retail news in context, analysis with attitude

Published on: March 5, 2014

by Kate McMahon

"Kate's Take" is brought to you by Wholesome Sweeteners, Making The World a Sweeter Place.

Now that CVS has announced that it will stop selling cigarettes and other tobacco products in its 7,600 stores by October 1st, all eyes are on social media and its rivals.

Within hours of CVS’ announcement, First Lady Michelle Obama tweeted support and the internet lit up with commentary on the bold move, which CVS says will cost it $2 billion a year in sales but, it believes, will strengthen its brand identity as health care player.

On CVS’ Facebook page, more than 350,000 followers hit “like” and 26,000-plus posted comments, overwhelmingly favorable and very personal for those who had lost family members to lung disease and smoking-related illness.

A typical post: “ My father died from throat cancer and my mom is a life time smoker. You earned my loyalty for life.”

Added another: “I support this!!! Previous 18-year smoker and have been free for 2.5 years and still strong.”

Detractors complained that the decision impinged on freedom of choice or questioned why the pharmacy giant would continue to sell alcohol, candy, junk food or sugary sodas.

Wrote one: “So are you also going to stop selling beer, ice cream, etc., and the two AISLES of CANDY because as a health care company you should NOT be pushing products that promote alcoholism and obesity??? If not, then you are nothing but a bunch of hypocrites and I will immediately have all our family prescriptions transferred to Walgreens.”

I give credit to CVS’ social media team for responding to so many of the comments. Granted, the replies frequently cited the same statistics but there was a sincere effort to engage in a thoughtful dialogue with critics and supporters alike.

Smoke-free advocates also turned up the heat on Walgreens, the nation’s No. 1 pharmacy chain with 8,500 outlets, to follow CVS’ lead. “I hope I don’t have to pass by my corner Walgreens to support CVS now,” wrote one Facebook user.

Leading health organizations and officials publicly urged Walgreens, Rite-Aid, the National Association of Chain Drugstores and the mighty Walmart (the largest seller of cigarettes in the nation) to follow suit.

For CVS’ competitors, the real-time online debate is a game-changer. Rather than relying on focus groups or surveys, Walgreens and Rite Aid got an immediate, uncensored response from customers on this hot-button issue.

Politics and posturing aside, this comes down to economics and health care. The family doctor is being replaced by retail clinics at pharmacies, supermarkets and drop-in locations. A study by the consulting firm Accenture projects that the number of U.S. retail clinics is expected to double in the next three years due to healthcare reform. CVS employs 26,000 pharmacists and operates 800 MinuteClinics, where nurse practitioners see patients and write prescriptions.

(Anecdotal note: My college-age daughter went to a MinuteClinic on Sunday for conjunctivitis. Bad news – the wait was two hours, 20 minutes. Good news – it was open on Sunday and a one-stop experience).

CVS also is working more closely with insurers and health care providers on preventive health and smoking cessation programs, and managing chronic illnesses often exacerbated by tobacco use. “We’ve come to the decision that cigarettes have no place in an environment where healthcare is being delivered,” said CEO Larry Merlo.

This is not an issue for the clinics operated by Target, which stopped selling cigarettes in 1996 for price/inventory reasons, or the pharmacies at Wegmans, which dropped tobacco products in 2008, citing health concerns. The majority of independent pharmacies do not sell tobacco products.

After CVS’ announcement, a Walgreens spokesman said it would continue to evaluate its tobacco policy. Number three Rite Aid responded that selling tobacco products was legal and it also offered a variety of smoking cessation products. A Walmart spokesman confirmed it had received a letter from seven Democratic senators urging a tobacco ban.

I think the pressure will continue to escalate from health care advocates, insurers and consumers. Several cities, including San Francisco and Boston, have passed bans on tobacco sales in stores with pharmacies, but I believe CVS’ corporate decision is more meaningful and tamps down complaints about the “Nanny State.” It also pressures competitors who rely on the adolescent’s favorite argument that “everyone else is doing it.”

Clearly, at a huge Walmart, it is logistically easier to separate tobacco products from the pharmacy and clinic. Not so at a Walgreens, Rite Aid, Duane Reade or a supermarket with a clinic.

Bottom line: You can’t have it both ways. You can’t be in the business of promoting health and selling a product that kills 480,000 Americans each year.

Comments? Shoot me an email at kate@morningnewsbeat.com .

Published on: March 5, 2014

It is a measure of how fast that social media can turn a person into a laughing stock that John Travolta found himself to be the target of online ridicule this week.

On Sunday's Academy Awards, you see, when introducing singer Idina Menzel, who was about to sing "Let It Go" from Frozen (which would go on to win the Oscar for Best Song), he mangled her name and called her "Adele Dazeem." (It was the second worst case of butchery evident on the Oscar telecast, the worst being what has been done to Kim Novak's face.)

The video clip quickly went viral. A Twitter account in the name of Adele Dazeem quickly got created. And best of all, Slate created a webpage called

"The Adele Dazeem Name Generator" that allows people to "Travoltify" their names. (I typed in "Kevin Coupe" and instantly discovered that Travolta would pronounce it "Kayden Cloirk.")

Pretty funny.

What really is the Eye-Opener is how fast this stuff happens, and how pervasive and sweeping the mockery can be. That's an important lesson for business. When I was starting out as a newspaper reporter, a politician I was covering once dismissed a negative story I'd written - and me - by saying that "today's newspaper will wrap tomorrow's fish." That's not true anymore. Today's newspapers are online … and remain online. Forever. Keep it in mind.

BTW … because I'd rather focus on the positive than the negative, let me refer you to an appearance that Idina Menzel made on "The Tonight Show" on Monday. Jimmy Fallon has brought a feature from his "Late Night" show over to "Tonight," bringing musical stars into a backstage music room along with his house band, The Roots, and they perform a hit song using only kindergarten instruments such as kazoos and building blocks. It is an absolutely charming and joyful rendition of "Let It Go," and I cannot imagine that anyone can watch it without smiling. (For my money, there is more joy in this few minutes of Fallon's "Tonight Show" than in any segment I ever saw of the Jay Leno iteration. But maybe that's just me.) You can watch the video by clicking on the screen at left.

Enjoy.

Published on: March 5, 2014

The Atlantic has an interview with Gibu Thomas, Walmart’s senior vice president of mobile and digital, in which he addresses the importance of mobile marketing to the retailer's broader strategic goals.

The reason?

"If you look at industry data," Thomas says, "what you see is that mobile-influenced in-store sales are double that of the entire e-commerce opportunity. By 2016, e-commerce sales are projected to get to about $345 billion in the U.S. 'Mcommerce' sales - online sales through a mobile device—are projected to get to about 10 percent of that number. But if you look at mobile-influenced offline sales in that same time frame, they’re projected to reach more than $700 billion."

And so, Thomas says, Walmart is working hard to "harmonize" the in-store and mobile experience.

Interesting story … especially because Walmart seems to have a specific vision for how this mobile strategy will be relevant to its budget-conscious consumers. You can read the interview here.

Published on: March 5, 2014

CBS News reports that Chipotle Mexican Grill has said in a new filing with the Securities and Exchange Commission (SEC) that "global climate change" is creating volatile weather conditions that could affect crops and product availability, leading to the possibility that it could have to temporarily suspend certain menu items. (Such as guacamole, for example, if lousy weather affected avocado crops.)

According to the story, it isn't the possibility of guacamole shortages that has raised eyebrows. Rather, it is the citing of "global climate change" in what essentially is a financial report, something that has created a political debate among those who disagree about climate change.

Chipotle says that customers and guacamole fans have nothing to worry about - for the moment.

Published on: March 5, 2014

Green America's GMO Inside campaign, a public advocacy organization dedicated to promoting GMO labeling and the eventual elimination of GMOs from the food supply, says that it is launching a "major push" to get Starbucks "to serve only organic milk sourced from cows not fed GMOs."

"Starbucks already serves soy milk that is organic and non-GMO. Consumers also deserve dairy milk held to the same standard and level of quality," says Nicole McCann, the group's campaign director.

Green America claims at least some of the credit for nudging General Mills to eliminate GM ingredients from its flagship Cheerios cereal. And, it says that "Pret a Manger, another quick service food and coffee chain, has already made a commitment to serving organic milk in its stores and sells coffee at competitive prices," which it says proves that such a change can be accomplished in economical fashion.

Published on: March 5, 2014

RadioShack used the Super Bowl to debut an ad that promised that it would convert an admittedly aging fleet of stores to a format that would be more relevant to 21st century shoppers and create a greater sense of consumer engagement, and now it seems that the venerable electronics retailer will have far fewer stores to renovate.

CEO CEO Joe Magnacca said yesterday that following an even tougher than expected fourth quarter with disappointing holiday sales, the company will close 1,100 stores around the country, or about one-fifth of its fleet. This comes on the heels of a February announcement that RadioShack would close 500 stores.

Still, the New York Times reports, the move leaves Radio Shack with more than twice the number of stores as competitor Best Buy.

Published on: March 5, 2014

The San Francisco Business Times reports that Goodwill, the charitable organization, is using e-commerce as a way of staying relevant in the 21st century.

According to the story, "Going into its seventh year, the e-commerce division of Goodwill Industries of San Francisco, San Mateo and Marin Counties has grown into a $4 million endeavor that’s looking to expand … Through eBay and Amazon, the nonprofit sells donated items in top condition - including designer handbags, shoes and jewelry - to online consumers, while a media division handles books, movies and music. Items are authenticated and checked for quality, and thousands turn out to be ripe for resale … Goodwill ships approximately 800 items a day that are sold through eBay, with shoes, bags and jewelry as the biggest sellers. Another 1,200 books and other media daily are sold on Amazon."

“It’s funny. It’s like this online startup that has really bootstrapped its way into this viable business,” Tim Murray, vice president of brand, marketing, and communications for Goodwill, tells the paper.

The revenue generated through the online sales "go back into Goodwill’s workforce training programs that help hundreds of unemployed and homeless people a year get jobs," the story says.

Published on: March 5, 2014

• Marketing Daily reports that Mondelez International has announced two online startups - "Prankstr will allow users to prank their friends and share the gags via social networks, while Betabox aims to distribute product samples through e-commerce companies."

The startups are the result of an initiative at Mondelez to "spur mobile innovation within the company," and to create ventures that can "capitalize on perceived market opportunities" that can positively impact brands such as Oreo and Cadbury.

Betabox, for example, "provides a mobile platform for promoting samples, content and special offers through 'reputable' e-commerce partners not yet named," Marketing Daily writes. "It allows brands to insert samples in the outgoing boxes of online retailers along with marketing material encouraging further interaction with the brand via mobile device."

Published on: March 5, 2014

• In New Hampshire, the Union Leader reports that Associated Grocers of New England is "breaking ground on a 105,000-square-foot expansion to its 380,000-square-foot Pembroke location, with construction expected to be completed by the end of the year. The current building was constructed in 2006."

The company says that its revenues and customer base have almost doubled over the past decade, making it necessary to expand its facilities.


• Bloomberg reports that the porcine epidemic diarrhea (PED) virus, which has spread to at least 25 U.S. states and killed more than four million pigs, is almost certainly going to result in shortage that will have Americans paying higher prices for pork in 2014 - as much as three percent more, according to government estimates.

Published on: March 5, 2014

• NACS has announced the hiring of Jonathan Taets as its new director of government relations. Taets comes to NACS after several years as legislative director in the office of GOP Congressman Leonard Lance from New Jersey, where he managed the Energy and Commerce Committee portfolio.

Published on: March 5, 2014

Some more responses to my criticisms of Sears and its chairman's delusions of grandeur…

One MNB user wrote:

I use the Sears online website from time to time because I have the store card and it sometimes help to defer the payment rather than go to Amazon.

Unfortunately, they make the online  experience the most difficult one I’ve ever had, whether it be the broken links, missing images or complete lack of descriptions of items.  Using their loyalty program is the most difficult part of the whole exercise, as insignificant as the savings is most of the time.

Most recently, I immediately received an e-mail from a VP at Sears after I sent my order, asking for feedback, but I didn’t have the time or energy to e-mail her with the level of frustration that users face.  I mean – haven’t they ever set up an account and filled up a cart to see how buggy and unfriendly the process is?

My guess is that they’ll make it through one or two more holiday seasons.  They are the biggest promoters of Amazon around.

From MNB reader Kevin Sullivan:

I needed a car battery and headed for our local brick and mortar Sears.  I arrived at the store at 7:15 p.m.  Hundreds of batteries on the wall.  I found the one I needed and tried to pay.  I was told they were sorry but they could not sell me the battery after 7.  The service center was closed.  I politely told them I did not need the service center to put the battery in my car, I could handle the two bolts.  They again apologized and said I could not purchase the batter after 7.  Did I mention there were hundreds of batteries within easy reach?  They did tell me I could order the battery on line and pick it up tomorrow!  Crazy!!  I had to walk over to their competitor in the same mall and purchase a similar battery with a longer warranty for $30 less.  They were happy to sell me that battery at any time of the day.  If you don't go out of your way to service your customer, you will not be in business much longer.  You point of differentiation is only to be difficult to deal with and that is what you would call an eye opener!!

Absolutely.




I wrote yesterday that now that we have Sunday delivery via the USPS from Amazon, I cannot imagine why consumers would tolerate anything less.

Which prompted MNB reader Joe Frindt to write:

In regards to why consumers shouldn’t DEMAND Sunday delivery, perhaps it is because some consumers understand that maybe one day of our already crazy lives should be reserved as best as possible for some sort of worship, family, and spiritual thought as opposed to DEMANDING that your next DVD or package of razors or newest iPhone be delivered right now.  Sheesh, for a guy that talks about his family a lot, I thought you would consider that maybe everyone should get an opportunity to enjoy theirs.

I would think that the USPS folks who are making those Sunday deliveries should be thrilled to have jobs, considering the state of the USPS.

As for "demanding" … I didn't. They offered. I accepted.

I'm old enough to remember a time when everything was closed on Sundays, but the world changed. I think for the better, but I understand that some folks would disagree with that. I think that Amazon, by offering Sunday deliveries, is just keeping pace with the way the world works.




Finally, responding to yesterday's piece about a story that cited 23 beers one must try before dying, MNB reader Mike Franklin wrote:

To a mid-westerner, Oregon micro-breweries would be a mystical and strange world…Beervana even. We actually have 253 micros in Oregon that could challenge any beer on that list…as you well know from your summer visits. We not only have Pinots that challenge the world, but micro beers that challenges our Pinots. If our micros competed at the Olympics, we would get a brew-ribbon made of gold. Since Austin, Texas doesn’t like it that Portland, Oregon claims the slogan “Keep Portland Weird”…we have changed the slogan to, “Keep Portland Beered.”

You're right. Beer is just one of the reasons - but a very good one - that Oregon is my idea of heaven on earth.