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    Published on: December 9, 2015

    by Kate McMahon

    Jerry Stritzke was clearly basking in his new reputation as a bold and benevolent boss for closing REI stores on Black Friday so his 12,000 employees could enjoy a paid holiday outdoors with their loved ones.

    So when he signed on to Reddit’s popular “Ask Me Anything” online and real time question-and-answer site to discuss his much-heralded move and #OptOutside campaign, expectations were high.

    And then they quickly came crashing down.

    Stritzke was slammed with questions asking why the outdoor retail co-op didn’t pay its employees a living wage, why it cut their hours and health benefits, and why it penalized experienced, informed workers who didn’t sell enough memberships.

    Not to mention why REI sold a snake bite kit that didn’t work, and actually caused more damage to the victim. Ouch.

    Welcome to the world of social media, Jerry, where a double-edged sword is just that.

    Stritzke, a lawyer by training and an avid outdoorsman, held top posts at Coach and Limited Brands before taking over REI in 2013. He succeeded Sally Jewell, who had been named US Secretary of the Interior.

    In addition to be a privately-held member co-operative, REI bills itself as a progressive retailer committed to “inspiring, educating and outfitting” its customers. Stritzke’s decision to close REI’s 143 stores in 35 states on Black Friday was seen as bolstering the firm’s claim that working for REI is “a lifestyle” and worthy of its perennial placement on the Fortune "100 Best Companies to Work" list. Stritzke has likened his sales staff to “merchants of joy.”

    Merchants of disappointment is more like it, based on the Reddit threads. Dozens of current and former employees ripped the company, likening the membership sales requirements to a Ponzi scheme and the scheduling and pay structure as Draconian.

    One post said it was “both hilarious and cringeworthy to see the company line and employee line colliding in this thread.” This customer’s response was typical: “I feel like this just ripped the curtain back and changed the way I perceive REI.”

    Stritzke was only on the thread for the first two hours, when there were some 300 comments, but the barrage continued overnight with some 5,000 posts. Clearly his PR team was monitoring the thread, and he returned the next day and answered some of the questions.

    I honestly think Stritzke & Co. were so caught up in their own hype they made crucial mistakes.

    First, as anyone who has followed Reddit’s Ask Me Anything can tell you, the Anything is just that. And this isn’t the first AMA to be hijacked by angry voices. Just ask actors Woody Harrelson and Morgan Freeman, political pundits Ann Coulter and Rachel Maddow, and even philosopher/guru Deepak Chopra – all tagged in the “AMA Disaster” files.

    Stritzke was clearly not prepared for the employee backlash. He did address a few of the issues the following day, but sidestepped others, which only extended some of the diatribes. He promised a “collective conversation” about membership sales and employee performance and wages.

    Stritzke closed by saying: “Bottom line, though, an open and transparent conversation is something CEOs should not be afraid of. I, for one, welcome it.”

    I think this illustrates just how complicated modern management is today – you can get some stuff right (as Stritzke did with Black Friday) but if you get other stuff wrong it can really tarnish the brand. And the speed and volatility of social media means your conversation with consumers can veer off course drastically, as was the case with REI and Reddit.

    So what is the most expeditious way to regain control of the narrative?

    Good question. There are no easy answers, especially as technology and social media continue to evolve

    It is the kind of question that I will continue to ask when this column resumes in 2016. Hopefully, we can find some answers together.

    I’d like to close this post by wishing the MNB community all the best this holiday season and in the New Year.

    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: December 9, 2015

    by Kevin Coupe

    Amazon yesterday announced another benefit for members of its Prime program ... except that this one is going to cost a little extra money.

    Variety reports that Amazon Prime "launched a new initiative called “Streaming Partners Program” Tuesday that allows Prime members to add subscription programming from close to 20 partners for an added fee to their Prime video service. Some of the add-on programming includes Showtime, Starz, the Lifetime Movie Club, AMC’s Shudder and SundanceNow subscription services, Comedy Central’s Standup+ Service, Acorn TV, Dramafever, the Dove Channel, IndieFlix and Ring TV Boxing. Consumers will be able to pick and choose these add-ons on an a la carte basis, and change their lineup month to month."

    The story goes on to say that "add-on subscriptions are available through Amazon’s video app on Android, iOS, Kindle Fire, Roku, Fire TV and other supported devices, which the company touts as an easier way to consume subscription video services. Consumers can, however, also use their Amazon credentials to log into the stand-alone apps of participating services, which will be good news to anyone looking to stream any of this programming on Chromecast or Apple TV."

    And, Variety writes, "at least in some cases, it’s also cheaper: Showtime will be available for just $8.99 a month, compared to the $10.99 a month a user pays when subscribing through Apple’s iTunes store or Google Play."

    And the Los Angeles Times described the appeal this way: "The Seattle-based Internet company said video providers would benefit from access to a deep streaming audience and that Amazon would handle all customer service, billing and subscriber acquisition. It said viewers, meanwhile, will get free trials on all subscriptions, the latest episodes of shows available simultaneously with their broadcast and a more convenient way to manage their streaming subscriptions."

    This is yet another example of how companies are working to disintermediate traditional businesses, and how the smart ones are embracing the trend as inevitable. Many of us remember how there once was only one way to watch television programming ... but now, there are a seemingly infinite number of sources of product, and choices for consumers to make.

    And, it seems to me, every business can to be contemplating the possibility that it can be disintermediated ... and they have to be considering their options.

    It can happen to everyone, and anyone. And it is an Eye-Opener.
    KC's View:

    Published on: December 9, 2015

    The Economic Policy Institute is out with a new study suggesting that Walmart's imports from China "eliminated or displaced over 400,000 jobs in the United States between 2001 and 2013," according to a story in this morning's New York Times. These jobs, predominantly in the manufacturing sector, represent 13 percent of all the jobs lost to China during that period, the Institute says.

    The study comes out even as Walmart is several years into an initiative originally designed to increase its sourcing of made-in-the-USA products by $50 billion over the next 10 years, though that number later was increased to $250 billion. This effort has been described by Walmart as a significant commitment, but dismissed by critics as being a cynical public relations ploy that borders on insignificant in the context of its total sales.

    “Walmart is one of the major forces pulling imports into the United States,” Robert E. Scott, an economist at the institute and the study’s author, tells the Times. “And the jobs we’re losing are good-paying manufacturing jobs, which pay higher wages and provide better benefits.”

    The Times reports that Walmart "disputed the conclusions of the study, which is an update of estimates that the institute released in 2007. For one, many of the numbers used in the study rely on guesswork, because retailers do not generally release a breakdown of their imports. Some economists also point out that studies like these do not properly account for the jobs that imports can create in industries like transportation, wholesale and retail."

    Lorenzo Lopez, a Walmart spokesman, described the study as "an old report with flawed economic analysis that assumes that imports equal job losses and does not take into consideration that countless jobs are added through the global supply chain, distribution and logistics, among other areas of the business."
    KC's View:
    It has to be pointed out that the Economic Policy Institute is generally described as a progressive think tank that long has criticized many of Walmart's policies, so the fact that it would come out with this study hardly is surprising.

    This being a "he said, she said" sort of scenario, it is hard to sit here are conclude what the real numbers are, though I do think that Walmart certainly is vulnerable on this issue ... though I tend to think more about the story from earlier this year, in which it was shown that Walmart was selling products as "made in the USA" that demonstrably were not.

    Whatever the numbers are, it seems logical to say that when products are made elsewhere, those manufacturing jobs go elsewhere. But it also seems logical that a robust supply chain can create even more jobs in transportation, warehouses, in bricks-and-mortar retail stores and in e-commerce.

    The pressure on Walmart is to get this right. And I think it has to do so in a way that changes the conversation and makes it less vulnerable to these criticisms.

    Published on: December 9, 2015

    Published reports are focusing on Chipotle's continuing food safety issues, as some 80 Boston College students who ate at the chain's Cleveland Circle outlet there said they got sick. The reports come, the New York Times writes, "at a time when the fast-food chain was still grappling with an outbreak of E. coli that infected customers in nine states."

    The store has been closed until further notice.

    The Boston Globe reports that "the Boston Public Health Commission said Tuesday that initial testing by state officials has shown the presence of norovirus at the restaurant. According to a statement, the commission was only able to confirm 65 known cases, including Boston College residents, students, and non-BC patrons ... all of the students have been tested for E. coli and norovirus, though test results will not be available for at least two days."

    Norovirus, the Times notes, "is the most common cause of gastrointestinal illness in the country, according to the Centers for Disease Control and Prevention, infecting as many as 21 million people and resulting in as many as 800 deaths in a year."

    The Globe reports that there were at least two food safety violations found in the store - product being held at inadequate temperatures - as well as one employee who came to work while ill.

    Chipotle management is saying that there is no evidence at this time that the Boston events are related to the broader E. coli issues with which it has been dealing.
    KC's View:
    It almost doesn't matter whether Chipotle thinks the Boston issue is related to other food safety problems ... because that's probably what many customers think.

    I'm convinced that there are a growing number of people who are driving by Chipotle and making other choices, and who are asking their kids not to go there. It will take a lot of time to change this perception of Chipotle as a deeply troubled company.

    Published on: December 9, 2015

    TechCrunch has a story about Tapingo, a mobile ordering service currently operating on 125 college campuses. "With an average campus coffee shop processing 300-500 Tapingo orders a day, and a busy venue receiving over 800 orders, the platform has grown to the point where it is a household name on some college campuses," the story says, that "processes over 25,000 transactions per day, with the average users placing four orders per week."

    The story goes on:

    "Tapingo’s service will be entirely staffed by students. The service is also designed to work with on or off-campus dining options, and students will be able to use campus meal dollars to pay for the food.

    "Daniel Almog, CEO at Tapingo, explained that the company is uniquely situated to offer the lowest possible delivery fee out of all its competitors. Almog said that this is because deliveries in a condensed area like a college campus means student couriers can be extremely efficient, delivering 3-4 orders an hour.

    "Student couriers will work on their own schedule and have the option to turn on the app whenever they want to accept a delivery. The company said that students could even turn on the app while going to pick up food for themselves, and end up accepting an order to bring back to the dorms or library with them."
    KC's View:
    This isn't just about satisfying college students who, let's face it, love instant gratification. It is about creating an entire class of people who will expect these kinds of services to be available to them, and are totally open to unconventional ordering and delivery services. Tapingo isn't doing it all by itself, but it is building on an existing trend and helping to set the table for the future.

    Published on: December 9, 2015

    The Associated Press reports that many of the companies that "pledged to build or renovate more stores in or near food deserts by mid-2016 as part of Michelle Obama's campaign to reduce childhood obesity" have lived up to their commitments, and that "only Wal-Mart and an independent store that is part of a cooperative have met their goals for the first lady's group, Partnership for a Healthier America."

    Walmart, the story says, "pledged to build or renovate up to 300 stores," and "built or renovated 392 stores, with the majority new stores." The independent is Brown's Super Stores, which operates ShopRite stores in the Philadelphia area.

    Among the companies that didn't get it done were Supervalu, which the story says promised to open 250 supermarkets and only opened 104, and Walgreen, which "promised to start selling more fruits and vegetables in 1,000 to 2,000 Walgreens stores" but only did so in 160 stores.
    KC's View:

    Published on: December 9, 2015

    The New York Times has a story about how Angela Ahrendts, Apple’s senior vice president of retail, is redirecting at least some of the Apple Store focus toward what are called "ultraluxe" products ... in one case, a $1,990 wireless speaker called the Phantom that soon will be in 14 US stores, with a broader rollout scheduled for next year.

    The device, the Times writes, "will get the sort of prominent display treatment that is typically reserved in Apple stores for the company’s Beats audio accessories."

    Here's how the Times frames the move:

    "Apple’s stores typically spotlight the company’s devices, with the most expensive audio accessories topping out in the hundreds of dollars. The Phantom is the first high-end non-Apple gadget that Ms. Ahrendts, the former chief executive of the fashion house Burberry, has brought in since she took the job. It buttresses some of her other recent moves to create more of a luxury Apple retail experience, including initiating private try-on appointments for the most expensive Apple watches, reducing the numbers and types of accessories that are sold, and pushing manufacturers to make special packaging for gadgets carried in Apple’s stores."

    One analyst describes Ahrendts as “shaving off some rough edges and completing our sense that the Apple Store is a premium experience."
    KC's View:
    It would be hard to find a more dedicated and loyal Apple user than me, but I do think this is an ares where Apple has to treat carefully. Nothing wrong with selling this kind of merchandise, but the Apple Stores always have done a good job of making technology - and style - accessible to a broad population. If they get too high end, they'll lose that facet of their appeal. And I just think they have to be careful.

    Published on: December 9, 2015

    The Wall Street Journal reports on how "surging sales of foods marketed as made without genetically modified crops are outpacing sales of food labeled organic in U.S. grocery stores. That is frustrating some organic companies and farmers, who invest significant sums to meet government organic standards and to get their foods certified.

    "The organic industry is responding with marketing campaigns touting that its foods—in addition to being made without genetically modified organisms, or GMOs, as such crops are known—also abide by other requirements." The debate is politically sensitive and has enormous economic implications ... especially as both camps vie for the allegiance of consumers

    You can read the entire story here.
    KC's View:

    Published on: December 9, 2015

    • The Food Marketing Institute (FMI) said yesterday that its president/CEO, Leslie G. Sarasin, has been appointed to serve as the in-coming Washington, DC-chapter president for the International Women’s Forum (IWF), which is described as bringing together "women leaders across politics, business, law, government, medicine, industry technology, the arts and sciences, in order to learn from each other’s success, failures and bridge community."


    • Coca-Cola announced a series of executive moves in the wake of the decision by Wendy Clark, its president of sparkling brands and strategic marketing in North America, to leave the company to become president/CEO of North America for DDB Worldwide.

    According to a story in Advertising Age, "instead of filling her role as is, Coke has elected to create a new division called USA Operations that will oversee all U.S. beverages, including brand strategy, marketing and integrated content for all sparkling or carbonated and still brands, as well as retail sales and franchise leadership.

    The USA division's president will be Hendrik Steckhan, a former president of Coke's German business who recently came to North America to serve as president of still beverages ... Meanwhile, Coke has named longtime employee Stuart Kronauge to lead brand marketing, where her responsibilities will include the Coca-Cola trademark, Sprite, Glaceau, water, tea and coffee. She is currently senior VP-customer marketing, which involves relationships with Coke retailers.

    "Also taking on an expanded role is Ivan Pollard, who will lead strategic marketing, including content, connections, investments, assets and portfolio strategy and innovations."
    KC's View:

    Published on: December 9, 2015

    • Douglas Tompkins, who founded the clothing and retail companies North Face and Espirit and then used his considerable fortune to promote environmental causes and acquire enormous amounts of land that he preserved in their natural state, has passed away.

    He was, according to reports, killed in a kayaking accident in Chile. He was 72.

    He spent much of his later life in South America, and once told a newspaper that "we only have one shot at this ... We need to pay our dues to live on this earth; we need to pay the rent and I’m doing that with the work we are carrying out here in Patagonia."
    KC's View:

    Published on: December 9, 2015

    Yesterday, MNB took note of an Ad Week report that online retailer Zappos engaged in a marketing stunt last week in Hanover, New Hampshire, sending 30 employees there in "the dead of night" and having them deliver gifts - headphones, backpacks and other warm-weather gear - to the doorsteps of every single home. Some 1,900 boxes were delivered in a single night in a town that Zappos describes as "fiercely loyal" to its brand.

    I commented:

    This all sounds lovely. Very Christmas-y.

    Except that I have a problem with all this charity being visited upon a town described as one of the wealthiest in the state. Y'think maybe there are other people and places that might've benefitted more from Zappos' marketing stunt? The pictures might not have been as pretty, but the impact might've been a lot more significant.

    I hate to say it, but, "Bah. Humbug."

    Nice try. But in the end, IMHO, this is a miss.


    MNB user Christine Neary responded:

    In regards to Zappos’ recent Hanover stunt … I don’t believe your sentiments make you a Grinch. Or maybe I just agree with you and that makes both of us Grinchy.

    If Zappos had the wherewithal to deliver 1,900 packages – wow, what an opportunity for them to make a meaningful difference in the lives of people who need it: school supplies for struggling students of all ages, warm coats, gloves, and scarves to the homeless, blankets and backpacks to foster children… I could go on, but I’m sure everyone gets the gist.

    Bottom line – Zappos failed.


    But another MNB user disagreed:

    You always preach about the importance of rewarding your most loyal customers. How can you oppose this? It was targeted to boot.

    It is a fair point ... but I still think that you can reward great customers and still make a difference in people's lives. This may have been an effective stunt, but it still is a stunt.

    It could have been more.




    Got a number of emails about the terrific Edeka holiday TV commercial that we featured yesterday.

    MNB user Larry Ishii wrote:

    I agree with you, Kevin.

    This is a great ad and they did not need to even mention Edeka because the viewer is glued to it to the very end.

    They have some great ad people.

    This is right up there with the P.O.S. beeper Christmas symphony they did last year.

    Thanks for sharing with all of your readers.


    My pleasure.

    BTW...I didn't remember the ad that Larry mentioned, and so I checked it out ... and he's right ... and now you can watch it, too ... here.

    MNB reader Jim DeLuca wrote:

    The production was great.  I was moved.  Then I thought that someone in my family would have killed Grandpa for pulling such a stunt... Then I thought it was way too manipulative...




    Regarding the report that the US Postal Service (USPS) is launching a new service called Informed Delivery, where if you sign up, the Postal Service will email you photos of  your letter-size mail envelopes by 11 AM each day, MNB reader Angie Dahman wrote:

    If I wanted my letters digitized I would use this new fad called email. SIGH. USPS has been out of touch for a very long time. Ironically Amazon is keeping them afloat by contracting with them for delivery services. The catch, they have to deliver 7 days a week.




    Finally, responding to our piece about Barnes & Noble's continuing problems, MNB reader Dan Blue wrote:

    I bought my wife a Nook Color when it came out 3-4 years ago and she loved it… until I got her a Kindle Paperwhite with Kindle Unlimited. I figured she'd use both ecosystems to read the "free" books, but she hasn't picked up the Nook for 18 months.

    Lasers won't save Barnes & Noble... not even tachyon beams could save them at this point.


    Agreed.

    I assume, by the way, that you are making a "Star Trek" reference. Though when I head the word "tachyon," I often think of the terrific series "Journeyman," which aired for 13 episodes in 2007 and should have lasted a lot longer. (You should binge watch it ... "Journeyman" is available on iTunes. ... and it is one of my favorites.)
    KC's View: