business news in context, analysis with attitude

Published on: October 7, 2016

by Kevin Coupe

Interesting piece in the New York Times the other day about the independent bookstore business, noting that a decade ago, it was viewed as being on an inevitable and irreversible decline, "crushed" in price and selection by Amazon and even by Barnes & Noble, which had its own problems.

"But after years of losses," the Times writes, "they are emerging from the decimation, with the number of independent bookstores rising 21 percent from 2010 to 2015." And, "in a twist of fate, it is the internet - the very thing that was supposed to wipe them out - that is helping these small stores ... Some bookstores are investing in infrastructure, such as in-shop e-book printers and new back-end systems, while others are embracing social media as an inexpensive way to connect with new customers." Some also are investing in book-of-the-month club programs that they market over the internet to existing and potential customers.

The Times writes that "the online model is attracting customers even to unlikely places, like The Last Bookstore, which opened in 2009 in what was then a skid row location in downtown Los Angeles. Now the area is gentrifying, and more people are finding the store and posting photos of its unusual interior. The 22,000-square-foot shop is inside a former bank building and has quirky décor. Its science fiction collection, for example, is in an old vault.

"The Last Bookstore now has 24,000 followers on Instagram. Staff picks posted there frequently become the store’s best sellers."

Yesterday's FaceTime focused on the last Howard Johnson's, a place where, I concluded, the owners aren't even trying. This Times story shows what happens when people think like entrepreneurs, that use every tool at their disposal to be competitive.

It is an EyeOpener.

Published on: October 7, 2016

Bloomberg reports that Walmart has rejected a proposal by the US Department of Justice and the Securities and Exchange Commission that it pay $600 million to resolve investigations "into whether it bribed government officials in markets from Mexico to India and China ... Such a settlement would rank among the largest in four decades under a U.S. law against bribing foreign officials to obtain business."

Walmart already has spent close to $800 million on attorneys' fees and an internal investigation into the bribery issue.

The story says that with Walmart's rejection of the government proposal, "prosecutors have gone back to elicit more evidence from witnesses about alleged bribe-paying in Mexico." If it is successful, the Journal writes, the feds could propose a penalty that would cost Walmart a lot more than $600 million.

There are some wrinkles that the Journal points out. Some of the evidence could be too old to prosecute. At the same time, federal officials would like to wrap up the case before a new administration takes office in January.

The Journal writes that "the U.S.’s proposed penalty accounts for the profits Wal-Mart reaped from stores it was able to open quickly after allegedly paying officials to speed zoning and building permits, said the people, who asked to not be named because the matter is confidential. Calculating a fine based only on the amount of the alleged bribes, as the department has done in some cases, would yield a lower penalty, they said.

"Even as the sides are grappling over the size of a penalty, they are also discussing whether there will be any criminal charges against any part of the company, the people said."

Published on: October 7, 2016

The Cincinnati Business Courier is reporting this morning about speculation in the investment community that Kroger "might be interested" in purchasing Whole Foods.

Neither company commented on the rumors, which suggested that Kroger could pay as much as $40 per share for Whole Foods stock that currently selling for around $29 per share.

Published on: October 7, 2016

The National Grocers Association (NGA) yesterday said that it will expand its annual trade show, moving it from Las Vegas to San Diego for the 2019 and 2020 editions. NGA said that "this move in location is directly in response to the need for a larger convention space to meet the growth in exhibitor and participant attendance and reflects the continued growth of NGA, which has doubled its membership in the past five years."

“We are very enthusiastic about the future of The NGA Show as well as the independent supermarket industry, and San Diego an exciting destination to match that sentiment. As we continue to expand we look forward to working with our Show partners to deliver value to attendees and make this a memorable conference,” said NGA president/CEO Peter J. Larkin.

The 2019 NGA Show will be held in San Diego, California on February 24 – 27, 2019 and February 23 - 26, 2020. The 2017 and 2018 NGA shows will remain in Las Vegas.

Full disclosure: NGA is a longtime MNB sponsor.

Published on: October 7, 2016

The Wall Street Journal this morning has a story about how McDonald's is "rethinking “legacy beliefs," and trying to compete more effectively with "better burger" chains that have challenged the fast feeder's traditional supremacy, which has been built on speed and low cost.

According to the story, "a 'sensory' panel is helping McDonald’s refocus on flavor, and the company is testing using fresh instead of frozen beef, different cooking techniques and an ordering system for made-to-order, customized burgers." But experience hasn't been a particularly good teacher in this regard, since McDonald's recent attempts to sell a higher quality burger at higher prices have not been successful.

"The challenges are clear," the Journal writes. "McDonald’s, the quintessential fast-food chain, gets nearly 70% of its U.S. business through the drive-through. Burgers are usually made in advance and held in warming cabinets so they are ready when customers pull up. McDonald’s said its goal for delivery time, from when the order is placed to when it is delivered to the customer, is a mere 90 seconds." And burgers remain the sweet spot for the business, generating one-fifth of all the company's sales.

The story notes that Burger King seems to have stabilized its business by focusing on lower end products, while Wendy's has managed to more successfully "play in an area between fast food and the high-cost better-burger segment with slightly more expensive burgers."

But McDonald's legacy - cheap burgers served fast - seems to be working against its ability to appeal to millennials, who seem to find the likes of Five Guys and Shake Shack more appetizing.

Published on: October 7, 2016

• Walmart said yesterday that "Wal-Mart said Thursday it expects its reported earnings to be relatively flat in its next fiscal year relative to its adjusted earnings in the current fiscal year," according to a piece in the Wall Street Journal. "It also plans to spend about $11 billion in its next fiscal year on e-commerce and digital initiatives and on speeding up the process of remodeling stores. Meanwhile, it is slowing new store openings.

Published on: October 7, 2016

• The Post and Courier reports that "Publix Super Market Charities is donating $1 million to the American Red Cross for Hurricane Matthew relief efforts in affected areas. The Florida-based grocery chain also is accepting donations from customers at checkout. All proceeds will be go to disaster relief efforts."


• The Des Moines Register reports that Tesco-owned F&F, a clothing company, is making its debut this week in Iowa with a "3,000-square-foot boutique that features men’s, women’s and children’s clothing" inside a Hy-Vee supermarket.

According to the story, "The store has been reconfigured to accommodate the boutique, which has been operating in new Minneapolis-area Hy-Vee stores for a couple of months." Another F&F is slated to be opened in an Ankeny Hy-Vee later this month, but the retailer reportedly has not committed to opening F&F boutiques in any other area stores, but is looking for places where it will work.

Published on: October 7, 2016

Got a number of emails yesterday responding to my piece about the last Howard Johnson's.

MNB reader Alyson Kretser wrote:

At least they are consistently horrible. There are a LOT of great food places in Lake George. Hopefully you had a better experience downtown.

MNB reader Donna P. Burns wrote:

OMG Kevin you just conjured up memories of the WORST summer of my life!  I thought I had securely tucked them away never to breech my conscious again but they came roaring back with your article!  The vivid brown and orange polyester uniforms with pockets so big you could fit an entire dinner plate in one, the smell of All You Can Eat Fish and Clam Strip Night forever embedded in the fabric, the vacant stares of both customers and staff, the endless cups of coffee for those that ordered toast for dinner (!), and no matter how big the check was you usually were left $1.00 as a tip!

It was a summer job between high school and college, my Dad secured it for me, and no matter how much I begged to quit, he told me work ethic and a promise to complete the task was more important than evidently my well being!  No lie, I even tried to break my leg one day so I could get out of work!  That’s how bad it was!  Although I have to say, it has been the best of the stories I have told, the laughter of many a night reliving the nightmare and to this day I use it as a barometer of how bad things can really be if I could make it through THAT summer waitressing job, I could pretty much do anything!

MNB reader Karen Shunk wrote:

I recall visiting Howard Johnson’s regularly with my grandparents in the early 70s in Florida.  The first time I went with them, I ordered the kids platter with a peanut butter and jelly sandwich.  The waitress apologetically informed me they had no peanut butter and asked me to make another choice.  My grandfather, flabbergasted by this answer, asked me to order this every time we went just to see if they ever had any peanut butter.  On the fourth or fifth visit, my grandfather couldn’t take it anymore; he gave the waitress a ten and told her to get his ‘grandbaby’ some peanut butter from the supermarket in the strip mall where this restaurant was located and to keep the change (and he called her Doll – definitely a different time).  So, it sounds like the same old joint, it just used to be cleaner.
 
Thanks for taking one for the team!

MNB reader Peter Talbott had better memories:

When I close my eyes I can still smell the fried clams cooking…

Those same clams are still cooking. And cooking. And cooking.




And, responding to the skeptics about how effective Lidl will be when it comes to the US, MNB reader Tom Gillpatrick (my boss at Portland State University) wrote:

Should USA retailers be concerned about Lidl? - IMO yes.  I shopped Tesco abroad never saw anything special, Fresh & Easy, did't offer me anything I really want.

While in Germany Lidl was my go to grocer...good quality, good selection of things I wanted and very good prices and in and out quick.  Be concerned!

And from another reader:

During my long career (36 years). I have dealt with just about all retailers at one time or another.  Any retailer who ignores Aldi is asking for disaster.  They have a very specific niche and no one is better in that niche, no one.  Most importantly that niche has an impact on any retailer who relies on solely price and any “low cost” retailer.  History backs me up on this.  They start slow and then become a more and more significant factor in the market they enter.




And finally, from another reader, on another subject:

Almost a week after you posted about ballparks, I’m not sure if you are getting tired of reading about other’s experiences.  Mine is not an experience but a question…
 
Since you’ve mentioned all the major league parks you’ve visited, and states you’ve visited, I was wondering if you’ve been to the Field of Dreams ballpark, and what your impressions were?  If not, any plans to make it a stop on your next cross country drive?

Never have. Always wanted to. Maybe next year.

Published on: October 7, 2016

• In the two American League Divisional Series games, the Toronto Blue Jays clobbered the Texas Rangers 10-1, and the Cleveland Indians defeated the Boston Red Sox 5-4.


• And, in Thursday Night Football action, the Arizona Cardinals beat the San Francisco 49ers 33-21.

Published on: October 7, 2016

It is always a good thing when Dave Barry comes out with a new book, and his just-published "Best. State. Ever." is no exception.

Now, let me be clear here. I think there are several reasons that I like Dave Barry (who, I should point out, I never have met). For one thing, we're about the same age - though he's a little older than I am. For another, he is from a New York town that is just a little bit north of where I was raised. But mostly, it is because I like to think we share a sensibility for the absurd ... though, I must admit, he's turned it into gold as a columnist for the Miami Herald and as a humorist and writer, and I mostly make myself laugh, and occasionally get a chuckle out of MNB readers. But I digress...

"Best. State. Ever." is subtitled, "A Florida Man Defends His Homeland," but I think that is a little strong. I think what he actually does is throw up his hands when viewing various absurdities and utter the most famous like from Risky Business. Which is not exactly a defense, but close enough.

Traveling around the state for "Best. State. Ever.", Barry captures the weirdness of places like Cassadaga ("the psychic capital of the world") and the Miami celebrity nightclub Liv. In between, there are visits to Gatorland and Weeki Watchee...There's even a visit to The Villages, the world's largest retirement community, in a piece that ends up being affectionate and even faintly wistful, while being really funny about what he finds there.

My two favorite pieces of the book are the one about his visit with a friend to Lock & Load, a place where one can fire off as many guns as one can afford to rent for that purpose even while risking a testosterone overload, and his visit with a different friend to Key West, where I once went with a friend of mine and had a ton of fun but not nearly as much as he did. (Maybe we'll go back when I get to be closer to Barry's age. Which will be in just a couple of years.)

The best thing about "Best. State. Ever." is that over and over, I laughed out loud. At home, that meant my wife and kids would wander into the room and ask what I was reading. On an airplane, it meant that I got the occasional dirty look, but also inquiries about what I was reading.

I told everybody what I'm telling you. It is Dave Barry's new book. You should read it.



If you like Dave Barry's books, I'd also recommend you read a number of books written by my friend Bob Morris, who gained attention with his Zack Chasteen mysteries. A few years ago he came out with several e-books that have much the same flavor and humor of Dave Barry's books, albeit with his own particular take on the really important things in life (food and drink, mostly, though family fits in there, too).

My favorite may be "The Man With A Fish On His Foot: And Other Tales From A Peculiar Peninsula," which focuses on Florid'a idiosyncrasies, and which you can find here. Other favorite titles in the series are "Gut Check: Adventures in Eating, Drinking and Wretched Excess" and "All Over The Map: Getting Lost in Good Places." And what I like most about them is that they replicate the experience of sitting at a bar with Bob and enjoying an adult beverage or two ... and let me tell you, he's very good company.

Check him out.




That's it for this week. have a great weekend, and I'll see you Monday.

Slàinte!