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    Published on: October 25, 2013

    by Kevin Coupe

    Southwest Airlines long has gotten a lot of positive reviews in the media and among fliers for its lack of fees - especially not charging for luggage, a policy that has even been the focus of a broad ad campaign.

    But now, the Wall Street Journal reports, "the chief executive of Southwest Airlines Co. hinted Thursday that the carrier could soon start charging for checked baggage if the flying public comes to accept the fees that other airlines charge ... Chief Executive Gary Kelly said the carrier has no plans to charge for bags at least through next year, in part because he believes its policy of two free checked bags per passenger brings the airline business.

    "But, in one of his strongest hints to date that the policy could change, Mr. Kelly said that if fliers come to better understand and maybe even prefer 'an a la carte approach…we’d be crazy not to provide our customers with what they want'."

    This is a statement worth parsing (will customers ever really "want" baggage fees?) and considering, since it challenges the notion of what the company has identified as a core value.

    Not sure I have the answer to this. On the one hand, it might be a little awkward if Southwest changes a policy for which it is well and positively known. There easily could be consumer backlash. On the other hand, I'm the first guy to say that it is critical in any business to be willing to challenge so-called "core values," that these are often just policies with a lot of dust on them, that, as Mark Twain once said, "Sacred cows make the best hamburgers."

    I do think that one thing seems obvious - that if Southwest does this, it'll be because management thinks that it will be better for Southwest, not better for customers. That's not necessarily the card I'd want to play.

    Either way, it's an Eye-Opener.
    KC's View:

    Published on: October 25, 2013

    Kantar Retail is out with its annual price point survey, concluding that for the second year in a row Dollar General has "narrowly" beaten out Walmart Supercenters.

    The Opening Price Point (OPP) survey, the company says, "determines how select retailers meet the grocery and consumable needs of shoppers looking for the lowest shelf prices to fulfill their basket requirements.

    "According to Kantar Retail, Dollar General’s total basket was the least expensive among retailers surveyed, edging out Walmart Supercenter’s basket by just $0.12 ... Conversely, Target’s total OPP basket was the most expensive, registering 48% more than Dollar General’s basket and 12% greater than the next highest-priced competitor, Aldi."

    Kantar says that "this represents a substantial closing of the gap in the survey conducted last year, when Dollar General’s basket of OPP items was 18% cheaper than Walmart's. The edible grocery and HBA sub-baskets drove Dollar General’s basket lead over Walmart. And while Walmart’s basket came in a close second overall, it recorded the least expensive non-edible sub-basket by a sizable margin."

    Kantar says that it "selected 21 categories across the edible grocery, non-edible grocery, and HBA segments ... All data was collected in the southern New Hampshire/northern Massachusetts area in October 2013. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in that category."
    KC's View:
    No surprise here that Walmart, which has had its own problems lately, is working to get tougher in terms of price. But I do wonder if the picture might look different if the canvas were a little wider.

    Published on: October 25, 2013

    The Atlantic has a piece about what it refers to as the "Amazon mystery," suggesting that in many ways, Amazon.com's "strategy isn’t new at all. It’s ripped from the mildewed playbooks of the first national retail stores in American history. Amazon appears to be building nothing less than a global Sears, Roebuck of the 21st century—a large-scale operation that aims to dominate the future of shopping and shipping. The question is, can it succeed?"

    You can read the whole story here.
    KC's View:

    Published on: October 25, 2013

    The Seattle Times reports that Canada's Loblaw Companies said yesterday that "it will provide long-term financial assistance to the surviving victims and families ... that were producing our apparel at the New Wave Style factory in Rana Plaza, one of five manufacturing plants in the Dhaka plaza that collapsed, killing more than 1,100 workers on April 24."

    No dollar amount has been provided.

    According to the story, "Following the accident, Loblaw signed a five-year pact to improve fire and building safety in Bangladesh. The company also has donated $1 million to Bangladesh-based charities.

    KC's View:
    I absolutely believe that for both moral and public relations reasons, companies need to take responsibility for the conditions that often are found in these third-world factories where human safety seems to be a low priority. It's the right thing to do ... and besides, if they don't, their apparent exploitation of workers (or, at least, profiting from the exploitation of workers there), it will be a major talking point in social media.

    Published on: October 25, 2013

    A new study published by Food Policy concludes that nutrition guidance program Guiding Stars "influences grocery shoppers’ selections, significantly increasing demand for products that are rated more nutritious, at the expense of those that are not."

    Guiding Stars ranks every product in the store according to nutritional attributes and then assigns one, two or three stars to products that qualify and good, better and best for you. The study says that "shoppers were significantly more likely to choose ready-to-eat cereals with one, two or three Guiding Stars, indicating a higher nutritional value, versus those with zero stars, or a lower nutritional value. As a result, the market shares of cereals earning Guiding Stars increased, while those without stars declined in relative proportion."

    Food Policy says that the independent research was conducted by scientists at the USDA, FDA and the University of Florida.
    KC's View:
    While I've been a Guiding Stars fan for a long time, I think that it is a no brainer to conclude that nutritional labeling helps people to make more nutrition-minded purchases. The same could be said, I'm sure, of many of the other nutritional labeling programs out there.

    It is simple. More information lads to better informed consumers, and that's a good thing.

    Published on: October 25, 2013

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

    • The Seattle Times reports that supermarket employees in Washington State are scheduled to vote next Tuesday and Wednesday on a tentative contract deal that was reached between the three unions representing 20,000 employees and four chains - Safeway, QFC, Albertsons and Fred Meyer - just two hours before a strike deadline last Monday.


    Bloomberg reports that Tesco-owned Fresh & Easy Neighborhood Markets in the western US has "won court approval of procedures for a Nov. 19 auction with the lead bid from an affiliate of billionaire Ron Burkle's Yucaipa Cos ... All potential buyers must submit an offer by Nov. 15. The company would hold the auction if it receives a competing qualified bid, followed by a Nov. 21 hearing to seek court approval of the auction winner.

    "Under the proposed deal, a Tesco affiliate would lend the Yucaipa unit $120 million to help fund the acquisition, according to court papers. Tesco would get warrants to buy as much as 10 percent of the equity in the reorganized chain. Fresh & Easy would get 22.5 percent of the equity in the reorganized chain if the Yucaipa affiliate’s offer prevails. The Yucaipa buyer also has offered to take on some of Fresh & Easy’s liabilities. The liabilities are valued at about $130 million in court papers and may exceed $200 million."


    • The Atlanta Journal-Constitution reports that the US Department of Agriculture (USDA) has ruled that "poultry processed in China can be sold in the United States. But first the birds must be born and raised in the U.S., Canada or Chile. Then they’re exported to China before being shipped back to the Americas."

    However, the story also notes that "food-safety experts worry about the quality of chicken processed in a country notorious for avian influenza and food-borne illnesses. And they predict China will eventually seek to broaden the export rules to allow chickens born and raised there."

    I hate it when I have knee-jerk reactions, but I cannot say that I'm thrilled by this, considering the food safety problems - many times from what appears to be negligence - that have plagued Chinese products. I'd certainly want to see on the label that the product had been processed there...because it might make me want to choose another product.


    • Wakefern Food Corp. said yesterday that "the cooperative had reached a record sales level of $14.1 billion in retail sales for the fiscal year ending September 28, 2013, a 3.9 percent increase from the same period last year, and $11.4 billion in Wakefern consolidated sales. The cooperative opened ten new ShopRite stores, four new PriceRite stores and one new The Fresh Grocer store during the same period. In addition, the company expanded its ShopRite from Home services to 172 stores."


    • The Columbus Dispatch reports that "Giant Eagle hopes to boost its standing in central Ohio starting next week, when it begins offering free prescription-drug delivery to customers’ homes ... Starting Monday, Giant Eagle will deliver prescriptions free within a 10-mile radius of each of its 22 central Ohio groceries with in-store pharmacies, said Anthony Mollica, vice president of pharmacy operations."

    The story notes that while it is "the first time Giant Eagle has offered market-wide home-prescription delivery. However, Kroger has offered free home-prescription delivery from all 124 stores in its Columbus district for years, said spokeswoman Beth Wilkin."
    KC's View:

    Published on: October 25, 2013

    • Coupons.com, online coupon site, announced yesterday that it has hired Mir Aamir, most recently Safeway’s president of customer loyalty and digital technologies, to be its new CFO/COO.


    • Acosta Sales & Marketing announced that Greg Delaney, the company's CFO, is moving into the role of COO.

    Matt Laurie, the company's Chief Accounting Officer and Controller, has been named interim CFO.
    KC's View:

    Published on: October 25, 2013

    I'm not sure how many people outside the New York metropolitan area will "get" this, but I'd like to take note of the passing of Bill Mazer, a longtime NY-area sportscaster who passed away this week at age 92, at an assisted living facility in Danbury, Ct. He was a 60-year broadcasting veteran, on radio and television, and was known for an encyclopedic knowledge of sports trivia ... and, I think, an enthusiasm for the games and personalities of sports that never, ever dimmed. (I met him several times. I worked in a clothing store with his son, Arnie. And I vividly remember a fitness crusade he was on back in the sixties, and how I went to a bowling alley as a participant.)

    I mention all this for a simple reason. I think it is worth noting the contributions of old lions who roar as long as they can ... maybe because I hope I'll be one of them.
    KC's View:

    Published on: October 25, 2013

    Got the following email yesterday from MNB reader Mark Heckman about my continued coverage of the wage disparity issue:

    Legislation and regulation, both new and old, have failed to narrow the gap between the haves and the have nots.  This egalitarian approach, while virtuous as a notion, does not exist successfully in the world, despite government’s insatiable appetite to intervene and control.  The underlying reasons for the growing “inequality of compensation” are socially and economically based and do not lend themselves to be solved by more rules and regulations that in many cases end up punishing those they are designed to help.

    The formula is simple.  The wage gap has a direct linear relationship with the disparity of value an individual has to the organization and the ability to replace that individual with someone of equal or superior talent.  If we expect the service counter folks at McDonalds to make $15/hr as a means of manipulating “income equality”, instead of narrowing the wage gap the result will expensive fast food, poor service, fewer jobs, and a business death spiral for McDonald franchisees.  No winners there.  On the other hand, if the Feds stay out of the way and let businesses grow without undo punitive repercussions, the job market will tighten and McDonalds will have to pay higher wages to attract fewer available workers,  who now have more options.

    If the Federal government truly covets a meaningful role in narrowing the wage gap, they would do well in looking at reforming the existing “entitlement programs” that foster complacency, destroy the nuclear family,  and produce a increasingly “uneducated and unqualified" work force.  Good paying jobs are out there with our current social support system, qualified workers are not.  

    We do agree that CEO compensation packages should be made public and totally transparent.  But we part ways if you advocate that the Feds need to legislate caps and ratios for how much they receive.  That responsible should rest with the board of directors, the stockholders, and ultimately the customers of that enterprise.


    I don’t think I’ve ever supported so-called living wage legislation, though I would not count myself among the people who even seem to think that minimum age legislation ought to be eliminated.  I think there ought to be some protections against people being exploited, and they ought to make common sense.

    The only place I would have government taking a specific stand would be when it comes to companies that are taking public money.  It strikes me as farcical if a company bids for a government project, gets the project because of a low bid, but then pays people so little that they have to take public assistance, funded by taxpayers, in order to support themselves.

    No, I think the pressure has to come from citizens who decide not to do business with companies that seem to be exploiting their employees, and investors who decide not to invest in companies that reward top execs in ways that seem totally out of whack compared to the people on the front lines.

    I think that laws requiring disclosure of such patterns in a clear and transparent will pave the way for consumers and investors to make such decisions and to form such grass-roots movements.  In the end, I think, that’s what some public companies really are afraid of … because special interests can spend a lot of money to lobby the government, but it is harder to lobby grass roots citizens, especially when they take up a cause that is just and right.

    Make sense?

    Another reader chimed in:

    I learned, like most of us, early in life that “life isn’t fair” but after viewing the ‘Wealth Inequality in America’ video that you posted on Thursday I feel sick.  I’m no economist but this distribution of wealth (and the rate at which it continues to progress) cannot be ideal for the overall well-being of our nation.

    I’d love to be able to jump up on my soapbox and shout out the ideal answer, but I just don’t have it.  Raising the minimum wage (unless it was increased to $50+/hr) wouldn’t begin to move the distribution needle (although I’m sure it would kill our economy).  Perhaps it is the outdated and confusing tax code that has driven the economy (and wealth distribution) in this direction.  Or, we can all point our fingers at Washington and blame the broken two-party system along with the lobbyists and the incredible amount of money that is poured into campaigns, etc. but what does that get us?

    Are we (90% of Americans) just pawns, running around and getting excited about meaningless things (in the big picture), in a game that is being run by the wealthiest 1% of Americans?

    It’s time to start the conversation – what should we do?  Should we do anything?  Is it possible to change the distribution of wealth?  If we could, should we?  Will we? Ugh!





    On another subject, MNB reader Elizabeth Archerd wrote:

    An MNB user yesterday said that GMO labeling would increase food prices. This claim gets repeated over and over by the GMO-using food companies, but several studies have indicated there is no truth to the matter. The companies already label GMO-containing products to ship oversees. Adding the wording to labels here will have no impact at all.

    Good try, though.





    On yet another subject, MNB reader Karen Trom wrote:

    I forwarded your story about Kraft Foods attempting to attract younger workers by moving to downtown Chicago to my 29 year old daughter who is a logistics specialist in Chicago.  Her response?

    “The only problem with being here (downtown) is you get fresh out of college fools who still want to party and act like $40,000/year millionaires. They have zero experience and aren't motivated to do much because they're just happy to get a paycheck. I think it must've started happening with kids who went to college when the economy crapped out.”

    If my daughter sounds like an old person, what am I?


    I know the feeling.
    KC's View:

    Published on: October 25, 2013

    In game two of the World Series last night, the St. Louis Cardinals defeated the Boston Red Sox 4-2, evening the best-of-seven series at one game apiece. The series now moves to St. Louis, where it will recommence on Saturday night.



    And, in Thursday night football action, the Carolina Panthers defeated the Tampa Bay Buccaneers 31-13.
    KC's View:

    Published on: October 25, 2013

    There is yet another new Spenser novel on sales this week, "Silent Night," and unlike the efforts by the excellent Ace Atkins - "Lullaby," "Wonderland," and the coming-soon "Cheap Shot" - this one actually was penned by Robert B. Parker before he passed away in January 2010.

    At least part of it was. "Silent Night," described as "a Spenser holiday novel," was started by Parker, who reportedly died at his desk while working on it. He'd written just 17 pages, and the balance has been completed by Helen Brann, his longtime agent.

    It is hard to tell how good a writer Brann is, simply because "Silent Night" shows her channeling Parker ... and she does a pretty good job. It helps, I think, that Parker gives her a running start with a classic Spenser setup - he's in his office at Christmastime, hanging out with Pearl the Wonder Dog, musing about the mythic and commercial aspects of the holidays, when a kid walks in and asks for help.

    From there, Brann spins a highly recognizable Spenser tale - it's got all the elements Parker's fans have grown to love. Boxing and food. Hawk and Susan. Contemplations about morality and mortality. Odes to Boston in the wintertime. And typically wiseacre dialog.

    There is a bittersweetness about this tale because we know it represents Parker's last work, and because Brann - unlike Atkins, who is charged with advancing the series - seems to have as her chief goal creating a kind of memorial to Parker. That's more than a semantic difference, and I think it shows in the writing. But I'm okay with it.

    At some level, the efforts by a variety of authors to continue much-loved Parker characters may be confusing to some readers. Atkins is doing a wonderful job with the Spenser series, while Michael Brandman (with the Jesse Stone books) and Robert Knott (with the Hitch-and-Cole westerns) are less so, simply because they are not natural novelists, though they seem to be getting better with each new turn. I'm not terribly concerned with the sanctity of the Parker oeuvre ... after all, he completed an unfinished Raymond Chandler novel, "Poodle Springs," and then wrote an original novel, "Perchance to Dream," that featured Chandler's private eye hero, Philip Marlowe. And Parker used to say that he did not worry about other iterations of his books, since he reasoned that he could only do what he could do, which was to write the best books he could. After that, everything else was commerce ... and he was not adverse to making a buck.

    If you're a Spenser fan, "Silent Night" is certainly worth picking up, reading, and adding to your collection. I enjoyed it. It ain't Parker, but it makes a cold autumn evening go by faster while we wait for "Cheap Shot," by Ace Atkins, which will be published next May. (I've already ordered my copy from Amazon.)




    Last weekend, I had a a choice of movies to go see. There was The Fifth Estate, about Wikileaks. There was the new Robert Redford movie, All Is Lost. Or Don Jon. Or a bunch of other movies that have gotten enthusiastic reviews.

    But no. Last weekend, because our wives were otherwise engaged, my buddy Mike Wellman and I went to see Escape Plan, the new Sylvester Stallone-Arnold Schwarzenegger action movie about a couple of guys trying to get out of the world's biggest and best high-security prison.

    I'm not even going to bother you with a plot description. Suffice it to say that this movie is exactly what you expect it to be. There are lots of fights, explosions, gunplay and macho posturing. But that's not all bad. Especially when afterwards, you hit a local pub for a couple of beers. (Or, in Mike's case, a martini. He's a lot more refined than I am.)

    This is my definition of junk food. Sometimes, it is what I crave (and have since I saw the trailer).

    I will say this. After all these years, Schwarzenegger still manages to perform with a twinkle, while Stallone has had so much work done on his face that it seems almost impossible for him to emote. Or maybe Schwarzenegger just has a better plastic surgeon. Either way, it's s shame because Stallone has some acting chops, but can't really use them anymore.

    I can't say that Escape Plan is a good movie, but I had a reasonable good time at it. Though I do agree with a friend of mine in the movie business, who says that it could have been titled Retirement Plan.

    Final irony: one of the trailers was for a movie called Grudge Match, a comedy that stars Robert De Niro and Stallone as long-retired boxers who decide to go into the ring one last time for a, yes, grudge match. De Niro, of course, was in the classic Raging Bull, and Stallone was Rocky. On one level, it looks awful and almost sacrilegious. And I can't wait.





    I have a lovely white wine to recommend to you this week - the 2012 Carlton Cellars Pinot Blanc, from Oregon, which is bright and fresh and perfect with the frittata I made the other night for dinner.




    That's it for this week. Have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View: