business news in context, analysis with attitude

Published on: June 2, 2016

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy.

There are times that I get accused of being too much in love with e-commerce, especially with the "evil" Amazon, and of being entirely too accepting of the idea that robots may be able to replace humans in many jobs.

I plead guilty to all of the above ... with the qualification that I don't think e-commerce is by any means evil. I like to say that I'm not anti-store, but that I am pro-relevance ... and bricks-and-mortar retailers that don't find ways to compete with e-commerce companies in the end only have themselves to blame. As for robots ... it is absolutely true that I accept the notion that someday, maybe soon, robots will be able to do the jobs of many people ... again this isn't a matter of right or wrong. It just is ... and people who want to be relevant and a culture that wants people to be relevant have to find ways to make it so.

Relevance, like excellence and exceptionalism, doesn't just happen every day, automatically. You have to earn it.

I've been thinking about this because of a bricks-and-mortar business in my town that recently shut down, and has left me betwixt and between about what to do next. It was my dry cleaners, an establishment that I've used for more than 30 years, through two owners. It isn't like I have a lot of use for dry cleaners, though I must confess I have a weakness for having my shirts laundered and pressed ... I wear jeans and t-shirts about 99 percent of the time, so on those occasions when I do wear a nicer shirt, I like to make sure it is up to snuff. But in the days before I adopted this approach to dress, I did wears suits and ties, and my dry cleaners always took good care of me.

In the end, though, a dry cleaners is a dry cleaners, and they're not all that different. But what made mine different was John ... the fellow who worked behind the counter for most of the past two decades, who knew me and my kids, who knew what we liked and what we needed so we didn't even have to ask. John knew everything that was going on in town and was always good for a spot of local gossip or some arcane bit of knowledge that he'd picked up over the years.

Last week, just before the store shut down, several of us were inside picking up our final orders, and we agreed that John was like a great bartender, and that we weren't quite sure what we'd do without him, even though we're all sure we'll find another dry cleaners. (My argument would be that every other dry cleaners in town should have offered John a job, if only because he'd bring the majority of his customers with him.)

John did what no robot could do ... he created relationships that mattered. He couldn't be replaced by e-commerce, because he was a differential advantage. And he was empowered to do so, because they knew that for us customers, it was John we were coming to see. (On Thursdays, John's day off, they'd put some other guy at the desk, and I made it a point never to go in. He'd get things wrong, and you couldn't talk to him, so what was the point?)

Of course, in the end, it didn't matter because this location was shut down last week. Based on what I know of the situation, it isn't that this store wasn't profitable ... in fact, it was the only profitable location in the entire company, which may have been made it worth closing. (Sort of like how A&P sold its profitable Canada division.)

I think the lesson stands, though. People can make a difference. But you have to hire the right people, empower them, invest in them, and celebrate their success so that they know how important to the business they are. It can't just be words, because if that's the case, the people won't really matter, and customers will go online or use a robot and the business will be left trying to figure out what went wrong and why the evils of technology ruined their business.

They'll only have themselves to blame.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: June 2, 2016

by Kevin Coupe

The Washington Post has a story about how, even in an economy that seems to improve only in fits and starts, one biotech company is going above and beyond to attract candidates.

Nick DeMarco, who runs a company called Practichem, "has 10 full-time employees and is trying to double that number with new hires." To get them , he is promising to lease new Teslas for his employees - when the back-ordered luxury cars become available. He says that he'd rather reward current and new employees than spend money on headhunters, and he's counting on the publicity the Tesla program has gotten to bring in resumes over the transom.

(A note here to younger MNB readers. I realize that the phrase "over the transom" has no meaning to you. A transom generally is defined as a beam that would be between a business's front door and a window that would open over it ... even when a business was closed, the transom window often would be open ... these were pre-air conditioning days. And so, people could deliver unsolicited items to businesses by sending them over the transom. Consider this a public service message, albeit one that clearly delineates how old I am. Sigh...)

The Post writes: "DeMarco's Teslas may be particularly flashy. But companies have been increasingly thinking beyond the usual buffet of benefits as they try to hire and retain workers with in-demand skills amid a tighter labor market. Companies like Fidelity and PwC have publicized the student loan repayment perks they now offer. Firms such Netflix, IBM and KKR have touted family-friendly benefits such as extended parental leave, free shipping for employees' breast milk or paid travel expenses for new mothers' nannies. Boxed Wholesale, an e-commerce company with 122 employees that sells bulk goods, sent out a news release last week announcing that it will help pay for all employees' weddings after the CEO learned about one of his employee's financial needs."

I don't think that crazy benefits will become the norm for all companies, but I do think it is worth recognizing that the best people are going to be looking for employers willing to make an investment in them. Sometimes it'll be a Tesla, sometimes just a decent wage.

It is all about investment - about companies that invest in their employees, knowing that this will encourage those people to feel connected to and invested in the business.

It is an Eye-Opener.

Published on: June 2, 2016

The Wall Street Journal reports that Bud Light came down firmly on the side of same sex marriage this week with an advertisement that showed Amy Schumer and Seth Rogen attending the wedding of two men, and Rogen saying, “Bud Light proudly supports everyone’s right to marry whoever they want.”

According to the story, "The brand is rolling out the ad now to coincide with Lesbian, Gay, Bisexual and Transgender Pride Month. It also comes a year after the U.S. Supreme Court’s landmark decision guaranteeing marriage equality in all 50 states." And, the ad - seen on broadcast television one night only, but available forever online - is seen as "the latest in a series of marketing moves designed to stem declining sales at Anheuser-Busch InBev NV ... the world’s largest brewer has decided it needs to be bold to reverse flagging sales of Bud Light and Budweiser. It has lost 5.2 percentage points of market share in the U.S. since 2008, falling to a 43.6% share, according to industry tracker Beer Marketer’s Insights."

Published on: June 2, 2016

The Wall Street Journal reports that the US Food and Drug Administration (FDA) yesterday "issued long-awaited proposed guidelines targeting the packaged food and restaurant meals that contain the bulk of American’s daily sodium intake," a voluntary approach that is part of the Obama administration's ongoing effort "to push the food industry toward reducing the amount of ingredients such as sugar and some fats in an effort to improve consumer health and reduce medical costs."

The story says that "the FDA wants to cut individual daily salt intake to 2,300 milligrams over the next decade from a current average of about 3,400 milligrams. It is targeting 150 categories of food, including soups, deli meats, bakery products, snacks and pizza, and officials said consumers have struggled to reduce their intake because most of it is added before it reaches the table ... The voluntary salt targets are to be phased-in. The rules as currently proposed give manufacturers two years to begin cutting sodium levels in products, and up to 10 years to make further cuts. The longer time period is intended to recognize the time it takes to develop new foods products, the FDA said."

According to the Journal, "The Grocery Manufacturers Association, a trade group, estimated that it would take six to 18 months and cost $500,000 to $700,000 to reformulate a product with less salt to meet the guidelines, assuming alternatives were available."

Meanwhile, in a related story, the Gothamist reports that a New York State appeals court has lifted an injunction that prevented the New York City Board of Health from enforcing a sodium labeling law.

The story says that beginning next Monday, "any chain restaurant in New York City that operates 15 or more locations in the United States is subject to the law, which requires them to mark dishes that exceed the Board's recommendation for daily sodium intake with an icon of a salt shaker inside a triangular warning sign."

Published on: June 2, 2016

The Wall Street Journal this morning reports that unsecured creditors have filed a lawsuit against Ron Burkle, owner of the Yucaipa Cos. private equity group, charging him with plundering Fresh & Easy Neighborhood Markets as he took the company into bankruptcy.

Fresh & Easy, which originally was an effort by the UK's Tesco to expand into the western US, went into bankruptcy for the second time last year, "wiping out thousands of jobs and leaving hundreds of millions of dollars in debts unpaid." After losing more than $2 billion, Fresh & Easy filed for bankruptcy protection in 2013, and Burkle agreed to take the company off Tesco's hands to see if he could make enough changes to rescue its investment.

The Journal writes that "Creditors want a court order to stop Mr. Burkle and associated entities from allegedly plundering 19 stores that Fresh & Easy creditors say rightfully belong to them. Earlier this year, court papers revealed Fresh & Easy creditors have been demanding information from Yucaipa about the alleged transfer of the stores—involving real estate worth at least $40 million, creditors say—from Fresh & Easy to a Yucaipa affiliate."

A lawyer for Burkle tells the Journal that the allegations are baseless: “It is routine in bankruptcy cases for creditors committees to pursue litigation against parties who are perceived to have deep pockets, regardless of merit."

Published on: June 2, 2016

The Seattle Times reports that Amazon has filed three different cases with the American Arbitration Association that charge third-party sellers in its Marketplace with "creating or paying for fake reviews of their products. A significant percentage of the reviews for these merchants’ products, Amazon says in the filing, were from so-called 'sock puppets,' accounts of made-up people created to post gushing comments."

The story says that "Amazon asks the arbitrator to ban these merchants from using the Amazon website, as well as set aside the profits obtained illegally with the fake reviews in a trust with Amazon as a beneficiary. It also wants damages and for the merchants to pay legal costs."

This is just the latest move by Amazon to protect the integrity of its user reviews; it also has been going after the companies that advertise their ability to create false reviews on Amazon.

Published on: June 2, 2016

Texas Monthly has a terrific piece about the ongoing and intensifying battle in Texas between HEB and Walmart, which is getting even more complicated because of heightened competition from other players. Lots of history, lots of play-by-play and color commentary, and definitely worth reading here.

Published on: June 2, 2016

• Fortune reports that Walmart plans to bring back the smiley-face symbol that used be ubiquitous in its advertising about low prices. ".First introduced as a sticker by Walmart in 1990," the story says, "the Smiley face was once meant to signify price cuts, or 'rollbacks' in Walmart-speak. The revived incarnation is now intended to represent any low prices at the retailer."


• Walmart this week said it will host 200 training academies around the country, designed to offer employees a two-week course that will raise their customer service skill levels. The academies are scheduled to begin operating next June.


• The Wall Street Journal has a story about how Walmart-owned Asda in the UK continues to lose market share, apparently because the company "has been prioritizing profit over sales. Asda has talked about cutting prices, but this seems more marketing than actual strategy." As a result, Asda hasn't just lost market share to the likes of discounters Aldi and Lidl, but even dropped from second place to third place in terms of total UK market share.

Published on: June 2, 2016

• Ahold-owned online grocer Peapod said this week that it has partnered with UK-based Whisk.com, described as "a personalized cookbook and digital shopping platform, to seamlessly turn digital recipes into groceries delivered to customers. The partnership makes it simple for home chefs to select great recipes from around the web and then send all ingredients directly into Peapod’s online shopping cart."

Peapod is the first US company to work with Whisk.

Published on: June 2, 2016

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

• The Chicago Tribune reports that the US Department of Justice is close to approving a $107 billion acquisition by Anheuser-Busch InBev of SABMiller, which would complete "the industry's biggest merger ever and redraw control of the global beer market." An approval would be contingent on the combined company accepting certain limits, including restrictions on how many distributorships it could own, which is seen as a way of protecting smaller companies and craft brewers.

I admit that I don't get it. The DOJ opposes a merger of Staples and Office Depot, two troubled companies that appear to be getting weaker by the day, and it supports the merger of two enormous beer companies that will only make them stronger? Clearly, this approach is specifically designed to prove to me how little I know and understand about antitrust law.


• German discounter Aldi announced this week the introduction of "its first full line of baby products, Little Journey, is set to hit all stores in August. From newborn diapers to training pants, cleansing wipes to gentle baby wash, formula to organic pouches, Little Journey will feature nearly 50 high-quality, affordably priced everyday essentials parents and little ones need."

Published on: June 2, 2016

On Tuesday, I wrote about a wonderful new memoir by iconic Irish retailer Feargal Quinn, "Quinntessential Feargal," which is now available on Amazon.com.

MNB reader Beatrice Orlandini sent me the following email:

Thanks for the tip. I'll buy the book straight away.

I, too, have the privilege of calling Feargal by his name.

A long time friend of my great teacher and mentor Mike O'Connor and of my father's, I have been greeted by him many times in his stores, in his offices.

He even bagged my shopping a couple of times, in that very merry fashion of his.

From 1995 to 2000 I can't remember how many times I took Italian retailers to visit his stores. Up to a point that a store manager once told me I was becoming furniture, so used he was to see me come.

There was always something incredible to learn. And I saw many of his lessons applied in stores the world over.

His first book, "Crowning the Customer," is timeless.

I had the privilege of translating its Italian edition and still have a few copies left.

Every time I give one away, the lucky reader marvels at its contents and cannot believe that it dates back to 1990...

MNB reader Janis Raye chimed in:

I have to second what you say about Feargal Quinn — he is a prince of a person. Besides being an absolutely brilliant businessperson, he is a wonderful human being, and my impression has always been that the human being part is far more important to him than the businessperson. Feargal is one of those very few people who pays complete attention to the person he is with — whether powerful, a customer, or (like my son many years ago) seven years old and asking questions for a school project while visiting Ireland.