business news in context, analysis with attitude

Published on: September 3, 2014

by Michael Sansolo

The endless and growing battle for share of stomach has a couple of simple realities. There are only so many stomachs and despite the growing problem of obesity, for the most part the size of the market is barely expanding. One thing that is expanding, though, is the number of companies looking to engage in the battle for share of stomach.

Today, food can be bought nearly everywhere you can think of, from home repair shops to gyms. Now we can add banks to the list.

I discovered this new reality while walking on a street in Boston’s financial district. The sign above the store read café and through the window I could see a Peet’s coffee shop. Yet the sign on the door threw me completely: it reads Capital One.

Called Café 360, the new branches are Cap One’s new attempt to jump into one-stop shopping.

First, it’s not really a bank branch. Rather Café 360 is a coffee shop with an ATM, but that provides a convenience that supermarkets learned long ago by adding all manner of products and services, including ATMs and banking branches. At Café 360, customers can handle all their banking needs and, of course, pick up coffee and various accompanying foods depending on the time of day.

There are tables, clean bathrooms and free Wi-Fi for those wishing to stay a while. To sweeten the deal, Cap One customers get special discounts by using their credit or debit cards to pay for their products. Go figure, just as we all find new ways of avoiding visits to the bank, the banks suddenly find a way to reach out and bring us back. And that matters.

Before you scoff at this experiment understand the scope of what can happen here. Cap One is a large bank and is already experimenting with Café 360 in numerous cities including New York, Philadelphia, Chicago, Los Angeles, San Francisco and, inexplicably, St. Cloud, Minnesota.

I spoke with one of the employees there, who told me that on business days the traffic is brisk, which is hardly surprising. The entire premise of one-stop convenience is the ability to do two or more things in the same place. Café 360 does exactly that.

The reason this experiment should catch everyone’s attention is the potential competitor that could result. Cap One alone has more than 900 branches, yet other banks will no doubt be watching. Plus, if the marriage of coffee and commerce is really working we can only imagine how Starbuck’s will respond.

In fact, the idea of building these bank/coffee shops might explain why St. Cloud is on the list. If you can make it there it might suggest you can make it everywhere, including in countless smaller cities across the country.

In other words, we could be seeing the genesis of a new competitor for share of stomach, which is certainly nothing the traditional food retailing world desperately needed. But that’s what makes for innovation: companies filling a need or creating a solution where no one thought one was needed.

The battlefield just got more crowded. You can duck, or you can do battle.


Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: September 3, 2014

by Kate McMahon

Milton Hershey would not be pleased.

The new Hershey’s logo, unveiled last week to great fanfare, was all the talk of Twitter.

For all the wrong reasons.

The streamlined Hershey’s Kiss graphic was immediately compared to an emoji (or "picture word") that, to phrase this as politely as possible, represents a steaming pile of feces.

Not exactly the connection that Hershey's was hoping to make.

Introducing the redesign, the 120-year-old chocolate giant called the new corporate logo “a fresh and modern interpretation of the beloved KISSES icon.”

The Twittersphere immediately reacted with every predictable turn of phrase, likening the new logo to the “poo emoji” and noting Hershey’s plan had “hit the fans.” Others tweeted: “Is it just me or does anyone else see a steaming turd?” and “Hershey, your new logo kinda stinks.” Eater.com posted: “Sad face: Hershey's new logo literally looks like crap.”

Blame it on the wrapper, or lack thereof. The old logo was a three-dimensional silver wrapped Kiss with the paper spelling out KISSES streaming out of the top. The new logo is flat and brown with just a graphic paper stream.

(You can see the two versions, from MarketWatch, at left.)

And yes it does resemble the official “pile of poo” emoji. For those new to this terminology, “emoji” means "picture word" in Japanese. The use of such digital characters in texts and messages is showing explosive growth around the world. Some 1,500 emojis have been standardized by the Unicode Consortium, a software industry body that has 10 full members, including Google, Apple, Microsoft and Yahoo. The most frequently used emojis tracked on Twitter include the heart symbol and faces that express tearful joy, winking, or grimacing. (I’m still learning all the emojis already in my iPhone.)

According to emojepedia.com, the emoji for “pile of poo” is described as shaped like brown soft-serve ice cream with smiling eyes -- for Apple and iOs. For Google/Android, it is a brown pile with flies circling above. In short, both are way too close to the Hershey logo.

Or as one Twitter user wrote: "The new #hershey logo looks remarkably like the poo emoji. Seems someone should have caught this earlier. “

To be honest, I never thought I’d type the phrase “pile of poo emoji” in an MNB column, yet here we are.

The big question - and the one that actually transcends this particular controversy - is whether Hershey’s logo design team should have anticipated this reaction, especially at a time when emojis are everywhere and Twitter is quick to pounce on a marketing mis-step.

The answer is yes, especially if you’re in the graphics/logo line of work and engaged in rebranding a global confectionary and snack company with $7.1 billion in revenue.

It’s not a catastrophe, or a massive recall of tainted product, but it certainly mars the introduction of a new logo to carry a storied American company forward for the next 100 years.

It’s a little late now to say, “Oh, crap.” I’m sure Milton Hershey would agree.


Comments? As always, send them to me at kate@mnb.grocerywebsite.com .

Published on: September 3, 2014

by Kevin Coupe

Little more than a year after Amazon CEO/founder Jeff Bezos acquired the Washington Post for $250 million, it was announced yesterday that Katharine Weymouth, the company's CEO and publisher, is being replaced by Frederick J. Ryan Jr., a former Reagan administration official.

Perhaps more indicative of Bezos' still-undisclosed plans for the iconic newspaper, Ryan was the first CEO of Politico, which was created by former Post reporters who felt that the newspaper was missing a big opportunity for online political journalism. Speaking to reporters at the Post yesterday, Ryan said that the paper need to embrace a growth strategy attuned to the technological changes that have been roiling the newspaper business.

The removal of Weymouth - who reportedly did not initiate the change, and was surprised by the timing - ends some eight decades of leadership by the Graham family, which sold the paper to Bezos last year because of the economic challenges inherent in owning a newspaper.

There is a certain irony that a paper that had perhaps its most noteworthy period during the Nixon administration, when the leadership of publisher of Katharine Graham and editor Ben Bradlee resulted in Watergate coverage that eventually led to the resignation of President Richard Nixon, now will be led by a man worked for President Ronald Reagan (though people who have worked with Ryan say he has never tried to influence coverage for political purposes). But the even greater irony is how a man who led a small smart-up that was designed to disrupt the more traditional company's business model now will be running the bigger company.

It is an Eye-Opener.

Published on: September 3, 2014

One month ahead of its previously announced schedule, CVS Caremark said that it has eliminated all tobacco products from its stores, a move that it has conceded will cost it $2 billion in annual revenue. CVS said it was making the move as a way of being more consistent with its stated mission of being a health-related retailer.

As part of this shift, the company said yesterday that it is changing its name to CVS Health, saying that this reflects "its broader health care commitment and its expertise in driving the innovations needed to shape the future of health."

In a prepared statement, CVS Health president/CEO Larry J. Merlo said, "For our patients and customers, health is everything and CVS Health is changing the way health care is delivered to increase access, lower costs and improve quality. As a pharmacy innovation company at the forefront of a changing health care landscape, we are delivering breakthrough products and services, from advising on prescriptions to helping manage chronic and specialty conditions."

In addition to eliminating tobacco products and changing its name, the company said it is launching a "comprehensive and uniquely personalized smoking cessation campaign to help millions of Americans to quit smoking."

In its analysis, the New York Times writes, "The decision to stop selling cigarettes is a strategic move as pharmacies across the country jockey for a piece of the growing health care industry. Rebranding itself as a company focused on health could prove lucrative for the drugstore as it seeks to appeal to medical partners that can help it bridge the gap between customers and their doctors … As the medical industry braces for the flood of new patients with insurance through the Affordable Care Act, drugstores see an opportunity to provide basic care to consumers who may not want to wait to see a doctor, if one is available in their area at all."

Published on: September 3, 2014

Forbes reports about how a number of food co-ops around the country have decided to remove products manufactured by Eden Foods products from their shelves, citing the company's lawsuit against the US Government over the employee birth control mandate included in the Affordable Care Act, better known as Obamacare.

The Eden Foods suit was similar to the Hobby Lobby suit that went to the Supreme Court, which resulted in a ruling that companies can cite religious reasons for not covering all forms of birth control in their insurance plans, essentially granting companies the same religious freedoms as individuals.

Among the co-ops that have made the decision to eliminate Eden Foods products are the Willy Street co-op in Wisconsin, Other Avenues in San Francisco, Central Co-op in Seattle, and Weaver Street Markets in North Carolina.

Kirstin Moore, director of Willy Street, said in a letter to Eden Foods owner Michael Potter, “Please stop allowing personal values to get in the way of the common ground you share with your diverse array of customers and help us return our focus to the high quality of your food."

It was a sentiment repeated by a number of other co-op directors, who noted that the decision to remove Eden Foods products was driven by the views of their members.

Forbes reports that "in July, the company sent a letter to members of the Independent Natural Food Retailers Association, a consortium of 160 grocery stores and small chains nationwide. In the mailing, Eden Foods explained its healthcare stance without mentioning contraceptives or birth control specifically. The letter urged grocers to consider the company’s healthy, organic, GMO-free wares above all else."

Published on: September 3, 2014

The Financial Times reports that a Frankfurt Regional Court in Germany has banned Uber, the car-sharing company, from operating anywhere in the country, saying that if the company violates the temporary injunction it faces fines of up to the equivalent of more than $300,000 (US).

According to the story, "The court granted the injunction following a challenge brought by the German taxi industry for non-compliance with German passenger transport laws."

FT quotes Dieter Schlenker, chairman of Taxi Deutschland, a taxi co-operative, as saying, "The Passenger Transport Act regulates the protection of drivers and consumers. That can’t easily be overturned no matter how neoliberal the company … Uber operates with billions in cash from Goldman Sachs and Google, wraps itself in a start-up-look and sells itself as a new economy saviour.”

Schlenker also is quoted as calling the sharing economy a "locust" that is harmful to "the state, society and employees alike."

FT notes that "the countrywide ban is the latest in a series of regulatory setbacks for Uber in Germany. Authorities have ruled against Uber in Berlin and Hamburg, citing both safety concerns and the threat to licensed taxi drivers posed by Uber’s competition."

Meanwhile…

The Los Angeles Times reports that Uber "has begun testing home-delivery of the midday meal in a pilot program in Santa Monica. Westside Uber customers, starting this week and running until Friday, September 5, will be able to order a pret-a-manger meal delivered to their door for $12.

"Selections, off a prix-fixe uberFRESH menu, will include fresh soups, salads and sandwiches, each delivered within 10 minutes, between 11:30 and 2:30pm … If the experiment is successful, the company said, Uber may expand uberFRESH to other LA-area communities."

The Times goes on to point out that Uber has been working to expand its footprint; just recently, it linked up with Starbucks, Hyatt, United Airlines and Open Table to provide service to their customers.

Published on: September 3, 2014

Bloomberg Businessweek reports that Home Depot is saying that it is "working with banks and law enforcement on the possible incursion, following a report by KrebsOnSecurity that a 'massive' batch of stolen credit- and debit-card information was posted for sale online … In Home Depot’s case, the suspected breach may have occurred in late April or early May and could encompass all 2,200 of the company’s stores in the U.S."

“The criminals are getting smarter faster than the companies,” Jaime Katz, a Morningstar analyst tells Businessweek. If the Home Depot breach is on the same scale as Target's incident last year, she says, “there is obviously significant concern."

Published on: September 3, 2014

• The Grocery Manufacturers Association (GMA) has announced that it has launched "a five-part initiative that will advance the procedures used to assess the safety of ingredients used in food products.

According to the announcement, "GMA will take the lead in defining a standard that will provide clear guidance on how to conduct transparent state of the art ingredient safety assessments (and) GMA is establishing a program to ensure the FDA has increased visibility to the ingredients that are assessed as GRAS by members of the food industry."


• 1-800-Flowers said yesterday that it is acquiring Harry & David, the gift basket company, for $142.5 million. The plan is to leave current management in place and run Harry & David as an independent subsidiary.

Published on: September 3, 2014

• It was announced yesterday that Keith Sherwell, former Sears CIO, has been hired to be CIO at Office Depot’s International Division.

Published on: September 3, 2014

Regarding the moves by Burger King to acquire Tim Horton's and move its corporate domicile to Canada as a way of cutting its corporate taxes, MNB reader Mark Raddant wrote:

I don’t think corporations are people or citizens.  And I don’t think they should be taxed at all, much less given  the right of Free Speech.  The capital gains of the ownership SHOULD pay income tax on their incomes, and at the same rates the rest of the workers pay taxes.  The difference in the amount the government receives from the current tax structure to the no-corporate tax structure should be borne by those with the highest incomes, who in essence have been having the corporations pay their taxes for them.  Since corporate revenues will go up by the amount left untaxed, the current income tax structure should make up the difference by taking the shareholders instead of the corporation.

From another reader:

Wouldn’t it be refreshing if Burger King were to announce they were substantially increasing their front-line employees’ wages with the money they are saving?

Yeah, right. These moves are made to line the pockets of management and shareholders. Nothing more, nothing less.




On the broader issue of whether "increasing shareholder value" ought to be a core corporate purpose, MNB reader Bob Bartels wrote:

Years ago, going through a GE training program, I was introduced to a key result area, “balancing the interests of the contributor claimants to a business”.  That would be shareholders, customers, employees, suppliers,  management and society in general (taxes are paid) or any others I left out.  This can be a tricky concept particular if one group is rewarded at the expense of the rest. I think this is in play with some of the distortions we have seen lately.

MNB reader Rich Heiland wrote:

Your "connect the dots" post made me re-visit some Peter Drucker. Some of his thoughts....seems to me if corporate leaders believed and lived these a lot of the train wrecks we see in corporations would be avoided…

Have a strong mission and a cogent answer to the deceptively difficult question, “What business are we in?”

Always remember that “there is only one valid definition of business purpose: to create a customer” while accepting that “quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.”

Push responsibility and accountability as far down into the organization as possible and follow this basic communications strategy: Listen down, talk up.

Embrace the fact that every organization develops people--“it either helps them grow or it stunts them”--and so you do everything you can to help them grow.

See innovation--that is, “change that creates a new dimension of performance”--as the responsibility of everyone in the enterprise, not just the R&D staff.

Regularly abandon things--products, policies, practices--that are no longer effective or are consuming an inordinate amount of resources when weighed against tomorrow’s opportunities.

Measure what can be measured and monitor what can’t, recognizing that good intentions are no substitute for performance and results.

Live by a core set of values, animated by the belief that an organization needs values “as a human body needs vitamins and minerals.”

Demonstrate social responsibility not simply by having a CSR department or donating to charity but by understanding that an organization is responsible for “whomever and whatever it touches.”



On another subject, one reader wrote:

In response to the plastic bag ban in California and being in the grocery industry, this is going to be a huge cost for the grocery business not to say raising prices to accommodate the cost of bags. California is so messed up that even a tube of toothpaste, in the box, that goes out of code is considered  hazardous waste and picked up by a company, sent to another state and incinerated. There is so many regulations that companies are having to raise prices because of the stupidity of the local government. This is typical  California legislation, if they would think before they do stupid things, California would be a better, more affordable place to live.

I suppose that there are a lot of things that could be done to make California more affordable. But to be honest, even as things are, it certainly would make my list of top-ten places to live.