business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: March 2, 2016

    by Kate McMahon

    The unlikely epicenter of this week’s social media firestorm is in Dodgeville, Wisconsin. More specifically, the headquarters of all-American clothing retailer Lands' End, where they no doubt have been monitoring the company's Facebook page and other websites wondering what new fires they'll have to put out.

    The incendiary spark? Just that revolutionary notion of equal rights for women.

    Yes, you read that correctly.

    An interview with feminist icon Gloria Steinem in the company’s spring catalog prompted an irate backlash on Facebook from pro-life customers. Lands’ End panicked, pulled the interview from its website and apologized. That fanned a new set of flames, firing up consumers who happen to think the Equal Rights Amendment is worth fighting for.

    Now seemingly everyone on both sides of the ideological spectrum is threatening to boycott Lands' End, and Facebook news feeds are flooded with angry emoji reactions.

    The Steinem interview was supposed to be the first in a new “Legend Series” conducted by Lands’ End CEO Federica Marchionni, who wants to cultivate younger, more stylish customers. Steinem discussed challenges for women in the workplace, her journey and the fight for equal rights. The politically divisive topic of reproductive rights was never even mentioned in the piece.

    No matter. All holy hell broke loose. Anti-abortion activists and Christian schools that order uniforms from Lands’ End Schools expressed outrage, a pro-life news agency jumped on the bandwagon and few hours later Lands’ End apologized to customers “offended” by the interview.

    Again, the interview focused on Steinem’s “quest for women’s equality.” While Steinem has long advocated that abortion should be accessible and remain legal, that issue was not addressed in the interview.

    The Lands’ End apology had an unintended effect. It prompted an onslaught of equally impassioned responses from customers who also were mad as hell.

    As of yesterday, there were almost 11,000 comments after the apology post, and the majority were lashing out at Lands’ End for backing down. Most telling was the tally kept by Facebook and its new Reactions emojis, unveiled just last week to give users the opportunity to express more than just “like.”

    Of the 3,500 responses to the official post withdrawing the interview, a whopping 2,500 users clicked the Angry emoji, 825 chose Like, 241 opted for Sad, 57 picked Love, 23 clicked Wow and 5 went for Haha.

    Here’s what I think, from a business standpoint. First, before any company endorses a cause, signs a spokesperson or in this case chooses a “legend,” it has to do the requisite due diligence. Someone in the room needs to ask, "How will our customer base react?" For a traditional clothing supplier such as Lands’ End, which sells lots of school uniforms, Gloria Steinem probably was not the safest choice. (To be fair, despite the outcry from both sides, she probably also was not the most provocative choice.)

    That said, once you commit to a cause or person, stick with it. Don’t pander to extremists - no matter what their ideology. It’s worth noting that more and more mainstream retailers are publicly taking stands on heated social issues such as the legalization of gay marriage, gun control and removing merchandise with the Confederate flag, even if it means losing some customers. Lands’ End only has itself to blame for allowing a brush fire to become a conflagration.

    On a personal note, as a woman and a mother of two, I’m still stunned that anyone would find the quest for equal rights offensive. Last I checked, it was not a “divisive political or religious issue” to treat women – or anyone - equally. The men I know feel the same way.

    Despite its all-American apparel, I think Lands’ End stance is decidedly un-American. You can count as a former customer.

    Comments? As always, send them to me at .
    KC's View:
    I want to weigh in on this, if you don't mind.

    To me, so much of this story reflects the intolerance of today's culture and politics. I've read the Steinem interview, and I don't see anything in it that I wouldn't want my daughter to read and take to heart ... there is absolutely nothing controversial about it. And yet, because she holds a position on reproductive rights that, admittedly, is a divisive issue in this country (though polls suggest that a majority of Americans believe it should be legal in all, most or some cases), she is demonized and Lands' End is demonized. In other words, she didn't pass some sort of cultural purity test, and therefore, she must not be heard from.

    I would feel the same way, incidentally, if liberals rose up in arms if Lands' End did an interview with a conservative "legend" who, let's say, talked about how religious values are relevant in the modern world.

    For the record. I suspect I'd fail any cultural purity test administered by either side. And I'm proud of it. I firmly believe what the great Pete Hamill once said, that ideology is a poor substitute for thought.

    My feeling always has been that I learn both from the people I agree with and the people I disagree with. When we stop listening to people with whom we disagree, we stop learning.

    I feel sort of bad for Federica Marchionni, who came to Lands' End after serving as North American president of Dolce & Gabbana ... a very different kind of company. She's just gotten a lesson in political correctness, circa 2016.

    I'm not really surprised, though ... except by two things. One is that anybody actually reads interviews included in paper catalogs. And the other is that Steinem is pictured wearing Lands' End clothing. Betcha it's the first time...

    Published on: March 2, 2016

    Fortune reports that a new a survey conducted and released by Cowen & Co found that 25 percent of Amazon Prime members used the company's Prime Now service just during January 2016, and that seven out of 10 of them used Prime Now "several times a month."

    The story notes that "Prime Now is still only available in 24 major U.S. markets and costs about $8 for one-hour delivery service. It is free for Prime members ordering from an assortment of 10,000 different items if delivery is after two-hours ... Cowen recently estimated that some 41 million Americans are Prime members ... meaning that 10 million people tried Prime Now in January, a sizable number considering its limited availability. What’s more, a December survey found that Prime is drawing younger and wealthier shoppers, who are now using the website to shop for an increasingly diverse range of products, notably apparel."

    In a research note, the Cowen analysts wrote that they "view Prime Now as one of the pathways Amazon is utilizing to gain share in the $1 trillion U.S. grocery market.”
    KC's View:
    Even I, as an Amazon user and enthusiast, am a little surprised by these numbers. I suspect that they may be a little high, inflated by the places the questions were asked.

    But I'm not surprised that Prime Now is gaining traction, especially among young people who don't remember a time when Amazon did not exist. Amazon won't kill the physical store, but it certainly creates new challenges for bricks-and-mortar retailers, who have to define with great clarity compelling points of differentiation. If they don't do that, it'll be suicide, not homicide.

    Published on: March 2, 2016

    Fortune reports that discounter Aldi has begun taking credit cards in its 1,500 US stores.

    "While Aldi is known for having customers bag their own orders to keep costs low and selling inexpensive equivalents of national brands of a wide range of staples," the story says, "the credit card news is clearly a move toward broadening its customer base. This puts it on a collision course with Walmart, the largest grocer in the United States with some $160 billion in annual sales."

    Aldi has said that it plans to have at least 2,000 stores in the US by 2018.
    KC's View:
    It would seem that Aldi may be willing to sacrifice a little margin for market share ... which should scare the hell out of the retailers that compete with them. Because it will find ways to nibble away at the market shares of a lot of different retailers, and have the kind of impact in the US that it has had in the UK. It'll take longer, but it'll happen.

    Published on: March 2, 2016

    The Wall Street Journal has a story about why falling gas prices are good for Costco, offering two reasons...

    First, the story says, "For most fuel retailers, falling gasoline prices mean revenue suffers and margins rise. The result: Profits don’t change all that much. A high-volume seller such as Costco, though, captures falling wholesale prices at a faster rate than smaller gas stations. At the same time, it can be slower to ratchet down its retail price than nearby gas stations. Costco pockets the difference, boosting profits."

    Second, "Consumers are more likely to schlep to a distant warehouse store for even lower prices, and then have more cash to spend on nonfuel items when they get there. And they may return more often than otherwise would be the case to keep filling up the tank."
    KC's View:
    I must confess to being a little confused by the assertion that Costco actually gets a little bit more margin when gas prices drop ... because I thought it was an article of faith at Costco that margins could not go above a certain level and that all savings had to be passed along to the shopper. Is it possible that gas is an exception? Or that certain articles of faith are not as inviolate as they used to be?

    Published on: March 2, 2016

    Sports Authority has filed for bankruptcy, and has identified some 140 of its 450 stores and two distribution centers that it plans to close or sell as it restructures.

    In the filing this morning, Reuters reports, Sports Authority listed assets of up to $50,000 and liabilities of between $1 million and $10 million. The retailer said it has received interest from companies interested in buying all or part of the company.

    The story notes that "the retailer has struggled with an inconsistent operating performance over at least the past four years, according to a research note by Moody's Investors Service, and has been trying to cope with the impact of adverse weather and poor management."
    KC's View:
    Could it be that Sports Authority has only $50,000 in assets? I would've thought that each of its stores has $50,000 worth of baseball mitts, based on how much they cost this year.

    Published on: March 2, 2016

    Forbes has a long piece about Starbucks CEO Howard Schultz, focusing largely on how he is trying to redefine his company in social/cultural terms, believing that it has a larger purpose than just selling coffee. Schultz calls it delivering “performance through the lens of humanity,” and he has a laundry list of issues about which he'd like to play a conciliatory role, providing a platform for - ironically - discourse that is somewhat less caffeinated than is typical on the public stage.

    Certainly, there have been missteps. But,"undeterred, the Seattle coffee king’s ambitions remain as big as ever, with Schultz targeting death-penalty injustices, chronic unemployment, veterans’ needs and the college aspirations of his baristas," the story says. "Watching Schultz’s crusades in the wake of the race debacle is akin to seeing a sword-swallower at a carnival. Each project generates its own rush of excitement. Each is tinged by a thrilling, terrifying sense that it could all go horribly wrong in an instant."

    You can read the entire, fascinating story here.
    KC's View:
    I have such mixed emotions about Howard Schultz. One the one hand, it always seems to me that he has a bit of a messiah complex, with pretensions that I find a little off-putting. On the other hand, I admire chutzpah ... and he has enough of that for a dozen people. In the end, he'll be judged by what he has built ... and by that standard, it is hard to argue with his approach.

    Published on: March 2, 2016

    The New York Times reports that the Appellate Division of New York Supreme Court has "ordered a temporary halt to New York City’s enforcement of a measure requiring some chain restaurants to post warnings on menu items with high levels of sodium," pending judicial review of the legality of the regulation.

    The story notes that New York City's Board of Health unanimously approved the regulation last year, saying that restaurants with 15 or more locations nationwide must "place small images of saltshakers next to menu items with at least 2,300 milligrams of sodium, which many nutritionists say should be the daily limit." The rule was opposed by the National Restaurant Association (NRA).

    While the judicial review is taking place, the city health department can inform restaurants that are not complying with the rule, but not issue fines.
    KC's View:
    Ah. Another industry effort to tamp down on consumer-centric transparency.

    What fools these mortals be.

    Published on: March 2, 2016

    • The St. Louis Post Dispatch reports that Walmart's Sam's Club "is building a team of regional U.S. buyers to bring in more local and organic groceries, a strategy used by rival Costco Wholesale Corp. to drive loyalty and attract wealthier customers ... Sam's Club has hired a handful of buyers in Dallas and is considering putting teams in up to five other markets ... People familiar with the matter said Sam's Club was considering having regional buyers handle 30 percent of its food items."
    KC's View:

    Published on: March 2, 2016

    • The Lakeland Ledger reports that Publix Super Markets had a pretty good 2015 - in fact, it "officially improved on its record-breaking 2014." The mostly employee-owned retailer had $32.4 billion in sales for the fiscal year that ended Dec. 26, up 5.9 percent compared to the year earlier. Publix's annual net earnings were $2 billion in 2015, compared to $1.7 billion in 2014.

    The story notes that as other chains in the southeastern US have been retrenching and closing stores, Publix is expanding its geographic reach and opening stores.

    • Albertsons Companies announced that "it will be working with its suppliers toward a goal of sourcing only cage-free eggs for its store operations by 2025, based on available supply."

    The company said it is making the move "not only as part of its ongoing commitment to animal welfare but also in response to customer buying habits."
    KC's View:

    Published on: March 2, 2016

    • The Jacksonville Daily Record reports that Southeastern Grocers has hired Anthony Hucker, the former president/COO at Schnucks, as its new COO. Hucker also has spent time at both Walmart and Aldi, which gives him experience with two of the retailers that are among the greatest competitive threats to Southeastern's BiLo and Winn-Dixie banners.

    Twin Cities Business reports that Mills Fleet Farm - a 35-store retailer with units in Minnesota, Wisconsin, Iowa and North Dakota that sells, among other things, fishing and hunting equipment, small appliances, hardware, apparel and garden supplies - has hired former Walmart chief marketing officer Duncan Mac Naughton as its new CEO. The hiring follows the acquisition of the retailer for $1.2 billion by investment firm Kohlberg Kravis Roberts.

    MarketWatch reports that Starbucks' former COO, Troy Alstead, has resigned from the company. Alstead has been on sabbatical for the past year, but now will not return as originally intended.
    KC's View:

    Published on: March 2, 2016

    Got the following note from MNB reader Bryan Silbermann:

    Thanks for your reference to Adam Gopnik’s masterfully-written New Yorker article “Straightened-Out Croissants and the Decline of Civilization.”  Reading it made me laugh, salivate, and reflect longingly for more insight like this in our world.

    Perhaps sentiment like this is behind the appeal of irregular curves, spirals and bumps of Inglorious produce displays … where people find joy in celebrating what’s less than perfect, more like nature intended, less than extruded, more like intrinsic.  Might it be that civilization as we know it stops the decline by finding salvation in the glory of Mother Nature?

    Following our criticisms of Sears, one MNB user wrote:

    Just wanted to share. This morning I researched the best vac for my son who lives in Florida, I live in Massachusetts.  That best vac happened to be a Kenmore model.  My habit is then to open Amazon, and "one-click" it, and direct it to my son's address.

    But I took a quick moment to read some reviews, one of which said it was cheaper on the Sears site.  I looked, and sure enough it was $60 less, and free click to pick up at the store.

    The process for ordering was easy, and as well as setting up the notification process for my son.
    They've since notified that the item is ready for pick up.  That my son just has to pull into the special pick up parking spaces, launch the app, scan the barcode in his text, and they guarantee the item will be at the car in under 5 minutes.

    I'll report back on the final pick up and just how easy it was.

    Here's the thing, under the radar, Sears has a great reputation for a number of their brands, they were $60 less than had I "one-clicked" on Amazon, and they seem to have an excellent process in play for "click-to-pick up" at a nearby store.

    I'll admit I've not set foot in a Sears in years, but I have to say I was impressed with them for today's transaction.

    Keep us posted.

    On another subject, from another reader:

    First, I drive a hybrid and buy a lot of organic foods, so I’m not anti-environment. But I am against mandatory labeling of GMO ingredients, which I believe to be safe, productive, and sometimes and in some ways environmentally preferred.

    I was struck by this part of your commentary:

    a) include the ingredient in their products, b) label the products as such, and c) do whatever is necessary to educate consumers about why this ingredient is a good thing and why people should buy their product. But that's not how they view this. It is easier to try to scare the crap out of people about costs.

    I think all of these arguments can be turned around. To a) and b), manufacturers are currently free to label their products non-GMO. To c), you could make a case that the Corn Refiners Association is trying to educate people (although your skepticism about their objectivity is not misplaced.)

    And to the use of scare tactics, isn’t that exactly what the anti-GMO camp is currently doing

    Concerns about mandatory labeling are real, including both the packaging redesign costs, and the reverse halo effect that could lead to reduced use of GMO’s and the corresponding reduction in crop yields.

    If being non-GMO is a positive attribute, why not just let manufacturers label their products as such, and call it good? Consumers could assume that products without that labeling do contain GMO ingredients, and could make informed choices accordingly.

    To be honest, I'm tired of the labeling debate ... and as I've said here before, the easiest way to resolve it is to mandate that everybody should label their products as either "contains GMOs" or "no GMOs." It'd be transparent, and it'd be over.

    Regarding the ongoing battle between Apple and federal law enforcement officials, MNB reader Tom Herman wrote:

    I too am in general support of Apple.  Apple should not be required to hand over technology that would allow law enforcement to unlock Apple phones.  At the same time, I am in favor of the government paying Apple to create a separate firewalled department that will unlock Apple phones with a court order with law enforcement waiting in an adjacent room for the unlocked phone to be handed back to them.  This would require a court order for every phone they request to be unlocked.

    An MNB reader accused me the other day of showing contempt for my readers when I criticize them (sometimes with what he viewed as excessively blunt language). Prompting another reader to write:


    I don’t think so.  I used to publish a trade magazine and the owner, objecting to an editorial I had written, said, “You can’t win any points by standing on top of the mountain and throwing stones at your audience.  You have to stand beside them and point the way up that mountain.”  I think that’s what you try to do, sometimes irreverently.  More or less.

    I hope so. But I do think that sometimes I throw stones ... not out of contempt, but because sometimes that's the only way to get people's attention.
    KC's View: