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    Published on: September 14, 2016

    by Kate McMahon

    I consider myself a most fortunate EpiPen holder, for two reasons. First, I have never had to use the device since my initial life-threatening anaphylactic reaction to shellfish decades ago. Unlike nuts, dairy, eggs, wheat and bees, shellfish is easy to avoid.

    Second, unlike so many of the estimated 15 million American children and adults who face that threat at every birthday party, lunch table or walk in the park, my health insurance actually covers the cost of my EpiPen with a co-pay of $57.

    Which is why I am outraged by what is known on social media as #EpiGate, the unconscionable 400% increase in the cost of an EpiPen sold by pharmaceutical giant Mylan. When Mylan acquired the product in 2007, the list price for a twin-pack of EpiPens was $100. That price tag had skyrocketed to more than $600 when parents of allergic kids unleashed a firestorm on Facebook and Twitter last month.

    For the uninitiated, an EpiPen is a plastic “pen-like” auto-injector that with a jab to the thigh immediately administers a dose of the drug epinephrine, which counteracts the potentially fatal allergic reaction known as anaphylaxis.

    For an excellent, one-click understanding of life-threatening food allergies and the role of the EpiPen, I would encourage you to read the recent New York Times piece by 24-year-old Ali Jaffe titled “How 12 EpiPens Saved My Life.” You can read it here.

    My daughters went to school with Ali and her three siblings, all great kids and all with serious food allergies. Fourth-grade teacher Maria Sette had three of the Jaffe siblings in her classroom, and was schooled in EpiPen protocol when her infant son Michael developed severe food allergies.

    When she went to CVS to refill Michael’s EpiPen before he started kindergarten this year, she found that the cost was $637 with insurance, down to $337 with a coupon, Maria posted her outrage on Facebook. She was in good company, as thousands of other parents and consumers lit up social media condemning Mylan for price gouging. The EpiPen price debacle was soon front-page news and the subject of governmental scrutiny.

    Mylan responded by offering its $300 coupon to qualified consumers and promising that a $300 generic version of the EpiPen would be available soon. Mylan CEO Heather Bresch faced the media and blamed the nation’s health care “crisis” for the escalated price of the product.

    The trouble with that defense is that Bresch’s annual compensation has also increased from $2.5 million in 2007 to nearly $19 million in 2015, earning her the title of America’s “new pharmaceutical villain.” In fact, the Wall Street Journal this morning reports that Mylan "had the second-highest executive compensation among all US drug and biotech firms over the past five years, paying its top five managers a total of nearly $300 million ... The big pay packages are unusual because of Mylan NV’s relatively small size in the U.S. drug industry, where it is No. 11 by revenue and No. 16 by market capitalization."

    In an interview with the New York Times, the jet-setting, 47--year-old  Bresch said her company struck a balance around the globe to “do good and do well” but remained focused on the bottom line. “I am running a business. I am a for-profit business. I am not hiding from that.”

    No, she's not. But she really can't, because social media has allowed outraged consumers to train an unflattering spotlight on her company, policies and attitudes. Certainly, one of a CEO's primary responsibilities is to generate profits for a company's shareholders. However, it also can be argued that a CEO's broader responsibility is to see the bigger picture; more and more that picture includes things like social responsibility.

    I think there are times when CEOs need to ask themselves if, under certain circumstances, there is such a thing as too much profit. Particularly when there are families struggling and making sacrifices just to make sure they can afford a life-saving EpiPen at home and in a lunch sack.

    Ironically, the question is posed in a new parody/web browser game called EpiPen Tycoon. The introductory page instructs: “You are Heather Bresch … Your shareholders want results. Your customers want to not die of anaphylactic shock. It’s up to you to jack the price as high as you can.” The game forces players to engage in a balancing act. But the parents and children affected by the EpiPen controversy are not playing a game.

