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    Published on: April 9, 2015

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here. This is FaceTime with the Content Guy.

    I'm coming to you this morning from my local Whole Foods, where I'm shopping for fingerling potatoes for my daughter. She loves fingerling potatoes, especially when I serve them with a nice grilled steak. And she especially likes the ones they sell at Whole Foods.

    Except today, they have different fingerling potatoes. Today, they have three different kinds - French, Austrian, and Russian Banana. I like the idea of choice, but part of providing choice ought to be providing information about what makes them different.

    That's where Whole Foods - a retailer that usually does a pretty good job of telling a story that enhances its own brand equity and explains many of the products it sells - has dropped the ball. There's no information anywhere here that tells me why I should choose French, Austrian,or Russian Banana fingerling potatoes. I'm just going to guess.

    Which means that Whole Foods didn't just drop the ball. It missed an important opportunity to not just be a source of product, but a resource for information. And that's the kind of thing that builds relationships and leads to repeat sales.

    It may seem like I'm nitpicking, but I don't think I am. There are so many competitors out there that retailers can't afford to miss any such opportunity. You may say potayto, I may say potahto ... but the one thing you don't want me to do is call the whole thing off.

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

    KC's View:

    Published on: April 9, 2015

    by Kevin Coupe

    What took so long?

    ESPN is reporting that the National Football League (NFL), a league hard-hit in recent seasons by domestic violence accusations against a number of players, has hired its first full-time, regular season female official. According to the story, "Sarah Thomas, who has worked exhibition games, will be a line judge for the 2015 season, the league announced Wednesday. She was one of nine new officials hired Wednesday."

    "I know that I will probably stand out being the first,'' Thomas said yesterday, "but as far as players and coaches, I've been around a good little while, and I think they know who I am and just want to make sure I can do my job ... I am a female, but I don't look at myself as just a female. I look at myself as an official."

    The ESPN story says that Thomas, who works during the week as a pharmaceutical representative, has "already broken ground in the officiating field as the first woman to work college games in 2007. She was the first female official on the FBS level and the first to officiate a bowl game, the 2009 Little Caesars Pizza Bowl in Detroit ... she began officiating college games when she was hired by Conference USA, working as a line judge and head linesman. She also has worked the Senior Bowl, the Fight Hunger Bowl, the Medal of Honor Bowl and the Conference USA Championship game in 2010 and 2014."

    Thomas says she's never been treated as anything other than a professional by players and coaches.

    All of which is great, though I still have to wonder what took so long. Where are the women umpires in Major League Baseball, as well as in other professional sports?

    This isn't, of course, just a sports issue. Remember, it was just a couple of months ago that I was writing here about research released by the Network of Executive Women (NEW) saying that over the past few years in the retail business, there's been no real improvement in the number of women in executive ranks. That continues to surprise me, because there is a perception of positive change. But perception, in this case, is not reality.

    One of the things that professional sports leagues have to do is create a pool of female candidates who can move to the big leagues when a) they qualify, and b) there are openings. That means, for example, that there ought to be one woman on every minor league baseball crew, so they get the experience necessary to move up the ladder. Just as businesses cannot be complacent about gender diversity within their ranks ... they have to be aggressive about creating a pool of future leaders who look like their customers.

    There was a story on CNN the other day about how "corporate America has few female CEOs, and the pipeline of future women leaders is alarmingly thin ... Only 14.2% of the top five leadership positions at the companies in the S&P 500 are held by women, according to a CNNMoney analysis."

    The story went on to say that "progress likely to be slow: But don't expect more women to break through the ranks unless there is a strong pipeline of female talent behind the CEO.
    That's why CNNMoney analyzed the next four executive positions -- chief financial officers, chief operating officers and other key roles at major companies. Women hold 16.5% of these four positions just below CEO in the S&P 500. Yet that's still a small pool of leaders to draw from."

    This is all about sports and business looking more like life. As they do it, I believe it will be an Eye-Opener.
    KC's View:

    Published on: April 9, 2015

    The Los Angeles Times reports that the Navajo Nation has simultaneously lifted a five percent sales tax on fresh fruits and vegetables and imposed a two percent tax on products defined as junk food. Think of this is the carrot-and-stick approach to curbing "rampant obesity, diabetes and heart disease" within the Native American community.

    Meanwhile, the Times also reports that seven years after the city banned new fast food restaurants from opening in the poor South Los Angeles neighborhood in an attempt to reduce high obesity rates there, a Rand Corp. report "says that from 2007 to 2012, the percentage of people who were overweight or obese increased everywhere in L.A., but the increase was significantly greater in areas covered by the fast-food ordinance, including Baldwin Hills and Leimert Park. The study also found fast-food consumption went up in South L.A. as well as across the county during that time."

    (To be fair, the story notes that data from the Los Angeles County Department of Public Health suggests that "from 2009 to 2013, the percentage of people in South L.A. who were obese dropped slightly, from 35.4% to 32.7%." So not everyone agrees that there's been no impact, though it certainly has been negligible ... though probably not so negligible if you are in the group of people who addressed their weight/health problems.)
    KC's View:
    The story about the nation's largest Native American tribe notes that the taxation shift carries with it economic implications: "About 42% of the Navajo Nation lives below the federal poverty line. For many in the tribe, a limited budget and few stores to choose from — the U.S. Department of Agriculture has declared parts of the vast reservation a food desert — mean gas stations and convenience stores are their primary grocers." And so lack of availability and lack of economic means both play into the tendency of poor folks to eat poorly.

    The report about South Los Angeles, I think, ought to serve as a kind of cautionary note on several levels.

    First of all, there never is a guarantee that targeted public policy moves alone are going to solve the problem, and I think it is naive to put all your eggs in that particular basket. That's not to say that there should not be a public policy response to high obesity rates. I think there should be, especially because a lot of experts say that the obesity epidemic creates all sorts of long-term health care, economic and national security problems. But public policy alone ain't gonna do it.

    It also is important to remember that there is no such thing as a fast fix. These are problems that have been in the making for a long, long time. The Rand report on South Los Angeles does not cover the two most recent years of the fast food ban there, and so we don't necessarily know if there's been any recent improvement. And while I'm not a fast food fan by any means, it is important to remember that not all fast food is created equal ... I keep reading about vegetarian fast food restaurants that are popping up in different places, and so it is important not to paint with too broad a brush. (Which, of course, is what politicians and public policymakers do.)

    In the case of the Navajo Nation, the LA Times story is highly instructive, explaining that "to understand how the Navajo Nation got here, it's important to understand its relationship with food.

    "Navajo society was for a time largely agrarian, a fact reflected in part of the Navajo creation story: A starving people from another world were met by a turkey, who shook out four corn kernels from beneath its wings, saving them. Navajo society relied on sheep and cattle, as well as corn. Then, in the 1920s and '30s, the U.S. government began setting limits on livestock, explained at the time as a way to preserve eroding and overgrazed soil."

    And, there are are real challenges on the reservation, where "just 7% of residents have a college degree, significantly affecting their job prospects.

    "Proponents hope the junk food tax will mark a turning point for the nation's largest tribe. Revenue will go into a community health fund to pay for infrastructure improvements on the reservation and educational programming."

    I'm not sure what the best way is to address all these complicated issues, but I'm pretty sure that a junk food tax - that has to be renewed in 2020, by the way, so it isn't like there is a long-term commitment - isn't going to be a panacea.

    The obesity issue - on and off the reservation - deserves attention for all sorts of reasons. Short-term fixes are not going to be the answer.

    Published on: April 9, 2015

    Amazon has announced that it is expanding its Prime Now same-day service to Austin, Texas ... continuing the fast rollout that in recent weeks has moved it into cities like Atlanta, Baltimore, Dallas and Miami.

    The one-day service started in Manhattan and Brooklyn, and offers "one-hour delivery on tens of thousands of daily essentials through a mobile app."

    In Austin, Amazon says, "Prime Now is available from 8 a.m. to midnight, seven days a week. Two-hour delivery is free and one-hour delivery is available for $7.99."
    KC's View:

    Published on: April 9, 2015

    • The Wall Street Journal reports that "subscription book service Oyster launched an e-bookstore on Wednesday that will allow consumers to purchase titles on an a la carte basis."

    The story notes that "New York-based Oyster, launched in 2013, had previously only offered a $9.95 a month all-you-can-read subscription package that allowed consumers to choose from more than a million titles.

    "For the new e-bookstore, Oyster struck deals with the country’s five largest publishers and others, including Houghton Mifflin Harcourt Co. and the Perseus Books Group. Many publishers want to sell their digital titles as widely as possible to lessen their dependence on market leader Amazon.com Inc."
    KC's View:
    Of course the publishers want/need to find a legitimate competitor to Amazon, which they clearly think has way too much power. Just like Walmart decided to stock Persil, the laundry detergent that it wants to turn into a competitor to Tide, so it can lessen its dependence on Procter & Gamble.

    Good luck with that. I'm a big Amazon Kindle user, and it is hard to imagine how any company could lure me away from that ecosystem.

    Published on: April 9, 2015

    The New York Times has piece by technology columnist Farhad Manjoo that reviews the new Apple Watch, concluding that "the first Apple Watch may not be for you — but someday soon, it will change your world."

    An excerpt:

    "It took three days — three long, often confusing and frustrating days — for me to fall for the Apple Watch. But once I fell, I fell hard.

    "First there was a day to learn the device’s initially complex user interface. Then another to determine how it could best fit it into my life. And still one more to figure out exactly what Apple’s first major new product in five years is trying to do — and, crucially, what it isn’t.

    "It was only on Day 4 that I began appreciating the ways in which the elegant $650 computer on my wrist was more than just another screen. By notifying me of digital events as soon as they happened, and letting me act on them instantly, without having to fumble for my phone, the Watch became something like a natural extension of my body — a direct link, in a way that I’ve never felt before, from the digital world to my brain."

    Manjoo says that unlike most Apple products, it is not intuitive and not necessarily for tech novices. It also is not cheap, ranging from $350 to $17,000. But he also says the technology has the potential to be every bit as transformational as the iPod or iPhone.

    "What’s most thrilling about the Apple Watch," Manjoo writes, "unlike other smartwatches I’ve tried, is the way it invests a user with a general sense of empowerment. If Google brought all of the world’s digital information to our computers, and the iPhone brought it to us everywhere, the Watch builds the digital world directly into your skin. It takes some time getting used to, but once it clicks, this is a power you can’t live without."

    You can read the entire review here.
    KC's View:
    The slow seduction has begun.

    I've written here often about how invested I am in the Apple/Mac ecosystem ... I have two MacBook Pros, several iPods, an iPad, a new iPhone and even an Apple TV. But with all the coverage of the Apple Watch, I've been curiously unmoved ... and I'm someone who has worn a watch almost every day of my life. I just haven't been able to find my connection to the technology ...

    But Manjoo's column has stirred the pot a bit. I'm not sold yet, but I'm curious. I can feel myself being seduced, and it is not an altogether unpleasant experience.

    Published on: April 9, 2015

    NBC News reports that "Americans trying to eat healthier food may have the cards stacked against them — it’s very hard to find healthful food in U.S. grocery stories, a government study finds. They found that fewer than half of packaged grocery-store products in most food categories met Food and Drug Administration requirements for being labeled as a 'healthy' food."

    The report, from the Centers for Disease Control and Prevention (CDC), goes on to say that "more than 70 percent of pizzas, pasta mixed dishes, and meat mixed dishes and 50 percent to 70 percent of cold cuts, soups, and sandwiches exceeded FDA ‘healthy’ labeling standards for sodium, whereas less than 10 percent of breads, savory snacks, and cheeses did."
    KC's View:

    Published on: April 9, 2015

    • The Associated Press reports that "discount retailer Dollar Tree said Tuesday it expects to be able to complete its purchase of competitor Family Dollar in May, and said it will have to sell about 340 Family Dollar locations to close the deal." The $8.5 billion deal is being reviewed by the Federal Trade Commission (FTC), which will have the final word on how many stores must be divested in order to preserve a competitive environment for consumers.


    • The Wall Street Journal reports that "Nestlé SA aims to exploit growing health concerns about soda as it rolls out new products and ramps up investment in the huge U.S. market to improve the profitability of its global water business ... Nestlé is launching more flavored versions of its sparkling waters—including a new green-apple flavor for Perrier and a cherry lemon flavor for Poland Spring—to capitalize on growing consumer wariness of both sugary and diet soda. Many of its new products will be sold in redesigned slim cans aimed at freshening up the brand."
    KC's View:

    Published on: April 9, 2015

    • Weis Markets announced that its chairman of the board, Robert F. Weis, is stepping down so he can focus on his health. He is being succeeded by his son, Jonathan H. Weis, who has been serving as vice-chairman, as well as being the company's president/CEO.

    The announcement notes that Robert Weis has served as an employee, director or officer since 1946 and was appointed board chairman in April 2002. His father, Harry Weis, founded the company with his brother Sigmund Weis in 1912.
    KC's View:

    Published on: April 9, 2015

    Yesterday, MNB took note of a Wall Street Journal report that "food pantries, where students in need can stock up on groceries and basic supplies, started cropping up on campuses in large numbers after the recession began in 2007. More than 200 U.S. colleges, mostly public institutions, now operate pantries, and more are on the way, even as the economy rebounds ... "the stigma attached to receiving free food has diminished among students as so-called food security - a term used by the U.S. government to describe reliable access to a sufficient quantity of affordable, nutritious food - is regarded on campuses increasingly as a right ... About 14.5% of U.S. households experienced some form of food insecurity in 2013, according to the Department of Agriculture’s latest data."

    My comment, in part:

    "This strikes me as yet another example of how the higher education system in this country is completely broken. College costs so much that many of these kids can barely afford to live ... and they accumulate so much student debt that it cripples them - and the economy - once they get out of school. And I see very little evidence that anybody in the public or academic sector is doing anything about it ... At a very basic level, a kid who doesn't eat can't study and can't excel ... and therefore cannot achieve the kinds of things that we as a society need him or her to achieve if we are going to continue to be a relevant society. This is insanity."

    One MNB user responded:

    The sadder thing is that they are not only starving in college but struggling to pay their way once they graduate because of the student debt  burden . The easy availability of loans to students filled classrooms and  have made the colleges and universities “ recession proof”.  They never had to shape up their operations like the private sector. It is obvious that the student loan scam was a pay off to professors and administrators for support of the President. It got the votes, but didn’t help the students. Let's hope they learn a lesson and remember how they were pawns when it is their turn to run things.

    There was a piece on my local NPR station that touched on rising college costs, and a study saying that the rise in college costs is almost entirely in non-instructional personnel (like administrators who have seen much bigger salary increases than professors). And to be fair, I know a whole bunch of college teachers who probably would argue with the assertion that they've been "paid off."

    From another reader:

    Thanks for the Food Pantries cropping up on College Campuses article today.  I had an interesting exchange yesterday with my daughter's high school.  The school, in Windham, Maine, has a Food Panty on its campus.  The need is there for students who may have food challenges at home.  It also serves those who may be homeless, living with helping families, who want to bring something home to help those helping them.  This program, while getting a start from an administrative assistant, is run by and supplied by …. the students!
     
    I find it a bit disturbing that this need is there, and at the same time I am elated to see that students see and support the need.  Students needing the assistance are not singled out, do not feel bad in using the resource, but rather feel the support and love of their fellow students.  It is a wonderful and interesting eye opener.


    You're right. It is.




    We had a piece about the growth of Uber as an alternative to traditional taxis for business travelers, leading one MNB user to write:

    To be clear, I do use Uber and it is a great convenience living in an urban environment, Chicago.  While I am a fan of Uber, there does appear to be a double standard to what is allowed.  As far as I know Uber drivers are not required to be licensed unlike cab drivers/companies.  As I understand it, these licenses or medallions are quite expensive, to the point where some have used these as an investment.  The question to me then becomes, is it fair to hold two in the same business, driving people, to a different standard?  Would border somewhat on unfair practice or discrimination.

    From another:

    Although I have yet to utilize Uber, I think we must be careful to not paint the Taxi industry complaints as only “whining”.  When you allow unregulated competition into a regulated space, it becomes very difficult to compete … Not significantly different than the “whining” other industries in the US do when trying to compete with foreign (subsidized) products.

    You're right. The competition is not fair. But that's an important lesson in the 21st century economy ... that the competition looking to disrupt your business is going to do everything possible not to play by the rules that you think are normal, and will look for loopholes and opportunities that a "normal" business may not see.

    I don't think you can afford to do that.

    Arguing for a level playing field is not whining ... but protesting instead of providing better and more competitive service is, at least in my view.




    We wrote yesterday about a Forbes reports that there is a difference between how Baby Boomers and Millennials rate companies in terms of customer service - though Amazon and Nordstrom seem to provide some sort of common ground for both generations. A new ranking by Prosper says that Millennials believe that the best customer service is offered by Amazon, followed by Victoria's Secret, Best Buy, Nordstrom and Macy's. Baby Boomers, on the other hand, put LL Bean first, followed by Amazon, and then by Kohl's, JC Penney and Nordstrom."

    I commented:

    The analysis seems to suggest that there is a "vast disparity" between the two generations' preferences, but I don't think it is as wide as all that. After all, one of the things that almost all these companies share is a commitment to omnichannel retailing - that's certainly an enormous priority for LL Bean and Nordstrom ... and while Amazon isn't omnichannel, it may be the outlier in this area simply because of its disruptive essence. LL Bean probably only outranks Amazon with Baby Boomers because people my age are highly aware of its "you can return anything, anytime" guarantee.

    MNB reader Rosemary Fifield responded:

    Regarding LL Bean’s popularity because of its return policy—maybe it’s more about familiarity in general. Let’s face it: We boomers are more likely to wear LL Bean than Victoria’s Secret these days.

    I can promise you that I've worn a lot more LL Bean clothing in my life than Victoria's Secret clothing. Any pictures on the internet to the contrary should be ignored as photo-shopped....




    Yesterday we reported on a New York Times story saying that despite the passage of the Food Safety Modernization Act (FSMA), there may be not enough money in the federal budget for the Food and Drug Administration (FDA) to accomplish its assigned mission. FDA would need $580 million from 2011 to 2015 to carry out FSMA's mandate, according to the Congressional Budget Office (CBO), but, the Times writes that "Congress has appropriated less than half of that amount, even as the agency is moving to issue crucial rules under the law this year."

    The suggested that there two issues affecting funding. One is that the Obama administration originally wanted the FDA's regulatory efforts to be funded through user fees, but Congress rejected that notion at least in part because of lobbying by the food industry. The other is that Congress seems loathe to appropriate more money to the FDA at a time when it really doesn't want to spend more money on anything.

    I commented, in part:

    First of all, let me be transparent about the fact that ReposiTrak, which has developed tracking technology invaluable in meeting FSMA mandates, is an ongoing and valued MNB sponsor. So I have a dog in this hunt. (Though, to be clear, my opinions as stated here are mine, not ReposiTrak's.)

    It would be just like the US Congress to pass new rules and then not provide the funding to implement them. That way, they can take credit for voting to improve the food safety apparatus, but not actually pick up the check.

    Without putting percentages on it, it seems to me to be eminently fair that industry and consumers share the cost of a better food safety system. Industry makes money if the system is safer, and consumers get safer food. Though, of course, industry is going to pass along as many of those costs along to consumers as it can.

    The problem is that we live in a "we want something for nothing" society. We want all the things that we've grown to expect government or society to provide, but we don't want to pay for them. I have no problem with forcing government to be more efficient, but it strikes me as silly to pretend that the bill won't eventually come due. It always does.


    MNB reader Joe Manganiello responded:

    You may have a dog in the fight, but the FSMA regs were not passed by the current Congress, but on December 19, 2010, as the last bill passed by a then Democratically controlled congress. The regs have since been modified and are considered a broad over-reach by the FDA by most in the industry. The only way to pull the teeth on it is to limit the agency’s funding. Thanks for being honest about where your bread get buttered, but it’s a bad law and should be replaced with much less regulation, much like Obamacare.

    My understanding is that much of FSMA originated in the George W. Bush administration, though it is accurate that it was passed by a Democratic Congress and signed by Barack Obama. However, there are those who consider it the essence of bipartisan regulation ... and I got that directly from Michael Leavitt, the former Republican Governor of Utah who served as Secretary of Health and Human Services (HHS) during George W. Bush's second term, and who helped craft the FSMA regulations.

    You can call it legislative overreach if you wish. But I don't think you can blame it only on the Democrats.

    MNB reader Jerome Schindler chimed in:

    In late 2012 I sent a series of letters to Rep. Boehner with ideas for spending cuts.  None were even acknowledged.

    The USDA Food Safety and Inspection Service budget for inspection services is almost $900 million.

    In addition, while the taxpayers pay the bill for the actual inspection services, there are other expenses borne by industry that end up being part of the cost of the finished foods.
    My suggestion to shift jurisdiction beyond slaughter to FDA probably would cut the costs by half.  The main problem is turf and egos - USDA would fight tooth and nail against any reduction in their assigned responsibilities.

    That $450 mil could be better used by FDA.  Food safety experts generally agree that continuous inspection is not an efficient use of resources.


    One of the things that Gov. Leavitt emphasized to me in our interview was that "we cannot inspect our way" out of current food safety issues ... which is why it is important to attack the problem at the source and require greater trackability, traceability and transparency throughout the food supply chain.
    KC's View: