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    Published on: October 27, 2014

    From Kevin Coupe & Michael Sansolo, co-authors of "The Big Picture: Essential Business Lessons From the Movies"…

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    "Retail Rules!", by Kevin Coupe, offers 52 rules to steer a retailer to success. With a liberal dose of examples from today's business environment, Coupe gives advice on management, marketing, customers, and operations, reflecting The rules Kevin's unique - and often irreverent - view of the world of retail.


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    Both "Retail Rules!" and "Business Rules!" are designed to be fast, evocative reads … and they're both made even more fun by the drawings of Steve Hickner, the well-known animator and director of Bee Movie, who illustrates every chapter with the kind of exuberance that Kevin and Michael bring to their writing.

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    KC's View:

    Published on: October 27, 2014

    The Wall Street Journal reports that the Postal Regulatory Commission has given the US Postal Service (USPS) to go-ahead for a two-year test that will have it delivering groceries to homes in the San Francisco market. The commission said, however, that if the USPS wanted to expand the test to other markets - such as Phoenix, Las Vegas and Portland, which it reportedly is considering - it will need to give advanced notice.

    The story notes that "the Postal Service has already been conducting a grocery delivery trial with Amazon.com Inc. in San Francisco, where it is delivering groceries packed into totes early in the morning. While that program was scheduled to end in mid-October, it was extended until the Postal Regulatory Commission reached Thursday’s decision.

    "The USPS previously said it would seek to deliver groceries for additional retailers during the test."

    The test reflects the latest move by the USPS to expand its capabilities and reduce its considerable financial shortfall.
    KC's View:
    It has long been the opinion here that the best way for the USPS to make itself relevant is to expand its products and services, not reduce them … so on that level, I think this is a good idea.

    Now, that's not to say that I don't have some misgivings about the USPS delivering groceries. The guy who delivers my mail seems incapable some days of closing the mailbox during as rainstorm, so I'm not very confident in his ability to deliver food.

    But hopefully they'll address such problems and turn the post office into a 21st century business.

    Published on: October 27, 2014

    Reuters reports that Tesco is being sued by US investors who charge that the company and its former senior executives deliberately obfuscated its actual financial condition and issued and misleading financial statements. The company has disclosed that the early booking of revenue and delayed recognition of costs resulted in an overstatement of profit projections by more than $400 million (US), which has led to the stepping down of eight executives and the resignation of the company's chairman as both internal and governmental investigations proceed.

    According to the story, the suit, brought by Irving Fireman's Relief and Retirement Fund "on behalf of purchasers of Tesco's American depository shares from Feb. 2 to Sept. 22, was brought in federal court and is seeking class action status.

    Tesco has not commented on the suit.
    KC's View:
    There was a series of pieces in the British press over the weekend that seem to be prompted by Tesco and calculated to get UK citizens to identify with Tesco's new CEO, Dave Lewis, at some level. The stories make the point that Tesco is only the second place that Lewis has ever worked - he has spent his entire career to this point at Unilever - but that he's had no second thoughts about taking the job, even though it has forced him to work nonstop and was unable to even take his daughter to college. The stories make the point that Lewis is trying to break down the bureaucracies that seem to have built up over time, and make Tesco a customer-centric organization again: "What I’m really trying to do at this point is to try to get everyone to look through the eyes of the customer again. I’m trying to get the business to make time for things that matter from a customer point of view: service, availability, quality – all those things that the customer can actually see."

    It is an interesting approach, and could move the needle a bit … because Lewis has the advantage of being an outsider who can serve as a surrogate for the British consumer. But I'm not sure it will actually work, simply because the problems being experienced by Tesco go far beyond the financial scandal and extend to its ability to compete in a market where discounters have changed the traditional rules of the game while mainstream retailers seemed not to be paying attention.

    Published on: October 27, 2014

    The Boston Globe reports that Market Basket, having moved beyond the ownership struggles that made it headline news during the summer months, has "resumed the break-neck pace that has made Market Basket such a striking success in the supermarket industry. Sales are up strongly, and the company is poised to open five new stores over the next several months and hire more than 1,000 employees."

    The stores are being opened as Arthur T. Demoulas works to conclude the deal that will have his side of the family acquiring the business from the side of the family represented by Arthur S. Demoulas for $1.6 billion - a sum that some thought would leave the company unable to expand because of the requirement that it service the debt created by the acquisition.
    KC's View:
    One of the things that Market Basket is trying to do is regain the momentum it lost during the summer, which is partly a matter of reality and partly a matter of perception. The comments the company makes about having completely recaptured all its pre-controversy sales fall, I suspect, into the latter category. I've heard from some pretty good sources that retailers that gained sales when Market Basket was in turmoil have kept some of those sales, so there is a bit of suspicion that Market Basket could be dealing in a bit of hyperbole.

    Published on: October 27, 2014

    USA Today reports that CVS and Rite Aid over the weekend disabled their ability to accept payments via the Apple Pay mobile payment system.

    According to the story, "the conflict between Apple Pay and a mobile payment system called CurrentC that is being developed by a retailer-owned mobile technology outfit called Merchant Customer Exchange (MCX). Unlike Apple Pay, CurrentC does not use an NFC chip, but instead generates a QR code that is displayed on the merchant's checkout terminal. Customers who have already linked their bank accounts to the CurrentC system scan the QR code from the terminal and the transaction is completed."

    And, the New York Times writes that "analysts said disabling acceptance of Apple Pay was a way to favor a rival system that is not yet available but is being developed by a consortium of merchants known as Merchant Customer Exchange, or MCX. Rite Aid and CVS are part of that consortium, not part of the group of retailers that had teamed up with Apple on its payment system. Nonetheless, over the week, Apple Pay technology was working in Rite Aid and CVS stores."

    Among the companies partnering in MCX are Walmart, Best Buy, Target, Darden, and Sears.

    The Times also reports that while Apple has not released data on how popular its new product is, "on Apple Pay’s first day, at Chase banking services seven times more people added Chase credit cards to Apple Pay than signed up for new credit cards."
    KC's View:
    There is going to be a lot of maneuvering and posturing, but at the end of the day what is going to matter is what systems consumers prefer. If Apple Pay is a winner, it will not behoove retailers not to enable it in their stores. Simple as that.

    Published on: October 27, 2014

    The Boston Globe reports that amid reports that Walmart may be planning to stay open all day on Thanksgiving and how "more and more companies have been opening earlier and earlier on Thanksgiving night, meaning that droves of workers had to cut their days with family and friends short to staff the shopping frenzy," there remains at least one holdout.

    Costco, the story says, has decided to remain closed on Thanksgiving.

    CEO Craig Jelinek explained the reasoning this way a year ago: “Our employees work especially hard during the holiday season, and we simply believe they deserve the opportunity to spend Thanksgiving with their families.”

    The story continues: "Costco, of course, is often held up as a counterpoint to WalMart’s corporate practices. It’s the second largest retailer in the country, trailing only WalMart, and is publicly traded. It also pays retail employees $20 an hour, its CEO collects a salary of $650,000 a year, and 88% of its employees carry company-sponsored healthcare."
    KC's View:
    Thanksgiving is one of those days that I feel strongly about, and on which I wish more retailers would stay closed. Let the madness begin on Friday.

    Now, I get that this probably has become impossible, especially because online merchants are open all day on Thanksgiving, and bricks-and-mortar retailers believe they have to respond. But I think that it is great that Costco is bucking the trend … that it is willing to let the madness begin on Friday.

    Published on: October 27, 2014

    The Washington Post has along piece about how Patagonia differentiates itself to its employees - by encouraging them to achieve a high level of work-life balance.

    An excerpt:

    "At a time when surveys show many Americans are worried about their jobs and research shows that long hours of face time in the office are highly rewarded, workers at Patagonia set their own hours. And the company signals that it doesn’t want those hours to be excessive; The child development center closes at 5 p.m. The headquarters buildings are locked, with everybody out, at 8 p.m., and on weekends.

    "Outdoor companies like Patagonia have a business incentive for making sure their employees have time to pursue sports and try out new gear. But in its 41-year history, Patagonia has taken it a step beyond, ensuring, for example, that even workers in its Reno distribution center have free yoga, an organic cafe, free scooters and skateboards and hiking trails out the back door.

    "Far from slacking off, the family-owned company has doubled in size and tripled in profits since 2008, earning $600 million in 2013. Its 2,000 employees around the globe are fiercely loyal. Turnover is minimal. The company is expanding into new global markets.
    Now some in intensely competitive corporate America, who once dismissed Patagonia and other outdoor companies’ attention to work-life details, are beginning to take notice."

    You can read the entire story here.
    KC's View:
    Sure, Patagonia is an outlier, and there will be few companies that can mimic its approach.

    I'm also aware of the fact that Jeff Bezos reportedly once said that if you are concerned about work-life balance, you must not like your work.

    But I think the broader message is a good one - that an appreciation of the people on the front lines is not incompatible with growth, and that if employees feel as if they are an asset to the company rather than a cost, they will respond.

    Published on: October 27, 2014

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Columbus Dispatch reports that the mayor there, Michael B. Coleman, "is considering measures to reduce the use of plastic grocery bags in the city. That could mean charging fees, providing incentives for using reusable bags or enacting an outright ban … When asked about plastic-bag fees or bans in the past, Coleman said he preferred to recycle them. But recycling efforts have fallen short, Williamson said. For example, not enough consumers are returning plastic bags to grocery stores for recycling.

    The story says that "Williamson said city officials will talk with the business community to get feedback and is asking residents to take an online survey to help officials determine priorities for a five-year sustainability plan. As part of the survey, residents are asked to select the top three of six suggestions to reduce litter. Among them: 'Incentivize reusable grocery bags and consider a surcharge or tax on plastic bags'."


    • The Wall Street Journal reports that as the holiday season approaches, "retailers are bombarding customers’ inboxes and Twitter feeds with help-wanted ads in addition to the usual gift ideas and free-shipping offers. To augment traditional hiring methods, which are failing to produce enough job candidates, retail chains are recruiting via channels usually reserved for promoting products."

    The story goes on to note that "the unemployment rate fell to 5.9% in September, the lowest reading since 2008. Holiday hires last year surpassed their prerecession peak and the National Retail Federation expects companies will match or exceed that level this year. But while the demand for retail workers is exceeding prerecession levels, the scramble for seasonal hires hasn’t led to more pay. In September, non-supervisor retail wages increased 2.1% from a year earlier, roughly in line with inflation."
    KC's View:

    Published on: October 27, 2014

    • Walmart said last week that it has named Murali Lanka, a general manager in the company's Texas division, to be chief operations officer at Wal-Mart India Pvt. Ltd., the company's wholly-owned Indian subsidiary.
    KC's View:

    Published on: October 27, 2014

    GeekWire reports that on "The Charlie Rose Show" last week, former Microsoft CEO Steve Ballmer talked a bit about Amazon and its troubles:

    "They make no money, Charlie,” Ballmer said. “In my world, you’re not a real business until you make some money. I have a hard time with businesses that don’t make money at some point … If you are worth $150 billion, eventually somebody thinks you’re going to make $15 billion pre tax. They make about zero, and there’s a big gap between zero and 15.”

    Ballmer went on:

    "One capability every business is expected to have is the capability to make money. It requires a certain kind of discipline, a certain kind of mindset. … As a businessman, if you ask me what I’m proud of, I’m proud of the fact that I made $250 billion under my watch as CEO.”
    KC's View:
    I think it is fair at this point in time to question Amazon's long-term financial strategy, especially if you are an investor in the company. I've always believed that the company needed to continue to invest in new products and services to keep its lead in the e-commerce sector, but it seems entirely legitimate to question whether management has gotten a little distracted (like, by the Fire Phone) and maybe a little arrogant.

    But "not a real business"? That strikes me as patently absurd.

    Published on: October 27, 2014

    Responding to last week's story about the news that at Safeway, three of the company's top executives, including two highly ranked women, will be leaving the company shortly after the planned acquisition by Albertsons is completed, one MNB user wrote:

    The news of Albertsons-Safeway anointing a boys club to the C-suite is about as surprising as a Tea Party rally in Texas.  It’s reminiscent of the collapse of Supervalu, when Sam Duncan (a pre-baby boomer Albertsons guy) came out of retirement and fired every division president who was either female or a person of color.  I tend to think that the rank and file at Albertsons still celebrate their hard-fought divorce from Supervalu, but this latest move might leave them wondering if the soul-sucking really stopped when Supervalu sank.

    The three execs are Larree Renda,the company's executive vice president and chair of The Safeway Foundation, who has been with Safeway for forty years; Diane Dietz, executive vice president and chief marketing officer, who joined Safeway six years ago after a career at Procter & Gamble; and Pete Bocian, executive vice president/CFO, who joined the company in 2013.

    From another reader:

    Seriously?  Why is anyone surprised by Cerberus cutting the female heads at Safeway?  They did the exact same thing at Albertsons and SUPERVALU.  Qualified women, many who were named as PG Top Women in Grocery, were packaged out or left voluntarily when they saw the writing on the wall.  In the wake of the "old white guys society" Janel Haugarth may be the only one who survived.  Larree and Diane are as outstanding and strong as Janel, I hope to see them, and a few others, join forces and show the good ole boys what the new century looks like.

    In my commentary last week, I wrote, in part:

    I expect that they'll all have successful post-Safeway careers … they are all young, with plenty of gas left in their tanks. (I would guess they all already are fielding inquiries and that they sit high on the list of potential "gets" compiled by executive search firms.)

    This led MNB reader Linda Wish to write:

    WHAAAAAA?????????????

    You are usually an advocate for judging individuals by their abilities. This statement makes it seem that you would understand if these folks did not get next jobs due to advanced age?

    So you are now indicating that ageism is understandable?

    I am sure this is a slip of the keyboard. It is so unlike you.


    In the words from Cool Hand Luke, what we have here is a failure to communicate.

    I don't think I was saying that at all. At least, that was not my intention.

    I was just saying that these three people hardly seem like they are at the end of their careers, and therefore there will be plenty of doors and opportunities open to them. I'm not suggesting in any way, shape, or form that ageism is appropriate or understandable … but I do think it is fair to say as we get older there are some options no longer as available to us.

    When I said they were young, I was thinking that they all probably are younger than I am. And that's my definition of young. I don't think I offended any of them with my comments, and I hope my sentiments were not widely misconstrued.

    Ironically, we also had a story last week about a study that seemed to prove that you really are only as old as you think you are, and that there are ways to connect the body to what the mind believes.

    To which MNB reader Beatrice Orlandini responded:

    Which only goes to prove that "age is a question of mind over matter; if you don't mind it doesn't matter."

    Another MNB reader wrote:

    This simply reinforces what I firmly believe;

    Retiring will make you old before your time.
    Work as long as you can, not as long as you need to.
    Don't move to a retirement community.
    Make sure you hang out with young people.


    Agreed. Totally.
    KC's View:

    Published on: October 27, 2014

    It is Week Eight in the National Football League…

    Detroit 22
    Atlanta 21

    Seattle 13
    Carolina 9

    Baltimore 24
    Cincinnati 27

    Miami 27
    Jacksonville 13

    St. Louis 7
    Kansas City 34

    Chicago 23
    New England 51

    Buffalo 43
    NY Jets 23

    Minnesota 19
    Tampa Bay 13

    Houston 30
    Tennessee 16

    Philadelphia 20
    Arizona 24

    Oakland 13
    Cleveland 23

    Indianapolis 34
    Pittsburgh 51

    Green Bay 23
    New Orleans 44



    In the 2014 World Series, the San Francisco Giants had a good weekend … the Giants lost 3-2 to the Kansas City Royals on Friday night, but then beat the Royals 11-4 on Saturday night and 5-0 last night.

    The series resumes on Tuesday night in Kansas City, with the Giants holding a 3-2 game lead in the best-of-seven series.
    KC's View:

    Published on: October 27, 2014

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    KC's View: