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    Published on: March 28, 2016

    by Kevin Coupe

    Two very different stories over the weekend illustrated some of the country's worst tendencies.

    The Hartford Courant had a story about how an annual Easter egg hunt at Pez Candy headquarters in Orange, Connecticut, turned into a greedy, out-of-control melee apparently because parents decided to ignore instructions that gave priority to smaller children and put limits on how many eggs any individual child could get.

    There some 10,000 eggs laid out for the event, which was attended by 1,000 participants, and reports say that parents encouraged their children to rush the field even before the event officially started, with older children able to take advantage of smaller children to get more eggs. There were reports of bloody noses and crying small children, and video on the local news of parents carrying piles of eggs scavenged by their kids.

    Company officials, who said they had the same number of staffers on hand as in past years, quickly cancelled the event and handed out candy and coupons to disappointed children.

    At the same time, there were multiple stories over the weekend about how human beings managed to corrupt an artificial intelligence experiment being conducted by Microsoft. The company had created an A.I. "bot" that was designed to go on Twitter and engage with users in casual conversation, using content-neutral algorithms to evolve its language and sensibility skills.

    While the "bot," named Tay, was designed to get smarter after engaging online with young millennials, it essentially fell in with the wrong crowd and devolved into something far more cruel and crude. Vice writes that "her initially sunny outlook quickly devolved into that of the standard internet troll," with Tay using obscenities, spouting racist remarks, demonstrating anti-Semitic and anti-feminist tendencies, denying the Holocaust and espousing white supremacy.

    Microsoft took Tay offline in a matter of hours and apologized, pledging to "bring back Tay when they are confident that they can program her to mitigate the internet's trolls." The company is convinced that Tay was the target of a coordinated attack rather than just of casual racism and sexism. But I'm not sure it matters all that much.

    Is it somehow better that online bullies were coordinated and specific in their efforts to influence Tay, rather than it just being the course of normal events? I don't think so. In either case, the instincts on display are the worst side of human nature, reflecting a belief that bullying is not just okay, but a perfectly acceptable way to get what you want, because what you want is the most important thing.

    Which is exactly what we saw on that field in Connecticut. Parents who felt that they did not have to respect the rules, did not have to care about other people and their children, who felt that they were entitled to do whatever the hell they wanted, because what they wanted was the most important thing.

    In both cases, I am disgusted. We just ended a weekend in which a sizable percentage of the population celebrated the concept of spiritual resurrection, and what we saw was anything but.

    (By the way, The New Yorker had a piece in which it blamed Microsoft for not programming Tay with the same kind of judgement that any sort of decent parent would use in raising a child - teaching it not to just avoid profanity or racist and anti-Semitic terms, but also that the Nazis are bad, the Holocaust actually happened. Which is a fair criticism, except that the events at Pez amply demonstrated that not all parents are decent, and that they are perfectly capable of passing their worst instincts on to their offspring.)

    They were Eye-Opening stories. More importantly, if we don't keep our eyes open, rejecting the baser, bullying instincts that seem to increasingly capture the popular imagination, things will only get worse - meaner, harder, crueler, even inhuman. If that happens, all we'll want to do is close our eyes.
    KC's View:

    Published on: March 28, 2016

    The BBC has a story about Tesco's latest misstep - labeling fresh produce as being from local farms that do not exist.

    The story says that "new brands such as Rosedene Farms and Boswell Farms were launched on Monday to cover Tesco's own-label produce," but that "despite the British sounding names, the 'farms' do not exist and the produce is often sourced from abroad."

    Phil Bicknell, of the UK's National Farmer's Union (NFU), released a statement: "It is clear that Tesco have identified that customers have a positive affinity with farmers and want to capitalise on this. The key question to ask with this is, what are these brands trying to communicate? If this is not aligned with the origin sourcing and specification of the product we must ask if this is misleading to customers."

    Tesco replied: "Every product is sourced from a selection of farms and growers - some are small, family-run farms while others are of a larger scale - reared or grown to our specific standards from known and audited farms and growers."

    The BBC story notes that Tesco hardly is alone in using fictional farm names to label products, and that numerous local analysts believe that while the decision may have been less than transparent, it was not malicious.

    The same could be said of Netflix.

    The Los Angeles Times has a story saying that while Netflix "has long framed itself as the good guy in the fight against Internet service providers," fighting against efforts to limit or slow down broadband access, "for more than five years, Netflix has secretly slowed load times and reduced video resolution — a process called throttling — to AT&T Inc. and Verizon mobile customers to keep them from exceeding the caps on their data plans."

    The story notes that "Netflix and its allies last year won the fight over net neutrality, arguing that without federal protections Internet service providers could throttle traffic to individuals and companies that didn't pay for access to Internet fast lanes. That's a big deal for a company responsible for more than one-third of all downstream Web traffic in North America during peak times. But by throttling its own mobile users, Netflix is working to shield customers from hefty fees for exceeding the limits on their data plans — charges that might make them think twice about watching 'House of Cards' on their smartphone."

    And, the Times points out that whatever Netflix's motivations, the decision has led to a perception that the company at best has been hypocritical.
    KC's View:
    It almost doesn't matter what motivations are, and whether companies are being malicious and/or hypocritical. Optics matter, and transparency is one of the best ways to make sure you are doing the right thing. (If you are being transparent, I think, you are more likely to actually do the right thing.)

    I would also refer you to a terrific column that Michael Sansolo wrote about a year ago, on how companies often seem populated by zombies, and why it is critical "to zombie-proof your conference room." There's a great movie metaphor involved (of course!), and you can read it here.

    Published on: March 28, 2016

    The Los Angeles Times reports that "California lawmakers have reached a tentative deal to raise the state minimum wage to $15 an hour by 2022 ... the wage, which was raised to $10 an hour on Jan. 1, would increase incrementally to $15 over the next six years. Small businesses would have an extra year to comply."

    However, it is not a slam-dunk that the deal will become law: "Gov. Jerry Brown of California, a Democrat, backed raising the minimum wage in 2013, when legislation passed increasing it to $10. He has since resisted efforts to raise it again, expressing concern that another increase could cost the state billions of dollars of wages and hurt the state’s business climate."

    If it were to be signed into law, the increase would reflect "the biggest advance yet in a campaign to increase pay for low-income workers that has reverberated in the Democratic presidential contest and in cities across the country. If approved, California would become the first state to adopt a $15 an hour minimum wage. A measure to impose a $15 statewide minimum wage in New York is under negotiation in Albany."
    KC's View:
    I totally understand both sides of this argument ... and I think the concerns about job loss are legitimate. But I also think there is a serious issue about minimum wages that leave a lot of people working hand and long and not being able to pay for basic needs. I just wish that there were a way for the two sides of the debate to figure out a nuanced way to address both issues without falling back on ideology (which, as Pete Hamill once said and I like to reiterate as often as possible, is a poor substitute for thought).

    Published on: March 28, 2016

    Fast Company has a piece about Whole Foods new "365" chain, which is scheduled to open its first., lower-priced, millennial-focused stores in just a couple of months.

    "The chain is rolling out a project called Friends of 365," the story says, "which is described in marketing materials as a 'super cool hang' that also happens to grow businesses: We're looking for innovative businesses like yours to set up shop inside our 365 stores (okay, in some cases, outside on the patio). By combining our strengths and yours - plus a whole horde of like-minded shoppers - we'll create that all-important synergy that grows businesses. We'll also have a super cool hang.

    "These businesses will essentially operate standalone stores within Whole Foods' 365 supermarkets. According to Whole Foods, these stores can be restaurants; vendors of things like body-care products, clothing, housewares, or pet supplies; or service providers such as barbershops, tattoo parlors, and bike shops."

    The story suggests that Whole Foods is courting local businesses with specific demographic appeal that will help it attract customers in a competitive environments where it faces tough competition from both local, regional and national food stores: "For 365, tattoo shops and vegan restaurants inside supermarkets just equals good business."
    KC's View:
    I think this approach can work in some cases, but I remain unpersuaded that barbershops, tattoo parlors, and bike shops are synergistic with the act of buying food. Maybe I'm wrong, and maybe I'll be proven to be guilty of old-world thinking in a new-world scenario.

    But there's nothing old-world or new-world about square pegs and round holes.

    On the other hand ... I remember as a college students going to a cheap Mexican restaurant near LMU called Los Amigos which offered giant burritos, refillable cheap beer cups, and a barber shop. I never actually got a haircut there, but as a young person I wasn't offended by it. So maybe Whole Foods has a point ... if it can attract enough of those kinds of young people to turn a profit.

    That's a big if.

    Published on: March 28, 2016

    Bloomberg reports that the federal judge hearing the Federal Trade Commission (FTC) lawsuit attempting to derail the proposed acquisition of Office Depot by Staples has criticized the FTC "for attempting to elicit false information from an Amazon.com Inc. executive to support its lawsuit."

    According to the story, when Prentis Wilson, a vice president with Amazon's new business supply unit, testified, he said "that in discussions with the FTC before the trial, the agency had suggested that Wilson say in a statement that Amazon doesn’t believe it will be in a position to bid on office supply contracts with large businesses until early 2017." Wilson did not say that, he said, because it was inaccurate.

    The FTC denied that it tried to get Wilson to offer untruthful testimony.
    KC's View:
    Between this case and the Alberstons-Haggen case, it appears that the FTC is rapidly descending into irrelevance.

    Oy.

    Published on: March 28, 2016

    MarketWatch has a story about how "small and medium-sized business owners are increasingly worried about finding new employees — and keeping the ones they have." And while the low unemployment rate and pace of job creation is creating a problem finding new hires, the story suggests that the bigger problem will be finding good hires: "Some said the problem wouldn’t be finding people who want a job. It would be finding people who want to work hard."

    Interesting piece ... and you can read it in its entirety here.
    KC's View:

    Published on: March 28, 2016

    • The International Business Times reports that Amazon is preparing to bring its Prime Now service to Berlin, offering to two-hour deliveries to residents out of a local warehouse that will stock some 10,000 SKUs. The story says that while Amazon has in the past used Deutsche Post's DHL parcel service for deliveries in Germany, it is developing its own proprietary delivery system for Prime Now there.
    KC's View:

    Published on: March 28, 2016

    Fortune reports that at an investor meeting last week, Dollar General announced "that it would open 900 new stores this year, and then another 1,000 in 2017. That would bring the discounter’s already staggering store count to nearly 15,000 locations."

    The story notes that "Dollar General stores are typically small: they are on average only 7,400 square-feet in size and located in strip malls." According to Fortune, it "recently completed its 26th straight year of same-store sales increases, a metric that strips out the effect of newly opened stores. In other words, the retailer’s new stores are not cannibalizing the more established ones."


    • The Associated Press reports that We the People: The Market Basket Effect, a documentary about the power struggle at the Market Basket grocery chain - where two sides of the Demoulas family fought for control, with one side portrayed as being on the side of consumers and employees, and the other on the side of taking money out of the company for their own enrichment - will be released in the Boston area on April 14.

    The film also will be available for on-demand home viewing.


    • C&S Wholesale Grocers announced that its wholly-owned subsidiary Hawaiian Housewares has signed an asset purchase agreement to acquire the operations of Edsung Foodservice Company, located in Honolulu.

    Terms of the deal were not disclosed. It is expected to close late next month.
    KC's View:

    Published on: March 28, 2016

    • Ingles Markets announced that Jim Lanning has been named CEO/President of the company. Lanning, an Ingles employee since 1975, has held the company's presidency since 2003.

    Robert P. Ingle II will remain as chairman, a post he has held since 2004.


    GeekWire reports that Nordstrom has hired Kumar Srinivasan, the "former general manager at Amazon Payments Merchant Solutions unit and more recently ... the co-founder and chief executive of software company Evocalize," to be its new chief technology officer. While Nordstrom has been scaling back some of its technology investments, it says that Srinivasan's role will be to shape its evolving technology agenda.
    KC's View:

    Published on: March 28, 2016

    Two giants in their very different cultural fields have passed away..

    • Jim Harrison, who sometimes seemed as if he emerged from a Hemingway novel, but whose fiction and non-fiction writing was far more lyrical and and sensibility was far more poetic as he wrote books such as "Legends of the Fall" and "Revenge" (both of which were turned into movies), has passed away at age 78. No cause of death has yet been announced.

    Harrison, a dedicated outdoorsman from Michigan, was a burly, one-eyed, bearded figure who, as pretty much all the obituaries noted, had a lusty approach to life, especially food and drink. He once wrote about a 37-course lunch that took 11 hours and included 19 wines, a summer during which he tried 38 varieties of Côtes du Rhône, and a sitting at which he consumed 144 oysters.

    It was just a week ago that, in an interview with the New York Times book review section, Harrison was asked about disappointing books, and what the last book was that he'd put down without finishing. "I don’t get very far into disappointing books before I abandon them," he responded. "Life is short and brutal."


    • Garry Shandling, who as one of the most influential comedians of his generation created two breakthrough television series - "It's Garry Shandling's Show" and "The Larry Sanders Show" - passed away last week of an apparent heart attack. He was 66.

    Shandling was a frequent guest host on "The Tonight Show Starring Johnny Carson," and turned down opportunities to host his own late night talk show, opting instead for the lacerating humor of "The Larry Sanders Show," which went behind the scenes of a fictional talk show. From all reports, Shandling also was a mentor to many young comedians, sharing time and energy and talent to help them through career minefields.

    It was just last season, when guesting on "Comedians in Cars Getting Coffee," that while discussing the death of Robin Williams with host Jerry Seinfeld, that Shandling mused that dying is pretty much the only time when people say, "But he was so young."
    KC's View:

    Published on: March 28, 2016

    Last week, in a story about Aldi's current expansion in Southern California's Inland Empire, MNB noted that Stater Bros. Executive Chairman Jack Brown "has urged Aldi to 'bring it on;' Brown seems to find some solace in the failure of Fresh & Easy - and Haggen - to make a dent in the marketplace. 'We’ve been here for 80 years. We’ll continue to be the No. 1 supermarket in the area'."

    I commented, in part:

    I would caution (Jack Brown) to be careful about underestimating Aldi, which is not Fresh & Easy and not Haggen. It is an aggressive, ambitious, high accomplished retailing machine that has done a lot of damage over the years to retailers that understated its potential impact.

    There's also a basic 2016 business truism that Brown makes the mistake of challenging. Just because you've been in business for 80 years is no guarantee that you'll be in business tomorrow.

    I hope that what he meant to say was that Stater Bros. has survived and thrived for 80 years by being able to meet new challenges, by having a nimble management structure that can adjust to change, and by having a customer-oriented business model that will fight for every customer dollar. Not only do I hope that this is what he meant to say, but that these things are true. Because if they're not - if Stater Bros. is bureaucratically structured, locked into legacy systems and processes, and built for the good of the business instead of the good of the customer - then they are in more trouble than they know.


    One MNB user responded:

    As for Stater Bros. vs Aldi ... Innovate or die.   Unfortunately, just visited a Stater Bros and felt shorted on experience, products and pricing.   Minimal acknowledgment of us as customer.   Won’t return.

    Within the same day, visited a Sprouts which was not only very good on all above….. the staff were thrilled to work there and told us how proud they were to represent the stores.   Hmmmm, maybe they are on to something.   Bricks and mortar have a competitive advantage if used right.


    MNB user Randy Evins wrote:

    Well said......I live in SoCal and love Staters. They have the best run grocery stores in SoCal. They are also VERY old school. Aisles are FULL and faced, perishables are fresh but not quite as good a quality as Costco. They don't know who I am and prescribe to the notion that loyalty is gained at the check stand only. They are anti technology and take great pride in under-spending on anything that is not a store. That policy/structure is about to be stressed.

    Aldi placed 4th in quality and service in a Supermarket News survey (right behind Publix, Wegmans and HEB). They are NOT Tesco or Haggen. In fact ask Tesco what they think about them in their core UK markets. The combination of Aldi and Lidl is ranking market share from them as we speak.

    Aldi offers price and quality....deadly in a SoCal grocery market that is dying for a good operator...


    And that's from someone who loves Stater Bros.




    I talked last week about a new startup called Screening Room, which challenges the traditional movie business model in which most movies are first shown in theaters and then, after a period of time, are available for at-home viewing. Now, that time has been shrinking in recent years as streaming services have gained traction, and in some cases, movies even can be seen at home before being released in theaters. But not big movies, not major studio releases.

    Screening Room would charge consumers $150 for a living-room device that can be used to rent mass-appeal movies for $50 apiece, for a 48 hour window) on the same day they arrive in theaters. It is controversial in Hollywood, but my argument is that it is up to studios and theaters to provide more compelling content at the multiplex, or they'll have nothing to complain about.

    The lesson, I wrote, should be learned by retailers. Want to get people to not use e-commerce? Create stores that are compelling, differentiated and worth leaving home for.

    One MNB user responded:

    Screening Room is yet another example of “bad technology” leading to the de-socialization of America. Not to mention one more piece of technology harming brick and mortar and eliminating low pay high school/college age jobs.

    It appears people won’t be happy until they can do everything without leaving the comfort of their home. Is it any wonder today’s communication (business and personal) is as poor as it is?


    I don't agree on one specific point.

    Technology does not harm bricks-and-mortar ... bricks-and-mortar harm themselves by not offering compelling competition.

    As for de-socialization ... Mrs. Content Guy and I went out to one movie this weekend, and watched another at home. Not sure one was a more social experience than the other. We also took walks, talked with friends and family, and had dinner with our kids every night...

    I think you paint with way too broad a brush.




    We hard an obit for Joe Garagiola last week, which prompted MNB user Howard Tobin to write:

    One of the times that Joe Garagolia guest hosted the Tonight Show included the only appearance on that show with both John Lennon and Paul McCartney.

    Wow.

    FYI...I tried to find the video online, but apparently it is among the tapes from Johnny Carson's early years on the show that NBC deliberately erased to save on videotape and storage space.

    Unbelievable.




    We had an evolving debate last week that was prompted by an MNB reader who wrote an appropriately snarky email noting that the late Andy Grove, the iconic Intel CEO, was in fact an immigrant to the US who changed the world ... and that such people ought to temper anti-immigrant attitudes in the US.

    There was some blowback on that, mostly noting that Grove was a legal immigrant, not an illegal immigrant, and that this makes all the difference. And there were suggestions that MNB was veering into inappropriate political territory.

    I commented, in part:

    I agree that there is a big difference between legal immigration and illegal immigration, just as there are big differences between how different people would deal with illegal immigrants. I do happen to think it is unfortunate when some folks describe illegal immigrants as being thieves or drug dealers or whatever ... a lot of them are anything but. And I think the current political climate actually lends itself to an anti-immigrant tone ... even legal immigrants. Where I think this could have a business impact, for example, is on legal immigrants who may be working in retail stores and who may be targeted by the less tolerant among us.

    Here's what I think I know. The subject of immigration is a highly complex one that deserves far more nuanced conversation and debate than we are getting in this country. Both sides of the political aisle are, for the most part, staking out positions and not budging, because they think that this is how elections are won. They may be right ... in which case, we're all screwed, because that certainly is not how you govern. And winning elections these days seems far more important that actually governing.

    If you think this does not have an impact on the conduct of business, I think you are mistaken.


    One MNB user wrote:

    I think the point (people) are making is that Grove came here to be an American. He assimilated. He didn’t rape when he got here. And I’m guessing he didn’t study bomb-making prior to his arrival.

    If you don’t think a non-nuanced view of illegal immigration can win an election, you have real eye-opener in store.


    Maybe.  On the other hand, when we start bragging about being non-nuanced in how we see the world, we'll be guilty of epistemic closure on a grand scale.

    One other thing. It seems to me that there are plenty of illegal immigrants who come to the US and never commit a rape, never build a bomb, and do the best they can to assimilate. And there are legal immigrants (and even people born in the US) who do commit rapes, do build bombs, and feel completely unassimilated.

    We have to figure out as a nation how to deal with both, and all the people who fall in between the two extremes.

    That's what's called nuance.

    From another reader:

    Seriously?  People are upset over this?  I took this solely as someone being sarcastic and probably anti-Trump.  Not for one instance did I believe this was someone actually writing you to complain about Mr. Grove being an immigrant from Hungary.

    The original correspondent was being snarky to make a point.

    And from another MNB reader:

    Maybe it’s just me……but I absorbed your printed comments from your reader regarding the passing of Andy Grove as being completely tongue-in-cheek and they made me smile.   Once again, you have proved to be a source of (I hope) civil discourse on a subject that is not limited strictly to the grocery business.  

    Even if we look at immigration policy strictly from an economic perspective, one thing is very clear:  there are too many jobs in the US that we would never fill with legal residents if we sent home all the current residents of this country who are considered to be here illegally.   There are millions of jobs here that existing residents refuse to fill which immigrants will happily take as a place to start.   We can debate for months the reasons why those jobs won’t be filled, but the fact remains that there are hard-working people elsewhere in the world who would risk their lives to get here and take those open positions as a way to establish a new home in a democratic society.    Without those indefatigable people, our country’s economy would not have had the ability to grow in the manner that it has since the end of World War II, making us the envy of every other nation in the world.

    The term “immigration reform” shouldn’t be referring to actions such as building a wall around our country.  Instead, it needs to refer to the work the government must to do to improve the process of screening immigrants and helping them enter our country at a measured pace.   Will the government make mistakes and allow someone to enter who shouldn’t be here?   Absolutely.   Do you make errors at your job?   I know I make errors every day….but I also attempt to minimize them, correct them, and learn from them to be better in the future.

    We need to allow our government to do the same if we don’t want our liberties restricted going forward in ways that the Founding Fathers could never have imagined.

    Compare and contrast our society to a more closed one such as Japan where they allow few immigrants…..the Japanese have had limited economic growth for years, they have a rapidly aging population with fewer and fewer young people to support and replace their retirees, and they are currently proving they can’t generate economic stimulus strictly through the actions of its central bank.    If you are old enough to remember the first transistor radio or first imported cars from Japan, you can recall the concerns that our politicians exhibited at the time that Japan’s postwar economic growth and innovation was going to lead them to surpass us as the world’s largest economy.   Clearly, that never came to pass.

    Unless you are a Native American, we are all immigrants or descendants of immigrants; we do not deserve to exhibit the hypocrisy of closing off or severely restricting future legal immigration opportunities for others.


    And from MNB reader Jesse Sowell:

    Kevin -- Your closing comments were terrific. I started to try to call out the points you made that I especially appreciated, but then realized that would be all of them.
     
    I read MNB every day because of the industry news and insight you provide. I look forward to reading it every day because of writing like this.

    Well said. Keep it up.


    Thanks.

    And, I got an email from the MNB reader who started this whole thing with his original email:

    I see I hit a nerve.
     
    It wasn’t hard.

    A ton of nonsense on this issue of course, and made worse this particular election cycle. I am just glad to have been able to contribute a moment of snarkiness.  Never underestimate the value some of us find in using you for outlet therapy and a form of primal screaming ... Anyway, thanks for the platform and the many issues you raise ... Never stop. You have created something special with MNB. I may never get over being envious, but then it is totally rooted in admiration.


    Well, I appreciate that. I have no intention of stopping ... in part because I really don't know how to do anything else.
    KC's View: