retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 12, 2015

    by Kevin Coupe

    The Golden Globes, while they get a lot of attention in Hollywood, are of dubious objective value. After all, there are fewer than 100 members of the Hollywood Foreign Press Association, which bestows the awards.

    Still, if only because it demonstrates a change in the business and cultural zeitgeist, it is worth noting that at last night's Golden Globe Awards ceremony, a show produced by and available only on Amazon - "Transparent" - walked away with a couple of major awards. The show won the best comedy series award (beating out, among other shows, "Orange Is The New Black," which is produced by and only available on Netflix), and the best actor in a TV comedy award went to Jeffrey Tambor.

    In addition, Kevin Spacey won the best actor in a TV drama award and Robin Wright won best actress in a TV drama award for "House of Cards" - which is produced by and only available on Netflix.

    In a lot of ways - in fact, in most ways - these awards are meaningless. They can recognize popularity rather than quality, and represent a narrow view of an only somewhat less narrow business.

    But think about it. That business, until a few years ago, was dominated by a relatively few major companies. Products were produced by a few companies, and available through a relatively few outlets. But that's changing ... and reflects much broader changes that are affecting businesses everywhere.

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

    Published on: January 12, 2015

    Reuters reports that President Obama plans to discuss recommendations today for legislation "aimed at protecting Americans and the trail of data they leave on smart phones, computers and other devices ... Obama will propose a new national standard that would require companies to tell consumers within 30 days from the discovery of a data breach that their personal information has been compromised, the White House said."

    The story goes on to say that "as part of the law, Obama will also propose to criminalize overseas trade in stolen identities, the White House said ... As part of the law, Obama will also propose to criminalize overseas trade in stolen identities, the White House said.

    Any changes in law would have to be approved by the Congress, of course, but the story suggests that online privacy could be an area in which the Obama administration could find agreement with the GOP-dominated Congress.
    KC's View:
    I think the thing that surprised me the most about this story was the fact that overseas trade in stolen identities isn't a crime right now.

    The whole subject of data privacy is going to be increasingly important, and it is a positive thing if it becomes a part of the political discourse. Assuming, of course, that there is actual discourse ... as opposed to ideological posturing.

    Published on: January 12, 2015

    The Wall Street Journal has a story about how, "in collaboration with chefs and companies like Hershey’s and Barilla, makers of 3-D printers are experimenting with chocolate, cookie dough, sugar and other ingredients that can be loaded into a printer.

    "The promise of these machines isn’t just mass production, but also an entirely different type of deliciousness. The printers can render ingredients like chocolate and pasta in shapes and textures that have previously been impossible to create. Molecular-gastronomy pioneer Ferran Adrià has experimented with the technology; a Barilla-sponsored competition for 3-D-printed pasta designs yielded one that blooms into a flower when boiled.

    "Most food-capable 3-D printers are targeted at professional chefs and will likely cost thousands when they hit the market. But what does the food taste like? At the Consumer Electronics Show in Las Vegas this week, I sampled sweets produced by three different models. For all, I asked for seconds."
    KC's View:
    I wonder which major food retailer will be the first to buy a 3-D printer and start manufacturing food in a display kitchen that can appeal to shoppers. Because it is going to happen...

    Published on: January 12, 2015

    There is a terrific piece in the Financial Times about the recent decline of Tesco.

    An excerpt:

    "Tesco was once so dominant that campaigners warned of a 'Tescopoly'. Politicians thought aloud about how to prevent the Tesco-isation of a Britain dotted with 'Tesco Towns' wherever the UK’s leading grocer planted its flag. Bristol hosted a minor riot when they tried to open a convenience store there.

    "Entering the lexicon may also have signified impending decline. Ever since Sir Terry Leahy left the company in 2011 the behemoth has floundered. Any number of reasons can be given. Perhaps Philip Clarke, Sir Terry’s successor, failed to match his brilliance. A more likely cause was the mess that was left behind. This included hubristic overexpansion, both abroad and in its home market. It coincided with a badly timed loss of focus: Tesco branched into broadband, television and banking just when it should have been worrying about cut-throat price competition from German discounters Aldi and Lidl."

    Lots of lessons here ... and you can read the entire story here.
    KC's View:

    Published on: January 12, 2015

    Howard Levine, chairman/CEO of Family Dollar, sent a 2,000-word letter to shareholders this morning explaining the board's recommendation that they vote for a merger with Dollar Tree and against a merger with Dollar General - even though the Dollar General deal is for hundreds of millions of dollars more.

    To boil the content of the letter down, it essentially says that a Dollar General deal will require too many stores to be closed to make the deal workable. An excerpt:

    "Family Dollar is in the unique position of receiving feedback from the Federal Trade Commission (“FTC”) staff on the progress of the FTC’s reviews of both the Dollar General proposal and the Dollar Tree merger. At this time, I wanted to provide complete transparency to you regarding the most recent feedback that we have received from the FTC staff, which reaffirms the statements that we have been making for several months now about the inability of the Dollar General proposal to be consummated on the terms proposed by Dollar General and the certainty of the Dollar Tree merger.

    "The FTC staff informed Family Dollar and Dollar General on January 10, 2015, that its most recent economic analysis of the Dollar General proposal indicates that 5,850 stores are presumptively problematic, including 2,965 Dollar General stores and 2,885 Family Dollar stores. After eliminating the duplication in the 5,850 figure where both a Family Dollar store and a nearby Dollar General store are on the list, we estimate based on experience with earlier iterations of the FTC staff’s store lists that the current count of stores that the FTC staff views as presumptively problematic is around 3,500 to 4,000 stores. This 3,500 to 4,000 range, while not final, is based on the most current and specific indication received from the FTC staff to date as to the number of divestitures that will ultimately be required by the FTC to permit the Dollar General proposal to be consummated."

    And, the letter goes on:

    "Dollar General has still offered to divest only up to 1,500 stores and remains committed to the position that no more than 700 stores will be required to be divested. Accordingly, the Family Dollar Board of Directors continues to be of the unanimous view that the current Dollar General proposal is not reasonably likely to be completed on the terms proposed by Dollar General and that discussions with Dollar General are not reasonably expected to lead to a new proposal that is reasonably likely to be completed on its terms."

    Naturally, Levine is optimistic about a deal with Dollar Tree:

    "The proposed combination of Dollar Tree and Family Dollar would create the leading discount retailer in North America based on number of store locations, operating more than 13,000 stores in 48 states and five Canadian provinces. The proposed merger would also allow the combined company to target a broader range of customers and geographies, leverage complementary merchandise expertise, generate an estimated $300 million of synergy opportunities and is estimated to be accretive to cash EPS within the first year post-closing, excluding one-time costs to achieve synergies. The combined company will also be better positioned to invest in existing and new markets and channels and to grow its store base across multiple brands. Finally, the combined company is expected to generate significant free cash flow, enabling the rapid pay down of debt."
    KC's View:

    Published on: January 12, 2015

    City AM reports that Tesco plans to close 13 of its more than 200 stores in Hungary as part of its broader moves to make the company more profitable, though it says that "we remain committed to our business in Hungary and to our customers.  We are proud of our ongoing contribution to the Hungarian economy and look forward to continuing to serve our three million customers through our existing stores."

    However, the story notes that "major retailers in Hungary face new legislation in the country that would enforce the closure of loss-making chains after two successive years of losses, as well as rises in food inspection costs." 
    KC's View:
    What a concept! If stores don't make money, they have to be closed...

    Published on: January 12, 2015

    • The Los Angeles Times has a piece about PriceSmart, which has all of its three dozen stores "south of the 48 contiguous states, spread from the U.S. Virgin Islands in the north, through Central America and south to Colombia." The story notes that sales are up, and the company is in expansion mode ... though the story also says that its biggest problems are currency fluctuations and "economic conditions in the emerging economies in which the company operates."


    • On Friday, Weis Markets announced the launch of what it said was its "its 12th round of price freezes, effective in all 163 stores. More than 2,000 products have been reduced in price and will remain at these discounted levels for 90 days ... Weis Markets’ current Price Freeze program includes name brand and private brand products in grocery, frozen, dairy, meat, health, beauty care and general merchandise. Customers can identify Price Freeze items through store signage and shelf tags for participating items, as well as in weekly circulars."

    Weis says that since the company began its price freeze initiative six years ago, its customers "have saved more than $50 million dollars. The current program began on Sunday, January 4 and runs through April 5."


    • The Associated Press reports that "JC Penney Co. says the closure of about 40 of its stores will cost around $38 million.

    "The department store chain said it will book pre-tax charges of $21 million in the fourth quarter of its fiscal 2014, and another $17 million will be incurred later. The company will cut about 2,250 jobs as it tries to improve its profitability."
    KC's View:

    Published on: January 12, 2015

    • The Wall Street Journal reports that "Coca-Cola Co. North American Marketing Chief Wendy Clark is taking a leave of absence and is expected to advise potential presidential candidate Hillary Clinton , according to people familiar with the matter.

    "Coke confirmed Friday that Ms. Clark is taking unpaid leave until March 31 'to support an outside project of personal importance to her' but declined to share specifics about the project."

    The story suggests that Clark eventually could take a job with the Clinton campaign ... assuming there actually is a Clinton campaign. Clinton is expected to announce her candidacy for the Democratic presidential nomination within the next few months.
    KC's View:
    Just what we need. Politicians being sold like soft drinks. And just to be clear, this is not a shot at Wendy Clark or Hillary Clinton ... or any other specific candidate of either party. But it seems to me that one of the problems with modern politics is that it ends up being all hat, no cattle ... we focus on style, not substance, we watch races like they are actual races and not a discussion of ideas, and substantive debates are few and far between.

    Published on: January 12, 2015

    Responding to last week's column by Michael Sansolo about exceptional service delivered by the US Postal Service (USPS), MNB reader Kevin Flanagan wrote:

    The USPS still has a lot to overcome – to remain viable in today’s “Amazon” environment.  Due to a career location change, I am currently living in one city/state with my family in another city/state, and we celebrated Christmas in yet another city/state.  One of my older sons gave gifts to my wife and daughters after they had left to go back “home”, so I went to the local Post Office, packed them in a “if it fits it ships” box, and paid my $12.65 (after waiting in line for the one and only clerk to assist everyone).  This was on a Friday, and the tracking information said it would arrive the following Monday.

    Fast forward--as I have tracked the package on-line, the updates have been few and far between.  Monday has of course come and gone.  I even tried calling the toll free number provided on my receipt, which basically gave the same information as the website (which was not helpful), and directed me back to the website for more updates.  No option to speak to someone about why my package was delayed, where it was at, was it lost, etc.

    Today is Thursday, and I finally got an update that the package had arrived at the sorting center in the city/state where my family is currently and should be delivered tomorrow. Okay, so while it is good to know the package is not lost, the system is broken when compared to all the other shipping options available to consumers today.  While I am not the type of person to ask for a refund on my “2 day shipping” that will now be 7 day shipping, I could not even imagine how to pursue that anyway based on the poor customer service to date.





    We wrote last week about a major Dunkin' Donut expansion planned for China, prompting MNB reader Norm Myhr - who happens to be from Portland, Oregon - to write:

    China? They managed  to skip right over the  Northwestern U.S. We are living in The Dunkin’ Devoid.

    The New England diaspora would at least support a few stores.


    Oh, come on. If you're in Portland, you can go to the vastly superior - and local - Voodoo Doughnuts and Stumptown Coffee.




    On another subject, MNB reader Jim DeJohn wrote:

    I love that Starbucks has finally put a Flat White on their menu as I have loved this drink each time I have visited Australia.  Now all we need are “Tim Tams” to enjoy the Flat White with.
    KC's View:

    Published on: January 12, 2015

    This weekend featured the National Football League divisional playoffs...

    AFC:

    Baltimore 31
    New England 35

    Indianapolis 24
    Denver 13

    NFC:

    Dallas 21
    Green Bay 26

    Carolina 17
    Seattle 31


    The New England Patriots will play the Indianapolis Colts, and the Green Bay Packers will face off against the Seattle Seahawks next weekend for the right to go to Super Bowl XLIX on February 1, 2015.
    KC's View: