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From The MNB Archives
Friday, July 26, 2013
by Kevin Coupe
Sometimes, I just want to share stories that I admire for being clever.
Like this one.
National Public Radio's Marketplace had a story the other day noting that when Apple released in most recent quarterly profit report, it said that it had $146 billion sitting in the bank.
So what can Apple buy with $146 billion?
Here's the Marketplace list:
• "A country full of geeks. (Apple could buy a pair of Google Glass for everyone in Germany.)"
• "Staten Island. (Apple could buy all the real estate and property in Staten Island, according to 2010 data.)"
"10 Mark Zuckerbergs. (Apple's wealth is ten times that of the Facebook founder.)"
They may say that Apple has lost a step. But there are about 146 billion reasons to think that it is going to be just fine ... that it has the wherewithal to take its time while defining the next innovation it will bring to market.
Regardless...that's clever writing. Just thought I'd share it.
The Wall Street Journal reports that the Great Atlantic & Pacific Tea Co. (A&P) is circulating an internal memo in which company chairman Gregory Mays lays out a number of options for assuring its future, with one of them being the sale of the company ... a prospect that insiders tell the Journal is more likely than not.
Other options include raising capital and going through refinancing. But a sale of the company - possibly to chains that include Kroger (which just bought Harris Teeter, and does not have a presence in the Northeastern US) and Ahold (which could see some of A&P's locations as a way of backfilling and cementing its footprint there) - is seen as the most logical next step.
Another company mentioned in the piece as a possible suitor - Cerberus Capital Management, which led an investor group that acquired a number of banners, including Albertsons, from Supervalu earlier this year.
A&P emerged from bankruptcy protection in March 2012. The Journal story says that it could be valued by buyers at between $500 million and $1 billion.
I'd love to see Kroger buy A&P, because it would good to have that kind of high-level competition in the region.
But I'm just not sure it is a good fit, and whether Kroger could be effective in the spaces that A&P owns.
But I'm also not sure that A&P fits well into what Ahold does. It just seems like too big a stretch.
Perhaps the real problem is that A&P has become such a shapeless, nebulous entity that it is hard to see it being much of an acquisition, except for the real estate.
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There is a terrific piece on Forbes.com by Chris DeRose in which he describes how his wife, having emailed a complaint to a customer service email address established by clothing retailer J. Crew, got a call back from Mickey Drexler, the company's iconic CEO, and Libby Wadle, J. Crew's president.
The entire piece is worth reading here. But here's an excerpt, which gets to the bottom line point:
"Drexler’s passionate pursuit of customer feedback is an inspiration to any of us who have written an irritated letter after a bad service experience or disappointing product purchase. Hopefully, Drexler will also serve as a role model for senior executives stuck in their headquarter offices to get out and interact with customers on the front line. Sure, such phone calls provide only one data point. But sometimes an emotional customer anecdote can give the impetus for making a judgment call that no spreadsheet can provide.
"Drexler not only pays attention to what customers are saying but also unabashedly acts on it, never apologizing for getting involved in the minutia of business operations. He will be the first to say that attention to detail is crucial for creating a product and brand experience that makes customers care enough to write those nasty letters in the first place."
This is exactly what savvy CEOs do. They don't hide behind their desks,they don;t interact only with direct reports and the board of directors. No, they get out in the stores, they get intimately involved with the brand experience, and they are smart enough to know that for a vision to be implemented, it has to be shared by everyone within a company.
What Drexler is doing isn't top-down management. Rather, it is top-redefined leadership.
The Huffington Post has a story about how fast feeder White Castle is testing an innovation in its Elizabethtown, Kentucky, store - "a stainless-steel and glass griddle set within a wall-free kitchen that allows patrons to see their burgers being cooked."
If the test works, the company says, the change will be rolled out nationwide.
According to the story, "White Castle executives said the idea behind the new look is to provide people waiting for their burgers a bit of food-related entertainment -- using an open kitchen to amuse customers in the same manner as knife-wielding sushi chefs and dough-tossing pizza cooks do at other restaurants."
The story doesn't address it, but I also think that having an open kitchen potentially does wonders for food safety practices ... if you know the customer is watching, you are a lot more likely to be vigilant about you handle and prepare food.
Even before I got on this transparency kick, I loved the notion of open kitchens. When I travel, I love to find restaurants that have bars that open onto the kitchen, so I can watch the chefs at work. It is like having dinner and a show ... and usually the food reflects the kind of passion that an increasing number of chefs are willing to put on display for their patrons.
The New York Times has a piece about how General Mills is taking what might be referred to as an enlightened approach to social media - being "brand agnostic," and using its Facebook site, "hello, Cereal Lovers," to occasionally highlight competitors.
For example, "Hello, Cereal Lovers featured a recipe suggested by a user made with Post Honey Bunches of Oats, while on Twitter it reposted a recipe made with Post Fruity Pebbles and Kellogg’s Rice Krispies."
“It is a new framework to consider now that we’re in great conversations with the people that buy and enjoy our products,” says Carla Vernón, marketing director for General Mills. “It’s important for us to be authentic and recognize what they want to share and hear about.”
The New Yorker has a terrific bit of analysis by James Surowiecki in which he looks at Barnes & Noble and suggests what it needs to do to be relevant. Or at least not obsolete.
It is possible, of course, that physical bookstores are dealing with slow, inevitable, extinction ... but the fact is that a lot of small, independent bookstores are thriving, even in the face of Amazon's success, because they have "close ties to both publishers and customers." (There's a business lesson just in that statement, if you read it carefully.)
Barnes & Noble also has some advantages. No national bricks-and-mortar competitor, for one. Short leases. Good locations. And the support of publishers who want - indeed, even need - Barnes & Noble to remain in business and strong.
To read the entire story, click here.
The Associated Press reports that the US House of Representatives Oversight and Government Reform Committee has approved a plan that it says would allow the US Postal Service (USPS) to cut as much as $4.5 billion a year from its budget - a major initiative for an institution that lost $16 billion in 2012 alone.
Among the innovations, the story says, is "a plan to move to cluster box and curbside delivery, which includes mailboxes at the end of driveways ... The cost differences are clear. Curbside delivery costs average $224 per year for each address, while cluster box delivery averages $160. Door-to-door delivery costs the agency about $350 per year, on average."
The plan would also eliminate Saturday mail delivery, but would keep six-day package delivery - a proposal that was rejected by the US Senate last year.
People with physical hardships would be able to get exemptions that would allow them to continue getting door-to-door mail delivery.
The USPS released a statement saying it would evaluate the House proposals.
Sure. What the hell. Give it a shot.
I haven't had mail delivered to my door in 15 years, so this isn't going to affect me. It had to be that long ago that we got a note from the USPS informing us that as a way of being more efficient, they'd be delivering mail to a mailbox at the end of the driveway. Which meant, of course, that we had to go out and buy a mailbox to put at the end of the driveway.
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Make the product. Produce the content. Collect some money. Repeat.
As a friend of mine says, "It's a living."
I get requests from time to time, when I'm traveling, to offer a time when interested MNB readers can get together to have a beer or a glass of wine. I've always found these evenings to be tremendously rewarding, because I'm able to put faces and voices to the names of readers with which I have become familiar.
So, since I'm in the Pacific Northwest for the month, I thought I'd schedule just such an evening in Seattle - on Friday, July 26, from 5-7 pm, at Etta's, located at 2020 Western Ave. I'll be at the bar, almost certainly enjoying a glass of wine while chatting with Morgan, my favorite bartender, and I hope to see you there.
...with brief, occasional, italicized and sometimes gratuitous commentary...
• The New York Times reports this morning that the US Justice Department has announced that it has identified the five members of a gang - four Russians and a Ukrainian - who "stole and sold 160 million credit card numbers from more than a dozen companies, causing hundreds of millions of dollars in losses."
Among the companies hit by the hackers: Hannaford, JC Penney, Carrefour, and JetBlue.
The story continues: "The attackers had a sophisticated division of labor, according to the indictment. One hosted an anonymous Web server. Others broke into the targeted sites. Still another went inside and fetched the items of interest. The tactic is a signature of Russian organized crime syndicates ... The defendants were identified as Vladimir Drinkman, Aleksandr Kalinin, Roman Kotov and Dmitriy Smilianets of Russia and Mikhail Rytikov of Ukraine. Mr. Smilianets and Mr. Drinkman were arrested in the Netherlands last year. Mr. Smilianets has already been extradited to the United States, where he is expected to make his first court appearance next week. The other three are at large."
• Nielsen is out with its "Global Survey of Consumer Confidence and Spending Intentions," reporting that "Global consumer confidence increased one point to an index of 94 in the second quarter, according to consumer confidence findings from Nielsen. The increase is part of a slow, but steady upward movement in consumer sentiment reported in the first half of the year."
In the US, the resurvey says, " a robust rebound in the housing and equity markets helped elevate confidence to a score of 96, an increase of three index points in the second quarter."
• The Wall Street Journal reports that Smithfield Foods is saying that the investigation into its acquisition by Chinese meat producer Shuanghui International Holdings Ltd. has been extended by 45 days, as the Committee on Foreign Investment - which must clear the propose $4.7 billion deal before it can be consummated - moves into the second phase of its review.
• The Wall Street Journal reports this morning that companies such as Kimberly-Clark, Georgia Pacific and Procter & Gamble are all engaging in a time-honored method of cutting costs - "desheeting," or "reducing the number of sheets of toilet paper or tissues in each package while holding retail prices constant."
The story goes on to say that "the continued reliance on desheeting and other volume-shrinking tactics underscores the still-frugal outlook of consumers four years after the recession ended. It also reflects the difficulty companies that make basics like toilet paper have raising prices in the face of competition from store brands and other cheaper alternatives."
One current trend is toward reducing the number of sheets while simultaneously making the products bulkier and softer, which has the effect of ameliorating any negative consumer reaction.
Desheeting I can live with. Thank goodness they're not short-sheeting.
• The Los Angeles Times reports that "Dunkin’ Donuts has signed agreements to open 45 new stand-alone Dunkin’ Donuts stores in Orange County and Los Angeles starting in 2015. The stores, to be launched by four franchise groups, would be the brand’s only locations in Southern California not at a military base. That stop, which opened last year, is at Camp Pendleton north of San Diego."
The company also says it may look to start opening stores in "non-traditional" locations, such as colleges and universities, casinos, supermarkets, airports and travel centers.
Got the following email from an MNB reader:
I've weighed-in with you on the postal issue a few times, but have never spoken-up about the world of grocery, which I've been selling to for 25 years. I enjoy your focus on our industry and your opinions, which by-and-large I agree with. As I sat in day two, of a two-day meeting in Chicago, I was struck at how I was being included in a very special and unique opportunity that many, many, many of your readers could learn from ...
Whole Foods Markets (WFM) has a program started in 2006 called the Local Producer Loan Program (LPLP) where-by you can apply to your Regional Category Coordinator (i.e. grocery buyer, health & body buyer, meat, etc.) for a low-interest loan to assist you in expanding your business, thus giving you the opportunity to sell more within your home region, or expand into other regions. Whole Foods prefers that the loan be used for capital expenditures (equipment) though exceptions have been made. The amounts vary from a few thousand dollars to $100,000 depending on a multitude of factors related to your history within Whole Foods.
This symposium was the first annual meeting of all recipients of the LPLP and was a half-day trade show and full day of Q&A sessions. At the trade show we set-up tabletops with our products and collateral material and had the opportunity to present to every WFM Regional Grocery Coordinator (buyer), which is invaluable for small producers. Our ability to travel to ten US regional office is many times unaffordable. There was no charge to us as vendors to participate and WFM brought from 2-5 representatives from each region to this event, plus what appeared to be dozens from the global headquarters. It also gave us a chance to meet and tell war stories with other like-sized companies.
The second day was all about WFM helping us be better at our jobs. Without going into details about each of the seven sessions here is an idea of what they were about: WFM commitment to local producers and the loan program, how do you expand into other regions, and how to navigate the supply chain. These were all presented by the top ranking person in the respective department with an extensive Q&A after. Next were panel discussions on extremely relevant topics, such as: maintaining your brand though picking the right broker or brand manager, success stories and advice "What we wish we would have know then," social media ideas, and stories and what do do if you are looking for capital. They told us that with a goal of 1,000 US stores they had to have those of us in attendance, and more like us, for them to reach that goal and still have unique products that meet their standards for health and sustainability.
They reported, to enthusiastic applause, that they have recently raised the amount earmarked for this program from the original $10,000,000 commitment in 2006 (which they will reach before year-end) to $25,000,000 moving forward. Obviously it's working for them, and the proof is them telling us that our [local vendors] sales can be two to four times those of like-products in a category.
The reason I thought of MNB while sitting in the very first session was, what other retailer in America (or the World for that matter) would, first-off loan you money to grow your business and secondly would rent a space in a major cities CBD for two days and fly dozens of their most relevant high-ranking executives in to tell a group of vendors how to grow with their company? Having sold to WFM for over 25 years with a number of small entrepreneurial companies, I was moved by this act of foresight on their part and the commitment to their vendors. This is unheard of and they are to be commended!
From a small one-man, or Mom & Pop producer to a multi-national large retailer, I think lessons can be learned from this, by any industry, on how and inspire those on your team to build better relationships to the mutual benefit of both parties.
Thanks for sharing. Great story.
On another subject, an MNB reader wrote:
One of your readers seems to question why Harris Teeter sold to Kroger although perhaps it could get a higher price from another. Perhaps, it's not just about always getting the stock price for the shareholder, but also about a responsibility (maybe even an obligation) to have sustaining jobs and career opportunities for their employees as well as being a quality food provider to their customers and communities. While a private family business may be more likely to think about their employees, customers and community, there's no reason a publicly-traded company cannot as well. It's not just altruism, it's being responsible.
On the subject of e-commerce, MNB user Mark Raddant wrote:
It will be interesting to see what the environmental costs are of all this added shipping. When I order on line, the original package is placed in the shipping package, often more than doubling the weight of the original. Add to that the emissions from countless extra delivery trucks and the added wear and tear on roads and streets. There is always a cost related to the idea of added convenience. Prepared foods made our lives easier, but now we know the added cost of having someone else mass produce our dinners is obesity, increased levels of diabetes, and who knows what else? It might be nice if for once, in our headlong rush to make our lives more convenient, we take time to find out if our lives get BETTER.
Regarding eBay's expansion of a same-day and next-day shipping program, one MNB user wrote:
Based on my experience, this week, I give the advantage to eBay. My pool pump stopped working on Sunday, so I Googled pool pump to find the nearest retailer that carries my pump. I found out the pump I need is a bit scarce, but came across a U Tube video on how to adapt it to a superior, more readily available pump. The new pump was available at Meijer’s but I needed 3 parts for the conversion, which were only available online. I found, and ordered the parts on Amazon. Since I’m not a Prime member, I had to pay shipping.
One of the parts, I needed was out of stock but Amazon indicated they would email me when it would be available and when to expect delivery. By midday, Monday, I hadn’t received an update from Amazon. I had to get the ten dollar part quickly so my pool wouldn’t turn to pea soup, so I Googled the part and found it and ordered it on eBay. I then cancelled my order for that part on Amazon. Shipping on eBay was free and, even though I didn’t specify overnight delivery, the part arrived via FedEx the next day. I’m still waiting for my other parts from Amazon. Thankfully, I was able to take temporary measures to keep my pool clean.
I will now start all my online shopping at eBay.
From MNB reader Jeff Folloder:
I keep reading about the conundrum of traditional b&m retailers being relegated to show rooms for Amazon. Today's Your Views looked at book retailers in the specific. And my mind started clicking (might have had something to do with the triple espresso). Amazon wants to expand their same day delivery services, books are a core business, book stores are still widely distributed... Why don't book sellers and Amazon team up? Link up the inventory and order/dispatch systems, where possible, have the local b&M actually fulfill orders, coupon arrangement for future local purchases...? Customers get their orders faster and the local guys stay relevant. What is worse for a local retailer: carrying dead inventory or moving it at a (presumptive) discount with the possibility of getting the customer into the store to experience added value?
MNB user Cassie Drake wrote, on another subject:
I wanted to respond to the article on Tuesday about the price gap between Target and Walmart. This story and others like it frustrate me. I Love Target! I often use a trip to Target as an "escape" or time to relax, just wondering around each aisle. Going to Walmart is never relaxing and I do dread it every time I go. I understand that I may be paying a little more for a bar of soap that I buy at Target versus Walmart, but I am willing to pay that and probably more because of the experience I have at Target. My fear is that Target will become too concerned with competing with Walmart on price and forget that as a customer I chose Target without much regard for the extra couple of dollars I might have to spend to shop there.
MNB user Dan Graham had some thoughts about yesterday's FaceTime, which suggested that it is counter-productive to stake out positions without considering the possibility that people holding different opinions might have legitimate reasons for their opinions:
Regarding your commentary I would just add that the path to an adult mind is usually education of some type - either formal or through the school of reality known as life. Of course to take the second road you need to pay attention, have an open mind and be willing to learn.
From another reader:
One of the aspects of life which is sorely neglected is the idea of balance. If you train to be an athlete, the best way to perform is in balance, it is more efficient and you are less prone to injury. To ignore balance is to hurt your performance and body. Intellectually, it keeps one from seeing the whole picture and developing a coherent, holistic response. Our culture now emphasizes the opposite. Case in point: when the President made a speech on the environment lately, very little was sown on ANY network; the talking heads jumped immediately to their own discussion of the political battles being fought at the extremes of politico/cultural thought. Absolutely NO discussion of the actual content of the speech.
It seems to me to be impossible to argue with your FaceTime piece this morning although I suppose that some will attack it for various reasons. At least part of the problem is that we get such frequent bad examples from the politicians of all parties on an almost daily basis. I don’t know if the impulse to act so child-like is something that bubbled up to Washington and so many state houses or something that flowed out of them but it sure is disturbing. With so many examples before us daily I don’t think your term Adult Mind is the correct term, it should be the Mature mind…something many adults neither have nor aspire too.
MNB user Blake Steen wrote:
Just because someone takes one side or the other on something doesn’t mean they don’t understand the other side. I’m 100% against a living wage because I saw my dad work two jobs and put himself through school when my sister and I were young. He sacrificed a lot to get an education to make a better wage. For the government to regulate anything is scary including a “living wage”. That is why I take the side of gay marriage as the government should not be telling people NO on that either.
To (in so many words) call your readers unintelligent because they choose a side is very unfair. It scares me when people don’t take a side. To take a side means you understand both sides of the issue and have chosen your opinion. Be careful when opining on such issues people are smarter than you give them credit for.
Not necessarily. There are a lot of folks out there who take positions without making any effort to understand the other side. They're called ideologues. And ideology, to quote the great Pete Hamill, is usually just an excuse for not thinking.
And, finally, from another reader:
You pompous, over educated, blowhard…how can you claim people default to calling names and demonizing people when they disagree.
And how could you possibly think your lefty commie diatribe about let’s all listen to the other guy’s perspective is worth the time I spent reading it.
Then you drag our politicians into the mud…well if we didn’t have right minded people fighting for right minded ideas our country would be going to hell in a hand basket faster than we already are.
Some days, professor, you just amaze me with your condescending thinking.
Of course this is all 100% in jest.
What a concept - compromise solution.
Last weekend, we went out to Manzanita, a small and quaint town on the Oregon coast. When I say small, I mean small. Manzanita has a population of about 600 people.
But Manzanita also has one of the most gorgeous beaches that I've ever seen, and as we walked it, marveling at the open vistas, we bumped into a couple who told us a story.
It seems that during the early 20th century, Gov. Oswald West led a drive to reclaim the Oregon oceanfront as public lands...which means that unlike in other parts of the country, where beachfront property is claimed by the wealthy and wealthier, Oregon's beachfronts belong to the people of the state. Sure, there are houses nearby, but the beaches are public.
And it is a perfect example, IMHO, of what government can and should properly do. To me, it is yet another example of what makes this state so special.
The wonderful meals continue here in Portland. Let me give you an example.
The other night, we went to a restaurant called Tasty n Alder, the third restaurant opened by chef John Gorham. No reservations taken ... you have to get there at 5:30, when the dinner seating starts. We did that, and were glad we did, since the place was pretty much full by 5:45 or so.
Among the things we enjoyed were the best Low Country Hush Puppies I've ever had, plus an amazingly spicy and flavorful Indonesian Short Rib Stew "Rendang," served with sticky rice. It was bold in all the right ways, and went perfectly with a pFriem Strong Blonde Ale from Hood River....just an extraordinary meal, shared with the women in my life - Mrs. Content Guy, and the Content Daughter.
But I'll tell you something that made the meal really special. To tell the truth, my daughter has never been the most adventurous eater. She has fairly conventional tastes (and, as you all know, her favorite food is meatballs). But she tasted the Short Rib Stew, and loved it ... and ate lots of it.
That meal ... and watching my daughter's palate expand, almost before my eyes ... was one of the best of my life.
And it figures it happened in Portland.
That's it for this week.
Have a great weekend. I know I will. And I'll see you Monday.
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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.
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