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    Published on: June 26, 2014

    This commentary is available as both text and video; enjoy both or either … they cover the same topic, but are not identical. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy. There are three subjects on my mind this morning, so let me take them one by one…

    First of all, I've gotten a number of emails asking me why I haven't covered or commented on the travails of American Apparel, the clothing retailer that has been in the news lately because the board stripped founder Dov Charney of his chairmanship and moved to fire him as CEO. The board made the move after years of allegations of sexual misconduct, though the official reason apparently has more to do with financial shenanigans (like paying off employees so they wouldn't sue him for sexual harassment).

    The reason I haven't commented on the situation is because I have this feeling that immediately after doing so, I'll need to take a shower … the situation is just so sleazy and creepy that I just haven't wanted to talk about it.

    So let me just say this. From all reports, the board has known for a long time what Charney's behavior has been like, but only decided to step in when it affected the company's financial performance. I'm not a prude, and I think that whatever goes on between consenting adults is none of my business. But that doesn't seem to be the case here, and it certainly isn't the kind of company where I'd want one of my kids to work. (I wonder how many of the board members have kids who work there. I'd bet none.)

    The board could've stepped in years ago, and probably should have … because certain kinds of behavior simply ought not to be tolerated. The allegations against Charney - which he doesn't seem to deny, but just argues that the board has no right to depose him - make him seem like a dirtbag, but the board may, in fact, be no better. A pox on all their houses.

    On the brighter side, I've been totally jazzed lately to see a number of articles pointing to how various fictional creations on Star Trek - like the transporter, the food replicators, the holodecks and even warp drive - suddenly seem to be less like science fiction and more like science…people are actually working on them, and they seem within the realm of possibility.

    I just think this is totally cool. I know I'm a bit of a geek about this, but Star Trek remains one of the most hopeful entertainments ever created … it actually posits a world where things are better, where mankind has gotten beyond petty concerns and looks beyond itself. It may be a lot more difficult, but if we can actually develop a transporter, I hope at some point we'll be able to achieve the things Star Trek says about the human heart and mind. I'm not encouraged on that score, but I'm hopeful.

    Speaking of hope … few things make me as hopeful as what I like to call my summer adjunctivity … I'm speaking to you this morning from the campus of Portland State University in Oregon, where I'm spending much of my summer team-teaching a marketing class with the great Dr. Tom Gillpatrick. It's early, but I can tell you this based on experience - the students are going to be smart, committed, innovative and thoughtful…and I'm going to learn as much from them as they learn from me. (This is true on so many levels. For example, I learned last night that one of our students is, in addition to her studies, a member of the Portland Shockwave, a women's full-contact professional football team competing in the Women's Football Alliance. I didn't even know there was women's professional football, much less a league. And last night we got a lesson in how the team and league work. Like I said, I learn a lot teaching this class.)

    Once again this year, we're going to have some terrific guests joining us in the classroom. I've been lucky enough to have friends of mine from all sorts of companies, some of them from as far as 3,000 miles away, come to Portland to spend time with my classes over the past few summers. I think this speaks volumes about their generosity of spirit, and to the allure that the classroom has for many of us. For a few hours, we're not putting out fires. Rather, we're stoking them…hopefully in the bellies of these terrific students.

    It is just a blast, and I'm lucky and privileged to be here.

    That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: June 26, 2014

    by Kevin Coupe

    Okay, to be honest, I don't know exactly what to make of this.

    But it certainly qualifies as an Eye-Opener.

    It seems that William Shatner is back. Again.

    This time, it is with a new show on Ora TV, a digital on-demand TV network that was founded in part by Larry King after he was deposed from his CNN talk show.

    Shatner's show is called … wait for it … "Brown Bag Wine Tasting," and in it he will be interviewing both celebrities and "real people" and talking about wine, challenging them to taste wine poured from a bottle in a brown bag, and then describe and identify the wine. New episodes will be made available twice a week.

    First up is Food Network host Alton Brown, who talks about the difference between a "chef" and a "cook," and ruminates about his upbringing and how his grandmother played an important role in his food education. It actually is pretty interesting show, made even more so by the fact that Shatner seems genuinely interested in and curious about his guest.

    In some ways, it reminds me of Jerry Seinfeld's web series, "Comedians In Cars Getting Coffee," which is utterly delightful.

    What they both have in common, it seems to me, is the importance of the table … the shows are about people getting together and talking over food and drink … and there's something basic and pleasing about that.

    I kind of liked it. Maybe you will, too.

    KC's View:

    Published on: June 26, 2014

    The Cincinnati Enquirer has a nice piece about Kroger's Rodney McMullen, who today will be presiding over his first annual meeting of the company as CEO.

    Excerpts:

    • "Humble to a fault, McMullen's easy-going demeanor belies the critical roles he's played for years before becoming CEO on Jan. 1. He's been intimately involved in the strategy that has grown Kroger's sales every quarter for 10 ½ years – transforming shopping for American consumers who want a viable alternative to Wal-Mart.

    "The company, by the way, is kicking its Arkansas-based competitor's ass – something Wall Street has noticed. Kroger's stock hit an all-time high of $50.20 last week even as the rest of the grocery industry appears in peril."

    • "In 1988, McMullen played a critical role in Kroger's restructuring – beating off corporate raiders from Wall Street attempting to take over the company in a leveraged buyout.

    "CEO Lyle Everingham, president Joe Pichler and CFO Sinkula pushed through a plan for Kroger to borrow more than $4 billion and distribute it to shareholders in a one-time dividend. McMullen crunched the numbers that predicted the future cash flow needed to pay off the debt.

    "The result was shareholders got a premium for their stock and Kroger stayed a public company."

    • "Toward the end of Pichler's tenure, Kroger's growth began to elude the retailer as nontraditional rivals – drugstores, dollar stores and discounters – discovered they could sell more groceries to drive traffic … McMullen was a key player on the team that figured out how much Kroger could grow sales if it cut prices. Then Kroger would use the additional money to cut prices further, spurring further growth, Pichler said.

    "For a time, Wall Street punished the stock because investors were worried the company was pursuing a smaller profit. They were right: Kroger's gross profit margin – the money left after paying for merchandise that's sold to customers but before operating expenses such as labor are paid – has dropped from 27.4 percent in 2002 to just 20.6 percent in 2013.

    "But Kroger thrived by taking a smaller slice of a bigger pie, as sales doubled in the ensuing years from $50.1 billion in 2002 to $98.4 billion last year (excluding $4.7 billion at newly acquired Harris Teeter)."
    KC's View:
    I know this may sound a little weird, but y'know what grabbed me most about this article? (Other than the fact that McMullen seems perfectly suited to Kroger, just as David Dillon was - it appears to be a company where egos don't run wild, and where being low-key and good at your job actually matters for something.)

    The thing that I noticed was that the Cincinnati Enquirer ran a story that said Kroger is - and I quote - "kicking its Arkansas-based competitor's ass."

    That's just so funny. And completely unexpected.

    Published on: June 26, 2014

    Mark Bittman, the New York Times food writer, has an excellent piece in the paper about foodies, and how to turn them into food activists.

    An excerpt:

    "I do wish there were a stronger, less demeaning-sounding word than 'foodie' for someone who cares about good food, but as seems so often the case, there is not. Witness the near-meaningless-ness of 'natural' and 'vegetarian' and the inadequacy of 'organic' and 'vegan.' But proposing new words is a fool’s game; rather, let’s try to make the word 'foodie' a tad more meaningful … We can’t ask everyone who likes eating — which, given enough time and an adequate income, includes everyone I’ve ever met — to become a food activist. But to increase the consciousness levels of well-intentioned foodies, it might be useful to sketch out what 'caring about good food' means, and to try to move 'foodie' to a place where it refers to someone who gets beyond fun to pay attention to how food is produced and the impact it has.

    "The qualities that characterize good food vary within a narrow range. Good food is real, it’s healthy, it’s produced sustainably, it’s fair and it’s affordable. Maybe it’s prepared at home, though if communal kitchens or restaurants can deliver those qualities, I’m all for that.

    "None of this is complicated, but simple doesn’t mean easy."

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

    Published on: June 26, 2014

    Investors Business Daily reports that a new pricing study by Sterne Agee analyst Charles Grom suggests that Dollar General has lower prices than both Walmart and Family Dollar.

    According to the story, "Grom's 'dollar store' studies follow Family Dollar's announcement earlier this year that it would be investing $50 million in prices across 1,000 stock-keeping units (SKUs), or items, as part of a move back to everyday low pricing … Even more interesting than the fact that Dollar General's basket price was 40 basis points lower than that of Family Dollar and Wal-Mart, he noted, is how closely all three baskets are priced.
    "In the recent study, Family Dollar's basket at $149.39 was 0.4%, or 64 cents, higher than Dollar General's, compared to last May when the spread between Wal-Mart and Family Dollar was $7.81 or 5.3%."
    KC's View:
    Reading this story, I could not help but think of the story from last week about the Planet Retail report saying "the company behind the Lidl supermarket chain is set to become western Europe's biggest grocery retailer by 2018 as discounters become mainstream across the continent."

    Have to wonder if this same sort of thing could happen here, and if there is a reset taking place that will have a chilling impact on the industry's traditional leaders.

    Published on: June 26, 2014

    • Published reports say that Amazon has finally reached an agreement with Transport for London that will allow it to install product collection lockers at two of London's tube stations. The deal follows similar deals that the London Underground's authority reached with Tesco and Waitrose to put collection points in six tube stations.
    KC's View:

    Published on: June 26, 2014

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

    Marketing Daily reports on the opening of Rite Aid's new story in Beverly Hills, which it says is its "its latest concept of wellness retailing," including such features as "larger departments for pharmacy, which now has a private consulting room; beauty; over-the-counter medicines and first aid. It has added a café and patio area, serving coffee, tea, baked goods, sandwiches and ice cream."

    The 4600-store chain has 1300 stores that use the new Wellness format, with another 450 to be converted by the end of next year.


    Reuters reports that Sen. Richard Durbin (D-Illinois) plans to introduce legislation today designed "to keep multinational corporations from fleeing the United States for tax reasons and to reward those that remain U.S.-based, pay a fair wage and create U.S. jobs." The bill is prompted by the possibility that Walgreen which has its headquarters in Illinois, could move its home base to Europe in a tax-avoidance move called "inversion." It would do so by acquiring the 55 percent of Europe's Alliance Boots that it does not already own and then shifting its HQ to Switzerland.

    According to the story, "Such tax-saving inversion deals, while still rare, are on the rise and are causing concern in Washington … A Reuters review showed that about 50 inversions have been done since 1982, with half of them occurring just since 2008."


    • Barnes & Noble said yesterday that "it plans to split off its Nook e-reader division as it looks to boost shareholder value," according to a store from the Associated Press.

    While Barnes & Noble developed the Nook to help it compete more effectively with Amazon's Kindle and Apple's iPad, it has struggled to find a niche, and the company's traditional retail division actually has outperformed it.

    Sad day when what was supposed to be your ticket to the future actually end up being the weight that is dragging down your financial performance.


    • The Chicago Tribune reports that "McDonald’s is testing a new mobile app that lets customers order their favorite McFoods on their phones. It would ask "burger and fry aficionados to register with email addresses and credit or debit card information before they compose orders and drive to curbside check-in spots outside the store, or walk inside. The app is free to download on Apple’s iOS and Google’s Android operating systems. Customers can then scan a QR code generated by the app on their phones, which pays for the order, and McDonald’s workers prepare the food, according to an app tutorial."

    The test is being conducted at 22 locations in Georgia and Alabama.

    McDonald’s spokeswoman Lisa McComb said, “We are testing these technologies in a few markets, so it’s premature to speculate on the decisions we may make after the tests, but we’re excited to bring a cutting-edge experience in the future to our customers.”

    Cutting edge…unless, of course, you actually have the Starbucks app…


    • The Washington Post reports that "Ikea, the Sweden-based global retailer of flat-pack furniture, plans to announce Thursday that it will raise the average minimum wage for its U.S. retail employees by 17 percent, to $10.76 per hour, beginning next year. The company said it’s overhauling how it determines wages for workers in each of its 38 U.S. stores and will now base its minimum pay on what’s considered to be a 'living wage' in each local area, rather than on what competitors are paying … Ikea is basing its new wage structure on MIT’s Living Wage Calculator, a Web site that shows how much workers need to make in any given county or municipality to afford basic goods."

    Is this going to dramatically affect the debate over the minimum wage? Probably not. But if Ikea makes this change and it does not hurt the company's numbers, then it could change perception in industry that higher wages mean lower profitability. And then it won;t matter what governments do, because companies, looking to be preferred employers, might sing a different tune.
    KC's View:

    Published on: June 26, 2014

    • The St. Louis Post-Dispatch reports that Schnuck Markets has hired a new CIO - Robert Hardester, previously the vice president of corporate systems at north St. Louis County-based Express Scripts.

    Hardester succeeds Mark Zimmerman, who is leaving the company.

    The move comes after last year's massive data breach at Schnuck, which affected more than two million credit and debit cards used in its stores.
    KC's View:

    Published on: June 26, 2014

    Gotta love this email from MNB reader Alex Drew:

    The more and more that I think about these recent articles of massive retail giants running into troubles like Tesco and Walmart and even Target I think of Jurassic Park.  The scene that comes to mind each time is when Richard Attenborough and Laura Dern are sitting at the table in the cafeteria eating the melting ice cream as the world around them is collapsing.  They begin to talk about the flea circus that Attenborough started his empire with, and how it was all an illusion.  At that point, Dern alerts Attenborough to the fact that the new park was the same thing, all an illusion of control.

    I wonder, do these massive retailers get it into their heads that they have control, of the consumer or the market?  They never do, but when they get that idea in their heads, that's when the power goes out and the dinosaurs (or consumers/market) overrun the place.


    Perfect metaphor … and extra credit for using a movie.

    It is, in fact, so perfect that I used it in class last night, and the students totally got it.

    So thanks for that.



    Regarding the tumult at Market Basket, one reader wrote:

    Brilliant move by the management team to resign. By doing so, they effectively wiped out the leadership ranks and with it, all the business decision making history. It also presents a massive challenge to maintaining key supplier relationships.  The rank and file are unlikely to do what it will take to keep the business running as well as it has been for the new CEO and COO, both of whom will be considered traitors before they’ve even had a chance to prove their mettle. Talk about destroying business value overnight. The only people who can be truly pleased with the changes are Arthur S and all of Market Basket’s competitors.  Market Basket has built a formidable business model and Arthur S’s ego clearly has clouded his ability to see this.  This family feud seems to know no end.

    Expect lawsuits. And lawyers getting rich, while the business loses equity with every passing day.



    From reader Brian Blank:

    In response to the reader who had doubts about insurance coverage should there be a mishap during an Uber trip (and also to counter a major point of mis-information constantly thrown out there by taxi operators), the following text comes directly from the Uber website:

    From the moment you get into any Uber product (e.g. uberX, UberBLACK) to the moment you’re dropped off, your ride is covered by commercial liability insurance. That goes for every trip in every city around the world. In the U.S. specifically, ridesharing has become a popular choice — and Uber is the first company to ensure true end-to-end insurance coverage for ridesharing, with drivers on uberX protected by liability coverage even between trips.


    So there.



    On the subject of fast food, MNB reader Lisa Malmarowski wrote:

    Fast food falling…

    There are so, so many more options for better, quick meals. Gee, I dunno, grocery stores come to mind. From Whole Foods to Wegmans, to mom and pop's to food co-ops, we're all on the fast feeder bandwagon and many of us do it better than old Mickey D's and their ilk, using real foods and personalized service.


    I conceded the other day that maybe I'm a snob about fast food, which led reader Bryan Nichols to write:

    Not liking McDonald’s does not make you a food snob.  You just have a different definition of value than some people, and that is what creates variety and choice in the marketplace.

    And, from another reader:

    I sure wouldn't call you a snob Kevin, but I will ask you this question: If you were a mom with 2-3 or 4 kids and you needed a lunch break every so often where would you suggest a place to take the kids them for lunch ?

    Hey, I'm a dad with three kids, and when they were young we used to eat at McDonald's - especially during Little League season when a fast meal after a late game was a definite necessity.

    But I hate myself for it.
    KC's View:

    Published on: June 26, 2014

    I saw two movies this past week. One was a big-budget dystopian blockbuster, and the other was a small film that mostly takes place in a private prep school. Guess which one I liked more?

    It's not that X-Men: Days Of Future Past is a bad movie. Hardly. The one thing about most of the X-Men movies is that they generally have something on their mind besides explosions. Being about mutants, and about traditional society's fear and intolerance of anything it sees as "different," the X-Men movies actually have concerned themselves with alienation and prejudice … until, of course, they get to the explosions and over-the-top special effects that are meant to give you your money's worth.

    This one is no different, though it is ambitious. It posits a world in which drone robots are being used to hunt down not just mutants, but anyone perceived as anti-government, and kill them. Professor Charles Xavier (Patrick Stewart), Magneto (Ian McKellan) and assorted other mutants find a way to send Wolverine (Hugh Jackman) into the past so he can change history and prevent the drone robots from being invented. When he gets there, he has to enlist the younger Xavier (James McAvoy) and Magneto (Michael Fassbender) in his efforts … and it gets complicated, as one might expect, since Richard Nixon and the Paris Peace talks about Vietnam are involved.

    It all works well enough, but it is what it is, and nothing more. It probably is unfair of me to expect X-Men: Days Of Future Past and its ilk to be more than that, but I keep hoping.



    On the other hand, there's a little movie called Words and Pictures that I found to be absolutely delightful … mostly because it actually is about something.

    Words and Pictures stars Clive Owen as an alcoholic English teacher who used to be a well-known writer, and who has either turned to booze to assuage his inability to write, or has allowed booze to make him unable to write. He's on the verge of losing his job until the school gets a new art teacher, played by Juliette Binoche, who find herself unable to paint because of severe rheumatoid arthritis. Nevertheless, Binoche's character is passionate about the fact that pictures express the truth more accurately than words, a belief that threatens Owen's world view. And so, he challenges her to a contest in which their students will debate the whole words-vs.-pictures issue.

    Now, there's no question that Words and Pictures is derivative - it reminded me in some ways of movies like Dead Poets Society, Mr. Holland's Opus, Wonder Boys and even Goodbye, Mr. Chips.

    But for me, it didn't matter. Owen and Binoche are terrific, the script, while talky, actually concerns itself with a serious debate, and the direction by Fred Schepisi is fine, which is what you'd expect from the guy who directed Roxanne (IMHO, the best movie Steve Martin ever made).

    I liked it a lot.
    KC's View:

    Published on: June 26, 2014

    As is my custom at this time of year, I'm going to be taking some time off…

    MNB will be on hiatus from now until Monday, July 14 … which seems like a long time, but it really is only 10 editions of MNB that I'll be missing. (I would've taken next Friday off for July 4 in any case.) I hope you'll welcome me back with open arms when I return.

    This will give me some time to recharge the batteries a bit … do a little jogging, a little hiking. a little reading, some eating and drinking, a little hanging out with my family, and a little enjoying of the great Pacific Northwest.

    But I'll be back … MNB will return on July 14, with all new stories and commentaries. Between now and the 14th, the MNB archives will, of course, be open. And, I may post the occasional note or picture on Facebook if the spirit moves me … sometimes I can't help myself!

    Thanks…I hope you'll also get some time this summer to recharge your batteries.

    And, as always…

    Slàinte!
    KC's View: