business news in context, analysis with attitude

Published on: September 9, 2014

by Michael Sansolo

It may have been one of the worst commercials of the 1980s, yet in retrospect it was loaded with foresight. You may remember the ad: actress Heather Locklear waxed so enthusiastically about her Faberge Organic shampoo that she promised to tell two friends.

Then as the screen kept splitting into additional images, Locklear promised that “they’ll tell two friends and they’ll tell two friends and so on…” Go figure. Heather Locklear understood social media before the phrase even had been coined.

Throughout this summer we’ve all watched countless connections dump ice water on their heads in the name of helping cure Amyotrophic Lateral Sclerosis or ALS. And each person then challenged two or three friends and they challenged three friends and so on…to the tune of more than 1 billion video views and $110 million in donations to date.

In contrast, Stand Up to Cancer boasts countless celebrity supporters, a telethon that ran recently on 31 different networks and a disease that sadly we all know far better than ALS. After six years of such efforts Stand Up has raised $261 million—a really fabulous total, but far smaller on an annualized basis than the Ice Bucket Challenge.

Just like that, we see the changing power of communication. Today we are all selfie-taking celebrities, connected to our own networks and, as the Ice Bucket Challenge demonstrates, able to make it rain.

Businesses - as Kate McMahon recently wrote here in MNB - better take notice.

Viveca Chan, the chairman and CEO of the We Marketing Group in China, says this change is all about the future of marketing and business. Social commerce, not e-commerce, says Chan, is the wave of the future. Companies will win by engaging customers, turning them into advocates and getting their connections to become buyers on their own.

Chan, who I recently heard speak at a TCC Global conference in Hong Kong, says the long sought after return-on-investment from social media comes in how companies engage and acquire the fans coming to them via social networks. And, of course, how they convert them into buyers.

Caroline Cotton is one of those who believe it can be done. Cotton, a long-time friend who previously ran a company that provided organization and standards to sampling, has formed Social Sampling Inc., believing that the powers of samples and social can be combined.

It’s an intriguing idea. We know sampling delights shoppers. At best, sampling leads to product trial and purchases. At minimum, sample stations create in-store excitement, an important tool in the world of e-commerce.

Cotton’s idea is to engage shoppers with samples and use those social connections to get them to share the news with others. In other words, they tell two friends and so on…and maybe you have a connection to additional customer traffic and new potential sales.

It’s a simple demonstration of what Viveca Chan says is the future: social commerce or connections that lead to purchases. If it can work for buckets of ice water imagine what it can do for a sample of ice cream.

FYI … A detailed guide to using the social web was created by the members of the Coca-Cola Retailing Research Council, where I serve as research director. It can be downloaded for free by clicking here.


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 9, 2014

by Kevin Coupe

Kudos to Honey Maid for its newest commercial, the extended web version of which can be seen at left.

Earlier this year, the Mondelez-owned brand aired a commercial that featured real-life American families, with portrayals of both traditional families as well as interracial and gay couples, a tattooed punk rock musician and a single father.

Not everybody approved. Some said the company was striving to "normalize sin." But Honey Maid took it in stride, even producing another commercial that gently addressed the controversy.

Now, Honey Maid is back with a new effort. This one continues to build on what clearly has been the company's epiphany - that its customers embrace diversity, and respect companies that speak to them in words and pictures that seem relevant to their lives.

In this case, the revelation is that four out of 10 Americans are part of what's called a "blended family."

And so, the new commercial focuses on what that means … concluding, quite naturally, that while the definition of family may have changed and expanded, the meaning of love has not.

It is an excellent piece of work.

And go figure … when it was over, I had a craving for some graham crackers.

It is an Eye-Opener.

Published on: September 9, 2014

Amazon sent an email to its customers notifying them that its Fire smartphone, on the market for just a couple of months, now will be sold at a substantially lower price than when it originally went on the market.

How substantially? The 32-gig version of the Fire, originally sold for $199 with a two-year mobile contract, now will sell for 99 cents. The 64-gig version will sell for $99, down from $299.

The Wall Street Journal writes that "the Fire phone's pared price comes ahead of Apple Inc.'s expected unveiling of its latest iPhone, which could come with new mobile-payment capabilities and screen technology. The Fire phone got mixed reviews, with some critics saying the holographic screen and product-recognition software didn't elevate it above competitors' devices."

And the New York Times writes that "the price cut gets the Fire phone closer to the company’s classic model of giving away hardware in the expectation that users will order enough from Amazon to make it worthwhile. Buyers of the phone still get a year of free Prime, Amazon’s shipping and video club, which normally costs $99."

Both stories noted that the Fire smartphone got generally mediocre reviews.

When the Fire was introduced, it was with the expectation that it would sell between two million and three million units by the end of the year. By way of comparison, Apple sold an average of 2.7 million iPhones globally a week during its most recent quarter.

Published on: September 9, 2014

The Associated Press reports that Home Depot has confirmed that its payment security systems were breached by hackers beginning in April 2014, and that the problem could impact customers who had used credit cards or debit cards in its US stores since then.

According to the story, "The largest U.S. home improvement chain says it has not found evidence that debit card PINs were compromised, and nor that online customers or shoppers at stores in Mexico are affected. The company did not say how many cards might be affected, but did say that customers will not be held responsible for fraudulent charges to their accounts."

The New York Times reports that "the retailer said the exact number of customers affected was still not clear. But a person briefed on the investigation said the total number of credit card numbers stolen at Home Depot could top 60 million. By comparison, the breach last year at Target, the largest known attack to date, affected 40 million cardholders."

Home Depot said last week that it was investigating a possible breach, but this is the first time it has confirmed the hack.

The home improvement retailer is just the latest major manufacturer to report that its payment systems had been hacked. Similar problems have been reported by Target, Supervalu, and the PF Chang restaurant chain.

Published on: September 9, 2014

The September 15 edition of The New Yorker features one of the magazine's patented long-form articles looking not just at the big, philosophical fight being waged by fast food workers around the country against the chains that they feel are taking advantage of them, but also at some of the specific employees, shining a light on the unique circumstances that fuel their protests.

One excerpt:

"The Berkeley-University of Illinois study, commissioned by Fast Food Forward, found that American fast-food workers receive almost seven billion dollars a year in public assistance. That’s a direct taxpayer subsidy, the activists argue, for the fast-food industry. Taxpayers are also, by that logic, grossly overpaying the industry’s top management. According to the progressive think tank Demos, fast-food executives’ compensation packages quadrupled, in constant dollars, between 2000 and 2013. They now take home, on average, nearly twenty-four million dollars a year. Their front-line workers’ wages have barely risen in that time, and remain among the worst in U.S. industry. The differential between C.E.O. and worker pay in fast food is higher than in any other domestic economic sector—twelve hundred to one. In construction, by comparison, the differential is ninety-three to one.

"The fast-food chains insist that if they were to pay their employees more they would have to raise menu prices. Their wages are 'competitive.' But in Denmark McDonald’s workers over the age of eighteen earn more than twenty dollars an hour—they are also unionized—and the price of a Big Mac is only thirty-five cents more than it is in the United States. There are regional American fast-food chains that take the high road with their employees. The starting wage at In-N-Out Burger, which is based in Southern California, and has two hundred and ninety-five restaurants in California and the Southwest, is eleven dollars. Full-time workers receive a complete benefits package, including life insurance—and the burgers are cheap and good."

You can read the entire piece here.

Published on: September 9, 2014

Consultancy Brand Keys is out with a new study saying that "demographics and associated core values of generational cohorts" are driving the failure "of fast food brands and the success of fast-casual brands."

The study says that Baby Boomers want healthier food and better service, two things that fast food restaurants tend not to do very well. The result: "Baby Boomers reported an 18% decrease in fast food restaurant visitation," while at the same time reporting "a 20% increase in visitation to fast-casual restaurants."

Gen Xers, the study says, "reported an 11% decrease in visitation to fast food restaurants – the lowest decline in the three groups examined – but with an equal increase reported in visitation to fast-casuals. " A desire for speed was cited by this group as being the primary reason for fast food visits.

And Millennials, the study says, "reported a 20% decrease in visits to fast food chains," while 42 percent "reported increased visits to fast-casual restaurants in the past year," with virtually this entire group saying that they are "looking for fast, casual food that they deemed tastier, healthier, and more customized, than fast food."

Published on: September 9, 2014

• Annie's, the Berkeley, California-based organic foods company, said yesterday that it is selling itself to General Mills for more than $800 million.

"Powerful consumer shifts toward products with simple, organic and natural ingredients from companies that share consumers' core values show no signs of letting up," Annie's CEO John Foraker said in a statement. "Partnering with a company of General Mills' scale and resources will strengthen our position at the forefront of this trend, enabling us to more rapidly and efficiently expand into new channels and product lines in a rapidly evolving industry environment."

Published on: September 9, 2014

• In Colorado, the Daily Camera reports that Alfalfa's chairman/CEO Mark Retzloff, a cofounder of the company, has been forced out of his management positions, though he remains the company's biggest shareholder and a member of the board of directors.

The stories differ somewhat on why he lost his job. The board says that it is because the company needs someone with stronger operational skills, but Retzloff says that there may have been some personnel issues involved.

Board member James Searcy will serve as CEO on an interim basis while a search is conducted.


• Mi Pueblo Foods, which only recently emerged from bankruptcy, said yesterday that it has named a new CFO, Martin Cortes.

According to the announcement, "Prior to joining Mi Pueblo, Cortes spent three years at Jonakari Enterprises, where he leveraged his 25-year expertise in accounting, finance, and operations to provide strategic solutions for small and large organizations in various sectors, including food retail, consumer packaged goods, restaurants, chemical distribution, engineering and education." He also has also served as CFO for Cardenas Markets and Del Real Foods.

Published on: September 9, 2014

On the subject of GMO labeling, MNB reader Kevin Davis wrote:

Kev, I agree with the premise of your argument, but not your conclusion as it pertains to Monsanto spending money to defeat the GMO labeling bill, meaning they have something to hide.  Customers should have a right to know what’s in the food they buy and food manufactures should have an obligation to tell them; but spending money to defeat a poorly written bill that does not address all of the issues, in all of the food categories, with comprehensive guidelines and a rational ( not alarmist) approach to the way those ingredients are communicated on the package labels, to ALL OF THE CONSUMERS ON A NATIONAL LEVEL, is not hiding anything.  It’s being honest.  Let’s get the USDA and FDA to step up on a national level and avoid fifty different state laws that will be impossible to manage without increasing costs to consumers.

I'm completely in agreement that we need a national bill. But I guess I've been doing this for too long, because I remain cynical about whether the pro-GMO lobby would support such a thing. A lot of money has been spent to defeat local and state proposals, but I haven't seen anywhere near that kind of money being spent pushing for a national GMO labeling standard.

One other thing. The Grocery Manufacturers Association (GMA) has been extremely anti-labeling. Many food retailers don't feel the same way, I think, because they are dealing with the customers and they know that more than ever, they are legally responsible for what they sell to shoppers. What this means, I think, is a potential big fight between retailers and suppliers on this issue.




On the story about Walmart deciding to dump the Express banner and call all its small stores Neighborhood Markets, which I think represents a lack of vision for what small stores should be, MNB reader Dan O'Keefe wrote:

I learn a lot and do get a lot of value from reading MNB almost every day, but this is another example of where your bias just makes me laugh. If this were an article about Amazon, you’d be applauding them for being willing to take risks, move fast, make mistakes, learn and move on. But because it is Walmart, you chastise the company for not nailing it right out of the gates. If they took 2-3 more years to get it exactly right, you’d be chastising them for being too slow.

Point taken.

Though I do think I'm willing to take Amazon to task when it seems appropriate.

More importantly, I've been to a bunch of small format Walmarts, and have found them wanting. So I think it is important to share those perceptions.

Published on: September 9, 2014

• In the US Open Men's Singles finals, Marin Cilic defeated Kei Nishikori, 6-3, 6-3, 6-3 to win his first Grand Slam title.

The match was the first Grand Slam final since the 2005 Australian open to not include at least one of the following players - Roger Federer, Rafael Nadal, Novak Djokovic or Andy Murray.



• In a Monday Night Football doubleheader, the Detroit Lions defeated the NY Giants 35-14, and the Arizona Cardinals defeated the San Diego Chargers 18-17.