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    Published on: December 5, 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.by Kevin Coupe

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    I've been thinking about yesterday's release of the Daymon study into male shopping habits, and as much I think this kind of information is valuable, I also think it is important to remember that these days, perhaps more than ever, people don't necessarily fit into neat descriptions. Sure, it'd be easier for marketers if this were true, but it isn't. The "why" is almost always more important than the "who" or the "when" or the "where."

    I've run into this recently on a number of occasions.

    For example, we've been considering a refinancing on our house, and Mrs. Content Guy has been doing most of the work on this. She narrowed it down to one possibility, but it all came down to points … since we're not going to be in this house very much longer, we want to be careful not to make a deal that is going to cost us money in the short-term, because there isn't going to be a long-term. She had various conversations with the mortgage guy, and then we decided not to do it. She sent him an email to that effect, and that was that.

    Earlier this week, I got a call from the guy, who started out the conversation by saying, "I got the email from your wife, but I realized that I'd never talked to you." I said that there was no reason to talk to me, that my wife was taking the lead on this and I was taking all my advice from her, and he said, "But, she's a teacher…"

    Well, first of all, just because she teaches third-graders doesn't mean she only has the knowledge of a third-grader. I pointed out to him that while she is a teacher now, she started off her career as a stock broker with Smith Barney, worked for a time as an investigator for the New York Stock Exchange, and subsequently was a founding employee of Citibank's high-net worth account business, which used to be called "Focus" and morphed over time into Citigold. So she knows a helluva lot more about this stuff than I do. (In fact, she knows a helluva lot more about most stuff than I do.)

    He backtracked a bit, saying he only referred to her being a teacher because she is hard to reach during the day. But that clearly was not what he meant, and he got caught applying old world stereotypes to a new world situation. Bad move.

    I was also in my bank branch the other day having a conversation with the new manager, and he expressed a little bit of surprise that someone my age actually does 99 percent of his banking online … I rarely write a check anymore, and pretty much do everything from my laptop. He's a young guy, a so-called "digital native," and while I may be a "digital immigrant," that doesn't mean I'm not working hard to understand the lingo. He was complimenting me, and I have to admit that I found a bit of pleasure confounding his stereotypical view of me. And I think a lot of us are like that.

    A couple of days ago, Mrs. Content Guy and I did something we'd never done before - we took a cooking class at Sur la Table. She'd indicated an interest in learning how to make soup from scratch, I found a class in soups and stews, I made the reservations, and off we went.

    Now, you have to understand … Mrs. Content Guy hates cooking. She doesn't even like to stir the risotto for any length of time f I get called away from the kitchen. But this was her idea, and she went into it gamely … even if it pretty much confirmed for her that it is probably a good thing that I like to cook.

    What was interesting was that the teacher of the class commented that most of the time, when couples take a class, she finds that one or the other is the main cook in the house, and that it is less common for people to be partners in the kitchen, sharing the duties equally. I thought that was fascinating, and maybe a little unexpected.

    Then again, I'm convinced in a lot of ways that one of the challenges of doing market research these days is that people are so easily able to confound expectations, challenge preconceptions, and avoid fitting into neat descriptions. We have access to so much more information and opportunity, and the ability - and freedom - to make choices is treasured.

    As I said before … The "why" is almost always more important than the "who" or the "when" or the "where."

    That's what's on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: December 5, 2013

    The New York Times reports this morning that "as fast-food workers plan yet another round of one-day strikes on Thursday in cities around the country, labor leaders, economists and industry officials continue to debate the potential effects of raising wages at companies that often assert that such increases would raise consumer prices and shrink the work force."

    The arguments are fairly simple. Labor leaders say that fast food workers ought to be paid $15 an hour, saying that these jobs do not pay enough money for these employees to support themselves and their families, much less engage in spending that would help the economy. And management says that such a big increase would force fast food restaurants to eliminate jobs, raise prices and hurt the overall economy.

    According to the Times, "Thursday’s one-day strikes are planned for 100 cities, and will include Boston, Denver, Detroit, Los Angeles, New York and Washington. The organizers say that there will be protest activities in an additional 100 cities and that thousands of fast-food workers will walk out. Industry officials insist that few workers will go on strike and that most of the protesters will be union or community activists."
    KC's View:
    I'm not yet persuaded that this labor movement - to which I am sympathetic, though I don't think the situation is as black-and-white as it would maintain - has reached any sort of critical mass. I tend to believe that if a fast food outlet were to open pretty much anywhere in America today, the line of people applying for jobs would probably be longer than any protest line that would be organized against it. When that's the case, it's hard to convince fast feeders that they need to increase their pay levels.

    Still, the situation needs to be addressed. I heard a statistic the other day that something like 25 percent of all fast food workers in America are mothers with young children. If they cannot support those children without taking a second job, which makes it much more difficult for them to parent those children, that creates societal problems. If they aren't making enough money to buy those children food and clothing, and pay taxes, that hurts the economy. And, you further create a bifurcated culture that is not economically healthy nor ethically sound.

    I'm not a fan of living wage legislation, and I don't think that fast food wages are simply going to be increased to $15. But I do think we need to have a national discussion about the value of work and the importance of an equitable reward system. And it isn't just the fast food industry that needs to be engaged in this conversation.

    Published on: December 5, 2013

    Just got an email from a company called Aisle50 saying that it has "teamed up with premium brands such as Clorox, Starbucks, Smuckers and Red Bull to offer consumers recurring discounts on the products they buy most often. The move gives Aisle50's retailer partners, which include Raley's, Shop 'n Save and Homeland Stores among others, an e-commerce platform that's unique within the world of groceries."

    The company describes the process this way: "Consumers sign up for grocery subscriptions at 15% to 40% off of normal prices at Aisle50.com or an Aisle50-powered retailer white-label site. Every month, the consumer's credit card is charged and their loyalty account is loaded with their subscription. For example, consumers can subscribe to 12-packs of Red Bull at Raley's at a 24% discount from normal prices. Shoppers receive reminder emails when their subscription reloads and can cancel their subscription anytime by logging into Aisle50. To redeem, shoppers simply grab the subscribed-to product at the store; when they check out, it comes completely off of the bill."

    Aisle50 also claims that its research shows that consumers who have used the program in test have both made extra trips to the store and have had bigger basket sizes … not to mention being locked in to both specific retailers and brands because of the subscription program benefits.
    KC's View:
    MNB readers will know that I'm an enormous fan of the subscription model … both from a business and personal perspective. I don't know much more about the Aisle50 model than I've described here, but conceptually, it seems very smart … though I would argue that the missing piece is the delivery portion.

    Published on: December 5, 2013

    The Salisbury Post reports that Delhaize-owned Food Lion yesterday opened a newly remodeled store in Concord, North Carolina, that features "all of the company’s newest innovations in one location."

    According to the story, "New additions include a section of 'grab and go' foods, daily dinner deals offered in the deli from 4 to 7 p.m., an expanded gluten-free section, a $1 Deals section and new Food Lion-brand beef in sealed-fresh vacuum packaging. The Concord Food Lion also has transformed its produce section into a walk-in 'garden cooler,' which keeps fruits and vegetables fresher, longer."

    The story notes that "Food Lion’s 1,113 stores across the Southeast have been going through a rebranding campaign that now features the marketing strategy 'easy, fresh and affordable' …. Depending on customer feedback in Concord, other Food Lion stores could see some of the new elements in the next year or two."
    KC's View:
    I like the folks at Food Lion, but I think they would probably agree with me that this rebranding strategy cannot be implemented in a leisurely fashion … they've got to continue to work hard to develop compelling stores that are clearly differentiated from the competition, and they must make this an ongoing and institutionally organic process. It's innovate or die.

    Published on: December 5, 2013

    The US Department of Agriculture (USDA) yesterday released a comprehensive plan for fighting salmonella, which causes 1.3 million illnesses in the US each year, saying that the battle is a major priority for the agency.

    Among the proposals, the Los Angeles Times writes, are "developing more stringent sampling and testing and creating first-ever national standards for salmonella contamination rates in cut chicken parts. The agency also wants to expand a controversial test program to overhaul inspection procedures at slaughter facilities, a process that could lead to fewer government inspectors in the nation's poultry plants … The plan announced Wednesday also includes the expansion of a 14-year pilot program to take federal inspectors off slaughter facility lines to roam other parts of plants to identify and test for problems."

    However, the story also says that "food safety groups were quick to note that the effort does not address growing fears about antibiotic resistance in salmonella, a trend they blame on the regular use of the drugs on farms to either promote growth or preempt disease in animals." The Center for Science in the Public Interest (CSPI), for example, "wants the USDA to treat antibiotic resistant forms of salmonella like other pathogens such as E. coli, which triggers an automatic recall when found in food. Salmonella has not been held to those standards because the government doesn't consider it an adulterant, rather a naturally occurring bacteria that can be mitigated through safe food handling and thorough cooking."
    KC's View:

    Published on: December 5, 2013

    The Wall Street Journal has a great column by Farhad Manjoo that assesses the reasons behind the revelation by Amazon founder/CEO Jeff Bezos on Sunday that the company is investing in drone technology that might be able to deliver packages up to five pounds to select markets in 30 minutes:

    "First, the plan got everyone talking about Amazon and its Prime subscription service right at the start of the holiday shopping season … Next, it gave investors a taste of the scope of Amazon's investment plans, forestalling any expectation that the company plans to begin making big money soon. And it cemented Mr. Bezos's image as the biggest thinker in tech, a guy who won't let little things like 'illegal,' 'implausible' and 'kind of silly' stop him from considering better ways to deliver your toothpaste."

    But the piece also notes that the whole concept of drone usage is one that needs to be considered:

    "They've become associated with surveillance and militarism, and most rational discussions of the technology are hijacked by fears of the imminent robotic takeover of our skies. While these are justified concerns, I fear they've gotten out of hand.

    "Too often, we worry solely about the worst possibilities of drones, without considering their substantial promise to improve much of the world around us. Long before they'll fly into our backyards with soap, we may see squads of them delivering medicine in developing countries, coordinating emergency relief after disasters, and monitoring crops to improve how we grow food. Are these and other potential applications worth considering, despite the risks of illegal surveillance or even more terrible uses of UAVs? We ought to have that conversation."
    KC's View:
    I've been amused at all the coverage over the past few days that has focused on all the reasons that Amazon's drone strategy cannot and will not work. You'd think that people who have learned that "cannot" and "will not" are words that people ought to avoid, because recent history demonstrates that, in the words of Jean-Luc Picard, "Everything is impossible until it's not."

    Published on: December 5, 2013

    The New Yorker has a good piece worth reading that draws a connection between the lower Black Friday sales this year and the debate that is taking place about minimum and living wages, suggesting that it is retail executives who may want to offer the best argument for higher wages.

    You can read it here.
    KC's View:

    Published on: December 5, 2013

    • The Washington Post reports that Walmart finally - after months of debate about "living wage" issues - opened its first two stores in the District of Columbia yesterday: "Like many other Wal-Mart stores, the new urban locations sell a mix of groceries, clothing and big-screen TVs, as well as hunting and fishing licenses. The stores — at 5929 Georgia Ave. NW and 99 H St. NW — are both less than 110,000 square feet, making them smaller than many of the company’s sprawling suburban locations."
    KC's View:

    Published on: December 5, 2013

    Online Media Daily reports that PayPal has launched a digital gift store, "allowing U.S. customers to buy digital gift cards using its payments service from third-party merchants. On board as initial partner is Apple, which is offering iTunes vouchers in different amounts … The company also recently began allowing customers to buy and use gift cards via its digital wallet app through a partnership with prepaid card network Blackhawk Network. With its new gift store, PayPal is taking a more direct approach to boosting its payments business online by setting up its own e-commerce site."
    KC's View:

    Published on: December 5, 2013

    • The New York Times reports that at a Fortune Most Powerful Women dinner in San Francisco, Anne Wojcicki, co-founder and chief executive of 23andMe, which sells at-home DNA testing kits, addressed the issues that caused the US Food and Drug Administration (FDA) to order the company to stop marketing its product.

    “We completely recognize we’re behind schedule; we failed to communicate proactively,” she said. “(The FDA is) a very important partner, and everyone is focused on resolving it.”

    The FDA ordered 23andMe to stop marketing the $99 kit because the company had not provided enough evidence that the tests were accurate, and also because there are concerns that people would use the tests as a replacement for getting proper medical treatment.


    • The Wall Street Journal reports that the private equity groups - CVC Capital Partners Ltd. and Leonard Green & Partners LP - that own BJ's Wholesale Club is interested in acquiring some 1,300 gas stations owned by Hess Corp.
    KC's View:

    Published on: December 5, 2013

    Business Travel News is out with its list of the nation's 25 most influential travel industry executives … and Jim Donald, the former CEO of Pathmark, Starbucks and Haggen Inc., who has only been in the travel biz for less than two years as CEO of Extended Stay America, is on the list.

    Donald, who joined the company shortly after it emerged from bankruptcy, has been spearheading a $626 million renovation program and recently oversaw an initial public offering (IPO) that raised $565 million.

    Extended Stay owns and operates almost 700 hotels with about 76,000 rooms.
    KC's View:
    Anybody who knows Jim Donald and his reputation won't be surprised by this.

    And I'll make another bet - that the vast majority of folks who work at Extended Stay feel valued to an extent that they never have before.

    Published on: December 5, 2013

    MNB user Brian Blank had some thoughts on the Made-in-the-USA discussion:

    Our household actually put its money where its mouth is recently regarding made in China vs. made in USA.  We had a large All-Clad griddle pan, purchased from Williams-Sonoma.  We have a number of pieces of All-Clad cookware and love it; this piece, however, warped.  As it turns out, All-Clad cookware come packaged in two different style boxes:  white for their Made in the USA cookware, and black-and-red  for made in China accessories.  (The “accessories” are frequently disguised as actual cookware…)

    Sure enough, our warped pan came in a black-and-red box.  Calls to All-Clad were not returned, by the way.  Williams-Sonoma was happy to exchange our pan, and we had several—including the same All-Clad—from which to choose.  In the end, we picked a Calphalon griddle pan, opting to pay the $30 or so premium to buy a US-made product.

    I suppose if it had been double the cost, we might not have made the same choice.  Actually, there’s no “suppose” about it!





    On another subject, US students' poor test scores compared to much of the rest of there world, an MNB user wrote:

    You missed a biggie when you were talking about it being about our future employees and our future customers.

    These are our children and grandchildren -- RIGHT NOW.  They deserve better, and we owe them more.


    Agreed.




    On another subject, MNB reader Adam Zimel wrote:

    I am a long time reader and appreciate your comments. I was struck with interest by your article on the Cyber Monday sales. While the numbers are up substantially for online shopping, I was amazed to read that holiday sales for online purchases ($80 billion) total roughly 12% of all sales ($680+ billion). Certainly the trend continues in favor of online shopping, with the younger generations having a strong influence, but I do think that the press/coverage surrounding online shopping is distorted versus the traditional shopping means when 12% of all shopping is done online. I asked a handful of people in my office what they thought the breakdown for online sales versus traditional sales during the holiday season and the numbers ranged from 30% to over 50%. They were surprised to hear the numbers and I think this would go for the majority of the population. I think we hear about it so much that we believe it comprises the majority of sales in our technologically savvy society. I am surprised, and somewhat glad, to hear the numbers from IBM.

    I am in the retail commercial real estate industry and while I do a considerable amount of shopping online, I think this is a reminder that the retailer will always have a place in the market as purchasers want a tangible shopping experience. This does not hold true for every item but I think it can hold true as a general rule.


    I would never argue that physical stores are going to vanish … just that e-commerce is going to continue to grow, and that the competitive challenge to the physical environment is only going to get tougher. Also … I think 12 percent is a lot.

    But I get your point.




    Responding to our brief RIP mention of Bruce Gethin the other day, MNB reader Jim Perko wrote:

    Wow – you rarely do what you did with RIP, but doing it today, brought back so many memories.

    I worked at Red Owl and  when Supervalu purchased them, eventually went on and worked at Sysco.  Been in distribution for over 30 years.'

    I worked closely with Gagnon and Associates on engineered work standards and efficiencies in warehouses from the mid 80’s until a few years ago when I decided to have my own business.

    So often one thinks of their past and realizes that there were so many influences missed in the reflection of their past.

    I am guilty of that, in the case of Red Owl, Gagnon and Associates, and Bruce Gethin. In reality they were the foundation of what I have been able to do for my family!

    My thoughts and prayers out to Laurie Gethin (Bruce's daughter, who is a longtime FMI executive).  And as many in the industry will realize, Laurie’s dad made it possible for many to succeed.





    Loved this email from an MNB reader who wanted to respond to my support of the subscription model, which I've said I use in numerous categories on Amazon, as well as for products from Starbucks and Jockey:

    Only one that is full of crap would need a Jockey subscription. While I find your liberal, East Coast elite leanings to have pretty high crap content, I still read your stuff every morning because I find it thought provoking. Keep up the good work!

    You gotta love it….
    KC's View:

    Published on: December 5, 2013

    Today marks the 80th anniversary of the official end of Prohibition, which ended in December 5, 1933, when Utah became the 36th state to ratify the 21st Amendment to the US Constitution, repealing the 18th Amendment.

    Cheers!
    KC's View: