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    Published on: February 23, 2016

    by Michael Sansolo

    There may be no greater gift in business or life than friends and colleagues who find a way to make us better than we are.

    That’s why, in the midst of all the political drama following the death of Supreme Court Justice Antonin Scalia, we have to consider one small moment that overflows with lessons in teamwork and self-improvement.

    So put aside your political positions - pro or con on Scalia - and consider for a moment the tribute from his colleague, friend and frequent opponent on the bench—Ruth Bader Ginsburg. In part, Ginsburg wrote of Scalia:

    “We disagreed now and then, but when I wrote for the Court and received a Scalia dissent, the opinion ultimately released was notably better than my initial circulation. Justice Scalia nailed all the weak spots - the 'applesauce' and 'argle bargle' - and gave me just what I needed to strengthen the majority opinion.”

    It’s hard to read that and not find reasons to appreciate both Scalia and Ginsburg. They didn’t always agree, but they worked together in a way that enhanced both of them and probably made us better as a nation.

    Scalia clearly had the immense intellect and writing ability to elevate a decision to a higher level. To Ginsburg’s credit she could acknowledge that Scalia’s well-formed arguments actually made her work better and stronger. She listened to his critiques and responded with even better efforts.

    That’s the true meaning of synergy - when one plus one equals more than two. If only we all had such colleagues.

    The reality is that we don’t work on the Supreme Court, where the Scalia/Ginsburg relationship demonstrates things might be more collegial thank politicians would have us believe.

    Yet I think here’s much we can all learn from this working relationship. No matter where we work there are times we get embroiled in disagreements. Sometimes our point of view wins and sometimes it doesn’t.

    From Scalia and Ginsburg we can learn the importance of listening better to points of view different than our own and then trying to rise to the challenge of those disagreements. Working relationships like those of the two Justices are rare, but the lesson is still applicable. We need to constantly challenge ourselves to think of opposite points of view on many decisions we make.

    Just think about some of the missteps made by Chipotle over the past few months. One has to believe the company might have handled its run of bad news better by thinking out how some of its moves would play among consumers. (For a great take on that, re-read Kate McMahon’s column here on MNB last Wednesday.)

    Likewise, a few years back some network news shows used to guard against ill-conceived reports by questioning whether Jon Stewart would skewer them on "The Daily Show." We’d hope journalistic standards would drive them higher, but if Stewart’s barbs worked, well, we can all be grateful.

    Ask yourself how dissenters are treated on your team and in your company. Are their arguments taken - as Scalia’s were - as an opportunity to improve or are they simply cast aside as annoyances?

    How do you personally handle criticisms? Do you chafe first or like Ginsburg are you willing to listen? Do you willingly give first-rate critiques like Scalia or after losing an argument do you just disengage?

    Maybe it’s time we all learn to be a little bit more Supreme.

    Michael Sansolo can be reached via email at . 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: February 23, 2016

    by Kevin Coupe

    It won't come as a surprise to most people - at least, not to those of us old enough to remember - that President Ronald Reagan liked to use movies as a reference point when he told stories and tried to promote his political point of view. After all, he was a creature of Hollywood ... and he used to get crowds all revved up by saying "Win one for the Gipper." Of course, Reagan wasn't actually the Gipper ... he just played him in the movies. But it worked, not least because Reagan knew how to sell it.

    So it was with considerable interest this week that I read a piece in the New York Times about how the 1983 movie War Games affected national policy toward "cyberattacks, computer surveillance and the possibility of cyberwarfare." And it was all because Reagan watched the movie - "starring Matthew Broderick as a tech-whiz teenager who unwittingly hacks into the computer of the North American Aerospace Defense Command (NORAD) and nearly sets off World War III" - and asked his national security advisors if such a thing were possible.

    Those advisors didn't know. But they said they'd check. A week later, they came back to Regan and told him that, in fact, things were potentially much scarier than the movie portrayed.

    "Reagan’s question set off a series of interagency memos and studies that culminated, 15 months later, in his signing a classified national security decision directive, NSDD-145, titled 'National Policy on Telecommunications and Automated Information Systems Security'," the Times writes.

    "The first laptop computers had barely hit the market; public Internet providers wouldn’t exist for another few years. Yet NSDD-145 warned that these new machines — which government agencies and high-tech industries had started buying at a rapid clip — were 'highly susceptible to interception.' Hostile foreign powers were 'extensively' hacking into them already; 'terrorist groups and criminal elements' had the ability to do so, too."

    It is a fascinating story, and you can read the entire thing here.

    I know it has nothing to do with business ... but since Michael Sansolo and I wrote a book about lessons to be learned from the movies, I certainly found it to be an Eye-Opener.
    KC's View:

    Published on: February 23, 2016

    Starbucks yesterday announced a major change to its highly successful loyalty program that now will reward customers based on the amount of money they spend, rather than the number of transactions they make.

    Currently, program members get a free drink or food item for every 12 stars they earn; each transaction earns a star.

    But as of mid-April, members will get two stars for every dollar they spend, with 125 stars necessary to get a free item.

    In addition, Starbucks is changing how customers achieve gold status. In the past, it has been by earning 30 stars in a year, but the changed program will require 300 stars to reach that status, which gives people access to special offers.

    Reuters reports that "Matthew Ryan, Starbucks global chief strategy officer, said the change was not a way to weaken Starbucks' rewards program. However, he acknowledged that 1 percent of the chain's total transactions now come from customers who request two or more transactions to earn stars more quickly.

    According to the CNN story, "Starbucks says that a program based on spending has been a top customer request. But when the company announced the change, many people took to Twitter to complain."

    And writes that "Starbucks is looking into adding partners to its rewards program, which it first introduced in 2009. Though it is not ready to announce any official partnerships at this time, company reps mentioned that its current in-app partnerships with Lyft, Spotify, and the New York Times could be folded into its rewards program at a later date, meaning, perhaps, that a monthly subscription to the Times could lead to freebies from Starbucks."
    KC's View:
    It will be interesting to see if Starbucks sticks with this change, even if consumer criticisms persist. The retailer seems to be doing the same thing that the airlines have been doing, and let's face it, the airlines don't exactly rank high in customer satisfaction. I'm not saying they will back off, but I think it is at least a possibility.

    The optics, at least, are not good. It used to be 12 stars to get a free coffee, and now it is 125 ... and while it is like comparing apples to oranges, it just doesn't look good. It suggests, at least, that Starbucks' much vaunted loyalty program was costing it more money than it was willing to absorb. The question I'd ask is whether the money it will save in this shift is worth the lousy PR it is about to get.

    From my point of view, I must confess that this won't make all that much difference to me. I'll still get plenty of freebies ... and sometimes I forget to use the ones I do get until after they've expired.

    I actually think it is fair to argue that people who order venti coffees ought to get more benefits faster than people who order smaller coffees. And I've always sort of thought that it wasn't fair that if I went in and bought four coffees, I got one star, not four ... I could get them to ring the coffees up separately, but that was sort of a pain.

    In the long run, this strikes me as being more about Starbucks than its customers ... and so a little out of character. Let's see if it sticks.

    Published on: February 23, 2016

    Amazon yesterday announced that it is raising the free shipping threshold for non-Prime members in the US to $49, from $35, though in what appears to be a nod to the company's roots, books costing $25 or more will still get shipped for free.

    Reuters writes that the move seems to be yet another move by Amazon to get people to enlist in its $99-a-year Prime membership program, which offers two-day shipping. Amazon also "has been spending on rolling out several new services for members of its $99-a-year Prime loyalty program, including one-hour delivery and original TV programming, to attract customers in a highly competitive online shopping market."

    In other Amazon news, the New York Business Journal reports that " Amazon is hiring heavily to staff up its Seattle-based Amazon Fashion private label unit which - if successful - could take on everything from fast-fashion chains to sellers of basic apparel such as Walmart." The story notes hat while Amazon has not yet officially announced a "private-label push, but in the last few weeks, a number of job listings have sprung up, including positions for a head of marketing and senior brand manager, senior sourcing manager and senior merchandiser to staff the Amazon Fashion Private Label unit."

    Expectations are that Amazon could start the private label clothing business by 2017.
    KC's View:
    Investors probably will love this. Customers probably will hate it.

    As in the case of the Starbucks change to its loyalty program, this is more about Amazon trying to get a little more profitability. In the end, I think, there's nothing wrong with trying to get people to become Prime members by incentivizing them. Amazon may take some heat, but probably not too much ... it isn't my sense that they took a big hit when they increase the cost of an annual Prime membership from $79 to $99.

    As for the private label clothing business ... I have no idea if this makes sense. My first instinct is no ... but I'm a guy who buys most of his clothes from LL Bean and don't trust brands I don't know. I can't imagine buying a shirt or sweater with an Amazon tag, but then again, I've bought a lot of things from Amazon over the years that I never would've expected.

    Published on: February 23, 2016

    According to the most recent report from the American Customer Satisfaction Index (ACSI), customer satisfaction with the retail sector has fallen for a second consecutive year, a reflection at least in part of great competition for employees, which has created higher staff turnover, which seems to have then resulted in lower consumer satisfaction.

    Some excerpts from the study:

    "Internet retail, which includes websites of brick-and-mortar stores, remains ahead of every other retail category despite a 2.4-percent drop to an ACSI score of 80. Every single online company shows deteriorating customer satisfaction, but Amazon continues its dominance at 83, remaining among the highest-scoring companies in all of the ACSI. Online retail sales growth year over year was about 13 percent for the holiday quarter, but Amazon nearly doubled that pace at 22 percent."

    "After several years of pretty high customer satisfaction, supermarkets register their lowest score in more than a decade, dropping 3.9 percent to 73. A wide range in customer satisfaction for supermarkets suggests that it is possible to please customers even though overall satisfaction is down for the industry. Wegmans, one of three retailers to improve customer satisfaction, gains 1 percent to 86 and becomes one of the highest-scoring companies in the Index ... The biggest loser in customer satisfaction among supermarkets is Target. It plummets 12 percent to 71, followed by Whole Foods, which dives 10 percent to 73. Competition for natural and organic foods has been heating up as Whole Foods struggles with a reputation among food shoppers for unjustifiably high prices. "

    "Wal-Mart remains in the basement with a score of 66. The next closest chain, Sears, is 5 points higher at 71."

    Costco is said to be "atop the specialty retail ratings at 81," with competitors BJ’s Wholesale Club and Sam’s Club even at 76.
    KC's View:

    Published on: February 23, 2016

    • The Wall Street Journal reports that Walmart "plans to focus e-commerce work this year on expanding its online grocery business and the number of products available at its website overall ... Wal-Mart has been working on a massive technology overhaul of everything from its website and mobile apps to backend transaction systems and fulfillment centers since 2012 and expects to spend $2 billion on e-commerce work in the next two years. The goal is to keep pace with customers who increasingly shop across channels."
    KC's View:
    And, of course, keep pace with Amazon.

    Published on: February 23, 2016

    • The New York Times this morning reports that Google has decided to shut down its comparison shopping site, called Google Compare, that has been running in the Uk for three years and the US for less than a year. The goal of the site was to allow consumers to compare rates for financial products such as insurance and credit cards, and thus be able to make informed decisions in the same way that some sites allow travelers to compare airline fares and hotel rates.

    Despite Google's dominance in the search business, the story says, Google conceded that "the sites never really caught on with consumers."
    KC's View:

    Published on: February 23, 2016

    • The Seattle Times reports that for the third time, Haggen is delaying the auction of its "core" Pacific Northwest stores, this time to March 11.

    As previously reported here, when Haggen decided to sell off the stores that it acquired (disastrously, as it turned out) last year after the Albertsons acquisition of Safeway, it said it planned to keep the core stores that it started with. But its agreement with creditors requires the company to also look for buyers of the core units and accept any reasonable offer as a way of raising cash to pay off its debts.

    Perhaps Haggen is hoping that the delays will allow its "core" customers, who believe in the company, enough time so they can clap, clap, clap their hands in order to keep the company alive. But I wouldn't count on it.

    • Ahold USA announced yesterday that by 2022 it will source only 100 percent cage-free eggs for its private label shell egg offerings. The decision affects all of Ahold's banners - Stop & Shop, Giant of Landover, Giant of Carlisle, Martin's and Peapod.

    "Animal welfare is a fundamental part of our responsible retailing program," Marissa Nelson, Ahold USA's senior vice president of responsible retailing and healthy living, said in a prepared statement. "We believe that cage-free environments are a more humane way to treat hens, and we have committed to have all of our private label shell eggs 100% cage-free, subject to available supply."

    Reuters reports that Ahold and Delhaize have "proposed to sell a relatively small number of stores in Belgium in a bid to win regulatory approval from the country's competition authority for their merger ... The companies said in an emailed statement that the proposed divestments would include both Ahold-owned stores and Delhaize-branded outlets.

    "Belgian media reported that eight of Ahold's Albert Heijn markets and five Delhaize franchise stores are up for sale, but the companies would not confirm that."

    Ahold announced its proposed acquisition of Delhaize last June, and the two companies have been working through all the legal and regulatory issues before the $10.4 billion deal is finalized.
    KC's View:

    Published on: February 23, 2016

    • Kroger announced yesterday that Jay Cummins, a 44-year veteran of the company who started as a store clerk and most recently has been president of the company's Smith's division, plans to retire at the end of April. No successor has yet been named.
    KC's View:

    Published on: February 23, 2016

    The Associated Press reports that Peter Mondavi, who with his brother Robert Mondavi - and often against him, as the two engaged in a decades-long feud - helped to turn the Napa Valley wine industry into a respected producer of fine wines, has passed away at age 101.

    The story notes that the historic Charles Krug Winery "has been in the hands of the Mondavi family since 1943, when it was purchased by Mondavi's parents, Cesare and Rosa. Peter and Robert ran the winery together after Cesare's death in 1959 but were unable to agree on management styles and split, with Robert founding the Robert Mondavi Winery in 1966. Later, the brothers reconciled and in 2005 celebrated their reunion by making a special blend of wine together."

    The AP story says that Mondavi "credited his stamina to good genes, hard work, pasta Bolognese — and a daily glass of cabernet sauvignon."
    KC's View:

    Published on: February 23, 2016

    Yesterday, MNB took note of a report in The Hill that "Sen. Pat Roberts (R-Kan.) has unveiled legislation to pre-empt states from issuing their own mandatory labeling laws for foods that contain genetically modified ingredients." The bill would require "the Secretary of Agriculture to establish a national voluntary labeling standard for bioengineered, or GMO, foods."

    Trade groups lined up to support the Roberts proposal, with plenty of opposition from pro-labeling forces.

    I commented:

    It is worth noting, I think, that Sen. Roberts in the past has come out against any federal intrusion into the rights of states of make decisions about education policy. And, he's come out against any federal intrusion into the rights of states to legalize marijuana. So it is fair to say that he's a states' rights guy except when he's not. I'd love to know how much money he's received, either directly or through political action committees, from the biotech industry.

    MNB reader Bruce Wesbury responded:

    KC, two things on the labeling article.

    Does anyone feel the need to fact check “93 percent of Americans want GMO labeling”. Sounds to me like it’s the same group that claimed 97 percent of scientist agree that global warming is true.

    I’m willing to bet that Hillary Clinton has taken 100 times more money from Wall Street than Roberts has taken from Biotech firms. So it’s fair to say Hillary is for Wall Street except when she’s not.

    I would probably share a general skepticism of both the 93 percent and the 97 percent numbers ... enough so that I cannot remember making a big deal out of either of them on MNB. (I may have, though. I can't really remember.)

    I'd be skeptical of the 93 percent number mostly because it all depends on who gets asked the question and how the question is asked. I would be willing to bet that if you did a survey in which you asked people if it is important that labels accurately reflect what is in their food, a majority probably would say yes. But this, of course, would not address the conflict .... since pro-GMO forces would argue that there is no difference.

    As I've said here many, many times, I'm generally agnostic on the subject of GMOs in food. But I respect the desire of people who want to know if GMOs are in their foods, and a little suspicious about companies that think information equals condemnation. I think that if the labels are on foods - and I'd be perfectly happy with having the info embedded in QR codes - it provides companies with the ability to educate consumers about why they are important and necessary.

    Would I prefer a national mandate rather than a state-by-state approach? Yes. But the folks who oppose a state-by state approach are, to my mind, disingenuous ... because the only really the states are even taking up the issue is because of the forces that don't want them at the national level either.

    As for the percentage of scientists who believe that climate change is a real thing and not a liberal fiction/fantasy ... well, I'm willing to accept NASA's position on the subject, which is that climate change is real and a threat. My sense of it is that a majority of scientists feel that way, with some estimates being as high as nine out of 10. I'm perfectly willing to believe that a percentage of scientists can be wrong and/or bought off by people and/or companies that have a stake in being climate change deniers ... after all, the tobacco companies had no problem getting at least some scientists to say that tobacco does not cause cancer.

    And I know that some will eviscerate me for saying any of this. Which is fine.

    Another MNB user wrote:

    Kevin, I was not surprised by your cynical view of Rep. Roberts proposed legislation to pre-empt states from passing their own version of GMO labeling laws.  To me it makes no sense to have a state by state labeling laws that would create an unworkable environment for national CPG companies to monitor and comply with.   I do agree the solution is not a “national voluntary labeling standard for bioengineered, or GMO, foods” as proposed by Rep. Roberts, but should provide for a mandatory solution that is well crafted, specific, and provides the consumer the needed information to make an informed decision at the POS.  A win/win is not hard to find and should have strong bi-partisan support.

    Except that it doesn't.

    MNB user Michael Phelan wrote:

    What’s my view? The $21,150 in donations to Sen. Pat Roberts from Berkshire Hathaway is an example of the hundreds of corporate donors who are currently leasing our government and legislators at the federal and state levels. The agriculture and  food industries respective statewide “lobbying” efforts must have failed with this one, but our Congress always takes cash and is one-stop shopping for the multinational conglomerates who also happen to feed us.

    MNB user Tom Herman wrote:

    There are regulations and laws that individual states implement that have nothing to do with interstate commerce and they should be able to set their own regulations and laws based on the will of the people in their states.  This is obviously not one of them.  Take off your liberal hat for a minute and think about the impact this would have on manufacturers and suppliers in the food chain if each state had their own labeling laws.  It would be a disaster of biblical proportions.  I think you may be reacting to the voluntary part because a federal standard is needed.  There are obviously things that the federal government shouldn’t be involved in and there are things they should.  I don’t know anyone that advocates to leave everything to the federal government or leave everything to the states and the local level.  People can have a healthy discussion on where those lines are drawn.  I see no federal implications if people in one community with its own elected officials on their school board or state representatives want to have more control over the education of their children.  Decisions that don’t affect interstate commerce and the like should be decided at the lowest possible level, not by the so called elite in Washington DC.  Do you want a President Trump telling you how to educate your children.  I know I don’t…

    MNB user Jackie Lembke wrote:

    I don’t know if Sen. Pat Roberts receives campaign funds from any “Big Food” group, although it wouldn’t surprise me. He does come from a state with a heavy agricultural emphasis so wanting a federal solution to the GMO labeling would not be outside his political scope. It almost seems like this is a little late to the party as the Vermont law goes into effect on July 1. I am doubtful anything can be accomplished before then, I could be wrong. I believe a federal solution is the right answer, but something needed to happen when the first labeling initiatives were introduced. At this point to meet the deadline most food companies will need something in place quickly, either bite the bullet and label GMO, go GMO free, or not sell GMO food in the state of Vermont.

    We also took note yesterday of an Associated Press report that industry groups from Vermont to Michigan sent a letter to the Food and Drug Administration (FDA) complaining about companies that label foods as "maple" but don't actually contain any: "They say products such as Quaker Oats Maple & Brown Sugar Instant Oatmeal and Hood maple walnut ice cream are misbranded in violation of FDA regulations because maple syrup is not listed on their labels. Quaker Oats said it did not have a comment, and a Hood spokeswoman said she was seeking more information but could not confirm if the ice cream’s flavor was derived from real maple syrup."

    I commented:

    This is just as bad as when we find out that some parmesan cheese manufacturers have been adding cellulose, a food additive made from wood, as a filler. I am thoroughly disgusted when products said to be made from "maple and brown sugar" don't have any real maple, or when products with the word "blueberry" in their names don't have any actual blueberries. And so forth. It is just a lie ... and I think that the national mood is working against such companies and such products.

    One MNB user reacted:

    As a career professional in the food industry, this has always bothered me. Current FDA regulations permit manufacturers to simply state "flavored" in very small print on the package when in fact the product does not contain any of the key flavor ingredients. Imagery, product name and other flavor "cues" may scream "blueberry" but if the consumer takes the time to read the ingredient statement, they will discover that the product does not contain blueberry. We're not eating food anymore, we're eating contrived substitutes that are cheaper, have a longer shelf life and are controllable in a manufacturing environment. The American food industry is rife with manufactured products that bear no resemblance to foods of a bygone era. I look forward to the day when the FDA cracks down on this deceptive practice and rewrites the regulations.
    KC's View: