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    Published on: December 2, 2013

    by Kevin Coupe

    Last night's 60 Minutes broadcast on CBS led with a profile of Jeff Bezos, CEO and founder of Amazon, which is worth watching for all sorts of reasons … not least of which is his revelation that the company is investing in the development of drone technology that will use octocopters to deliver packages of up to five pounds, and ideally will be able to deliver packages in select markets within 30 minutes of an order being placed. (For the record, Bezos says that 86 percent of the packages shipped by Amazon are five pounds or less.)

    Bezos acknowledges that this is an R&D project that can't be put into place "before 2015, because that’s the earliest we could get the rules from the FAA. My guess is that’s, that’s probably a little optimistic. But could it be, you know, four, five years? I think so. It will work, and it will happen, and it’s gonna be a lot of fun."

    You can watch the entire story here.

    Some other Bezos quotes from the Charlie Rose-reported piece:

    • "The secret is we’re on, like, our seventh generation of fulfillment centers. And we have gotten better every time. When I was driving the packages myself, one of my visualizations of success is that we might one day be big enough that we could afford a forklift."

    • "I would define Amazon by our big ideas, which are customer-centricity, putting the customer at the center of everything we do, invention. We like to pioneer, we like to explore, we like to go down dark alleys and see what’s on the other side."

    • "In the long run, if you take care of customers, that is taking care of shareholders. We do price elasticity studies. And every time the math tells us to raise prices." But, Bezos says, to raise prices "would erode trust. And that erosion of trust would cost us much more in the long term."

    • "The long term approach is rare enough that it means you’re not competing against very many companies. 'Cause most companies wanna see a return on investment in, you know, one, two, three years. I care (about that), but I’m willing for it to be five, six, seven years. So just that change in timeline can be a very big competitive advantage."

    • "The Internet is disrupting every media industry, Charlie, you know, people can complain about that, but complaining is not a strategy."

    It is an Eye-Opener.
    KC's View:

    Published on: December 2, 2013

    The National Retail Federation (NRF) is saying that while Thanksgiving weekend shopping traffic was up 27 percent compared to a year ago, spending for the weekend was actually down - shoppers spent just over $407 between Thursday and Sunday, down from $423.55 a year ago.

    The NRF said that 45 million consumers did some shopping on Thursday, up from 35 million a year ago, and 92 million people went shopping on "Black Friday," up from 89 million a year ago.

    The Associated Press offered the following analysis: "Retailers got Americans into stores during the start to the holiday shopping season. Now, they'll need to figure out how to get them to actually shop."

    And, the AP notes that the decline in dollars spent over the Thanksgiving weekend is "the first decline since the 2009 holiday shopping season when the economy was just coming out of the recession," which underscores the basic challenge - the economy may have experienced some level of recovery, but relentless promotions by retailers have led to consumers who expect bigger and better sales, no matter how well the economy is doing: "And stores may have only exacerbated that expectation this year. By offering bargains earlier in the season, it seems they've created a vicious cycle in which they'll need to constantly offer bigger sales. Shoppers who took advantage of 'holiday' deals before Thanksgiving may have deal fatigue and are cautious about buying anything else unless it's heavily discounted."

    Indeed, the evidence to this point suggests that the retailers that either opened for the first time on Thanksgiving or earlier on the holiday as a way of priming the sales pump succeeded largely in shifting sales earlier, not adding incremental sales.
    KC's View:
    I'm not sure why anyone could be surprised that Thanksgiving Day sales would impact Black Friday sales. And based on all the emails I received over the weekend, my sense is that pretty much retailer out there is extending their sales, creating expanded promotions, and demonstrating that they're desperately trying to end the year on a good note. If I had to guess, I'd predict that it'll be a pretty mediocre holiday season … maybe with some small increases, but nothing to shout about.

    BTW … In what may be the most depressing piece of news, Advertising Age reports that Black Friday mania has invaded the UK … a country that does not even celebrate Thanksgiving on Thursday. The movement seems to be driven by Amazon and Apple, which are using US-style Black Friday promotions there, but are being picked up by department store chains there.

    Oy.

    Published on: December 2, 2013

    All Things D reports that MasterCard has announced the creation of a "Free Shipping by MasterCard shopping portal, which gives online shoppers six months of free, two-day shipping at Best Buy, QVC, Macy’s, Kohl’s and Walmart when they pay with a MasterCard debit or credit card."

    According to the story, "MasterCard cardholders have to do a bit of work to earn the free shipping — start their shopping on the MasterCard free shipping site, pay the shipping charge up front, and then email their digital receipts to MasterCard to get a statement credit — but that makes the program an easier sell to participating e-commerce sites, who don’t have to deal with any major tech integrations to participate."

    The goal of the program is to help retailers compete with Amazon Prime, which offers unlimited two-day shipping to consumers who subscribe to the program with a $79 annual fee.
    KC's View:
    Free shipping. Fast and faster shipping. Consumer expectations are being driven in these directions, and retailers are going to have to figure out a way to either match these offers, or offer compelling alternatives.

    Published on: December 2, 2013

    The New York Times had a fascinating piece over the weekend about the challenges of living on a minimum wage, which is something that an increasing number of people - many of them older, many of them former members of the middle class - find themselves doing.

    You can read the story here.
    KC's View:
    The piece also notes that many of the people who find themselves facing this scenario are hard-working, industrious citizens who don't want handouts or freebies, but just the opportunity to support their families … but discover that the workplace is not built to allow them to do so. It is not an easy problem, and there are no easy solutions … but it is a situation that needs to be addressed both through public policy and private enterprise.

    Published on: December 2, 2013

    The New York Times reports that while there have been many calls for a resurgence in American manufacturing, there are certain hard economic facts that come into play, preventing the kind of expansion that many people want.

    "As textile and apparel companies begin shifting more production to the United States," the Times writes, "taking advantage of automation and other cost savings, a hard economic truth is emerging:  Production of cheaper goods, for which consumers are looking for low prices, is by and large staying overseas, where manufacturers can find less expensive manufacturing. Even when consumers are confronted with the human costs of cheap production, like the factory collapse in Bangladesh that killed more than 1,000 garment workers, garment makers say, they show little inclination to pay more for clothes.

    "Essentially, to buy American is to pay a premium — a reality that is acting as a drag on the nascent manufacturing resurgence in textiles and apparel, while also forcing United States companies to focus their American-made efforts on higher-quality goods that fetch higher prices."

    The story notes that while shoppers say they will pay more for Made-in-the-USA merchandise, their actions do not always match their words.
    KC's View:
    If the economy were doing better, then people might have more money to spend on American-made goods. One can only hope that the economy will get better, which will create all sorts of collateral advantages.

    I happen to think that if Made-in-America is going to be seen as a label that suggests better quality and an impetus for stronger economic development, that's a good thing. There ought to be a way to market around that…

    Published on: December 2, 2013

    In the UK, the Guardian reports that "Tesco is preparing to offer same-day delivery for online groceries as it fights to shore up its struggling UK business and take on rival services by Waitrose, Morrisons and Asda.

    "The move would see the UK's biggest online grocer competing with Ocado, the company which delivers Waitrose groceries and is set to offer the same service for Morrisons shoppers in Warwickshire early next year. Bigger rival Asda is also planning to introduce same-day grocery deliveries next year."

    The story notes that "Tesco is also piloting a collection service at its small Express stores for groceries ordered online."
    KC's View:
    See my comments about consumer expectations, above. There are a lot of moving parts for all these companies, and everybody is looking for a differential advantage.

    The only wrong move would be to think that traditional ways of doing business are enough.

    Published on: December 2, 2013

    USA Today reports that "from Oct. 24 to Nov. 4, Bizrate Insights surveyed 14,721 online buyers who made a recent purchase from a retailer that was not Amazon and asked them where they planned to buy gifts this year.

    "These shoppers planned to allocate 43% of their holiday shopping to physical stores on average. But they also planned to spend 34% of their gift money at Amazon. That was almost as much as they planned to spend at all other online stores put together (35%), including destinations such as eBay.com and Walmart.com, according to Bizrate's survey.

    "Bizrate Insights also asked where these consumers typically start online shopping and 25% said Amazon. Google came in third at 22%, with "directly to a retailer's web site" coming second at 24%.

    "The shoppers are also big users of Amazon's Prime program, which offers free two-day shipping in the U.S., along with other benefits, for $79 a year. The survey found that 35% of them have a Prime account."
    KC's View:
    Yikes.

    It seems to me that there is a correlation between the fact that Amazon has such a big share of the retail pie, and at the same time is testing what on the surface would appear to be the outlandish notion of delivering products via drones. It is, I think, because there is a direct link between audacity and success, especially when in between concept and success there is a high level of discipline and successful implementation.

    Published on: December 2, 2013

    The Los Angeles Times reports that publishing house Elsevier last Thursday retracted a major study that it released last year finding that "laboratory rats fed for up to two years on genetically modified corn of a type widely used in the United States developed huge, grotesque tumors."

    The original study was published in Elsevier's Food and Chemical Toxicology journal, and has been subjected to much criticism of its methodology, analysis and conclusions. There also were questions about the credibility of its author, French researcher Gilles-Eric Seralini, a longtime critic of GMOs.

    However, the retraction itself has created controversy. "Elsevier's action, which has been challenged by Seralini, has already shifted the debate from the adequacy of the original paper to the process of peer review in scientific publishing and the politics of this particular retraction," the Times writes. "The European Network of Scientists for Social and Environmental Responsibility responded within a day with a statement calling the retraction 'a travesty of science' that appears to be 'a bow to industry'."
    KC's View:
    You know my feelings about this … all the continuing controversy suggests to me the precise reason why labeling is a good idea.

    Published on: December 2, 2013

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

    Buffalo Business First reports that four supermarket chains - Wegmans, Price Chopper, Hannaford, and Tops - have all reached an agreement with New York State officials to allow the retailers to sell E-ZPass tags that can be used at toll booths on the NY State Thruway and on highways in 15 states.

    The E-ZPass system is an electronic toll collection process that uses battery-powered RFID transponders.

    E-ZPass is one of the great innovations of the late 20th century. Having taken one of my sons to the airport yesterday, which involves going through toll booths three separate times, I was amazed - as always - at how many people simply don't use them, and end up lined up waiting for the few cash-only booths that still exist. Making the E-ZPass tags more available can only help in the modernization of an infrastructure system that is badly in need of it.


    • The Philadelphia Business Journal reports that Ahold-owned Giant Food will open a new store on December 11 in Flourtown, Pennsylvania, that will include a beer garden that will sell a wide selection of craft, specialty, domestic and imported beers.


    • The Columbus Dispatch reports that Kroger is testing three Turkey Hill convenience-and-value stores exclusively in the Columbus, Ohio, market. The units are 7,500 square foot stores that "include many things found more typically in full-size grocery stores, such as fresh produce, meats, dairy and eggs, as well as prepared, packaged and frozen foods," but also are "smaller than the average Kroger store (67,000 square feet), while still about 70 percent bigger than the chain’s convenience-store-sized Turkey Hill Minit Markets (4,000 square feet)."


    Advertising Age reports that MillerCoors has using a new beer, Batch 19, to celebrate the 80th anniversary of the official end of Prohibition. (It ended in December 5, 1933, when Utah became the 36th state to ratify the 21st Amendment to the US Constitution, which repealed the 18th Amendment.)

    According to the story, "Miller Coors' Batch 19 beer is turning the milestone into a marketing event as it seeks new momentum for the small but growing brand.

    "The Repeal Day campaign includes signage, in-store sampling and bar parties at which brand representatives will wear historical clothing like flapper outfits. One poster encourages drinkers to celebrate Repeal Day because 'without it, you'd be drinking swill'." The story notes that MillerCoors hopes to turn Repeal Day into an annual marketing event.

    Good idea. One of the best parties I ever went to was in 1983, on the 50th anniversary of the repeal of Prohibition. I was doing public relations for The New Yorker at the time, and they took over the Rainbow Room, atop 30 Rockefeller Plaza in New York City, for a black tie gala that was pretty amazing. (Liquor was always a big percentage of the magazine's ad pages.) As far as I'm concerned, more beverage retailers and manufacturers ought to celebrate it.
    KC's View:

    Published on: December 2, 2013

    Many of us are lucky enough to have had that great teacher or two who had a formative impact on our lives, shaping how we think and feel about ourselves and our world. (I've always felt that Mrs. Content Guy is one of those … that the children she has taught in first, second and third grades will always remember her passion, good cheer and engagement, as well as her driving desire to get them not just to learn, but to think.)

    I've had several of those teachers in my life - people who I think about all the time, who helped make me who I am, who helped make me a better man. I mentioned all this because over the weekend, while talking to an old friend, I learned that one of these teachers - Bill Fitzgerald - died on October 2, about two months shy of his 89th birthday.

    I only took one class from Bill. "Politics & the Movies" was a class he team-taught during my senior year at Loyola Marymount University, and I loved it … we not only watched movies about politics, but engaged with guests from both politics ands the film industry to learn about the intersection of culture and public policy. It was a dream semester, and he and I became friends … we corresponded over the years, and I always stopped by his office when visiting LMU's campus in Los Angeles. After he retired, we stayed in touch for a while, but not for some time. And I felt bad about that when I learned about his death.

    For the record, I'd like to share with you what his family wrote about Bill on Legacy.com:

    If the test of a person is how much joy, humor and love one spreads about our planet, Bill Fitzgerald passed that test with flying colors. As a soldier in World War II, he fought fascism and discrimination on the beach of Normandy and the fields of Europe. As a young man, he captured the heart of Martha, the love of his life, and together they created 11 wonderful children. As a professor at Loyola Marymount University, he opened thousands of minds and filled them with a thirst for knowledge and collective engagement.

    Full of boundless intellectual curiosity, Bill explored the worlds of politics and public policy with a keen eye informed by his very human heart. He and Martha were courageous leaders throughout the American civil rights movement, the peace movement and the ongoing fight for simple economic justice. A Ph.D. in political science, Bill understood that politics is, at its core, the democratic means of creating a fair and just society. And he dedicated his life to accomplishing that goal.


    Greatness can be defined a lot of ways. For my money, Bill Fitzgerald was a great man, and someone who helped shape my life. And I wanted to use my small soapbox to pay tribute.
    KC's View:

    Published on: December 2, 2013

    I got an email from MNB reader Tom Kroupa over the weekend that drew my attention to a comment posted by Robert Reich - the former US Secretary of Labor and current professor at the Goldman School of Public Policy at the University of California, Berkeley - on his blog:

    The most important website this weekend and in weeks to come -- on which the hopes and fears of countless Americans are focused (and the President's poll-ratings depend) -- isn't HealthCare.gov. It's Amazon.com. Even if HealthCare.gov works perfectly, only 5 percent of Americans are in the private health-insurance market to begin with. But almost half of the 140 million Americans now shopping for holiday deals are doing so online, up 20 percent from last year.

    The irony is most of what's being sold this holiday season is coming from Asia, which leaves retail jobs as the largest and fastest-growing segment of the U.S. workforce. Yet as online shopping takes over, where will Americans find jobs in the future? The biggest reason holiday deal-shopping is especially frenzied is so many Americans are already stretched to the breaking point (65 percent are now living paycheck-to-paycheck, up from 61 percent last year) that they're more desperate than ever for bargains. And the main reason the President's poll-ratings are falling isn't because of HealthCare.gov. It's because the economy remains lousy for most people. It will likely remain that way: As technology and globalization take over the economy, the U.S. has no national strategy for creating more good jobs in America.


    I thought this view worth highlighting because it seems to encompass so much of what we talk about here on MNB …
    KC's View:

    Published on: December 2, 2013

    It's Week Thirteen in the National Football League….

    Oakland 24
    Dallas 31

    Green Bay 10
    Detroit 40

    Pittsburgh 20
    Baltimore 22

    Tennessee 14
    Indianapolis 22

    Miami 23
    NY Jets 3

    Chicago 20
    Minnesota 23

    Tampa Bay 6
    Carolina 27

    St. Louis 13
    San Francisco 23

    Denver 35
    Kansas City 28

    Jacksonville 32
    Cleveland 28

    Arizona 21
    Philadelphia 24

    New England 34
    Houston 31

    Atlanta 34
    Buffalo 31

    Cincinnati 17
    San Diego 10

    NY Giants 24
    Washington 17
    KC's View: