retail news in context, analysis with attitude

Published on: December 4, 2013

by Kevin Coupe

There's no question that Amazon's investment in drone technology that founder/CEO Jeff Bezos says could deliver products within 30 minutes has captured the American imagination. Some are enthralled by the audacity of the notion, while others think it is just a public relations ploy to take the public's eye off the company's lack of profits.

It certainly was inevitable that the story would dominate more than a few news cycles … and equally inevitable that Stephen Colbert would turn his attention to it on The Colbert Report.

Colbert demonstrates a certain amount of cynicism about the drone technology … because, in his mind, it won't make things available fast enough..

See for yourself. Click the video window at left.

And enjoy this Eye-Opener.

Published on: December 4, 2013

Reuters reports that Walmart is paying for legal representation for more than 30 of outs executives who are involved with the federal investigation into allegations that the company engaged in systemic and systematic bribery of Mexican officials to grease the wheels of its expansion there.

The investigation also is looking into whether company executives engaged in a cover-up to hide the payments, and whether similar kinds of misconduct took place in Brazil, China and India.

According to the story, "While it is common for companies in bribery investigations to cover executives' legal costs, experts said the large number of attorneys hired in the Wal-Mart case suggests prosecutors are aggressively testing information that the company has turned over, and may be considering cases against multiple individuals."

Walmart has confirmed the payment of the legal bills, but won't name the executives involved or provide any more specifics. And while the Justice Department isn't commenting because it is an ongoing investigation, sources tell Reuters that the probe is not close to being concluded.

The investigation was prompted by an extensive New York Times story in December 2012 that detailed millions of dollars in bribes paid to Mexican officials, and efforts to cover up the payments at corporate communications. The stories implicated both former CEO Lee Scott and former vice chairman and Walmex CEO Eduardo Castro-Wright.

Walmart reportedly has paid more than $300 million in legal fees, both in relation to the federal probe and an internal investigation that it claims predated the Times story. While it has hired a number of law firms to assist it in the case, because of conflicts of interest the executives under investigation have had to hire their own representation, for which Walmart apparently is footing the bill.

One passage from the original Times story:

"Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals."

Published on: December 4, 2013

Daymon Worldwide is out this morning with a new study entitled "Men on a Mission," which it says reveals "six types of male mission-oriented shopping trips and never before discovered male shopper archetypes based on evolving gender roles and shopping behavior."

According to the study, "52 percent of primary male shoppers in the US are personally responsible for about 78 percent of all groceries purchased for their household in the last month, so they represent a huge financial opportunity for retailers ready to respond with customized products and services."

The study also suggests that "nearly 50 percent of all US men make mission-oriented trips to shop for a specific item or group of items, including take out to eat at home … Additionally, 60 percent of male shoppers are personally responsible for all or nearly all of their household’s grocery shopping."

The Daymon study segments male shoppers into six archetypes based on their attitudes and feelings about gender roles, cooking and shopping for their household, saying that "all of these archetypes view shopping as mission-based trips but each with a slightly different perspective." The archetypes are:

• Traditional Male (15 percent): "A slightly older group of men who are more set in their ways and would like to turn back the clock to more traditional gender roles. They are big fans of home cooking, but likely believe it should be done by the woman of the house."

• Modern-Day Male (12 percent): "These are more forward-thinking male shoppers that believe in equality, and enjoy being active participants in sharing household chores and cooking. They also enjoy home-cooked meals, but might prefer being the actual chef."

• Primal Male (14 percent): "This group tends to be older and often believes they are the dominant sex and can better handle cooking and shopping roles compared to their female counterparts."

• Confused Male (19 percent): "This younger group of men tends to be in a state of confusion when it comes to gender roles. Possibly unconsciously, they think women should do the cooking and cleaning but another part of them doesn’t want to offend women, and looks to appease them. They also often struggle with their identity and hesitate to show off their feminine side."

• Discerning Male (20 percent): "These highly educated men usually command a higher income and share many similar traits to the Modern Day archetype as they also believe in equality, supporting their spouse in any way needed, and owning many of the household chores. They are more involved in food shopping, and focus on the highest quality options. They are also somewhat more likely to tap into their feminine side."

• Heckled Male (20 percent): "Similar to their Confused Male shopper brethren, this group of men do their best to avoid conflict and will bend to the will of the women in their life. They strongly believe in equality, the splitting of household chores and are not afraid to show their feminine side. But they don’t want to challenge the women in their life and may even have felt 'beaten' down in their past relationships."

And, the study breaks down the shopping "missions" this way:

• Well MAN-nered (13 percent): "Male shoppers who go on this mission are seeking to purchase items that show that they care, and to accommodate special entertaining occasions that will allow them to impress their families and friends while enjoying the process. The 'Confused Male' shopper often falls into this segment."

• Stockpiling the Man Cave (10 percent): "Male shoppers that take this less sophisticated, 'search and retrieve' approach to shopping usually do so in preparation for entertaining or hosting a more informal gathering like tailgates for sporting events, game nights or hanging out with friends. The 'Primal Male' archetype often falls into this segment."

• On DeMANd (23 percent): "Quick and easy convenience is the endgame for male shoppers who go on these types of missions as they look to pick up something quick for dinner, either from the grocery store or take-out from a restaurant. The 'Traditional Male' shopper archetype often falls into this segment."

• Man-Shape (13 percent): "This trip is all about achieving a healthier lifestyle. Male shoppers on this mission are willing to take their time to explore the store to find their favorite healthy product offerings, or even try something new. Both the 'Discerning' and 'Heckled' male shopper archetypes often fall into this segment."


• Crowd MANagement (26 percent): "This mission-oriented trip calls for more robust shopping occasions geared to find something for everyone at the table. These trips are usually done early in the day, and involve browsing and searching for appealing options. The 'Modern Day' male shopper archetype often falls into this segment."

• Man-riety (15 percent): "These occasions are about switching things up or trying something different. There is an exploration component to these trips as shoppers are looking for something out of the ordinary. The 'Confused Male' shopper often falls into this segment."

Published on: December 4, 2013

The New York Times has a story this morning about a new series of retailers using the subscription model to generate sales. Here's how the story is framed:

"Consumers have been enthusiastic about subscribing to an array of products, from monthly shipments of razor cartridges to regular deliveries of trial-size personal care products. But the subscription model has gained a foothold with, fittingly, socks.

"Within the last two years, about a dozen online stores have sprung up offering sock subscriptions, primarily to men, with names like Soxiety, Sock Panda and Ankle Swagger. Sales of men’s socks online grew 29 percent for the 12 months that ended Sept. 31, compared with a 4 percent increase in stores, according to the NPD Group, a research firm. Women’s socks sales online were up 35 percent for the period and down 4 percent in stores."

You can get details here.

Published on: December 4, 2013

The Wall Street Journal this morning reports that Tesco, which has been refocusing its business by reducing "international sprawl" and emphasizing core markets to a greater degree, released third quarter same-store sales numbers that were disappointing.

UK same-store sales for the quarter were down 1.5 percent, the story says, "slipping back into negative territory after a flat performance in the second quarter."

The story goes on to note that "Tesco has retrenched its international sprawl, selling out of the U.S. and Japan and creating a joint venture with a partner in China." However, "the remaining markets in Asia and Europe in which it operates declined by 5.1% and 4%, respectively, on a same-store basis in the quarter."

CEO Philip Clarke said this morning that "the turnaround strategy was on the right track but that store refurbishments and introducing new ranges of nonfood items was taking time." Clark reportedly is resisting calls from the analyst/investor community to dramatically lower prices as a way of building market share.

Published on: December 4, 2013

Business First reports that it isn't just Amazon investing in drone technology as a possible method of delivering packages, and that United Parcel Service (UPS) has been quietly "testing and evaluating different approaches to drone delivery."

In addition to exploring the possibility of using drones to deliver packages to consumers, UPS also reportedly is considering the use of drones to move packages around its warehouses, or "could use drones to move packages from a major airport or city to pick-up centers in more remote locations."

Published on: December 4, 2013

• NBC News reports that Walmart's biggest seller on Black Friday was towels:

"The retailer announced it had sold 2.8 million towels during the shopping event, which this year started even earlier at 6 p.m. on Thanksgiving Day. The textile sales outpaced the 300,000 bicycles, 1.4 million tablets, and 2 million televisions sold during the period, and also beat last year's towel sales by 1 million.

"For $1.74, bath towels and six packs of washcloths were available. That breaks down to $.29 per washcloth."

Published on: December 4, 2013

• Door to Door Organics, an online grocer specializing in natural and organic foods, announced yesterday that it is expanding into New York by serving the borough of Staten Island. Currently, the business generates $25 million in sales and serves sections of Colorado, Missouri, Michigan, Illinois, Pennsylvania, Delaware and New Jersey.

The company, which partners with local sources in these various markets, says it plans additional expansion in 2014.

Published on: December 4, 2013

• The Los Angeles Times reports that "the parent company of Toys R Us and Babies R Us agreed to pay nearly $180,000 to settle a lawsuit alleging that the retailers overcharged Southland shoppers, according to the Los Angeles County district attorney’s office … Investigators purchased 4,167 items from the stores and found that they had been overcharged in 5% of cases, according to prosecutors."

The retailer has not admitted liability in the case.


• Advertising Age reports that both Coca-Cola and PepsiCo are investing in scientific ventures that they hope will allow them to reduce the amounts of sugar and high fructose corn syrup in their full-calorie and mid-calorie sodas while maintaing taste.

According to the story, "PepsiCo, in collaboration with San Diego-based biotech firm Senomyx, is in the late stages of developing a 'taste modifier' that would essentially fool taste buds into thinking they are getting more sugar than delivered … Coca-Cola, meanwhile, continues to experiment with steviol glycosides, which are the sweet, calorie-free extracts from South American stevia plants."


• The Baltimore Sun reports that "downtown Baltimore "will lose one of its few grocery stores when six Fresh & Green's markets in Maryland and Washington close by the end of the month. Natural Markets Food Group announced the closings Monday. The stores, former Superfresh markets, opened in 2011 under the ownership of Natural Markets, a subsidiary of Catalyst Capital Group, a Canadian private equity firm."

The company said that continuing to operate the underperforming units did not make any economic sense.

Published on: December 4, 2013

• Ahold USA announced that with the departure of executive vice president/CFO Paula Price, Dan Sullivan, currently the senior vice president of business planning and performance, will become the new executive vice president and chief financial officer effective January 1, 2014.

Price, the company says, "decided to take her career in a new direction. Price will lecture at a leading university on leadership and technical topics related to her unique business journey. In addition, to complement her existing corporate and non-profit board positions, she is pursuing further corporate board roles."

Published on: December 4, 2013

Bob Carey, who served as CEO of the Produce Marketing Association (PMA) from 1958 to 1996 and helped to fashion PMA into a global organization serving both buyers and sellers, passed away on November 29. He was 82.

In his eulogy for Carey yesterday, current PMA CEO Bryan Silbermann said, in part:

"I offer you the condolences and the profound thanks of legions who knew Robert Lee Carey … knew him as a great leader and one of the warmest human beings who walked this earth.  We hold you all in our hearts in these days of mourning.

"But as we mourn with you, we also want to share with you the joy and the pleasure, the sustenance and the friendship that Bob brought to our world for so many years – 38 years in fact, starting in the late 1950s and ending in the mid 1990s. Those years are important, because Bob Carey really was a Man for All Seasons and A Man for All Ages.

"You see, your father/brother/grandfather/uncle Bob was a man who made the sun shine down on whomever was lucky enough to be in his company.  And that is how I will always remember Bob Carey.  Bob’s genius was getting the best from everyone around him.  He was a master at making those around him believe they could succeed at whatever they set out to do. One of his mantras was 'You can accomplish a lot if you don’t care who gets the credit.'  What a lesson for contemporary leaders!

"Even in the deepest darkness of a situation that seemed irrecoverable, being with Bob was like having a candle to light up unexplored solutions, discover unknown paths, or find willing helpers. His belief in the strength of the human spirit and the power of harnessing that in a community of interest made Bob the perfect association leader."

Published on: December 4, 2013

Got the following email from MNB reader Mike Franklin, commenting on Michael Sansolo's column yesterday that drew business lessons from the weekend's Alabama-Auburn college football game.

The lesson was Alabama (Walmart) versus Auburn (Amazon).

Heft versus Speed.

Old-school versus new school.

(Alabama coach Nick) Saban has said all year that he doesn’t like the new speed football…Auburn does…and won because quick and efficient (Auburn) to market beats slow and efficient (Alabama) every time…or at least more than 50%…

Brilliant! And precisely the point.

BTW…I'm not a college football fan, but I was totally disgusted with Saban throwing his players under the bus in his post-mortem of the game.

Great leaders don't blame their people when things go wrong.

Beyond that, at the core, Saban is supposed to be a teacher, and the players are his students. His post-game comments were reprehensible.




I also got the following email from Al Lees III, responding to my piece about him selling his family's store to another single-store operator, and memories of a dinner that I had with his father and fellow independent Marv Imus that I wrote about in a piece called "Dining With Dinosaurs":

I am so appreciative of your mention about the sale of Lees Market to the Clements family. It is clearly the end for me and my family in the retail grocery business, but a wonderful continuation of our legacy to another very significant independent operator. It is the right time with the right family to lock in the future success of a business that is so much of a part of the community, my staff, and my family.

When my father,, Marv, and you had dinner and spoke about the independent retailer as dinosaurs, it was probably the right conversation at the right time. I would challenge you to revisit this. My thesis is that the small independent sector of the grocery business, rather than being the end game, is in fact the game. Not every customer wants the impersonal megalith, nor do they seek it out. To think of the consumer as a homogenous group only interested in low price is missing the larger point that business is not all about numbers and efficiency and accountants and takeover artists ... It is about relationships and the value equation. In many cases the only time that the former succeeds is when the latter fails.

I have high hopes for a bifurcated industry with the commodified food boxes at one end and the smaller, nimble, customer centric independents at the other. I wouldn't worry about us, it's the chains in the middle that are the dinosaurs.

Come and see us anytime. The wine is always good and the conversation candid.

I will. I promise.