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: February 5, 2015

    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.

    Last weekend's Super Bowl, and indeed the entire playoffs season, featured something that we are used to at American sporting events - athletes who seem to believe that they succeeded because of divine intervention. This always makes me a little crazy, because God is not a Patriots fan, or a Yankee fan, or a Lakers fan. (I think we know for sure that he or she is not a Jets or a Mets fan, but that's a different story...)

    I have no problem with people making the most of what they believe are their God-given talents and then giving thanks to whatever deity they believe in. There's something actually humble about players of opposing teams gathering in a circle to pray at the conclusion of a football game. Though, to be honest, I wonder how people would react if Muslim players engaged in a public display of their religious beliefs after a game.

    I do think there is a line that probably should not be crossed, mostly because I think there is a certain arrogance in thinking that God has a stake in - or even cares - how a sporting event turns out. Just not that important. (Though my kids did advance the theory that if God is a Patriots fan, maybe we can blame God for deflating the balls...)

    I've been thinking about this subject in part because of a story that was reported out of Blue Ridge, Georgia, about a Walmart greeter there who got into trouble because he'd say to people entering the store, "Have a blessed day." Apparently somebody complained, and Walmart told him to stop. Then there was a public backlash, and Walmart reversed itself. James Philips is now allowed to say, "Have a blessed day," and not get into trouble.

    Here's what I think about this.

    I'm far from being a particularly spiritual guy, but it wouldn't bother me at all if someone said that to me in a Walmart. I'd probably say, "You have a blessed day, too!" Quite frankly, I have a problem with people who are so intolerant that they'd complain about such a thing. Life's way too short...

    The guy wasn't saying, "Have a blessed day, but only if you worship my God at my church, using my rules." And it doesn't sound like there was fire and brimstone in his voice .... the guy sounds like a reasonably pleasant individual. Quite frankly, it seems to me that even atheists and agnostics could find something to like in his greeting, which also could be interpreted as "have a day blessed by good luck."

    I mean, come on. Can't we all just relax a little bit about this stuff? Who complains about things like this? Again, I think there probably are lines that should not be crossed, especially in a work environment ... but I also think that if I want people to be tolerant about whatever my beliefs happen to be, I need to be tolerant about theirs. Most of time, I want to be the guy erring on the side of being too tolerant. It is easier to make and keep friends that way, easier to get things done, and a better way of avoiding agita.

    From my perspective, there's way too much agita in the world, most of it caused by people who are sure their way is the only way.

    That's what is on my mind this Thursday morning .... I hope you have a blessed day or a happy day ... or whatever kind of day you'd like to have. As always, I'd like to hear what is on your mind.

    KC's View:

    Published on: February 5, 2015

    by Kevin Coupe

    The Daily Beast reports that in Seattle, "residents can now buy medical marijuana through the user-automated technology. The ZaZZZ marijuana vending machine debuted Tuesday morning inside Seattle Caregivers medical-marijuana dispensary. The company behind the vending machine, American Green Inc., billed it as the first age-verifying, climate-controlled self-service dispensary."

    According to the story, the machine stocks a “wide range of medicinal and recreational marijuana flowers, pot-infused edibles, and merchandise" and "uses an ID-scanner to verify a buyer’s identity and age before dispensing the pot." The company plans to expand usage of the machine to elsewhere in Washington State, as well as locations in Colorado, California, Michigan, Rhode Island, and Alaska.

    One can only assume that these folks will take advantage of natural synergies and put candy machines next to the marijuana machines...

    It's an Eye-Opener about how, in so many ways, the world is changing...
    KC's View:

    Published on: February 5, 2015

    Yesterday, MNB took note of a New York Times report that the New York State Attorney General is accusing GNC, Target, Walgreens and Walmart "of selling fraudulent and potentially dangerous herbal supplements and demanded that they remove the products from their shelves."

    The story says that the AG's office says it "conducted tests on top-selling store brands of herbal supplements" at the retailers "and found that four out of five of the products did not contain any of the herbs on their labels. The tests, the story says, "showed that pills labeled medicinal herbs often contained little more than cheap fillers like powdered rice, asparagus and houseplants, and in some cases substances that could be dangerous to those with allergies."

    Almost immediately, there was a backlash against the New York Times story and the New York AG's test methodology.

    The Natural Products Association (NPA) released a statement from its CEO and Executive Director, Daniel Fabricant, Ph.D., who previously was director of the Division of Dietary Supplement Programs at the Food and Drug Administration (FDA):

    “The full details and data the New York Attorney General found through the DNA tests have not been made available to the public. We do not know exactly what was tested, and no labels of products have been shared. The Natural Products Association has confirmed with one of the retailers, GNC, that every product tested was a botanical extract, in which DNA is unlikely to be intact, making that test not fit for purpose. Therefore, if the study is using the wrong tool, that hardly seems newsworthy or beneficial for consumers.
     
    In addition, we do not have any insight into how reference materials were selected to compare the products in this study. We also do not know how products were obtained or sampled, nor do we know the chain of custody of said products. What’s interesting is that in keeping with the federal regulations for dietary supplements, ingredient identity testing is a requirement, as are the use of reference materials to establish identity, so it’s peculiar that a study to evaluate quality isn’t consistent with parameters of what’s required by the federal regulations for quality. Also, per these same regulations, manufacturers are given flexibility in testing decisions, and may or may not choose to use DNA barcoding, as it may or may not always be appropriate. Nevertheless, they have requirements on testing for identity that are required by law, and if those requirements aren’t met, the government can and does take action, ensuring consumer protection is in place. Thus, it is unclear as to why the New York Attorney General is making this request.

    We encourage the New York Attorney General’s office to release the full study details promptly, and look forward to reviewing them thoroughly. Consumers should know that supplements are a safe part of a balanced approach to a healthy lifestyle that includes good diet and exercise, and they should consult with their doctor or health care professional before making any changes to their health care regimen.”

    Steve Mister, president & CEO of the Council for Responsible Nutrition (CRN), issued a statement as well:

    “These actions today by the New York State Attorney General’s (AG) office smack of a self-serving publicity stunt under the guise of protecting public health. Supposed concerns about the products in question are based on a novel testing method that has been roundly criticized by botanical scientists who question whether DNA barcoding technology is an appropriate or validated test for determining the presence of herbal ingredients in finished botanical products. Processing during manufacturing of botanical supplements can remove or damage DNA; therefore while a DNA testing method can be useful in some cases, this method well may be the wrong test for these kinds of products. 

    Nor does the DNA testing method provide information on the amounts of food contaminants found in the products. This is important because there are well-established legal thresholds that allow for trace amounts of some ingredients like gluten, and trace amounts of DNA from rice, beans, pine, citrus, etc. are not considered harmful or required on labels. Announcing the detection of minute amounts of these substances unnecessarily alarms consumers without informing them whether the detection of DNA from these substances poses any allergic risk.
    Instead of giving companies a reasonable opportunity to respond to these concerns, the AG unfortunately chose to label them guilty without a fair trial. Not only is the testing method itself suspect for these kinds of products, but the scientist who developed the assay and conducted the testing is not a botanical or a food expert. He is an evolutionary biologist who specializes in testing DNA in dinosaurs and lizards."

    Maged Sharaf, Ph.D, chief science officer for the American Herbal Products Association (AHPA), said in a prepared statement that "using  DNA barcoding as the only method for identifying ingredients in popular herbal dietary supplements and ignoring all other well-established and valid methods of herbal analysis is a suspect analytical process at best, and likely to provide results that are inaccurate."

    And Mark Blumenthal, founder and executive director of the American Botanical Council (ABC), told ABC News that "from a scientific perspective, it appears that the NY AG is way out in front of the available scientific evidence to support and substantiate his position. We cannot know this for certain until we know more about the testing protocols, but in general, as we told the New York Times, DNA barcode testing often cannot determine the identity of a botanical material if it’s been extracted, or if the material has been submitted to a prolonged heat treatment,” he continued,  “so, if any of the products tested were extracts — e.g., ginkgo, and possibly the St. John’s wort products — then it’s understandable why they got a negative finding. This also may be true for other products tested, i.e., if they were extracts.”
    KC's View:
    The bulk of my commentary was focused on the fact that I find it fascinating that retailers are being held responsible for what they sell, though I also said that "I've never much believed" in supplements.

    In addition to these official responses, and stories, I got a number of emails about the story. The longest was from MNB reader Skye Lininger, who also happens to be the CEO of Aisle 7, which used to be known as Healthnotes, and who has experience with this industry...

    First, I’ve never understood the statement “I don’t believe in supplements.” Supplements aren’t something you believe or don’t believe in any more than you believe or don’t believe in gravity. They are well understood chemical compounds that science has demonstrated have biological activity. I make this claim with confidence since for more than twenty years our business has curated the science around supplements and have cataloged over 100,000 studies that have been published over the past 50 years in over 1,000 medical and scientific journals on dietary supplements and are indexed in PubMed (a service of the National Library of Medicine). There have been many thousands of clinical trials, double-blind placebo controlled trials, epidemiological studies, and meta-analysis. Over half of all Americans take supplements on a regular basis.

    Second, the four cited retailers are all very large companies. The vendors who supply them are also billion dollar companies. The raw material supply chain in the supplement industry for major players is well established. The NY AG’s testing was only on herbal products. When herbs arrive at a manufacturer’s facility they are quarantined and tested. The plant material is then matched against reference samples. Botanical lab experts do organoleptic and other testing before releasing for manufacture. While the size of a company isn’t a guarantee, it does imply a certain level of process, documentation, care, and expertise. There is, after all, a lot at stake.

    Third, you assume at face value that the DNA studies performed by the NY AG’s office were valid without questioning whether or not they knew what they were doing. The AG’s office houses lawyers, not scientists. Experts know that HPLC is the standard for testing herbs and other dietary supplements. Which do you think more likely, that very large supplement manufacturers and retailers all carried products from a variety of vendors that supplied products that contained ZERO Gingko (as in one of the alleged fraudulent products), or that a lab for an attorney general, with no expertise in the field (the AG’s tester is a paleontologist, not a biochemist) blew it?

    Fourth, it is not possible to test for some of the items alleged to be in the products. You can’t test for an unknown most of the time. You can test for something you know is there if the item hasn’t been overly processed. In the case of the herbs, some were in tincture form. Tinctures are most often made using alcohol which denatures the protein, destroying the DNA. Think about how in CSI if the perp wipes down an area with alcohol there is no longer any DNA evidence. There is no mention of HPLC testing in the report from the AG.

    Fifth, dietary supplements are not exempt from regulation. There is, in fact, an elaborate enforcement structure and plenty of authority for both the FDA and the FTC to act. The FDA has published “Good Manufacturing Practices” that are similar to those required for OTC drugs that the supplement industry is required, by law, to follow. It is the FDA’s job to enforce the GMPs. Companies not following GMPs or other FDA regulations are cited, fined, and sometimes shut down. There are certainly bad actors, but this is true of all industries—e.g. there are counterfeit pharmaceuticals on the market. A big difference between the two (i.e. supplements and drugs), that many people miss, is that drugs are very powerful compounds that, if misused, can kill people. Dietary supplements are much more benign—and while not harmless, do not carry the same risks as pharmaceuticals.

    Finally, you say that the supplement industry has spent a ton of money lobbying. All industries lobby. The dietary supplement industry is roughly $32 billion in size. The global pharmaceutical industry is closing in on $400 billion. Who do you think spends the most on lobbying? And what is wrong with lobbying? It is a legal activity designed to educate lawmakers on your industry’s views and positions. The supplement industry has never lobbied against safety or reasonable regulation.

    Could the supplement industry do a better job at policing itself? Could the FDA do a better job at regulating the industry? Of course the answer (as with every industry) is “yes.” However, your comments on this issue were disappointing since you perpetuated a lot of misinformation about the supplement industry. On this one, I don’t think you were thorough with your homework and relied instead on a not fully accurate news story from the NY Times without checking with experts in the category. I believe time will show that the AG jumped the gun and that their process was far more political than it was scientific. In the meantime, many will continue to erroneously believe that supplements are not well studied and that they are unregulated; when in fact, the opposite is true.


    Points taken.

    I'll keep my response short and simple.

    You're right that I was overly glib in saying that I've never much believed in supplements. What I should have written is that rightly or wrongly, I've always had a kind of healthy skepticism about the supplement industry ... but then again, I have a fair amount of skepticism about a lot of industries.

    I'm happy to stand firm on my criticism of lobbying. I think that all people and all special interests have a right to be heard ... but the outsized amounts of money spent by companies and industry to get their own way and influence legislators always has struck me as a corrupting factor in the way government works. I feel exactly the same way about money spent on elections. Is it all legal? Sure. Does it all hurt democracy? In my view, immeasurably, and perhaps, eventually, fatally.

    As for the rest of it ... which has to do with methodology and scientific conclusions ... I'm willing to wait to see how it all turns out. I'll be interested to see if the companies involved - manufacturers and retailers - have anything close to the kind of record-keeping and documentation that the courts will demand of them.

    I would point out that the fact that more than 50 percent of all Americans take supplements is not by itself persuasive, since 25 percent of all Americans reportedly believe that the sun revolves around the earth...

    Published on: February 5, 2015

    As was speculated about yesterday here and elsewhere, Staples has announced that it wants to acquire/merge with Office Depot in a deal valued at $6.3 billion.

    The Staples-Office Depot deal will create a retailer with $34 billion in annual revenue and 4,400 stores. It follows by two years the merger of Office Depot and Office Max, which was designed to help those two companies survive in a competitive climate where online retailers such as Amazon and big box stores like Walmart and Target are taking away sales and market share.

    Ironically, the Federal Trade commission (FTC) vetoed a proposed Staples-Office Depot deal in 1997 for fear that it would reduce competition in the segment.

    The New York Times reports that the deal "is expected to be closely evaluated by antitrust authorities, given that it will shrink the world of office supply retail specialists to a single chain ... But the two retailers will argue that since (the 1997 merger attempt) the business of selling office supplies has become significantly more competitive."
    KC's View:
    Kudos to MNB reader Jack DiSalvo, who when this story was first being speculated about, wrote me an email with the best possible description of what was happening...

    Simple.  It’s dinosaurs mating.

    The question is whether, in this particular case, life will find a way.

    Published on: February 5, 2015

    The New York Times reports that Tom Wheeler, chairman of the Federal Communications Commission (FCC), proposed that consumer internet service should be regulated as a public utility, "saying it was the right path to net neutrality. He also included provisions to protect consumer privacy and to ensure Internet service is available for people with disabilities and in remote areas."

    According to the story, "Mr. Wheeler’s plan would also for the first time give the F.C.C. enforcement powers to police practices in the marketplace for handling of data before it enters the gateway network into people’s households - the so-called interconnect market. For good measure, he added a 'future conduct' standard to cover unforeseen problems." The story goes on to say that the open Internet order "will give the commission strong legal authority to ensure that no content is blocked and that the Internet is not divided into pay-to-play fast lanes for Internet and media companies that can afford it and slow lanes for everyone else. Those prohibitions are hallmarks of the net neutrality concept."

    However, a proposal does not a policy make.

    The Times writes that "Mr. Wheeler will circulate his proposal to other F.C.C. commissioners on Thursday, and the plan could be modified. The proposal is subject to a vote by the full commission on Feb. 26. The commission typically decides major decisions by 3-2 votes, with the two other Democrats joining Mr. Wheeler.

    "If the proposal is approved, as expected, the cable and telecommunications companies have vowed to fight it in court ... The opponents of utility-style rules, led by the cable and telecommunications companies, view the approach as opening a door to heavy-handed regulation that will deter investment and innovation, ultimately harming consumers."
    KC's View:
    I figure it is a pretty good bet that cable and telecommunications companies will figure out how to make a buck even if the internet is ruled to be a public utility. They always do. I also figure that the interests of the public and small businesses need protecting a lot more than the interests of these corporations.

    Published on: February 5, 2015

    CityWire has an interesting story about how "retail behemoth Wal-Mart Stores may not admit it but retail experts don’t doubt there is already a team in Bentonville mulling the opportunities that may await just 90 miles off the south Florida coast.  Political action is still in the early stages with respect to relaxing U.S. travel restrictions to Cuba for U.S. tourists, the opportunities to open commerce with the island nation are openly discussed across multiple business sectors, including retail."

    A number of retail experts and observers - including our old friend Ryan Matthews, CEO of Black Monk Consulting, and Dr. Raja Kali, professor of global economics at the University of Arkansas - tell the paper that the stars are aligning for Walmart to open stores in Cuba, where a poor population might find its "always low prices" approach to be highly attractive. At the same time, despite the fact that opening Cuba to US businesses is a political hot potato, it is suggested that Walmart would be a great billboard for democracy and capitalism that could have an enormous impact on how Cubans think and feel.
    KC's View:
    I've long felt that there are a ton of companies with their eyes on Cuba ... I wouldn't be surprised if companies like Marriott and Wynn, in addition to Walmart, not only have lust in their hearts, but also potential location addresses and even floor plans on their corporate hard drives. (Betcha there are some bribery funds being put away for a rainy day as well...)

    The question isn't whether Cuba turns into Las Vegas once the walls come tumbling down. The question is how fast it will happen. (And can they avoid turning it into Atlantic City...)

    Let's remember what Hyman Roth once told Michael Corleone:

    Here we are, protected, free to make our profits without Kefauver, the goddamn Justice Department and the F.B.I. ninety miles away, in partnership with a friendly government. Ninety miles! It's nothing! Just one small step...

    Published on: February 5, 2015

    The 16th annual Harris Poll Reputation Quotient study is out, studying how communities rank the reputations of regional and national companies that serve them, and Wegmans Food Markets has made the top of the list for the first time, supplanting the much larger Amazon, which dropped to number two.

    The top 25 companies are, in order: Wegmans, Amazon, Samsung, Costco, Johnson & Johnson, Kraft, LL Bean, Publix, Apple, Google, Berkshire Hathaway, Walt Disney, Sony, CVS, Microsoft, Lowe's, Kellogg Company, Chick-fil-A, Boeing, Inet, Whole Foods, USAA, LG, Procter & Gamble, and Nike.

    “Reputation is far from static and is a business asset that is earned every day as people evaluate companies through the lens of what matters most to them. Wegmans has spent years building a sterling reputation in the communities they serve, through its employees, one shopping experience at a time,” says Carol M. Gstalder, Reputation & Public Relations Practice Leader for Harris Poll. “Samsung has steadily climbed up the ranks in recent years with consumers rating it among the 5 best on key reputational dimensions of products and services, emotional appeal, financial performance and vision and leadership. Apple’s performance, while still excellent, has fallen 5 points since 2012.”
    KC's View:

    Published on: February 5, 2015

    Investors Business Daily reports that "while Amazon waits to get permission from the U.S. government to test delivery drones, its counterpart in China has beaten it to the air.
    Alibaba's major online marketplace Taobao, has partnered with the Shanghai YTO Express delivery service to run a three-day test program ... Customers must live within a certain radius of distribution sites in Guangzhou, Beijing and Shanghai, Tech In Asia said. The packages will be delivered within an hour, Taobao said."

    The story notes that "Taobao plans to deliver by drone a brand of ginger tea to 450 customers from Wednesday through Friday this week ... The ginger tea is used to treat menstrual cramps."
    KC's View:
    Drones will be delivering everything they can lift, in an enormous number of places. And I'd be willing to bet that this is going to happen faster than anyone expects.

    Published on: February 5, 2015

    Bloomberg reports that the Walmart driver "whose truck crashed into a van carrying actor-comedian Tracy Morgan lost a legal bid to halt a civil lawsuit against the company while criminal charges are pending against him.

    "Kevin Roper, who is charged with vehicular homicide and assault by auto, may not intervene in the suit by Morgan and other passengers injured on June 7, a judge ruled Tuesday in federal court in Trenton, New Jersey. The crash killed comedian James McNair and seriously injured Morgan.

    "Roper sought to enter the case and halt proceedings to preserve his right to a fair criminal trial, avoid incriminating himself and ensure that state prosecutors don’t gain access to information they couldn’t otherwise get. Lawyers for Morgan and the others say the civil case may proceed without Roper."

    As the story notes, "Police said Roper went at least 24 hours without sleep before the accident, driving from his home in Georgia to a Wal-Mart facility in Delaware. He then made deliveries and pickups in New Jersey, Delaware and Pennsylvania, the National Transportation Safety Board has said. He drove at 65 miles an hour for the 60 seconds before the crash in an area where the speed limit was 45 due to construction, the NTSB said."
    KC's View:

    Published on: February 5, 2015

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

    • Macy's announced yesterday that it will acquire Bluemercury, a stand-alone beauty and spa chain, for $210 million. The New York Times reports that "Bluemercury operates 60 stores in 18 states and has a growing e-commerce business. Macy’s, which also owns the Bloomingdale’s chain of department stores, said it also planned to bring some Bluemercury boutiques and products to some department store locations."


    • Unified Grocers announced yesterday that Rudy and Debbie Dory and their daughter Lauren Johnson — owners of Newport Avenue Market in Bend, Oregon — are this year's recipients of the 2015 "Ben Schwartz Retail Grocery Visionary Award." The award is given to "an independent retail grocer or grocery company that is a leader and innovator in the retail grocery industry. The award recognizes retailers who, by their practice and example, have consistently demonstrated initiative, creativity and leadership within their businesses and, in the process, have inspired others to think and act creatively and with passion in the grocery field."

    Congrats to Rudy, Debbie and Lauren ... and I am happy to say here that Newport Avenue Market is the impetus behind rule # 19 in my book, "Retailing Rules: 52 Ways To Achieve Retail Success." So I'm not surprised....
    KC's View:

    Published on: February 5, 2015

    • Valerie Oswalt, currently the West Area Vice President, US Sales, for Mondelez International, has been appointed to the role of President, US Sales, effective April 1, 2015.  She succeeds the retiring Don Quigley.


    • Target announced that it has hired Stevie Benjamin, MillerCoors' senior director for marketing connections, to be its new VP-media strategy. The Advertising Age story about the move notes that it "named Ms. Benjamin a 'Woman to Watch' in 2012, noting that the brewer had moved aggressively into branded and digital content under her watch."
    KC's View:

    Published on: February 5, 2015

    ...will return.
    KC's View: