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    Published on: March 26, 2014

    by Kevin Coupe

    Variety has a story this morning saying that "the number of frequent moviegoers in the all-important 18-24 age group plunged an unprecedented 21% in 2013, according to MPAA annual statistics released Tuesday … while attendance in the 12-17 age bracket also saw a precipitous drop off, falling almost 15%." The story concludes that formerly frequent moviegoers "from 12-24 are likely spending much of their previous moviegoing time watching a variety of other screens."

    To me, this is the kind of story to which every business needs to pay attention, since it reflects a broader demographic trend - young people who used to be committed to a certain kind of behavior, on which an entire industry depended, changing that behavior in ways that cannot help but change that industry.

    In this case, we're talking about the movie business. But there's no reason to think that pretty much any other industry would not be vulnerable to the same kinds of seismic shifts.

    Now, I would argue - probably because I am a man of a certain age - that this may end up being a good thing. Too many movies, in my view, have been targeted specifically to that 12-24 demographic. Too many car chases and explosions, too little characterization and legitimate drama. If this target demographic no longer can be counted on, it will mean that the movie industry will have to get more diversified in its tastes, painting with different brushes, using different colors, and appealing to different audiences with a greater variety of product. (Or, the industry will just double down, offering faster car chases and more explosions as a way of getting the target demographic back into theaters, which may work in the short term but is not, in my view, a sustainable strategy.)

    Meanwhile, the movie industry has to figure out how to make the theater experience a more compelling and attractive one, and how to embrace the technology that make it possible for these young people to consume content on their own terms (and still make a buck).

    There are lessons to be learned here by every industry. It is about understanding that the next generation of consumers may have absolutely no fealty to traditional consumption methods, and figuring out how to compensate for these changes.

    The changes are an Eye-Opener. The mistake is keeping your eyes closed and ignoring broad consumer trends that are inevitable.
    KC's View:

    Published on: March 26, 2014

    Salon has an interview with a Walmart assistant store manager who talks about Walmart's approach to overtime, chronic understaffing in its stores, and regulatory changes that he says could have a dramatic impact on his work-life balance.

    An excerpt:

    "What the average customer sees in the store is forcing the manager to step out of that manager role, and into that hourly associate role. So you’ll have managers that are cashiering, stocking shelves … We’re trying to take care of our managerial duties too … As a salaried manager, if I’m [moving] freight all night long, I’m not able to give my associates in the building the attention that they need, or you know, the developmental process … [to] grow within their role within Wal-Mart. You know, it makes the job very hard to do … If you have a manager that’s running a cash register, you know that manager is not on the sales floor ensuring that product is on the shelves. You know that manager is not able to respond to customer calls as quickly …

    "So I think customer service definitely does lack."

    It is an interesting interview, and you can read the whole thing here.
    KC's View:
    Listen, there's no question that Salon is a site with a point of view, but I also think that the scenarios described by the assistant manager seem entirely credible - that Walmart is at a point right now that in its stores, there is such a focus on cutting costs that its people spend all their time putting out fires and almost no time trying to build a structure of growth. Such an approach can only go on for so long before the structure collapses under the weight of ineffectiveness … efficiency will only get you so far.

    Published on: March 26, 2014

    Amazon customers who bought e-books from the company between April 2010 and May 2012 have begun receiving credits from the company this week, informing them that it is their share of a $166 million antitrust settlement in a case that charged Amazon, Apple and five publishers with colluding to raise e-book prices.

    According to the Wall Street Journalstory, "The civil antitrust lawsuit filed in April 2012 alleged that the five publishers and Apple conspired to raise e-book prices in a bid to stop Inc. from pricing digital best-sellers at $9.99. Publishers worried that the heavily discounted $9.99 price threatened the perceived value of physical books, particularly hardcovers. Numerous states later filed lawsuits seeking refunds for their residents."

    Amazon has not been found guilty of any wrongdoing, and the credits it is issuing are from the involved publishers, which settled the case. Apple has not settled, however, and continues to fight the accusations in court.

    The email sent to the Content Guy read, in part:

    Good news! You are entitled to a credit of $16.56 for some of your past Kindle book purchases. The credit results from legal settlements reached with publishers Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin in antitrust lawsuits filed by State Attorneys General and Class Plaintiffs about the price of eBooks.

    You don't have to do anything to claim your credit, we have already added your credit to your Amazon account. We will automatically apply your available credit to your next purchase of a Kindle book or print book sold by, regardless of publisher. The credit applied to your purchase will appear in your order summary. If your account does not reflect this credit, please contact Amazon's customer service … Your credit is valid for one year and will expire after 03/31/2015. If you have not used your credit, we will send you another email 90 days before it expires to remind you that it is still available.

    "Consumers will receive $3.17 for each New York Times best seller and 73 cents for all other titles," according to the Journal.
    KC's View:
    Nice to get some money from Amazon, instead of the other way around.

    Published on: March 26, 2014

    Reuters writes that a new report issued by the US Senate Commerce, Science and Transportation Committee says that "Target Corp missed multiple opportunities to thwart the hackers responsible for the unprecedented holiday shopping season data breach," and ignored warnings that would have allowed it to prevent consumer data from being stolen by hackers.

    According to the story, "the staff report said Target 'failed to respond to multiple automated warnings from the company's anti-intrusion software' that 1) the attackers were installing malicious software and 2) they were planning escape routes for the information they planned to steal from the retailer's network. It also said Target gave access to its network to a third-party vendor that did not follow accepted information security practices."
    KC's View:
    The willingness of people to accept anything less than total vigilance is a lot less that it used to be … and companies are going to have to work together and with the government to design a system that stays ahead of the bad guys. It isn't just a matter of economics….it is a matter of national security.

    Published on: March 26, 2014

    A website called PFHub has a piece suggesting that big box stores such as Walmart and Target may soon legal services to their suite of offerings as they look to expand their appeal and draw customers into their stores.

    The story says that "Paul Paton, a law professor and a vice-provost at California’s University of the Pacific in Sacramento, hypothesized that lawyers, in order to remain competitive in a highly competitive industry, will likely offer their services next to tax professionals and pharmacists in big-box retail outlets in the not-so-distant future."

    The reason? Well, once again it is the Internet, where consumers can find vast amounts of legal information, therefore making them less willing to visit traditional law offices and may high legal fees. This, the story says, "is part of the reason why the average lawyer will need to stay ahead by serving its potential clients in unconventional ways." In much the same way, one supposes, that health care companies are opening medical clinics inside retail stores as a way of being more accessible to patients.

    Paton also sees potential problems, among them: "Despite the inevitability behind it, there still remains the ethics: how can a lawyer be loyal to clients when it is employed by a multinational corporation like Walmart, which has shareholders on the stock market to answer to?"
    KC's View:
    Nothing would surprise me.

    Published on: March 26, 2014

    Outside magazine has a story about the first Trader Joe's store to be opened in Boulder. Colorado, and how the much-vaunted chain may not be everything it is cracked up to be.

    "Trader Joe's isn't hawking health food exclusively," the story says. "Even so, its marketing certainly exudes an aura of clean livin' goodness. Plus, its website claims that its privately branded products - those with the TJ's label - contain 'no artificial flavors or preservatives,' and no 'synthetic colors, MSG, trans fats or genetically modified ingredients.' They also tout vegan, kosher, gluten-free, low-sodium, and fat-free alternatives. Tantalizing!"

    The problem, the story suggests, is that there is "a long list of Trader Joe's private label products that contained questionable preservatives - sodium phosphate (Pulled Beef Brisket), trisodium citrate (Bacon Cheddar Cheese), sodium lauryl sulfate (Bibimbap Bowl), sodium phosphate (Pork Roast Florentine)…"

    And while the writer says that Trader Joe's employees are engaged, engaging and anxious to please … even if she found it hard to answer some of the questions being raised by the writer, who concedes that the standards in Boulder may be higher than they are in many other regions.

    Interesting story, and certainly contrary to conventional wisdom about Trader Joe's … and you can read it here.
    KC's View:

    Published on: March 26, 2014

    The Conference Board said yesterday that its consumer confidence index "shot up to 82.3 this month from 78.3 in February," and said that this is "its highest level in more than six years."

    According to the story, the report "added to indications that some weak economic data in recent months were caused by unusually bad weather and were not a harbinger of a more protracted slowdown … Over the last few weeks, government and private reports have shown economic activity accelerating. Retail sales and factory growth were up in February, and the labor market also rebounded after lackluster job creation in December and January."
    KC's View:

    Published on: March 26, 2014

    • The Cincinnati Business Courier reports that Kroger is teaming up with the Cincinnati Reds to create "Reds Home Team" brand that will include bottled water, Italian ices, potato chips, peanuts, brat buns, corn dogs and soft pretzels. Some of the items (water, chips, ices and peanuts) are available at Great American Ballpark, where the Red play; all of them are available at area Kroger stores.

    “We’ve been a Reds sponsor for over 60 years, and this is two hometown teams partnering together,” says Kroger spokeswoman Rachael Betzler. “It made sense to bring the Reds brand outside the park, as well.”

    • The Chicago Tribune reports that Walgreen Co. has decided to close down 76 unprofitable stores around the country "as part of a plan to save $40 million to $50 million per year beginning in its fiscal 2015 … Including the closures, the company still plans to have a net increase in store count in 2014 of between 55 and 75 locations. It operates 8,210 drugstores nationwide, 138 more than a year ago."

    Exact locations have not been disclosed. The stores will be shuttered by August, the company says.

    • The Newark Star Ledger reports that John Mortiz, the former senior VP-marketing at A&P, has pleaded guilty to one count of wire fraud, and faces as much as 20 years in prison and $250,000 in fines in a case in which he was accused of using company money "to buy tickets to hot concerts, sporting events and Broadway shows as a reward to star employees, but ended up just rewarding himself instead."
    KC's View:

    Published on: March 26, 2014

    • The Cincinnati Enquirer reports that Dick Graeter, the former CEO of Graeter's Ice Cream and the guy who created the company's popular black raspberry chocolate chip ice cream, has passed away at age 83.

    The Enquirer obituary says that "the heart of Dick Graeter's tenure as the head of his family's ice cream company was figuring out how to maintain the traditional way of making Graeter's 2 or 2 1/2 gallons at a time … When Dick Graeter took over, the ice cream was still being made in 80-year-old cypress pots. He worked to improve and modernize the equipment without changing the ice cream-making process. Since no other manufacturer had made ice cream the same way for years, there were no machines to buy. He had stainless steel versions of the pots made by a local washing machine company, experimented with Italian gelato makers, and finally began having machines custom-made."
    KC's View:
    Never had the chance to meet Dick Graeter, but I've had more than my share of his ice cream … and my sense is that when it comes to an outstanding brand like Graeter's, tasking the brand is like knowing the person.

    Published on: March 26, 2014

    • Family Dollar Stores said yesterday that it has named Brian Hancock, president of The Martin-Brower Company, a food supplier to fast food chains, as its new senior vice president-supply chain.

    • Crossmark, the sales and marketing services company, has named Ben Fischer, its president/COO, to be its new CEO, succeeding the retiring Joe Crafton.
    KC's View:

    Published on: March 26, 2014

    There was an MNB reader the other day who accused me of being obsessed with Amazon, suggesting that I couldn't go a day without writing about the company.

    Frankly, I didn't even debate the point …I just think it is a compelling and fascinating retail story that seems to reveal new chapters almost every day.

    Well, another MNB reader decided to apply a little scientific theory to the issue:

    I agree, Amazon is an on-going story. One of many.

    However, just to test a theory, I ran all 5 of last week’s MNB articles through a word counter. I excluded all ads, but did include the commentary of your fellow MNB writers as well as all posted “your views.”

    The details and density are below.

    Amazon is the third most used word for the week. The only words with more frequency are “story” and “food”. All of the top 10 you would expect to see considering the content and nature of your site – Reports, Business, Company etc, but Amazon is the only Name that hits the top 10. Even MNB isn’t in there.

    So – Obsessed? Or simply paying attention?

    I guess it’s a matter of writing it… or having to read it, over and over again.

    13152 Words
    76753 Characters
    63859 Characters (no spaces)
    Sentences 567
    Paragraphs 451
    Avg. Sentence (words) 24
    Avg. Sentence (chars) 136

    Keyword Density
    51 (1%)story
    44 (1%)food
    43 (1%)amazon
    36 (1%)reports
    30 (1%)business
    30 (1%)company
    28 (1%)stores
    27 (1%)customers
    27 (1%)people
    25 (1%)time

    Well, I hope folks don't think they are reading the same story over and over. My goal is to do stories that look at the company from a variety of angles … but it also is to provoke people to think about their own businesses from a variety of perspectives, and often Amazon provides a good prism through which to examine one's own efforts.

    I used to get emails complaining that I wrote about Walmart too much, and then Tesco, and at one point the complaints were about Apple.

    To be honest, there isn't much I can do about it … and there isn't much I want to do about it. MNB is, as much as anything, a reflection of my own tastes and interests, and I hope that it is illuminating more often than not. If I get to the point where I start counting anything, I'm not going to be doing what I think is my job.

    On another subject, MNB reader Philip Herr wrote:

    Interesting juxtaposition of stories. One about hacking our information and the other about handing over our daily routines in order to get weather reports – and risk that information being stolen, giving thieves the schedule for break-ins. I don’t plan to sign on.

    Excellent point. I didn't see the juxtaposition … but you're absolutely right. There is a point when all this information sharing is going to be too much.

    Responding to our story about Walmart saying that public assistance cuts could impact its bottom line, one MNB reader wrote:

    Walmart was losing low end customers to dollar stores regardless; could the complaint about public assistance cuts be a case of Execs conveniently blaming "government" for soft sales, rather than face competitive reality?

    Dollar stores are better & better merchandised, with better & better stock management logistics, broader & broader product lines- and less & less stigma attached to shopping there.

    Walmart has 'moved up' - their stores are no longer 'low rent', nor is their clientele. That may imply the opportunity/risk to become 'the Sears' of this era.

    And marketers know there are risks to being in the middle.

    At the risk of another mention of Amazon, here's another email from an MNB reader:

    For whatever reason, I haven't got around to renewing my Amazon Prime membership. I always loved it, but after it was cancelled I looked at my usage - which was less than 20 orders -- and decided to go it alone.

    So far I have placed two orders and have had no problem at all buying enough stuff ($35.00) to qualify for free shipping. Oddly though, in both cases the checkout communications read "Free two day shipping"  The first package came in the advertised two days. My most recent package -- ordered yesterday in the AM -- just showed up at my door this (Tuesday) afternoon. Once again, Amazon is exceeding customer expectations. But the box I am looking at reads "Amazon Prime for free two-day shipping!"

    Clearly they are at an odd place. At this point, the only real benefit I can see from Amazon Prime is the ability to buy something small (i.e. a computer cable) that is less than $35.00 and still qualify for free shipping. Even in these cases though, shipping is usually $3.99. At this rate, I could still make 10 "one item purchases" (i.e. less than $35.00) with shipping @ $3.99 and still come out $40.00 ahead for the year.

    But the point remains: How to differentiate Amazon Prime when you are offering "Free two day shipping" on many - if not most - orders over $35.00. They are delighting me - to the point that they have rendered Amazon Prime all but irrelevant to my shopping habits.

    KC's View: