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    Published on: November 14, 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.

    Normally I save my book reviews for Fridays, but this week I want to use this time to talk to you about "The Everything Store: Jeff Bezos and the Age of Amazon," the just published book by Brad Stone of Bloomberg Businessweek.

    My recommendation is very simple. Everybody needs to read this book. Whether you approach it as a consumer or as a businessperson, or whether you are a retailer or a manufacturer, "The Everything Store" is a fascinating account of how Amazon was created and evolved. Unlike Walter Isaacson's biography of Steve Jobs, "The Everything Store" is not an intimately familiar portrayal of Bezos - it wasn't meant to be, in part because Bezos didn't really cooperate with its writing.

    But that said, it is an enormously engrossing look at the genius behind Amazon. And make no mistake - Bezos is one of the few people who, no matter where he is, probably is the smartest guy in the room. He also has that thing that seems to personify great leaders of transformational businesses - the ability to see things that nobody else sees, to drive things forward no matter what the obstacles, and, in some cases, to be ignorant about human limitations and feelings. That means he can act like an ass, and be an ass, more than occasionally. But it is hard to argue with the premise that his unwillingness to accept limitations, or mediocrity, or anything less than the best, is what makes his business so extraordinary.

    One of the reasons I liked the book so much is that I was an early adopter of the Amazon business model - I placed my first order on Amazon back in 1997, and when reading the book, I can almost imagine the chaos that my order - and so many other orders in those early days - created. It almost seems at time like Amazon succeeded in spite of itself … there were so many missteps, snafus, miscalculations and bad decisions, that the company almost succeeded in spite of itself. But the unifying glue behind the whole thing is Bezos … it is almost as if he cannot accept the notion of defeat, and so the company keeps moving ahead. If he'd been the captain of the Titanic, he would've figured out a way to keep the boat afloat.

    There's been some controversy about the fact that MacKenzie Bezos, the wife of the founder, has taken issue with some of the book. I suspect that the real problem is that different people see the same events through different prisms, and so not everyone agrees how things unfolded. MacKenzie Bezos may not be the most objective observer of how Jeff Bezos operates. In fact, I would hope she wouldn't be.

    "The Everything Store" is that wonderful thing - a page-turning business book that is full of great stories, interesting people, and a main character who has done as much as anyone to define the character of e-commerce in the late 20th and early 21st centuries.

    Read it.

    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: November 14, 2013

    by Kevin Coupe

    And now, another sign of the times … though in this case, I triple checked it to make sure that the story wasn't a spoof.

    National Public Radio reports that The Onion, the popular satirical news organization, has decided to stop publishing a print edition and will become all-digital as of next month.

    The final print edition of The Onion will be published on December 12.

    Onion Inc. President Mike McAvoy tells Morning Edition that "while print has taken a turn and that's no longer a profitable business for us, the rest of the company has thrived."

    And these days, companies have to address such issues with their eyes wide open … being willing to abandon traditional ways of doing business when they don't make sense anymore.
    KC's View:

    Published on: November 14, 2013

    Walmart this morning said that its Q3 same-store sales dropped 0.3 percent, a result of fewer shopper visits, and it said that it anticipates lower profits during the upcoming holiday season.

    Reuters reports that "Wal-Mart said comparable sales at its expanding fleet of smaller-format U.S. stores rose 3.4 percent. Overall revenue increased 1.6 percent to $115.69 billion … International sales rose 4.1 percent to $34.4 billion, excluding any currency impact.

    "Same-store sales rose 1.1 percent at the company's Sam's Club chain, which has long lagged rival Costco Wholesale Corp. Analysts were expecting a gain of 1.3 percent.

    "Third-quarter profit from continuing operations rose 2.8 percent to $3.73 billion, or $1.14 per share. That was 1 cent higher than analysts were expecting."
    KC's View:
    No wonder they're opening earlier than originally planned on Thanksgiving.

    Published on: November 14, 2013

    There is a report on saying that as Tesco-owned Fresh & Easy Neighborhood Markets was losing $22 million a month and facing bankruptcy, Tesco pulled close to $214 million out of the venture. While the actions are not described as being illegal, experts say that they could make it easier for outside creditors that did not get paid because of the bankruptcy to sue to challenge the sale of Fresh & Easy's business to Yucaipa Cos.

    According to the story, "Tesco has said in court documents that it put more than $3 billion in debt and equity into the venture, an effort to break into the competitive market of selling fresh food in California, Nevada and Arizona just as those areas were being slammed by the recession … Court papers say the bulk of the insider payment, nearly $189 million, was to repay debt Fresh & Easy owed its parent. Another $10 million went from Fresh & Easy to cover Tesco payroll costs in the U.K. and Bangalore, India.

    "An additional $15 million in insider cash was labeled simply "all other payments." It is money Fresh & Easy sent home to the U.K. while shuttering stores in the recession-hit Western states where it was attempting to establish itself."

    The story goes on to say that "Tesco's hefty insider take--the amount is the equivalent of 19% of Fresh & Easy's net revenues for the year ended February 2013--could be enough to make it worthwhile for unhappy creditors to probe for pressure points.

    "While there's no law against parent companies, or any other insider, collecting what they are owed even when a business is in trouble, anything from technical glitches in loan documents to evidence of undue pressure on a troubled business can set off a clamor among creditors to sue."
    KC's View:
    I'll accept the idea that this money drain was perfectly legal, but it does seem sort of sleazy … especially because it appears that when it came to recouping losses, Tesco wanted to cover its own rear end as much as possible while leaving its creditors exposed.

    I'm not a litigious person, but I think that these creditors should sue. Seems to me that if I sign a contract with a company, I have a responsibility to live up to that contract before I take care of myself. Isn't that the definition of ethical behavior?

    Seems like a good time to once again post the passage from Robert Bolt's "A Man for All Seasons," in which Sir Thomas More, unwilling to compromise his core values, says:

    “If we lived in a State where virtue was profitable, common sense would make us good, and greed would make us saintly. And we'd live like animals or angels in the happy land that needs no heroes. But since in fact we see that avarice, anger, envy, pride, sloth, lust and stupidity commonly profit far beyond humility, chastity, fortitude, justice and thought, and have to choose, to be human at all, why then perhaps we must stand fast a little, even at the risk of being heroes.”

    For his trouble, More ended up in the Tower of London and eventually was beheaded. Tesco just wants to revive its fiscal prospects.

    Published on: November 14, 2013

    Bloomberg writes that the the Institute for Local Self-Reliance has issued a report saying that Walmart is not living up to pledges made after Hurricane Katrina to "rely fully on renewable energy and sell products that sustain the environment."

    Eight years later, the report says, Walmart's "greenhouse-gas emissions are rising, and its share of renewable energy, measured as a percent of power it uses, lags behind rivals such as Kohl's Corp. and Best Buy."

    "Rather than allocate resources to reduce emissions, Wal-Mart has launched a publicity campaign that boasts of solar installations while green-washing the true environmental costs of its business model,” said Stacy Mitchell, a senior researcher at the Institute and author of the report.

    The story continues: "Mitchell and environmental allies say the company is falling short of its pledge to use all renewable energy, with just 4 percent of its power coming from renewable sources it operates. Another 17 percent of renewable energy is supplied by the grid. As it continues to grow, Wal-Mart has continued to generate more total emissions. Since 2005, Wal-Mart’s greenhouse gas emissions rose 11 percent, reaching 21 million metric tons per year, according to company data."

    Walmart spokesman Tara Raddohl responded: "The results speak for themselves -- we’re showing that we can grow our business while slowing our greenhouse gas emissions, improve the supply chain, make renewable energy more affordable and serve our customers for generations to come."

    Walmart says that it has met "a goal of cutting greenhouse gases by 20 percent at its existing stores, and has increased the mileage efficiency of its fleet of trucks, the company said. It predicts that it will begin reducing its overall emissions by 2020, even as it grows the number and size of its stores."
    KC's View:
    I suspect that the truth may be somewhere in the middle … that Walmart has not achieved the kind of sustainable purity that the Institute would like, but that it is doing better than many companies even while dealing with a much bigger infrastructure. But I think the bigger problem for Walmart is an increasing perception that it is playing the image game … that its first goal is to shine up its image, with actually addressing issues somewhat lower on the priority list.

    Published on: November 14, 2013

    USA Today reports that Starbucks has unveiled its first-ever store on a train, partnering with Swiss Federal Railways for a store that has "a fully-branded Starbucks motif on the inside and out. And, of course, baristas serving the java.

    "The move comes at a time that Starbucks continues ramping-up its efforts to expand outside the conventional storefront. It's sold in grocery stores. It's sold on college campuses. It's served on some airplanes. And now, even a Swiss train."

    The company says the effort was an big design challenge, and that it is not planning to put such stores on Amtrak trains. At least, not yet.
    KC's View:
    Love the idea. Go where the customers are, as opposed to waiting for customers to come to you.

    Published on: November 14, 2013 reports on the continuing one-day strikes taking place at Walmarts across the country - in Southern California, Seattle and elsewhere - that are being supported by an online petition calling on President Barack Obama to intercede with Walmart on behalf of working people, and that are leading up to planned Black Friday strikes against the retailer.

    Wal-Mart spokesperson Brooke Buchanan tells Salon that the company is “really focused on serving our customers, and giving our customers and our associates the best holiday ever.” While Buchanan said the company has “a strict anti-retaliation policy,” and will not take actions against protesting employees, she also noted that Walmart does "enforce attendance policies when they are broken."
    KC's View:
    I'm not sure, but I'm beginning to think that this is going to grow into a bigger problem for Walmart than it has been….perhaps fueled by a sense that, as expressed by one employee, "I want people to be able to live better, you know, like the commercial says … Nobody lives better except for the Waltons now."

    I do think they're smoking something if they expect Obama to intervene. He's got other problems to deal with that strike me as a little more pressing….

    Published on: November 14, 2013

    Target said yesterday that it will expand its "Beauty Concierge" program to 95 stores in New York, New Jersey, the San Francisco Bay area, and Dallas-Fort Worth. The program puts what is called a "highly trained, brand agnostic beauty enthusiast" into stores' beauty and cosmetics aisles for free customer consultations.

    The Beauty Concierge program was originally tested in the Chicago market in summer 2012, and then was expanded into select stores in Los Angeles, Orange County, Washington, D.C., Northern Virginia, Baltimore and Minneapolis. The Beauty Concierge program is now available in nearly 300 stores across the country, Target says.
    KC's View:
    Just like a Genius Bar. Stores need to invest in more such efforts.

    Published on: November 14, 2013

    • The New York Times reports on a company called Good Eggs, "a website and delivery service that lets you order food from local farmers and artisanal food makers … Shoppers can go on the site and browse through dozens of virtual stands, searching by the type of item (dairy, meats, baked goods, produce and so forth) or by farm … Good Eggs is one of a handful of companies around the country that are tapping into the local food movement and making it more accessible with technology. They offer a large array of products from a variety of farms, which distinguishes them from services known as C.S.A.’s, or community-supported agricultural programs. C.S.A.’s let people pay up front for a season’s worth of local produce to be delivered or picked up once a week."

    In the case of Good Eggs, the reporter on the story placed an order on Wednesday, the food was harvested at and collected from farms on Thursday, and delivered top his home on Friday.

    The goal, the Times writes, is to create "an online version of a farmer’s market."
    KC's View:

    Published on: November 14, 2013

    Bloomberg has a good story about how gluten "has become the latest dietary bogeyman," resulting in moves by companies like General Mills and Kellogg Co. top boost "output of pricier gluten-free foods," even though many dietitians would argue that the industry should be pushing back against gluten-free trends that go against scientific evidence.

    "Less than 1 percent of Americans have the disorder that requires a gluten-free diet," Bloomberg writes, "yet almost one in three now eschews gluten, according to trend watchers NPD Group, influenced by bestselling anti-gluten books and celebrity endorsements. The U.S. market for gluten-free foods will climb from $4.2 billion in 2012 to $6.6 billion by 2017, according to researcher Packaged Facts, as bread bakers, craft-beer makers and eateries from Hooters to Michelin-starred Hakkasan embrace the trend."

    Mark Lang, a food marketing professor at St. Joseph’s University, tells Bloomberg that "grain producers won’t criticize the anti-gluten authors for fear of fueling sales of their books or offending those with celiac disease who really must avoid gluten. Celiac sufferers produce antibodies to attack gluten, causing damage to the intestines and illness, according to the University of Maryland Center for Celiac Research. "Large companies have learned not to overreact to these flash trends," Lang said. "There is nothing to gain, and you have everything to lose."
    KC's View:

    Published on: November 14, 2013

    • The Washington Post reports that "unionized employees at Washington area Safeway and Giant Food stores voted Wednesday to authorize a strike against the grocery chains if the two parties fail to agree on a new contract." Negotiations between management and the United Food & Commercial Workers (UFCW) have been ongoing for weeks over a new contract that expired at the end of October and that covers some 17,000 employees.

    The major sticking point, according to the story, has been the cost of health care benefits, though the negotiations have been characterized as "productive."

    • The Wall Street Journal has a story about how "high-concept flavors and ingredient combinations that once were considered niches—like vodka-flavored Limoncello and Montebianco, based on the Italian dessert made with roasted chestnuts and whipped cream—are going mainstream, as sellers of premium-priced gelato, sorbetto and ice cream cater to adult tastes and look to increase flat sales … Frozen-dessert makers see the shift to adventurous flavors as an opportunity to snap up market share, says Lynn Dornblaser, new product expert at market-research firm Mintel. Adjusted for inflation, sales of ice cream including individually wrapped pops and other frozen novelties, have been essentially flat at some $11.2 billion, according to Mintel data."

    • The New York Times reports that Men's Wearhouse management will review strategic options for the company, including the $2.3 billion unsolicited bid for the company made by Jos. A Bank. "The announcement of Men’s Wearhouse’s intentions comes two days before a deadline that Jos. A. Bank had imposed on its takeover bid, one that Men’s Wearhouse has steadfastly resisted since it was first made in September," the Times writes. "Jos. A. Bank has said that its offer will expire on Thursday if the two sides do not begin talks."

    Wine Enthusiast magazine has named Kroger its 2013 Retailer of the Year, citing the retailer's "dynamic growth, dedication to wine, ability to foresee trends and customer service."
    KC's View:

    Published on: November 14, 2013

    …will return.
    KC's View: