retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 29, 2014

    by Michael Sansolo

    It’s been said that every one of us has no more than three degrees of separation from someone who runs in the Boston Marathon. On that basis alone, it’s no big deal that our family friend, Larry Chloupek, competed and finished this year. Lots of us know people who competed.

    Except that Larry was the only competitor of his kind and his story is one you need to know. Larry, who lost a leg to childhood cancer, was the only participant to finish all 26.2 miles on crutches.

    Our family came to know Larry about a decade ago when our son was lucky enough to have Larry coach his junior varsity baseball team in high school. Larry was great at teaching skills, sportsmanship, discipline and teamwork. But again, that’s not what makes him special.

    In fact, what makes Larry special is that for his entire life he has tried to never be special.

    When he was seven-years-old, Larry lost his left leg up to his hip due to bone cancer. Larry’s parents emphasized that he was just another kid. So even though his amputation is so severe he can’t use a prosthetic, Larry is the most capable person you’ll ever meet.

    Powering by on his crutches and incredibly strong arms, Larry runs, coached baseball and basketball, and plays golf. He played in the 1996 Paralympics, has completed a bunch of half marathons and, minus the crutches, finds a way to ride a bicycle.

    My son says the most impressive thing he saw his coach do was effortlessly avoid or block foul balls hit his way while coaching third base. I’d argue that it was watching him balance a tray of food and drink in a quick serve restaurant, and scoot between crowded tables without losing a drop.

    I have a feeling many wounded Iraq and Afghanistan war vets at Walter Reed Medical Center near Washington would offer different thoughts. Larry works out with them regularly (he works at the National Institutes of Health) to help with the healing process.

    As I said, he’s the most capable person you could ever meet.

    Larry’s appearance at this year’s Boston Marathon was significant for two reasons. First, it’s an achievement to qualify for and complete the race. (Larry’s wife, Jenn, deserves a special shout out for running with him and completing the course too. It’s something many of us cannot and will not do.)

    But Larry recognized that this year’s race was different, it being the first since the terror bombing in 2013.

    As he told the Washington Post, Larry wanted his appearance to give some of those who lost limbs in last year’s blast a message. “I wanted to give them some strength. They’re new amputees. I wanted to prove a point to them, that despite what happened last year, they can overcome it."

    Larry did all that and more in 5 hours and 20 minutes. Although he admitted to one problem: the near constant ovations he received along the course touched him deeply, leaving him in tears repeatedly as he went.

    Ordinarily, at this point in any column I do my best mental gymnastics to connect whatever story I’m telling to a business lesson. When it comes to Larry, there’s really no effort needed.

    As we were told repeatedly in the movie Forrest Gump, “stupid is as stupid does.” In other words, you are how you act.

    My friend Larry is simply the most able person I could ever know because that’s how he acts. In a world where so many people are famous for doing nothing, Larry Chloupek is now famous for what he did on an April day in Boston to help others through his own example.


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: April 29, 2014

    by Kevin Coupe

    Michael's column this week is a message of hope and optimism.

    This morning's Eye-Opener, not so much.

    Because I find myself disheartened by the degree to which continued racism in this country has been on display over the past week or so.

    There's Donald Sterling, the owner of the Los Angeles Clippers, who seems to bring a plantation mentality to running a sports franchise. And Cliven Bundy, the Nevada rancher accused of owing the US government a million dollars in unpaid grazing fees for letting his cattle feed on federal land, who went from not recognizing the federal government to suggesting that African-Americans might've been better off as slaves.

    Disgusting.

    On the other hand, while the musings of these two people were truly depressing, there was a bright side. With few exceptions, both men's attitudes were almost instantly reviled in the courtroom of public opinion. Which counts, I guess, as some sort of progress. The problem, of course, is that these guys are not alone. They just happened to have microphones thrust in their faces (whether they knew it or not).

    In the case of Sterling, who apparently made racist comments about African-Americans in a conversation with his mistress that she surreptitiously recorded, the commercial impact was immediate. Mercedes Benz, Diageo, Kia Motors, Virgin America, Red Bull, Aquahydrate, CarMax and State Farm all either ended or suspended their relationship with the Clippers, citing Sterling's comments as being unacceptable.

    If there is a business lesson here, it is how fast this kind of ugly discourse becomes public. It is like a wildfire, and there's no way to tamp it down.

    But somehow it seems insufficient to look at this case and take only a business lesson from it. Because there also is a much broader life lesson about the ugliness of intolerance.

    As of this writing, it is impossible to know what will happen next in the Sterling case. The National Basketball Association (NBA) may be legally limited in what its responses can be; even if Sterling can be forced to sell the team, he'll make hundreds of millions of dollars from such a sale. I suspect - or hope - that even if the NBA can't do anything, market forces will work against Sterling.

    Still, there are two Eye-Openers here. One is the degree to which ugly racism still exists in this country, even if it is on the fringes. And the other is the speed of response from people for whom racism and bigotry are unacceptable options.

    BTW…it is worth reading a commentary about racism written by the great Kareem Abdul-Jabbar on the Time website. You can read it here.

    Also…I thought that, as usual, Jon Stewart hit it out of the park last night with his treatment of Sterling, which you can watch here.
    KC's View:

    Published on: April 29, 2014

    Consumer Reports has released what it calls a "nationally representative survey" saying that a "majority of consumers think organic produce should not have pesticides (91% of consumers) or antibiotics (86%). According to the survey, "an overwhelming percentage of consumers (84%) think the use of artificial ingredients in organic products should be discontinued, if not reviewed, after 5 years; few consumers (15%) endorse continued use of the artificial ingredient without review."

    The survey results come as the National Organic Standards Board (NOSB) meets in Texas to consider new exemptions to federal law, which "prohibits synthetic substances in organic agriculture and food processing, including synthetic pesticides, fertilizers, antibiotics, growth hormones and artificial food ingredients," though the law "also allows exempted materials to be used for five years." The concern is that the NOSB could expand the exemption list rather than limit it.

    “Despite the fact that the public does not want a host of artificial ingredients in their organic food, some national advisers and decision-makers in the National Organic Program have overtly expressed a desire to grow the exemption list in order to grow the organic market. We believe this violates the public’s trust of what organic means,” says Dr. Urvashi Rangan, Executive Director of Consumer Reports Food Safety and Sustainability Center.
    KC's View:
    It seems to me that at a time when there is so much discussion about things like GMOs, and concerns about how GMOs can contaminate even organic products, regulators ought to be stricter about standards. But then again, I tend to worry about relaxed standards in general … that because it seems easier, or cheaper, or more profitable, we allow standards to lapse a bit. When that happens, it seems to me, we then end up with things that are not themselves at all. And it is too late to go back.

    Published on: April 29, 2014

    The New York Times reports that Nestlé-owned Stouffer's "is introducing a series of commercials that aim to shift the perception among some consumers that processed frozen meals are not as tasty or nutritious as freshly prepared meals."

    Total frozen food sales, according to a Mintel study, have dropped five percent since 2008, from $8.48 billion to $8.04 billion.

    A company spokesman says that the ads are designed to address "consumer misperceptions over the quality and nutrition that our frozen meals offer," and that it is agreed that the company needs "to educate the people about what frozen meals can offer in terms of ingredient quality and the nutrition profile of our meals.”
    KC's View:
    I was fascinated to read this story, mostly because, when I thought about it, I'm pretty sure that with the exception of a couple of frozen pizzas and frozen french fries, I don't think I've bought any frozen food in 35 years. And they're right - frozen food has the kind of image that means I probably won't be buying any for the next 35. And I'm not sure that any commercials can fix that problem.

    Published on: April 29, 2014

    The Boston Globe reports this morning that Hawaii lawmakers have agreed to raise the state's minimum wage to $10.10 per hour by 2018. The formal vote is scheduled for later this week.

    According to the Globe, "This will make Hawaii the third state after Connecticut and Maryland to raise its minimum wage to $10.10/hour this year … As of Jan 1, 2014, the federal minimum wage is $7.25/hour. Twenty-one states and D.C. have minimum wages above the federal minimum wage of $7.25/hour. Four states, Wyoming, Minnesota, Arkansas, and Georgia, have lower minimum wages below the federal wage floor."
    KC's View:
    Two reactions to this story.

    One … whatever the motivations and intentions, simply raising the minimum wage will do little to address the problems of income inequity in this country.

    Two … 2018?

    Published on: April 29, 2014

    Reuters reports that "Wal-Mart Stores Inc paid about $234 million in debt related to the purchase of a stake in its Indian joint venture with Bharti Enterprises, which the U.S. retailer ended in October last year, according to its 2014 annual report. Wal-Mart, the world's largest retailer, had earlier paid $100 million to take over its Indian partner's 50 percent stake in Bharti Wal-Mart Pvt Ltd, which runs 20 wholesale stores under the Best Price Modern Wholesale brand."
    KC's View:

    Published on: April 29, 2014

    Forbes.com has a long an interesting piece about Denise Morrison, who since 2011 has been the CEO of Campbell Soup, making a priority of creating "a new innovative culture that would address the changes in the marketplace, get better results, and deliver shareholder value."

    In one comment, Morrison talks about the importance of driving decision-making: "We were a culture that spent a lot of time driving alignment, which meant we were talking to each other – and it slowed us down. And some decision-making requires alignment, and some doesn’t. And so, making that determination and figuring out who has the decision? What decision has to be made? Who’s an advisor, and who needs to be informed?  We trained all of our leaders on how to do that. And now we get in the room, we make decisions, and we go. And that’s accelerated our pace."

    You can read the entire piece here.
    KC's View:

    Published on: April 29, 2014

    Bloomberg reports that Energy Transfer Partners, described as the owner of 35,000 miles of natural gas pipelines, is acquiring c-store owner Susser Holdings for about $1.8 billion. According to the story, "the Susser deal builds the company’s retail presence in Texas, where an oil-drilling boom is driving economic growth."


    • In the UK, the Guardian reports that Tesco CEO Philip Clarke "faced fresh pressure yesterday after another rating agency warned of a potential cut to its credit rating. Standard & Poor's (S&P) changed its outlook on Tesco's debt from stable to negative, a move that flags the supermarket is more likely to have its rating cut than raised … The change of stance follows in the footsteps of fellow ratings agency Moody's which on Friday warned it was considering cutting the supermarket chain's credit rating for a second time."

    Tesco is facing a number of issues, including declining sales and market share in the UK, as well as questions about management's ability to cope with current challenges.


    • Whole Foods has announced that it will begin utilizing new technology in one of its Washington State stores that will "be capable of combining outdated perishable foods and produce, blending it into a nutrient-rich liquid, providing it to local farmers for fertilizing crops, living up to the company’s commitment of practicing environmental stewardship as Whole Foods Market states." The equipment is described as "neighborhood-friendly as the machine is clean, odor free, inaccessible to pests and quiet compared to conventional composting methods. The tank can process up to 4,000 pounds daily of scraps coming from meats, bones, produce, flowers, compostable paper products, and fats and oils."

    The equipment was developed by bio-clean technology company WISErg Corporation.


    Salon reports that because of extreme weather has wreaked havoc on the Brazilian coffee business, Starbucks has stopped sourcing beans there.

    The story notes that "Brazil, which is responsible for about a third of global coffee output, in the midst of its worst drought in decades; as a result, coffee production is down, and prices are way up — futures have surged about 90 percent this year. Once the drought is over, things are only expected to get worst: heavy rains anticipated for later this year threaten to further slow the harvest and reduce crop quality."

    While Starbucks is not raising prices at this time, it is believed that eventually the problems will drive up coffee prices for consumers.
    KC's View:

    Published on: April 29, 2014

    MNB had a piece yesterday about the challenges and opportunities facing Amazon, which has seen a lack of profits affect its stock price, as investors seem to get impatient with its strategy of constantly reinvesting in new initiatives.

    Some responses…

    MNB reader Herb Sorensen wrote:

    I think most discussion of Amazon and pricing pretty much totally misses the point.  Of course, ultimately, a company focused on the profits is focused on the present, the immediate connection to the past, from whence the profits come.  Now, if you take away all the Amazon investment in growth, the company would be profitable in a NY minute.  But it IS day one for Amazon.  Walmart is 4X larger than Amazon, and took a long time to get there.  Amazon's share of market remains puny, as a share of a $15 trillion market.  How is Amazon to grow?  It's #1 avenue is research and development - research that learns what the future can be, and development that makes that future the new now, for Amazon.

    I built a small company that grew at 30% annually for 20 years straight - 1989-2009, when I sold to TNS.  MANY times over the years I had discussions with my senior financial advisor about the exact issue at play here with Amazon.  Typically, the conversation would go that if we had reasonable profits we would now have X amount of money in the bank.  My response was, and what would our sales be today if we had done that?  Typically, the answer would be, 30-50% smaller than we were presently.  So my question was, if I was an aggressive entrepreneur, with that amount of money in the bank, and that amount of sales, what would I likely do with that money?  The answer is simple, I would spend that money as fast as I could, to get to the sales I already now have.  And that money would be spent on R&D to build a better mousetrap, and marketing & sales to let the world know about it.  I had already done that, and already had those sales, and was continuing to invest what could have been profits, in further growth.

    I know that Jeff Bezos thinks about many things better than I do.  But on this issue, I believe we are of the same mind.  And I can't understand why business people have such a hard time understanding it.  Most investors are really only interested in the past - the money they are getting to put in their pockets NOW.  But the real winners always live in the future.  I know, I know, predicting the future is hard - particularly the part about saying what will happen.  ;-)  But Jeff Bezos is creating the future - and that's where the REAL profits lie.

    I recommend "Knowledge and Power: The Information Theory of Capitalism and How it is Revolutionizing our World" by George Gilder, on how the "information theory of capitalism" is about accounting of the future, while present accounting systems are obsessively about the past.

    Personally, I'm VERY glad Bezos is always at Day One, just getting starting.


    Me, too. I'm with you 100 percent.

    A different perspective:

    Many of the Amazon apologists will cite the company's penchant for innovation as something that must be taken into consideration in discussions of revenues, profitability and competitive threat. But few ever bother to mention that most of the industries or categories Amazon is targeting offer razor-thin margins, at best. Apple, Google and Microsoft can all afford to experiment and innovate with the same passion as Amazon because they can yawn their way to the bank with highly profitable revenue streams like hardware & services, online advertising and software. Meanwhile Amazon is left trying to crack the code to, uh, home grocery delivery? And even if we declare Amazon the winner of e-commerce, many would argue they have achieved that victory by undercutting the competition at less than sustainable margins made possible by, you guessed it, Wall Street's share price.

    I'm not arguing that Amazon not be taken seriously. I'm merely suggesting that the "Amazon as innovators" argument doesn't seem to get very far when all of their kindred spirits in the tech arena have been pursuing their own innovation agendas, albeit with much more stable, high-margin revenue streams to support their experiments. I wonder if analysts and pundits would be championing Google's or Microsoft's innovation strategies as an excuse for their inability to successfully monetize online ads or software? "Yeah, we know that Google has yet to turn a profit on online ads, but you've to think in the long term like Larry Page does when he's working on the future of driverless automobiles…"

    I can't predict whether or not the market will sour on Amazon (nobody can). And I cannot pretend to know where Amazon will be after the next decade (Jeff Bezos doesn't know that either). What I can say is that Amazon has been doing the retail commerce thing for about 20 years now. For better and worse, that is saying a lot.


    I guess I would make one observation here … which is that I'm not sure it is entirely fair to suggest that people who believe in Amazon's business strategy are "Amazon apologists." And I say that as someone who is constantly described that way.

    I'm not apologizing for Amazon. I just think that that there is a broader strategy at work here, and that maybe different metrics need to be applied to how businesses like Amazon grow in a 21st century technology.
    KC's View: