business news in context, analysis with attitude

Published on: July 28, 2015

by Michael Sansolo

Every now and again we need to forget about complex topics like e-commerce or GMOs and remember that so much of what makes business succeed or fail is simply people…and how they are managed.

Whether you run a department, a store or an entire corporate team, you understand that truth. People perform based on motivation, involvement and feedback (among other things).

Well, the last leg of that stool - feedback - is the subject of a long overdue conversation and it’s one that for countless reasons every company should be considering.

Consulting giant Accenture recently announced that it is largely doing away with performance reviews. The move represents new thinking and the growing importance of the Millennial generation.

Thanks to the technologies they have grown up with, Millennials are accustomed to rapid and constant feedback. Experts have long predicted that Millennial employees will never understand the notion of waiting for full-blown review once or twice a year.

Pierre Nanterme, Accenture’s CEO, elaborated on that in a wide-ranging interview with the Washington Post this past Sunday. “For the millennium generation," he said, "it’s not the way they want to be recognized, the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years you lose them.” (Emphasis added.)

But in truth, this change goes way beyond our younger workers. As Nanterme makes clear in the interview, annual reviews are far more burdensome than helpful. They are widely disliked by staffers and management. It’s hard to argue that point. I’ve sat on both sides of the desk during performance reviews and honestly it is hard to recall which was more distasteful.

Measurements or forced rankings of staff produce far more angst than impact. “We’re not sure that spending all that time on performance management has been yielding a great outcome,” Nanterme said.

Understand that the Accenture chief isn’t saying that performance doesn’t matter. Just the opposite - the change is in the process, which Accenture must hope will lead to a climate of fast feedback and constant improvement.

Nanterme made one other point that managers at all levels should ponder. “What I learned is that leadership is about letting it go. Trust people. The art of leadership is not to spend you time measuring, evaluating. It’s all about selecting the person.

“And if you believe you selected the right person, then give that person the freedom, the authority, the delegation to innovate and to lead with some very simple measures.”

In practice that appears to mean putting much more time into screening and hiring and far less into micromanaging and reviewing. That’s hardly a new thought, but it’s one that once again needs attention.

A few weeks back I wrote about breaking yourself out of zombie-like thinking, of simply doing the same things over again. Right now there are countless managers reading this and thinking up reasons why this type of performance assessment change cannot work, starting with all the reasons why your workplace is so different than Accenture’s.

Well, your workplace is different, but that doesn’t make this idea any less important. If we truly are only as good as our people and if feedback is essential to improving performance, then improving the feedback mechanism seems an important step to take.

It’s certainly worth some feedback (and discussion) in your company.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.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.

Published on: July 28, 2015

by Kevin Coupe

I hate Adam Sandler movies. Pretty much every one. I can find redeeming qualities in a few of them (like The Wedding singer and Fifty First Dates), but for the most part, I don't think he's funny and I hate pretty much the entire Sandler oeuvre. If his name is on the movie, that's pretty much enough to stop me from going to that particular film.

Clear?

So, it was very interesting to me that in yesterday's Variety, there was a story detailing the five reasons that Adam Sandler no longer is a movie star, prompted by the fact that his newest movie, Pixels, underperformed at the box office in its opening weekend, just like many of his recent movies.

What intrigued me were the reasons for Sandler's diminished box office clout, which in any other business, would be defined as lower sales and profits. In many ways, these reasons reflect the same kinds of factors that can hurt pretty much any business.

For one thing, the story suggests, Sandler "aged out of his material" - which is another way of saying that he didn't change. As he entered middle age, his characters never grew up, never evolved. Think about what happens to a business when it doesn't evolve or grow.

The story also suggests that rather than challenge himself with new and talented co-stars, he largely keeps returning to old friends to cast his films - people like Rob Schneider, David Spade, Norm MacDonald, and Kevin James, who certainly are capable (to varying degrees) of being funny, but who don't push him in new directions or force him to up his game. (To be clear, Sandler produces almost all his movies - he's responsible for everything you see - or don't see - onscreen.) That's death for any executive.

Here's another relevant criticism from the Variety story:

"Many A-list movie stars keep their distance from reporters, but Sandler takes it to another level. Feeling burned by critics who trashed his movies, he instituted a no-print-interview policy, because Sandler believes he didn’t need press to open a movie. That may have been true in 1999. Yet our 24-hour celebrity news cycle demands for actors to be more media-friendly. If you refuse to talk to journalists, you should at least tweet or use Instagram."

Think about how that plays out in pretty much every business these days. There are a lot of communications levers available to business leaders, and it is incumbent on them to use all of them, lest the narrative end up belonging to someone else. If you are going to explain your vision to customers, employees and business partners, it better be you doing the explaining. Not someone else.

By the way ... Variety points out that Sandler's recent decision to make a deal with Netflix - resulting in his next few movies being released exclusively there - might ordinarily indicate an acknowledgement that his career requires some disruption. However, all indications are that the only thing it indicates is that Netflix is one of the few places willing to shell out any money for an Adam Sandler movie, and that the subject matter, approach and casting are all right out of the typical Sandler playbook.

I may hate Adam Sandler movies, but I appreciate the fact that his career track straight downward offers some vivid and Eye-Opening lessons that can be applied to almost any business.

Published on: July 28, 2015

The Tampa Bay Times reports that while Publix has not been able to find an e-commerce model that satisfied it, its products may soon be available online anyway.

According to the story, an Uber-like service called Shipt has decided to start selling Publix products online to customers in the Tampa Bay market beginning August 4, with home delivery available within an hour of ordering. The story says that "all items sold at Publix are available for delivery through Shipt. Customers order, pay and ship via the company's app ... Shipt customers are required to sign up at www.shipt.com for an annual membership for $99 or monthly fee of $14. New customers get a year of free shipping on orders over $35. Shipping costs are usually $7 per order."

Shipt only works with one grocer in each market, providing a kind of exclusivity that Uber and Instacart do not.

Publix says that there is no "official partnership" between the two companies, but that it is "reaching out" to Shipt - whatever that means.

Published on: July 28, 2015

The Wall Street Journal reports that the $6 billion class action antitrust settlement that was supposed to resolve a decade-long dispute between millions of merchants and Visa and MasterCard is now in jeopardy of falling apart.

According to the story, lawyers representing some 100 of the merchants - including Walmart, Home Depot and 7-Eleven - that originally sued the credit card companies - over transaction fee policies and price fixing, are seeking to "scuttle" the deal because of alleged attorney misconduct. Here's how the Journal explains the story:

"The twist in the case follows a remarkable series of events that began when Keila Ravelo, who represented MasterCard in the antitrust case when she was a partner at Willkie Farr & Gallagher LLP, resigned from the firm in November. Shortly thereafter, she and her husband, Melvin Feliz, were charged by the U.S. attorney’s office in New Jersey with conspiracy to commit wire fraud by setting up two dummy companies to fraudulently obtain more than $5 million from Willkie Farr, law firm Hunton & Williams LLP - where Ms. Ravelo also had worked - and MasterCard, according to authorities and court filings.

"While investigating the alleged theft, Willkie Farr discovered emails and documents that were exchanged between Ms. Ravelo and Gary Friedman, who represented merchants through his own law firm Friedman Law Group LLC. The two lawyers were colleagues at another firm early in their careers, but the merchants plan to contend that the communication between them involved confidential information and resulted in the merchants getting inadequate representation, said the people familiar with the matter."

The Journal story also notes that "lawyers are expected to take the same steps in a similar case involving a pending $79 million settlement involving American Express Co. and roughly the same group of merchants."

Not surprisingly, "Both MasterCard and American Express have said in court filings that the lawyers didn’t play large enough roles in the cases to justify an unraveling of the settlements."

Published on: July 28, 2015

Market research publisher Packaged Facts is out with a new study saying that "shifting household dynamics are changing the way Americans shop for groceries. Most notably is the diversification of the primary store shopper with moms no longer always assuming this role exclusively," with evidence that "the percentage of men who are now the primary shoppers in their households has more than doubled in the past two decades."

The study goes on to say that "research shows that men clearly shop differently than women. Overall, men tend to shop with greater weekly frequency and spend less time in the store. The good news for retailers is that men tend to spend more, yet purchase fewer items - making their average cost per item higher."

Furthermore, the study says, "food marketers must be aware that age/generation also plays a role in shopping behavior, and shifts in gender household responsibility are evident in grocery shopping behavior by both age and generation. Younger males are the most likely to be involved in frequent shopping trips as those aged 18-34 (i.e., Millennials) are 161% more likely than average to shop four or more times per week. In contrast, men aged 55 and older significantly under index in shopping as often. At best, older men will shop once a week for items.

Millennial dads in particular are proving to be a very unique group, with behaviors that are a significant departure from previous generations. This set had a different upbringing and don't subscribe to traditional gender norms. Because of this, Millennial dads are redefining fatherhood by spending more time with their kids, doing a larger portion of the household shopping and spending lots of money ... Millennial dads are significantly more likely to shop 4+ times a week when compared to the average shopper. Notably, these dads aren't just making the quick shopping trips as they over-index in shopping for more than an hour. The value of this demographic is elevated when considering their higher average spending ($170 compared to $108 of all) and increased cost per item. The implication is that Millennial dads are likely seeking out quality over a good deal."

Published on: July 28, 2015

The San Francisco Chronicle reports that the American Beverage Association (ABA) is suing the city of San Francisco over new regulations there that mandate warning labels on advertising for sugar-sweetened beverages.

The labels are to read: “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes and tooth decay.” The city's Board of Supervisors also banned the advertising of such products on city property, and funded a public service campaign that warns of the health risks associated with the consumption of sugary drinks.

The ABA lawsuit accuses the city of abridging its First Amendment right to freedom of speech.

BevNet writes that the ABA has been fighting the anti-sugary beverage battle on a number of fronts.

"Last November, San Francisco voters failed to pass a measure that would institute a 2-cent-per-ounce tax on sodas and other sugary beverages. Nearby voters in Berkeley, Calif., however, passed landmark legislation to become the first city in the country to impose a tax on soda. Seventy-five percent of Alameda County voters voted in favor of the tax.

"Meanwhile, lawmakers in Alabama are set to meet next month to discuss a statewide tax increase on soda as the state looks to close a shortfall in its 2016 budget of $200 million. The proposed soda tax would go a long way towards doing so; officials have said it would raise $182 million."

Published on: July 28, 2015

United Press International reports that "a Florida man said Starbucks has lifted a lifetime ban he was given for asking people not to illegally use parking spaces reserved for the disabled." The man, Rob Rowen, admits that "he recently started asking drivers to move their cars after he noticed how often vehicles were parked in the handicapped-accessible spaces without the proper placards on their cars ... his efforts began by telling a man he would publicly embarrass him for parking illegally, and he later had a confrontation with a woman after snapping a picture of her license plate."

Rowen said he was prompted to take these actions because his son-in-law has muscular dystrophy, and often would have trouble finding a parking space because of non-disabled people using those spots.

After several of these confrontations, Rowen was banned from his local Starbucks by the store's manager, and he later received a letter from the company forever banning from all their locations worldwide.

A Starbucks spokesperson said that the company understood his concerns, and would work to alleviate them, but that confronting other customers was counter-productive.

Published on: July 28, 2015

• The Wall Street Journal reports that "One month after Apple Inc. started selling Apple Watch at its own stores, the company said it will bring the device to Best Buy stores in August. Apple said its smartwatch will be available at more than 100 Best Buy stores in the U.S., expanding to over 300 outlets before the holiday shopping season. Best Buy will be the first major U.S. retailer beside Apple to sell the device."

The Apple Watch originally was only available at Apple's online store, which the Journal suggests may have been a miscalculation - the long lines at Apple Stores that almost always occur when the company rolls out a new product were not in evidence for the smartwatch, and therefore the company did not benefit from the mob scenes that "function as free advertising and help to build the perception that the new product is a must-have item.


• King's Food Markets has announced a new deal that will bring in artisanal baked goods to its 25 New York metropolitan area stores from the Zaro’s Family Bakery company, best known for operating high-volume bake shops in New York-area commuter hubs such as Grand Central Terminal and Penn Station.

Published on: July 28, 2015

• 99 Cents Only Stores LLC announced today that Jack L. Sinclair, most recently the Executive Vice President of Walmart's US Grocery Division, has been appointed Chief Merchandising Officer.


• The Wall Street Journal reports that the Procter & Gamble board of directors is expected to announce today that David Taylor, a 35-year P&G veteran, will succeed AG Lafley as CEO; Lafley is expected to remain as chairman for a time to aid in the transition.

This is Lafley's second time stepping down as CEO. He first retired in 2009 and was replaced by Robert McDonald, who retired in 2013 largely because of investor discontent. The board brought Lafley back and charged him with cost-cutting and a return to stronger revenue, but while Lafley has sold off some 100 brands in an series of efficiency moves, he is said to be frustrated by the company's "tepid sales growth, a sluggish share price and limp market-share gains."

Published on: July 28, 2015

Yesterday, I took note of a CNN story about how Walmart and Evenflo are selling "a new infant car seat with technology designed to remind drivers of their backseat passengers, and stop children from dying in hot cars." That story pointed out that "38 children die every year as a result of being trapped in hot cars. In about half the cases, children are forgotten in the back seat, according to the nonprofit KidsAndCars.org. Often, a parent has forgotten to drop a child off at daycare."

I commented:

To be honest, I am amazed how many stories I read in the course of a year about idiot parents who leave their kids in cars. They ought to make this kind of technology absolutely mandatory ... and I also tend to think they ought to sterilize any parent who leaves a child in a car so that he or she is prevented from procreating ever again. Though I suppose there would be some who would argue that this kind of punishment may be a little over the top...

Several people pointed out to me that while they were not defending parents who leave their children in cars, my "idiot parents" comment may have crossed the line ... and all of these readers suggested that I look at a 2009 Washington Post article by Gene Weingarten entitled, "Fatal Distraction: Forgetting a Child in the Backseat of a Car Is a Horrifying Mistake. Is It a Crime?," which won a 2010 Pulitzer Prize.

I've done so, and if you're interested in reading it, you can do so here.

The Weingarten piece is heart-wrenching, and I think the folks who wrote me about it make a fair point - I was cavalier and overly glib in my language. This is not to excuse or defend these parents in any way ... but I was dismissive in a way that did not really illuminate the story and the problem in any way.




On the subject of minimum wage hikes and Walmart's decision to raise wages as a way of making jobs there more attractive, one MNB user argued that while wages may have been raised, jobs may have been eliminated as a result:

?I wish Doug McMillon would have been asked how many cashier positions were replaced with self check out machines.  And how much margins have been tweaked to accommodate higher operating costs. 
 
Informed decisions need to be made using all data not just those that support one side of an argument.

From another reader:

 
This is completely different than when a government dictates that thou shalt increase wages to X….period. This is unionistic socialism at its best. No reason, no incentive, no reason for initiative, just because I say so. Changes not made for competitive reasons, just forced changes to all employers so guess what…those increases flow through and are reflected in cost to the consumer, or hours are cut in order to maintain current labor costs. Entry level wages should be based on need; supply and demand. You hire the best you can then identify those that show ability and initiative and keep them moving up in pay and responsibility because they’ve earned it, not just because.

So now I'm a unionistic socialist? Never had that one before.

From yet another reader:

This is business 101 right?  If my turnover is high and team member moral is generally low there are several avenues to fix it, one being increased wages.  This shows an appreciation for one of the three major groups any business must concentrate on (customers, people, suppliers).  However, this is a business decision made by the company, where the team members understand that in this case Wal-Mart is listening.

A mandated increase is a different thing altogether.  Team members will understand that the same company, grudgingly, is following a new government requirement, and the sense of entitlement rather than being appreciated takes over.  The company still doesn’t value my effort any more than they did, but I now deserve to make more.



Also regarding Walmart, an MNB reader wrote:

I live in Bentonville and have for the past eight years.  As a supplier living in the "town that Walmart built and continues to build upon", our choices for groceries is very, very limited.   A handful of Independent's (Allen's and Harp's) but mostly,
instead of "where do you shop," it's which Walmart do you shop at?

As you continue to keep us informed and report upon, the new leadership at Walmart is trying to "fix" the in-store shopping experience...

This past Friday, 7/24/15, I had a scheduled two hour Walmart meeting beginning at 900am and at 700am realized that I needed a few small supplies for the meeting so I was in a hurry.  I drove up to Walmart #100 (100th one built, literally across the street from Mecca - aka Walmart Home Office).

Under a tight timeline, I did my shopping, I had a dozen items in the cart and proceeded to the checkout area.  There were twenty (20) registers and one (1) of them was manned.  The line was seven deep (I counted) with a few very full and loaded carts.

I quickly scanned the area and roughly counted about ten (10) blue vests milling around and I asked two of them: are there any other registers open or are you opening another one or two (hint, hint) up and both said, "you can use self checkout."

NOTE:  If I wanted to use self check out versus a manned registers, I would have...I had four produce items in the cart and self checkout is not my favorite task with look ups.

Again, one of the twenty registers was manned at 715 am on a Friday literally across the street from Walmart Home/Corporate Office.  Good thing I was not Doug McMillon or Greg Foran.

Know what is wrong with Walmart? Labor or lack thereof.




On another subject, one MNB reader wrote:

In your comments on the A&P story, you mention the employees were betrayed by leaders "whom will end up in the same hall of shame occupied by people like the guys at Kodak who did not embrace digital photography because it would've killed their film business." Today, the retailer I work for makes an above-average net profit % based entirely on customer transactions taking place inside our physical stores. However, most eCommerce delivery models are showing net profit margins at a fraction of the already-thin profit margins in the supermarket industry.

Convincing leadership to invest in efforts that will drastically reduce current profit margins is proving extremely difficult, despite having some highly intelligent people in those leadership positions.

A fair point. But this is how traditional businesses get disrupted by upstarts.




And finally, from MNB reader Daniel Hogan:

I’m fairly new to the industry and have only been reading the MNB for a handful of months now. Lately I’ve been seeing updates almost daily concerning Wal-Mart & Amazon; I know the retail is constantly changing due to advancements in technology, as it should, but is it common place for MNB to closely follow every move in the war between major powers in an oligopoly? To clarify, I’m not complaining about it. I thoroughly enjoy reading the updates every morning  as I am a very passionate fan of Amazon who has a very passionate hate of all things Wal-Mart. I’m just curious!

First of all, welcome.

Second of all ... Yup!

I recognize that not everybody is as fascinated by this war between two major retailing powers as I am, but I continue to believe that when the history of retailing is written, this period will be seen as absolutely critical in terms of winners and losers and collateral damage. It's the story that most interests me, and therefore is the story I'm going to come back to most often and most passionately ... because I sort of work on the premise that what interests me will prove most interesting to the folks who subscribe to MNB.