business news in context, analysis with attitude

Published on: September 10, 2012

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Published on: September 10, 2012

by Kevin Coupe

The Washington Post over the weekend reported on a new report released by the US Department of Agriculture (USDA) Economic Research Service, saying that at times during 2011, one out of ten US households were unable to provide their children with "adequate, nutritious" food. The story says that "this translates into more than 16.6 million children — or 22 percent of all American kids — who lived in households that could not adequately feed them."

Now, the report also notes that the 2011 numbers did not change much from 2010. Which strikes me as cold comfort in a supposedly civilized nation where people like to congratulate themselves for their exceptionalism.

“These numbers confirm that a humanitarian crisis looms within our own borders that can no longer be ignored,” Billy Shore, founder and CEO of Share Our Strength, an organization that works to end childhood hunger, said in a prepared statement. "The crisis of childhood hunger in particular is putting at risk a generation of our youngest Americans, our national education goals and our economic competitiveness ... While families continue to feel the sting of the current economy, these numbers should serve as a wake-up call for the nation’s leaders, who have the power to ensure that more children receive the food they need to grow up healthy, do well in school and keep America competitive."

No excuses. These numbers are horrifying, and eye-opening.

Published on: September 10, 2012

The Sacramento Bee reports that Save Mart Supermarkets finally has some labor peace.

According to the story, employees of the company who are members of the United Food and Commercial Workers (UFCW) Local 648 in San Francisco have voted to accept a contract that the UFCW has said is "distasteful," but necessary if the retailer is to survive; among other concessions, the contract requires employees to pay health care premiums for family members.

This is the second vote on the contract. As the story notes, "Local 5 and San Francisco's Local 648 overwhelmingly rejected it, while Local 8 in Roseville, covering the Central Valley, approved it. Local 648 took another vote earlier this week and approved the deal, and now Local 5 has followed suit."

However, the path to approval was not easy. The Bee reports that members of Local 5 actually rejected the contract, but that the local's "executive board planned to invoke union rules and ratify the deal on the members' behalf, according to an announcement by Jacques Loveall, a vice president with the UFCW international union and president of the local covering the Central Valley."

The move leaves Raley's and Safeway still negotiating with the UFCW on new contracts.

Published on: September 10, 2012

The Los Angeles Times reports that Unilever-owned Ben & Jerry's has filed suit against Caballero Video, a pornography producer, over a series of "Ben & Cherry's" adult films that the producer says are a homage to the ice cream maker, but that Ben & Jerry's thinks are neither flattering nor funny.

The story notes that the "DVDs, according to the filing, involve 'blatant and outrageous copying and misappropriation of the Ben & Jerry's intellectual property.' Ben & Jerry's won a court order temporarily halting the studio from marketing and selling titles such as 'Boston Cream Thighs,' 'Peanut Butter D-Cups' and 'Chocolate Fudge Babes'."

Published on: September 10, 2012

• The Wall Street Journal reports that Walmart said last week in a regulatory filing that it has so far spent $51 million to deal with investigations into charges that it engaged in the bribery of Mexican officials as a way of accelerating growth of its devision there. The company is conducting its own probe into the allegations, is cooperating with several federal investigations, and also is defending itself against more than a dozen lawsuits related to the matter.

• The New York Times reports that a local judge has refused to stop the construction of a Walmart Neighborhood Market store in the Chinatown section of Los Angeles, making it seem even more likely that despite the opposition of local businesses and activists, the new store will open next year.

Here's how the Times frames the story:

"The Walmart Neighborhood Market would offer Chinatown its first mainstream grocery store in decades. But since the company’s plan was announced in February, a furious battle has broken out over the project, with community activists and labor unions determined to block the world’s largest retailer from the neighborhood.

"In March, the City Council banned large chain stores from opening in Chinatown. But Walmart received its building permit a day before that vote, exempting the store from the ban. Then in June, thousands of protesters marched through Chinatown in a show of opposition to the new Walmart. Several labor unions have also sued to stop the project."

Published on: September 10, 2012

• The Wall Street Journal reports that a Manhattan-based federal judge has approved a settlement between the US Department of Justice and three book publishers that resolves charge that they colluded with Apple Inc. to set pricing of e-books in a way that forced Amazon to stop discounting them. As part of the settlement, the three publishers have agreed to terminate their agreements with Apple and to make no effort to limit anyone;'s ability to discount e-books for two years.

Meanwhile, the agreement does not affect Apple and two other major publishers, all of which are prepared to go to court next year to defend themselves from antitrust charges.

When Apple got into the e-book business, it established what is called an "agency model" - it took 30 percent of the sale prices, but let the publishers set that price. The publishers then forced Amazon to accept the same model, which resulted in higher e-book prices on its site.

Published on: September 10, 2012

In the UK, The Grocer reports that Starbucks "has revealed plans to rollout thousands of coffee vending machines of its own - starting next week in four Sainsbury’s stores ... The machines would prepare Starbucks-quality coffee in less than a minute and give customers 280 different drinks to choose from ... The designers have also tried to make the machines more fun than the average vending machine, by giving them attractive graphics and a touchscreen interface that allows customers to play a game while waiting for their coffee .... Starbucks will begin installing its vending machines at locations such as petrol stations and other Sainsbury’s stores - where it has run cafés for 10 years - over the coming months.

Published on: September 10, 2012

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

• The Newark Star Ledger reports that one week after a shooting left two employees dead and the shooter mortally wounded from a self-inflicted gunshot, the Pathmark store in Old Bridge, New Jersey reopened last Friday.

According to the story, "At 9:30 a.m., a handful of employees on a break gathered outside the store and gazed at a memorial of lit scented candles, flower bouquets and a large flower arrangement on a stand. Tacked to the arrangement was a card saying the flowers were from 'The Pathmark Family'."

• The Chicago Tribune reports that "Sears Holdings Corp. plans to spin off its Hometown and Outlet stores to shareholders  Tuesday." The company reportedly "will distribute transferable subscription rights to shareholders Tuesday, allowing them to buy shares of Sears Hometown and Outlet Stores Inc. on a pro rata basis for $15 per whole share." The Sears Hometown stores are described as "small hardware stores, usually operated by independent retailers. Outlet stores, which thrived during the recession, sell Sears merchandise at a discount. Sears announced its intention to spin off the stores in late February."

• The Associated Press reports that Kraft Foods has come up with a new flavor of Oreo cookie that it will be selling exclusively at Target stores this coming Halloween - Candy Corn Oreos.

This is almost not fair. I try not to eat this kind of stuff anymore, but this combines two of my favorite sweet concoctions - candy corn and Oreos. I may actually have to stop by my local Target to buy a box. Just for professional market research purposes, of course.

• The San Francisco Chronicle reports that Americans spent $52.9 billion on pet care in 2011 - and that one of the real growth segments in the pet business is funeral homes, crematories and cemeteries that cater only to pets; there are some 700 of them in the US, appealing to Baby Boomers who "increasingly are turning to pets for companionship after their spouses die or their children leave home."

Published on: September 10, 2012

I wrote the other day about how Jay Leno took a 50 percent pay cut - from $30 million to $15 million - and extended his contract for two years as a way of helping keep some people employed at "The Tonight Show" at a time when NBC is looking to reduce its budget.

I commented:

While the business may be show business, the story seems familiar. Costs rise, competition grows, and suddenly an enormously profitable business becomes less so, and the folks at the top start looking for ways to cut their way to prosperity - and the first people to go are the support staff who nobody sees, but who help make the product function.

What is important, I think, is the highly symbolic move made by Leno. Unlike some other organizations, where executives don't take cuts and even look for retention bonuses that will reward them for sticking around to finish the job they were paid for in the first place, Leno's move is noteworthy.

Sure, the context is different. The numbers are inflated, even by big business standards.

But there's leadership. And then there's covering your own rear end.

One MNB user responded:

As for Supervalu, some have boldly suggested the execs take pay cuts (like Leno) versus closing stores and a lot of people losing their jobs.  The ones who put it in writing can do so somewhat anonymously on a store computer and may be at the stores that are closing anyway, but it’s still good to see people openly expressing their views in-house.  If you hear a big thud, it’s because it happened and I fainted; however, I am not holding my breath.  As John Wayne used to say “That’ll be the day.”

My comments were not aimed directly at Supervalu; it really was a broader commentary than that. I believe that in a lot of companies, there is a divide between the people at headquarters and the people on the front lines, which the latter not getting the respect they deserve. Which strikes me as foolhardy, since the people on the front lines are the people most responsible for a company's success or failure.

Now, one MNB user disagreed with my analysis:

He cut his salary by 50% from 30mm to 15mm/yr What's better, earning? 15mm/yr or having a salary of 30mm and no job?

Jay is only looking out for his own behind, there's nothing to respect there!!!

I understand your point of view. But there are a lot of executives out there making millions of dollars a year running troubled companies with financial problems, and who negotiate compensation increases and retention bonuses for themselves.

I just think it is worth thinking about.




We continue to get email responding to the comments made by an MNB reader last week about how "older Americans are working longer because many of them have done such a terrible job of saving money for retirement." Another reader offered:

Like we the little people have control over the teeny tiny interest rate at the bank, Wall Street, etc.  I DID roll my investments over.

Pardon some of us for not being selfish enough to only think of ourselves and not the children we put on this earth.  Gosh, we should have anticipated the idiots who were going to put us in the ditch.  I didn’t PUT my daughter through college.  She worked her tail off and I only had to take out some parent loans to close the gap and even then almost had to cancel the last year.  We’re not driving $50,000 cars nor are we living in $14 million dollar houses .  We’re trying to survive.  It’s called the disappearing middle class syndrome. I ask the writer of the above – Were you ever a single parent?  Walk a mile in the older worker’s shoes.  There are many stories in the naked city.




MNB had a story about Byerly's/Lunds adopting the NuVal nutritional labeling system, which led one MNB user to write:

I enjoy visiting Byerly’s very much.  But, I only have the opportunity to do so when I’m in the Minneapolis area for business ... along with the NuVal system on the packaging, it would be interesting if they were able to provide an “average” of some sort on customers’ receipts or as part of a record they might be able to find online, associated with the loyalty program.  Sort of a “dashboard” of shopping habits, beyond just what is being purchased. 

I think I am a very balanced eater.  I believe I consume my fair share of healthy foods and only “treat myself occasionally.”  Somehow, I have a feeling I wouldn’t like my score . . . at least in the beginning.  But, at least I’d have a little more information to better ensure my perception and reality were aligned. 
 
At any rate, I hope the system is successful and the concept expands to other companies.




In a comment about Amazon and Tesco battling it out in the UK the other day, I made a comment that a "war is coming," which prompted MNB user Ron Bartlett to respond:

In my retail blog, I draw the comparison with the TV series / books Game of Thrones.

In the TV series Winter is coming… and you are right an almighty war is coming to UK retail, and it is coming soon.

Like many others I watched the TV series Game of Thrones, and I am currently reading book 2 of the series. There are a number of parallels between the behaviour of the supermarkets and the TV series.

In the TV series, the kings fight among themselves for superiority and thus weaken themselves, whilst the far larger menace arising in the north is ignored while it gathers strength.

In online retail, Amazon has move into product categories beyond books, and achieve significant market share, such that for many people it has become the first port of call. If / when Amazon moves into online grocery in the UK then it will be able to compete with the UK grocers across every product category.




On the subject of Amazon's new commercials, which stress how they are looking for ways to disrupt normal and make the wildly impractical completely normal, one MNB user wrote:

Interesting look into the corporate mind of Amazon and how they wish to engage their customers, especially after reading a comment earlier this morning from the head man at RyanAir who described a customer as ‘an idiot.’  Guess which business will be around and prosperous a few years from now?

This is true.

Ryanair CEO Michael O'Leary the other day described passengers who don't print out their boarding passes at home as being "stupid," and said their stupidity means they deserve to be charged an extra fee to have the passes printed out at the airport.




We had a story the other day about how cooperative supermarkets are working to be more competitive. One MNB user responded:

If you ever visit Minneapolis you might want to check out the Wedge www.wedge.coop. There is a Kowalski's about a quarter mile from the Wedge and a Lund's about a mile away from the Wedge. Even though the Wedge is about half the size of either of these stores at any given time the Wedge probably has about as many shoppers as those stores combined.




Love it when I get responses from MNB readers about things like movies, TV shows, wine and books.

Like this one:

Anyone who's read Lee Child's books will think Tom Cruise being cast is a caricature! How could this movie be so miscast is beyond comprehension!!!

It will be hard to swallow.

Another MNB user wrote:

Really appreciate that you publish comments that mention TV shows. It's great to know what other fans of "Longmire" and "Homeland" enjoy, so we can fill in during the dry season between seasons.

MNB user Lisa Bosshard wrote:

I can't recall if you're a fan of Rieslings, but we've recently tried a newer one on the market and have to share - it's honestly one of the best for the price range.   Barefoot Riesling is a newcomer to the market and inexpensive.   It's smooth, fruity and not as sweet as many I've previously tried.   Just wanted to pass along something new for your palette 🙂

Thanks.

And this one, from MNB user Dan Graham:

Your mention of "Fool Me Twice" prompted me to send you this note.  After reading your recommendations of Robert Parker's novels I decided to give them a try.  I now have one Spenser novel remaining and have enjoyed the series tremendously.  My wife has also taken up the series and is about half way through.  It's been great reading lines from the books to each other, and laughing over Parker's clever dialogue.  I hate for the series to end - great characters like Spenser, Susan and Hawk are hard to find and will be missed.  I'll certainly read the Ace Atkins novels, but I somehow think it will not be the same.  It's on to Jesse Stone for me, and then the rest of Parker's work.  Thanks again for guiding us to a source of so much great reading. I envy you your meeting with Mr. Parker!

My pleasure.




Finally, at the risk of beating a dead horse, we continue to get comments questioning my judgement in doing a piece the other day using GOP vice presidential candidate Paul Ryan's inflating of his own marathon finishing time as a metaphor for why it is important to be accurate and transparent in business. (I'm willing to keep this conversation going mostly because I am the dead horse being beaten, and I think it is only fair to give people a chance to unload.)

One MNB user wrote:

Just that you would pick out the Ryan marathon comment is an example of bias and partisanship. This is such a minuscule issue and that you would pick it up and use it on MNB is poor judgment. Although you cloak this as “a worthy business example”, dipping into the political/election pool at this point in time and especially picking on a candidate that you don’t support is akin to a wink and a nod as you peddle it as an objective business lesson.

In full transparency, why don’t you use an example for business folks of someone promising to take an action and then backpedaling…..like Guantanamo Bay (Gitmo), or  showing how the majority rules, but really doesn’t as in the vote on the floor for the change in their platform at the DNC convention.

I have no issue with a political note from time to time in MNB, but this was just a little too partisan for me.

MNB user Gene Goodwin wrote:

You choose to have Paul Ryan’s  misstatement as the lead story.  Paul Ryan lying is a political issue and a chance for you to report information that damages a group that you do not agree with.
 
You choose not to report anything on the Chick-fil-A  controversy.  This issue was deeply involved in the retail industry but the information showed tremendous support for a group that you do not agree with.

You are accurate in your defense that you report the facts accurate but you choose what to report.  So if you choose not to report the FACTS because you do not agree with them is that a lie of admission?

A few points here.

One. Every source of news/information/commentary makes choices about what to cover and not to cover. That hardly makes me unique. In general, I choose the stories that interest me, that strike me as having resonance, and that allow me to make broader points. I cannot remember ever thinking to myself that I would not cover something because I disagreed with the people involved or the conclusions it would suggest. You may not believe me, but that's true.

Two. I hardly think it is fair to accuse me of not covering the Chick-fil-A story. What I did not do was write about the people lining up to buy sandwiches there as a way of supporting its founder's position against gay marriage - but, as I made clear afterwards, I did not cover the specific event because I'd already written about Mike Huckabee calling for that show of support, and I thought my coverage of the whole story was becoming repetitive. In retrospect - and I wrote this at the time - that probably was a mistake in judgment.

But by the way ... just based on the fact that every few weeks I get taken to task by people in the MNB community (and those emails get posted here), at the very least I think you have to concede that I'm writing stories about issues that I may disagree with, expressing my opinion in a transparent fashion, and then giving people a forum to disagree with me.

I do this, at least in part, because I'm willing to listen to people with different opinions, and try not to have a knee jerk response to them.

From another MNB user:

Even in these politically overblown weeks, I’m getting tired of people who do those “Aha, I see you are a (Fill in the blank – Democrat, Republican, Socialist, Communist) and therefore are to be suspect in everything you say or do.”  Sometimes a comment is made just to illustrate a point as you did in pointing out the ‘truthiness’ of Ryan’s claim.  If you had to balance it with the ‘truthiness’ of every politician’s claims, you would never be able to publish another newsletter.

And, from another MNB user:

The logic in your lead article is flawed and unconvincing, and your political bias is off-putting to say the least.  Why do this in a grocery blog?

You gave a one-sided account of Paul Ryan's comments about running a marathon, and then you jump directly to pointing out the need to be "transparent and accurate," and hence you raise questions about his character.  By transparent, we usually mean there is nothing hidden; what are you imagining here?

Ryan wasn't accurate, ok, got that.  I suppose he's the best example of inaccuracy you could find.  Was there no one on the other side of politics to make that point?  Really?  Maybe you're just getting the main stream media view, with claims that weather clears when Obama appears.

I find it hilarious that the media finds nothing better to assail Ryan with than his marathon time. What's notable "in my neck of the woods" is that your biases and weak analysis color your thinking so much that you're blind to the offense, and it lessens your credibility.

Here's a mantra for you:  "Grocery News with a Leftie View!  Shush, I'm smarter than you, and I get the last word."

It's true. I do get the last word. Somebody has to, and it might as well be me.

But I hope I don't abuse that privilege. And I hope that I never leave the impression that I think I am the smartest person in the MNB community. In a lot of cases, even when I express my opinion, I'm struggling with issues because I'm trying to be empathetic about other people's positions and why they hold them.

And I never say "shush." (I ran your email, didn't I?)

One final comment, if I may have yet another last word.

I fervently hope that MNB is not just a "grocery blog" or "grocery news." Every morning, I work very hard to make it something more than that ... to be about the intersection of commerce and culture, to be about companies and people serving as change agents, to serve as a window into how the media covers retailing and marketing. To make it fun and lively and provocative. And, ultimately, to make it live up to some of the wonderful mantras that people have suggested to me over the past few weeks.

If you only want grocery news, and you want it in plain vanilla, there are plenty of places to go. But not here.