    Perhaps Bresch and CEOs of her ilk (like, say, Martin Shkreli of Turing), ought to turn to another book for guidance. You know, the one that contains the following passage: “For what shall it profit a man, if he gain the whole world, and suffer the loss of his soul?”

    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: September 14, 2016

    by Kevin Coupe

    The Washington Post the other day had a story about a new technology that allows employee badges to measure virtually every aspect of the wearer's performance - from how long they sit, how much they fidget, how long they spend away from their desks, and who they talk to.

    According to the story, "A Boston company has taken technology developed at MIT and turned it into special badges that hang around your neck on a lanyard. Each has two microphones doing real-time voice analysis, and each comes with sensors that follow where you are in the office, with motion detectors to record how much you move. The beacons tracking your movements are omitted from bathroom locations, to give you some privacy."

    The company, Humanyze, says that the system "doesn’t record the content of what people say, just how they say it. And the boss doesn’t get to look at individuals’ personal data. It is also up to the employee to decide whether they want to participate."

    Company CEO Ben Waber says that "the company is careful not to divulge personal data to the employer, preferring instead to stick with broad analytics. Employees get to see their own data, but managers do not get to identify the employee with the specific data."

    Indeed, he describes it as "exactly like a Fitbit for your career." In other words, an Eye-Opener.

    But...

    It also may be seen by some employees as a little too "Big Brother" for their tastes. I know I'd feel that way ... and I'd worry that while the intention might not be to link specific behavior to specific employees, the temptation might be a little too great under certain circumstances.

    The Fitbit metaphor is a powerful one. I live in a household full of people who spend all their time tracking footsteps and stairs and burned calories, and so I know this can be a strong motivator.

    I just think that while it is terrific to have technology that can improve productivity, it is equally important to create a culture that has faith in the people who work there. Most people respond to being trusted and empowered ... and I think that companies ignore this at their own peril.
    KC's View:

    Published on: September 14, 2016

    The Food Marketing Institute (FMI), National Grocers Association (NGA) and National Association of Convenience Stores (NACS) have all come out in opposition to what is being called the "CHOICE Act" that has been brought up for consideration by Congressman Jeb Hensarling (R-Texas), who is chairman of the House of Representatives Financial Services Committee.

    FMI yesterday said that the legislation would actually eliminate choice for businesses and repeal debit card reforms that it said "have fostered  competition in the marketplace for the past five years."

    Those reforms were included in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which "required debit networks to actually compete for both bank and merchant routing business, breaking up monopolies" and "finally brought stability, transparency and even competition into the debit routing market.  Repealing the successful debit reforms would remove competition and increase merchants’ operating costs; with a 1.5% industry profit margin, any increases will have a direct impact on prices for consumers. The largest card networks should compete with each other and regional players to bring the best value and efficiency to customers, just like Main Street retailers do every day."

    Greg Ferrara , NGA's senior VP of Government Relations and Public Affairs, released this statement: “Since its passage six years ago, the Durbin Amendment has brought competition and transparency into a payment system that has historically been void of it. Repealing these reforms would have negative impacts on the independent supermarket industry and the consumers it serves. We need to ensure more competition within the debit market – not remove it.

    “NGA is disappointed to see members of the House Financial Services Committee side with Wall Street banks over Main Street grocers and merchants.  Repeal of these important reforms is simply another gift to the nation’s biggest banks and card networks.  NGA and our members are committed to defeating this legislation so long as it continues to include repeal of the Durbin reforms.”

    And Lyle Beckwith, NACS' senior vice president of government relations, said, “NACS is deeply disappointed at the House Financial Services Committee’s vote to report the controversial and misnamed ‘Financial Choice Act’—which includes repeal of the highly effective, pro-competition and pro-consumer debit swipe fee reform—but given the bipartisan opposition that arose even as the bill was rammed through committee, repeal efforts should not move forward."

    Jennifer Hatcher, FMI's chief public policy officer & senior vice president, government relations, added: "H.R. 5983 would be more appropriately named the ‘No-Choice’ act as it eliminates competition in the debit routing market and essentially ensures a return to a monopoly for one player."
    KC's View:
    I was curious, so I just did a quick online check, and found that Hensarling gets political contributions from the financial services industry ... which tells you everything you need to know about the political process and the clout exercised by banks. This doesn't make him unique, by the way - every politician gets money from special interests, and those interests make sure they spend money on the lawmakers who regulate their businesses.

    Best government money can buy.

    How about legislation that prevents lawmakers from taking any money from any organization, company or person over which they have any sort of oversight or regulatory responsibility?

    Published on: September 14, 2016

    The San Diego Union-Tribune reports that Target is testing a new "Cartwheel Perks" customer loyalty program in select markets - San Diego, Denver, Houston and St. Louis - that rewards shoppers with 10 points for every dollar spent.

    The story notes that the program "is part of the retailer’s 3-year-old Cartwheel mobile app," which "lets shoppers redeem coupon-like discounts with a single scan ... Downloaded more than 27 million times, Cartwheel is a deals-centric app that offers people hundreds of digital coupons that can be redeemed with a single mobile barcode scan at the register."

    The Union-Tribune writes that "in a recently updated version of the app, users in test markets will find a Perks page that provides an overview of the new points-based program and lets them choose from different rewards — say a pair of sunglasses, workout gear or laundry detergent — when they accrue 5,000 points ... Though Target did not disclose its plan for rolling out Perks to other areas, the test represents a noticeable shift for Target, which has never offered a points-based rewards program outside of a small test in Raleigh-Durham. There, the company trialled a separate mobile application called Red Perks, but those users will eventually be transitioned to Cartwheel Perks."

    For the moment, the program is only available to in-store shoppers, and not to online customers.
    KC's View:
    I think that if consumers see this program as being relevant and convenient, they'll use it ... but I also think it is counter-intuitive not to have it linked to online shopping behavior.

    I believe in loyalty programs, mostly because it allows retailers to a) identify their most valuable and loyal shoppers, and b) demonstrate loyalty to those consumers. That's key ... loyalty programs aren't just about bribing shoppers already spending a lot of money with you, but also finding ways to prove to those shoppers that you are loyal to them.

    Published on: September 14, 2016

    The National Association of Convenience Stores (NACS) is out with a survey saying that "despite a 10-cent increase in gas prices over the past month, US consumer optimism about the overall state of the U.S. economy remained stable ... Even though many customers noticed the gas price increases, their economic mood remained largely unchanged, increasing one percentage point to 45% optimistic. There were strong regional variations in the latest survey results, with consumers in the West much more likely to be optimistic (49%) compared to consumers in the Northeast (40%). Consumers in the Northeast also were the most likely to say that gas prices will increase over the next 30 days (51% in the Northeast vs. 45% in the rest of the country)."

    The survey also revealed that "for the first time since the monthly surveys were launched in January 2013, younger consumers—those ages 18-34—are the least optimistic age group, with 42% expressing optimism about the economy. Also, women have been generally less optimistic about the economy than men, but were slightly more optimistic in September (45% vs. 44%)."
    KC's View:

    Published on: September 14, 2016

    CNN reports that Walmart has obtained a patent from the US government for a system of self-driving shopping carts.

    The story explains the concept this way:

    "According to the patent request, the carts will be equipped with detachable motors that have sensors and video cameras. Customers will be able to request a cart using a “user interface device” — potentially a smartphone — and the roaming motors will be able to fetch a cart and bring it to a customer.

    "And employees who are usually in charge of rounding up abandoned carts may be able to abandon that task. The system will, in theory, be able to identify an unattended shopping cart in a store or parking lot and return it to a docking station, according to the filing.

    "The system may help the stores manage inventory. One portion of the filing describes a scenario in which the system receives a request for an item, searches an inventory database, then sends the motorized unit to a store shelf to ensure the product is there."
    KC's View:
    As much as I like this idea in theory, it is sort of entertaining to imagine the chaos as self-driving carts careen through store aisles and parking lots. I hope Walmart is current on its insurance premiums.

    On the other hand, let's be fair. If it is possible to imagine delivery drones, why not self-driving shopping carts?

    Published on: September 14, 2016

    • The Omaha World Herald reports that Google Express has launched in the Nebraska markets of Omaha, Lincoln and Grand Island, allowing consumers there to purchase from 17 different merchants -  including Whole Foods, Walgreens and Petco - and have their orders delivered.

    The story says that "members pay a $95 annual fee and receive free delivery if they meet specific requirements, such as a minimum purchase before taxes or fees ... Google Express already operates in parts of Iowa, Kansas and Arizona. It’s being extended to include portions of Nebraska, Missouri, Colorado, South Dakota, North Dakota, Oklahoma, Texas, Michigan, Ohio and Arkansas."

    The World Herald notes that the service competes with the click-and-collect options offered by retailers such as Hy-Vee, Walmart and Baker’s.
    KC's View:

    Published on: September 14, 2016

    • The Minneapolis / St. Paul Business Journal reports that while Target continues to try to improve its grocery offering, believing that this is key to sustained growth and relevance, there is at least some belief in the marketplace that Target will continue to lose market share to Walmart, which continues to make its own improvements.

    The story says that "Minneapolis-based Target has struggled with customer traffic all year, especially in the sort of "fill-in trips" that customers make to buy milk or other consumables. Target has recently revamped its grocery staffing and is working on a redesigned concept for its grocery departments, but that rollout could take time.
    Meanwhile, Wal-Mart has grown more aggressive on pricing and stepped up features like online pickup.


    • Weis Markets yesterday announced its plans to convert 38 Food Lion supermarket locations that it acquired to its own banner, saying that it expects the process to be completed by the end of October, along with the hiring of some 2,000 Food Lion employees to staff the stores. Weis said it plans "to close and reopen each location quickly and efficiently to ensure that customers are faced with little inconvenience. This process is expected to take less than a week for each location."

    "Once the conversions are completed over the next two months, we will have nearly doubled our Maryland store count and expanded into Virginia and Delaware," said Kurt Schertle, Weis Markets' COO. "Our goal is to build on our advantages as a locally focused retailer that offers a strong combination of quality, value and service. As part of this commitment, we plan to expand variety in every department."

    Between this acquisition and one earlier this year of five Mars Super Markets in Baltimore County, Weis Markets now has increased the number of its operating stores by more than 25 percent and will operate 204 stores in seven states: Pennsylvania, Maryland, Virginia, New York, New Jersey, Delaware and West Virginia.


    • Associated Wholesale Grocers, Inc. (AWG) and Affiliated Foods Midwest Cooperative, Inc. (AFM) announced that they had reached agreement on how to combine the two cooperatives’ distribution businesses, having received "near unanimous approval from the over 400 grocery store member- owners of AFM" who cast votes "at their annual shareholders meeting over the weekend in Omaha, NE."

    Following unification, the companies say, "the expanded AWG will provide products and services to over 3,500 independently owned member stores located in 35 states from nine full-line wholesale divisions making it the nation's largest cooperative food wholesaler. In addition to its' cooperative wholesale operations and related services, the company operates subsidiary companies which provide wholesale supply of health and beauty care, general merchandise, pharmaceutical supplies, and specialty, natural, organic and international foods, together with certain real estate and supermarket development services, retail accounting, digital marketing services, and military commissary supply. Following the unification, AWG will have annualized consolidated sales of approximately $10 billion.
    KC's View:

    Published on: September 14, 2016

    • The Phoenix Business Journal reports that Fox Restaurant Concepts, which owns concepts such as Flower Child and Zinburger, has hired Christine Barone, former senior vice president of food, evenings and licensed stores with Starbucks, to be CEO of its True Food Kitchen, which it plans to spin off into a standalone business.

    True Food Kitchen is described as being "inspired by the principles of Dr. Andrew Weil’s anti-inflammatory food pyramid."
    KC's View:

    Published on: September 14, 2016

    Earlier this week, MNB took note of a Washington Times story saying that an Albertsons bakery in Louisiana got a lot of attention on social media when it refused to inscribe a birthday cake with the words, "Trump 2016." After the customer drew attention to the incident on social media, local TV stations picked up the story, and then it went national ... as illustrated by the Washington Times piece.

    I commented:

    This stuff just makes me nuts. You're a baker. Bake the freakin' cake, and write whatever the customer wants on top of the cake, assuming it isn't profane or vulgar. This goes for gay weddings and presidential endorsements. Writing something on top of a cake does not constitute a personal endorsement.

    MNB reader Jim Huey had a thought about this:

    Kevin, I’m curious if you have ever refused an advertiser to your site? It is that baker's constitutional right to deny a customer. The customer’s rights have not been infringed upon. In fact, if I use the knowledge I have gained from reading your blog, that customer should find a baker who will do it, or start her/his own bakery and develop a niche catering to issues other bakers don’t want to. I don’t understand why you don’t take the stance “Why doesn’t the customer just go to another baker and not make a big deal out of it?”

    A fair point.

    I would suggest that in this case, at least, there does not appear to be a corporate policy against certain kinds of cake inscriptions. This was just one baker - an Albertsons employee - making what strikes me as a kind of random decision.

    You are right that the customer has the right to and probably ought to go patronize another baker. My larger point is that when it comes to things like cake inscriptions, the fact that a baker writes something does not imply any sort of personal endorsement, and that maybe they are becoming bigger deals than they need to.

    As for MNB ... you are right that I've turned down potential advertisers. Like tobacco companies. I think I'd justify that by suggesting that the personal nature of the site is that carrying advertisements from companies like that would suggest that I'm endorsing them ... when in fact, I abhor them.

    That said, I've been lucky. The companies that want to sponsor MNB - and let me take this opportunity to point out that this means that they make it possible for people to get MNB for free - have always been companies with philosophies and strategies consistent with our approach. I think that's because they realize that MNB's readers are interesting, interested, smart, innovative, curious and a little bit irreverent about the world. In other words, the most important readers to reach.




    On another subject - the racial stereotyping of residents in poor neighborhoods and how they behave - one MNB reader wrote:

    I have often had conversations with our (now) adult sons about the importance of setting expectations when working with people in their respective careers.   This discussion in your blog is just another example of how a retailer can set expectations for its customers simply by maintaining high standards.  
     
    Early in my retailing career, I spent four years working in a conventional supermarket (for a large Midwestern retailer) in a low-income neighborhood.   I worked with a store director at that time who would not tolerate allowing the store’s standards to slip below the standards of any other store in the company.  We executed the fundamentals very well by making sure we were well-stocked, clean, and friendly 24 hours a day.   There were allowances in our operation that had to be made such as keeping a uniformed off-duty police officer on staff nightly, hiring extra plainclothes security help, or having a “greeter” walking the aisles daily, but the locals knew that we wouldn’t tolerate theft or inappropriate behavior.   Most of all, we were able to hire employees who treated our customers with respect, regardless of their socio-economic status.  
     
    Yes, I spent mornings helping to pick up dirty diapers and empty motor oil bottles in the parking lot, along with chasing down shoplifters or stopping someone from trying to pass a bad check…….but I believe that our store became a point of pride in the neighborhood because it was as well-run as any other store in any other area of town.   The law enforcement folks (whom we got to know well over the years) told us that the “bad guys” in the area made a point to avoid our store because they knew the odds of getting caught were higher and we always prosecuted them, in addition to banning them from returning to the store at any point in the future.
    KC's View: