business news in context, analysis with attitude

Published on: October 9, 2012

by Kevin Coupe

Facebook said that it now has more than one billion active monthly users; it had reached 500 million active monthly users in July 2010.

In the Wall Street Journal story about the milestone, it was reported that "Facebook said it had 600 million mobile users, meaning more than half of the social network's members access the service on phones or other on-the-go devices. There are five billion mobile device users in the world ... To date, people have made 140 billion friend connections on Facebook, the company said. As it matures, Facebook users are getting younger: The median age of a user joining today is about 22, down from 23 for a user who joined at the time the site hit 500 million users."

Of course, there had to be a little rain on this celebratory parade; the Journal also noted that coming not long after an Initial Public Offering (IPO) that has proven to be disappointing, the milestone "raises growth questions anew for the social network and whether it can profit off its giant user base."

While the wisdom behind and the execution of the Facebook IPO certainly can be questioned, the extent of the company's influence is enormous - it has helped to redefine the word "friend" (for better or worse), has connected and reconnected people all over the globe, and has become one of the chief standard bearers for the social media revolution.

And, by population, these active monthly users would make Facebook the third biggest country in the world.

That's an Eye-Opener.

Published on: October 9, 2012

The Albany Times Union reports that Golub Corp.-owned Price Chopper plans to build a new concept store that "will have 16 different eateries, an in-house cooking school, and produce grown and harvested in the store. It will be created by an expansion of the current Latham store on Route 9 ... The supermarket will add 10,000 square feet to the store for a total of 90,000 square feet. It will feature a New York Style deli, a chef's grill, a pizzeria, a Mexican restaurant, a New England-style fish fry, a salad and vegan bar, and a meat rotisserie among other places where customers can buy freshly made food that will be ready in five to seven minutes ... A seating area will have room for 140, with 40 to 50 additional outdoor seats during the warmer months.

"The in-house cooking school will invite local and regional chefs to cook in front of customers, and some of the store's produce will be grown and harvested within the store. The revised pharmacy will have an outdoor entrance and a drive-up window."

According to the story, "With four new ShopRite stores built in the Capital Region, as well as new competition from The Fresh Market, Trader Joe's and a coming Whole Foods market, Price Chopper intends to invest $61 million in 11 of its Capital Region stores."

"Our goal here is to create a store by which all other stores will be judged," says Neil Golub, executive chairman of the board for the company. "Every seven to 10 years, we go back to the drawing board. In our industry, there are those who lead and those who follow. The followers see what you're doing, and they try to replicate that."

Construction is expected to start before the end of the year, and the new store to be open in 12-14 months.

Published on: October 9, 2012

The October 8, 2012, issue of The New Yorker has a long and interesting profile of Ron Burkle, often described as a "supermarket magnate," who launched his highly successful investment career with an unsuccessful attempt to take over Stater Bros. back in 1982. Burkle has come a long way since then, and lately has been focused on the film business, though he still has money in retail.

The piece looks at both his personal and professional life, and is must-reading for anyone looking for some insight into what makes him tick. (It is not yet available online unless you are a subscriber.)

Published on: October 9, 2012

Guiding Stars, the nutritional labeling system developed by Delhaize-owned Hannaford Supermarkets that uses an algorithm to rate products as good for you, better for you and best for you, now has it ratings available via smartphone.

The Guiding Stars program began with participating supermarkets labeling qualifying products with one, two or three stars. Now, Midcentury Media, creator of the mobile app Shopper, has released "an upgraded iPhone app that gives busy grocery shoppers instant access to Guiding Stars’ easy-to-navigate nutrition rating system right on their shopping lists. The UPC-driven app lets users identify the healthiest foods for purchase by providing simple star-ratings on nearly 100,000 foods and beverages, enabling on-the-go shoppers to quickly identify the nutritional value of foods on the fly."

According to the company, "The Shopper app allows iPhone users to quickly and conveniently access the Guiding Stars nutritional rating system from anywhere. Some of the upgraded features allow users to browse and compare Guiding Stars rated food items within the Shopper app ... add Guiding Stars rated options directly to a shopping list ... gain a better understanding of healthy food and beverage choice ... create multiple lists for specific stores or recipes and share them with others ... (and) organize lists to match the aisle order or layout of the stores where they shop."

Published on: October 9, 2012

The Chicago Tribune reports on how Chicago city employees "will compete against the city workers from San Antonio for a $5 million grant from the American Beverage Association to see which workforce is healthier. The nationwide soda lobbying group will also pay $1,000 to individual workers who meet as-yet unspecified health care goals." City workers are not required to join the competition, but Mayor Rahm Emmanuel said that the initiative is designed to encourage personal responsibility - a stark contrast with the efforts in other cities to tax or restrict access to sugary soft drinks.

"“I believe firmly in personal responsibility,” he said, adding, "I believe in competition, and I believe in cash rewards for people that actually make progress in managing their health care ... If you basically put aside personal responsibility, you’re missing the core ingredient for improving health outcomes."

However, as part of the initiative, soft drink manufacturers have agreed to add both calorie counts and more low calorie beverages to their vending machines. These retooled vending machines, according to the New York Times, "will first appear in municipal buildings in Chicago and San Antonio early next year. It represents the latest effort by the industry to head off mounting criticism of its products as one of the chief villains responsible for the nation’s obesity crisis."

“We believe partnerships like this — those which involve government, industry and civil society — can have a meaningful impact on the obesity issue,” says Steven A. Cahillane, president/CEO of Coca-Cola Refreshments, the unit of Coca-Cola responsible for its vending machine business.

Published on: October 9, 2012

• The Wall Street Journal reports that Walmart and American Express announced yesterday that they will roll out "a prepaid card that they say offers unique services designed to help shoppers manage and control their everyday finances."

The card, called Bluebird, is described as acting "like a checking account but without the fees that have increasingly frustrated shoppers. It will have no minimum balance and no monthly, annual or overdraft fees. They say the only fees that will be associated with the card will be transparent and within the user's control, such as out of network ATM withdrawals by consumers who don't use direct deposit.

"Instead, what Bluebird will be loaded with is a number of features, including the ability to deposit a check to one's Bluebird account by simply taking a picture with a smart phone. It will also offer the same fraud protections in an event the card is stolen or lost as other standard cards."

• CNBC reports that Walmart "is expected to offer more details of plans to expand its small stores at its annual investor meeting Wednesday.

"As of the end of July, Wal-Mart had 10 'Express' stores and had ramped up its 'Neighborhood Market' concept to 217 locations." Analysts say that Walmart "is just beginning its small-format store drive, but the concept could help it increase its position inside city centers..."

Published on: October 9, 2012

The Nielsen Company is out with a new study saying that "more than 8,100 convenience stores (C-stores) have been added nationwide since 2005, bringing the total to 148,764. In fact, there are more C-stores than warehouse clubs, supercenters, dollar stores, supermarkets and drug stores combined. Most other types of store formats have also added locations in the past seven years, some at a higher rate than C-stores, but no other retail format can match the number of new C-stores ... In addition to store count, revenue is up for C-stores as well. Year-over-year sales in the U.S. grew 4.9 percent in the 52-week period ending August 4, 2012, compared to 3.7 percent growth for the marketplace overall."

Other excerpts pointing to changes - both existing and potential - in the c-store business:

• "C-stores are increasingly emerging as a viable choice for quick and/or healthy on-the-go meals. Within the past year, common grocery items like yogurt and fresh produce have increased sales in C-stores by 57 percent and 38 percent, respectively. These stores make it easy for consumers to eat fresh, buy less and shop more often. The trend is gaining traction across the U.S. and could attract higher-income shoppers. C-store drive-thrus are also gaining in popularity with Americans, making most store items (including grocery staples such as bread, eggs and cereal) available without having to leave the car."

• "Interesting partnerships between C-stores and other retailers and manufacturers have helped to accelerate growth. One such collaboration with an internet retailer uses C-store locations to house delivery lockers for online purchases. By providing a secure location for deliveries, Internet merchants cut shipping costs and C-stores attract customers. Taking a page from Asia Pacific retailers in countries such as Indonesia and Thailand, U.S. and Canadian retailers could look for new revenue opportunities by considering in-store technology for paying utility bills, buying movie tickets and receiving money transfers. These kinds of strategies helped grow the number of C-stores in the Asia Pacific region by 29 percent over the past two years and may serve as thought starters for how to improve historically-low Asian-American consumer interest in C-stores."

Published on: October 9, 2012

CBS News has a brief piece about Aretha Franklin, and how the Queen of Soul is trying to get into shape at age 70. Her secret - big box stores.

She walks around them and has lost more than 85 pounds over the past year or so.

“I stay in great shape. I walk. I am very, very fit...walking K-Marts, the Superstores, Wal-Marts,” she says.

Published on: October 9, 2012

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

• The Bergen Record reports that the troubled Great Atlantic & Pacific Tea Company (A&P) has confirmed another round of layoffs at company headquarters. While the company would not divulge details, sources tell the paper that some 40 people lost their jobs, including a senior vice president, a vice president and five department directors.

The story notes that "in July, the company confirmed it would be eliminating an unspecified number of accounting and finance jobs over six months because it had decided to outsource those jobs to India — part of a deal with the outsourcing firm Wipro. About 700 people worked at the headquarters before the layoffs."

A&P might as well outsource additional functions, because at this point it already has outsourced a lot of its customers...

• The Associated Press reports that "salmonella has been found in a New Mexico plant that produces nut butters for retailer Trader Joe's and several other large national grocery chains, the Food and Drug Administration said Friday. The Trader Joe's peanut butter is now linked to 35 salmonella illnesses in 19 states — most of them in children under the age of 10 ... the government findings have prompted New Mexico-based Sunland Inc. to recall everything made in the plant since March of 2010 — a total of 240 products. The company last month recalled 101 products that were manufactured in the plant this year ... The recall includes nut butters and nut products sold at Whole Foods Market, Target, Safeway, Costco, Fresh & Easy, Harry and David, Sprouts, Heinen's, Stop & Shop Supermarket Company, Giant Food of Landover, Md., and several other stores since 2010 ... The products recalled include peanut butters, almond butters, cashew butters, tahini, and blanched and roasted peanut products."

• The San Jose Mercury News reports that "federal immigration agents launched an audit of the 21-store Mi Pueblo supermarket chain in mid-August after hearing complaints about suspected illegal immigrant workers, the company announced Friday. The audit of I-9 forms, known as a 'silent raid,' was the reason the San Jose-based grocer voluntarily joined the federal E-Verify system a short time later to check the immigration status of all new hires ... The announcement comes days before a threatened boycott is to begin at noon Monday, led by a union trying to organize Mi Pueblo's more than 3,000 workers and demanding that the company stop using E-Verify ... The union said Friday it is backing off on the E-Verify demand amid news of the ICE audit, but is proceeding with the boycott because Mi Pueblo refuses to sign a labor agreement."

• Reuters reports that just days after being spun off by Kraft Foods, Mondelez International "is buying Italy's Vitasnella snack business from French foods maker Danone for an undisclosed sum as part of its consolidation plans in Europe."

Published on: October 9, 2012

• Safeway announced yesterday that Russ Jackson, its senior vice president of human resources, "has been named by Human Resource Executive magazine to the influential 2012 HR Honor Roll," recognized for "strengthening the company's leadership development efforts," "elevating the company's efforts to support veterans," and making "significant strides in the area of employee health and wellness."

Published on: October 9, 2012

Michael Sansolo is off on assignment. "Sansolo Speaks" will return next week.

Published on: October 9, 2012

Last week, MNB had a story about how "McDonald's has filed a trademark filing that suggests the fast feeder plans to sell bagged ground and whole bean. This is addition to a filing earlier this year that indicated McDonald's could start selling branded sandwiches, oatmeal and other food products in venues that are not covered by golden arches."

I commented:

McDonald's may just want to protect its trademarks. But my feelings is that if McDonald's tries to sell anything through supermarkets, no store should carry its stuff. This is about a hardball battle for share of stomach, and nobody should do anything to help McDonald's bottom line.

MNB user Steve Kneepkens responded:

I find this commentary very curious. I didn’t see you write anything obstructionist about Starbucks selling their items in grocery stores. Or TGIF selling potato chips.. or PF Changs selling frozen meals. This is driven by your clear dislike for McDonalds rather than having a business perspective on the potential success or failure of the brand.

McDonalds is truly one of the most successful business models in the history of mankind. They now sell more apples and salads than any other company in the world. They have made coffee a destination (It tastes better then Starbucks and it is significantly cheaper) and their smoothies aren’t bad either.

You may not like their product but millions – BILLIONS DO. You are constantly espousing the virtues of finding different channels – or creating channels – to build brand consumption, yet if the brand goes against your personal liking – lookout. It may not be cool for you to pull into a McDonalds and consume a Big Mac… but the playland would be right up your alley. Gotta go. There is a $1 freshly brewed McDonalds coffee waiting for me.

One MNB user responded:

We are concerned with our bottom line and this is the reason we carry the Starbucks line. These purchases represent two very different consumer behaviors and do not see the "share of stomach" issue here at all.

Actually ... longtime MNB readers will know that this position has nothing to do with my feelings about McDonald's, but in fact is a long-held (and to some, annoying) view about what products supermarkets should stock. And, in fact, I have suggested that supermarkets perhaps ought not carry Starbucks or Dunkin' Donuts coffee, nor many of the other restaurant-branded items you mentioned.

I am being a little hyperbolic here, but my position is rooted in the belief that this is a hardball battle for share of stomach in which restaurant brands gain credibility, visibility and profit by selling branded items in supermarkets. I'm not sure it is in supermarkets' long-term best interests to cooperate.




On another subject, an MNB user wrote:

It strikes me for someone whom writes about retail that you don’t like to go to retail stores. While I agree that online shopping is getting bigger and better there is a whole segment that will always go to a brick and mortar stores, and the online shoppers still have to frequent brink and mortars from time to time.

Untrue, though I understand why you might think that.

I like good stores. I like stores that differentiate themselves, that are aspirational, that delight in the categories in which they do business. I like unexpected pleasures. I hate mediocrity. I hate stores that make shopping a chore. I don't like retail that settles, or that is just good enough.

When I write about online shopping, it is to point out how companies like Amazon are doing a better job than many traditional retailers, and to suggest ways in which they can be competed with.




I sort of teed off last week on a guy who seemed to suggest that it is best to hire white, heterosexual christian males because they won't sue you.

Which prompted another MNB user to write:

Clearly the reader has a world view you don’t appreciate.  Got it.  It’s hilarious that you claim to embrace diversity when you don’t accept much of a difference in thinking.  Your intolerant attitude confirms your desire to disdain this reader's thoughts, and demean a group you identify as less than desirable.  You realize that the whole basis of race, age, and gender protection laws required the definition of groups of like individuals who were being discriminated against.  Hmm, with thinking like yours, maybe some day white, hetero believers can get some legal protections against the like of you.

Do you really think there are just a couple of kooks out there who don’t agree with you?  It's likely there are lots of us.  Fortunately, you don't represent the majority.   But you do get the last word in this blog.

I'm not sure how long I'm going to let this discussion continue on MNB….at some point I'll move things in another direction because my sense is we've exhausted the conversation, at least for the moment, and I don't want people to get bored.

However, I thought your email deserved a reply.  In short, I think you are missing my point.

All I am really arguing is that I would never assume that all gender discrimination lawsuits are frivolous or baseless.  I'm sure some are, just as I am sure are not.  And while I hate litigation and litigiousness, I'd rather live in a system where people have legal recourse than in one where they do not.  Abuse of the system from time to time, it seems to me, is the price we pay for our system.

A few other things…

• I know that white, heterosexual christian males are not a legally protected class.  In fact, that is the precise point I was making.  I just think that some of the people who fall into that demographic would like to be protected from people who don't.

• I do not think that there are just a few "kooks" who disagree with me.  I would never describe someone that way just because they disagree with me.  There are kooks out there, but there are probably as many who agree with me as disagree with me.  By and large, I think that MNB provides a forum in which a wide variety of opinions are aired, and to suggest that my disagreement - sometimes profound - is the same as intolerance is to suggest that you are not paying attention.  I give tons of space to people with polar opposite views from mine.  (If I didn't, then I would not get into these kinds of discussions after I've disagreed with them.)

• Yup.  I do get the last word.  But I try to be fair about the stories I write, specific and accountable for the commentaries I make, and evenhanded about choosing the email I run.  And then I get the last word.




Finally, thanks to all of you who responded to my "OffBeat" column from last Friday. There were dozens of emails, including many from people who were dealing with loss and feeling the same emotions that I was. One was from a fellow reading MNB on his smartphone while waiting for a funeral service to begin; several were from people who had lost friends and relatives at a young age. Almost all were from people who, like me, just wanted to go hug their kids...

Published on: October 9, 2012

In Week Five of National Football League action...

Philadelphia 14
Pittsburgh 16

Green Bay 27
Indianapolis 30

Atlanta 24
Washington 17

Miami 17
Cincinnati 13

Seattle 16
Carolina 12

Chicago 41
Jacksonville 3

Buffalo 3
San Francisco 45

Tennessee 7
Minnesota 30

Cleveland 27
NY Giants 41

Baltimore 9
Kansas City 6

Denver 21
New England 31

San Diego 24
New Orleans 31

Houston 23
NY Jets 17




And, in the Major League Baseball playoffs...

In the American League Divisional Series, the NY Yankees and Baltimore Orioles are tied at one game apiece in their best-of-five series, while the Detroit Tigers have a 2-0 lead over the Oakland Athletics in their best-of-five series.

Over in the National League, the Cincinnati Reds have a 2-0 lead in their best of five series with the San Francisco Giants, while the Washington Nationals and the St. Louis Cardinals are tied at one game apiece.