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    Published on: August 8, 2014

    by Kevin Coupe

    Go figure. Uber just became a potential political weapon.

    Uber, for the uninitiated, is a car-sharing service that seeks to supplant much of the traditional taxi industry in many big markets. It has been the subject of numerous protests from the traditional taxi business, which sees it as a unfair competitive threat because it has avoided the licensing and regulatory costs that they have to absorb.

    Now, Politico reports, the Republican Party is hoping that it can translate the affection that young urban voters feel for services like Uber into affection for GOP candidates.

    "Republicans see it as the perfect opportunity to help sell the GOP’s free-market, lower-regulation message to a younger generation of voters they’ve struggled to win over in the past few elections and who often feel alienated by the GOP’s social conservatism," Politico writes. "On Wednesday, the Republican National Committee pounced, launching a petition to support Uber saying 'taxi unions and liberal government bureaucrats are setting up roadblocks, issuing strangling regulations and implementing unnecessary red tape to block Uber from doing business in their cities'."

    Democrats, the story says, tend to have taken a bifurcated approach to Uber and its brethren - they've supported its development, but have said that they need to adhere to the same rules as everyone else.

    I have no idea if this will work, but it is an interesting approach. At some level, this reflects the broader strategic decision by some in the GOP to position the party as more populist, and characterize the Democrats as being beholden to big business. I'm frankly a little cynical about the whole exercise - the one thing that seems utterly clear to me is that both political parties have been corrupted by big money … I make voting choices based on the positions taken by candidates, regardless of party, but never kid myself that these options cannot be swayed by a big check.

    Trying to appropriate Uber as a political symbol may be effective, but I'm not sure it is the kind of issue that will move voters from one political party to another. There are a lot of other issues that are far more consequential …

    However, I do think that there is a broader lesson to which both politicians and businesses should pay attention. It is far better to engage with people and companies that are trying to change the game and challenge the rules than it is to side with the status quo. Otherwise, you find yourself hoping that you'll get backed by the buggy whip industry…

    The limits of which will be an Eye-Opener.
    KC's View:

    Published on: August 8, 2014

    The New York Times writes this morning about how Walmart "is making an aggressive push to become a one-stop shopping destination for medical care.

    "The company has opened five primary care locations in South Carolina and Texas, and plans to open a sixth clinic in Palestine, Tex., on Friday and another six by the end of the year. The clinics, it says, can offer a broader range of services, like chronic disease management, than the 100 or so acute care clinics leased by hospital operators at Walmarts across the country. Unlike CVS or Walgreens, which also offer some similar services, or Costco, which offers eye care, Walmart is marketing itself as a primary medical provider … With its vast rural footprint, Walmart is positioning its primary care clinics in areas where doctors are scarce, and where medical care, with or without insurance, can be prohibitively expensive. If they succeed, the company said, it is prepared to open even more."

    The Times notes that "while experts agree that increased access to health care is a good thing, others say patients with chronic conditions need complex care that retail giants cannot provide. Diseases like diabetes, for example, can result in complications that are not easy to manage."

    The clinics, the story says, have "a supervisory physician who oversees compliance and prescription orders at one or two locations, those doctors do not actually treat patients. The system is the same as for acute care clinics that treat minor skin infections or a sprained ankle, but it is more unusual for facilities that provide more complicated health services, said Dr. Steven J. Kravet, the president of Johns Hopkins Community Physicians."
    KC's View:
    I've argued here for a long time that Walmart needed to take greater direct control of its clinic system, and that eventually it would - there is just too much opportunity there for a company like Walmart to simply have a toe in the water. And sure, the clinic model challenges traditional healthcare systems, but it strikes me as an entirely reasonable approach in certain markets. The way healthcare services are provided is changing in dramatic ways, and the smart companies are figuring out how to be part of the change.

    Published on: August 8, 2014

    The New York Times reports that Barnes & Noble is working with Google to provide same-day delivery of books in select markets - Manhattan, Los Angeles and San Francisco - as a way of competing more effectively with Amazon.

    The delivery service comes via Google Shopping Express, the year-old service that, as the Times writes, "allows online shoppers to order products from stores like Costco, Walgreens, Staples and Target, and have them delivered to their doors within hours."

    The new deal with Barnes & Noble "differs from that of Amazon and other big retailers," the Times writes. "Instead of relying on warehouses full of merchandise, Google is using a fleet of couriers who collect products from local stores, sort and bundle them and deliver them within a three- to four-hour window selected by the customer. Delivery is free for subscribers to Google Shopping Express, and costs $4.99 per delivery, per store for others. Membership is free for the first six months. Google has not announced what the subscription fee will be."

    The arrangement is designed to benefit both companies: "The partnership could help Barnes & Noble make inroads into online sales when its brick-and-mortar business remains stagnant. The company has closed 63 stores in the last five years, including some in bustling areas of Manhattan and Washington, leaving it with a base of about 660 retail stores and 700 college campus stores. Its Nook business fell 22 percent in the fourth quarter compared with the period a year earlier, according its most recent earnings report." At the same time, "Amazon’s popularity as an online shopping destination has the potential to undercut Google’s lucrative search engine advertising business. By adding Barnes & Noble to its list of 19 retail partners, Google is making a more explicit grab for Amazon’s turf. The partnership also comes at a moment when many authors and book buyers are frustrated with Amazon because of what they say are its punitive negotiating tactics in its standoff with the publisher Hachette over e-book pricing."
    KC's View:
    I'm amazed that it has taken this long for Barnes & Noble and Google to team up …. it seems to me that this can be a strong alliance, though they'll have to work very hard to overcome the competitive lead that Amazon has established for itself. I would suggest that one of the things that they could do is figure out a way to a) have a more collaborative relationship with big publishers, an area in which Amazon seems to be having some trouble lately, and b) work hard to embrace the small authors (like me!) that have found Barnes & Noble almost impossible to work with. It'll take a lot of effort, but that's where I'd be putting my focus - on creating a vibrant, diverse, and open content-rich environment.

    Published on: August 8, 2014

    The Wall Street Journal reports that "two decades after the first genetically engineered seeds were sold commercially in the U.S., genetically modified organisms - the crops grown from such seeds - are the norm in the American diet, used to make ingredients in about 80% of packaged food."

    However, the story says, "'non-GMO' is one of the fastest-growing label trends on U.S. food packages, with sales of such items growing 28% last year to about $3 billion, according to market-research firm Nielsen. In a poll of nearly 1,200 U.S. consumers for The Wall Street Journal, Nielsen found that 61% of consumers had heard of GMOs and nearly half of those people said they avoid eating them. The biggest reason was because it 'doesn't sound like something I should eat.'

    "Grass roots campaigns in several states are pushing for mandatory labeling of foods with GMOs—something most food companies staunchly oppose. In May, Vermont adopted the first state law requiring companies to label GMO foods, starting in 2016.

    "The anti-GMO backlash reflects the deep skepticism that has taken root among many U.S. consumers toward the food industry and, in particular, its use of technology. Similar criticism has roiled other food ingredients including artificial sweeteners and finely textured beef, the treated meat product that critics dubbed 'pink slime.' The Web and social media have enabled consumer suspicions in such matters to coalesce into powerful movements that are forcing companies to respond."
    KC's View:
    This can be hard. The story notes that while ben & Jerry's committed to eliminating GMOs from its products two years ago, it has found that "the biggest hurdle is milk. The vast majority of the feed given to dairy cows in the U.S. is made with GMO corn, soybeans and alfalfa. That makes it difficult to find non-GMO milk in quantities large enough for Ben & Jerry's…"

    Keep in mind that the anti-GMO backlash has been fueled in part by the utter unwillingness of many companies to label them and then educate consumers about them. They could change the game by embracing labeling as an opportunity, but they've not done that … and so they have only themselves to blame for much of the controversy.

    Published on: August 8, 2014

    Bloomberg Businessweek reports that the decision CVS Caremark to ban tobacco sales from its stores, reasoning that as a health care provider it could no longer be in the business of selling an addictive carcinogenic product, looks to cost the company $2 billion in annual sales.

    According to the story, "Executives confirmed that eye-popping estimate after a little prodding on an earnings call. In the second quarter, the company said, sales at the front end of CVS stores where the cigarettes have been kept dropped 0.4 percent. Some stores are still in the cigarette-selling business. The self-imposed deadline to remove all tobacco products doesn’t come until October, so the modest drop in sales up front last quarter might come from stores that have stopped replenishing inventory.

    "CVS isn’t just facing lost revenue from the sales of cigarettes—it’s losing money on all the other stuff that those smokers might have bought. Plus, CVS has locked itself out of an emerging business. The company didn’t stock e-cigarettes at the time of its tobacco-free announcement and said it will wait for guidance from the Food and Drug Administration before making a decision about selling them."
    KC's View:
    I have a strong bias here, as I've explained often in the past, but I think that CVS made exactly the right marketing and long-term business decision in banning tobacco sales - it is being very clear and very consistent about its mission and values.

    Besides … For what shall it profit a man, if he shall gain the whole world, and lose his own soul? (Mark 8:36)

    Published on: August 8, 2014

    There were mixed signals yesterday at Market Basket, as the company told most of its part-time workers that the tumult affecting the company would result in most them being laid off until operations return to normal.

    However, shortly thereafter - especially after Massachusetts Attorney General Martha Coakley established a hotline for employees to call if they feel they are bring treated unfairly or illegally - the company issued a clarifying statement, saying that "store directors were not instructed to lay off associates, but to adjust hours to meet current demand. It is our hope that we will be back to normal business levels in the not too distant future and all associates will be back to a full schedule.”

    Meanwhile, the Boston Globe is reporting that Delhaize - parent company to Hannaford Bros., a Market Basket competitor - is the company that has bid to acquire the the 50.5 percent that is owned by Arthur S. Demoulas and his siblings. The 49.5 percent owned by cousin Arthur T. Demoulas apparently is not for sale.

    As previously reported … The longtime family feud boiled over with the move by Arthur S. Demoulas, to oust CEO Arthur T. Demoulas due to a conflict over the company’s finances. The fight is characterized differently by the two sides. The Arthur S. Demoulas faction argues that Arthur T. Demoulas spends money irresponsibly and refuses to take direction from the board. The Arthur T. Demoulas side maintains that his cousin is fueled by greed, only interested in raising prices, cutting employee compensation, and threatening the formula that has built the company to a New England success story. The family feud has been exacerbated by mass protests organized by employees and store boycotts organized by customers, as well as a systematic slowdown in deliveries by warehouse employees that has left many units virtually empty of product.

    Delhaize has not commented on the Globe report.
    KC's View:

    Published on: August 8, 2014

    The New York Times reports on a new front being opened in the three-month war between Amazon and Hachette over book pricing, which Amazon virtually halting the sale of books published by Hachette as a way of forcing the publisher to agree to lower prices on e-books. Hachette responds that Amazon is being a bully, using its ever-increasing market power as a way of pushing it into near-irrelevance.

    Now, there is a letter from more than 900 writers being sent to Amazon CEO Jeff Bezos - and published as a full-page ad in Sunday's Times - demanding that Amazon stop using authors as virtual hostages in the negotiations.

    The Times writes: "This latest uproar in Amazon’s three-month public battle with Hachette comes at a vulnerable moment for the Internet giant, which is rapidly transforming itself into an empire that not only sells culture but creates it, too.

    "Amazon does not want to be seen as hostile to content creators, one of the four groups it says on its investor relations web page it is expressly set up to serve. But it also has to price their creations cheaply enough to draw hordes of consumers, while at the same time making enough of a profit to satisfy investors.

    "It is a complicated balancing act. Some argue it is impossible. Amazon just surprised Wall Street by saying it may lose more than $800 million this quarter, potentially wiping out its profits for the last three years, partly because creating video content is expensive. The prospect of this unexpected loss has raised questions about whether Amazon’s money-losing ways are finally catching up with it — and whether that is the real reason it is making new demands on publishers like Hachette."

    The letter has been signed by authors such as Stephen King, John Grisham, Robert A. Caro, Malcolm Gladwell, Michael Chabon, Michael Lewis, Jon Krakauer, Scott Turow, Sebastian Junger, and Nora Roberts, with the wealthier authors paying for the placement in Sunday's Times. It originated with Douglas Preston, a thriller writer who has seen his sales and pre-orders plummet since the Amazon-Hachette war broke out - roughly half of his sales have been on Amazon.

    "“We feel strongly that no bookseller should block the sale of books or otherwise prevent or discourage customers from ordering or receiving the books they want,” the letter states.
    KC's View:
    I wonder to what extent the battle against Amazon will get any sort of grassroots traction; the problems of publishers and authors may not capture the public's imagination the same way other issues do.

    Nobody ever asked me to sign this letter, but I probably would have, since I do think that Amazon is making a mistake here. I understand that Amazon is just doing what a lot of big retailers do - using their power to drive down prices. But Amazon has occupied a different position in the minds of consumers, mostly because it has positioned itself that way, and this battle may dilute its image to some degree.

    That said, this is a tricky balancing act. Amazon needs to satisfy its customers, suppliers, authors and investors … and there may be no way to make everybody happy. In the end, it has to side with its customers … and the question is, does it best do that by making everything available on its site at sharp prices, or by using its clout to drive prices down even more, even if that means making some products unavailable for a time?

    Published on: August 8, 2014

    • Sprouts Farmers Market, which has positioned itself as competitive to Whole Foods but at much lower prices, said yesterday that its Q2 net sales were up 20 percent compared to a year ago, to $743.8 million, while same store sales were up 9.5 percent. Sprouts said that it opened six stores during the quarter, and plans to open 24 new stores during 2014.


    CNBC reports that the Neighborhood Market Association, which represents some 2,400 small markets in the western US, is saying that while plastic bag bans are said to be good for the environment, they also seem to result in an increase in shoplifting incidents.

    The problem seems to be that when people bring in their reusable bags, they're able to steal products with greater ease than with single-use bags they get at checkout. The evidence is anecdotal rather than statistical, but there seems to be a growing feeling that there could be a correlation if not causality.


    • The Chicago Business Journal reports that "for the fourth year in a row, Aldi was named the top low-price grocery store chain in America, according to a new survey conducted by independent research firm Market Force. " The survey says that Aldi "ranked ahead of familiar discount grocers such as Costco, Walmart and Trader Joe's in the low-price category."

    The story goes on to say that "in addition to its top ranking among low-price grocers, Aldi also ranked as one of top three favorite grocery store chains in America in the new Market Force survey, which polled more than 6,000 consumers. Aldi was third among the top three, behind top-ranked Trader Joe's and Publix."
    KC's View:

    Published on: August 8, 2014

    …will return.
    KC's View:

    Published on: August 8, 2014

    In "The Forsaken," the newest and fourth Quinn Colson novel, writer Ace Atkins creates the layered and complex world of fictional Tibbehah County, Mississippi, populates it with unique and diverse personalities, and harvests all of them to create a remarkable piece of crime fiction. It is the kind of book that, once you start it, is difficult to put down - it has a driving narrative that recalls some of Elmore Leonard's best work, but also has resonances from the novels of Ross Macdonald, in which the sins of the past often catch up with both the innocent and guilty in the present.

    The main plot of "The Forsaken" concerns a rape-murder that dates back almost four decades, and that resulted in the lynching of a black man presumed to be guilty. However, the surviving victim knows that the wrong man was hung, and she asks Sheriff Quinn Colson to delve into the case and find out who was wrongly punished and who was actually responsible for the attacks. It isn't a good time for Colson - he's being unfairly targeted in a corruption investigation that has been initiated for political reasons, and it isn't a good time to be digging up bodies, literally and figuratively, in Tibbehah County.

    But one of the things that makes a hero a hero is the willingness to do the difficult under tough circumstances, and to show character under fire. And Colson - a former Army Ranger who has returned to his hometown with a desire to clean up the corruption there - is every bit a hero. He's a little bit Gary Cooper (in High Noon), a little bit Henry Fonda (in My Darling Clementine), and a little bit Billy Jack (in fact, he mentions Tom Laughlin, who gave us Billy Jack, in the dedication, along with Elmore Leonard). "The Forsaken" and the earlier Colson novels may take place in the deep South, but they are very much modern westerns, morality tales that pit good against evil, and yet with shadings of gray that remind us that life is rarely as simple as we'd like it to be.

    Robert B. Parker, creator of the Spenser novels (a series that Atkins has quite capably continued since Parker's death), used to say that he thought people liked the novels because they liked the musicality of the language. They may be reading it, he'd say, but they could also hear it in their minds, and found it pleasing. That's certainly the case with "The Forsaken," as Ace Atkins plays southern blues in his own, inimitable way.

    Great book. Read it.



    By the way … Atkins had a meditation on bourbon, William Faulkner and writing this week in the Wall Street Journal. It gives you a sense of his affection for the landscape against which he sets his Colson novels, and you can read it here.



    My wines of the week are the 2009 and 2011 Carlton Cellars Pinot Noirs … they're a little bit different, but both excellent. After all, they're from Oregon…




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

    Slàinte!
    KC's View: