business news in context, analysis with attitude

Published on: November 20, 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, Kevin Coupe here. This is FaceTime with the Content Guy.

Doing what I do for a living, you have a lot of interesting conversations, some of which can lead you into unexpected directions.

Like, for example, the series of conversations I recently had about condoms.

That's right. Condoms. Not exactly a subject that I thought I'd be spending a lot of time addressing at my age, but go figure.

It all started with a friend of mine, who was telling me about some work he was doing with a company that makes Sustain Condoms (which, parenthetically, I have to say is one of the better names one could come up with for this type of product …. kudos to the marketing folks). When he was describing the condom, he used words like "environmental," "responsible," and "ethical." I have to be honest … it piqued my curiosity, because when I think about condoms, while words like "sustainable" and "ethical" do come to mind, it is in a somewhat different context.

So I did a little research. The company that makes Sustain Condoms was started by Jeffrey Hollender, who created the Seventh Generation brand, and his daughter Meika. His background certainly gave the environmental pitch some credibility, and I learned as I did the research that Sustain gets the latex rubber for its products from "one of the most sustainable rubber tree plantations on the planet, located in southern India," a plantation that bans child labor, pays reasonable wages, and is committed to providing education and healthcare to the local community.

In addition, I learned that Sustain, concerned about the fact that many condoms sold in the US contain a carcinogen called nitrosamine, decided to insure that its condoms would have no detectable nitrosamines. All good, and all sounding like a differential advantage.

But let's go back to something else about the company - that it was started by Hollender and his daughter, Meika. Really? I can imagine being in business was a daughter, but I'm not sure that this is the one I'd choose.

Well, it ends up that Meika's role is invaluable, because in fact Sustain condoms are largely being marketed to women. That's because Sustain is focusing not just on the birth control aspect of condoms, but also on the women's health aspect - there has been an enormous increase in sexually transmitted diseases, especially among young women who are sexually active. If one is work from the premise that people are responsible for their own health, the Hollenders reason, then women are a natural market for condoms, which if used more often could have a significant impact on reducing disease rates.

All differential advantages … and I also thought it was noteworthy that the company is donating 10 percent of its profits to its nonprofit arm, which will fund women's reproductive and family planning initiatives.

Now, my goal here is not to do a free commercial for Sustain. I wanted to bring all this up because of what happened after I did all my research, and even talked to Jeffrey Hollender, who was nice enough to send me a sample.

First of all, my kids were sort of amused to see their father getting a box of condoms in the mail. (Amused, and maybe a little horrified.) But after the condoms arrived, it led to a pretty interesting conversation about women's issues, about being responsible for your own health and well-being. I'm not sure, to be honest, that I would've had that specific conversation if we were just talking about condoms within the context of just sex. It was a broader conversation, and more open.

Now, that's what I call a differential advantage. Sometimes, products and services can go beyond the mundane, and lead to more meaningful connections and exchanges. It is how retailing and manufacturing companies create sustainable and relevant brands. Sometimes, a thing is what it is, and nothing more. But not always.

Those are the moments we all have to seek. The "something more" moments.

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

Published on: November 20, 2014

by Kevin Coupe

Thanks to the MNB reader who sent along a MacWorld story about how "researchers at Nanyang Technology University say they've discovered a way to build a better battery … a battery that charges in mere minutes and lasts an amazing 20 years."

Yikes.

The impact, the story says, could be enormous:

"These batteries could revolutionize the electric car industry. Beyond that, if these batteries begin trickling into mass production, they could also kill two of the biggest irritants in today’s mobile electronics: Long charging times and forced obsolescence.

"The benefits of fast charging need no explanation, but many of today’s smartphones and tablets won’t let you remove their batteries, essentially forcing you to buy a new device when the lithium-ion battery inside starts to fade after 500 or so charges. A battery that lasts 20 years could dramatically change how long people hang on to their smartphones, especially with the mobile industry’s recent trend of decoupling hardware fees from services subscriptions. Together, the combo could further reduce the two-year upgrade cycle so common in the mobile industry."

In other words, it is an Eye-Opener.

Where do we all sign up?

Published on: November 20, 2014

Fresh Encounter, which operates 25 stores in Ohio and Indiana, said this morning that it is acquiring 11-store Chief Super Markets, also based in Ohio.

According to the announcement, "The acquisition incorporates all Chief Super Market, Inc. retail locations, Boots BBQ, Chief Kitchen and Chief Smokehouse operations into the Fresh Encounter retail business."

Michael Needler, Jr., president/CEO of Fresh Encounter, said that the deal would be "transformative" for his company. " “It is difficult to create a merger of this size in such close proximity and not overlap retail locations, but this is one of those rare instances when we can consolidate resources without sacrificing any retail operations," he said.

Stephanie Skylar, Chief's president & CEO, said that "Fresh Encounter is an obvious succession plan for our organization. We have been colleagues for many years and respect their approach to the challenging, yet rewarding, grocery business."

Fresh Encounter reportedly plans to keep the Chief banner intact. Terms of the deal were not disclosed.

Published on: November 20, 2014

How Amazon founder/CEO sees one of his newest investments, the Washington Post, became a little clearer this morning.

Amazon and the Post said they have jointly launched a new application for the Amazon Fire tablet that will make the newspaper's content more available and accessible to a national and international audience. According to the story, "The new app will showcase The Post's award-winning national and international news coverage, striking photography and informative graphics. The immersive tablet experience has a bold visual display that lets readers quickly and easily navigate stories, giving readers around the country everything they need to know in one, easy-to-use place … This app gives new form to The Post while offering all that has made The Post a must-read destination for millions of readers around the country and the world."

The Post says that the app will be available exclusively to Amazon Fire customers for free for six months, with no subscription required.

The announcement notes that the Post has been highly focused on growing its non-DC readership, with the current count at 42 million "and growing," as it looks to better amortize the newsroom staff of some 700 people.

The Post story says that "the new app marks an important step in the quest laid out by Jeffrey P. Bezos, Amazon’s chief executive and owner of The Post, soon after the August 2013 announcement that he would purchase the publication. He described a goal of creating a new 'daily ritual bundle' that would combine a wide variety of material and appeal to a wide variety of readers In doing so, Bezos said at the time that he wanted to reverse the trend of people flitting from Web site to Web site, often arriving via Facebook or Twitter to read a single story before moving on."

Published on: November 20, 2014

MarketWatch is out with an analysis of a National Retail Federation (NRF) survey of how many people actually are interested in shopping on Thanksgiving.

The story says that "while 61% of consumers said they will or may shop between Thanksgiving and Sunday" next weekend, "only 18.3% of those who plan to shop that weekend said they’ll buy in stores or online on Thanksgiving, down from 23.5% in 2013, when NRF first asked about Thanksgiving.

"That would translate to 11% of U.S. consumers planning to shop on the holiday.

"In fact, for those who said they want to shop during the four-day weekend, the percentage that said they’ll buy on Black Friday, the day after Thanksgiving and the biggest sales day of the year, also declined to 68.2% from 69.1%, the NRF survey showed."

NRF president/CEO Matthew Shay is quoted as saying, “We could witness a sea change this holiday season as consumers’ reliance on extremely deep discounts over the biggest shopping weekend of the year shifts to more of a ‘wait- and-see’ mentality."

Published on: November 20, 2014

Bloomberg reports that close to 5,000 people "have signed a petition calling for Kmart to ensure that its workers have enough time off on Thanksgiving, part of a backlash against retailers that are open during the holiday."

The story says that "Kmart said it helps customers as a place for early-bird holiday shopping and last-minute Thanksgiving needs. The chain has operated on Thanksgiving for 23 years, with stores opening at 6 a.m. for the past four years. This year, stores will operate for 42 hours straight, until midnight on the Friday after Thanksgiving. That’s up from 41 last year."

In other Thanksgiving-related news, "RadioShack Corp. scaled back its Thanksgiving hours last week after workers complained." And Whole Foods this year is boosting Thanksgiving pay to double-time, from time-and-a-half, after workers at two Chicago stores last year demonstrated against mandatory holiday work."

Published on: November 20, 2014

The Chicago Tribune reports that animal rights group Mercy for Animals has released a hidden camera video that purports to show "workers abusing chickens at what is identified as Park Ridge-based Koch Foods locations … The group asked that Koch Foods, a major chicken processor in the United States, adopt new animal welfare standards to prevent future abuse."

According to the story, "The videos depict chickens hanging on a moving conveyor line that pulls them through a vat of water charged with electricity. The charge is intended to stun the animals before their throats are cut … The group suggested a more humane way to kill chickens would be 'controlled-atmosphere killing,' in which chickens are rendered unconscious by replacing the oxygen in the air with nitrogen, argon or carbon dioxide."

Koch Foods has not commented about the video.

Published on: November 20, 2014

Getting a lot of attention this morning is the Wall Street Journal story about how JetBlue "is adding baggage fees and cutting passenger legroom to improve its lagging financial results, concessions by one of the last holdouts against industry tactics that have frustrated many fliers but boosted the nation’s airlines … The move leaves Southwest Airlines Co. as the last big U.S. carrier to let all fliers check at least one bag free."

According to the story, "JetBlue said Wednesday that it would introduce basic fares next year that don’t include a complimentary checked bag, as part of three new fare classes at the carrier. The two higher classes will include free bags and other perks.

"JetBlue also said that, starting in the third quarter of 2016, it will increase the number of seats on its Airbus A320 jets to 165 from 150. The move will reduce average legroom by almost 5% to 33.1 inches per seat, which JetBlue said is still the highest average among U.S. carriers on narrow-body jets. The additional seats will require a fourth flight attendant on those aircraft because of federal rules … JetBlue said its new steps and improvements in other projects would increase annual operating income by about $450 million by 2017, including $200 million from the new fare classes and $100 million annually from the new seats."

Published on: November 20, 2014

• The Wall Street Journal this morning reports that Walmart "is tightening its new online price-matching policy, after people used listings it alleged were fake to buy PlayStation videogame consoles and other products at deeply reduced prices. In some instances, Wal-Mart sold $400 PlayStation consoles for less than $100.

"Wal-Mart said it will no longer match prices from marketplace vendors or third-party sellers and will limit the list of retailers it would match to 30. The list of approved retailers includes Amazon and the web sites of major chains such as Best Buy Co. Wal-Mart also doesn’t match online prices from auction sites such as eBay Inc. or websites that require memberships."

Published on: November 20, 2014

• The American Farm Bureau is out with its annual estimate of the cost of a Thanksgiving dinner, saying that for ten people, the average cost will be $49.41, or 37 cents higher than last year.

For that increase, the Associated Press writes, "you can blame dairy products, coffee and that all-important marshmallow-topped sweet potato casserole," all of which have gone up in price.

The story also notes that "the good news is that a drop in fuel prices won't just make it cheaper to drive to Grandma's house for the big meal, it also helped keep down the cost of some ingredients. Flour-based foods, such as stuffing mix, pie shells and dinner rolls, will run about 21 cents less than last year, likely due to energy cost savings by the processors."


• Reuters reports this morning that Dollar General has confirmed that "it is in talks with the U.S. Federal Trade Commission (FTC) over the number of stores it will have to sell to receive approval for an acquisition of Family Dollar Inc."

While Dollar General had said that it believed it would have to divest no more than 1,500 stores to make the deal work from an antitrust perspective, there have been reports that it could have to sell off as many as 4,000 units.

Published on: November 20, 2014

Mike Nichols, one of the world's most accomplished film and theater directors, passed away last night suddenly at the age of 83.

Nichols' family fled Germany in the late thirties, and he first found show business fame as one half of a legendary comedy duo, with Elaine May. During the mid-sixties, he segued to directing, and over a long career he directed such plays as the original productions of "Barefoot in the Park" and "The Odd Couple," as well as "The Gin Game," "The Real Thing," and "Spamalot."

On film, Nichols had an auspicious career - Who's Afraid of Virginia Woolf? was his first film, followed by The Graduate, and then Catch-22. Other Nichols-directed films include Silkwood, Working Girl, Heartburn, Primary Colors, The Birdcage and Charlie Wilson's War.

Tom Stoppard, who wrote "The Real Thing," was once quoted as saying about Nichols, “He is a giver. He’s good at comfort and joy. He’s good at improving the shining hour and brightening the dark one, and, of course, he’s superlative fun. ... To me he is the best of America.”

Published on: November 20, 2014

We wrote the other day about supermarket share erosion in the UK, and suggested that US retailers ought to be getting prepared for the same thing happening here. Which prompted MNB reader Greg Seminara to write:

USA supermarkets have already suffered the same market share erosion as the UK.

In the mid 80's, USA Supermarkets accounted for about 85 % of the food dollar, now it's down to around 58 %.

UK shoppers suffer from retail boredom . Small UK stores, 47 % private label market share, and little of the multi channel alternatives and price competition that most USA shoppers enjoy. Lesson learned is that USA consumers still prefer the thrill of the multi-channel chase and that National Brands and assortment are still powerful magnets.




Michael Sansolo had a column the other day about misleading statistics, noting one study in which some Americans suggested that the nation's unemployment rate is as high as 32 percent; we suggested that some of this may reflect epistemic closure on the part of the respondents, which led MNB reader Tony Moore to write:

I’m going to be more cynical than evoking epistemic closure to explain the estimation of unemployment rates that are so outlandish.

There are a lot of people, well functioning people, who have no concept of numbers.  I have encountered in business folks who approach reading a P&L statement as if it was hieroglyphics.  Some have no concept of how large their home are in sq. feet, how many miles from point “A” to point “B”, how many hours to do a standard task.  I have had relatively bright people answer these questions with multiples of 3-5 from the actually value.  These are people that excel in other areas and have been successful in their pursuits because they are not required to be proficient in an quantitative capacity and generally have found someone or some way to cover this area over.

I too believe in the notion many if not a large % of us (myself included) get wrapped in in our own beliefs and objective thinking becomes difficult if not impossible.  However for anyone to think 32% is the present US unemployment rate would have to be either a recently let go newspaper reporter or a very challenged right brainer.

MNB reader Monte Stowell chimed in:

I just read Michael Sansolo’s article about unemployment numbers. In our food sales industry, I think our unemployment numbers would be quite high today versus historic averages,
 
First of all, I am not an economist, but here is one man’s POV as to what has occurred in the food industry as it relates to direct salespeople, broker account managers, retail salespeople, and all the business assistants, secretaries, etc.. I have been in the food industry since 1963 and my career has allowed me to manage a direct sales team, I have worked with several brokers in all the west coast markets. I will use Portland, OR as a point of reference, as this is where I have live all my life. In 1970 or so, there was about 30+ food brokers, 30-35+ direct salesforces with all the direct manufacturers, and with all these businesses, the support people to many to count. Remember that there we had a buying office in every major city for all the big chains, and oh yes, there used to be 2 or 3 successful wholesalers in these markets. Take these numbers and expand them into Seattle, Sacramento, Spokane, Anchorage, Sacramento, Fresno, San Francisco, Oakland, Los Angeles, Phoenix, Salt Lake City, Boise, Great Falls, etc. How many people were employed in these markets 20-35 years ago, I would guess tens of thousands.
 
Let’s fast forward to today, there are 3 or 4 national brokers, with some markets  that have small independent brokers, and the brokers number 5-6. Most national manufacturers do not have a direct retail sales force in each of these markets. That is a long way from what each market used to have. The retailers have consolidated their locations for buying and merchandising, example:  Kroger, Safeway, Albertsons, Unified Grocers, etc.  The manufacturers and brokers now have teams of people who call on the major retailers, who have taken the buying and merchandising functions into a central location, thus fewer people are needed on the sales side. How many people are employed today versus years gone by? I would guess that several jobs have gone away to never come back. A lot of these jobs were well paying white collar jobs. The number of jobs gone forever, several thousand. Remember how much entertaining was done by the industry and all the big foods shows and conventions that there used to be?
 
Nothing scientific and I cannot quantify the employment number in the food industry as it relates to a number, but all I can say is that there are tens of thousands  good paying jobs that will never come back due to the evolution of how retailers, manufacturers, and food brokers go to today’s market. The national unemployment  number would be too high to venture a guess what that number might be.




On another subject, MNB user Jim Veregge wrote:

Kevin, agree 100% with your comments on the Wal-Mart/Tracy Morgan situation.  Wal-Mart claiming that Tracy Morgan was “partially at fault” by not wearing a seatbelt, when it’s driver was clearly at fault would be akin to someone claiming that a shooting victim was “partially at fault” by standing in the way of a bullet.




Finally, thanks to all of you who wrote yesterday to congratulate MNB on 13 years of being in business. There were far too many to quote, but I did want to post one email, from MNB reader Gary Taylor, that made me laugh out loud:

Huge Congratulations on the 13 year anniversary. Only found your page a couple of years ago but wished I had found it sooner. Amazing information and insight every week day in my inbox. I don't always agree with all of your comments, but almost always learn more about the topic than I knew before even if my mind is not changed.
I often wonder how difficult it is for you to keep going after getting beat on by some of your readers over your stance on certain issues and then I remember the great line from The Replacements: "Pain Heals, Chicks Dig Scars, Glory Lasts Forever."

Hope you keep doing this for another 13 years or longer. Thanks for what you do.

Extra credit for the movie reference. Thanks.