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    Published on: October 10, 2014

    by Kevin Coupe

    The CEO of Microsoft, Satya Nadella, created a social media firestorm yesterday when he suggested at a conference that women should not ask for raises when they think they deserve them, but rather should trust the system to reward them appropriately.

    Here's what he said, according to a New York Times transcription of the event:

    "It’s not really about asking for the raise, but knowing and having faith that the system will actually give you the right raises as you go along … That, I think, might be one of the additional superpowers that, quite frankly, women who don’t ask for a raise have. Because that’s good karma. It’ll come back because somebody’s going to know that’s the kind of person that I want to trust. That’s the kind of person that I want to really give more responsibility to. And in the long-term efficiency, things catch up.”

    Adding to Nadella's problems: He made the comments at the Grace Hopper Celebration of Women in Computing conference, in Phoenix.

    That's bad karma.

    The Times notes that social media went a little nuts after Nadella's comments were made public in a webcast, and that shortly thereafter, he took to Twitter to backtrack, saying that that his comments were "inarticulate." He also sent an email memo to Microsoft employees, saying that “I answered that question completely wrong" and that "if you think you deserve a raise, you should just ask.”

    Ironically, the Times notes, Nadella had a good reputation for how he deals with women's issues.

    Here's the deal, IMHO. I actually think that Nadella said exactly what he thinks - which is that most companies would run more efficiently and effectively if the people who worked there didn't ask for raises, but just focused on the job and trusted in the system.

    All people. Men and women. But since he was at a conference talking about women, in this case, he talked about women.

    Not such a good idea.

    Because what he didn't factor into his thinking is that it has been proven that women make less than men in comparable jobs … and that women, even more than men, should stand up for themselves to demand equal compensation.

    It is hard to trust a system that so often has been proven to be untrustworthy, or, at the very least, biased in favor of middle aged white guys.

    One other note. There is a very, very funny video online that talks about what women need to do in order to attain equal pay. It stars Sarah Silverman, and while I loved it, I have to caution you that a lot of people will find it to be vulgar … which is sort of Silverman's specialty. If you want to see it - and don't say I didn't warn you - just go to YouTube and search for "Sarah Silverman Closes The Gap." (I'm not providing a link because I don't want people clicking on it without reading my caution … it is easy to find, but I want you to have to want to watch it.)

    It is an Eye-Opener.
    KC's View:

    Published on: October 10, 2014

    The Wall Street Journal is reporting that Amazon, the world's pre-eminent online retailer, plans to open the first bricks-and-mortar store in its two-decade history - on 34th Street in New York City, just west of Fifth Avenue, across the street from the Empire State Building, and a couple of blocks east of Macy's in Herald Square, which, ironically, used to describe itself as "the world's biggest department store."

    However, a New York Times story this morning throws some cold water on the Journal piece. While real estate sources say Amazon is buying the building, Amazon is not commenting, and "whether there will be an Amazon store any time soon on 34th Street seems an open question. The two retail outlets in the building, a Mango and an Express store, recently signed new leases. Juliana Ochoa, store manager at the Mango store, said the retailer had no plans to move out of its space."

    According to the Journal, the building at 7 West 34th Street "would function as a mini warehouse, with limited inventory for same-day delivery within New York, product returns and exchanges, and pickups of online orders. The Manhattan location is meant primarily to be a place for customers to pick up orders they’ve made online, but will also serve as a distribution center for couriers and likely one day will feature Amazon devices like Kindle e-readers, Fire smartphones and Fire TV set-top boxes, according to people familiar with the company’s thinking."

    Perhaps more importantly, the Journal writes, the location "would mark an attempt by Amazon to connect with customers in the physical world. Amazon has built its business on competitive pricing and fast shipping. Until now, though, it couldn’t compete with the immediacy of a traditional store."

    In its coverage, the New York Times writes that "Amazon’s opening of a physical store is one of those stories that is constantly the subject of speculation in the technology news media, similar to what the next iPhone will be like or what the iPhone after that will be like. The Journal’s report of a possible Amazon store immediately became the top article on the Techmeme site, which collects technology news.

    "Part of the fascination is the irony: The company that basically invented e-commerce would be acknowledging the virtues of old-fashioned shopping. Partly, also, it seems inevitable. For all their focus on the future, technology companies have been expanding to traditional retail for quite a while."

    And, the Journal reports: "Amazon has experimented with physical stores before, including pop-up shops and locations run by subsidiaries. Last November, Kindle-brand pop-ups appeared in U.S. malls, selling e-readers and tablets from vending machines. Its Zappos unit has a store near its Kentucky distribution center and once operated a few outlets in its hometown of Las Vegas; and its Quidsi unit runs a cosmetics store in Manhasset, N.Y.

    "Amazon also has set up large metal lockers in convenience stores and parking garages around the country, to accommodate deliveries and returns. The lockers don’t offer same-day delivery, however. The lockers have been a popular option, and Amazon has expanded them to a number of cities, including overseas, after initially just offering them in Seattle."

    CNBC reports that Amazon "risks increasing costs related to retailing such as paying leases and hiring workers. But if the store is successful, it may set a precedent for additional stores in other cities.

    "Amazon has been researching and scouting a possible store for several years, said a person familiar with the project. Two years ago, the company went as far as scouting spots in Seattle, where it is headquartered."
    KC's View:
    If Amazon's concept for this store is to create a unit that can serve as a showcase for its private label technology offerings, and it can mimic the Apple Store approach without becoming a clone of the Apple Store (which essentially is what the Microsoft Store is), then this may not be the worst idea in the world, and it might prove to be a concept worth expanding.

    But I think that Amazon has some other things to which it ought to giving a higher priority…

    • End the spat with Hachette. It's stupid at this point … and the bad PR you are getting will end up subverting any wins you achieve.

    • Fix Subscribe and Save. It is my impression, and it has been confirmed by people a lot smarter than I, that because Subscribe and Save has gotten to be too expensive, some manufacturers are backing away from supporting it, which has led to a cutback in availability. Amazon instead seems to be throwing its support behind its Prime Pantry service, which does not seem nearly as attractive to me. (Or, maybe they just have to do a better job selling Pantry and convincing me to use it.)

    • Amazon Fresh. I'm hearing too many reports of out-of-stocks and delivery problems. My suspicion is that there may be too many people who specialize in algorithms working on this project, and not enough people who actually understand grocery and customer service.

    I just hope that the NYC store idea, if it is being accurately reported, isn;t the beginning of a national chain of stores that will hang around Amazon's neck like an anchor … and is the kind of mistake that its bricks-and-mortar competitors would love to see Amazon make.

    Published on: October 10, 2014

    In Toronto, the Globe and Mail reports that Target's new CEO, Brian Cornell, "is taking a hands-on approach to fixing the company’s problems in Canada, making regular trips to check stores here as he heads into the all-important holiday season.":

    According to the story, Cornell "has 'put on pause' the company’s earlier plan to appoint a non-executive chairperson with domestic experience to oversee the troubled Canadian operations.

    "The close involvement in the Canadian division of Target’s top executive underscores the seriousness of the situation for the big U.S. retailer. The Canadian operation lost almost $1-billion (U.S.) last year and the red ink has continued to flow in 2014, as consumers complained about high prices and empty shelves." Out of stocks continue to be a problem for Target in Canada, with products offered in the store's advertising circulars often not available on shelves.

    “This is about back to basics,” Cornell tells the paper. “My message to the team is not about what’s new, what’s exciting, some magic new change we’re going to make. It’s about doing all the fundamentals well and executing the Target experience in Canada … Tomorrow is not fast enough. There has to be a sense of urgency."
    KC's View:
    It sounds like Target's Canada problems are similar to the problems that I've seen in many of its US stores, only on steroids. I think this is all going to be a long-haul fix for Cornell, and that anybody expecting quick results is going to be disappointed.

    Published on: October 10, 2014

    Acosta Sales & Marketing is out with its latest "The Why? Behind the Buy" report, saying that 54% of total U.S. shoppers say they enjoy grocery shopping, up from 41% in 2011. The report says that "shoppers are driven by the thrill of the hunt: 40% like finding new products to try, 38% like looking for the best deals or sale items and 25% like browsing the aisle for products."

    The study goes on to say that "shoppers report spending an average of $318.70 per month on groceries--the highest figure since Acosta began the survey in 2009--compared to $288.70 a year ago." The company says that while "monthly grocery spending has increased, likely due to inflation … sales volume remains sluggish."

    And, the report shows what it calls "marked increases in shopper enjoyment within specific ethnic and age groups, with 72% of Asian-Americans, 67% of African-Americans, 66% of Hispanics and 64% of Millennials reporting they like to grocery shop."

    Meanwhile, Business Insider reports on a recent report by real estate investment firm JLL saying that while "high-end grocers like Whole Foods and cheap retailers like Family Dollar will expand in the coming years, traditional grocery stores like Kroger, Giant Eagle, and Publix could close stores … Since the 2008 recession, consumers have been reluctant to pay full price for items. This led to dollar stores expanding their food assortments to include brand names. Meanwhile, those who do want to pay more want the organic, artisanal assortments grocers like Whole Foods have to offer."
    KC's View:
    I actually sort of hate it when I see stories about how more people like grocery shopping than ever, because I think they a) are misguided, and b) give a lot of mediocre retailers false reassurances.

    Here's what I think. The reason that high end and value retailers are doing better is because they actually stand for something - they are specific, they know their customers, and they deliver on their value proposition, whatever it happens to be. But the muddy middle is getting both deeper and muddier, and you just cannot survive there anymore.

    But does anyone really like shopping at Family Dollar?

    I also think that if you are going to talk about mainstream retailers that are going to have problems, three retailers I might avoid talking about would be Kroger, Giant Eagle and Publix … all of which have done a pretty good job differentiating their formats and raising the levels of their games.

    Published on: October 10, 2014

    • The National Grocers Association (NGA) presented Greg Gregerson, president and CEO of Gregerson's Foods and Pharmacy, Inc., with the NGA Spirit of America Award at the Alabama's Food Industry Finest Luncheon, held earlier this week. The award is one of NGA's top honors and recognizes individuals for their dedication and service to the independent supermarket industry.
    KC's View:

    Published on: October 10, 2014

    • Tops Holdings said yesterday that its senior vice president/chief financial officer, William R. Mills, has resigned. David Langless, vice president/chief accounting officer at Tops, is taking over the CFO role on an interim basis.
    KC's View:

    Published on: October 10, 2014

    We have some more comments on the Walmart decision to eliminate health care coverage for a segment of its part-time employee base.

    MNB reader Glenn Cantor wrote:

    As I travel to retail stores throughout the country, I see that having motivated and happy store employees is critical to the shopper perception of the store experience.  Is shopping in that store pleasant and enjoyable, or is it a troublesome chore?  Walmart’s operating structure makes it prohibitive to continue to offer health insurance to part time employees, especially since these employees may now get coverage through “Obamacare.”  It puts them in a bind, however, because many of the faces that their shoppers see will now be less helpful and not as devoted to unsurpassed customer service. 
    Does the value of low prices surpass that of providing a good shopping experience?  Not when other retailers can provide equally low prices and a pleasant store, ex. Kroger, Costco.  The senior managers at Walmart making the decision need to consider the intangible, difficult to measure impact on customer service when calculating the cost of providing health insurance to part time employees.  They need to realize that many of their front-line, part-time employees openly complain while working.  What impression does this give and how does this affect long-term shopping habits?

    Another MNB reader agreed:

    I cannot understand an industry that is facing the nuclear force of on line shopping, and their response is to devalue their ONLY point of difference - personal customer service.  This is more than a race to the bottom, it's suicidal!  Aaaarghhhh!!!

    I agree with both these emails.

    But not everybody does. One MNB reader wrote:

    Businesses do not exist to pay taxes and provide healthcare. Once everyone understands the definition of a business you would better understand how laws and taxes affect jobs. We have seen millions of jobs going overseas because of economic gains for the business. We benefit from a lower cost of goods from these moves too as a consumer. A business is as an enterprise to make money. What is the definition of obscene profit? Profit pays for everything. Profit comes from a robust economy. Cost control is a fundamental practice of a vibrant business. Make laws and tax that lowers costs businesses will follow. Make laws and taxes that raise business costs and the businesses will move the opposite direction. It’s reality. I want business to be profitable!  Vibrant businesses employ, pay taxes and it provide benefits for all… If you expect the government to pay for everything in reality you are saying raise everyone’s taxes. My father always told me… Be careful what you ask for and never believe you get something for nothing… Sage advice more so today that when he told me this 40+ years ago… Wal-mart is reacting to market conditions like any other business must.

    I have no problem with an efficient and effective national system in which everybody has healthcare coverage. I do have a problem with folks who argue against national health care, but also say that businesses ought not provide such benefits in their quest to be more profitable, since this inevitably will mean that only the highest-earning folks will be able to afford decent health coverage.

    The fact is that companies have traditionally provided health care coverage as an employee benefit … the idea being that sustaining salaries and strong benefits result in a competent and engaged workforce, which then creates a business that is … wait for it! … profitable.

    Somehow, this seems to have been lost in the national discussion. The quest for profits has become too much about cutting, and not enough about creating value for customers, shareholders and, yes, even employees.

    I got a particularly ugly email yesterday from someone suggesting that Walmart's employees are slow and unmotivated and therefore don't deserve healthcare benefits (unlike employees at places like Costco, Starbucks and The Container Store). But it seems to me at least possible that companies get the employees they deserve … and that companies treating employees as if they are a cost, not an asset, usually will get employees who behave in exactly that way.
    KC's View:

    Published on: October 10, 2014

    In Thursday Night Football, the Indianapolis Colts defeated the Houston Texans 33-28.
    KC's View:

    Published on: October 10, 2014

    Just a few quick pop cultural notes this morning…

    I'm thrilled that "Homeland" is back, even though the first two episodes of the fourth season, which began last Sunday, seemed more designed to set up a variety of plots for the coming episodes than to move things forward significantly. We learn that Carrie is back in the field as a CIA station chief in the Middle East, that Saul is dissatisfied with working in the private sector and years to be back at the CIA, that CIA director Andrew Lockhart is still guilty of questionable judgement, and that CIA agent Peter Quinn is beginning to resemble a John le Carre protagonist. And we learn that much like in real life, events in the Middle East are spinning out of control, and that despite her bipolar disorder - or maybe because of it - Carrie is simply able to see things other people don't see, though these same qualities also make her a lousy mother.

    The cast remains stellar - Claire Danes as Carrie continues to give a completely unsentimental performance, daring us not to like her - and there was a moment last Sunday when I thought she was going to do something as horrible as anything I've ever seen on TV, and it would've been entirely in character. And Mandy Patinkin's Saul is the guy we all wish were running things in DC - he has a soul, but also a hard-headed intellectualism that allows him to make hard and even unethical decisions when necessary.

    It'll be interesting to see where "Homeland" goes from here. There's no Nicholas Brody to deal with, and therefore geopolitics is likely to play a larger role than Carrie's emotional life. I'll be there next Sunday, and every Sunday after that.

    And then, of course, on Sunday, November 9, "The Newsroom" returns for its final season. Yippee.

    Some other fall television notes…

    I actually like the beginning of the television season, because I watch lots of pilots and first episodes just to get a taste of what the networks are offering. I stay with very few of them in the long run, but it is a fun process. For example…

    "Gotham"…the Batman prequel story, focusing on Det. Jim Gordon's adventures in Gotham City while Bruce Wayne is still a child, is very interesting - lots of atmosphere, strong performances, and enough hints of what is to come to make it compelling for those of who are Dark Knight fans.

    "The Flash"…loved the pilot, but I'm not sure there is enough there to keep me coming back. But I think it'll be a big hit for the CW network.

    "How To Get Away With Murder"…I have no idea yet what this show is about, even though I've seen the pilot, but I'm intrigued, though confused by the time-humping style. Might be a binge-watching show down the line.

    "Bad Judge"…what an awful piece of crap.

    "Madame Secretary"…is sort of like "The West Wing" lite, undermined by a wooden performance by Keith Carradine as the president. (It may not be his fault; it is not a character that is well written.) But I love Tea Leoni as the secretary of state, and the heart of the show, IMHO, is her relationship with Tim Daly, who plays her college professor husband, and their assorted children.

    "The Mysteries of Laura"…dull stuff.

    "Forever"…ditto. (Though I'm glad to see the great Judd Hirsch back on TV.)

    "Scorpion"…loved the pilot, but I'm done.

    "NCIS: New Orleans"…my favorite guilty pleasure of the season. Like great meat loaf…entertainment comfort food, and it's got Scott Bakula.

    Finally … last week, I met my friend Bob Morris at Prato in Winter Park, Florida, for a drink … and we had an absolutely phenomenal beer - something called Yonder Bock Tropical Malbock, which is a collaboration between Sierra Nevada and Cigar City Brewing. It is an absolutely wonderful brew - silky and malty, but with a little bit of tropical fruit (though not much, which is good, because I don't like fruity beers). I'm told that this beer has Cuban roots, which strikes me as a good enough reason to open up all trade with Cuba and start flying regularly to Havana.

    Great stuff.

    That's it for this week.

    Have a great weekend, and I'll see you Monday.

    KC's View: