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: May 11, 2016

    by Kate McMahon

    I’m betting most parents have dodged a difficult question by responding, “Go ask your father (or mother).” Call it a dodge, a deflection, or just a decision to pass the buck.

    It is an option that today's retailers - faced with consumers demanding answers about divisive cultural issues - may not have.

    Just ask Target, which is at the epicenter of the seismic national debate over allowing transgender employees and customers to use a restroom or fitting room that corresponds with their gender identity.

    Or ask Lands' End, which got tripped up on cultural issues that weren't even mentioned when it featured in its advertising an interview with feminist icon Gloria Steinem.

    And now, ask Old Navy, which unwittingly set off a firestorm on Twitter last week with a perfectly delightful ad featuring an attractive interracial family. It prompted a bigoted backlash on social media, followed by an even stronger response to the racist vitriol with the hashtag #LoveWins, which went viral last year after the Supreme Court’s marriage equality ruling.

    Different scenarios and different issues, to be sure - but they all illustrate how retail has become a battleground for the nation’s culture wars, and why it is so important that businesses are ready for these thorny questions and the ramifications of their response.

    The transgender bathroom issue is dominating front pages and social media, fueled by a North Carolina law requiring people to use bathroom facilities consistent with their birth gender. Target is the biggest national retailer to publicly state its support for gender identity over birth gender as the determining factor. Other companies including Starbucks and Barnes & Noble have a similar policy.

    Target said its decision is based on inclusivity and respect. Conservative groups argue that Target’s policy threatens the public safety. There have been protests across the country and more than 1 million people have signed a boycott Target petition.

    In my view, Target has taken an important stand against discrimination. Is the boycott costing Target customers? Absolutely. Does the company think doing the right thing is worth taking the heat? I believe so, and support its stance.

    That said, I understand that the transgender bathroom issue is extraordinarily complicated.

    What is not so complicated, and is much easier to understand (and condemn), is the racist mindset behind the venomous initial reaction to the Old Navy ad, with hashtags such as #WhiteGenocide. I was heartened by the good-trumps-evil internet response, including a family photo posted by Navy pilot Jack McCain, the senator’s son, who is white, and his Air Force reservist wife, Renee Swift McCain, who is black. The backlash-begets-backlash scenario was reminiscent of the innocent 2013 Cheerios ad featuring an adorable and relatable interracial family, which Cheerios brought back for the 2014 Super Bowl.

    The reality is the American family is evolving and becoming increasingly diverse. The Pew Research Center found that 12% of newlyweds in 2013 married someone of a different race, a record high. Add in same-sex couples and the share of non-traditional families in the U.S. is even larger, and on the rise.

    Retailers, of course, must factor in socio-economic demographics and cultural attitudes when formulating policy and business plans, which will differ based on size and geographic location.

    But keep in mind that this only goes so far. A company's response in North Carolina also will be noted - and publicized - via both traditional and social media virtually everywhere. Which almost certainly is why Target made the decision that even though its response to the bathroom law in North Carolina might make it unpopular in certain circles, it needed to make a statement that it believed that was appropriate and relevant to a much larger circle.

    Target's bet was that a message of anti-discrimination - that bias based on sex, race, age, religion, disability, sexual preference or gender identity is illegal and morally wrong - would be the one that is most resonant and most relevant to the majority of its customers, and that this majority only would grow.

    Comments? As always, send them to me at .

    KC's View:

    Published on: May 11, 2016

    We report on a lot of studies here on MNB, but try to be conscious of the fact that for every study's results, there often is another study to contradict them.

    Sometimes it can be confusing.

    It seems to go without saying that some studies are more reliable than others, and that some scientists are not bought-and-paid-for. But let's be honest - one has to be careful not to only accept the findings of studies that reflect stuff we already believed, and it can be hard for people without scientific backgrounds to separate fact from fiction. Or what probably is fact from what almost certainly is fiction.

    And so it was a great pleasure on Sunday to watch John Oliver, on HBO's "Last Week Tonight," to train his highly skeptical eye and finely honed sense of humor on the subject of scientific studies (many of them having to do with food and drink, as it happens). Which we're linking to here.

    Now, as usual with "Last Week Tonight," a warning. The language can be pretty salty and the attitude provocative. You probably want to use headphones if you are in a cubicle, or at home if there are kids nearby.

    It is good stuff. And, as usual with John Oliver, an Eye-Opener.

    KC's View:

    Published on: May 11, 2016

    Walmart yesterday sued Visa Inc, charging that the credit/debit card company was illegally preventing it from requiring customers to use PIN-based cards rather than signature-based cards.

    According to the New York Times story, Walmart says that Visa's goal in requiring signatures is to get the higher fees that come when transactions are signed for. Fees are lower when customers use PINs.

    The Times writes that "The lawsuit is the latest development in the long-running debate over how to balance security and convenience in the checkout line with the new generation of chip-enabled cards. While consumers typically use a PIN when using their debit card at an ATM, some shoppers opt to sign for purchases made with a debit card when they are in a store.

    "Wal-Mart says it prefers PINs because they are more secure than signatures. Debit cards are the most frequently used form of payment at Wal-Mart, accounting for more than 70% of the dollar value of card payments, the retailer said in the lawsuit."

    Visa has not commented on the suit.
    KC's View:
    Walmart is making a clear pro-consumer statement here, and Visa - not surprisingly - seems to be only on the side of its own financial interests.

    My suggestion to Walmart - and every retailer - is that they all ought to post big signs in their stores informing customers why PIN usage saves them money and is more secure, and that the credit/debit card companies only want customers to sign for purchases because it makes them more money.

    This strikes me as a PR campaign that retailers cannot lose.

    Published on: May 11, 2016

    Kroger said yesterday that it will hold a nationwide hiring event on Saturday, May 14, with a plan to hire 14,000 full-time employees. Applicants can apply online and then show up at an Kroger store for an interview.

    “We have openings across the country for friendly, hard-working associates to join our team,” Tim Massa, Kroger’s group vice president of human resources and labor relations, said in a prepared statement. “We are looking for people who are passionate about making a difference for customers and communities—and want to do it in a fun, team environment with great benefits and advancement opportunities.”

    Kroger currently operates 2,778 grocery retail stores in 35 states.
    KC's View:
    The best part of this is that it is full-time employees being hired ... because while full-timers may cost more, they also have the strong potential for being more invested in the business and better at dealing with customers. At least, if they are well-trained and well-motivated ... which has to be the other piece of this.

    Published on: May 11, 2016

    The New York Times reports that Judge Emmet G. Sullivan of the Federal District Court for the District of Columbia ruled yesterday that the proposed $6.3 billion acquisition by Staples of rival Office Depot "would 'substantially impair' competition in the business of selling office supplies."

    The Federal Trade Commission (FTC) had sued to block the merger of the two companies, saying that it would result in too much power residing in the hands of one company, and higher prices for large corporations and institutions.

    The Times writes, "In the case of Staples and Office Depot, the two would have had about $37 billion in revenue and roughly 3,500 stores. In 1997, the F.T.C. blocked a previous attempt by the two companies to combine.

    "The companies had fought back in court, arguing that joining forces was necessary with much-larger competitors like Walmart and Amazon. Other antitrust regulators, including in Europe, signed off on the deal after the two companies agreed to sell off certain parts of their businesses.

    "In statements on Tuesday, both Staples and Office Depot said that they planned to move on from the failed merger. Under the terms of the deal, Staples will pay Office Depot a $250 million breakup fee."

    The Times goes on to say that the ruling handed the Obama administration another "huge victory" in its ongoing efforts to block "big deals they say create juggernauts that would unfairly dominate their industries."
    KC's View:
    Add Judge Sullivan's name to the list of people who seem never to have heard of the internet and clearly never have shopped on Amazon. Because this ruling is a crock ... and based on competitive rules that were drawn up decades ago, when people couldn't shop online.

    The rationale appears to be that because corporate and institutional processes make it harder to just go on Amazon and buy stuff, those processes cannot be changed. Which is another crock.

    Let's start the countdown clock now for when Office Depot ends up filing for bankruptcy protection.

    Published on: May 11, 2016

    HEB said yesterday that it is going to split its San Antonio grocery delivery business between two companies - Shipt and Instacart, and that it will launch there later this month "with plans to expand to Houston, Austin, Dallas and more markets this year."

    The services will deliver groceries from both HEB and its Central Market stores.

    According to the San Antonio Express-News, "Shipt’s coverage area will span downtown and most near-downtown neighborhoods, as well as nearly all of the North Side. Smith said the coverage is based on demand and will likely expand. Instacart will offer service to large swaths of the central North Side and the Northeast Side, but not in downtown or farther south."

    The Express-News notes that "the company has been expanding its online presence over the last few years — since November, it has made 50,000 products available on its website for shipment in Texas and to 48 other states and U.S. military bases worldwide."
    KC's View:
    I remain convinced that this is a short-term way for HEB to get into the delivery business, and that the company will continue to look for ways that it can supplant both outsourced options with something more proprietary. I'm not surprised that HEB would use both Instacart and Shipt - it gives it a lot more leverage with Instacart, which could've shopped its stores even without a formal agreement. And now it can learn from both models and figure out what the strengths and weaknesses are.

    Published on: May 11, 2016

    The Seattle Times reports that Amazon "has launched a self-serve marketplace for video that lets pretty much anybody upload content and make money off it. It’s where YouTube meets Kindle Direct Publishing, the tech giant’s self-publishing service for books."

    While it seems unlikely that Amazon will overtake YouTube in the short-term - or even the long-term - the story notes that the e-tailer likely is inspired by "YouTube and its endless buffet of content as a way to boost its own video library, a critical cog in the Prime membership money machine, with lots of new content it doesn’t have to produce or purchase."

    The Times writes that the new Amazon Video Direct offering "highlights the company’s knack for breaking down most forms of gatekeeping that have traditionally ruled cultural industries, from books to movies. Amazon Studios, its movie production arm, already invites wannabe screenwriters to submit scripts and concepts online. KDP, the self-publishing service, has unleashed countless independent authors, some of whom have been wildly successful."

    And the Wall Street Journal writes that "Amazon faces an uphill battle if it wants to create an able rival to Google’s YouTube, which has a decade-long head-start. More likely, Amazon aims to capture new users through the free video service and persuade them to buy Prime subscriptions, content for their devices or additional merchandise through its namesake site."
    KC's View:
    I love this. I've got a screenplay in my bottom drawer about forward buying, just-in-time deliveries and slotting allowances. It's a black comedy. Maybe I'll ship it off to Amazon...

    Published on: May 11, 2016

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • Dean Foods announced yesterday that it is in the process of acquiring the manufacturing and retail ice cream distribution assets of Friendly's Ice Cream for $155 million in cash. The company said that Friendly's Restaurants, a chain with over 260 locations in the U.S., will continue to be owned and operated by an affiliate of Sun Capital Partners.

    The Street reports that Target will open a 1,100 square foot Chobani cafe - operated by Chobani - at its new two-level, 45,000 square foot Tribeca store scheduled to open in New York City this fall. It will feature yogurt-based dishes and drinks as well as Mediterranean themed sandwiches and salads.

    Chobani already operates a stand-alone cafe in New York's SoHo neighborhood, and has plans to open additional cafes in Chicago, Los Angeles and San Francisco.

    • The New York Times reports that Anheuser-Busch InBev will replace the brand name "Budweiser" on cans of the beer with the word "America" between the end of May and Election Day in November.

    Ricardo Marques, a vice president at Budweiser, tells the Times that the move is designed to reflect a growing sense of national pride, and that this will be “probably the most American summer of our generation."

    I'm pretty sure that the general climate between now and Election Day will be such that changing a brand name to "America" would be better suited for a really strong soap. Or maybe Lysol. Though, come to think of it, I'm also pretty sure that many of us will be drinking heavily between now and November. Though it certainly is nice that a Belgian company wants to celebrate the good ol' USA ...
    KC's View:

    Published on: May 11, 2016

    • The Dallas Morning News reports that Kip Tindell, chairman/CEO of The Container Store, is giving up the CEO role, passing it on to Melissa Reiff, who has been president of the company since 2006 and COO since 2013.

    The Morning News writes that "Reiff joined The Container Store as vice president of sales and marketing in 1995. She’s a champion of the corporate culture that’s made The Container Store a regular over the past 15 years on Fortune magazine’s best places to work list. After The Container Store’s IPO, Reiff personally visited all of its stores to answer questions."
    KC's View:

    Published on: May 11, 2016

    ...will return.
    KC's View: