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    Published on: May 9, 2014

    by Kevin Coupe

    Mashable has a story about the mixed results that AOL is achieving as it works hard "to reinvent itself as a modern digital media and advertising company."

    But what grabbed my attention was the following Eye-Opening number - that AOL membership fees, generated by 2.4 million dial-up internet customers around the country, generated $196 million in revenue last year, and $138 million in profit, which was a significant portion of the company's overall revenue and profit numbers.

    That's interesting.

    Because a lot of people - and I would count myself as one of them - talk about the internet and e-commerce as if everybody has broadband access. Which clearly they don't. For reasons of geography or economics, some people still are accessing the internet the old fashioned way.

    Which tells us something Eye-Opening about both geography and economics.

    This story comes on the heels of a Los Angeles Times story about a United Nations report saying that while close to three billion people on the planet will have access to the Internet by the end of the year, that means that "60% of the world's population -- about 4.2 billion -- will remain unconnected … The report says 78% of people in developed countries are expected to have access to the Internet, but in countries that are still developing, the percentage of connected users drops dramatically. In those countries, only 32% of the population is expected to have access to the Internet by the end of the year."

    Lots of work to be done. Because you can't be competitive without internet access, and as so many of us have discovered - and often take for granted - broadband changes everything.
    KC's View:

    Published on: May 9, 2014

    The New York Times reports this morning that Amazon has begun discouraging customers from buying books published by Hachette Book Group, telling shoppers that they may have to wait weeks for the books - written by the likes of Malcolm Gladwell, Stephen Colbert, James Patterson and JD Salinger - to become available.

    According to the story, Hachette says that the problem is at Amazon's end - that it is doing its best to keep the e-tailer supplied with books, but that Amazon "is determined to squeeze as much margin out of its suppliers as possible … For at least a decade, Amazon has not been shy about throwing its weight around with publishers, demanding bigger discounts and more time to pay its bills. When a publisher balked, it would withdraw the house’s titles from its recommendation algorithms."

    Amazon did not comment on the story to the Times.
    KC's View:
    If true, and Amazon is squeezing publishers at the expense of its customers, then my question is what the hell happened to Amazon's customer-centric culture.

    This is the kind of crap that can undermine a company's culture and subvert its relationship with shoppers. Even frequent shoppers. And can make it vulnerable to competition.

    I have no problem with retailers pushing back against manufacturers that are looking for unreasonable increases. That's fine. But that doesn't sound like what is happening here.

    The game has to be played with both fear and arrogance. Arrogance is fine, but only when it it tempered by fear.

    Arrogance alone can be a first step to oblivion. Amazon should walk carefully.

    Published on: May 9, 2014

    The Associated Press reports that President Barack Obama today will appear at a California Walmart "to announce commitments from more than 300 companies and local and state governments to use solar energy technology. He also was announcing executive actions aimed at increasing energy efficiency in buildings and appliances. The White House says the solar effort will power the equivalent of 130,000 homes and the administrative actions could reduce carbon pollution in an amount equal to taking 80 million cars off the road for one year."

    The story says that the White House "chose Wal-Mart because the company has committed to doubling the number of solar energy projects at its stores, Sam's Clubs and distribution centers."

    However, the decision to use Walmart as a backdrop for the announcement, and highlight the company's energy conservation commitments, drew fire "from labor unions and pay equity advocates who say Wal-Mart pays low wages and who archly noted that Obama has made pay equity a central issue of his presidency."
    KC's View:
    I get that organized labor is duty-bound to object, but at some level I think they have to take a chill pill. No organization - no company and no union - is all bad or all good. You can ask legitimate questions, I think, about Walmart's labor practices, but I think one has to concede that it has been highly aggressive and progressive when it comes to many environmental issues. I refuse to look at the Bentonville Behemoth as being a black-or-white entity.

    Published on: May 9, 2014

    The New York Times reports that RadioShack said yesterday that it has been unable to come to an agreement with its lenders that would have allowed it to close 1,100 stores, which it had said it needed to do in order to turn the company around.

    According to the story, "The company’s credit agreement allowed it to close only 200 stores a year and up to 600 over the life of the agreement … In a document filed with the Securities and Exchange Commission on Thursday, the company said that its lenders were demanding terms that it could not accept, and that was why it would scale back the reorganization."

    RadioShack currently operates 4,300 stores. The Times notes that "in its last fiscal year, RadioShack reported a loss of $400 million, a substantial slide from its loss of $139 million the year before."
    KC's View:
    This is going to make it a lot harder for RadioShack to live up to its recent promise to make its stores relevant to 21st century needs and shoppers. Look for the company to go into bankruptcy at some point as the numbers making continuing the way it is almost untenable.

    Published on: May 9, 2014

    There is a wonderful story in The New Yorker about entrepreneurial efforts to create food that isn't … developing products that can replace traditional foods with something far more utilitarian. The focus of the piece is Rob Rhinehart, who has decided to call the product "Soylent" - a reference to the old Charlton Heston movie, Soylent Green, which some may find to be an unfortunate reference.

    An excerpt:

    "Soylent has been heralded by the press as 'the end of food,' which is a somewhat bleak prospect. It conjures up visions of a world devoid of pizza parlors and taco stands—our kitchens stocked with beige powder instead of banana bread, our spaghetti nights and ice-cream socials replaced by evenings sipping sludge. But, Rhinehart says, that’s not exactly his vision. 'Most of people’s meals are forgotten,' he told me. He imagines that, in the future, 'we’ll see a separation between our meals for utility and function, and our meals for experience and socialization.' Soylent isn’t coming for our Sunday potlucks. It’s coming for our frozen quesadillas."

    You can read the entire, excellent story here.
    KC's View:

    Published on: May 9, 2014

    Bloomberg has an interview with embattled Tesco CEO Philip Clarke in which he says that after three years of declines in revenue, profits, share price and market share, he believes that the best way to turn things around is to emulate the likes of Amazon and Apple, rather than discounters like Aldi that have been making his life miserable.

    According to the story, "Rather than battle retailers like Aldi on price, Clarke is modelling Tesco on the tech giants, building a digital one-stop shop centered around its Hudl tablet that includes everything from movies to banking. A smart phone will join the stable later this year. The aim? Lock in customers by incentivizing them with loyalty points to buy everything from mortgages to grapes from the Cheshunt, England-based retailer."

    Clarke says, "“I see competition emerging from non-traditional retailers and I watch all of them … I’ve always been impressed with Amazon” and its execution.
    KC's View:
    There are a lot of moving parts here, and I have no idea whether Clarke can make this work - online sales in the UK are a small part of the whole, and he may not have the time or the room to achieve the kind of change he needs to get in order to get Tesco headed in a sustainable and positive direction.

    That said … I always have believed that it is folly for Tesco to try to out-discount Aldi or Lidl. It traditionally has stood for something else - sharp prices, but also a compelling, relevant offering that made its stores the first stop for many UK shoppers. Clarke has to clear away the clutter and redefine the path of least resistance between Tesco and its shoppers … which isn't nearly as easy as it sounds. It is, however, critical to being competitive.

    Published on: May 9, 2014

    • The Chicago Tribune reports that "a few hundred fast food workers in Chicago on Wednesday voted to join a national one-day strike against their employers on May 15. Strikes are planned for 150 cities, including New York City. The national strike was announced at an event there at midday on Wednesday."

    According to the story, "The workers say they want $15 per hour wages and to form a union that would bargain over benefits and wages on their behalf. Fast food workers in Chicago make about $8.25 per hour, the state’s minimum wage."


    • IGA yesterday announced that it has joined forces with Wounded Warrior Project (WWP) in its fourth annual IGA Exclusive Brands donation initiative. During this national campaign—running in participating IGA stores from Memorial Day Weekend (May 26) through Labor Day weekend (Sept. 1)— a number of WWP co-branded IGA Exclusive Brand products will be available for purchase in participating IGA stores. By fall of this year, IGA plans to donate $250,000 to WWP.


    • The New York Times reports that The Kellogg Co. has agreed "to drop the terms 'all natural' and 'nothing artificial' from some products in its Kashi line as part of a settlement agreement ending a class-action lawsuit."

    According to the story, "Plaintiffs in the lawsuit, filed in 2011 in California, said the company used those terms on Kashi products that contained ingredients like pyridoxine hydrochloride, calcium pantothenate and soy oil processed using hexane, a component of gasoline. Such ingredients occur naturally — wheat germ and flaxseed are sources of pyridoxine hydrochloride, for example — but food companies, as well as makers of vitamins, often use synthetic versions to control costs and ensure consistent supplies."

    Kellogg's says that it stands behind its ad and labeling practices, but will change the labels in order to end the suit. The company also is writing a $5 million check to resolve the suit.
    KC's View:

    Published on: May 9, 2014

    • Hudson's Bay Company said yesterday that it has hired Paul V. Beesley as its new CFO. Beesley is a former executive with Empire Company Limited, where he spent part of his tenure as Chief Corporate Development Officer for Sobeys Inc.
    KC's View:

    Published on: May 9, 2014

    Regarding my criticisms of Target earlier this week, MNB user Brian Blank wrote:

    So…I’m sensing a theme here:  Target stores in the Northeast have serious issues.  Like your recent experience in Connecticut and your reader’s experience in New Jersey, my local experiences here in central Connecticut have been mediocre for some time and have gotten worse over the past 1-2 years.  Out-of-stocks are at absurd levels, no matter when I’m in the store—worse than Walmart and Stop & Shop, who both have issues as well.  At least once the merchandise I needed was in the back room, but no one bothered putting it out—and it was an item that comprised the lion’s share of an endcap display on the main ‘racetrack’ aisle.  Like others have noted, it is very common to walk into the store and find few or no carts available, and the rack for the hand baskets is almost always empty.  (Insert obvious hell-in-a-hand-basket joke here.)

    Compounding these day-to-day operational problems are examples of utterly clueless merchandising and missed opportunities.  When a customer walks into the New Britain, CT store, directly in front of the shopper (just past the empty basket rack and  empty cart corral) is an expanse of shelves that gives the appearance of being empty, even if it isn’t.  Tiny bottles of nail polish are arrayed there amidst massive white space.  It is the opposite of attention-getting—except in a negative way (“This store is empty.  Are they going out of business?”).  As for missed opportunities:  last fall I was in suburban Atlanta for a wedding, and had to run into the Target that was next door to my hotel.  Right inside the door, where the shopper pauses to decide forward for soft-goods or right for home/pharmacy/CPG, there was a prominent alcove merchandised as a ‘boutique’ for local college teams’ merchandise (tees, sweatshirts, etc).  I have never seen an effort like that in a New England (or Midwest, for that matter) Target store.

    In fairness, I must point out one problem that Target has addressed (at least in this market—can’t say if this is nationwide):  prices.  A couple of weeks ago, I had the adventure of doing major stock-up trips to both Walmart and Target in the same day, and having gone to Walmart first, I saw that Target had brought quite a few of its prices down to be in line with Walmart’s—and on at least one item was actually undercutting Walmart by $3 and change—on an everyday price, not a promotion.  This was my first trip into a Target since news of the data breach, so I was quite surprised.  Last year, I was seeing such a price differential that I started going to Target ONLY for specific items/brands that aren’t available at Walmart because even with the 5% Target Card discount,  they were still way higher than the same/comparable item at Walmart.




    On the subject of GMO labeling, MNB user Mike Franklin wrote:

    I find politics entertaining…when the Feds try to regulate something…the opposition stands up and shouts…the individual states should deal with the issue not the Feds…or when the states try to regulate an issue…the opposition stands up and shouts…the Feds should regulate this, not the states.  Quite frankly, sometimes I wish neither would do anything, because either’s actions typically mean somehow I’m going to take it in the shorts…

    Good Luck at PSU…and I’ll bet a beer that Oregon has a GMO Initiative on the ballot this November…

    As Mark Bittman stated, “the goal is to eat healthier and to eat foods that are sustainably grown.”  GMO labeling allows me to choose foods that do not contain herbicides…even though my government, the food industry, food manufacturers, and herbicide manufacturers assure me that eating herbicide is not harmful to my health. Please let that be my choice.


    From another reader:

    The argument against GMO labeling that food costs will increase is weak.  What was the cost incurred when other labeling requirements were initiated?  I would argue, though I don’t know for a fact, that nutrition labeling increased the cost per household by far more than GMO Labeling is slated to.  Regardless of whether it was more or not, the labeling empowered citizens to take control of their health and make informed choices on which products to purchase.  GMO labeling is no different.

    And another:

    Not sure where it’s going to end up but seems similar to all the confusion around organics back when they first came out.  I cannot see how each state would impose their own version of GMO labeling that would be an absolute nightmare someone needs to step in.  I think it’s just something as simple as the labeling that alerts consumers of certain items that were packed in an environment that could lead to a trace of peanut in the ingredients which is much more critical since some people have life threatening allergies to peanuts.  Maybe for all the tree huggers it should also say “GMO free but contains soybeans sprayed with 10 times the amount of herbicide than genetically engineered soy beans – enjoy!”




    Responding to our story about how FedEx is going to change its pricing in a way that could have a negative impact on e-commerce, one MNB user wrote:

    Weight and cube impact shipping costs? Welcome to supply chain. This will be the biggest hit to e-tailers since sales taxes.

    And another:

    You will hear from people far smarter in logistics than I but this makes sense. Trucks often cube out before they weight out and ignoring the former means lost revenue for Fedex.

    And still another:

    I understand why Federal Express and UPS want to encourage shipping smaller packages.  When the full space of an airplane or delivery truck are considered, it is more profitable to fit as much as possible into the finite spaces.  The result is going to be that average people will see it as sport to see how much they can cram into smaller boxes.

    MNB reader Ken Hayden wrote:

    How many packages do you get that have more "filler" than product? I get lots. Big box with lots of crumpled paper or styro peanuts or those bags of air as "filler" to prevent damage. Multiply all those boxes filled with mostly nothing with how many are on FedEx trucks and planes and you have a pretty big bunch of ....useless emptiness taking up space. Space that is increasingly becoming needed for FedEx to remain competitive and efficient. 

    Not in every case, but there are many instances where items could be packed into smaller boxes and save much space. Could result in more packages on fewer trucks. A win for everyone even the environmentalists. Fewer trucks could result in fewer drivers so maybe not a win for everyone, but more packages could result in more handlers.

    KC's View:

    Published on: May 9, 2014

    For decades, one of the best moments of any year was when the newest Spenser novel by Robert B. Parker would arrive at my door. It was an annual event, and I couldn't wait to crack open a beer, settle into a chair and begin to read. Inevitably, the first chapter would begin with a client walking into Spenser's office, or Spenser going to visit a prospective client … and from there, we were off … into what I always knew would be a solid, entertaining novel filled with witticisms, descriptions of good food and drink, colorful Boston characters and a sardonic world view that I found in synch with my own.

    Parker, of course, died in 2010. But his Spenser novels have remained robust and alive, thanks to the work of Ace Atkins, a southern novelist who is just out with his third Spenser novel, somewhat cumbersomely entitled "Robert B. Parker's Cheap Shot."

    But I'll get to the book in a minute…

    Last night, I had the chance to grab a beer with Atkins during the NYC piece of the book tour in which he's currently engaged. He's promoting not just "Cheap Shot," but also "The Forsaken," which is the fourth novel in another series he's writing, featuring a former Army Ranger turned Mississippi sheriff named Quinn Colson. (It'll be out in late July).

    It's the second time I've had the opportunity to spend time with Atkins, and he's an immensely likable guy - it is just great fun to have a beer and talk about food and restaurants and old movies, in part because those are just some of the subjects that animate his writing and in part because it's just cool to talk about that stuff with someone so accomplished.

    But the thing that I took from this conversation was the level to which Atkins brings journalistic discipline to his novelistic work. He thinks he shares that with Parker, who, he notes, could be "flippant" about his writing, making it look effortless, but who in fact was a very hard worker (5-10 pages a day, five days a week). "My process," he says," is that I keep regular office hours, I have an office in town, and I keep it professional - I get there between 9 and 9:30 every morning, I get my coffee, and I work until 4:30, with a break for lunch. I do that six days a week, and the office building is filled with lawyers, which actually makes it easier."

    Atkins' journalistic sensibility - he started his writing career as a newspaper reporter - means that in placing "Cheap Shot" against an NFL background, he was careful to sprinkle in doses of reality - owner Robert Kraft, head coach Bill Belichick, and quarterback Tom Brady all are referenced, though they're not characters in the book. (That stands in contrast to "Mortal Stakes," the Parker book that involved the Boston Red Sox, in which there were no actual players or coaches mentioned.) "If those people were not in place," Atkins says, "then it would not have seemed like the Patriots."

    And, in "Cheap Shot," Atkins subtlety works in suggestions that Spenser - who has seemed permanently in his fifties for several decades - may be aging. He slips on a pair of glasses at one point (the last time I can remember him doing so was in "The Widening Gyre"), and even gets a little out of breath running … he's human, he's mortal, and that only makes him more endearing. "I had to fight a little bit for that stuff," Atkins says, "but I can never imagine Spenser being a young guy. For me, he's in his mid-to-late fifties."

    Atkins says that he actually misses journalism, and plans to do the occasional magazine investigative piece, just to keep those skills sharp and scratch that itch. But he's also firmly dedicated to the Spenser oeuvre - he's under contract to write two more novels for the series, and seems to hope that, at age 43, he's got plenty more Spenser and Colson novels to write.

    I hope so, too.

    Now, about "Cheap Shot"…

    I think it is terrific. The client is Kinjo Heywood, a star Patriots linebacker who finds himself stalked by persons unknown, for reasons unknown, and then has his young son kidnapped. Spenser's job is clear - find the kid - but as always, the task is never all that simple. And thank goodness, because Atkins takes us through a colorful array of characters and neighborhoods, as Spenser tries to put the pieces of the puzzle together. Many of the bad guys - and good guys - are not quite what they seem, and it falls to Spenser to figure things out.

    This is, by the way, one of the places where Atkins' journalistic sensibilities serve the character and series well. The act of tracking down a story has some similarities to solving a mystery, and he knows not just how to do it, but how to make it a fun ride.

    Spenser is, of course, not alone for the ride. He's aided by the implacable Hawk, the novice Zebulon Sixkill, and, of course, his longtime love, Susan Silverman. It all works.

    I would describe "Cheap Shot" as being similar to a favorite comfort food, like meat loaf … but meat loaf that, while made using a proven and favorite recipe, also has had some extra spice added, so it tastes unique and has some kick to it.

    If you are an Atkins fan, or a Spenser fan, read "Cheap Shot." And if somehow you are not familiar with the genre, pick up or download a copy of the book, find a favorite chair, pour yourself a craft beer, settle in, and enjoy.




    Some other quick OffBeat notes…

    • I love the new John Oliver HBO series, "Last Week Tonight," which has as part of its pedigree Oliver's work on "The Daily Show." Because Oliver's new show has a once-a-week schedule rather than a four-times-a-week schedule, he and his staff are able to spend a little more time crafting their stories and jokes … and, in fact, the extra times also allows their outrage to simmer a little longer and on a slightly higher temperature. Hence, what I think were brilliant pieces the first two weeks on democratic elections in India and the state of capital punishment in America. It is great stuff, and, i think, quickly will become Sunday night appointment television.

    • "24" is back, and former counter-terrorism agent Jack Bauer (Kiefer Sutherland) hasn't lost a step since we last saw him become a fugitive four years ago. He's still on the run, and in London, where he's learned of a plot to assassinate the visiting US president (William Devane). There are some familiar faces and plenty of new ones, but after just two hours, it is clear that the producers are not trying to reinvent a formula that worked for a long time. And it still does.

    • "The Amazing Spider-Man 2" is just more of what most comic book movies offer - ramped up explosions, more broadly drawn villains, and an overlong narrative that seems designed to be more like a great amusement park ride than a coherent story. The one thing this one has going for it is an almost magical romantic chemistry between the two leads - Andrew Garfield as Peter Parker and the luminous Emma Stone and Gwen Stacy. It was okay, but just okay … and I just wish they'd figure out how to balance spectacle with story.

    • I was surprised this week to read in USA Today that Blazing Saddles is 40 years old this year … and having just seen it recently, I am here to tell you that it is a movie that is every bit as funny now as it was when I first saw it. Most writers and directors would be thrilled to have one classic movie on their resume, and Mel Brooks has three - Blazing Saddles, The Producers, and, of course Young Frankenstein. Brooks is 87, but still very funny … check him out with Carl Reiner on Jerry Seinfeld's "Comedians in Cars Getting Coffee" by clicking here.




    That's it for this week. Have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View: