business news in context, analysis with attitude

Published on: May 30, 2014

by Kevin Coupe

Many parents have very fond memories of "Reading Rainbow," the old PBS television show that featured LeVar Burton and focused on getting kids to read - an admirable mission that the show approached with imagination and "video field trips" that brought the books' subjects to life. Full disclosure: In another life, more than 30 years ago, I actually did public relations for the show, and spent some time with Burton during one publicity tour.

The show went off the air in 2006, but has maintained a fan base; Burton's production company bought rights to the series, and developed an application for tablet computers. The goal, however, was to do something bigger…

And so this week, Kickstarter - the crowdfunding site - started a campaign to raise $1 million to fund a new iteration of "Reading Rainbow." It reached the goal in less than 24 hours.

According to Mashable, "The money from nearly 23,000 donors will be used to bring Burton's cult TV classic to a new generation of readers by building a web version for families at home, creating a classroom version for teachers and providing free access to it for schools in need … Like every Kickstarter campaign, Burton's project offered several levels of rewards to supporters based on how much they individually donated. Rewards this time included a chance to wear Burton's 'Star Trek' visor, 'Reading Rainbow' app subscriptions, books, autographed memorabilia, dinner with Burton and an appearance in a video field trip."

It speaks to the power of consumers and the power of a great idea when they come together … it is an Eye-Opener.

Published on: May 30, 2014

ice piece on the Huffington Post site about Costco's most recent fiscal quarter, for which it reported US sales that were up six percent and profit that was "up slightly."

The story continues: "What Costco did not do was spend any time moaning and groaning about the terrible weather in the quarter, setting itself apart from Walmart and many other retail peers. Companies ranging from Macy’s to Home Depot have blamed the weather for poor performance in recent months. Walmart executives said the word 'weather' at least 20 times in their conference call discussing the company’s first-quarter results, by Fortune's recent count."

The story goes on:

"It’s true that the weather was particularly unbearable this past winter (polar vortex anyone?), and many economists have said the super-cold and snow was the main reason the economy shrank in the first quarter for the first time in three years.

"But a handful of popular outlets, like Costco and Chipotle, managed to handle the winter pretty well. That suggests there's more going on here than meteorology.

"Costco's winter survival is a hint that maybe the company’s no-frills model -- which includes almost no advertising, paying workers decently and courting customer loyalty -- may just be a better way to get customers to buy stuff. Costcos generate about $1,100 in sales per square foot, on average, while Walmart and Sam’s Club generate $400 and $680 per square foot, respectively, according to an analysis from Morningstar, an investment research firm.

"Some of Costco's competitors also have other issues than the weather, including inventory problems and Internet competition."

It is interesting that at the same time as this story ran, Bloomberg Businessweek had a story saying that Costco "is grudgingly turning to the Internet in search of more millennials," with CFO Richard Galanti saying that the company is only taking "baby steps."

That story says that "the Web push is as much about defense against such e-commerce giants as Amazon (AMZN) as it is an exercise in business development," and Galanti adds that “we’re open-minded, but don’t expect us to go to everybody’s doorstep … Delivering small quantities of stuff to homes is not free. Ultimately, somebody’s got to pay for it."

Published on: May 30, 2014

Politico reports this morning that the US House of Representatives Appropriations Committee voted 31-18 yesterday to "advance a fiscal 2015 agriculture spending bill with a controversial rider that would allow schools to opt out of nutrition rules requiring more fruits and vegetables, less sodium and more whole grain-rich products if they are losing money from the healthier meals."

According to the story, "the opposition to many of the new nutrition standards, which stem from the 2010 Healthy Hunger-Free Kids Act, has been fueled primarily by an extensive lobbying effort by the School Nutrition Association. The group, which represents 55,000 school nutrition professionals and the food companies that supply the National School Lunch Program, has been flying in school meal directors and cafeteria workers from across the country to ask lawmakers to give schools some regulatory relief by 'hitting the pause button' on the sweeping rules."

The vote sets up a potential political clash. Politico notes that the Democrat-controlled Senate Appropriations Committee has passed an agriculture spending bill without the school lunch provision; the House, of course, is controlled by Republicans. Meanwhile, neither the full House nor the full Senate have voted on the bills, though if they follow the lead of their committees, it will set up a potentially "contentious" conference committee trying to reconcile the two bills.

And, the debate is given even greater visibility because of the public support for the new standards - and against any relaxation of the mandates - by First Lady Michelle Obama, who has made childhood health and obesity centerpiece issues during the Obama administration's two terms.

BTW … United Fresh President & CEO Tom Stenzel released a statement yesterday saying that his organization was "deeply disappointed" by the vote, saying that United Fresh does not believe that it "is indicative of full House support for rolling back school meal standards …
We believe there is strong support both at USDA and among a majority of House members to find ways to help schools adjust to some of the more technical requirements of the rules regarding sodium and whole grains, but preserve the critical importance of serving at least one half-cup of fruits and vegetables in school meals."

Published on: May 30, 2014

There is an excellent piece in The New Yorker that puts the decision by Portland, Oregon, to ban Walmart from the city's investment portfolio in a context that is both cultural and economic, looking at how it can be perceived as both friend and foe, depending on your point of view.

It is more complicated than one might expect.

And worth reading in its entirety here.

Published on: May 30, 2014

Home improvement chain Lowe's, reports eSecurityPlanet, "recently began notifying an undisclosed number of current and former employees that their personal information may have been disclosed when a third-party vendor mistakenly backed up Lowe's employee data to an unsecured server."

In a letter to employees, Lowe's wrote:

"We are writing to inform you that certain personal information that Lowe’s maintains about you may have been subject to unauthorized access. Lowe’s contracts with a third-party vendor to provide a computer system (E-DriverFile) that stores compliance documentation and information related to current and former drivers of Lowe’s vehicles as well as information about certain current and former employees who access and administer the system. The personal information in E-DriverFile may include names, addresses, dates of birth, Social Security numbers, driver’s license numbers, Sales IDs, and other driving record information. We recently learned that the vendor unintentionally backed up this data to an unsecured computer server that was accessible from the Internet. You are receiving this notice because we’ve determined that your Social Security number and/or driver’s license number was in E-DriverFile and thus potentially exposed.

"Promptly after learning of the potential issue, the vendor blocked access to the unsecured backup server and retained data security experts to conduct an investigation of the incident. That investigation determined that personal information from the backup server may have been accessed between July 2013 and April 2014. To ensure that each potentially impacted person can take steps to protect themselves, we are providing this notice. At this time, we have no evidence that any of the information has been misused."

Published on: May 30, 2014

• The Associated Press reports that Walmart is fighting back against a recommendation from Institutional Shareholder Services (ISS), which advises big shareholders how to vote on corporate ballot issues, that stockholders seek a more independent board of directors, criticizing the exiting board's positions on a foreign bribery scandal and executive pay issues.

According to the story, "In a filing with the Securities and Exchange Commission Thursday, Wal-Mart said that the ISS analysis 'misconstrues the nature and operation of Wal-Mart's executive compensation program."

And, the story says, "Wal-Mart said that ISS's request for disclosure of 'specific findings' in regard to possible violations of the Foreign Corrupt Practices Act, which can include bribery, is 'contrary to the best interests of the company' because such a disclosure could interfere with the ongoing investigations. Wal-Mart said that that type of disclosure could also 'adversely affect the company's position in any current or future legal proceedings'."

Published on: May 30, 2014

The Wall Street Journal reports that the state of Connecticut has added text messages to the state's "do not call" registry, banning the use of unsolicited text messages by marketers.

The story says that "the law increases the maximum fine for violations to $20,000 from $11,000. It requires companies issuing account statements for cellphones and landline phones to print a conspicuous notice at least twice a year informing consumers of prohibited actions by solicitors and how to place their numbers on the 'Do Not Call' registry."

Published on: May 30, 2014

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

• Advertising Age reports that Pizza Hut "is going for less flash and more flavor," and responding to research showing that customers - especially millennials - "are increasingly seeking food perceived as higher quality and more gourmet with unconventional flavor combinations … including garlic-parmesan pizzas (a five-cheese and a chicken-bacon-tomato variety) and three barbecue pizzas promoted by country singer and TV personality Blake Shelton."

Pizza Hut also is upping its investment in digital advertising, believing that this is the best way to reach desired customers.

Gee. Quality and flavor as a differentiating sales proposition. What a concept.


• Bloomberg reports that Royal Ahold, coming off a recent quarter in which operating income was down more than four percent, is responding by "putting more focus on its online businesses as consumers around the world seek out value and ease of purchasing…"

Y'think?


• Reuters reports that German labor unions are once again threatening a strike against Amazon, complaining that the company's "refusal to speak about a wage agreement shows a lack of respect and that it doesn't value the performance of its employees."

The debate is an ongoing one - the unions want Amazon employees to be paid in accordance with national collective bargaining agreements covering retail employees, while Amazon maintains the warehouse employees and logistical workers and are being paid "above average" salaries for that sector.


• In Washington State, the Herald Business Journal reports that "the Haggen Food & Pharmacy in Arlington and the TOP Food & Drug store in Edmonds will be shut down within the next two months … the closure of the stores came after the chain was unsuccessful in negotiating a lease renewal with the property owner, the company said in a statement."

Over the past 18 months, Haggen has closed eight stores as part of what it calls "a long-term plan to improve competitiveness."


• The Chicago Tribune reports that Tyson Foods has "offered about $6.2 billion for Hillshire Brands Co., topping the bid a major rival made just two days earlier for the Chicago-based maker of Jimmy Dean sausages and Ball Park hot dogs." The bidding is expected to go higher, with rival suitor Pilgrim's Pride expected to come in with an even higher number.

Published on: May 30, 2014

Yesterday, in "FaceTime," I spoke about a local mailman who, when he had to walk three steps to my mailbox because of how a workman's truck was parked, left notes in the mailbox and on the windshield asking us not to block the box. I commented:

Now, I don't mean to be petty here … but the mailbox wasn't blocked. It was easy to get to, albeit on foot. Three steps!

At some level, maybe this is a civil service mentality. But I also think there is a broader business lesson here. How many employees in any business would resent it if made to go just a little bit out of the way for a customer? How many employees in failing businesses would feel that way … and to what extent could one actually attribute a business's problems to employees with that kind of attitude problem?

My feeling is, that guy should've walked the three steps and thanked his lucky stars that the Post Office hasn't yet gone to five, four or even three day a week delivery. Or sold its assets to FedEx or Amazon.

The thing is, it is entirely possible that postal workers are being evaluated based on speed, not customer service. And not just postal workers. There are a lot of organizations in which people are ranked on efficiency, not effectiveness. When you think about it, such cultures may actually be getting in the way of their own success.

In the current economy, nobody - not at the highest levels, and not on the front lines - can afford to mail it in. Because we live in a world where the only way to get ahead is to work hard and take advantage of the opportunities to delivery exceptional service … not whiny little notes.

MNB reader Bob Thomas disagreed with my commentary:

I am not with you on this one.  If you have a house with mobile delivered service then you should not block the mailbox.  Respect the rules.  Are you trying to stop a disabled worker from completing his/her duties?  I am not sure about the current stats but it used to be that 95% of all first class mail was delivered within 3 days.  Any private companies willing to compete with that at the prices charged?

And another:

Think for  a moment how much later the mail would be if half the mailboxes on each street had a car parked in front . . .   Think how you would feel if the contractor had parked halfway across your driveway and you had to spend an extra two minutes trying to get out.  One person’s negligent blocking of a mailbox isn’t much, but multiplied, it could delay everyone’s mail considerably.  A polite note to avoid blocking a mailbox or a driveway is not really anything to rail against, is it?

And from another:

Kevin, you are way off the mark in my opinion.  Back up a step and consider the worker who parked so close to your box that the driver could not pull up to it.  Where’s the “outrage” for his inconsideration?  The postal carrier made his delivery and asked you not to do it again – what’s wrong with that?  You’re whining like he keyed your car!

The carrier made more of an effort in this affair than either you or the truck driver.  Why don’t you wait out by the box tomorrow with a cookie and a thank-you?

For balance, read the story in Wednesday’s Fort Worth Star Telegram about carriers being attacked by dogs.  Now, they also have to watch out for grumpy homeowners!

But, another reader wrote:

Your observation on your local mailman mimics what I've seen over the years.

I work at home and have seen our local mailman go through all kinds of elaborate contortions to avoid getting out of the truck; Driving over the lawn, pushing garbage cans around, etc.

One year he got stuck in a snow drift (I live in NY).  I went to get my mail and actually helped push him out.  He never moved of course.  He did thank me though.

He actually skipped me once because he couldn't get to the box.

Not a bad guy, but holy cow, try and get out of the seat once in a while.

From another reader:

This has been going on for quite some time now. If you have daughters with friends stopping in it's even worse. One short 5 minute stop for a pickup and if it happens to be in front of the mailbox just at the wrong time of day it's no mail for that day.

I also work in a position where we send information out to our customers monthly. About a year ago some of the mail started to be returned with a note that read "no mailbox at curb". The stores have an address on the door and the mail was always brought in. That way the mail carrier could also pick up any out going mail.

Not so any more. They were told their mail would no longer be delivered until a box was installed at the curb.

Now that's customer service. Not!





MNB user Jason Priest wrote:

I had two recent experiences with the Post Office that made me wonder (even more so than normal) how they are still in business.  I was in a local Post Office twice over the last two weeks to send two packages.  For whatever reason, I had brought both packages to the Post Office without being taped up.  The boxes were normal sized.  The first package I shipped, I asked for tape at the counter and was told that if I added tracking and signature confirmation, he could find some tape for me.  I was ok with that, and the employee proceeded to tape my package with tape he had at his register station.  One week later, I had a different person helping me... this time it was a woman.  I again asked if I could use some tape for my package.  The first question I was asked was "how was I planning to ship my package - ground or priority?".  I wanted the cheapest option - I responded ground.  I was then told that she did not have tape, but there was tape for sale for $3.95 a roll.  I was quite furious over this "bartering" situation and gave her a piece of my mind.  I ended up taking my package to UPS, where they had plenty of tape for me to use with no bartering involved.

MNB reader William Holleran wrote:

Deliberate use of the phrase “mail it in”?  You have to think of how the Post Office must feel that their entire business can be summed up in a phrase that means inefficient and slow?

Thanks for the chuckle.




And, on another subject, one MNB reader wrote:

KC…thought you would like to know…The ‘Frozen’  YouTube video you had on the MNB the other day was hilarious. My wife is a preschool teacher and can’t get the kids to stop singing the song…ad nauseam everyday. She laughed out loud and couldn’t wait to share it with her fellow teachers. You never know what you’re going to find on the MNB…

Music to my ears…

Published on: May 30, 2014

I've always been a believer in the domino theory of life … that even though we all make mistakes (and I've probably made more than most), these mistakes help to make us who we are. Correct any of them, and things would not necessarily turn out the same way. One can regret mistakes - the job you took or didn't take, the person you did or didn't ask out on a date - but one also has to respect their role in how life evolves.

That's essentially the subject of a new Broadway musical, "If/Then," starring Idina Menzel (Frozen) and created by the folks who brought us the acclaimed "Next To Normal." I suspect that this show will be a mainstay of regional theaters in years to come - it has a great leading role, a manageable cast size, and a hummable score than is heavy on uplifting ballads.

The scenario is similar to the old Sliding Doors movie - it looks at the roles of fate and choice as a newly divorced woman comes to New York looking to create a new life. Elizabeth (played by Menzel) is faced with a simple decision early in the play - go one way, and she becomes an accomplished and celebrated city planner known as Beth, go another, and she becomes Liz, a teacher with a somewhat complicated personal life.

Menzel is fabulous as both Liz and Beth, and she's backed up by a strong supporting cast. But I think the thing I liked best about it was the reaction of my 19-year-old daughter, who, while she's never been a big theater person, wanted to see this show because of how much she loved Frozen. She came away not just entranced by the show, but checking out the Playbill for other shows she'd like to see.

My feeling is this. Pretty much anything that makes someone fall in love with live theater is wonderful. I'd go to the theater once a week if I could afford it … it remains one of the great pleasures of my life that I've seen so many shows. (Remind me to tell you the story some day of how I actually have shared the stage at various points in my life with Meryl Streep, Raul Julia, Ian McKellan, and Michael McKean.)




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

Slàinte!