retail news in context, analysis with attitude

Yesterday we reported on how CVS agreed to settle a case with the SEC by writing a check for $20 million but not admitting any guilt. I suggested that this was "demonstrably absurd," since I cannot imagine writing a check that large if I were not guilty.

Which prompted one MNB user to write:

Really? Demonstrably absurd?

If CVS thought they had a 65% chance of winning in court, but faced $60MM in fines if they lost, plus significant legal expenses and management time (depositions, etc.), it wouldn't make sense for CVS to settle for $20MM with no admission of guilt?

Noticed that you didn’t ask, how much harm to investors did these actions, if true, cause? Why did the SEC settle for cash with no admission of guilt? Is there deterrence when there's no admission of guilt, or just a sense that the SEC has problems? Did the SEC have a strong case?

Maybe CVS was making a business decision. If they had dug in on principle. would that have been best for shareholders?

All good and legitimate points. I think maybe I was overly glib on that one…

Regarding the retail brand equity story that ran yesterday, one MNB user wrote:

Again Walmart kicks butt despite how bad you run them down, KC. Whole Foods gets on the list only because of organics and surely not because of any value. Once most of these chains get fully into organics, which I believe they will, WF will drop out of the top 20…

Last week we had a story about legislation making its way through Congress that would redefine - for the purposes of health care coverage - a full time work week as 40 hours, not 30. I suggested that Democrats that want to retain the 30 hour limit, saying that few companies would keep employees to 29 hours or less as a way of avoiding health care expenditures, were dead wrong.

And, I commented:

I'm also not sure why anyone would've suggested that 30 hours a week is a full-time job. Where do they think we are? France?

One reader wrote:

I present the case of a Family Practice Nurse Practitioner who works full time (40 hours).  Medical providers in clinics work "sessions," or times during which they see patients.  A session is usually 4 hours, and a work week consists of ten sessions.  A full time provider (100%) usually gets one session for desk time--time to complete patient charts, respond to requests from patients or interactions with other parties such as workman's comp claims people, test results from labs, school sports forms, a different clinic who has seen their patient, a referred specialist, etc. and if they have any organizational role, take care of manager duties, or program updates, etc.  Each patient visit is 20 or 40 minutes depending on the type of visit (this varies by organization) during which it is often impossible to complete all the notes in the electronic record--they are trying to look at you and talk to you and complete whatever physical examination needs to take place--and so at the end of a pretty standard day, there can be 16-24 charts to update, each taking anywhere from five to twenty-five minutes depending upon the complexity and how well the provider knows the patient already.

Taking just the average of those figures (20 charts at 15 minutes each), the full time work day becomes 8 hours of patient visits and four hours of patient charting (leave off the interactions and duties other than patient charting for now).  Thus, the 'full time' work week is nine sessions (36 hours) and 4 hours to complete the additional 18 hours of charting.  Often that four hours of desk time is the only weekday time not scheduled for patients, and so the full time health care provider can only make those doctor appointments for themselves or their family during that one session each week and so that time is given to other pursuits.

So the provider sticks those 18+ hours of charting in wherever they can--after dinner for two hours, on the weekend all day each day . . . you get the idea.

Many providers, as a result, often work .8 (80% or 32 hours with patients) which would create 16 hours of charting for a week's total effort of 48 hours.  Most find they have to knock it back further to have any kind of sane life to .6 (60% or 24 hours with patients, 12 hours of charting).  Remember, their full- or part-time status is based on the sessions they see patients, plus paid-for desk time (which seems to only come with a 100% work time).  Those hours charting and taking care of the extras is unpaid.

For many doctors, the income helps make it possible to work less, though getting health benefits is often no less expensive for them even though that's the business they work for.  (For Nurse Practitioners, the pay does not help them reduce this workload without hardship.)  So, it's great if 30 hours can be "full-time" to allow for at least getting healthcare benefits.

For my profession (retail analyst), a 45-hour work week is normal, and with a few exceptions, I can let it go completely on the weekend.  I don't know how long I'd last if I had a job that required at least 60 hours of focus every week.  My partner is a nurse practitioner; we'd all be a lot happier with a lighter workload for that role--closer to, say, 40 hours a week.

From another reader:

I do not believe that anyone thought that 30 hours is actually a full time job.  At my business, we consider 35 hours as full time though.  I supported the 30 hour definition because I thought it was needed to get employers to offer health care.  In the retail world, most employees generally do not have any benefits.  So making 40 hours the line won't change anything.

Employers already keep 75% or more of their employees as part time.  I guess I am completely baffled as to why there is so much anger about providing health insurance to citizens.  I just had a blood test to confirm a diagnosis; I didn't have to have the test, but I thought I would like a confirmation.  I did not think to ask how much it might cost.  Most of my other blood tests cost less than $300.  When I got the bill I almost went nuts; my insurance was charged $6400 which they reduced to $3300.  I have a $5200 deductible plan...  I wish that as a people we could actually sanely discuss what it would take to have a health insurance system as good as France's!

From another reader:

My daughter graduated from college in December 2012 and like many other recent grads has been unable to find employment in her chosen field (Graphic Design). Instead of giving up, she has gone into a related design field, Retail Fashion Merchandising. Retail has always been a challenging work environment but it just got worse – her employer, a division of GAP, Inc. is now very careful to make sure she never gets scheduled close to the 29 hours a week that would trigger them having to offer health benefits. They are also very careful to avoid giving her enough hours in a day where they would have to give her a meal break – but that’s another story unfortunately.

This strikes me as such a shame. At some point, I imagine, this company could well wonder why your daughter feels limited loyalty to it … ignoring the fact that other than writing her a check, they are doing little to make her feel invested in the entire enterprise.

Now, the importance of getting a check is not to be underestimated. It is better than not getting one. But it makes the relationship largely transactional, and does not take advantage of what can happened when happy and invested employees feel engaged with the process and a sense of ownership about the company.

Responding to our story about Amazon Fire TV, one MNB user wrote:

Amazon is late to the party - I already have Chromecast, Micracast, Apple TV and Roku. But I'll wait until Fire TV is free with Prime, as it should be considering the money they can make through serving up personalized ad content targeted to your family. Now with a voice activated remote, imagine how easy it would be to search for stuff while you're watching TV through voice control. With X-Ray that Amazon already has integrated into Amazon Instant Video they can even make offers - Like the outfit this character is wearing? Available at Order with a click of your remote.

And since Amazon already applied for a patent to ship you products that you did not order but they know you need - Fire TV can help refine that algorithm.

So if you take the data from website browse/purchase, Kindle and Fire TV, Amazon would probably know you're likely to propose even before you do...and ship you an engagement ring via Prime Air drone when you're watching that romantic movie with your love streaming via Fire TV. And you would probably go ahead and do it anyway 1) You were thinking about it anyway and she's already teary eyed from the movie 2) Because you're too lazy to ship it back to them and 3)They gave you a 10% discount on the stone if you keep it. Unbelievable? Maybe not.

When the divorce happens, y'think they'll be able to name Amazon as the co-respondent?

From MNB reader Doug White:

I have been waiting for this introduction ever since you hinted weeks ago that it was coming.  I too received a message announcing the product is available for $99.  I believe that Amazon is missing the mark here, they should be giving the devices away for free – or at least free to it’s Prime members.  Heres why:

The information they will be able to mine from users will be priceless -  greatly exceeding the $99.

The last thing I really need is another set top box to clutter the space around my tv’s. 

For $99 the device should at least include a Blu-ray player, thereby replacing my existing player – a solution to #2 above.

My TV’s do not have built in internet capabilities nor do they have DVD players.  However, each one has a separate Blu-ray player that includes internet capabilities that allow me to receive Netflix.  The added features of Fire TV (music and games) are not useful to me and the the video content offered by Amazon is not that impressive.  For me to use Fire TV now it would need to be free.  However in the future when Blu-ray discs have gone the was of VHS, and their streaming video content equals or surpasses Netflix and I can shop at Amazon – then I will be ready for a Fire TV!!

I must admit that our Fire TV unit showed up last Saturday…but I've been on the road constantly since then, and have not had time to even plug it in, much less test it out.

We had a story recently about how Southwest Airlines has been struggling to maintain some of the differential advantages that have defined its success, which led MNB user Dean Balsamo to write:

Regarding the Southwest article, I used to fly Southwest upwards of 90% of the time for the 25 to 30 trips a year I take for meetings with grocers all over the country. But over the last few years I’ve pretty much stopped using Southwest for a variety of reasons-. I feel that with the AirTrans acquisition a few years back they started to lose some of the magic they had.  I don’t find them particularly business travel friendly these days.. I’m someone who began flying Southwest some 12 years ago on regular basis.. Here  are some of my thoughts about Southwest these days:

Schedule changes seen to happen out of nowhere. Whereas for years I could get non-stops to Portland and Seattle from my airport here in the southwest - those are gone. Now it’s through Phoenix or Denver and even then there’s no advantage to getting out on the first plane since often times the most direct routes or least amount of time spent flying happen on flights either late morning or early afternoon or late at night-nothing connected to any of the patterns someone traveling for business would typically take advantage of. It’s as if they must have done some rationalization of their hubs and decided some didn’t merit as much attention.

Their particular way of using hubs -all short haul flights between various cities means if you’re going to the East Coast you could end up spending 8 hours getting there  from the West Coast who knows how long. It’s a local not an express.. Definitely a turn off if you’re traveling a long distance for work as it can add an extra day or more to a trip, not good if you’re trying to maximize your time in a productive fashion.

Pricing. Not much of an advantage anymore. It used to be but now when I go to check pricing Southwest just doesn’t have the advantage they once had-at least not if you’re booking two weeks out. If you go to Orbitz you’re just as likely to find both a better flight time/connection situation and as good as or better pricing-specially for booking closer to your departure date.

Southwest handling of “situations” like the Midway debacle cited in the article is  poor. Starting about the time they acquired Air Trans I experienced three separate incidents where unexpected events - all weather related - completely threw them off. They had no backup plan. In one case where it was too foggy to land in Oakland…they flew us down to Los Angeles and just dropped us off with no game plan. No, rebooking people on another fight up to the Bay Area, not even a “we’re sorry.” Nothing  I  also remember being at La Guardia a couple of times when delays happened and Southwest didn’t have a clue as to how to take care of customers in an organized fashion, it was a free for all. Unlike say American which has automatically re-booked me on another flight in situations like this.

And then there’s the people-the customers-who fly Southwest. Let’s say it’s like flying in a city bus. Expect anything and anyone to get on board. You might pay for the  Business Select but it doesn’t mean you won’t end up sitting next to the person with the bare feet,  the dude with all the tattoos and surly attitude or Vegas people either coming or going and already drunk, the family of six with children throwing stuff or kicking the seat over and over again without the parents saying anything - in short a slight difference in customer decorum from those you typically fly with on Delta, American or United for instance.

Now I typically fly American. They’re not perfect but overall not bad. They’ve got long haul flights when you need them,  a good hub in Dallas that’s  easy to fly out of, they’ve taken care of me when there are problems-and rebook my flights, while some flight attendants are getting older and look tired the majority are in good spirits and accommodating. They’re getting newer planes on the shorter haul flights. I’m not crazy about their taking on US Air which I tend to avoid but time will tell. Over the years I’ve  gained some rewards status so it’s works  out well.

Delta’s my second choice as I don’t live near one of their busier hubs. I’ll take it if I can’t find the ideal flights on American. Pretty much my airline of choice if I want to get to Portland or Seattle earlier in the day from where I live.   I find them reliable and also pleasant staff all in all.

Alaska Air is one I wish I could fly more. They’ve got some spark to them and younger attendants that are enthusiastic and come across as sincere. Love Alaska Air.

It is amazing that an industry that has spent so much time and money developing loyalty programs has also largely corrupted any sense of loyalty that people might feel toward it. And that's a good lesson for any company operating any sort of loyalty scheme.

On another subject, MNB reader Kendra Riffe wrote:

A friend of mine just posted this on FaceBook. 

“Just received my latest copy of the Yellow Pages. Thank goodness! Now I can find the Blockbuster store located closest to me!”

And that, in a phrase, encapsulates how the world has changed and how business models go from being vital to obsolete.

MNB user Philip Bradley had some thoughts about the changes in Amazon's shipping policies, utilizing the USPS for the last mile:

I was most interested in your reader's views on this subject, probably because my wife has her own business in which she receives important documents and packages through the mail, and has had a wide variety of experiences with the USPS.

Apparently, when her "regular" carrier is on duty, she always gets her mail and packages promptly.  But when he is on vacation, sick, etc., and they have a sub, her mail is often delayed.  Her regular carrier explained that this is because the route is complex, and subs can never finish their work on time--so they leave some of the mail behind for the next day.

In addition, because the USPS is under tremendous financial pressure, and employees experience this in many negative ways, a large number of longtime employees have left or retired, leaving a smaller number of less experienced workers behind--and efficiency suffers, with mail and packages delayed.

Finally, I believe that the primary reason that the USPS is having such difficulty in responding to the challenges it faces is that it is based on the military model of efficiency--very structured and hierarchical.  The military model has never been known for entrepreneurial thinking or action, yet that is precisely what the USPS desperately needs.

Got several emails regarding two stories that appeared next to each other … as one MNB reader wrote:

Wow, I’m really confused!

Genetically modified salmon is resisted because of a concern that it might cross breed with wild caught salmon.

Fake chicken (which no doubt had some genetic modifications, they just aren’t referencing it as such) is ok despite the fact that it had to be recalled.

So….salmon “life’s too short not to eat the real thing” vs. chicken “strides are being made in developing products with mouth appeal” leaves me really considering what the key difference represents.  It seems that both initiatives are focused on ensuring a good, safe food supply for a growing population that taxes our natural resources less than the original model.

I’m always in agreement with your position on transparency, but it really seems to me that the entire GMO issue is being somewhat demonized without discussion around the possibility of benefits to our food supply.

To be clear, I was saying that I think I'd rather eat non-genetically modified salmon … but while I was reporting on the development of meat-substitutes, I wasn't actually saying I would any of it.

Along the same lines, one reader wrote:

You don’t have to be “anti-science” to understand the fundamental truth that food is medicine, and when you change the formula of food it works differently. You are a fundamental influence in this industry, get off the fence on GMOs. You know what’s right!

I don't think I am so much on the fence about GMOs as I am unable to go so far as to say that I cannot imagine circumstances under which it would not make any sense to produce and consume genetically modified food.

MNB reader Jerry Dismore wrote:

How about labeling non-GMO items as GMO free?  The product would be labeled as GMO Free Green Beans, pasta or whatever and elsewhere would be the statement that this product contains no GMO ingredients.  Seems to work for the organic industry.  The dairy industry also uses this for the rBST free claim. 

Then one can easily determine which products contain GMO ingredients.

I'm actually okay with that. At least, I think I am. But I'm reasonably sure there is an argument that "contains GMOs" is the better way to go.

We had an MNB reader tell us recently about a nightmare scenario that unfolded around a bicycle purchase at Toys R Us, where it seemed that store employees had as their goal the desire to drive away every customer walking through the door.

Another MNB reader chimed in:

The horror story about the bike return at Toy R Us really just underlines something…

Something such as a bicycle should never be bought at a big box store! Unless you’re someone who can do your own maintenance, forging a relationship with a local bike shop will pay for itself many times over. On the surface you’re paying less at the big box, but in terms of the quality of the bike and the ongoing maintenance that will need to be done, you’ll pay and pay (in time, money and energy) to get the thing assembled, properly adjusted and keep in it operational shape.  The shop owner at a nearby college town has horror story after horror story about families bringing their young students to town and buying a bike at the local big box only to have to bring it to him to correct everything that’s wrong with it, some of it potentially dangerous problems. If they had bought it there first he would have had it properly set up before it even went out the door, and many times minor adjustments will be done for free for a while after purchase.

This is one of those areas where expertise is worth every penny.

Regarding the Mozilla/Brendan Eich controversy, MNB reader Andy Casey wrote:

Actually, I think it pretty dangerous ground when we start limiting our relationships to only those people we agree with.  If you never hear divergent opinions / thoughts how do you learn anything new?  I mean, what if Congress did that?  Oh wait …

And from another reader:

Your readers' impassioned responses to your Brendan Eich/Mozilla comments are exactly why civil discourse is absent from the gay rights/gay marriage debate.  I no longer discuss it with people because I got tired of being ridiculed/lambasted/bullied/patronized (pick your favorite word) for simply asking questions and trying to find out why people believe what they believe.

I find it interesting that none of the stories I have read about Eich mention that our current president stated very publicly that he believed marriage is between a man and a women around the same time frame as Eich’s donation.  If I am not mistaken, one of our next presidential candidates did the same thing.

All true.

Look, I don't know what is in Eich's heart. I don't find it impossible to simultaneously disagree with his stated position on this issue and wonder if, six years after making the donation, he should've lost his job over it. I also don't find it contradictory to believe that his position infringed on the civil rights of an entire group of people, and also believe that in order to have a civil conversation, we have to understand what the motivations are behind those beliefs.

We had a story the other day about how Chick-fil-A is reinventing itself a bit, leading one reader to write:

Chick fil A consistently demonstrates a best practices example for fast food dining because of the quality of customer service.  Their employees are trained to respond with “it’s my pleasure” whenever a customer says “thank-you” for something.  The franchise owners are usually visible, on the front lines greeting customers.  Most of their stores even have a host, who greets customers, asks if refills are wanted, and offers mints.

Chick fil A’s food is consistent.  They offer several good tasting, low-calorie options for people who are trying to maintain a healthy lifestyle.  As a result of providing good food, good service, and varied options, Chick fil A’s restaurants are rewarded with strong lunch-time traffic.  Doing things right works!

On another subject, MNB reader Kelly Jacob wrote:

I am surprised no one in this current conversation is bringing up the fact that the produce industry faced COOL regulations a while back, didn’t think they could manage it and had all the concerns listed by the meat industry….but they did it.  Why wouldn’t that experience be the roadmap for everyone else especially when it comes to animals and how they are handled in other countries.

If I don’t want to eat a chicken raised and slaughtered in China, I should at least have the opportunity to look at the label and decide on grass-fed beef in the US for dinner instead.

And, on still another subject, one reader wrote:

One of your postings intrigued me to investigate Amazon for a subscription service for dog food. My wife typically replenishes the dog food supply, lugging home a couple of 40 pound bags each month or so that address the age and dietary needs of our two dogs. It seemed to make a lot of sense.

I was able to find the exact same dog food listed on Amazon, only in somewhat smaller sizes, and the equivalent pricing wasn’t even remotely in the game. As much as I love my wife and would like to make her life easier, I can live with her lugging the bags home from the big box pet store.

This is one of those cases where Amazon clearly decided that having a low price on a subscription item didn't serve its broader needs, even if it would've served your wife's. Which is too bad … but, by the way, it strikes me as an opportunity for your local supermarket to make some inroads!

Another Amazon-related email, this one from Susan DeRemer:

This week I had a unique experience with Amazon that has massively increased my customer loyalty, and will cause me to purchase more grocery items there in the future.

I’d purchased some organic spices from Amazon, since my local grocer wasn’t carrying a full range of organic selections.  Received them on Sunday (delivered by a US Postal Service truck!) and put them in the cupboard. 

On Tuesday I received an email alert form Amazon, to inform me that there’d been a recall on one of the spices.  The FDA recall was dated April 4, the same day I purchased the items online. 

Amazon’s incredibly fast alert system insured that my family was not at risk from a possibly contaminated item.  Makes me feel like they ‘have my back’ and I can count on them to look out for my food safety.  Contrast this with an experience of several years ago, where I received a letter (a letter!) by mail from a local retailer, informing me that hamburger I’d purchased 4 months prior was contaminated.  Naturally we’d already eaten it long before getting the letter.

Finally, got the following email from MNB user Craig Ryder:

Was interested to see the NY Times inference that the growth of the discounters in the UK is a function of an economy struggling with slow recovery. Speaking with consumers around the country, I see a paradigm shift. The UK is one of the most 'internet-savvy' economies. The big store formats that Asda, Tesco, Sainsbury and Morrisons operate are therefore proving increasingly redundant - 'all under one roof' has lost it's allure. They require a minimum two hour trip and they are full of items you probably ordered on the internet when the need for them arose.  A trip to Aldi meanwhile delivers a 'Time & Effort' benefit (the whole store visit is finished in under an hour) and, more importantly, delivers better quality than traditional private labels. Add to that a shift in middle class perceptions (for whom Aldi was once a no-go zone but is now almost a badge of honour) and it looks a long road ahead for Britain's 'big four' grocers. Expect to see similar problems for Target, Meijer and Wal Mart as Aldi's aggressive roll out in the US continues!

Thanks for the insights … what you are describing makes a lot of sense.
KC's View: