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Thursday, April 04, 2013

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FaceTime with the Content Guy: Dispatches FromThe Walmart - Amazon Wars

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Around here, it pretty much is an article of faith that the big battle of the next few years is likely to be Amazon vs. Walmart. Call it the Clash of the Titans, if you will.

That doesn't mean that other big retailers won't be able to survive and thrive. It doesn't mean that independent and niche retailers won't be able to make an aggressive and successful case to shoppers. It just means that the Amazon-Walmart wars are likely to attract a lot of attention, soak up a lot of the oxygen in the room, and create a lot of collateral damage.

In Star Trek terms, this is like the Klingons vs. the Romulans.

Or maybe, to use another movie reference, it is Alien vs. Predator.

There have been a couple of stories the last few days that have elaborated on the coming conflagration ... dispatches from the battlefield, if you will.

Forbes had a piece suggesting that Walmart is looking for "out of the box" solutions when it comes to doing battle with Amazon. Its recent announcements about testing lockers in stores so that online shoppers can pick up ordered merchandise, and considering a delivery system that would have customers bring product to other customers, are both just symbols of a kind of new thinking at Walmart.

An excerpt from the story:

"The big box behemoth may not be a start-up, but it does try to think like one with its Walmart Labs division. That group is developing Pangaea, a global technology platform, scan and go apps that let shoppers buy in store via a smartphone, and online operations in growing markets outside the U.S. such as Brazil and China.

"Wal-Mart is still testing same-day delivery in four cities. The program uses stores as fulfillment centers and if expanded, could turn 4,000 stores into bases for same day delivery."

And Wired had a story that said, in part:

"Over the past year and a half or so, Walmart has gone on a tech hiring frenzy. Its e-commerce operation now employs about 1,500 people, and the company expects to hire hundreds more in the near future, most of them in Northern California. These days, Walmart battles the Googles and Facebooks of Silicon Valley for engineering talent and sometimes wins.

"Though these workers are a tiny fraction of Walmart’s more than 2 million employees, they represent the core of the company’s effort to stay relevant in the 21st century. And the way they plan to do it, at least according to the people in charge, is to act more like the startups that surround this California outpost of the global symbol of brick-and-mortar business success."

Hear the theme that is developing? Walmart is trying to think and act like a start-up...

Now, that's easier said than done. Walmart has plenty of legacy issues with which to grapple, and a culture that is biased toward protecting the traditional bricks-and-mortar retailing business, not disrupting it. In a battle with Amazon, which is built culturally on the notion of disruption, that could be a key difference. Hell, it could be the key difference.

But let the behemoths fight it out. For everybody else, the question has to be, how does a retailer stay relevant, aggressive and ambitious in an Amazon-Walmart world. In fact, how do they prevent it from becoming an Amazon-Walmart world?

It isn't going to be easy, and there is no short-term solution. It requires strategic planning, the ability to move fast and faster, and a willingness to be disruptive and make hamburger out of sacred cows.

The one thing you can't do as this battle develops is keep your head down and hope to survive.

I can't say it often enough:

COMPETE IS A VERB.

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

Thursday Morning Eye-Opener: Post-Recession Financial Attitudes Improving

The Associated Press reports that Fidelity Investments is out with a "Five Years After" survey of investors, designed to gauge the post-recession financial attitudes of Americans, concluding that "the frugality and investing discipline that the 2008 financial crisis imposed on Americans appear to have led to permanent changes in behavior on money matters."

Among the conclusions:

• "56% reported their financial outlooks changed from feeling scared or confused at the beginning of the crisis to confident or prepared five years later."

• "Survey participants estimated their household had lost 34% of the value of their total assets, on average, at the low point of the crisis. At least 35% experienced what they considered to be a large drop in income, and 17% said at least one head of their household lost a job."

• "42% increased the amounts of regular contributions to workplace savings plans, including tax-deferred retirement savings accounts or health-savings accounts."

• "55% said they feel better prepared for retirement than they were before the crisis. However, among the group of survey participants who reported they continue to feel scared, just 34% said they're better prepared for retirement."

• "49% have decreased their amount of personal debt, with 72% having less debt now than they did pre-crisis ... 42% have increased the size of the emergency fund they've established to meet large unexpected expenses."

• "78% of those saying they're prepared and confident said the financial actions they've taken are permanent changes to their behavior. And 59% of the scared group said they've made permanent changes."

We may not have "recession babies" in the same sense that the events of the 1930s created "Depression babies," but it seems clear that at least for the moment, a large percentage of Americans are more money-conscious than ever before. Not sure if this will change if the country experiences another bubble .... but a higher sense of financial responsibility has to be considered a good thing.

Consumer Expectations, In Sharp Relief And High Definition

So here are some statistics that say something about the demands and expectations of the American consumer...

Telecompetitor.com reports that "high-definition television (HDTV) sets are present in 75% of U.S. households, up from 23% five years ago according to Leichtman Research Group’s (LRG) 1Q 2013 Research Notes."

The study also says that 38 percent of US households have more than one high-definition television set, up from 26 percent with multiple HDTVs just two years ago and five percent that had more than one five years ago. In fact, more than half of US households equipped with a high-definition TV actually have more than one.

The numbers skew upscale ... but not wildly so: "84% with annual household incomes over $50,000 have an HDTV compared to 73% with household incomes of $30,000-$50,000, and 56% with household incomes under $30,000."

KC's View: I just think this speaks to consumer expectations ... they have these marvelous televisions at home, which then forces the movie theater industry to work harder to be differentiated and relevant. That could be a metaphor for what is happening in many industries - heightened competition that ratchets up the pressure on a wide range of companies.

The Growth Of Smartphone Nation, Part II

Yesterday, MNB carried a story about the growth of smartphone penetration in the US - in 2012, 49.4% of the U.S. population had smartphones, in 2013 it is expected that 57.3 percent will have smartphones, and by 2017, projections are that 67.8 percent of the population will have smartphones.

The Los Angeles Times now reports that Facebook today is expected to introduce its own smartphone, described as "an HTC smartphone that operates on software called Facebook Home. The social network’s News Feed, messaging, photo uploading and other features will be integrated into the phone ... It will be the biggest step yet to re-engineer Facebook into a mobile company. Like Amazon.com, Apple, Google and Microsoft before it, Facebook is putting a device into people’s hands that is designed to tether them to the service."

KC's View: Hard to know at this point whether the Facebook phone will be a big success or not. But clearly, shifting consumer behavior is forcing the company to adjust its approach to business ... it can't just be your older brother's Facebook anymore.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From MyWebGrocer...

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From MyWebGrocer...


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Databases Offer Opportunity To Weed Out Retail Job Applicants Who Are Theft Risks

Interesting piece in the New York Times about how some retailers are using a database to essentially blacklist employees accused of theft - but never formally charged or convicted - so they have trouble getting another job in retail.

Here's how the Times frames the story:

"The repositories of information, like First Advantage Corporation’s Esteem database, often contain scant details about suspected thefts and routinely do not involve criminal charges. Still, the information can be enough to scuttle a job candidate’s chances.

"Some of the employees, who submit written statements after being questioned by store security officers, have no idea that they admitted committing a theft or that the information will remain in databases, according to interviews with consumer lawyers, regulators and employees.

"The databases, which have tens of thousands of subscribers and are used by major retailers like Target, CVS and Family Dollar, are aimed at combating employee theft, which accounts for a large swath of missing merchandise. The latest figures available, from 2011, put the loss at about 44 percent of missing merchandise, valued at about $15 billion, according to a trade group, the National Retail Federation."

According to the story, the Federal Trade Commission (FTC) "has fielded complaints about the databases and is examining whether they comply with the Fair Credit Reporting Act, a federal law aimed at curbing inaccurate consumer information and giving consumers more control." In addition, "Lawsuits have proliferated against the companies that operate retail theft databases, like LexisNexis, which owned Esteem until this year, HireRight and GIS, according to a review of court records. In the last year, the nature of the lawsuits has changed, too, as lawyers try to build class-action cases."

KC's View: Fascinating piece, and you can read the whole thing here.

I understand why weeding out thieves is important, but what worries me is the "us vs. them" climate that seems to exist at some companies. It just doesn't seem consistent with a sustainable strategic approach to retailing.

Walgreen Health Clinics Expand To Handle Chronic Diseases

The Associated Press reports that "Walgreen Co. has expanded the reach of its drugstore clinics beyond treating ankle sprains and sinus infections to handling chronic diseases such as diabetes, asthma and high blood pressure." According to the story, Walgreen now "will diagnose, treat and monitor patients with some chronic conditions that are typically handled by doctors," but now will be facilitated by nurse practitioners or physician assistants.

The AP notes that the new approach is not universally popular: "Drugstores say they don’t aim to replace doctors, but rather to provide more people with access to health care and work with physicians as part of a team treating patients. But the move to provide more complex care has drawn concern from doctors who say that can disrupt their relationships with patients and lead to fragmented care."

Grocer Accused Of Administering Corporal Punishment To Disabled Employee

AOL Newshas a story about Ohio supermarket owner Ron Kronenberger, who stands accused of spanking a mentally disabled employee who made mistakes.

According to the accusations laid out in the story, whenever the employee, Mark Neace, would make a mistake, Kronenberger would take him in a back room, tell him to pull down his pants, and then beat him with a belt and paddle. Neace eventually told his sister, who went to lawyers and authorities, and now has filed a lawsuit against Kronenberger.

KC's View: Here's where this story - which is disgusting at best - takes an even weirder turn...

This is not the first time Kronenberger was accused of spanking a man ... Kronenberger earlier this year was accused of spanking a tenant for being late with the rent. The tenant, later identified by Reuters as Jimmy Marshall, allegedly met with Kronenberger in a back room at his market to discuss his inability to pay the rent. Kronenberger responded by telling him, "If you're going to act like a child, I'm going to treat you like one." And he then spanked him.

Kronenberger reportedly was placed into a diversion program ... which, if the reports are true, did not take.

Well, if the allegations are proven to be true, I would suggest that a different kind of diversion program is called for. I'm not a big fan of corporal punishment, but this guy deserves a little bit of his own medicine. in fact, more than a little bit. I think he deserves what I would think of as some Raylan Givens justice.

Hedge Funds See Opportunity In Supervalu

SAC Capital Advisors, under continued investigation by federal regulators for insider trading and having agreed to pay more than $600 million to settle existing charges without admitting any guilt, apparently has taken an interest in Supervalu.

According to a MarketWatch story, SAC, the giant hedge fund owns and managed by multi-billionaire Steven A. Cohen, "owns nearly 11 million shares of Supervalu," a position that has largely been built during 2013."

According to the story, SAC wasn't the only hedge fund interested in Supervalu: "Coatue Management more than doubled the size of its own position to over 10 million shares, giving it a position worth $25 million. Saba Capital initiated a position of 8.2 million shares between October and December, making the grocer one of the five largest single-stock equity positions in its portfolio. Blue Mountain Capital, Brigade Capital, and Jeffrey Altman's Owl Creek Asset Management are also among SVU investors." However, the story also notes that "the most recent data shows that 35% of the shares outstanding are held short, so a number of market players are bearish on the stock."

KC's View: Let's put these numbers in context.

Yesterday, Supervalu's stock closed at $4.69, almost double what it was back in January, making SAC's holdings worth a little bit more than $51.5 million.

After Cohen got the news that he was going to settle a case against him by writing a check for $614 million (assuming a judge allows the settlement to go through; he has expressed some skepticism about the decision not to force SAC to admit guilt), he apparently celebrated by buying an East Hampton ocean-front mansion for$60 million, and a Picasso painting, “Le Rêve,” for $155 million.

Yikes.

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Corporate Drumbeat

Made in the USA is making a comeback, and Walmart gets behind it

On April 22, 2013, MNB wrote about Time Magazine’s cover story:  “Just caught up with a Time piece about how and why Walmart has decided that a "made in America" initiative makes sense, noting that "the same forces that are making the U.S. a more hospitable place for manufacturing —higher shipping costs and wage rates overseas among them—have prompted the company to reevaluate its sourcing on a variety of products." It is worth reading, and you can do so here.

And KC commented: "Clearly, Walmart believes that it can use a made-in-America program to clear up some supply issues without raising its prices, which marks a real sea change in how the company works. And, at a time when the company has taken some hits because of issues like foreign bribery, a made-in-America initiative also can have a positive PR impact"


Isn’t it time you made this a competitive advantage for your products?  Whether it’s detergent or diapers, apple juice or orange juice, pork or beef, the USA Certified seals signal strict compliance to American-made inputs, services and/or processes, and outputs.  Your customers, regardless of where they’re seeing the seal, are ensured of buying American.  Join other companies who have found that certifying their American products is a competitive advantage.

To learn more about how to certify your products as Made in USA Certified or Product of USA Certified, click here.

Now back to regularly scheduled editorial...

Editorial continues after a word from our sponsor...

Industry Drumbeat

Cornell University Food Executive Program:  Diverse Skills for Diverse Challenges



July 14-19, 2013 - Ithaca, New York

The Cornell University Food Executive Program is unique – it offers an unmatched opportunity for food industry leaders to sharpen skill sets, gain new perspectives, advance careers, and make a difference.
 
Who Should Attend?

Retailers, Wholesalers, CPG Suppliers, Service Providers.
• The program prepares middle- and upper-level executives for their next promotion and beyond, and is well-suited for high-potential leaders being prepared for broader general management responsibility.
 
“The Professors and industry-leading speakers are very connected to the real world and are also very willing to provide that ‘nudge’  to think differently, ask ‘why’ and develop as a leader.  You learn from the professors, you learn from each other and you come back ready to perform.”  - Beth Newlands Campbell, President, Food Lion
 
For more information and to apply, click here.

Now back to regularly scheduled editorial...

FastNewsBeat

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

• In Minnesota, the Star Tribune reports that Best Buy and Target are ending an experiment "that stationed Geek Squad agents at Target stores in Denver and Minneapolis," with a stated goal of providing services to "electronics customers at 29 Target stores, including installation, repair and warranty plans. The program covered a wide range of products — from mobile phones and MP3 players to e-readers and home theater systems."

The six-month test ideally would have helped Best Buy extend its brand equity, which has been diminished because of tough competition in recent years. But the folks at Best Buy - wisely, I think - figured that in a time of limited resources, they were better off focusing on their own stores than bolstering the service quotient at someone else's. Better it should figure out how to compete with Amazon than help Target compete with Walmart.


CNN has a story saying that a new Consumer Reports study says that "CVS charges $150 for a monthly prescription of the generic version of the cholesterol drug Lipitor. The same drug goes for $17 at Costco."

It isn't just Lipitor. Consumer Reports says that it "sent secret shoppers to 200 pharmacies that carry five blockbuster drugs: Lipitor, Lexapro, Plavix, Actos and Singulair, all of which lost their patents in the last two years. Shoppers found they could be paying as much as $749, or 447%, more for a generic prescription drug in one year at the highest-priced pharmacy, compared with the lowest."

The story says that "the priciest places to pick up these prescriptions were CVS, Target and Rite Aid. The least expensive were Costco and Sam's Club, while Wal-Mart, and Walgreen's fell in the middle."

Executive Suite

• AWG announced that Jeff Pedersen, most recently Senior Vice President and Division Manager in Oklahoma City, has been promoted to a newly created position of Senior Vice President of Member Services, responsible for strategic and managerial oversight of corporate sales and development, education and training, and communications.

Danny Lane, currently V.P. of Merchandising and Marketing, will replace Pedersen as Sr. V.P. & division manager.


• Weis Markets announced that Gretchen Suydan, former director of Marketing and Advertising for Farm Fresh, has joined the company as Director of Marketing.

In addition, Weis Markets has promoted Brian Bosworth, a category manager with the company, to Sales Director, and Maria Panko, Center Store Category Manager, to Private Brands Manager.


• Supervalu Inc. announced that Sherry Smith, executive vice president and chief financial officer, will leave the company at the end of May. She has been CFO since December 2010, and has been with the company for 26 years. A successor has not yet been named.

Supervalu also said that Karla Robertson, vice president of the employment, compensation and benefits law functions, has been named executive vice president for legal, effective immediately.  She replaces the soon-to-depart Todd Sheldon, executive vice president, general counsel and corporate secretary, and will get his title when he leaves the company in May.

Your Views: Just Like Old Times

Michael Sansolo did a column this week in which he noted that, while shopping in a local supermarket, he was asked by an employee if he qualified for a senior citizen discount. (He doesn't. He's younger than I am, and I don't qualify either.) The experience led Michael to consider how difficult it is to deal with such situations, and how companies might better offer and promote discounts without offending people too young to qualify for them.

Well, the floodgates opened, and we got an enormous amount of email on this subject ... much of it suggesting that Michael's skin is a little thin, and his hair too gray for him to object.

Here's just a taste...

MNB user Bob Bartels wrote:

If at age 57 your tolerance is plus or minus 3years you might embrace the future instead of fighting it.  I personally think the ideal age is75 and seven grandchildren.

MNB user Paul Gilbert wrote:

I wonder how Michael would have reacted if the cashier just gave him a Senior discount without asking.  I am 58 and there is a fast food chain in my area that offers a senior discount.  I have no idea what the age requirement is or if it only applies to a certain day of the week.  I have never been asked my age but sometimes I get the discount.  By the way I have received it for a few years even when thanks to Just For Men I had no gray hair.  Management at this specific location has told its cashiers, when in doubt don’t ask, just ring up the order with a 10% discount.  My only reaction is thank you.  And I think that Michael should have said.  “Thank you very much for asking but I am not 60 yet and hopefully I will get there someday.”   Of course it might be that he is much more vain than I am or that he is not as thankful as I am that I reached this age when many others (including some very close relatives) are not as fortunate.

Another reader wrote:

Get over yourself Sansolo...you are close enough to 60 a look it to be asked and by asking it helps build awareness of the program.  Give the kid a break.

MNB user Wendell Ponder wrote:

Michael, my diagnosis is that you are insecure and should seek treatment!  ;-) 
 
I find that this type of conversation occurs relatively frequently.  For example, I went to a plant nursery last weekend to purchase fertilizer.  A 20-something guy helped me find the stack of fertilizer bags and identify the organic ones.  Then he dove into the application process, what to do if it rained or did not, application rate, etc.  It was a 5-minute spiel.  I’ll modestly admit that I probably have read more research about organic gardening than the sales associate, but I enjoyed listening to him and made a few comments to encourage his suggestions. 
 
I believe that it is important to nurture discussion.  Being curt or acting dismissive with someone only encourages that person to communicate less.  In your case, a self-depreciative remark like “I may look like I qualify for two senior discounts, but I have x years to go!” would have corrected the cashier and taught him to be more careful.  It may have made you smile, too.


MNB user Peter H. Grimlund wrote:

Come on Michael.  Really?  Indignant about being asked if you are eligible for a senior discount?  This isn’t about the poor kid – who was probably just doing what he had been trained to do – it seems more likely that this is about you seeing 60 creep up on you and there is not a darn thing you can do to avoid it.  Our culture is too obsessed with youth worship and your reaction or in my mind over reaction, is a primary example of the effect it has on us.  It is fantastic that you maintain your health and physical fitness as it will make the decades ahead more enjoyable but please, try not to overreact when a member of the younger generations is trying to be courteous.  Life doesn’t end at 60, at least it didn’t for me last year or for the world as was predicted.  One just sees things through a lenses of accumulated wisdom born both of success and failure.  So embrace the gray and give the kids a break.

Another MNB user wrote:

Michael, calm down. Consider the following: I worked at a Dairy Queen one summer during high school. In an effort to be respectful, I used the words “sir” or “ma’am” when addressing customers (including through the drive thru intercom) – that turned out to be a bad idea. I got it wrong once, and she did not appreciate being called “sir”! I was terribly embarrassed and I genuinely felt bad. The point: I changed my behavior and never used those words again.

This cashier was trying to execute store policy/customer service, not exercise personal judgment. Your description of his reaction indicates to me he had good intentions, he understood he offended you unintentionally, and he felt bad about it. I suspect he will alter his behavior because of it. Consider for a moment that he may not even think of 60 as “old” and doesn’t understand why it might offend someone. You may have missed an opportunity to coach him in a positive way about the dangers of posing such a question and why it might offend some people.

So, how do you make this a win? Employ tolerance, patience, and a willingness to be the bigger person. Unfortunately I think you displayed the opposite when you insinuated that he, his store, and his company somehow owe you for not posting the details because of your “sense of fairness” – bad form, sir.


MNB user Elaine Howard wrote:

I have had the same experience as you and HATED it. However, it caused me to examine my reasons for being offended. Was it that the cashier is obviously not observant enough to tell 50-something from 60? Everyone over 40 was ancient when I was working retail! Especially for the wages and working conditions, I say we should give them a break and be aware that it is not their job to watch out for our defensiveness, but it is their job to be sure they offer all shoppers the discounts that could be available to them at checkout. It’s a very competitive marketplace out there—every discount is noted.
 
P.S. Having met you myself, I would have known you could not possibly qualify! But then again, I am close to your age.


From another reader:

Ah, Michael, lighten up.  Kids think you are dead at 40.

From Rudy Dory:

Michael you should have told him you were 67 and he might have said, Dam you look good for your age.  Just saying...

MNB user Erica Schulte wrote in, referencing a suggestion by Mrs. Content Guy that instead of asking, stores ought to just put up signs informing people of the discount and let people announce themselves as qualified:

So I understand where you're coming from, people are easily offended….but as you said, this person was providing a service that he/she didn't need to provide, bring up, ask about, etc. At least they were being thorough with their job and the information they had…it is quite hard to tell how old people are nowadays.  Think Botox.

Mrs. Content Guy's idea is a good one except in one aspect…I went to a mall to purchase a $100 gift card. I had seen advertising all week in magazines, on TV, EVERYWHERE that said if you buy a $100 gift card for this mall you get a $20 gift card free (It was the holiday season). Well this is great, right? I purchased the $100 gift card, completed my transaction and stood there waiting for my free $20 gift card…when none arrived I asked, "Don't I get a $20 gift card for free?" To which she replied "only if you ask for it."  Which, as a marketing professional, made my jaw drop to the floor. Are you kidding me? I saw so many of your ads about this that I came out of my way to your establishment, during your office hrs., and your customer service doesn't align with your marketing campaign?  Needless to say. NEVER again. Plenty of malls to go to. 

So the sign thing and the not offering thing has potential to upset some and send them walking...


From another reader:

There is a large portion of the senior population who would think it rude to ask for their discount.  It may be a Midwest thing but they were raised not to ask even though they would complain amongst themselves if they don’t get it.
 
Many of the places my in-laws frequent are because they don’t have to ask for their discount. They have always been like this.  I don’t agree with it but have found that many in their age bracket are this way.


One MNB user wrote:

Had to laugh when I read this.  My one grandson has friends at college who have worked for Disney as interns at their parks.  There are certain rides that are not to be ridden by pregnant women, and one of their jobs was often "policing" the ride lines as everyone waited in line for those rides.  One of Tom's unlucky friends went up to a lady (he only did this once as the rest of the story will show why) and told her that pregnant woman were not to go on this ride.  Well, you guessed it.  She wasn't pregnant and wasn't happy about being mistaken for being pregnant.  Lesson learned for that poor kid.  From then on, whenever he would see someone whom he suspected of being pregnant, he would simply stand back and shout out to the entire line, "if anyone is pregnant, please step out-of line".  Talk about a no win situation. I would also mention that there were signs everywhere along the ride-waiting-line mentioning this, but Disney figured not everyone reads the signs.

MNB user Wayne Redfearn wrote:

I had to laugh...it's like asking that young, plump woman if she is pregnant only to find out that she had too many bon bons.

I'm 65 and enjoy both the discounts and Medicare coverage... it's the only thing good about getting older that I can see.


MNB user Amanda Bond-Thorley wrote:

Your editorial this morning reminded me a similar incident a few years ago. It happened to me twice in a Hallmark store (2 different stores). At the time I was 44 years young. The first time, I wasn’t even asked if I wanted the senior citizen discount. It was just applied to my purchase at checkout. When I questioned the discount (silly me!0,  I was told  that I had been given the senior citizen discount, which is offered to customers 55 and above.  I was quite indignant, given that I have been told many times I don’t even look like I’m in my forties!   Both times the  cashiers were young enough to be my children and my equally aged friends (while finding the whole thing hysterical) were quick to point out that anyone their parents' age would be deemed “old”. Yet,  I found it offensive that on both occasions the cashiers just smirked when I pointed out that I was more than 10 years away from being eligible for a membership to AARP! I agree with you that companies  need to train our younger folks to avoid asking such personal questions. Thanks for bringing this up! I guess the winner here was P&G, who benefitted from my immediate and ongoing purchases of anti-wrinkle creams!

MNB user Jeanne Colleluori wrote:

My not-so-favorite grocery store story – I was loading groceries into my car when a nice, young parking lot attendant asked if I would like help. He was so eager that I backed away and let him finish the job. When he finished, I said, “Thank you for your help.” He then politely replied, “You’re welcome. We’ve noticed that our older customers really appreciate this service.”….. Yes, I could be his mom; I’m 52. But I’m fit, upright, and was doing the job without a struggle before he approached me. After my anger subsided, and my wounds had been thoroughly soothed, I realized he was trained to ask that question and was simply doing his job. Is it reasonable to expect teenagers to think beyond their training? The teenage brain focuses on “me” not “you”, so grace, class, and kindness may not be a realistic expectation.

MNB user Tom Ewing wrote:

It’s not the years Michael,  it is the mileage!

Extra credit to Tom for the movie reference.

And from yet another MNB user:

Really? Lighten up and maybe change the way you dress...look at your pic...Who dresses like that? You look like you ARE 60....there I said it!

Wow. That's a little harsh, don't you think?

And another:

I think you are being overly sensitive.  Looking at your picture, I think you would/should qualify for the senior discount.

Even harsher!

Michael doesn't need me to defend him ... and I suspect he'll have something to say about this kerfuffle in his column next week.

But I will say this. I know Michael well enough to know that he wasn't really offended by this, but rather saw in it the opportunity to talk about a subject that retailers and other marketers ought to think about - the fact that many baby boomers, even as they get older, don't think of themselves in those terms. Smart marketers don't just talk to people as they are, but also as they think they are ... and marketing to people's aspirations is one of the most powerful approaches that one can take.

If anything, Michael has a good sense of humor about this kind of stuff.

There's a difference between being "youth obsessed" and being unwilling to graciously accept the idea of getting old. I vividly remember my dad's 40th birthday, and looking out the 2nd floor window of our house, watching my parents and their friends celebrating with a barbecue in the back yard. And I remember thinking that 40 seemed utterly ancient. I'm 58 now, and certainly don't feel ancient ... in the same way that Michael doesn't feel old ... but somehow the number doesn't jibe with the reality. Or maybe it does. That's the disconnect - and how marketers should deal with it - that Michael was exploring.

I've found that lately, when going through airport security, the TSA agents have been scrutinizing my picture a little more closely than they used to ... I think because my hair has gotten a lot grayer since my ID photo was taken. I've gotten to the point where I have a standard line ... I just grin and say, "It's me. Older but not wiser."




Got a number of emails regarding continuing reports of Walmart experiencing a significant out-of-stock problem...

MNB user Justin Fishman wrote:

Your report & Bloomberg's info is 100% accurate in my experience.

They are out of stock on tons of things. One makes an effort to shop WM on the premise it is one stop shopping & well priced, but if they are out of half the things on ones list, what is the point.

Also they carry their economizing to extremes & don't apply good judgement. Often it is evident the buyers have driven the supplier too far & the product while cheap is poor & delivers no value. Private label oatmeal, cheaper than Quaker, but full of husks & stems, makes it worth nothing. Etc, etc.
 
They are stubborn & resistant to input & hate to change.


MNB user Chris Tomandl wrote:

In regards to Wal-Mart’s OOS woes, I remember being at a major grocer’s executive meeting a few years back and being told that their research showed a major issue in OOS. The issue was that a typical customer with a shopping list had between 12 and 16 items on it and that at their stores, an audit found that 2-3 items on EVERY list were unavailable during that trip. The best traffic driver for their competition was themselves! So what does that mean to a butcher shop? Not as much as it does to a Wal-Mart Super Center that sells convenience and one stop shopping at a guaranteed low price. If you are planning tacos for dinner and Wal-Mart has the lettuce, tomatoes, cheese, and hamburger but is out of the taco kit and you need to make another stop, you just broke a promise to the consumer and also lost the consumer’s savings by having to drive somewhere else and their time. The scary part? Sending the consumer to get taco shells at Kroger and seeing that the tomatoes she just bought at Wal-Mart are on sale cheaper than Wal-Mart and of better quality. Now that is the true vicious downward cycle.

MNB user Pete Deeb wrote:

The fact that Wal-Mart admits to 5-10% out of stocks indicates that the problem is very real! Most consumers get annoyed when they can’t find one item that they use on a shopping trip, let alone 10% of them! There is an easy way to verify the truth, most manufacturers Reps or the big 3 Broker Reps track out of stocks and distribution voids religiously. The Brand manufacturers are very upset at any number over 2%! The hand held tracking systems in use today make verifying out of stocks very easy and very accurate! I would be surprised if those numbers don’t reveal the truth! Very good retailers scorecard the manufacturer deliveries to their DC’s and demand 99% or better. When the retail only translates to 90-95% of those warehouse shipments a lot of the fault has to be put on the Retailer.

From another reader:

Well, as someone who worked for WalMart for 20 years and just got back from Denver last week I would STRONGLY suggest that Ms. Buchanan (the Walmart spokesperson who said that the out-of-stock problems were both isolated and overstated) visit the Denver market. While there I made visits to three WalMart’s, ALL were dirty, had Huge out of stock issues throughout the store in ALL departments, bathrooms that hadn’t see a mop for a while, and yes, no associates to be found. Yes, it did snow there that week, BUT in visiting three Target Supercenters and two King Soopers they did not reflect ANY of these conditions. WalMart needs to quit their denial of outs.

Just last month Bill Simon at WalMart meeting openly stated they did have an out of stock issue, so I guess Ms Buchanan didn’t attend that meeting. It is crystal clear that since taking over the US operations, Bill Simon had cut the heck out of hours, reduce full time shifts, “reassigned” the door greeters and just okayed a massive expansion in self checkouts. While at the same time coming up with an app for CPG companies and brokers that lets THEM know the “in stock/ inventory level” of their items while there in the store, or as its being called, “ guilt merchandising”. Let's also point out that WalMart is now requiring CPG companies to have the representatives stock shelves while they are in the stores, and also are asking for funding so WalMart can hire outside companies to do the same. While watching expenses is nothing new for WalMart, Simon has taken it too an all new level in hopes to offset the margin pressure he must be under in TRYING to cut prices in HOPES of getting back to EDLP, which in my opinion is not really where he wants to go.

WalMart has a real issue, as one travels and hits stores across the US, you can easily  see the inconsistency in store conditions, layouts, signage and execution. What I find interesting is watching how the store managements seem to run around the store with a list of to do task sent from the home office each day like they are unable to think for themselves.


And another reader:

Regarding the Walmart out-of-stocks, I think it was last year that Duncan MacNaughton gave a presentation to manufacturers where I got the impression that he and/or Walmart were blaming the vendors for the out-of-stocks at retail.  At the time, I thought it funny that (in a bad economy where everyone was looking to sell as much as possible,) manufacturers would not be producing enough product to handle, arguably, their largest customer.  And, if that was the case, wouldn't all of the smaller retailers also be experiencing this problem?  I have to believe that Walmart has a state of the art automatic replenishment system for their stores so the back rooms have to be filling up.  To me, the Bloomberg article reinforces my thought.  "Penny wise, pound foolish" comes to mind when I hear of retailers "saving" money by eliminating those towards the bottom end of the totem pole.  Other sayings are, "you can't sell out of the back room." and "you can't sell from an empty cart."  That's one of the great things about being old...  You have so many "sayings" to draw upon.  Maybe Walmart's response to customers that can't find the products they want should be,  "You name it, we've got it....  you just haven't named it yet."

From MNB user Bryan Nichols:

There is a problem if Wal-Mart actually considers a 5 to 10 percent out of stock rate normal and acceptable.  I suspect most retailers would be very concerned if 10% of its products were out of stock.

And another reader:

Walmart, here in NoWheresVille is the only game in town.   And the stock gets smaller and smaller.  Fewer and fewer checkout lines are open.   Wait is ridiculous.   

BTW, the quality of its own food brand, especially the frozen food section, gets worse and worse.   No longer will buy it.   Won't buy its meat or produce.   Did break down and buy a head of needed garlic.   Figured how badly can they botch that up.   A nice firm head of garlic ended up being total mold when I wanted to use it the next day.

Never again.


MNB user Nick Freed wrote:

Out of stocks are a massive problem for any retail business.  Sometimes these out of stocks are controllable and sometime not, but this makes no difference to the customer.  Each single out of stock is of course a lost opportunity for a sale, but even worse this is a negative shopping experience for the customer.  Enough negative shopping experiences and an unhappy customer turns into an ex-customer.  
 
I can imagine the extent to which out of stock issues become amplified in a supply chain the size of Wal-Mart’s and I would expect higher levels of out of stocks due to this.  However, I was shocked to hear that in stock levels average only 90-95%.  One out of every ten to twenty products being unavailable adds up to be an enormous amount of lost sales and negative customer experiences. 
 
I am also curious if Wal-Mart is using inventory reporting metrics or actual retail audits to arrive at this calculation.  With the sophisticated inventory management systems available today, there is a large amount of easily traceable real time data available on store inventory levels.  Using reporting metrics at our company, warehouse product retail in stock levels are typically between 98.5%-99.5%.  However, when actual in store audits are preformed this number is often slightly lower due to product being in the backroom or poor store level execution of the ordering systems.  I can’t imagine Wal-Mart is in a great position with regards to either of these issues.  This number also gets lower when the product is DSD or entirely manually ordered at store level, more areas I would suspect Wal-Mart has opportunities. 
 
Wal-Mart is a fierce competitor for any retailer and the issues with out of stocks are certainly not causing a mass exodus of customers.  Yet there is opportunity for competitors who can more effectively manage their in stocks levels to gain customers from Wal-Mart.  After all winning in a competition is all about doing something better than your opponent and all businesses need to do something better than their competition to survive.


MNB user Bob Vereen wrote:

I shop regularly at two different Walmarts and have for many years (also a longtime shareholder).  

Have not noticed any stock-outs of any consequence, so the problem probably is more an individual-store problem, rather than a chain problem.





Yesterday, MNB pointed with delight to a video used by United Fresh to hype its upcoming convention, featuring CEO Tom Stenzel skydiving out of an airplane and landing on an aircraft carrier anchored in San Diego, which is where the show will take place. The video was great and demonstrated, breathtakingly, that Tom Stenzel has real onions.

You can see the video here.

Well, I got a note from Tom Stenzel yesterday:

Kevin, please remind me that whenever I want thousands of my closest friends to see an important message, I should advertise on MorningNewsBeat.  Who knew when you poked a little fun at our skydiving video today that the emails would overwhelm my inbox?

And, since this was a marketing stunt, let me repeat ... everyone be sure to come see us at the United Fresh Produce Convention, May 14-16 in San Diego!


For the record, I was not poking fun. I was enormously impressed. If it had been me, I would've puked on the camera.




Finally, responding (I think) to stories and commentaries about gay marriage and the consequences that some retailers face when they take controversial political/cultural positions, one MNB user wrote:

Why are you so determined to take what you have as an informative daily business resource and turn it into a political platform.

It is clear you have a Liberal slant on your personal views and that is good for you but please don’t ruin what I have found to be a great source of information as a business guide for all of us, and allow these individuals to go back and forth on your page with their political views.

One TV actor was known for a very basic statement “facts just the facts” can you please get back to this on your page.


When these stories have come up, I think they've generally been initiated by a business story - in this case, positions taken by senior execs at Chick-fil-A and Starbucks. I will admit, however, to sometimes taking positions on subjects having nothing to do with business - like the designated hitter, which I continue to believe is an abomination.

Also, with all due respect .... MNB has never been about "just the facts." It is about identifying stories that I think shed some light on how consumers behave and/or how marketers respond, stating my biases when relevant, and then trying to offer provocative commentary when appropriate, and letting you do the same.

"Dragnet," this ain't. Then again, I think MNB is a lot more fun than Jack Webb.

From The MNB Culture Desk

Here at MNB, we appreciate people with a strong work ethic.

So it is worth noting that Roger Ebert, the longtime film critic for the Chicago Sun Times and former host of a movie criticism television show that existed under various titles, announced yesterday that a recurrence of cancer means that he'll be cutting back a little bit on his workload.

Last year, Ebert wrote more than 306 film reviews, a couple of blog posts a week and a bunch of other articles. All this from a man who can no longer speak - he has had cancers of the thyroid and the salivary glands and lost his lower jaw in assorted surgeries.

Ebert wrote on his blog that "at this point in my life, in addition to writing about movies, I may write about what it’s like to cope with health challenges and the limitations they can force upon you. It really stinks that the cancer has returned and that I have spent too many days in the hospital. So on bad days I may write about the vulnerability that accompanies illness. On good days, I may wax ecstatic about a movie so good it transports me beyond illness."

KC's View: I do MNB about 230 days a year, so I have some small appreciation for what Ebert has accomplished and continues to accomplish. After I see a movie and write about it for MNB, I often will then go read what he said about it ... I learn from doing so, because I'm interested in what he saw and reacted to and how it differed from or was similar to my experience. Even when we don't agree, I find myself caught up in his enthusiasm for the art form, even when he's disappointed by the execution.

And so this morning, as Ebert embarks on what he calls his "leave of presence," I thought it was worth saluting a guy who has always gotten it done, and who continues to get it done, even under the toughest of personal circumstances.

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Kevin Coupe was an injection of high energy. Both his presentation and the session he facilitated were huge hits with our team.  Unanimously, people told me how right on, topical and extremely well presented his speech was!"
- Peter T. Wolf, Chief P Global Sales Operation, ParTech Inc.

With a uniquely fast-paced, provocative and entertaining approach, Kevin Coupe identifies the ways in which consumers are changing, the reasons behind these changes (technology, the economy, culture, demographics), how new and unorthodox competitors are altering the marketing landscape, and what companies need to do to find and exploit differential advantages.

"My team was mesmerized by Kevin’s presentation. Thanks to Kevin, they left the meeting newly energized with a strong sense of purpose.”
- Donna Giordano, President, Ralphs

"He’s refreshingly real and authentic…it’s more of a conversation than a presentation ... He uses everyday customer experiences to think about food retailing and the possibilities ... Many times he was reaffirming where we were headed, occasionally he pointed out something we hadn’t thought about and in at least one moment, we knew we had a lot of work to do ... " - Beth Newlands Campbell, President, Food Lion

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Want to bring this kind of excitement and energy to your next meeting or conference? Check out KevinCoupe.com.

Contact Kevin Coupe at 203-662-0100, or email him at: kc@morningnewsbeat.com .

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