's marketing travails, MNB reader Monte Stowell wrote:

    Mickey D's has tried many times to put out a higher quality hamburger, most recently the Angus Burgers. I am sure they do a lot of focus group tasting etc., but they still have to have better tasting hamburgers. Made with real cheddar cheese, like the Tillamook brand we have here in the NW would be a start.

    A chain here in the NW, called Burgerville, has a Tillamook cheeseburger, and they get a good price for it and it the taste is much better than any burger Mickey D's has on their menu. The consumer will pay for a better quality product and for my taste buds, McDonalds has never found that sweet spot for many of us baby boomers. FYI, Consumer Reports had Burgerville burgers rated as one of the top burger places in America.


    I've raved about Burgerville many times here on MNB. I agree with you.

    I suggested that McDonald's changing its Dollar Menu to a "Dollar Menu & More" menu would result in a watered down message. MNB reader David Mallon disagreed:

    I think the Dollar menu has been around for 10 years. Obviously, cost inflation compounded over that period would be significant. Would you prefer the $2 Value Menu?

    My guess is that they tested a number of options and found the Dollar Menu & More to be the best option. And, in my opinion that doesn't water down the message or image.


    Okay. we can agree to disagree. As for my preferences, I'd actually prefer to eat a salmon burger at home.

    From another reader:

    McDonald's didn't make a sound business decision to pursue the healthy food initiative.  They made a political decision based on political pressure and the threat of lawsuits from the DOJ.   Similar to how Janet Reno put pressure on banks with the threat of lawsuits for not lending to minorities (the obvious and predictable race component) to lend people money they could not afford to pay back.  These two can serve as classic examples to how when you pervert the free market with liberal "well intended" ideas, you have abject failures to which no one will take credit but will be quick to blame the corporate world for its "lack of judgement".   How come no pressure on Taco Bell?  Maybe they have the "proper" policy leanings and really don't need to demonstrate their good community stewardship.

    MNB user Paul Jaeckel wrote:

    Why does McDonald’s take the hit for all fast food chains?  Their competitors launch product innovation entirely focused on taste with little regard for nutritional value.  I’m not a big fan of fast food dining, but let’s give kudos to McDonald’s for trying to do the right thing.  They all have shareholders to keep happy.
     



    We had a piece the other day about how both the Food Network and Blockbuster were celebrating major birthdays, though I argued that only the Food Network had managed to keep up with the times.

    Which prompted one MNB reader to argue:

    I actually disagree (somewhat) with your suggestion that the cooking channel has done an effective job of evolving to stay relevant to it's audience. In many ways it's programming is remarkably similar to it's origins, and has benefitted significantly from our culture's dynamic increasing interest in the food world.

    Meanwhile consider other channels that evolved much, much more in their content offerings. When ESPN first debuted, we got a mix of Australian Rules Football, Billiards, Bowling and Cricket. Bravo offered a mix of Opera and Uptight "cultural" crap. And A & E's stated intention to mimic PBS and offered loads of serious documentaries. Now those two channels are chock full of reality TV with things like Pickers and Dog the Bounty Hunter. Opera to Dog. That's evolution (of a certain kind).


    Back in the mid-eighties, I actually worked on the public relations campaign for A&E back when it was just The Entertainment Channel, and all it had was almost unwatchable BBC programs - the stuff that PBS passed on. To write the press releases, I had to watch all of it. So I get your point.

    MNB user Mike Core wrote:

    Not to beat the dead horse Blockbuster, but I would like relate a story that foreshadowed the demise of Blockbuster in 1998. I was an early adopter of the DVD format buying my first DVD player in early 1998. There were a few mom and pops video stores that rented DVD’s but with limited offerings. I went to my local Blockbuster to ask why they were not renting DVD’s and was told that they were waiting to see if the format was going to catch on. I am sure that was not the official response but rather the words of an 18 year old “manager”. As I left the store shaking my head I remembered that In the box of the Sony DVD player that I had bought, there were 3 free DVD rental coupons  from a company called Netflix. They were a per movie rental company to start and did not switch to a monthly subscription until 1999, and well, the rest is history.

    We all should've bought stock.




    Regarding the GMA decision to be transparent about what companies were donating to its campaign to defeat a Washington State referendum that would mandate the labeling of products with GMOs, one MNB reader wrote:

    I was also pleased to see GMA agreeing to file reports indicating who contributed, how much they contributed, and how the money was spent to oppose Washington State I-522 on GMO labeling.  GMA has always been a class act.  Who is on that list should be no surprise as the grocery industry generally is opposed to what is essentially a "scarlet letter" that would have to appear on many foods.  If I had known the donor list was going to be published I would have given them $25 myself.  It is already very easy to determine what foods may contain GMO's.  If the food isn't labeled "No GMO's" or an equivalent statement you can assume it may contain GMO's.  Will the next labeling initiative demand be "Contains ingredients that are not natural"?;  "Contains non-organic ingredients"? ; "Made with milk from cows treated with rBST"?";  "Contains preservatives"?.  These labeling statements are actually misleading to consumers as they strongly imply that there is something inferior or unhealthful about such foods though there is no credible evidence to support that blanket conclusion.  This GMO Labeling movement is really not about transparency.  Anyone concerned about GMO's can currently determine what foods are GMO free.  It is about scaring people in a "Chicken Little" manner.  The anti-GMO crowd is hoping that the "Contains GMO's" labeling will cause many food companies to move away from GMO ingredients forcing the 99% of us who "frankly don't give a damn" to pay higher prices for our food.  Transparency would be if the ballot initiative stated "Passage of this initiative may well increase food prices".

    Say what you will about the issue, it is worth noting that GMA only agreed to be transparent when threatened with a lawsuit. It is a fairly safe assumption that GMA's attorneys told the leadership there that if they went to court they'd lose. (Which is the same thing as advising leadership that GMA was breaking the financial disclosures law.)

    The forces that prefer a lack of transparency when it comes to GMOs in foods also seem to prefer a lack of transparency when it comes to money in politics.

    Coincidence? I think not.
    KC's View:

    Published on: October 24, 2013

    In Game 1 of the World Series, the Boston Red Sox shellacked the St. Louis Cardinals, winning the first game of the best-of-seven series 8-1.
    KC's View: