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    Published on: November 25, 2013

    by Kevin Coupe

    Think of this is a spat that went straight into the toilet.

    Salon reports on how rapper Kanye West recently went "on a rant" against e-tailer Zappos on a podcast.

    West said that Zappos CEO Tony Hsieh "told him to stick to music and not get into fashion at a recent business meeting. 'I got into this giant argument with the head of Zappos that he’s trying to tell me what I need to focus on. Meanwhile, he sells all this (expletive that is a synonym for crap) product to everybody, his whole thing is based off of selling (expletive that is a synonym for crap) product.”

    Some might be offended. Some might turn the other cheek. (Pun intended.)

    But not Zappos, which at the end of the week added a new product to its pages: a $100,000 toilet.

    Here's what the promotional copy said:

    Interested in buying Sh-t product? You’ve come to the right place! Here at Zappos.com, we happily sell Sh-t products to everybody! This is the throne, everyone has been watching. Whether you’re #1 or #2, your clique will show no mercy, even in Paris.

    The perfect gift for the man that has everything.

    Requires lots of 'focus' for most productive use.

    Considered a 'safety zone' when in arguments.

    Makes giant arguments seem much smaller.

    Caution: Do not place our Sh-t product near any fans.

    Avoid storms.


    I gotta love a company with a sense of humor, and a willingness to engage.
    I give this round to Tony Hsieh…
    KC's View:

    Published on: November 25, 2013

    The New York Times reports that while US retailers that had products being made at factories in Bangladesh - where conditions related to safety violations led to thousands of deaths and injuries - are working to help improve safety conditions in such facilities, they have not demonstrated a willingness to contribute to compensation funds for the families of those who died or were injured there.

    Here's how the Times frames the story:

    The International Labor Organization is working with Bangladeshi officials, labor groups and several retailers to create ambitious compensation funds to assist not just the families of the dead, but also more than 1,800 workers who were injured, some of them still hospitalized.

    "A handful of retailers — led by Primark, an Anglo-Irish company, and C&A, a Dutch-German company — are deeply involved in getting long-term compensation funds off the ground, one for Rana Plaza’s victims and one for the victims of the Tazreen fire, which killed 112 workers last Nov. 24.

    "But to the dismay of those pushing to create the compensation funds, neither Walmart, Sears, Children’s Place nor any of the other American companies that were selling goods produced at Tazreen or Rana Plaza have agreed to contribute to the efforts.

    "Supporters of compensation plans say they are needed to pay for medical care for those who are paralyzed or otherwise badly injured, to provide income after a vital breadwinner died and to give families enough income so that children are not forced to quit school and go to work."
    KC's View:
    The American retailers' position seems to be that because any production of goods in the factories was unauthorized, they do not have any responsibility for compensating the families of the victims. In addition, experts say that the retailers could be placing themselves in legal jeopardy by contributing, that they would open themselves to litigation. Which demonstrates, I suppose, the chasm between legal responsibility and moral/ethical responsibility.

    Because you could have a convention of people who believe the "we didn't know that they were manufacturing our products" line in a phone booth. If you can find a phone booth. (Google it if the phrase "phone booth" is foreign to you.)

    Published on: November 25, 2013

    Amazon announced over the weekend that for the first time it will allow shoppers to buy Prime memberships as gifts.

    Amazon Prime is the highly successful service that offers two-day shipping on purchases for $79 per year, plus access to Amazon's various streaming services.
    KC's View:
    The only thing that surprises me about this is that Prime has been around since 2005 (that's when I bought in), and it is only being made available for gift-giving purposes now.

    Because for retailing purposes, this is the equivalent of allowing consumers to give heroin as a gift. It'll create an entire new group of people who are addicted to Prime, and who will buy their own memberships when the gift runs out. Because once you've had Prime, you can't live without it. And experience tells Amazon that its Prime customers are more frequent and profitable customers.

    BTW … just for the hell of it, I placed an order on Amazon on Friday. It showed up on Sunday, compliments of the USPS and its new deal with Amazon (and for no extra charge). And I'll tell you this - there is no doubt in my mind that FedEx and UPS are going to have to offer Sunday delivery, because once you've had it, the concept just makes sense.

    Published on: November 25, 2013

    Chicago Grid.com has a story worth taking a look at: it explores what it might be like to go grocery shopping while wearing a pair of Google Glasses.

    The broad impact: in the long run, the technology will make shoppers more informed and even more in charge of the shopping experience.

    You can check out the entire piece here.
    KC's View:
    I found it instructive - and not at all surprising - that one self-styled consultant interviewed for the piece talks about how stores won't welcome the technology because it will permit instant comparison shopping and give shoppers "another tool to kind of get one up on the store." And, the piece wonders how retailers that don't allow picture taking in there store will react.

    All of which strikes me as typically myopic thinking.

    First of all, any store than bans cameras and picture taking in the store is guilty of self-delusion. Virtually every shopper now carries a camera into every store, and can take pictures - and post them instantly on the internet - at will.

    As for empowering the customer … exactly. This is a good thing. Or, at the very least, an inevitable thing, so you might as well embrace it and treat it like a good thing. Because the impact of technology almost always is to empower the shopper through information and context, and to deny it, resist it or decry it is to simply waste energy that would be better spent creating a shopping environment that takes advantage of these shifts.

    Retailers who position the customer relationship as a kind of "us vs. them" contest, and let's make sure that they don't get one up on us, are simply missing the point and living in a world that does not exist anymore. Of course, they probably are being encouraged by consultants who would prefer a world that does not exist anymore, and who make a buck by deluding their clients. (Always better to tell a client what they want to hear as opposed to what they need to know.)

    It may take years for Google Glass to get the kind of traction that will have a real impact on the shopping experience (in the supermarket and elsewhere). But that's not the point here. The real issue is whether retailers are wise enough to embrace a smarter shopper, to understand that while it may be tougher and more challenging to compete, the fruits of such efforts may be sweeter, with better connectivity to core customers.

    Published on: November 25, 2013

    The Chicago Tribune has a piece analyzing what it suggests is the great lie of Black Friday - that retailers offer deals on that day that are not available at any other time.

    "Many characterize the shopping bonanza as an expertly marketed ploy to capitalize on shoppers' fear of missing out," the Tribune writes. "By dangling a small batch of irresistible savings, stores land hordes of hopeful shoppers all scheming to score the retail version of Willy Wonka's golden ticket … The weekend is crowded with misleading promotions, including deceptive discounts off misstated 'original' prices and deals that could have been had a year earlier, according to NerdWallet. More than 90% of Black Friday ads this year feature items being sold at exactly the same price as they were last Black Friday, the financial advice website said.

    "And some door-buster prices are available throughout the year, including a $79.99 Tommy Hilfiger jacket at Macy's that NerdWallet said was also offered during the retailer's Veterans Day sale. At Target, researchers discovered a KitchenAid mixer selling for less than its advertised Black Friday sale price."
    KC's View:
    I've always believed that Black Friday is nothing but a marketing canard. And it is worse this year because it is the shortest shopping season - 26 days - in a decade because of the way the calendar falls.

    When I read this story in the context of the Google Glass story that precedes it, I cannot help but think that the whole Black Friday construct almost inevitably is going to collapse under the weight of its own deceptions … simply because technology will expose the lies, and most consumers will only get smarter.

    It is a shame that as we approach a holiday that is built on hope, the traditional beginning of the holiday shopping season actually trades on fear.

    Published on: November 25, 2013

    The New York Times reports on how, "as the holiday shopping season gets underway, same-day delivery has become a new battleground for e-commerce."

    The Times writes:

    "It wasn’t so long ago that overnight delivery seemed amazing enough. Then Amazon started building huge warehouses — what it calls 'fulfillment centers' — near major cities to be, in a spokeswoman’s words, 'as close to customers as possible.' With 40 such centers in the United States encompassing more than 80 million square feet of storage space and employing 20,000 full-time workers, Amazon offers same-day delivery in 11 cities.

    "EBay, which last month announced plans to expand eBay Now to 25 cities, and other businesses, including Google’s nascent shopping service and start-ups like Deliv, have a different model: Use existing stores or 'retail partners' as distribution centers and beat Amazon in the race against the clock."

    The story goes on:

    "Years ago, similar endeavors imploded. Webvan, UrbanFetch and Kozmo (which was backed by a $60 million investment from Amazon) were seen as follies of the early dot-com era, brought down by high labor costs and unrealistic pricing.

    "Today companies are scrambling to find the right new formula. Deliv uses a crowdsourcing approach, tapping students, real estate agents, aspiring actors and others with spare time and a vehicle. EBay recently announced plans to acquire for an undisclosed price Shutl, a London company that uses technology to pair couriers at hundreds of firms with local orders for delivery. Postmates, a start-up that operates in New York, San Francisco and Seattle, has been adding 100 to 200 couriers a week, but it recently instituted 'surge pricing,' higher prices for customers, when demand for deliveries outstrips the supply of couriers."
    KC's View:
    Fascinating story, and you can read the whole thing here.

    The so-called "last mile" used to be measured in terms of distance. These days, it seems to be as much about speed.

    There are going to be a lot of naysayers about this, but in the end, it will be about what the customer wants, not what retailers think they can do … because there will always be those who will create solutions by dint of an "everything is impossible until it is not" attitude.

    The lesson: Look for solutions. Not excuses.

    The movie line is from Black Rain, when a Japanese detective tells Michael Douglas's NYC detective that the Japanese are good at fixing problems, while Americans are good at fixing blame.

    Boy, did they get that right!

    Published on: November 25, 2013

    The Salt, on National Public Radio, had a story the other day posing the kind of question that would have been unimaginable - or maybe even unimportant - just a few years ago: Can farmed fish be certified as organic?

    The story notes that coming up with organic labels for aquaculture "is not coming easy," with the process having taken up more than decade without answers being arrived at.

    Environmentalists, The Salt reports, "say fish farms shouldn't quality for an organic label if they rely heavily on feed that can't be verified as organic. And they cite other problems on fish farms, including pollution and disease, that make them less sustainable than the typical organic farm."

    The US Department of Agriculture's National Organic Program (NOP), together with industry groups, has been developing guidelines that "would allow up to 25 percent conventionally grown material — specifically fishmeal — in the diets of farmed fish certified as organic. The plan would be to slowly scale this amount down over the years, though critics say they doubt this process would occur."

    But environmentalists and consumer advocates suggest that such an approach would essentially compromise the spirit of organic certification procedures.
    KC's View:
    I am hardly a scientific expert on such things, but my sense always is that if you say something is organic, it ought to really be organic … and in the case of farmed seafood, it has been fed organic food, not 75 percent organic food. When you start lowering your standards, what you are saying is that you don't really want standards.

    I'm not saying that farmed fish is bad. Just that a thing is what it is, and nothing more and nothing less.

    Published on: November 25, 2013

    • In the UK, the Guardian reports that when Morrisons begins its grocery delivery service in early January, it will offer "a virtual butcher and a grading system for fresh food, (and) will allow shoppers to immediately hand back food they don't think is good enough."

    According to the story, CEO Dalton Philips "is hoping an array of specialist services can draw in shoppers who will spend more online with Morrisons than they do with other grocers and keep them loyal. Those services include expert quality ratings on all produce, special packaging to prevent damage to fragile items such as bananas and the ability to return and receive money-off vouchers for fresh goods found not be up to standard on the doorstep. It will also offer steaks in a variety of thicknesses and bread and cakes baked fresh in Morrisons stores. The retailer is hoping these ideas will help it become profitable online, unlike other grocers, by boosting sales of fruit, vegetables, meat and fish – which make more money than general groceries."


    CNBC reports that Gap Inc. is offering a new service - customers can go online and reserve items, and then can go into a store, pay for them and pick them up within 24 hours.

    After a test in 40 Gap and Banana Republic stores that began over the summer, the company is rolling out the program to the entire Banana Republic fleet of more than 400 stores, and almost a third of the nation's Gap stores.

    One caveat - shoppers can't use the service on Thanksgiving or Black Friday, days on which management wants employees focused on shoppers who actually are in the store.
    KC's View:
    Not sure why Gap isn't asking people to buy the product online and then just pick it up in-store, but there must be some logic in there somewhere.

    Published on: November 25, 2013

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

    • The Wall Street Journal reports that the decision by Sprouts Farmers Market to delay its initial public offering (IPO) last week is "a rare occurrence in capital markets," but that the delay should only amount to a week or two: "The offering, originally slated to price late Thursday, was postponed to Monday night in part because a Sprouts peer, Fresh Market Inc. reported disappointing quarterly results, people familiar with the matter told The Wall Street Journal late Thursday. The sellers worried the news might weigh on grocery stocks broadly, these people said."

    It always worries me when I see this kind of stuff, but not because such hiccups affect Sprouts' stock price (not to mention the share prices of competitors like Fairway and Fresh Market). No, it's because such stories just reinforce for me the possibility that these chains are going to be more focused on Wall Street than Main Street, which means that they might be making short-term financial plays rather than long-term investments that build sustainable enterprises.


    • The Post and Courier reports that "two months after selling the majority of its tri-county stores to Bi-Lo and Harris Teeter," Piggly Wiggly "will shut down its warehouse in North Charleston and the 612,000-square-foot distribution center in Jedberg near Summerville."

    Piggly Wiggly reportedly will use "New Hampshire-based C&S Wholesale Grocers to supply groceries to its remaining stores. The transition from the locally based distribution will be completed in about three to four months."


    • The Wall Street Journal reports that it looks like two Amazon distribution centers in Germany will face a strike by employees today, with employees facing off against the company over wages and benefits and promising more such actions as the Christmas season approaches.

    According to the story, "Amazon has been a target of repeated strikes this year in Germany, its largest European market. The union wants the world’s biggest Internet retailer to adopt industry-wide wage agreements for employees in Germany, rather than using its own pay scale … In addition, the union wants Amazon’s Germany-based employees to be paid in line with the retail and mail-order sector, rather than the logistics sector."

    Amazon has defended its pay policies and generally refused to negotiate with the German unions.
    KC's View:

    Published on: November 25, 2013

    Ah, technology…

    MNB reader Jim Van Gorkom wrote:

    It’s just amazing how fast technology is changing the shopping experience. Your report that Macy’s will use your location in a store to send personalized offers to your smartphone reminded me of your November report about Tesco scanning your eyes to send personalized advertising. It’s not hard to envision walking through any store or shopping area being bombarded with offers and other information. Some people may like it. For others it will be information overload. We Boomers are all thinking, “Toto, we’re not in  Kansas anymore”.

    Extra points for the movie reference.





    BTW…speaking of movie references, thanks to all the folks who caught the Princess Bride and Trading Places call-outs last week.




    On the subject of NYC raising the age at which you can buy tobacco products to 21, one MNB reader wrote:

    I don't smoke and  don't know much about the price of cigarettes state to state, city to city  etc. [In Ohio a pack is between $5 and $6.]  But if a pack of cigarettes costs $10.50 in NYC I am sure those with higher incomes will easily find a way to buy their smokes  elsewhere.  With the resources to buy several cartons they will find it worth their while to make a trip outside the city to purchase their cigarettes and perhaps other things while they are there.   Commuters from Connecticut, New Jersey etc. will bring them in for their NYC resident co-workers.  The poor, however, will have to buy them one pack at a time in the city.   I hear there may also be Indian Reservations not far from NYC that sell tax free smokes…

    While I find aspects of these new rules a little troubling - 18-year-olds can fight for their country, but not buy a beer or buy cigarettes - I refuse to bow to the economic argument. The moral argument here - that tobacco kills, that tobacco companies make money on death, and that such companies have traditionally lied in search of profits - is, in my view, incontrovertible.

    From another reader:

    Once again Mayor Bloomberg is overstepping his authority and prerogatives. People must be allowed to exercise their rights to make decisions for themselves even if they can be unhealthy. As a high school graduate in 1968 I could have served 2 tours in Viet Nam before I would have been allowed to vote, drink or even get married without the signature of my father. Incidentally, my dad had to sign for me as I was married at 20 yrs 4 months. Outrageous to think that we are going backwards in personal accountability. I hope these draconian exercises of power are abated by more clearly thought-out plans.




    Along these same lines, one MNB reader wanted to address our story about how kids today are in worse physical condition than their parents were at their age:

    I read this article and couldn't help being disappointed because it reminded me of the article I just read yesterday that said a Long Island NY elementary school banned the use of balls in the school even during recess because someone could get hurt.  I believe it also said the school frowned upon cartwheels and jumping jacks or somersaults, I can't remember which.  I couldn't believe that something this idiotic could actually stick.  The article said they weren't alone, meaning the school.

    There are 2 major points in this that drive me nuts.

    • The US is slowly becoming a nation of babies.  We are so afraid of hurting people and hurting people's feelings that we blind ourselves to the simple facts right in front of us.  Seriously, so what if your kid gets hit in the head from a ball, even if it's being mischievously thrown at them.  That's how you learn how to duck and how to deal with people that come after you.  We can't keep our children in bubbles and I won't keep mine in one.  We play outside as much as we can.  They trip and fall sometimes, and then they get up and play some more.  It's called resilience.  It's called drive.  It's called motivation to keep going.  It's what made America great.

    • At a time when NYC seems to be going overboard with banning certain soda sizes under the premise that it's to help combat obesity, their suburbs are eliminating and restricting play time in the school yard.  I just don't understand where our minds are as a country.  Health Care costs are a huge issue, but rather than truly helping the problem, we put a Bandaid on it while also creating another law and another way to take freedom away from the healthy.  Talk about government being short sighted?  Simply put diet + exercise = good health.  Sure it's not going to save you from the reaper but it's the most basic equation to healthy living.

    Instead of banning things for the whole population, we should be encouraging exercise and encouraging healthy eating in schools.  Instead of taking things away, give people the opportunity to do the right thing.  Give kids play time, heck, give grown ups play time.  Instead of charging people more for bad health care habits, give them something to make them healthier.  Give, instead of take.  Our leaders would be much better leaders if they realized this.

    KC's View:

    Published on: November 25, 2013

    In Week 12 of the National Football League…

    Minnesota 26
    Green Bay 26

    Carolina 20
    Miami 16

    Jacksonville 13
    Houston 6

    Pittsburgh 27
    Cleveland 11

    NY Jets 3
    Baltimore 19

    Dallas 24
    NY Giants 21

    Tennessee 23
    Oakland 19

    Indianapolis 11
    Arizona 40

    Chicago 21
    St. Louis 42

    San Diego 41
    Kansas City 38

    Tampa Bay 24
    Detroit 21

    Denver 31
    New England 34
    KC's View:

    Published on: November 25, 2013

    RETAILER TO RETAILER tactical education sessions on Merchandising, Fresh Foods, Operations, Financial Controls, Digital Marketing and Store Management.

    EXPANDED EXPO FLOOR with more suppliers and pavilions in categories such as Produce, Meat, General Merchandise & Health Care, and Technology.

    OPENING GENERAL SESSION featuring Pulitzer-Prize winning journalist Bob Woodward.

    CHAIRMAN’S DINNER AND GALA with entertainment by award-winning country stars Thompson Square!

    For more information please visit www.TheNGAShow.com .
    KC's View:

    Published on: November 25, 2013

    Walmart announced this morning that Mike Duke, 63, is retiring from his job as CEO of the company, and will be succeeded by Doug McMillon, 47, who has been running Walmart's international business.

    The change is scheduled to take place February 1. McMillon will be just the fifth CEO of the company founded by Sam Walton since it went public in 1970.

    Duke will stay with Walmart as chairman of the executive committee. No replacement for McMillon in the international job has yet been named.

    Bloomberg Businessweek writes that "McMillon, who first worked at Wal-Mart as a summer employee in 1984, will grab the reins as the retailer tries to restore U.S. sales growth with Amazon.com Inc. and dollar stores luring away its customers. Overseas, where McMillon was in charge, Wal-Mart has been accelerating its expansion in China and other emerging markets while probing allegations of bribery in Mexico and possible violations of the Foreign Corrupt Practices Act … The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores in the country. Federal and local government agencies in Mexico also are involved in investigations. Wal-Mart has said that it also has started inquiries into potential violations of the FCPA at operations in Brazil, India and China."

    The Wall Street Journal reports that McMillon "has served on the board of Wal-Mart de Mexico since 2009 as the company has worked to deal with a federal investigation into possible violations of the Foreign Corrupt Practices Act in the country in the middle of the last decade. The company has said it is cooperating with the investigations by the Securities and Exchange Commission and Justice Department."


    The Businessweek story notes that McMillon was one of three people in line for Duke's job, with one other prominent name being Bill Simon, who runs Walmart's US business. McMillon is said to be close to the Walton family, which may have tipped the scales in his favor, despite the cloud that seems to hanging over the company's international expansion efforts.

    In a statement, Walmart's chairman, Rob Walton, said in part that, "a merchant at heart, Doug has both a long history with our company and a keen sense of where our customers globally are heading next."
    KC's View:
    Duke's departure has been rumored for some time now, but it is hard to judge whether this is a matter of the rumors finally coming true, or nature just taking its course.

    I guess Walmart must have a lot of confidence in its ability to survive all the international bribery allegations, or it would not have named the guy running international to the top job. Either they think they're innocent, or they think that they have enough political and financial capital to make the charges go away.

    The major question that needs to be answered, I think, is whether McMillon can bring enough objectivity to the role to see where the problems at Walmart really are, where what have been described as "core values" really are just practices with a lot of dust on them, and how the company must re-engineer itself to compete in a world where Amazon seems to be dictating many of the rules of the game.

    Does he have the ability to make those changes and address these issues? Or is he just a Walmart lifer who buys his suits and gets his haircuts and engages with the community in all the same places where Walmart CEOs always have done so?