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    Published on: June 19, 2018

    by Michael Sansolo

    The difference between being mediocre and great is shockingly small, perhaps best described by Crash Davis in the movie Bull Durham:

    “Know what the difference between hitting .250 and .300 is? It's 25 hits. 25 hits in 500 at bats is 50 points, okay? There's 6 months in a season, that's about 25 weeks. That means if you get just one extra flare a week - just one - a gorp... you get a ground ball, you get a ground ball with eyes... you get a dying quail, just one more dying quail a week... and you're in Yankee Stadium.”

    For business, the difference isn’t how or where you hit a baseball, but how you train staffers and reinforce those lessons. That’s the only supposition I can make between two shockingly different experiences in the burger-eating world last week.

    Last week Kevin wrote about a failure of a trip to IHOP to experience the chain’s new commitment to burgers. If you read the story you walked away with two memories: Kevin’s stomach distress that followed the meal and the staff ordering in pizza for their own lunch. Neither anecdote would send you running to IHOP to try the new “signature” dish.

    So here’s the opposite experience. Last Thursday I met a business colleague from Chicago in Washington, DC, for lunch. Being the class act I am, I suggested we eat at a nearby Shake Shack, one of the new better burger fast food joints now dotting the landscape.

    Kevin only wishes he was with us. First off, the burgers were excellent as always. Shake Shack has a simple menu - burgers, fries, shakes, drinks and a couple of variations like hot dogs - and they do everything well. But that’s not what made this visit so memorable.

    My friend, a retailer, was very pleasantly impressed with the staff interactions we had when ordering and picking up our food. Neither process is especially complex, but Shake Shack somehow trains staff to make those little moments count.

    But what happened next was amazing. While we sat at a table two different staffers approached to ask if we were enjoying our meal and if we needed anything else. Remember, this is a fast food restaurant.

    One of those two staffers noticed our drink cups were getting low and offered to get us refills. We couldn’t help but notice her blue, disposable gloves.

    One minute after taking our cups she returned without those gloves to explain that she was putting on a new pair to ensure that our drink cups were properly handled. Frankly, that’s a level of food safety concern I never would have requested, but once she said it, it became the main topic of discussion at the table.

    We started speculating on how Shake Shack has created a culture of such amazing and caring customer service in - remember - a fast food restaurant, where there was clearly no expectation nor indication that a gratuity was anticipated. It was simply great customer service.

    Of course, once Kevin and I compared our burger stories it left no contest as to who had the better experience (cheaper as well). There’s no doubt both of us will be back in Shake Shack long before we hit IHOP again.

    In baseball terms, what happened in Shake Shack was a grand slam versus what Kevin saw in IHOP. Every business needs to remember that. There are things you can and cannot control, just as there are customer needs you can and cannot possibility satisfy.

    Service that is caring, friendly and goes that extra step is a simple-to-execute winning formula every time. And for Pete’s sake, make sure staff eats the same food customers are having. Nothing could possibly express less confidence than ordering in pizza. That is striking out!

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:
    In chatting with Michael yesterday about his column, I remembered something I forgot to write about last week, which also serves as another poor reflection on the IHOP experience. Unlike Shake Shack - or Starbucks or McDonald’s or most fast food or fast casual restaurants that I’ve encountered recently - IHOP does not have customer Wi-Fi. These days, it seems to me, that ought to be a standard offering by every retailer … and it is another place where, to borrow Michael’s metaphor, IHOP whiffed.

    Published on: June 19, 2018

    by Kevin Coupe

    One of the outgrowths of the Harry Potter phenomenon - a brand estimated to be worth $25 billion dollars, with its roots in books and movies and the stage - has been fan festivals at which enthusiasts dress up as favorite characters, hold Quidditch tournaments, and enjoy events designed to celebrate their enthusiasm for the franchise.

    But now, the Associated Press reports, Warner Bros. “is cracking down on local Harry Potter fan festivals around the country, saying it’s necessary to halt unauthorized commercial activity.” That means “letting them know new guidelines prohibit festivals’ use of any names, places or objects from the series. That ruled out everything from meet-and-greet with Dumbledore and Harry to Defense Against the Dark Arts classes.”

    It is, the AP writes, “all about protecting the trademark: ‘Warner Bros. is always pleased to learn of the enthusiasm of Harry Potter fans, but we are concerned, and do object, when fan gatherings become a vehicle for unauthorized commercial activity,’ the company said.”

    These are not small fan gatherings, the story notes. One last year, in Chestnut Hill, Pennsylvania, attracted 45,000 people last year.

    Fans, the AP writes, “liken the move to Death Eaters sucking the joy out of homegrown fun.”

    Festival organizers say that they’ll turn their events into more generic magic-themed gatherings, engaging in family-friendly “wands and wizards” nights and more adult-oriented pub crawls; if people show up dressed as Harry or Ron or Dumbledore, it won’t be their fault.

    Now, let me be clear. I’m all in favor of businesses protecting their trademarks. But I also think that Warner Bros. ought to be working harder to figure how to do so without dampening the enthusiasm of their fans … enthusiasm that they should not take for granted.

    Fans create their own kind of magic. It isn’t just the Harry Potter franchise. It is Star Wars and Star Trek. (Hell, Star Trek fans have made their own movies about the series’ characters, which only recently have been cracked down on by owner Paramount, which worried that they were getting a little too ambitious for the franchise’s good.) Or “Doctor Who” or “Firefly.” Or any rock band that has inspired tribute bands to perform their catalogues.

    But magic needs room to breathe. I cannot help but feel that Warner Bros. is making a miscalculation here, not understanding that such fan celebrations are an Eye-Opening way to heighten the brand’s profile and even its profitability, not diminish its potential.

    Then again, maybe everything will change, now that Warner Bros., as part of Time Warner, now is owned by AT&T. And we all know how good phone companies are at treating their customers…
    KC's View:

    Published on: June 19, 2018

    Reuters reports this morning that Unilever “is cutting ties with digital media ‘influencers’ that buy followers, saying it wants to help make advertising more transparent.”

    The story goes on to say that Unilever believes that “the practice of buying followers risks eroding trust and therefore damaging one of the fastest-growing areas of advertising - the billion-dollar-a-year market now known as ‘influencer marketing’ - and Unilever says it wants it to stop.”

    Keith Weed, Unilever’s chief marketing officer, puts it this way: “Trust comes on foot and leaves on horseback, and we could very quickly see the whole influencer space be undermined. There are lots of great influencers out there, but there are a few bad apples spoiling the barrel and the trouble is, everyone goes down once the trust is undermined.”
    KC's View:
    Good for Unilever. I’m a big fan of companies doing whatever they can to assure that their endorsements/reviews are authentic, and not just coordinated clutter. If that means getting rid of influencers who are pumping up their numbers illegitimately, that’s fine. If that means Amazon saying it won’t allow people to post reviews if they haven’t bought the product on Amazon, that’s fine, too.

    I’m equally appalled when people in my business just give or sell their email lists to companies, showing utter disregard for their customers/readers. If you get an email from me, it ought to be an email from me … not an ad. And people in my business ought not sell space to consultants for them to write stories that are designed to appear as editorial. Ads ought to be labeled as ads, with full disclosure when something is advertising. I’m all in favor of making a living, but deceiving customers is never a good idea.

    Published on: June 19, 2018

    MillerCoors is looking at a $40 million “hit to its bottom” as a result of tariffs on foreign steel and aluminum being imposed by the Trump administration, Brewhound reports.

    According to the story, MillerCoors CEO Gavin Hattersley says that the 10 percent tariff on aluminum and 25 percent tariff on steel “will likely force the company to scale back investments and hit the pause button on hiring new employees … It could also lead to increased beer prices, he added, noting that the company’s shareholders won’t simply accept a $40 million hit to it profits.”

    Craig Purser, president/CEO of the National Beer Wholesalers Association (NBWA), also is quoted as saying that wholesalers, retailers and consumers “will be forced to pay more for beer” as a result of the tariffs.
    KC's View:
    Get used to it. Probably going to be a more expensive summer for beer drinkers.

    Published on: June 19, 2018

    USA Today reports that while Sears Holdings CEO Edward Lampert keeps saying he wants to restore the iconic retailer to “former glory,” an examination of public filings and analyst research indicates that the company’s investment in its stores is “stark” when compared to its brethren.

    Furthermore, the story says, loans made by Lampert’s hedge fund to the business have been structured so that if Sears Holdings goes into bankruptcy (which many would say is a matter of ”when,” not “if”), “Lampert's hedge fund will be positioned at the front of the line when loans are repaid.”

    Some excerpts from the story:

    • “Sears stores, on the other hand, have fallen into disrepair. Stained carpeting, broken fixtures and dim lighting are commonplace. Analysts, industry watchers and even shoppers predict the iconic retailer doesn't have much time left.”

    • “While Sears has steadily lowered its investment in store upgrades over the last five years, the company has loaded up on loans due to Lampert himself. 
    By extending almost exclusively secured loans to the company, Lampert's hedge fund  has racked up more than $2.4 billion in Sears debt.”

    • “As the company bleeds cash and puts prized brands up for sale, some industry watchers question whether a greater focus on its stores — or even a declaration of bankruptcy some years ago — could have put it on the path to profitability. Now, instead, the company's demise may be inevitable.”

    • “Lampert has previously said he does not believe in pouring money into stores that would not provide sufficient return on the investment. Instead, he has pursued partnerships, including recent deals with and Citi that have earned praise from investors, and made loans to the company that have been personally lucrative.”

    • “Lampert has put the hedge fund in position to snap up some of the company's prime assets, analysts said. This would come after the CEO orchestrated a series of complex financial deals in which he effectively has played the unusual role of both seller and buyer or lender and borrower.”

    For the record, Sears says it “disagrees” with the assertion that it has not sufficiently invested in its store fleet.

    You can read the entire analysis here.
    KC's View:
    I have no reason to disagree with the USA Today analysis, which makes me wonder why anyone would sell a product to Sears or Kmart under these conditions. If Lampert is getting ready to shear Sears, it sounds like the stage is set so that everybody else gets the shaft.

    Published on: June 19, 2018

    The New York Times reports that the National Institutes of Health (NIH) has decided to shut down a study into the health effects of alcohol after an internal probe determined that “a Harvard scientist and some of (the) agency’s own staff had crossed ‘so many lines’ in pursuit of alcohol industry funding that ‘people were frankly shocked’.”

    According to the story, “Kenneth J. Mukamal, the lead investigator of the trial, was in close, frequent contact with beer and liquor executives while designing the study,” with “disturbing examples of the coziness between the scientists and their industry patrons. Dr. Mukamal was eager to allay their concerns, respond to their questions and suggestions, and secure the industry’s buy-in.”

    What essentially was taking place, the story says, was “a concerted campaign to obtain funding from the alcohol industry for research that may enshrine alcohol as a part of a healthy diet.”

    The story notes that “Dr. Mukamal has repeatedly denied communicating with the alcohol industry while planning the trial, telling The Times last year that he had, ‘literally no contact with the alcohol industry’.” And he continues to say that “he and his colleagues ‘stand fully and forcefully behind the scientific integrity’ of the trial.”
    KC's View:
    Stories like these make clear why consumers often get confused - it often is because there is a lack of intellectual and scientific rigor in how they are conducted, with the bottom line being more about money than accuracy.

    Published on: June 19, 2018

    David Leonhardt, a columnist with the New York Times, has a piece about how getting big is about to get bigger, with consolidation activity expected to pick up.

    Leonhardt writes about many companies that “have decided that their best strategy for raising profits involves getting bigger. Larger companies simply have more power — to compete with other giants, to restrain workers’ pay, to influence government policy and, in the long run, to increase prices … Airlines, banks and oil companies have merged in recent decades. So have retailers, hospitals, hotels, manufacturers, drug companies and law firms. The resulting behemoths have then taken advantage of their newfound scale, as well as globalization and digital technology, to grow further.

    “For everyone else, the consolidation boom hasn’t worked out so well. Since the modern merger era began in the 1980s, corporate profits have surged, while family incomes have stagnated and income inequality has increased.

    “Say this much for the corporate executives who argue that a bigger company can be more profitable: They know what they’re talking about.”

    You can read the column here.
    KC's View:

    Published on: June 19, 2018

    Advertising Age reports that Tony Rogers, chief marketing officer for Walmart US, is moving over to the company’s Sam’s Club business as chief member officer, a newly created position.

    It is, the story says, a “surprise move” in that it “takes him from running marketing for the world's biggest retail chain to a club store that's in an underdog battle against Costco.”

    According to Ad Age, “Rogers says he found the post appealing because after 20 years in marketing working on packaged-goods, tech, retail and customer marketing, this will be his first time working with a membership database … Rogers comes to a Sam's Club with improving recent results and strong momentum, Rogers says, but also the opportunity to increase a relatively small e-commerce business. Rogers says he relishes playing the underdog for the first time in a while by going up against Costco, which also has lagged Walmart – and far more so Amazon -- on the e-commerce front.”

    Rogers’ successor as Walmart CMO has not yet been named.
    KC's View:

    Published on: June 19, 2018

    • Amazon this morning announced what it is calling Alexa for Hospitality, offering hoteliers the ability to allow guests to “ask Alexa for hotel information, contact the hotel to request guest services, play music in their room and more. For hotels, Alexa for Hospitality helps deepen guest engagement through seamless voice-first experiences that offer new ways for guests to access services and amenities during their stay.”

    The announcement goes on: “With Alexa for Hospitality, hospitality providers can enable and customize a range of voice-first features based on their guests’ needs. Using an Amazon Echo in their room, guests can ask Alexa for information like pool hours or fitness center location, request hotel services like room service or housekeeping, call the concierge, and more. Alexa can also be configured by hospitality providers to allow guests to control and adjust in-room devices like lights, thermostats, blinds, and TVs to their individual preferences or ask Alexa to play music from popular services including iHeartRadio and TuneIn. Guests can also be given access to thousands of Alexa skills to check airport wait times, play games, get in a quick guided workout, play white noise to help them fall asleep, and more.”

    According to the announcement, “Alexa for Hospitality is available to hospitality providers by invitation starting today, with Marriott International introducing the new Alexa experience at select properties in Marriott Hotels, Westin Hotels & Resorts, St. Regis Hotels & Resorts, Aloft Hotels, and Autograph Collection Hotels starting this summer.”

    Gizmodo reports that 20 groups of Amazon shareholders Are pressuring Amazon founder/CEO Jeff Bezos “to stop selling the company’s face recognition software to law enforcement … Called Rekognition, the software came under greater scrutiny last month when the ACLU published revealing internal documents related to its use by police. Numerous civil rights organizations co-signed a letter demanding Amazon stop assisting government surveillance, and several members of Congress have expressed concerns about the partnerships.”

    The letter says, in part: “We are concerned the technology would be used to unfairly and disproportionately target and surveil people of color, immigrants, and civil society organizations. We are concerned sales may be expanded to foreign governments, including authoritarian regimes.”

    ZDNet reports that Amazon Prime has finally launched in Australia, “13 years after the United States got its hands on the service.” Though Australia is so big that “Prime members in more remote or rural locations will receive free expedited shipping in four or five days.”
    KC's View:

    Published on: June 19, 2018

    • The Toronto Star has a piece about the Feed It Forward grocery store initiative, which gathers food - not expired or rotten, but being gotten rid of because of excess quantity or it is bruised or misshapen - from a wide range of retailers and restaurants, and then sells it.
    KC's View:

    Published on: June 19, 2018

    We had a story yesterday about how Consumer Reports is recommending that “consumers avoid buying and eating pre-sliced melon until the end of June and discard any that they've already purchased. That’s because in the past two months, 60 people in the U.S. have gotten sick from a dangerous strain of Salmonella bacteria, likely from eating presliced watermelon, honeydew, or cantaloupe shipped to major retailers across the country.”

    One MNB reader wrote:

    Thirty five years in the retail side of the produce business and now another ten years on the supply side….I virtually NEVER eat cut melons that I did not cut myself. I’m especially weary cantaloupe and honeydew in hotels, or kiosks at the airport….why? Because I just don’t think that folks know how to recognize visual signs that the fruit is going bad, and that the cold chain’s been maintained…I see too much of it on display that I would never eat. They take best if used by dates on cut fruit as the gospel. That’s just store level handling…not even thinking about the prep before cutting. That said, every meathead I’ve ever known always has their steak cooked well done. I like mine rare, but I always wonder what those meat guys know that I don’t!

    From another reader:

    At Albertsons/Shaw's everything, and I mean everything, is processed in store at great labor expense.  We are required to wash all fruit and vegetables in Sterilox before processing them, thus preventing any possible contamination. Probably why we're not one of those stores on the list.

    Chiming in on the discussion about Chewy, one MNB reader wrote:

    I agree with Pat I. (who also has my sympathy on her loss) regarding Chewy.  That’s not the first time I’ve heard of them doing wonderful things for their customers.

    I just started auto-ship from there a few months ago and I usually get my shipment in 1 day.  I’m thrilled to not have to lug a 42 lb. bag of kitty litter into a cart, into my car, out of my car, into the house, along with the cans of cat food, etc.

    I do order my fair share of items from Amazon, but for pet supplies Chewy is the place to go.

    On another subject, one MNB reader wrote:

    I am puzzled by the statement in the article that proclaims, “… Whole Foods sales are up, though “sales per customer are down by an average of 1%.” That may not necessarily be a bad thing - it could mean that people are going more often and making more frequent, if smaller, transactions.

    Retailers (except perhaps Trader Joe’s) have been pursuing bigger rings per transaction with a passion, and for a long, long time. Now, smaller transactions are better?

    That was my observation … and I was just suggesting that maybe, under some circumstances, more frequent trips, even with a lower ring, could be a good thing if it promulgates greater loyalty and a higher spend overall. Is it necessarily a bad thing if I go to Whole Foods three times a week and spend $20 each time I’m there, as opposed to going once and spending $50?

    An MNB reader yesterday wanted to bet me on where Amazon’s HQ2 will end up, but I declined, saying that too many people have wanted to bet with me on this subject. Another MNB reader wrote:

     If you are getting dozens of people wanting to bet that a certain location is going to win the HQ2 sweepstakes, if the bet is if that one location wins, you pay, if any other of the 19 location wins, you win, you should take the bets if the offers are spread out over between multiple finalists.  For example if you have 10 people all wanting to bet you $1 that a different finalist will win, taking all 10 bets guarantees you a net win of $8, 9 wins minus 1 loss.  Just make sure no more than half of the total value of all bets are not on one location.

    I get your point. But I’m not getting into the bookie business.

    Finally…yesterday we took note of a CNN report about a 23-year-old man, Thomas Frudaker, who was arrested last week and charged with making fraudulent returns - to the tune of $1.3 million - at more than 1,000 Walmart stores around the country over the past 18 months. He was arrested when trying to do so in Yuma, Arizona, and charged immediately with six felony charges, “including two counts of theft, two counts of fraudulent schemes and two counts of criminal damage.”

    I commented:

    Think about that. This guy visited almost 25 percent of the Walmart stores in the US in less than two years. I wonder how many Walmart executives did that. They ought to go after him with the full force of the law, but they may want to consider pulling an Alexander Mundy with him, and use Frudaker as an invaluable resource.

    MNB reader Mary Schroeder wrote:

    Nice “It Takes a Thief” reference. 
    Thanks for the chuckle.

    MNB reader Mark Boyer wrote:

    Or Frank Abagnale.

    If I have to choose between being Frank Abagnale or Alexander Mundy, I’m totally choosing the latter. Mundy (Robert Wagner) was much cooler, went to better places, and he had Alistair Mundy (Fred Astaire) has his father. Doesn’t get much better than that.
    KC's View: