retail news in context, analysis with attitude

Published on: October 9, 2014

This commentary is available as both text and video; enjoy both or either. 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.

Yesterday, we posted a letter from a 22 year old MNB reader who talked about the generation gap issue that affects many workplaces. He said, in part:

"We have been 'trained' via texting, social media, and even the way school is now structured to receive immediate feedback, which often times is focused on the positive vs the negative. To capture the talent that the younger generation has I think it is extremely important for managers to understand that need for feedback. I think that really is all it can take to bring out the talent in young professionals."

It was an interesting email, coming after a Michael Sansolo column on the same subject, and it got me thinking about some encounters I've had recently with business leaders - not just in the retail business - in which they described one of the central problems they are having managing young people.

These business people told me that a core focus in their companies has been to flatten the organization, to make them less bureaucratic, more nimble, to have leadership from all levels of the company. That way, they say, the company is better prepared for 21st century competition, with greater investment from people who want to see themselves as part of the solution, not part of the problem.

But … it ends up that it isn't just feedback that young people want. They also want advancement within these organizations … that they feel that if they are not moving up the organizational chart, even in small increments, then they are not being successful and their contributions are not being recognized, and therefore it is time to go elsewhere.

See the dichotomy? At least some percentage of young people want to move up the organizational charts in companies where leaders are trying to flatten the organizational charts. So some of these companies are having to invent bureaucracy just to keep their future leaders engaged…

It is an interesting management problem, and to be honest, I have no easy solution for how to navigate it. I would think that at least part of the answer is to create a culture in which titles matter less than responsibilities, and in which associates believe that the company is invested in them and their futures, and not just costs against the bottom line.

But that's easier said than done.

But one thing I do know. Business leaders have to "mind the gap," and pay close attention to the interests and needs of 22 years olds like our reader. Leaders cannot just lead with their backs to the troops…they have to have what my mom used to call "eyes in the back of their heads," paying attention to every nuance, believing that their own success and failure is dependent on the success and failure of this next generation of leaders that has unique insights into the next generation of consumers.

Easier said than done. Then again, to paraphrase Finley Peter Dunne, business ain't beanbag.

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

Published on: October 9, 2014

by Kevin Coupe

The Daily Meal reports that the city of Seattle will now tax people who throw away too much food.

That's right. According to the story, "The Seattle Public Utilities Council has specifically determined that if sanitary workers picking up trash find that a household’s garbage collection contains more than 10 percent food waste, then they can tack on the $1 fee. Apartment buildings and businesses will be subjected to the same fees, but will get two warnings before they are implemented. Ticketing starts January 1, and fees will go into effect on July 1, 2015 … The goal, says the city agency, is to get the city’s recycling rate up to 60 percent by the end of 2015."

City officials say that the goal is not to raise revenue, but rather to reduce waste.

Even if you believe that - and there will be an enormous swath of people that won't - I have to admit that even I have a problem with this policy. (I say "even I" because I don't tend to take a knee-jerk approach to taxes … I think some are good and some are bad, and hold the radical notion that sometimes that taxes can be a way for a citizen to invest in the nation's infrastructure and culture.)

This approach to using taxation as a way of molding public behavior strikes me a bridge too far.

For one thing, we may have a recycling issue in this country, but we also have an obesity problem. Can't it be argued that when food is thrown out, it is because people decided not to clean their plates, which means they are eating less, which can be a good thing?

Of course, if we accept this as a possibility, the next step in Seattle is to start evaluating how much food people buy, relative to how many people are in their households, and then taxing them for "excess food acquisitions."

It gets a little crazy.

Still, there are studies showing that America wastes one-third of its food. I actually think that Seattle's heart is in the right place - it makes sense to find ways to waste less, to encourage recycling, but maybe there are ways to encourage good behavior rather than penalizing bad behavior.

Still, the new rules in Seattle demonstrate how the world is changing, at least in some parts of the country.

It is an Eye-Opener.

Published on: October 9, 2014

The San Francisco Business Times reports on Curbside, described as a new mobile application "that lets shoppers buy products and schedule pick-ups from retailers, including Target Corp. stores, in the greater San Francisco Bay Area."

According to the company, Curbside is "a one-stop destination app that allows shoppers to find the products that are in stock at multiple local stores and check out with a single tap … The service is free, the app is free, and Curbside does not mark up store prices … It’s optimized for shopping on a small screen – not a retrofit desktop e-commerce experience. It allows consumers to shop with one card securely on file."

The service is expected to move into additional test markets next year. Following a beta test in the San Jose, Calif. area, Curbside is now available to the greater San Francisco Bay Area … It is currently available at 10 select Target stores throughout the Bay Area.

The Business Times reports that Curbside "is backed by Yahoo Inc. co-founder Jerry Yang, Google Inc. Chairman Eric Schmidt and several venture capital firms."

Published on: October 9, 2014

Advertising Age reports on a recent conference addressing the importance of creating a compelling physical brand experience at retail, especially in a world where pretty much everything is available online.

According to the story, "Consumers want more from brick-and-mortar stores than they can get online, where shopping is faster, easier and often cheaper … They're looking for human interaction, said Rachel Shechtman, founder of Story, a boutique in Chelsea. 'The future of retail is about entertainment and community,' she said. 'It's really about the surprise and delight factor'."

The story goes on: "Personalization is another area where brick-and-mortar retail falls short, said Alex Bell, CEO of Signal 360, a proximity-marketing platform. It's 'amazing and scary' how much websites know about consumers, but none of that translates to in-store experiences. 'Retailers have to use that weaponry that's online, which is about data and personalization, to make it so that when you do go in the store, we can give you something else and we can make you come back,' said Mr. Bell. He creates solutions to help brands reach customers who in the store -- to find them in the aisles and recommend products they might like."

Published on: October 9, 2014

Go figure. The future looks like Estonia.

The reason? According to the New York Times this morning, the nation's citizens "have fully embraced the digital world, enthusiastically adopting public and private online services — offering a snapshot of a society that lives first and foremost online.

"Estonians, using a national identity card embedded with a microchip, gain access to some 4,000 services, including banking, business registration and even fishing licenses. They review medical records and order prescriptions on smartphones. Almost everyone files taxes on the web within minutes, and about a third of voters now cast their ballots online.

"While Europe and the United States debate the role of technology in people’s daily lives, Estonia has welcomed it as a fact of life, largely shooing away concerns about data privacy that have become hot-button issues elsewhere. In the last 23 years, Estonia, a Baltic country, has transformed from being a member of the Soviet bloc to one of the most connected countries, using technology built primarily within its borders."

It is a fascinating story that makes clear how a future may look, if only political and cultural leaders are willing and able to grasp the possibilities and embrace the potential. And you can read all about it by clicking here.

Published on: October 9, 2014

For the second year in a row, Interbrand has named Apple the world's most valuable brand in its annual "Best Global Brands" report. The company's brand valuation is said to be $118.9 billion, up 21 percent from a year ago.

Google is ranked second, with a valuation of $107.4 billion, up 15 percent from a year ago. Coca-Cola is third, up three percent to $81.6 billion.

Rounding out the top five - IBM, down eight percent from a year ago to $72.2 billion, and Microsoft, up three percent to $61.2 billion.

The analysis of Apple's brand valuation says, in part, that "not only is Apple using devices to broaden its penetration, it's also credibly extending into new spaces. With the unveiling of Apple Watch-reportedly more capable than any other smartwatch on the market, not least of all in terms of advanced health monitoring-Apple's future will rely heavily on its ability to partner effectively with healthcare companies. CarPlay, giving drivers access to their iPhone's best features in the car, has brought the brand into the automotive space. HomeKit, providing seamless integration between accessories, promises to make our homes smarter. Apple Pay certainly has the potential to become the most powerful payment platform around."

Published on: October 9, 2014

Fortune reports that United Parcel Service (UPS) is testing a new service called UPS Access Point that is designed "to recruit local businesses with evening and weekend hours within a short distance of customers to serve as additional pick-up spots where UPS can leave a package when someone isn’t home to accept it, thereby lowering the number of failed delivery attempts."

The program is being tested at 300 locations in New York and Chicago, and the story says that "the company is planning on rolling out the service, already available in Europe, to all major U.S. metro area next year, and in January, to its own network of 4,400 UPS stores."

The broad goal for UPS is to "improve service and lower its costs amid stiffening competition," the story says.

Published on: October 9, 2014

• The Post and Courier reports that C&S Wholesale Grocers is in the process of acquiring the wholesale assets of Greenbax Enterprises for $9.3 million, and - along with Greenbax - will help finance the purchase of 17 Piggly Wiggly stores that have been owned by Greenbax and are being sold to independent buyers.

The stores are expected to keep using the Piggly Wiggly banner.


• On National Public Radio, The Salt reports that while "voters in Colorado and Oregon will decide this fall whether or not they want labels on foods containing genetically modified ingredients," measures that "highlight a much larger national conversation about requiring labels on genetically modified foods," it seems unlikely that the debate will stop, regardless of how the votes turn out.

No matter what happens, the story suggests, lawsuits are probable and there is little evidence that people on either side of the debate are willing to accept the voters' verdict.

Published on: October 9, 2014

Lots of email yesterday about the decision by Walmart to end health care coverage for some 30,000 part-time employees working fewer than 30 hours per week.

One MNB reader wrote:

The conversation can continue; if you compete against Wal-Mart and they just lowered their cost of doing business. Then guess what happens next? It is just a horrible race to the bottom. IE: who can pay the lest, who has the lowest benefit package, all in the name of cheap retails. When you drive down the cost of business sometimes there are losers. When companies look at their employees the way most retail employers look at them, not a field I would encourage my children to get into.

And another:

I do not know why employers should provide health care.  I can see wanting to provide a benefit to attract good employees, but that only works when there is not a shortage of jobs.  The sooner we migrate to a basic uniform national health care plan for everyone, the better for everyone.  Then if companies choose to induce employees with an expanded benefits plan over and above the base plan, great.

Businesses should not be saddled with the costs and administration of products that are not their own area of expertise.

And from MNB reader Bob Overstreet:

Why is any one surprised at this?  Obamacare was designed to transfer people from private insurance to the taxpayer’s cost.  If it wasn't designed to create more part-time, taxpayer subsidized people, then maybe someone should have read the law.

MNB reader Scott Nelson wrote:

This is not really surprising to me.   From the beginning we have been hearing that the real goal of the ACA is to move the country towards a single payer, aka government provided health care. To me this is evidence that it is coming sooner rather than later.  I agree with your sympathies towards Walmart.   Money will always flow to the path of least resistance, tax, or cost, like it or not.

Still another MNB reader chimed in:

“I'm actually sympathetic to Walmart here - we're talking about an enormous amount of money,…” (KC)

On what planet does investment in healthcare insurance for that large a population of employees on which they depend on so much, become an “enormous” amount of money?

And they’re announcing it on the same week that they announce that they’ll be offering healthcare services at their store locations for a fee? George Orwell couldn’t have written it better.

Why does WalMart, which posted $16 Billion in profits last year, get a pass on this?

You know what IS an enormous amount of money? The $16 Billion in profit that WalMart made in profit last year.

From another reader:

Considering that WM made $15.88B in profit last year, which equates to $43M/day in profit.  The extra $180M for taking care of their employee’s equates to a little more than 4 days of profit for the entire year.  Seems like a small investment in taking care of their second most important asset after taking care of their customers.  Just another reason to shop elsewhere.

MNB reader Terry Pyles wrote:

I think the folks who run the "Bentonville Behemoth" need to do some collective soul searching.  I'm not saying they are wrong on this subject.  From a business perspective it seems to be a rational decision.   But having said that, if they took all the money paid in bribes to foreign governments, combined it with all the money paid to get themselves out of the bribery scandal, I'll bet they could have funded employee health care for years to come.

I think it was Benjamin Franklin who said you can do well by doing good.  Words the folks at Walmart would do well to heed.

MNB reader Jeff Totten wrote:

I agree with your comments. It's sad to see more value being placed on the bottom line than on providing people with the income and benefits they need to have a viable life in this country. I do hope and believe that they will be able to find lower insurance via the Affordable Care Act. Now if we could just stop insurance companies from finding loopholes, but that's another issue.

And yet another:

Kevin,  you hit the nail on the head about the sustainability of our health care system and the fact that employers are choosing to hire more part time employees as a way to cut costs.

The part that infuriates me is the unfairness of a system that encourages this corporate behavior.  There is a pervasive strategy of “whatever my competitor is doing” I must follow suite in order to compete.  To some degree that’s true but what you end up with is the lowest common denominator of corporate behavior and the lowest ethical standard.  All the while Congress has been content to sit back and watch it all happen with no penalties for these dubious acts.  In my view the lack of a penalty for bad behavior is the same as an incentive.  I recently left a company that was patting itself on the back for creating jobs when in reality they were carving up full time positions for part time to save on rising health care expenditures, funny how you can spin such a move.  I’m sure that company wasn’t the first to think of it.  I am further convinced that this rising tactic of corporate behavior accelerated the trend in rising health care premiums.  Take people out of the system and those who do pay must now pay more.
 
I also think that in the case of Walmart the Affordable Care Act may have accelerated the issue.  I was glad to hear even though the overall numbers are large, it was only to a small percentage of their workforce…unless of course it’s you who’s losing your coverage.
 
I would have rather seen a bill from Congress forcing companies to play fair by their employees by mandating proportional coverage.  Work 20 hours get half the coverage.  Go get another part time job at 20 hours and you get your other half covered.  If the employee elects no coverage it goes back to the employer, like if the person is covered under a spouses plan.  If that had been the course rather than the ACA, it would have forced companies to higher ethical ground and completely eliminated the need for the ACA and its enormous bureaucracy.  Ok, rant over!

Y'know, I thought a lot about my commentary on this story yesterday … and upon reflection, I think I blew it.

I expressed sympathy for Walmart since the money saved is "a lot of money." But you're absolutely right - it is nothing compared to the $16 billion in profit it made last year. And the $500 million more it says it will spend on health care expenses is a number that is remarkably close to the $400 million it says it has spent so far on the global bribery scandal - and it hasn't even been charged with anything. Yet.

I'm not smart enough to completely understand all the implications of the new health care law. I do think, and have always thought, that the US needed a better, more sophisticated and national approach to providing health care for its citizens that also could be economical and efficient. I'm by no means sure that Obamacare is that approach, and the Walmart decision may end up shining a spotlight on whether it makes sense or not.

But there's another spotlight here, and it is being trained on exactly how Walmart feels about part-time employees who staff its stores. For better or for worse, we now know how the company ranks those people on its priority list.

There are other retail companies - Starbucks, Costco and The Container Store are three that immediately come to mind - that provide far better coverage to their employees, and seem to remain viable business entities while doing so. Their positions, I think, stand is sharp relief compared to what Walmart is doing.

The problem, of course, is that Walmart is helping to drive a national trend. we have to hope that it also helps drive a national conversation about how companies value their workers, and how they express that valuation.

(Out of curiosity, I wonder what will happen to all these part-time workers if the GOP takes back the Senate, and then the White House in 2016, and does what it says it wants to do, which is to defund and eventually get rid of the Affordable Care Act. How many uninsured people will there be in the US? What impact will that have on the economy?)

Hey, Walmart made a decision. Legal, and fiscally advantageous. But it seems to me that it also has said that it views its employees as costs, not as assets.

It will have to live with the long-term implications of that statement.