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    Published on: May 13, 2014

    by Michael Sansolo

    Do you want to know why consumers are always confused? Consider this one small example:

    The most recent edition of Good Housekeeping highlights 10 heath rules readers need to ignore, mostly on eating and exercise. Apparently the old rule was to avoid squats. Now, GH readers are advised to do the very opposite.

    When it’s that hard to understand the pros and cons of a simple workout, we understand why complex topics completely flummox the general population.

    Let’s take a far more serious example: imagine there was a technology that scientists and public health officials consider nearly a magic bullet to address food safety. It involves a technology that is already widely used and in one form is found in almost every American kitchen.

    You’d think there would be nothing controversial about that except that it is. The technology is irradiation and despite years of discussion and widespread use, the name remains a killer of popular acceptance.

    As the Washington Post reported two weeks ago, irradiation “has barely caught on in the United States…(because) for many consumers it conjures up frightening images of mutant life forms and phosphorescent food.”

    As the Post reported, there are dozen of studies showing that irradiated food is safe for consumption and really does deliver on its promise of zapping bacteria out of food. Plus, as one proponent says, the technology is pretty ubiquitous. As he put it, “Naysayers better throw out their microwaves because that is irradiation.”

    For balance, the Post also quotes irradiation opponents who claim the technology would cause food suppliers to relax current safety procedures and rely too heavily on irradiation.

    The challenge we seem to face is just like the issue of whether squats are a worthwhile exercise: how to advance sound or even simply balanced information in a day and age of endless and unfettered information. It’s one of many reasons why industry must learn to master the world of social media and new communication because silence will not win the argument.

    The food industry sits in an unusually important position on the need to help consumers better understand a world of complex issues. Topics from the scientific to health dominate discussion, yet frequently uninformed voices speak loud enough to win the day. As some suggested in the Post article, industry needs to find new ways of opening these complex discussions, possibly by better positioning why technology is used.

    For instance, instead of simply labeling products as irradiated, packages could explain the product is “irradiated to protect your family.” Yet that too requires education to make the point. It’s not just a slogan.

    However, the importance of communication and education cannot be overstated. In the article, Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, blames the federal government for failing to properly educate the public on scientific issues from irradiation to childhood immunizations to fluoridated water.

    “Not using irradiation is the single greatest public health failure of the last part of the 20th century in American, “Osterholm said to the Post.

    Makes you wonder what discussion will be held when people look back on the first half of the 21st century. I’m betting no one will say the greatest public health failure involves squats.

    Michael Sansolo can be reached via email at . 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: May 13, 2014

    by Kevin Coupe

    You have to love this young woman. More importantly, you may want to find a job for her in your organization.

    Her name is Megan Grassell, and she's currently 18-years-old. When she was a junior in high school, a recent story in the New York Times reported, she was "disturbed" by the selection of bras available to girls her age. She felt they were "dominated by push-up styles with padding and underwires. So last year, Ms. Grassell founded her own company, Yellowberry, and began making colorful, age-appropriate bras herself."

    The Times goes on to say that "without knowing how to sew, much less how to create prototypes and samples, Ms. Grassell began to research fabrics and sketch designs. She asked her mother for help ordering materials, and she hired a local seamstress to collaborate on prototypes, paying for everything out of savings earned from summer jobs … In February, the first batch of Yellowberry bras arrived at the Grassells’ home from a Los Angeles manufacturer. Ms. Grassell began selling them online for $29.95 to $42.95. She declined to disclose Yellowberry’s total sales, other than to say that the first three batches of orders she placed with her manufacturer had sold out."

    Now, to be sure, Megan Grassell is not your average teenager. She has a competitive spirit and is a champion skier - in fact, the reigning Wyoming state champion in the slalom and giant slalom events. And while she's been accepted to Middlebury College in Vermont, she may delay her education to shepherd Yellowberry through its next growth phase.

    But I think this story represents something more fundamental - yet more evidence of the power of the consumer. If companies don't give them what they need or want, they'll do it themselves. If they're savvy, they'll use Kickstarter to raise money. (Grassell did.) And if they are both lucky and good, they end of inventing a niche and building a category that nobody else saw.

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

    Published on: May 13, 2014

    The Wall Street Journal reports that the way that Amazon manages inventory at its warehouses that is provided by third-party sellers and fulfilled by Amazon, "has allowed many to pool their inventory with supposedly identical items supplied by other sellers - in essence commingling products from third-party merchants with those supplied directly to Amazon by the brands themselves. In other words, a product ordered from a third-party seller may not have originated from that particular seller. If the bar code matches, any one that is on the shelf will do."

    The Journal goes on to say that while this system - which is voluntary for third-party sellers - has given Amazon a lot of flexibility and enabled it "to make better use of its warehouse space and keep a wide variety of items in stock around the country," it has in some cases "led to mix-ups between counterfeit and authentic products, even when they are sent by Amazon itself."

    The result: bruised feelings on the part of the brands, and damaged relationships.

    German knife maker Wüsthof, for example, has stopped allowing its products to be sold on Amazon because of concerns about counterfeits. Johnson & Johnson suspended the sale of its products to Amazon last year because of its trepidation.

    Amazon is not commenting on the story.
    KC's View:
    It is hard not to feel that there is beginning to be a steady stream of stories suggesting that Amazon - whether intentionally, or because its size is dictating certain inevitable shifts - may be finally suffering from growing pains that could hurt it, and give competitors an opportunity to make some headway.

    Published on: May 13, 2014

    Mother Jones has a terrific piece about a recent meeting of the California Dietetic Association (CDA), at which McDonald's was not just a featured sponsor, but also the sole provider of one day's lunch.

    The story goes on:

    "McDonald's wasn't the only food company giving away freebies. Cheerful reps at the Hershey's booth passed out miniature cartons of chocolate and strawberry milk. Butter Buds offered packets of fake butter crystals. The California Beef Council guy gave me a pamphlet on how to lose weight by eating steak. Amy's Naturals had microwave brownies. The night before, Sizzler, California Pizza Kitchen, Boston Market, and other chain restaurants had hosted a free evening buffet for conference-goers: 'Local Restaurant Samplings for Your Pleasure.'

    "And that wasn't all. The sessions - the real meat and potatoes of the conference - had food industry sponsors as well. The Wheat Council hosted a presentation about how gluten intolerance was just a fad, not a real medical problem. The International Food Information Council - whose supporters include Coca-Cola, Hershey, Yum Brands, Kraft, and McDonald's - presented a discussion in which the panelists assured audience members that genetically modified foods were safe and environmentally sustainable. In 'Bringing Affordable Healthier Food to Communities,' Walmart spokespeople sang the praises of (what else?) Walmart."

    You can read the entire story here.
    KC's View:
    I'm not sure which impulse is greater - the likelihood that I'd choke on some of this food, or the probability that I'd choke on the hypocrisy.

    Published on: May 13, 2014

    We've all heard about showrooming, which describes the process of a consumer walking into a bricks-and-mortar store, looking at products, and then using mobile technology to order those items online.

    Now, AdWeek writes, there is "webrooming," which essentially is exactly the opposite - researching online and then buying in a physical store.

    According to the story, a study by Merchant Warehouse says that "69 percent of people with smartphones in the 18-36 demo have webroomed, while only 50 percent have showroomed. Among 37-48 year olds, 71 percent have webroomed versus 53 percent who have showroomed.

    "The report doesn’t get into revenue figures, but Forrester Research vp and principal analyst Sucharita Mulpuru does. Citing data from a recent Forrester study, she estimated that webrooming will result in $1.8 trillion in sales by 2017, versus $1.2 trillion in 2012. In comparison, all e-commerce sales should reach $370 billion in 2017."
    KC's View:
    No real surprise here, since people actually were webrooming before there were smartphones and tablet computers. I still think that showrooming is the bigger threat to many retailers … and that stores have to be focused on making sure that when people come into their stores, the most interesting thing to look at is not their phones and tablets.

    Published on: May 13, 2014

    Bloomberg reports on a new trend among adults under the age of 35, traditionally a group that is the most mobile in the US.

    That's changing, the story says, "as members of the millennial generation, the estimated 85 million born from 1981 through 2000, prove less restless than their forebears. The standstill may be holding back recovery in the labor and housing markets." Indeed, there is evidence that these young people are delaying a lot of life decisions, including marriage, having children and buying first homes.

    The story goes on to say that "while the decline in mobility is more pronounced among the young, older Americans, too, have become less inclined to pull up stakes. Among all Americans, 11.7 percent moved in 2012-13, just above the 11.6 percent all-time low reached two years earlier … Economists and demographers say a combination of relatively low-paying opportunities, the burden of student loans and an aversion to taking risks explains the reluctance to relocate. Student-loan debt rose $114 billion in the year ended in December to $1.08 trillion, according to the Federal Reserve Bank of New York."
    KC's View:
    Funny … my first thought when reading these sentences is that it is extraordinary that we have a system in which student load debt, accumulated by people trying to go to college, is crushing … and the beneficiary is the banking system. The government subsidizes the banks, but not the students … which strikes me as a lousy sense of priorities. Especially, because if the analysis is correct, it hurts the country in a lot of different ways.

    Published on: May 13, 2014

    International Supermarket News reports that InPost, which has close to 1,000 locker installations across the UK, allowing customers to "click and collect" when acquiring products from a variety of e-commerce sources, has signed a deal with supermarket retailer Morrisons to dramatically expand that network of collection points.

    Morrisons operates more than 500 superstores across the UK, and InPost has said that its goal is to have more than 1,500 lockers by the end of the year.
    KC's View:

    Published on: May 13, 2014

    • Walmart has committed to doubling the number of solar energy projects that it has installed in Walmart stores, Sam's Clubs, and assorted distribution centers, by the end of 2020. The retailer says that it is well on its way to achieving its goal of 100 percent renewable energy, with more than 300 projects in this area; it also says it has plans for wind-generated energy, fuel cells, and other advanced technologies.
    KC's View:

    Published on: May 13, 2014

    • Hy-Vee CEO Randy Edeker tells the State-Journal Register that the chain, which currently operates 238 grocery stores and 120 convenience stores with fuel, plans to open 16 new c-stores and four new grocery stores, in addition the remodeling of 10 supermarkets and relocation of two more. This plan is scheduled to be completed by the end of the company's fiscal year, September 30.

    • The Associated Press reports that Procter & Gamble has enraged anger among some Germans "after unintentionally placing a neo-Nazi code on promotional packages for Ariel washing powder." Those boxes showed a white soccer jersey with the number 88, which, as it happens, is the code used by neo-Nazis to represent the phrase 'Heil Hitler," because "H" is the eighth letter in the alphabet.

    The use of actual Nazi phrases is illegal in Germany.

    P&G said the use of the number was "unintentionally ambiguous," and has stopped shipping the offending product.

    • The Seattle Times reports that it is looking good for Costco's first-even Spanish store, scheduled to open in Seville on Thursday. According to the story, the 145,000 square foot store "is already making ripples in Spain’s fourth-largest city. It has suddenly created hundreds of relatively well-paid jobs in one of the areas worst hit by the eurozone’s downturn, with a jobless rate of 34 percent.

    "By March more than 148,000 people had applied for the Seville warehouse’s 250 jobs, said Diane Tucci, who leads the company’s operations in Spain."

    Costco currently operates stores in a number of countries outside the US, including the UK, Mexico, Australia, Taiwan, South Korea and Japan, but Europe is seen as a big opportunity for a company that has as its goal expanding from 652 club stores to 1,000. And Spain is seen as a major test for the company, which plans to open half its new stores this year outside the US.

    • Hillshire Brands yesterday said that it will acquire Pinnacle Foods for about $6.6 billion, which, as Reuters writes, adds "products such as Duncan Hines baking mixes to its portfolio that includes Jimmy Dean sausages and Hillshire Farm luncheon meats."
    KC's View:

    Published on: May 13, 2014

    The Grocery Manufacturers Association has announced that it will sue the state of Vermont over a new law requiring the labeling of food with genetically modified organisms (GMOs), which led MNB reader Mike Franklin to write:

    It makes me so proud to work in an industry, supported by an association, that understands the truth will confuse shoppers.. I can only hope that they can find a way to also suppress books that are negative of our industry. Life would be so much better without those pesky shoppers that want to know what’s in their food…don’t shoppers know our industry knows what’s best for them.

    I share your cynicism.

    MNB yesterday took note of an interesting piece in the New York Times that essentially suggested that Walmart has been cooking the books - not in any sort of illegal way, but enough to allow senior executives to qualify for bonuses that they might not otherwise have received, based on company performance.

    Which prompted one MNB reader to write:

    Walmart has done nothing wrong... why make a case?  Oh yes...just because they are Walmart.

    Just because something isn't illegal doesn't mean that it should be ignored. I don't know about you, but I think it is fascinating when a company appears to have created an accounting system that rewards senior executives regardless of whether they really hit their numbers, especially at a time when it is making other cuts.

    BTW…I would find this fascinating if the story were about any company. (And I'm sure there are other companies that could have been the focus.) This just happens to be about Walmart, which is, after all, the world's biggest retailer.

    Besides, I totally believe in the dictum (first said by Finley Peter Dunne) that the role of journalism is to comfort the afflicted and afflict the comfortable.

    Regarding the dispute between Amazon and Hachette, which seems to have the e-tailer slowing the availability of its books in retaliation for not cutting prices enough, one MNB user wrote:

    MFunny...when companies are small, all things are great with world...but as they grow and have to compete with other large corporations, then we lose sight of what companies are forced to do to compete.

    The problem here is not that Amazon is simply doing what it needs to do to compete, and we've just lost sight of reality. I think the problem is that there seem to be signs that Amazon may be losing sight of the customer-centric focus that always has made it different.

    MNB reader Dean Balsamo wrote:

    This not directly related to the publisher spat with Amazon but with the possibility that it’s growth might be affecting it’s service.

    For over 12 years I’ve been a steady Amazon customer…a Prime member since the service started and like many have seen my purchases grow over the years to the point where I’m now ordering some grocery items like a certain brand of Lapsang Souchang tea and of course tons of books.

    But last week two unusual for Amazon  things happened with my orders…things that I’d never experienced in hundreds of orders with Amazon:

    One: They sent the wrong 6 box pack of tea. Same company’s tea and similar packing but they sent Scottish Breakfast tea instead of my order. I got to keep the wrong tea and they sent the right one a few days later but…I’d never had a wrong order with Amazon.

    Then a few days later they informed me that a book I’d ordered-a used book they said was in the “Amazon warehouse”…was not there…they couldn’t fulfill the order.

    Twice in the same week after never having a problem with an Amazon order seems strange to me. Does it  mean anything? I don’t know but it was unusual.

    I don't believe in coincidence.

    From still another reader:

    You are right on when you caution Amazon is messing with a good thing and treading on dangerous ground.   Sensitive thing, the topic of books and manipulations of what you should and should not read… They have enjoyed being my first go-to  place on books for some while now but the appearance of diversion games and power mongering are getting annoying and are alarming. I had to hunt and hunt to find a book in its original state as they kept pushing an Oprah annotated version as an only option.  Gratefully a reviewer warned me or I would have purchased it unwittingly. I like Oprah, but did not seek any annotations, just the author’s artistry. What financial arrangements conjured that diversionary ploy? As I read of the games you write about, my inclinations to wander from Amazon increases. My trusty standby is not perhaps so trusty…  I want a book vendor, not a book gestapo.  Where can they be relied upon to draw the line?

    Responding to our piece about Netflix prices going up, but only for new customers, MNB reader Kevin Ellis wrote:

    About a week before your report I got a notice from Netflix saying my monthly charge is going up $1 a month.  I have been a subscriber for several years.  Apparently not all current subscribers are grandfathered for not rate increase.

    Hmmm…I went back to check the email they sent me, and it read:

    In order to continue adding more movies and TV shows, we are increasing our price from $7.99 to $8.99 for new members. As a thank you for being a member of Netflix already, we guarantee that your streaming plan and price will not change for two years.

    Do me a favor. Forward me the email that Netflix sent you. I'm happy to check it out and report back.

    Another MNB reader wrote:

    Sign of the times...Corp Taxes and regulations coming from this Administration continue to raise costs....this will not be the last increase. Some of us remember when your cable bill was only 39.95 per month…hello?

    I do find it interesting that for some folks, it doesn't matter that Netflix said - and we reported - that the monthly streaming membership fee was going up a buck because it is investing the money in original productions. Nope, you decide that it really is corporate taxes and government intervention that is causing the increase.

    To be sure, I hate it when unnecessary government intervention and expenses cause prices to increase. On the other hand, when those expenses are related to public safety, such as, say, food inspections and infrastructure improvements, I'd rather pay a little more than get sick or have a bridge go out while I'm on it. Maybe that's just me.

    One other thing. Yes, I do yearn for those days when the cable bill was $39.95. But if I remember correctly, my cable bill was that low when I had one set hooked up, there were a lot fewer channels, and the cable company wasn't also providing my wi-fi access and my telephone service. Do I think cable charges are out of whack, largely because of lack of competition? Sure. But I also try to keep in mind that you have to compare apples to apples. (When was the last time you paid long distance charges?)

    I'm just saying.

    MNB reader Edward Zimmerman sent me the following note about yesterday's Eye-Opener about how Nikki, at our local Starbucks, offered my college-age daughter exceptional customer service:

    Fantastic story, excellent way to begin a Monday morning – BTW, good luck to Ali on her finals.

    Thanks. I'm proud to say that she's gotten four of her final grades back, and so far for the semester she has a 4.0 grade point average. There could not be a prouder father out there right now than I am.

    About the same story, MNB reader David Peterson wrote:

    I know you have a penchant for bending things in society to fit with your “eye opener” theme, but really – could it be that Nikki was doing it out of kindness and caring for your daughter and not because she is “smart and savvy …, working with her eyes open and making a difference one customer at a time”.


    When I wrote that piece yesterday, it never was with the intention of casting a cold and cynical eye on what Nikki did. Rather, I agree with you - I think she was being kind and caring, qualities that made her a better retailer, and allowed her to make a difference. I don't think the two rationales are mutually exclusive…rather, I think they worked together to create an exceptional customer experience.

    And from another:

    I liked your piece about your daughter's experience with a great Starbucks barista.   Just a thought:  with all the Sbux consumption in your household, wouldn't it be more sustainable for all of you to have re-usable mugs?   I keep one in each of my cars, hermetically sealed in a ziplock bag, so that when I get coffee to go, I just take it into the shop with me.  It's easy to just wash it at home and put it back in the bag.   (When "dining in,"  I always request a real mug.)   If you're using reusable bags for grocery shopping, you can easily remember to do this and reduce the number of coffee cups, lids and sleeves that enter the waste stream.   I don't mean to sound preachy, but we can all do our part, and it's easier than you think!

    Just trying to spread the word....  :)

    Thats for the advice.

    Not to be defensive, but usually the vast majority of my Starbucks coffee consumption is at home, where I make it myself and use a real mug. (I also take it with me on the road.) These days, I must confess, I've been going down to Starbucks to buy coffee more often because we're having some kitchen work done and as anyone who has gone through such a thing knows, it makes life hugely inconvenient.

    Finally, I loved this email, received last week:

    You feeling ok?

    In one post, you criticize Amazon and defend Walmart.

    Knock it off – I read you to get an outside-of-Bentonville view of my company. It helps me with my epistemic closure.

    I figured those stories would throw people who pay attention to my various biases.

    But what can I say? I have to make sure that I'm not guilty of epistemic closure, too.
    KC's View: