retail news in context, analysis with attitude

Published on: January 29, 2014

by Kevin Coupe

There is a question that Michael Sansolo and I have posed over the years when talking about customer service and corporate policies that simply don't seem to make any sense.

It is this: How come the more expensive a hotel happens to be, the more likely it is that it will charge - often a lot - for internet access? And conversely, how come less expensive hotels almost always offer free Wi-Fi?

Well, National Public Radio's Marketplace has a story about this subject and concludes that there actually is a fairly simple answer to the question.

Expensive hotels charge for Wi-Fi access because they can.

It is all about price sensitivity. People who stay in expensive hotels usually have the money to pay for internet access, or they're there on business and are just going to pass on those expenses to their clients and/or employers.

They're simply not price sensitive.

On the other hand, the story says, "folks at budget hotels … are definitely price sensitive. Managers have to keep Wi-Fi free just to compete."

Marketplace reports that things may be changing: "The website HotelChatter has a long-running survey of hotel Wi-Fi. Managing editor Juliana Shalcross says nearly two-thirds of hotels offer it free, and that number's growing." In addition, "Hotels don't want angry customers in the age of online reviews and social media. Companies that give hotels a lot of business are complaining too. So many hotels are getting rid of Wi-Fi charges, which sounds great."

Except … it looks like at least some of the hotels getting rid of the Wi-Fi charges may be raising their room rates to compensate for the move.

Though I suppose they have to do something to make up for the fact that they're not making as much money as they used to on from-room phone calls (everybody uses their cell phones) and in-room movies (because we all bring our entertainment systems with us in the form of laptops and tablet computers).

It's an Eye-Opener.

Published on: January 29, 2014

by Kevin Coupe

SCOTTSDALE - Amber MacArthur, the social media entrepreneur, author and host of "App Central," a Canadian television series about technology, served up the final lessons in the wrap-up public session at the 10th annual StorePoint networking and education event here, suggesting that retailers need to follow the advice once given by race car driver Mario Andretti: "If everything seems under control, you're not going fast enough."

It is critical, she said, that retailers and manufacturers find ways to adapt quickly to new mobile realities, to be responsive both to consumer desires and to new technology developments, and to make sure that they are creating value with their innovations. It is not enough, she said, just "to use things for the sake of using them."

One compelling example: In Canada, she said, McDonald's has created a mobile application that actually provides data to its customers about where the ingredients in its food come from, but also presents the information in an entertaining and compelling format. "Now, I'm not sure I actually want to know what is in my McDonald's burger, but this is good for the connected consumer." And maybe even a cost of doing business with the next generation of consumers.

Another example: the development of facial recognition software that can be used at store checkouts, so that ads shown to people on line are targeted in a way that is consistent with information - gender, age, etc… - that the software can garner.

Also, some intriguing statistics proffered by MacArthur:

• 38 percent of children under the age of two already have used smart phones. ("Imagine what'll happen when they start buying stuff," she said.)

• 69 percent of consumers use the iPad in the bedroom, while 42 percent use the iPad in the kitchen.

• 20 percent of men use the iPad in the bathroom.

Published on: January 29, 2014

The City Wire reports that Walmart has agreed to "pay $87,500 and furnish other relief to settle a lawsuit for retaliation filed by the U.S. Equal Employment Opportunity Commission (EEOC)."

The suit - which dates back to 2007 - accused the retailer of refusing to hire a former employee's adult son and daughter for entry level positions at a New Mexico store because the employee "filed a sex discrimination charge against Wal-Mart with the EEOC. Retaliation against an employee because of her opposition to discrimination and/or participation in protected activity, such as filing a discrimination charge, violates Title VII of the Civil Rights Act of 1964."

In a prepared statement, the company said: "Walmart does not condone retaliation of any kind. We terminated Ms. (Ramona) Bradford for legitimate business reasons. We have continually maintained that we did not retaliate against her or her family and we stand by that. We’re pleased to have resolved this with the EEOC."

Published on: January 29, 2014

The Sacramento Bee reports that David John Magana, a former advertising director for Raley’s, has been sentenced to almost four years in prison in a money laundering and mail/wire fraud case. Magana pleased guilty last February, the story says, and admitted to "devising a scheme under which printing and paper companies providing services to Raley’s paid unnecessary commissions to a co-conspirator in the fraud. Magana disguised reimbursements to the companies for the commissions as additional charges on their invoices." Magana then received kickbacks from the co-conspirator.

Magana also admitted "to working with others to sell significant quantities of Raley's paper inventory to third parties at discounted rates," the story says.

Published on: January 29, 2014

• The Wall Street Journal reports that Walmart has promised to "strengthen vendor compliance in China," as it responded to criticism from the Chinese media that it was violating the country's permit procedures as a way of increasing profits.

According to the story, "China Central Television last week accused the world’s largest retailer by sales of bypassing China’s quality, trade and food-manufacturing permit procedures and working with unlicensed vendors since 2006." While there have been no indictments, and Walmart at first defended its practices as diligent, now it is promising to "increase its scrutiny of documents related to products being sold by vendors in its stores in China. The Bentonville, Ark., retailer said it would collect more than a million documents annually to verify product labels, ensure that government test results are received for all items and substantiate product claims, such as 'organic,' according to the statement."

Walmart currently operates more than 400 stores in China.

Published on: January 29, 2014

The Food Marketing Institute (FMI) and the National Grocers Association (NGA) said yesterday that they have sent letters to members of the US House of Representatives Ways and means Committee supporting an amendment to the Affordable Care Act (ACA), better known as Obamacare, that would redefine "full-time employee" as one who works 40 hours a week, not 30 hours.

In its letter, FMI said that "it is critically important to change the law’s definition of full-time as 30 hours of service to a definition more in line with employment practices. The law’s definition of full-time as 30 hours of service per week does not reflect employers’ workforce needs or employees’ desire for flexible hours. This change is needed to avoid disruptions in the workforce and maintain flexible work options for employees."

And NGA said that "the ACA's definition of a full-time employee at only 30 hours per week will have an enormous impact on the independent grocery industry, which creates over 944,000 direct jobs. It is critical for Congress to work together and pass legislation to amend this section of the ACA before its impact is felt by both employers and employees across the country."

Published on: January 29, 2014

The Puget Sound Business Journal reports that Amazon "has applied for a patent for a card that would link all of your credit cards to one Amazon card and let you choose which one to use via an app on your phone."

The story notes that this concept has some similarities to Google Wallet, though the Google product "doesn’t yet link to your credit cards and you can’t yet use it for anything other than spending the balance in your Google Wallet. So basically, you can use it like a debit card, but not in place of that pile of credit cards in your wallet."

One advantage that Amazon may have, the story says, is "a pre-existing, payment-processing architecture that is already being used by the company’s third-party sellers and other merchants."

Published on: January 29, 2014

Bloomberg reports this morning that Abercrombie & Fitch has separated the roles of chairman and CEO, hiring Arthur Martinez, the former CEO of Sears, to replace the controversial Michael Jeffries as chairman. Jeffries remains as CEO, though at least one activist shareholder regroup has called for his dismissal.

Jeffries has been much criticized in some circles for comments he made last year about how he really only wants slim, good looking people to come into his stores and buy his clothes, and that he's really only interested in marketing to cool people - to the point that the company does not even make large sizes. Which sort of annoyed people who are not particularly slim but might've gone into an A&F store to buy presents for people who are. In addition, the company's reliance on scantily clad models for marketing purposes seems to have lost its luster, with three straight quarterly declines. And, Jeffries has been criticized for having peculiar demands of the flight crews who work on the company's private jet, down to what scent and undergarments they wear.

Published on: January 29, 2014

TheVerge.com has an interesting story noting that while Apple's iPads and iPhones sold better than ever before during the recent holiday season (though not as well as analysts expected, which was at least part of the reason the company's stock price has been dropping), sales of its iPod line dropped 52 percent compared to the same period a year earlier.

"What happened to the iPod?" the story asks. "Simple cannibalization, for one: every one of those 51 million iPhones can take the place of an iPod. (Steve Jobs famously called the iPhone 'the best iPod we've ever made.') And as people increasingly get their music from streaming services, a constant internet connection could be key, something you don't get with an iPod or even a iPod touch unless you have a Wi-Fi hotspot to pair with."

In other words, the company may have engineered itself out of the iPod business … unless, of course, it can come up with a dramatic refresh for the line that will capture public attention and create acquisitional fervor in a way that the original iPod did.

Published on: January 29, 2014

• The New York Times reports that negotiators for the US Senate and US House of Representatives have "agreed on a new five-year farm bill that will eliminate or consolidate dozens of agriculture subsidy programs, expand government-subsidized crop insurance and cut about $8 billion from the food stamp program over the next decade … The bipartisan agreement, two years after lawmakers began work on the nearly $1 trillion bill, is a major step forward in reauthorizing hundreds of farm and nutrition programs that must be renewed every five years. And, at least for now, it brings an end to the partisan fighting that stalled two previous attempts to pass the legislation. The bill would reduce spending by about $23 billion over the next 10 years."


• The San Antonio Business Journal reports that a survey conducted for the National Retail Federation (NRF) "found that an estimated 181 million Americans 18 years of age or over plan to watch the match-up between the Denver Broncos and the Seattle Seahawks.
Those 181 million viewers are expected to spend a total of $12.3 billion — on everything from food, to decorations, to taking the party to a restaurant and/or bar."

However, the study also finds that "only 47.5 percent stated that the game is the most important part of the Super Bowl show," with 24.9 percent saying they're most interested in the commercials, 17.3 percent saying that they enjoy spending time with friends during the game, and 10 percent saying they're mostly interested in watching the half-time show.


• The Kalamazoo Gazette reports that discounter Aldi "continues to expand in Southwest Michigan, with plans to open its fifth area store in Otsego this fall … It now has 60 locations in the Great Lakes State, not counting the five that are to open this year. The chain includes about 1,300 supermarkets in 32 states in the Midwest, East, Southeast and southern United States, with plans to expand to the West Coast in the next few years."

Published on: January 29, 2014

…will return.