business news in context, analysis with attitude

Published on: August 9, 2012

This commentary is available as text or video. Enjoy either, or both.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

I grew up at a time when the "generation gap" was a popular turn of phrase. It was the late sixties and seventies, the political and cultural divide between kids and their parents may never have been greater.

I was thinking about it this week when I was talking to a fellow who mentioned to me that of his three children, only his youngest had a checkbook - and she only got it because her landlord required a personal check to pay her rent. The others have found other ways to pay their rent, and a checkbook is just beside the point. It's irrelevant.

I'd never thought about it before, but he's right. I have three kids, and none of them use checkbooks. They have checking accounts, but make all their payments online. I'm pretty sure that they know how to write checks, but I'm not entirely sure. Maybe I should find out.

I was in an airport lounge not that long ago, and a woman near me was on the phone instructing someone back in her office about a package that had to be mailed ... and she had to take him, step by step, with the process of what to do when you go to the post office. Again, the whole process is pretty irrelevant to the younger generation, which is why it is somewhat amusing that the US Postal Service spends so much time trying to figure how to fix its infrastructure at a time when it seems entirely possible that its time has passed and it has outlived its usefulness.

This is the world today. Things that we all are familiar with, that have been part of our existence for as long as we can remember, simply don't matter to an entire generation.

I love the description of the younger generation as "digital natives," while people my age as "digital immigrants." They cannot remember a time without the internet, without iTunes, with iPods, without cell phones. People my age can ... are we have to learn the language.

But we have to learn.

Which is why it continues to amaze me when I give speeches around the country and run into grocers who have never gone on Amazon's grocery pages,, have never ordered any grocery product from Amazon, and often don't even know that Amazon sells groceries.

I'm beginning to feel a little like John the Baptist, wandering the wilderness trying to bring illumination to as many people as I can.

But I'll do it if I have to.

I'm not saying that Amazon is the be all and end all of e-grocery. But I am saying that they are a competitor, they tend to be an enormous factor in any category they enter, and that people in the supermarket industry need to know what they are up to.

In fact, no matter what you sell, you ought to whether Amazon is in your business or is planning to get in your business.

So go to Amazon. Now.

Your business cannot afford to be the victim of a generation gap.

That's what's on my mind, and I want to hear what is on your mind.

Remember....you can access this and every FaceTime video by going to the MorningNewsBeat Channel on YouTube.

Published on: August 9, 2012

by Kevin Coupe

I love this idea.

The New York Times reports on how, in the San Francisco, area young technology-savvy people flock to the city, "aspiring tech entrepreneurs on the bottom rung of the Silicon Valley ladder."

They often have no job, or little money. But what they have is passion, and frequently a lot of interesting ideas.

And so, an entrepreneur of a different kind came up with an idea - "a minichain of three bunk-bed-stuffed residences under the same management, all places where young programmers, designers and scientists can work, eat and sleep." Called "hacker hostels," these residences offer not just cheap rent of about $40 a night, but also "camaraderie and idea-swapping," with potential tenants "screened to make sure they will contribute to the mix." Some people stay days, some much longer, as they look for work, funding, and a more permanent place to live.

The story notes that "hackers - the Mark Zuckerberg variety, not the identity thieves - have long crammed into odd or tiny spaces and worked together to solve problems. In the 1960s, researchers at the Stanford Artificial Intelligence Laboratory slept in the attic and, while waiting for their turn on the shared mainframe computer, sweated in the basement sauna." But this may be the first effort to institutionalize the concept.

This just strikes me as so smart, and quite frankly, it is the kind of thing in which tech companies - in fact, any company with an IT component - ought to be investing. It seems to me that the one thing that the world cannot have enough of is smart young people with great ideas, enthusiasm, and a desire to mold the future. And I cannot help but think that these "hacker hostels" - while they might not be a place I'd want to sleep or live - are serving as a kind of hatchery for concepts and businesses that will change the way we live and work.

Which is kind of cool.

Published on: August 9, 2012

Cool story in USA Today about how "the convergence of smartphone technology, social media data and futuristic technology such as 3-D printers is changing the face of retail in a way that experts across the industry say will upend the bricks-and-mortar model in a matter of a few years ... Within 10 years, retail as we know it will be unrecognizable, says Kevin Sterneckert, a Gartner analyst who follows retail technology. Big-box stores such as Office Depot, Old Navy and Best Buy will shrink to become test centers for online purchases. Retail stores will be there for a 'touch and feel' experience only, with no actual sales. Stores won't stock any merchandise; it'll be shipped to you. This will help them stay competitive with online-only retailers, Sterneckert says."

The story goes on:

"Branding strategist Adam Hanft says this all might sound futuristic, but much of it is rooted in reality. He says satellite stores will open in apartment buildings and office centers. FedEx and UPS will delve deeper into refrigerated home delivery. Google trucks will deliver local services. Clothing — even pharmaceuticals — will be produced in the home via affordable 3-D printers."

And there's more:

"Technology advances won't just change the physical appearance of stores for consumers, but should transform the retail workforce into more of a customer-friendly field, too. Retailers who don't adapt quickly and successfully risk losing out, Sterneckert says.

"What might this evolution mean for the nation's malls and shopping centers and people whose paychecks depend on today's retail model? Experts aren't predicting the end of the in-store experience, but it stands to reason that as with other industries, technology might improve efficiency while setting retailers on a path toward a leaner workforce."

The whole story is worth reading here.

Published on: August 9, 2012

Fortune has a terrific piece about the recommendation systems developed by Amazon.com, noting that it "is based on a number of simple elements: what a user has bought in the past, which items they have in their virtual shopping cart, items they've rated and liked, and what other customers have viewed and purchased. Amazon calls this homegrown math 'item-to-item collaborative filtering,' and it's used this algorithm to heavily customize the browsing experience for returning customers ... Go to Amazon.com and you'll find multiple panes of product suggestions; navigate to a particular product page and you'll see areas plugging items 'Frequently Bought Together' or other items customers also bought."

But here's the interesting thing that probably will surprise you: the recommendation process - especially when it comes to emails - isn't entirely automated.

"Whereas the web site recommendation process is more automated, there remains to this day a large manual component," Fortune writes. "According to one employee, the company provides some staffers with numerous software tools to target customers based on purchasing and browsing behavior. But the actual targeting is done by the employees and not by machine. If an employee is tasked with promoting a movie to purchase like say, Captain America, they may think up similar film titles and make sure customers who have viewed other comic book action films receive an email encouraging them to check out Captain America in the future."

You can read the whole story here.

Published on: August 9, 2012

The nonprofit Cornucopia Institute announced that it has "filed a formal legal complaint with the United States Department of Agriculture (USDA) against several infant formula manufacturers that are adding two synthetic preservatives to certified organic infant formula," noting that "the Organic Foods Production Act, passed by Congress in 1990, explicitly bans synthetic preservatives in organic food."

The preservatives identified by the Institute are "beta carotene and ascorbyl palmitate, synthetics that are added to infant formula to prevent the oxidation and rancidity of ingredients such as the controversial patented supplements DHA and ARA, manufactured by Martek Biosciences Corporation (Royal DSM) and marketed as Life’sDHA." The Cornucopia Institute named the following brands of organic infant formula in its complaint to the USDA: "Earth’s Best, Similac Organic, Vermont Organics, Bright Beginnings and Parent’s Choice (sold by Walmart). Similac Organic is produced by Abbott Laboratories, a $30 billion pharmaceutical corporation.  The other brands are produced by PBM Nutritionals, owned by Perrigo, a $2 billion dollar pharmaceutical corporation."

Published on: August 9, 2012

AdWeek reports on how Sizzler, Applebee's, Taco Bell and a number of other national restaurant chains are trying "to crack the code of food truck culture. Even companies that aren’t in the business of slinging hash have begun including food trucks in their marketing plans. Last year, for example, the Gap deployed food trucks in New York, Chicago, Los Angeles and San Francisco as part of a two-month promotion for its 1969 apparel collection. And this past spring, NBC’s Today show commissioned a pair of food trucks to make its presence known at the annual SXSW festival.

"But is there really room for Big Macs and Jumbo Jacks alongside all those organic s’mores and sustainable grilled cheese sandwiches?"

The story goes on:

"To die-hard fans, 'corporate food truck' may be an oxymoron along the lines of 'caffeine-free energy drink' or 'eco-friendly SUV.' Food trucks are in vogue precisely because they are an antidote to corporate chains, with their dull, processed and, more often than not, unhealthy eats. Food trucks became hot by offering fresh, artisanal and sometimes daring fare in limited quantities at select locations - status dining for foodie elites on a Groupon budget.

"And yet, given its explosive popularity and intrinsic marketing value, one could hardly expect the food truck to stay trapped in such a narrowly circumscribed paradigm."

The co-oping of food truck culture by corporate behemoths is being done for two basic reasons: it allows them the ability to bring their products to locations not served by their bricks-and-mortar units, and it gives their brands a "cool" billboard with a bit of panache.

Published on: August 9, 2012

Fascinating story in Fortune about how Staples could be facing some tough years ahead, for a number of reasons. For one thing, its core business - office supplies, especially paper - has been severely affected by the recession. Much of the copying and print services business has migrated to fedEx/Kinko's. At the same time, many of the products it sells - both instore and online - also are sold by Amazon, which puts it into direct conflict with a powerful and aggressive competitor.

And it gets worse: "Amazon just bought one of the last hopes for Staples to gain efficiency in its distribution centers: Kiva Systems. Kiva makes the robots that bring 200% to 400% efficiency gains to pick-pack and ship operations. Now that Amazon owns Kiva, it can control pricing of these robots and limit their upside impact at Staples ... Amazon will probably not make any immediate move on this front to squeeze Staples. Yet, it surely will keep the best distribution center technology for itself even as Staples will now pay Amazon for last year's models."

The story suggests that Staples may have to move out of the commodity business and find ways to differentiate itself. The mission of Staples has long been "to be the best office supply company in the world," Fortune writes. "That is a misguided goal in today's times. Instead, Staples should immediately leverage its corporate business and transition to services and value-added products in the way that IBM did."

Published on: August 9, 2012

Interesting piece in the Los Angeles Times that starts with the premise that Trader Joe's may be the country's most innovative supermarket because it is "sensitive to the politics of the plate while also keeping its prices low."

However, the Times writes, there are two new concepts that could usurp Trader Joe's position - at least as it relates to having healthy products, a sustainability-friendly image, and decent prices:

"In London, there’s a laboratory of sorts called FARM:shop that aims to bring a more sustainable form of agriculture closer to where people actually live. The founders hope the concept will give people a closer connection to their food. More than that, though, it would cut down on the energy spent refrigerating and transporting food. 'While few would contest the rehabilitative social value of projects like FARM:shop, its founders argue it could be the start of something much more: A radical new approach to ecologically sustainable agriculture,' write George Webster and Leo Dawson on CNN about the 'farm in a shop,' which produces more than just lettuce.

"Closer to home, we have BrightFarms, which wants to build hydroponic greenhouses on supermarket rooftops to house multi-acre farms that would produce tomatoes, lettuce and herbs. Founder Paul Lightfoot’s 'innovative arrangement,' writes Fast Company’s Jane Black, 'allows grocery stores to pay nothing to build the farms. Instead, they sign a 10-year contract to purchase their lettuce, tomatoes, and herbs from BrightFarms, with a guarantee that prices will never exceed average inflation. According to BrightFarms's projections, if future price increases mimic historical patterns, its produce will cost a fraction of market rate by 2030. In an industry where margins average just 1% to 2% per year, those savings would have a significant impact on grocers' profits'."

Published on: August 9, 2012

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

• The Sacramento Bee reports that members of the United Food and Commercial Workers (UFCW) employed by Save Mart Supermarkets in California's Central Valley have voted to ratify a new two-year contract with the retailer, while their counterparts in the San Francisco Bay Area have rejected the tentative deal, though not by a big enough margin to authorize a strike.

The split decision means that the contract will not go into effect, and that the UFCW will have to sit back down with Save Mart at the negotiating table to figure out what to do next. The UFCW had already gone on record as saying that it believed, based on its analysis of Save Mart's books, that the retailer was losing money at a number of locations and needed concessions just to stay in business.

Not sure if this is good or bad for Raley's and Safeway, the other two California chains negotiating with the UFCW. On the one hand, a Save Mart contract might have given them a template from which to work on their own deals ... though Raley's was said not to be happy with the Save Mart contract, thinking it did not offer enough concessions. On the other hand, maybe this gives them a little more time to make their own plays...

• The Des Moines Register reports on a new Hy-Vee store scheduled to open next week in Urbandale, Iowa - a 95,000 square foot store that is "the grocery store chain’s newest concept store ... likely to wow and overwhelm shoppers all at once."

According to the story, among the innovations in the store are an Italian gelato stand, a lounge with seating for 10 around a stone fireplace, made-to-order sushi bar, an oatmeal bar that features eight kinds of oatmeal and toppings, expanded organic, gluten-free and natural food selections, and a separate wine and spirits department.

• The DailyMeal.com reports that Starbucks has signed a deal with Crumbs Bake Shop, a 521-unit New York based cupcake chain, that will have the bakery pouring Starbucks coffee.

According to the story, "Crumbs will be the largest chain to serve Starbucks beverages outside the Seattle-based coffeehouse’s 17,651-unit system ... In recent years, Starbucks has been building the foodservice business for its secondary Seattle’s Best Coffee brand, which is brewed by a number of restaurant chains, including Burger King, Subway and Taco Bell."

Terms of the deal were not disclosed.

• USA Today reports that credit card debt in the United States "fell 5% to $864.6 billion. That's only 1.6% above the post-recession low reached in April 2011. Americans have been relying less on credit cards since the 2008 financial crisis and Great Recession."

However, "Steady gains in student loans have pushed borrowing back to near-record levels ... Overall consumer borrowing rose because of increases in auto and student loans. The Federal Reserve says total borrowing increased 3% to $2.58 trillion in June from May. That's just below the all-time high reached in July 2008."

What this all seems to add up to is consumers who are spending less because of continuing concerns about high unemployment and stagnant economic growth ... not to mention crushing student debt. I am still amazed at some of the numbers I am hearing from parents and students about debt being carried out of college ... and it confirms for me that one of the best things we've done as parents is making sure that our kids don't have that kind of financial weight hanging from their necks, affecting every decision they make.

Published on: August 9, 2012

Got a number of emails yesterday about our story detailing how Amazon.com seems to be expanding the use of lockers in supermarkets, convenience stores and drug stores, using these facilities as delivery depots.

MNB user Hortencia Espinoza wrote:

One thought came to my mind when I read that Amazon is going to be testing the locker boxes out of grocery stores and such in the Bay Area:

I wonder,  if before this program is launched nationwide, if the Post Office is smart enough to help themselves survive and bring in SOME revenue, to offer rental space to Amazon in their THOUSANDS of post office locations conveniently located through the USA.

Probably not, huh?

Another MNB user agreed:

Kevin, in connection with one of your favorite topics, the USPS’s un-visionary attempts to make itself relevant, why aren’t they lobbying Amazon to put those lockers in post offices? Seems like Amazon would prefer to go widescale on lockers with one contract vs hundreds or thousands, and also put its footprint in places where there isn’t competition.  And the USPS could use the $$.

That would be really smart, huh?

Listen, I've been saying for a while now that the USPS ought to make a pilgrimage to Seattle, go see Jeff Bezos, and ask what it will take for it to become the exclusive Amazon shipper in the US. And you're right ... putting the Amazon Lockers in post offices around the country would be a masterstroke.

Another MNB user wrote:

For businesses hosting these Amazon lockers, I wonder how (or if!) they're using pickup visits to drive loyalty. I can think of some dumb examples: if you bought a movie, how about selling popcorn? If you ordered an electronic toy, how about batteries? Would Amazon provide any support in this area? I'm definitely no expert in marketing or merchandising, but every traditional retailer who bemoans Amazon's entry into every retail vertical should take this as an opportunity to think outside the box and grow their business in new ways.

This sounds like an opportunity for the beleaguered Post Office to partner with companies, rent out lockers, increase traffic and perhaps make some money.

I'm just guessing, but I think that Amazon would offer little or no help in this area.

I could make the argument, by the way, that supermarkets and drugstores ought not put the lockers in ... because they would be giving both visibility and accessibility to a competitive retailer that wants to crush them.

MNB user Jessica Harper sent us a picture of an Amazon Locker installation and wrote:

Saw this in the 7-eleven down the street in Arlington the other day. While I was there – UPS was delivering packages. For lots of people in DC who work at secure worksites and can’t have things delivered and have no doorman or staff at their building to accept packages, it’s a convenient option. Will be interesting to see if it takes off.




Responding to yesterday "RIP" note, MNB user Chris Connolly wrote:

About ten years ago while living in a small town in Iowa we had the privilege of seeing Marvin Hamlisch perform at our local auditorium with a small orchestra consisting of musicians who lived in the area.   

His show was wonderful and he carried on a lively banter with the audience members throughout the entire performance.   Needless to say, he played many of his various compositions and shared the history behind each of them as they were performed.   More than that, he attended a reception after the concert where we were able to meet him in person.  He was warm, personable, humble, and sincere in his conversations with the attendees.

It is my belief that the list of artists who have won Oscars, Grammys, Tonys, Emmys and a Pulitzer Prize is a very short one…..in fact, I think Marvin Hamlisch and Richard Rodgers might be the only people to have accomplished such a feat.  If so, Mr. Hamlisch is a member of a very exclusive club.

He will truly be missed.




Regarding the NFL's first female referee, one MNB user wrote:

A little more background for you on Shannon Eastin.    I especially like Coach Whisenhunt’s comment that he didn’t even notice she was female when she worked the Cardinals scrimmage; that’s the perfect game for an official – doing your job without being noticed.

And, from another reader:

I have no problem with female football refs except that the football field is a dangerous place for anyone, let alone someone who has no protective gear on AND who never played and thus does't understand how to read the flow of a play. I assume that Ms. Eastin will be on the fringes of the action rather than positioned behind the inside linebackers where refs are frequently in the line of fire of players who are way bigger, faster and more violent than any baseball or basketball player.

I have to believe, if she is being employed by the NFL, that this woman understands how to read the flow of a play. And while I agree that we don't want anyone getting hurt, I suspect that a lot of women are getting tired of not getting certain opportunities because of the perception that they need to be protected.




And on another, highly controversial subject, MNB user David Farnham wrote:

I wholeheartedly agree.  Baseball is a team sport and everyone on the team should hit.  If a pitcher can’t  hit well he’d better strike some people out to make up for it.

They can learn to bunt. No excuse for them not to be able to handle a bat.

MNB user Tom Devlin wrote:

While I totally agree with your baseball beliefs on the DH and managers being part of the strategy in the game, instead of just the Home Run Derby for ESPN highlights in the 90's.

I will say I am so disappointed because I was looking forward to protesting the MNB until you agreed with me… But you did… so now what is a professional protester going to do?

Hmm I am sure we can find something to disagree on…. The Mets, Jimmy Buffet … like those guys too… What a tough country to live in!!

Hey, I grew up in the sixties and seventies, so I have a soft spot in my heart for protest movements.

I remember fondly protesting against Richard Nixon in the fall of 1972 when Air Force One flew into a local airport and drove past seething crowds of young people with an arrogant smile on his face...

Those were the days...