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    Published on: April 17, 2014

    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.

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

    There was a piece in the New York Times the other day about a Seattle-based investor and entrepreneur named Richard Barton, who has been part of such major internet success stories as Expedia, Zillow and Glassdoor.

    "He is a staunch believer," the Times wrote, "in the opportunities afforded by giving consumers access to data, including Yelp-like reviews and prices, that did not exist before or were closely guarded by professionals. In conversation, he blends business buzzwords like 'transparency' and 'opacity' with the language of liberation movements, using the slogan 'power to the people' to describe the philosophy behind many of his businesses."

    "If we’re doing things for regular folks that make their lives better and save them money and give them transparency, we’re on the side of the angels," he says.

    And here's the quote from Barton that really grabbed my attention: "We live in fear and awe of consumers."

    That's exactly what every retailer and marketer should do. Retailers - in fact, every marketer - should have that sentence emblazoned on a sign and posted in stores, meeting rooms, cafeterias and even bathrooms. It's that important.

    By the way, I'm not usually big on taking retail advice from the investment community - as a rule, I'm more interested in what is happening on Main Street than Wall Street - but I got a note from a friend of mine in the investment community the other day that I thought made an excellent point.

    He was writing about investment opportunities, and he wrote:

    "Investors always say they want opportunity, but the fact is that opportunity is only created when enough investors don't want something - either because they're scared or the investment is out of fashion - and its price falls too low. Real opportunity is unattractive to most investors (and a great investment opportunity like 2008 is positively hideous). On the other hand, a soaring market like 2013, while quite gorgeous, presents little opportunity. At the end of the day, what investors really need is a more volatile, less-than-beautiful environment."

    I'd never really thought about investments in that context before. That's really smart. And I think that the sentiments actually serve as pretty good advice for the retail community.

    Opportunity, the argument goes, can be found when things are tough. That's certainly the retail environment right now … the middle class has less money than ever, the bottom third of the economy continues to hurt, there is more competition than ever before, and much of the competition is coming from unorthodox places.

    Which is why this is the time not to "get back to fundamentals," to use a catch phrase I really hate. If you're not great at the fundamentals, you have no business being in business. No, now is the time to stretch … to find that great opportunity that most people don't see or are too afraid to invest in … to use consumer knowledge to forge new and unexpected connections to shoppers in a way that gives power to the people and puts revenue in your pocket.

    It ain't easy. If it were, in the words of the great Jimmy Dugan, everybody would do it.

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

    KC's View:

    Published on: April 17, 2014

    by Kevin Coupe

    It used to be that there were companies that would help bricks-and-mortar companies go digital.

    Now, Internet Retailer reports that a company named Storefront is engaged in the practice of helping online merchants - ranging from retailers to artisans - find and develop temporary bricks and mortar locations where they can sell their products and services. In addition to serving as a kind of real estate agent to such companies, Storefront also reportedly "can assist with insurance coverage up to $5 million for retail spaces, and promotions," and has more than four million square feet of available space listed on its website.

    The story says that since launching a year ago, more than 1,000 merchants have used Storefront, and generated more than $5 million in sales; its clients have included such well-known names as Nike and Google. And it is doing well enough that the company just completed raising more than seven million dollars in investment capital that it will use to expand in the Los Angeles area.

    The story reminds me of one from several months ago, about how the Mall of America in Minnesota is embarking the notion of showrooming, by rolling out free Wi-Fi for the entire 4.2 million square foot facility and marketing space that retailers can use as showrooms, with the actual merchandise available online.

    What the folks at Storefront really are doing, it seems to me, is managing a convergence … as the distance between physical and virtual stores is reduced, giving consumers and retailers more and more accessible options.

    It is an Eye-Opener.
    KC's View:

    Published on: April 17, 2014

    One of the things we talk about a lot here on MNB is the importance of transparency - not just in terms of product ingredients, but also in terms of company thought processes. It would be my feeling that since consumers have more access to information than ever before, it makes sense for companies to use accessible technology to tell shoppers not just what they are selling, but what they are thinking. Call it a sign of respect.

    Which is exactly what Wegmans is doing when it comes to GMOs. Mary Ellen Burris, the company's legendary senior vice president of consumer affairs, has posted an article on the company's blog that addresses the subject of GMOs is food, noting that Wegmans has "drilled down" on the subject over the past two years, trying to understand both science and perception and make an informed and intelligent decision about how to deal with the issue.

    In the blog posting, which you can and should read in its entirety here, Burris explains the subject in an accessible manner, and then concludes:

    "We believe in offering you choices you can trust that provide health, help and value. We think it is now time for the FDA to officially formalize approval for food produced by GMO technology, before it is released. This would assure us all that all future GMO products meet the well-recognized food safety standards no matter what country or company develops them. We also believe that a national standard should be created for labeling non-GMO products."

    I am sure of several things. This posting will get read - a lot. This posting will generate intense debate from both sides of the issue.

    But mostly, I am sure that I respect the fact that Wegmans is dealing with the subject, approaching it intelligently and treating its customers as if they are intelligent.

    Check it out.
    KC's View:

    Published on: April 17, 2014

    The New York Times reports this morning that General Mills "has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, 'join' it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways. Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site."

    Indeed, the Times writes, General Mills also is saying on its site that anyone who even buys any of its products, ranging from Cheerios to Bisquick, gives up their legal right to sue and instead must go to binding arbitration.

    The move, according to the Times, "made General Mills one of the first, if not the first, major food companies to seek to impose what legal experts call 'forced arbitration' on consumers." A 2011 Supreme Court decision paved the way for such an approach, which has been adopted by credit card and mobile phone companies, among others.

    In a prepared statement to the Times, General Mills said, "While it rarely happens, arbitration is an efficient way to resolve disputes — and many companies take a similar approach … We even cover the cost of arbitration in most cases. So this is just a policy update, and we’ve tried to communicate it in a clear and visible way.”

    However, Julia Duncan, director of federal programs and an arbitration expert at the American Association for Justice, a trade group representing plaintiff trial lawyers, tells the paper that the move is "essentially trying to protect the company from all accountability, even when it lies, or say, an employee deliberately adds broken glass to a product."

    The Times writes that "General Mills amended its legal terms after a judge in California on March 26 ruled against its motion to dismiss a case brought by two mothers who contended that the company deceptively marketed its Nature Valley products as 'natural' when they contained processed and genetically engineered ingredients."
    KC's View:
    Wow. That's a pretty nifty legal argument - simply by doing business with us, you give up your right to sue.

    Look, I'm not a lawyer. So I can't pretend to understand the rationale behind such a Supreme Court ruling, except to say that it seems to me that SCOTUS appears to be in a pro-business cycle. Which is good if you are a business. Not so much if you are a consumer or consumer advocate.

    I guess what I don't know is whether such an approach by General Mills could have a chilling affect on its business, or at least its reputation. Because in essence, the company that just a few weeks ago said that it would eliminate GMOs from its Cheerios flagship brand - appearing for the moment to be on the side of the angels - now is saying that even if it violates that promise, consumers' options are limited. Which, to my mind, makes the promise just a little less impressive.

    Published on: April 17, 2014

    Americans for Tax Fairness, a national advocacy group, released a report yesterday saying that "Walmart’s low-wage workers cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing."

    The Forbes story on the report says that it was completed by "using data from a 2013 study by Democratic Staff of the U.S. Committee on Education and the Workforce," and used numbers from Wisconsin - which estimated that a single Walmart Supercenter's employees cost taxpayers between $904,542 and $1.75 million per year - and extrapolated those figures to the national scene.

    Walmart spokesman Randy Hargrove said the report was "inaccurate and misleading," though he also said that he had no internal numbers on how many Walmart employees receive public assistance.
    KC's View:
    Here's what I don't believe - that Walmart has no idea how many of its employees are on public assistance and what that assistance is worth in real dollars.

    They've got to know that. If only to know how to argue their case when studies like this come up.

    Y'know what else? If Walmart employees only receive half of what the study says they get in public assistance - $3 billion a year - that's still a pretty big number.

    The company likes to talk about the value of work, but how are employees supposed to feel it is valuable if they cannot use their wages to house and feed their families, pay their bills, and help propel their kids into better lives?

    Published on: April 17, 2014

    The Atlanta Journal Constitution reports that Sprouts Farmers Market has plans to open four stores in the Atlanta area - in Snellville, Dunwoody, Norcross and Johns Creek - before the end of the year. It is the Arizona-based company's first foray into Georgia and the southeastern US.

    As the story notes, "In the battle for shoppers looking for ample organic food choices, Sprouts will compete with major retailers such as Whole Foods, The Fresh Market and, increasingly, Wal-Mart, which recently announced plans to offer a wider variety of organic foods at competitive prices."
    KC's View:

    I wonder to what extent the announcement by Walmart and Wild Oats that they intend to make a major push with economically priced organics - as heralded in the YouTube video at left - is going to force other companies with the same agenda to move up their own expansion plans. Sprouts definitely has a niche, and I know a number of folks who like shopping its stores, but it cannot be thrilled with the Walmart/Wild Oats partnership. (Though, I suppose there is an argument that Walmart and Wild Oats are actually expanding the pie, creating a larger marketplace in which everybody does better.)

    Published on: April 17, 2014

    Reuters is reporting that Walmart plans to announce today a new electronics payment service that it will operate with Euronet Worldwide, though specifics were not yet available.

    The story notes that Kansas-based Euronet's main offerings include "automated teller machine and point-of-sale services, card outsourcing and card- issuing services, as well as electronic payment products and money transfer services."
    KC's View:

    Published on: April 17, 2014

    ...with brief, occasional, italicized and sometimes gratuitous commentary...

    • The Food Waste Reduction Alliance (FWRA) - a cross-sector industry initiative led by the Food Marketing Institute (FMI), the Grocery Manufacturers Association (GMA) and the National Restaurant Association (NRA) - yesterday announced the release of a toolkit that it said would "help businesses in the food sector reduce the amount of food waste sent to landfill" by focusing on strategies that "food manufacturers, retailers and foodservice operators can employ to keep food out of landfills, and to reduce food waste at the source."

    “Our goal for the toolkit is to elevate the issue of food waste within the sector and enable more companies to take action by sharing key learnings and model practices gleaned from organizations who are at the leading edge of this issue," says Gail Tavill, vice president, sustainable development for ConAgra Foods and one of the toolkit authors.

    • The Pittsburgh Business Times reports that HJ Heinz "is offering buyouts to its nearly 800 Pittsburgh-based employees with a severance package that apparently gives an out to workers who aren't buying into the new corporate culture," terming it ""a generous opportunity for eligible employees to leave Heinz with enhanced severance benefits."

    The story notes that Heinz has adopted a zero-based-budgeting, efficiency-driven corporate culture since being taken private in 2013 in a $28 billion acquisition by Berkshire Hathaway (NYSE: BRK.A) and 3G Capital. Since that time, it has reduced its national employee base from 31,000 to 29,000, has replaced both the CEO and CFO, is selling or closing three plants, and that "part of its strategy going forward is to reduce operational costs and focus on cash flow generation and deleveraging."

    Yikes. Not to pass judgement here, because I'd hate to alienate the company that makes Heinz 57 sauce, but I have to say that Heinz doesn't exactly sound like a great place to work these days. How many folks are going to the office in the morning worrying that this will be the day that they get deleveraged out of a job?

    • The Wall Street Journal reports that the Sonic hamburger chain plans to add more than a thousand stores to its fleet over the next decade, an ambitious growth plan for a company currently with about 3,500 units.

    Sonic, which operates 1950s-style carhop restaurants in which servers deliver orders on roller skates, currently operates mainly in the South. "In expanding," the Journal writes, "it is making adaptations like building indoor dining rooms in restaurants in colder climates. Many of its new stores will be in California, where the company plans to build 300 by 2020, up from 65 now."

    Sonic vs. In-N-Out? Good luck...
    KC's View:

    Published on: April 17, 2014

    • Kroger said yesterday that it has promoted Timothy Massa, currently the company's vice president of corporate human resources, talent development, to be its group vice president, human resources and labor relations.
    KC's View:

    Published on: April 17, 2014

    On the subject of government regulations, often a topic here on MNB, reader Herb Sorenson had the following observation:

    My job 40+ years ago required daily scanning of the Federal Register.  It was an eye-opening exercise with life-long impact, for me.  Regulation after regulation was a blatant attempt by one business interest to screw another business interest.  The idea that this is all some exercise in looking out for the citizenry is farcical.  Of course, over the years, a lot of faux-consumerists have gotten on board, too.

    This is why the ONLY possible solution is reduction of the size of the citizen crushing machine.  I saw Microsoft go from a young entrepreneurial business to a global lobbying titan.  Why?  Because their business enemies began to use the force of government to attack them, rather than the marketplace.

    The ONLY solution I see to this is to cut total government down to a maximum of 20% of GDP.  If we don't, there is no possibility of being anything but an oligarchical crony capitalist/socialist commune.

    When I was young, I always wanted to join a commune. But I don't think that's the kind of commune you have in mind…

    Regarding the pressure being placed on Walgreens by some investors to move its HQ to Paris to avoid US corporate taxes, one MNB user wrote:

    Born capitalist at heart but how about this to appease both sides: Move to Switzerland, make lots of money, re-invest it in America where the healthcare market is worth billions upon billions of dollars and create more jobs, more wellness schemes and make the country a healthier place with more employment?

    We had a story yesterday about Facebook considering an entry into the mobile payments business, which prompted MNB reader Alex Jackson to write:

    I totally agree with your thoughts. Especially after reading Facebook’s “privacy” terms for their Facebook Messenger app, which basically says you have absolutely no privacy when logged into Facebook Chat on your phone, I can’t help but think that Facebook would give their client’s access to your credit card information, bank accounts, etc.

    And referencing the KFC prom corsage promotion that includes a piece of chicken on the corsage, one reader offered:

    Just what you want to get on your new prom dress, chicken grease stains. Charming. Actually, the bigger concern I would be worried about is the group of teenage food dummies that will take a munch after wearing it unrefrigerated for hours on end, get sick, possibly very sick and the parents sue the chick corsage peddlers.  Some marketing ideas are best left in the coffee room.
    KC's View:

    Published on: April 17, 2014

    This seems like a good moment to thank the folks at the Network of Executive Women (NEW) Denver chapter for all their hospitality when they recently hosted me for a presentation entitled "From Thelma & Louise to Zero Dark Thirty: Women, Business & Business Lessons from the Movies."

    One of the things that I've always been impressed about with NEW is the supportive atmosphere they create for people who attend their sessions, no matter what level they happen to occupy in their organizations. And that came across in spades at the NEW Denver event … from the companies that put money behind this important initiative to the obvious mentoring relationships that seem to exist there.

    And, they had a wonderful idea for an ice-breaker going into the presentation. When people got there, they had to write down on a sticky note - and attach it to their badges - the answer to the following question: "In the movie of your life, who would you want to play you?"

    That's a really interesting proposition, because it tells you a lot about someone's self-image and/or priorities if they choose Meryl Streep vs. Angelina Jolie, Julie Andrews vs. Jennifer Lawrence, or Julia Roberts vs. Tea Leoni. (Yes! There was a Tea Leoni in the group.)

    So thanks to the board of the local chapter - one of NEW's newest, if I understand correctly - for bringing me along for the ride. It was a great time.

    I just finished reading a terrific book entitled "Mad As Hell: The Making of Network and the Fateful Vision of the Angriest Man in Movies," by Dave Itzkoff.

    Now, I'm reasonably sure that a "making of" book about a movie that came out in 1976 won't be considered kind of scintillating reading by everyone. But because I was a film major at Loyola Marymount University in 1976, not to mention serving as the campus newspaper's movie critic, I had a strong connection to the events described in the book. Network, after all, is one of the most prescient movies ever made, with writer Paddy Chayefsky and director Sidney Lumet accurately creating a satiric masterpiece that correctly foresaw so many of the changes that have taken place in the television industry and the news business.

    If you've never seen Network, you should - it erupts with well-placed and well-measured literary bile, as Chayefsky uses his story and unforgettable characters - played by William Holden, Peter Finch, Faye Dunaway, Robert Duvall, and, memorably in two short but extraordinary performances, Beatrice Straight and Ned Beatty - to give voice to his concerns about a world run amok, a society in which the upper five percent gives little quarter to anyone else, and in which the disenfranchised are seeking a prophet - any prophet - to tell them what to do and what to believe.

    The book does an excellent job of chronicling the development and making of Network - it isn't the most imaginative writing, but it doesn't need to be. The story speaks for itself.

    I mentioned my "connection" to the events in the book, and there are two moments that are indelibly imprinted on my memory.

    One was being invited, with numerous other film students, to go to an advance screening of Network on the old MGM lot in Culver City, which was followed up by a panel discussion with Lumet, Chayefsky, Dunaway and Finch. Heady stuff, if you're a 21 year old film students.

    And then, several years later, I remember being in Central Park in New York on a Sunday morning and seeing Chayefsky walking across the park. He was wearing a tan trench coat, was carrying the Sunday New York Times, and seemed to be thinking about weighty ideas (though, to be fair, he may have been deciding where to eat breakfast). And I remember thinking to myself (still starting out in my writing career) that this is what a writer looks like.

    Again, "Mad As Hell" won't be for everyone. But…if nothing else, go revisit the movie … and bask in the presence of film genius.

    As I eagerly await the early May publication of the next Spenser novel by Ace Atkins (who, as has been well chronicled here, has taken up the mantle for the late Robert B. Parker), I note that Putnam, the publisher, and the Parker estate seem to be making a change in authors for the Jesse Stone series.

    Up until now, Michael Brandman - who has collaborated with Tom Selleck on the Jesse Stone movies - has been writing the post-Parker novels. As I've mentioned here before, Brandman does not seem to be a natural novelist, and so they've chosen a replacement for the replacement - Reed Farrel Coleman, a writer with whom I am not familiar, but who is an Edgar nominee, has written a whole bunch of novels, and would seem to be better qualified.

    I note that Coleman already has a series of mysteries featuring a former police detective turned wine shop owner named Moe Praeger … and this sound so promising that I've already downloaded one and eagerly await seeing what he'll do with Jesse Stone, beginning in September with "Blind Spot."

    In the meantime, it's less than three weeks until the new Spenser. "Cheap Shot."


    I have two beers to recommend to you this week … the Venice American Amber Ale, from the Venice Beach Beer Company, which is a really nice amber with touches of caramel … and the Primo Island Lager, from Hawaii, which just great when the sun is up, the beach is nearby and the last thing on your mind is work.


    KC's View: