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    Published on: July 14, 2015

    by Michael Sansolo

    Sometimes the confluence of events reminds us of how much things are really changing and how powerful new realities are for business.

    In other words, we need consider the intersection of Donald Trump and "Sesame Street" and not because the latter actually has a character named “Donald Grump.”

    Unless you’ve been living under a rock in the past few weeks you have heard of both the speech Trump made in launching his presidential campaign and the blowback to his businesses for his comments about Mexican immigrants. (For a second here, put aside your political beliefs, whether pro or con when it comes to Trump and his statements, which I know some of you might support. Let’s talk business, not politics.)

    In contrast you might have missed the story that Sonia Manzano is retiring from "Sesame Street." For the past 44 years Manzano played Maria, one of the human residents of "Sesame Street" and was, as one article called her, possibly the most loved character on television.

    During her long career, "Sesame Street" viewers saw Maria age, get married, have children and battle endlessly with Oscar the Grouch. Truly, she had one great - and meaningful - career.

    Yet consider this: when she debuted on the show in the early 1970s, Maria was, for some viewers, the first Hispanic person they ever met.

    Forty-four years ago, Hispanics were a far smaller part of the American mosaic and they were largely prevalent in just a few regions. Today, they are the largest minority, remain one of the fastest growing parts of our population. Today they are a highly sought after demographic for marketers and politicians.

    Donald Trump is always must-watch television, but the frenzy following his comments is a powerful reminder of how much clout this demographic now has. Like it or not, that’s the result of a powerful change.

    Our world is constantly changing and somehow it seems to be happening at an accelerating pace. Technologies that we couldn’t have imagined a year ago suddenly dominate our lives. Tastes and fashion shift at breakneck speed giving incredible rise to everything from kale to quinoa. Taylor Swift gets near universal praise for a stand against free music downloads.

    Two weeks ago I doubt any of us would have imagined the overwhelming vote and support for lowering the Confederate flag in South Carolina. Things change really, really fast these days.

    One more thought about this...

    A few weeks back, while moderating NCR’s Synergy Conference, I had the opportunity to talk with guest speaker Mario Andretti, one of the most accomplished race car drivers in US history. One of Andretti’s stories offered a powerful, yet simple metaphor for all of us dazzled by the speed and constancy of change.

    Andretti said in racing drivers love to feel in control of their car, the track and the competition. However, it’s a false feeling. As he reminded the group at the conference, when you are in control, you are comfortable. When that happens there is another driver pushing the limits of control who is getting set to speed by you.

    That’s change and it moves ever faster whether in business, politics or even on "Sesame Street." And in truth, none of us are every in control.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: July 14, 2015

    by Kevin Coupe

    You can go home again. At least, you can if your name is Opus.

    "Bloom County," one of the most beloved comic strips of the 1980s, has returned. The cartoonist who created it, Berkeley Breathed, retired from producing the satirical comic strip in 1989, in part because of an editorial dispute with a publisher. It is remembered fondly, even passionately, by many of us ...and the Sunday-only strips that Breathed produced in its stead simply did not suffice.

    But yesterday, "Bloom County" returned. Breathed had teased the return on Sunday with a Facebook posting ... and yesterday the first new strip appeared - once again, on Facebook.

    National Public Radio reports that "it's unclear whether Breathed will syndicate his new work in newspapers ... His Facebook postings, Breathed said earlier this month, are 'nicely out of reach of nervous newspaper editors, the PC humor police now rampant across the web ... and ISIS'."

    It is a mark of how the world has changed after 25 years that Breathed, if he wishes, can take distribution of his strip into his own hands ... though to be sure, the economics of such a move remains to be seen. That's the world we live in now ... traditional business models are becoming increasingly irrelevant, and traditional businesses are going to have to figure out ways of not being irrelevant in the face of such shifts.

    The first new strip showed one of Breathed's main characters, Opus (a penguin of considerable optimism and even more naïveté) waking up and saying to another character, Milo, ""That was some nap!! How long was I out, Milo?"

    "25 years," Milo says.

    Been too long. And I trust that whatever the business and distribution model, "Bloom County" will be with us for another long run, using Eye-Opening satire and sarcasm and sardonic wit to puncture the world's pretensions.
    KC's View:

    Published on: July 14, 2015

    Walmart has fashioned a response to Amazon's Prime Day promotion, which on Wednesday will offer a series of steep price cuts as often as every 10 minutes only to Prime members as a way of celebrating its 20th birthday.

    Not only has Walmart promised a rival sale on the same day that will offer more than 2,000 price cuts on products sold on its website, but it is also doing so with a little attitude - saying that the discounts are available to everyone that visits its online store, and not just to people who pay the Prime membership fee.

    Prime - for those who never have visited Amazon's site or never have read MNB before - typically offers two-day shipping for a $99 annual fee, plus access to ever-expanding streaming offerings as a way of creating ongoing loyalty as well as an ecosystem of consumers who think of Amazon first for almost everything.

    “We’ve heard some retailers are charging $100 to get access to a sale,” Fernando Madeira, CEO and president of Walmart.com, says in a blog posting. "But the idea of asking customers to pay extra in order to save money just doesn’t add up for us."
    KC's View:
    I have to say that I sort of admire the cheekiness of the Walmart response ... it is playing hardball in a way that is necessary. And I'm sure Amazon expected nothing less.

    That said ... there are two problems with the response.

    One is that while the Walmart promotion will certainly get it attention, I have to wonder if it will make any difference. I've long believed that part of the challenge that Walmart faces with competing with Amazon for online sales is that Amazon customers will tend not to be Walmart shoppers, but Walmart shoppers are quite capable to become Amazon shoppers. Call it snobbery, or call it whatever you will. I'm just not sure that Amazon shoppers - especially hardcore shoppers who are Prime members - will be all that tempted to switch over to Walmart's e-commerce offerings.

    The other problem is that Walmart may regret making derogatory remarks about Prime because, at some point, it may decide that creating this sort of program is the best way to build loyalty to its e-business. Sure, I know that seems unlikely and even antithetical to its business model ... but so did slotting allowances, right up until the moment it decided that it needed that revenue to bolster its books.

    I understand all the reasons Walmart would want to be catty about Amazon Prime. But in a lot of ways, it has to envy the depth of the program, the consistency of Prime members' loyalty, and the extent of the actionable information that it provides Amazon, and upon which Amazon actually acts.

    Published on: July 14, 2015

    Delhaize-owned Food Lion yesterday announced what it called "significant investments in prices throughout its stores by lowering prices on thousands of items that are most important to customers as the grocer taps into its longstanding heritage of low prices and convenient locations. The price reductions also include new, easier ways for Food Lion customers to save brought to life by new signage throughout the store ... The price reductions are based on extensive customer research of frequently purchased items, such as everyday staples like apple juice, peanut butter, frozen vegetables, canned beans and household items like paper towels, detergent and much more."

    "Affordable prices and great deals are a significant part of our heritage at Food Lion and the reason why we have invested further to bring our customers even lower prices," said Meg Ham, president of Food Lion, in a prepared statement.
    KC's View:
    I have to believe that we're going to be seeing a lot more press releases like this one from a lot more companies as Aldi continues to expand and Lidl plots its US invasion. These two companies can be enormously disruptive to the mainstream supermarket industry, and companies are smart to start getting their houses in order and weapons sharpened as soon as possible.

    Published on: July 14, 2015

    In Arkansas, CityWire reports that Walmart and its Sam's Club division "are in the process of cutting up to 1,000 corporate headquarter jobs by Nov. 1, according to several sources familiar with the situation. The cuts would happen through layoffs and attrition, and may include up to 200 vice presidents.." If true, it would be "the second local corporate layoff by the retail giant this year after about 50 positions were eliminated in February."

    Walmart has not commented on the report.

    The story notes that "new executive management under the leadership of Walmart U.S. CEO Greg Foran is leaving no stone unturned in the effort to run an efficient operation. His boss, Wal-Mart Stores CEO Doug McMillon, recently made it clear to analysts following the shareholders meeting that the top priority of the home office is to serve the stores. “There are no cash registers in the home office,” McMillon said.
    KC's View:
    That's a great line about cash registers. He's right.

    There's a little bit of a revolution taking place in Bentonville these days. I wonder how many people are putting together their resumes.

    Published on: July 14, 2015

    Marketing Daily reports that Whole Foods is teaming up with PBS Kids for a back-to-school promotion designed to get into the hands of young students "a variety of eco-friendly school supplies, from notebooks made from recycled paper to organic cotton backpacks and reusable lunch totes. Many of the proceeds from the sales will be used to support PBS Kids’ educational programming and the Whole Kids Foundation, which is dedicated to improving children’s nutrition and wellness."

    According to the story, "The companies will market the products through their digital and social properties, as well as through in-store packaging calling out the “give-back element” of the partnership."
    KC's View:
    I think this is a very good idea ... but I can't help but think that maybe while those kids are in Whole Foods picking up their school suppliers, maybe they could give some basic addition and subtraction lessons to all those clerks who the retailer "admits" have been overcharging shoppers.

    Just a thought.

    Published on: July 14, 2015

    The Los Angeles Times reports that "Starbucks Corp. is leading more than a dozen companies in an effort to hire 100,000 young workers with 'systemic barriers to jobs and education' in the next three years ... The group has pledged to bring on more 16- to 24-year-olds as apprentices, interns and employees by 2018."

    Among the companies joining with Starbucks in the pledge are Alaska Air, CVS, Lyft, Macy's, Microsoft, Target and Walmart.

    The story goes on to say that "in the U.S., a disconnect exists between 3.5 million unfilled jobs — many of them so-called middle-skill positions that don’t require a four-year degree — and 5.6 million young people who are neither in school nor working ... Members of that untapped labor force don’t know which jobs are available or how to find them; employers struggle to recruit and train such workers, according to Starbucks."

    And, the Times writes, "Companies participating in the hiring initiative will be at an Aug. 13 job fair in Chicago, where they expect to make at least 200 on-the-spot job offers and eventually hire more than 1,000 people in the area over the next 18 months."
    KC's View:
    Great idea.

    Published on: July 14, 2015

    The New York Times reports this morning that even as Amazon celebrates its 20th year in business, and a level of success that is reflected in the fact that it currently sells one-third of all new print books sold in the US, as well as at least two-thirds of all e-books, a group of authors is calling it "a bully and a monopolist" and is demanding that the US Department of Justice investigate the company for antitrust violations.

    Here's how the Times frames the story:

    "Five years after Amazon secretly asked regulators to investigate leading publishers — a case that ended up reinforcing the e-commerce company’s clout — groups representing thousands of authors, agents and independent booksellers are asking the United States Department of Justice to examine Amazon for antitrust violations. Perhaps stealing a page from Amazon, which often promotes policies that would benefit it by talking about what customers want, the groups said their concerns were more about freedom of expression and a healthy culture than about themselves."

    The story says that "the Authors Guild, the American Booksellers Association, the Association of Authors’ Representatives and Authors United said in letters and statements being sent this week to the Justice Department that 'Amazon has used its dominance in ways that we believe harm the interests of America’s readers, impoverish the book industry as a whole, damage the careers of (and generate fear among) many authors, and impede the free flow of ideas in our society' ... Among the destructive practices cited by the critics was Amazon appearing last year to engage in content control, 'selling some books but not others based on the author’s prominence or the book’s political leanings'; selling some books below cost as loss leaders to drive less well-capitalized retailers — like Borders — out of business; and blocking and curtailing the sale of 'millions of books by thousands of authors' to pressure publishers for better deals."

    While Amazon has not yet responded to these specific charges, its general position seems to be that a) it sells what people want, b) it has a lot more product in stock than anyone else, c) rather than limiting the availability of books, it actually makes it possible for unknown authors to get published when major publishing houses are unfriendly to their efforts, and d) low prices will nurture rather than inhibit a book-oriented society.
    KC's View:
    As I've said before, I'm conflicted on this. I get the authors' concerns, but I also know how successful Michael and I were with our books on Amazon, and how we could not even get a hearing from Barnes & Noble, or from most independent bookstores.

    That doesn't sound or feel particularly anti-competitive to me.

    Published on: July 14, 2015

    The Wall Street Journal has a piece about how major food manufacturers are "scrambling for a way to stay relevant and boost weak sales," noting that "the top five food and beverage companies in the U.S. logged an aggregate sales increase of 1.4% over the past five years, while total U.S. packaged food and beverage sales rose 11.4%."

    In other words, big food has an image problem.

    Part of the issue, the story says, is their "image as laggards in a rapidly evolving food market is so ingrained among some consumers that they have to compete with perception as well as reality. Some are buying smaller natural-foods companies that already have consumers’ trust rather than building up their own brands, because it has become so difficult for them to win shoppers over."

    It is a really good piece, and you can read it here.
    KC's View:
    I think the observation that grabbed me the most in this piece came from Mark Lang, professor of food marketing at St. Joseph’s University, who says that "iconic food companies and their mature brands are not responding effectively. Large, established food companies and their brands are being managed as portfolios of revenue and profit streams with a short-term financial orientation, and not as companies that produce food products. Small companies, on the other hand, are being created and managed by people with a food orientation and passion."

    In a lot of ways, the same could be said of some iconic food retailers ... that they are managed almost without regard for the fact that they are in the food business.

    For both sides of the business, in my view, this is a potentially disastrous error of judgement.

    Published on: July 14, 2015

    Loyalty 360 reports that Haggen - - the 18-store Pacific Northwest-based supermarket chain that acquired 146 former Albertsons and Safeway stores that need to be divested when those two companies merged operations - has decided to upgrade its loyalty program so that it encompasses its digital operations as well as physical stores.

    Beth Walsh, Vice President of Consumer Loyalty Program Insights for Haggen, tells Loyalty 360 that the goal is "to give our customers authentic rewards that make the trip worth their time ... to upgrade our digital flyer, provide product recommendations and ratings, and incentivize every shopping trip with coupons, recipes and list-making tools to make shopping simple and easy." The story notes that the technology is designed to "enable 1-to-1 recommendations across the online experience, including personalized ecommerce homepages and searches, individualized product recommendations, and personalized circulars to drive in-store purchases."

    Walsh concedes in the interview that "it’s a tough market out there, and these days it takes a little more to get people to go out of their way for groceries."
    KC's View:
    I'm not sure a digital component to Haggen's loyalty program is going to solve the serious problems it is facing. But I suppose that it is a piece that it has to have in place in order to be relevant.

    Published on: July 14, 2015

    • Interesting piece in the Chicago Tribune about Walgreen Boots Alliance and its new CEO, Stefano Pessina, who, as we noted yesterday, is also the company's biggest shareholder. The story notes that his large stake in the public company is unusual, and creates potential governance problems for a board of directors that is supposed to oversee his work.

    The story also points out that when Pessina was first named interim CEO and then permanent CEO, he was given stock grants ... which some observers suggest is inappropriate and even redundant since he always owns one-fifth of the company.


    • Consumer optimism about the economy slumped five percentage points over the past month and a minority (47%) of Americans are now optimistic about the economy, according to a survey of U.S. fuel consumers conducted on behalf of the National Association of Convenience Stores (NACS). According to the press release, "The numbers are somewhat surprising because traditionally summer is when optimism grows. Last July, optimism surged 7 percentage points to 46% at a time when gas prices were 80 cents per gallon higher than they are today."
    KC's View:

    Published on: July 14, 2015

    • Casey's General Stores has announced the retirement of CEO Robert Myers, who has been with the company for 26 years and who became CEO in 2006. he will be succeeded by Terry Handley, who last year was promoted to president, and who has been with the company for 34 years. Myers will remain on the Casey's board following his retirement next April.
    KC's View:

    Published on: July 14, 2015

    Responding to yesterday's Eye-Opener about an article concluding that one of the best ways to make employees feel appreciated is to pay them a living wage, MNB user Jim DeLuca wrote:

    Dan Pink's book "Drive" is the layman's distillation of the most cutting edge research on motivation.  The info in there agrees that purpose and autonomy really are only good motivators if people are making a living wage...  Pink became a lawyer but never practiced because he hated it; worked with Sec of Labor Robert Reich and became chief speech writer for Al Gore before launching a very good pop culture series of business books.

    Unfortunately, a significant part of the population would view those credentials as being intellectually disqualifying. But I like to think that good ideas can come from anywhere, if you;re willing to listen with an open mind and not indulge in ideology, which (as the great Pete Hamill has said) is just a substitute for actual thought.

    From another reader:

    I enjoy watching the TV show called the “The Profit”, on recent episode the show’s star gave an employee a 25% stake in the company he owned because he recognized the contributions his employee ( made in the success of the business ( Key Lime Pie company in Key West Florida. I just watched a DVR recording of this episode and then just read your article this morning……it made a powerful connection for me. Was wondering if you ever watch the show?

    I have not. But I'll make an effort to now.

    MNB reader Tom Murphy wrote:

    It seems to me that this is a stupid article for stupid managers/executives who should have made this connection years ago without any studies necessary.  It is common sense, unfortunately, not common practice!  Get with it retailers!

    I think Tom is referring to the article I was referencing, not my piece. At least, I hope so...

    I also think that while it'd be nice to think that most executives get the premise of the article - that a living wage is a powerful incentive - I'm not the evidence supports that point of view. Many of these same CEOs will engage in hardball negotiations to get the best deal they can for themselves, but never think that perhaps employees have the same needs and desires.




    On the subject of CVS making an anti-tobacco campaign a centerpiece of its transition from retailer to health services company, one MNB user wrote:

    I wholeheartedly agree.  And as a consumer, I have gone out of my way to make CVS my destination for drug and beauty needs.  One more reason to support them.  And where, do you wonder, are the food retailers on this issue?




    Yesterday, MNB took note of a Daymon Worldwide study concluding that "40 percent of consumers have lost enjoyment of the foods they eat due to safety and quality concerns, and many are actively seeking stores that offer product alternatives. Nearly twice as many parents as non-parents report these anxieties, according to the study."

    I commented, in part:

    If you believe this study, the best way to alleviate the concerns that it raises is to provide as much information with as much transparency as possible. Now, I suppose it also could be argued that consumers have too much information, and this is what is scaring them. But I think in a world that is increasingly transparent and information-rich, this is a dangerous road on which to travel.

    MNB reader Lance Hollis McMillan responded:

    If anyone thinks 40% of consumers have lost enjoyment of the foods they eat due to safety and quality concerns, then they haven’t spent much time actually looking at consumers…

    Calorie info is a great mental tool for me. You have to want to be healthy. Willpower is rarely found in a chart.


    It occurred to me after I posted MNB yesterday that another reason that 40 percent of consumers are not enjoying food as much is because they're eating crap, and way too much of it.

    Just a thought.




    We also reported on a Wall Street Journal story about how the US Food and Drug Administration (FDA) has decided to give "restaurants and other food purveyors an additional year to comply with new rules that require calorie counts on menus, a response to concerns by some food establishments that the requirements are confusing and broad." The new deadline is now December 2016, and FDA said it "would post a draft guidance document in August to answer some of the frequently asked questions from the industry."

    Trade associations representing food retailers seemed relieved. My comment, in part:

    I get that some food industry segments would prefer less restrictive laws, but I also think it is interesting that supermarkets want to be seen as competitive with and comparable to restaurants, except when it comes to following the same menu rules, in which case they want to be seen as a different class of trade.

    My feeling is that the more information the better for the consumer, and that the rules ought to apply to everyone, because consumers don't walk into a supermarket or convenience store and suddenly think to themselves, "I need less information from these folks."


    MNB reader Andy Casey responded:

    The problem doesn't seem to be too much information but rather too much conflicting information so consumers don't know what or who to believe. A good place to start would be solid, standard definitions of every claim made and buzzwords used so people could know unequivocally what" organic" or "natural" means.

    From another reader:

    I was just reading about the grocery business not wanting to label product from their in-store delis. I have been in the grocery business for 55 years and have seen it make great gains in adapting to the consumers.  They obviously have not adapted enough if they think they should not have to label ingredients and information like carbs, calories, sugar etc.

    The normal consumer now days is looking at what he is eating. My wife just got diagnosed with diabetes 2.  We have to watch carbs.  How much product do you think we pick up from delis that are not labeled? The answer is “0”.  They are foolish if they don’t think non-labeled product won’t  hurt their business.


    Agreed.




    We also had a story yesterday about how Haggen has begun reducing hours and laying off employees - even recently hired employees for the suddenly expanding chain - as it experiences some significant growing pains.

    I commented:

    I have to believe that Haggen, in its efforts to establish as efficient a business model as possible, may well be sacrificing some degree of effectiveness ... and to my mind, that's the one thing it cannot and should not do at this point. If it doesn't have the resources to wow the customers in the early going, then it strikes me as unlikely that it will even get the opportunity to do so down the line.

    You don't compete better, create customer affinity and establish yourself as competitive by cutting back on employees.

    This is not looking promising.


    One MNB user responded:

    You are spot on with your comments.  Store labor is one of the biggest expense items and while it's easy to cut hours and see a savings, it's also something that has a dramatic, negative impact on shoppers and their experience.  It's unfortunate that Haggen's has to do this, but might be necessary for their survival, much less their success.  We can probably expect to soon see them divesting some of the stores they acquired, as they obviously bit off much more than they can chew.

    One other thing occurs to me ... that if Haggen actually hired some good people as it expanded, and some of those people are now being laid off, it seems highly unlikely that they'll ever get them back. Would you believe in Haggen if it offered you a job right now? And, by the way, how do you think the survivors are feeling? I'd bet not very secure...




    Finally...a word of thanks to all of you who welcomed me back yesterday and said you missed me while I was on vacation.

    I missed you, too.

    And a special thanks to almost 100 people who signed up as MNB subscribers while I was taking time off. I assume you liked what you saw in the archives, and I'll do my best to measure up on a day to day basis going forward...
    KC's View: