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    Published on: June 3, 2014

    by Michael Sansolo

    It’s both a curse and a blessing that I look for lessons everywhere in life because I’m constantly finding them. Sometimes they even come while watching my mother celebrate her 84th birthday by getting on a playground swing next to my 19-month-old great nephew.

    At that moment two simple questions struck me: in what ways will little Jonathan’s life be similar to my mom’s and in how many ways will they be different. Some are obvious - Jonathan is very talkative and can already say “iPad” in recognizable tones. Technology already makes his life different and those changes will only grow with the years.

    Certainly there are endless life lessons, ethical questions and even interpersonal situations that will be exactly the same for both of these relations despite the 83 years between them.

    But I have to believe that when it comes to shopping, there’s little that will look the same. My mom recalls a time before the advent of supermarkets, when her neighborhood was dotted with shops for all the many needs of life largely because both cars and good home refrigeration were nascent. It wasn’t just the butcher and baker. It was everything, including the man man who lived on the street and supplied butter to the entire neighborhood.

    Then again, depending on how the locavore movement evolves, it’s possible that Jonathan will grow up in a similar world. But I’m not counting on that trend ever going that far.

    The reality for all of us in business is figuring out how to straddle all these divides successfully, understanding that the world of the future endlessly looks so different than the past.

    Last week, Kevin wrote about Walmart’s ongoing attempts to enter the banking industry and the industry’s endless push back, plus the many ways the younger generation is making what we might consider unorthodox choices. That discussion should make us question two things.

    First, the banks probably realize they have to wage this fight. If Walmart and others get into banking there is every reason to believe they will succeed. Today’s younger consumers (even those much older than toddlers) have no real concept of lines between businesses. In their memory Walmart and Walgreens (and others) have always sold food. Supermarkets always have pharmacies, gas stations have no service, and so on. Those who were once called non-traditional competitors are now part of the landscape.

    Younger shoppers would probably ask why wouldn’t a store offer banking services? After all, who’s to say that Walmart isn’t a bank already for the large portion of the population using money orders and other such services?

    Second, we might question why we have banks at all. Think about the falling relevance of the post office or library. Movie theaters have only survived by radically changing their business model.

    Are any of us really certain that banking will exist forever? Anyone want to bet that checks, credit card or even cash will even be relevant in the world my great nephew will see when he’s 80? I can remember a time when banks closed at 3 p.m. and there were no ATMs to let us access our own money when we actually needed it. Imagine that!

    The simple truth is we don’t know. When my mom was Jonathan’s age no one could have possibly predicted that she’d be learning Skype and Facebook in her 80s, would watch a flat screen television or refuse on principle to give up her flip phone. She probably thought she’d buy butter from the man down the street forever because she knew nothing else.

    Thank goodness playground swings still work the same way.

    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: June 3, 2014

    by Kevin Coupe

    The Washington Post has an interview with Biz Stone, co-founder of Twitter, in which he talks about leadership as being defined "as good communication plus confidence without ego."

    And it speaks to one of the central metaphors used here on MNB that he draws inspiration from - "Star Trek: The Next Generation."

    "One of my favorite episodes of 'Star Trek: The Next Generation' is when the captain and the doctor are stranded alone on this planet, and their brains are linked by some kind of alien device so they can read each other’s thoughts," he says. "They’re trying to get somewhere and the captain says, 'We’re going this way.' And the doctor says, 'You don’t know which way to go, do you?' Because she can read his thoughts.

    "He explains to her that sometimes part of being a leader is just picking a way and being confident about it and going, because people want to be led. I remember that episode, because it rang really true to me. Sometimes you just have to lead, even if you don’t have all the answers. In fact, you shouldn’t have all the answers. If you think you have all the answers, then you’re probably doing something wrong. Good leadership means being willing to have the confidence to move forward, even if you don’t have all the answers."

    You can read the entire interview - which has a lot more than "Star Trek" - here.

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

    Published on: June 3, 2014

    The Seattle City Council yesterday unanimously raised the local minimum wage to $15 per hour, the highest in the nation.

    The New York Times writes that "under the plan approved on Monday, the hourly wage will rise to $15 by 2017 for employers with more than 500 workers that do not provide health insurance, and by 2018 for those large employers who do. The minimum will be phased in through 2021 for smaller employers. In its early years, the law allows employers to include tips as part of a workers’ compensation in reaching the minimum, but that provision is phased out over time."

    The Times also reports that "the vote, economists and labor experts said, accentuates the patchwork in wages around the country, with places like Seattle — and other cities considering sharply higher minimum pay, including San Diego, Chicago and San Francisco — having economic outlooks increasingly distinct from those in other parts of the nation. Through much of the South, especially, the federal minimum of $7.25 holds fast.

    "Eight states plus the District of Columbia have already increased their minimum wages this year, the most to have done so in a single year since 2006, and at least eight other states and municipalities could put minimum wage ballot measures before voters by November. But it is the scale of ambition that is catching the attention of economists, labor leaders and business owners."

    The story also notes that "Washington State already has the highest state minimum wage in the nation, $9.32, but more than 24 percent of Seattle residents earn hourly wages of $15 or less, according to the city, and approximately 13.6 percent of Seattle residents live below the federal poverty level."
    KC's View:
    The argument about an increased minimum wage seems pretty clear. Some people say that it will destroy businesses, forcing them to lay people off as a way of keeping their labor costs in line, which will have a negative impact on the nation's employment levels. And others argue that in the long run, people who make more money will have more money to spend, which will be good for the economy, and will lead to companies actually hiring more people to handle the increased business.

    I guess we're gonna find out who is right.

    There have been studies saying that we can already see the answer - that Washington State, with the highest minimum wage in the country, also has some of the highest job growth because of the health of its economy. (Of course, if more than 13 percent of Seattle's residents are living below federal poverty levels, there would seem to be limits on how effective a high minimum wage can be. Though, maybe we can attribute that high percentage on the high cost of coffee in Seattle…)

    I actually think that it is entirely possible that both arguments will prove out … that there could be a negative short-term impact, but that the longer term prognosis actually is pretty good.

    I got an email yesterday from an MNB reader saying that he'd never seen any evidence that increased wages lead to increased productivity … but that's certainly never been my argument. I do believe that there is a wage disparity problem in this country, and that to some degree it reflects an attitude that does not value work on the front lines as much as it values work in the executive suite. Which strikes me as both a value and a values problem.

    As I've said here before … the income disparity issue is not one that can simply be solved by increasing the minimum wage. It strikes me as typical of this country that we look at real problems created by a vanishing middle class and the enormous (and growing) chasm between the top five percent and everybody else, and the argument focuses on the minimum wage. You can't boil down systemic cultural and socio-economic issues to a couple of bucks per hour. Not to say that a couple of bucks per hour can't have an impact, but it is a band-aid.

    Published on: June 3, 2014

    Reuters reports that a group of retailers will ask the US Supreme Court to rule on a case "involving Federal Reserve rules that allow banks to charge debit card 'swipe fees' that retailers view as too high."

    Here's how the story is framed:

    "The 2010 Dodd-Frank law called for the Fed to cap the fees, which were about 44 cents per transaction at the time. Retailers had argued the fees were too high and led to higher prices for consumers.

    "The Fed in 2011 limited swipe fees to 21 cents per transaction, but retailers said the law intended the cap to be even lower.

    "The National Retail Federation, whose members include Wal-Mart and JCPenney, the National Restaurant Association, and other groups, sued the Fed in 2011.

    "A U.S. district court in July 2013 sided with the retailers. The Fed appealed, and an three-judge appeals panel in March reversed the lower court's decision and upheld the Fed's rules.

    "The retailers had the option of appealing to the full appellate court or directly to the Supreme Court. The court now will decide whether or not to hear the case."
    KC's View:
    I'm on the retailers' side here. But I don't have a lot of confidence that they are going to win this argument.

    Published on: June 3, 2014

    Panera, the sandwich chain, said yesterday that its 1,800 bakeries and cafes around the country will remove all artificial colors, flavors, sweeteners and preservatives from its food by 2016, committing to what it calls a "clean" and "simple" food policy.

    The Associated Press reports that this move comes as Panera is trying to jumpstart its sales (which were up 2.2 percent last year in stores open at least a year), as well as cater to a consumer class that is more interested than ever in food quality and, to a degree, food purity.

    "The unveiling of Panera's sweeping 'Food Policy' … underscores how positioning foods as natural has become a marketing advantage, regardless of whether it brings any nutritional benefits," the AP writes. "Part of the attraction for customers is that they feel better about what they're eating, sometimes because they don't feel as guilty about how many calories they're consuming."
    KC's View:
    There are, of course, limits to how far Panera can go. The chain won't be eliminating GMOs from its products … though it can be argued that GMOs could be an even bigger factor if consumer decision-making by 2016. (I think the jury remains out on this one.) And, they'll keep selling soft drinks…many of which are sweetened by high fructose corn syrup, or by low-calorie artificial sweeteners.

    I have to wonder whether this inconsistency is in some ways worse for the company than not making such a "Food Policy" declaration at all. If you are going to commit to "simple, clean" food, I'm not sure there should be room for the word "except" in that commitment.

    Published on: June 3, 2014

    The Wall Street Journal reports that Staples shareholders, in a non-binding vote, have voted 54 percent to 46 percent to reject the retailer's executive pay proposal, which changed the formula for bonuses and incentives so that leadership could get raises despite weak performance.

    The company had argued that the change in metrics was needed to recognize increased workloads in the face of tough competition and changing market conditions; CEO/chairman Ron Sargent's total compensation package added up to $10.8 million last year.

    The story notes that the vote was symbolic, though the company said it takes it "seriously." In a separate vote, shareholders narrowly passed a resolution calling for an independent chairman of the board.
    KC's View:
    Yet another example of how shareholders seem to be standing up against what they feel are corporate executives feathering their own nests. My question is this: what are they doing for the people in the stores who also may see their workloads increased, and who are on the front lines of competition?

    Published on: June 3, 2014

    The New York Times reports that Target's interim chairwoman, Roxanne Austin, has sent a letter to shareholders that defends the company's management and oversight related to the massive data breach that exposed tens of millions of shoppers' credit and debit card information to hackers late last year.

    “Breaches are occurring across the economy and are affecting a wide range of victims including the U.S. government, the technology and defense industries and more traditional companies, like retailers,” the letter said. “Your board fully recognizes the importance of its oversight responsibilities in this area. Under the board’s leadership and oversight, Target took significant action to address evolving cybercrime risks before the breach.”

    The letter, the Times writes, "highlighted steps the company had taken in response since the breach was revealed in December, including accelerating its conversion to a more secure payment-card technology on its branded cards and in its stores and hiring a new chief information officer."

    At the same time, Bloomberg has an interview with Target's interim CEO, John Mulligan, who says that the company had become too cautious and bureaucratic in its management: “We are accelerating how we make decisions,” he says, noting that the new management is trying to give more autonomy to design and store teams. “We got a little bit risk-averse in making sure things were perfect and we understood the economics," he says. "Now, it’s really unshackling ourselves.”
    KC's View:
    I don't have a strong opinion one way or the other about the Target board. I think it is probably is fair to say that the board and top management were not as vigilant as they should have been before the data breach took place; I also think it is fair to say that there are a lot of retailers out there looking at Target's situation and saying, "There but for the grace of God go I."

    I wonder if there are bigger questions that need to be considered, about board expertise and responsibility that could, if answered appropriately, could restructure the ways in which companies think about how boards work. In the words of the old Buffalo Springfield song, "There's something happening here … what it is ain't exactly clear."

    Published on: June 3, 2014

    Fortune is out with its annual list of the top 500 American companies, and once again it is topped by Walmart, followed by Exxon Mobil, Chevron, Berkshire Hathaway, and Apple (which made it into the top five for the first time).

    The 6-10 spots were taken by Phillips 66, General Motors, Ford, General Electric and Valero Energy.

    Other notable rankings include: CVS Caremark (12), Costco (19), Kroger (24), Procter & Gamble (31), Home Depot (33), Amazon (35), Target (36), Walgreen (37), Johnson & Johnson (39), PepsiCo (43), Google (46), Coca-Cola (58), Best Buy (60), Safeway (67), Sears (87), Mondelez (89), Tyson (93), Supervalu (94), Publix (104), McDonald's (106), Rite Aid (118), Staples (127), Kraft (156), General Mills (159), Dollar General (164), and Starbucks (196).
    KC's View:

    Published on: June 3, 2014

    • The New York Times reports that Pilgrim's Pride has raised its bid for Hillshire Brands, to about $6.7 billion, which is above the $6.1 billion bid by Hillshire made by Tyson Foods.

    According to the story, "The fight over Hillshire by the two country’s two biggest chicken producers highlights the continued consolidation within the food industry, as companies pursue higher growth. Both Pilgrim’s Pride and Tyson view Hillshire’s well-known brands, which also include Sara Lee desserts and its namesake lunch meats, a way to gain higher-margin products … The two bidders have been emboldened by high chicken prices and cheap corn feed costs, giving them the resources to pursue acquisitions."

    • In the UK, the Guardian has a story about how the British government is funding 21 technology projects that it hopes will "help independent retailers and town centres that are struggling to cope with a dramatic shift towards online shopping." The 21 projects were chosen from 181 applicants; each of the 21 gets six months to do feasibility testing, and the best of the best then will get additional funding.

    Among the projects being tested: a local currency that is called "town-to-town pound," which actually supplants the national currency while offering users some benefits; and a service "that enables shoppers to find and book available parking spaces using a smartphone, which then guides them to their destination."

    • The Monterey Bay Aquarium Seafood Watch program and The Safina Center (formerly Blue Ocean Institute) announced yesterday that after four years of partnering with Whole Foods on seafood sustainability issues, they both now will use "Monterey Bay Aquarium’s science-based criteria and methodology for rating the sustainability of wild-caught seafood, offering consumers consistent recommendations from trustworthy nonprofit conservation organizations."

    The agreement, they say, will give them "a greater capacity to evaluate a larger number of species and fisheries. The more species that are rated, the more seafood choices retailers like Whole Foods Market can offer."
    KC's View:

    Published on: June 3, 2014

    • Tesco CEO Philip Clarke has announced the creation of two new leadership positions as he looks to "reshape" the company to meet changing consumer needs.

    According to the story, Jill Easterbrook, who has been running Tesco's emerging health and well-being businesses, will become the chief customer officer. Former CMO Matt Atkinson will take on the role of chief creative officer,

    • Delhaize Group announced this morning that Denis Knoops has been appointed CEO of Delhaize Belgium and Luxembourg, effective immediately, succeeding Dirk Van den Berghe, who resigned last week.

    The announcement notes that "Knoops has worked for Delhaize Group for 22 years, serving the company in a variety of commercial, operational, strategic, and real estate roles across Belgium, the United States, and Asia. Since 2006 he has been a member of the Delhaize Belgium Executive Committee where he was most recently responsible for leading the network of affiliates as well as new markets and real estate."
    KC's View:
    Congratulations to Denis. Smart guy.

    Published on: June 3, 2014

    …will return.
    KC's View:

    Published on: June 3, 2014

    by Kevin Coupe

    "Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

    Content Guy's Note: "Fresh Talk" is a new MNB column, scheduled to alternate on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.

    I'd read a fair number of articles about Market Bistro, the new format developed by Price Chopper that opened recently in Latham, New York, before getting in the car and driving three hours north to see it. After more than eight decades serving upstate New York communities, the Golub family was justifiably proud of their new baby, and the local media had responded with enthusiasm. I had some sense of what the store might look like, since Neil Golub, the company's chairman, had shown me some sketches and blueprints more than a year earlier; even then, it seemed to me, he was fairly bursting, impatient for the store to open so he could see it in action. But I've been doing this a long time, and I often find that reality does not match expectations.

    Not this time.

    Market Bistro by Price Chopper, as the store if formally known, is a remarkable piece of work, brimming with energy and reflecting a focus on fresh foods that strikes me as an enormous competitive advantage. Bistro Boulevard, which is the spiritual centerpiece of the store, is in fact a kind of fantasyland of fresh foods and service counters … everything from fried fish, burgers and ribs to gorgeously thin lox, thick and succulent corned beef and pastrami (from the Ben & Bill's Deli counter), to custom-made burritos in a department that would put Chipotle to shame.

    Walking through Market Bistro, in fact, is a sensory experience … it sounds and smells like a food store, and when you sample the goods, the first reaction is that this is not supermarket food, but something a lot better than that. In part, this is because the Golubs have been rigorous about making sure the food is as fresh and as tasty as possible; words like "good enough," it seems to me probably never were used when developing recipes. One of my chief criticisms of many supermarket foodservice operations is that they go for the lowest common denominator when it comes to flavor, so afraid that they might alienate someone that they manage not to tantalize anyone. That's certainly not the case here.

    To be sure, the Golubs are placing a significant bet here, and I'm not just talking about the cost of building the Market Bistro store. While the facility itself is impressive, there also seems to be a conviction that service counters - rather than self-service bars - is the way to go, and that people will respond to the marketplace aspect of the experience.

    I think it also will be a challenge to make sure that quality stays both high and consistent, though I have the suspicion that there will be enough oversight to assure that nobody is coasting on their laurels. And one of the advantages of the Bistro Boulevard approach is that the individual counters can be changed out; if burritos suddenly no longer are in fashion, they can convert that space to something more trendy … they're not locked into anything in perpetuity, which is critical if you;re in the food fashion business. Which they are.

    Now, you may be wondering, based on the headline, precisely what hydroponic tomatoes and french toast do have in common…

    Well, for me, they were the signature Market Bistro features that stand out in my mind, and that, if I lived nearby, would have me coming back for more with great frequency.

    The hydroponic tomatoes are, in fact, being grown in the store - there's a small hydroponic installation in the center of the ample produce department, and you can't get much more local than that. Once again, this demonstrates an admirable fresh food-centricity, a connection to the land, at Market Bistro that takes it beyond the average supermarket. Or even beyond the above-average supermarket.

    As for the french toast … well, they make maybe the best french toast I've ever eaten at the Chef's Grill counter that anchors Bistro Boulevard. They make it with this amazingly thick challah bread that is soaked - not dipped - in the special egg mixture for a minimum of 30 seconds … and I ate an entire plate, with fresh maple syrup, even while knowing that I'd probably have to double up on my Lipitor the next day.

    You can check out Market Bistro online here, but as good as the website is, it doesn't do the store itself justice. I think Market Bistro is a legitimate step forward in how supermarkets prepare, present and peddle food … and that's not only because my mouth waters when I think about the french toast.

    KC's View: