business news in context, analysis with attitude

Published on: October 30, 2012

by Michael Sansolo

This being MorningNewsBeat.com, I’m betting that most of our readers are big fans of the Internet. No doubt some of you think we overdo it between Kevin’s focus on Amazon.com and other e-commerce companies, and mine on social media. But this is not something that is likely to change anytime soon.

One of the reasons we need pay close attention to social media is the almost daily recognition that the new level of connection allows disparate people to share feelings on a single issue at the drop of a hat. It’s not all about “binders of women” or “horses and bayonets,” thanks to our politicians.

Sometimes it’s about retail issues that annoy people far and wide that now get shared, discussed and mixed around like never before.

If you are like me, you’ve run into this situation: you go into the local Radio Shack (they seem to be everywhere) to buy something simple, like a battery. No matter how you pay they ask for your phone number.

If you Google the question “does Radio Shack still ask for your phone number?” you get 4.3 million possible solutions including a segment from Seinfeld. That suggests this may be an issue that bugs a lot of people.

Just how much this angers the general population was laid clear this weekend in the New York Times, which runs a column called "The Haggler" about a reporter trying to take on different consumer problems. This week, Radio Shack’s strange mania for phone numbers was on the line.

Actually, Radio Shack made the column for two consumer problems and a failure by the company to simply answer questions. But what clearly riled up the audience was the phone number request, especially when the reporter was only trying to return an item he bought with cash. Eventually he got the answer, but it suggests a management challenge that many other companies constantly share: in the process of correcting an internal issue, Radio Shack manages to annoy an incredible number of shoppers.

The reason for the phone number request on returns is simple: Radio Shack wants an audit trail on the money handed out of the registers. Like many retailers, Radio Shack understands the painful reality that an unscrupulous cashier can cause massive damage through theft, even if it comes by pocketing fake refunds or handing money to a friend.

As the Haggler noted, that seems entirely reasonable except that it irritates shoppers by making them divulge a simple piece of information for no apparent reason.

That, in turn, takes us to the power of the social web and why it matters so much. No longer do shoppers have to wonder if they are the only one irritated by a policy like that. No longer do they have to basically accept it. Now they can simply Google the phrase and find out that millions feel like they do. And now they can find articles, like "The Haggler" that give power to their complaint and an outlet to share their anger.

It’s a reminder that in this new world, we’re all on the front lines whether it’s an issue of product quality, customer service or well-meaning policies designed to prevent a problem. Business as usual doesn’t work anymore, which means you have two tasks you need to take on.

First, figure out if you have any policies that customers don’t understand and really dislike and therefore are talking about widely on the web. Second, fix it.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: October 30, 2012

The San Antonio Express News has a long, 2,000+ word piece about how H-E-B "is preparing to confront an unprecedented onslaught of competitors. In the 155 Texas communities in which the grocer operates, shoppers will encounter more than 30 new food and drug store offerings in their neighborhoods next year. That's about triple the amount of competitors that opened new storefronts in H-E-B's markets this year, and about four times the number that set up shop in 2011."

Those new stores will carry banners that include Trader Joe's, Whole Foods, Target, Walmart, Aldi and Costco. Winco has plans to enter the Dallas market in a couple of years. And so the challenge to H-E-B is to chart its own expansion course judiciously, while at the same time making sure that its existing fleet of stores, "each one carefully calibrated to serve its neighborhood," focuses on the company's value proposition.

“The thing that drives us is to be the place for our customers to feel like they can get the best price for the freshest product,” Suzanne Wade, president of the San Antonio food and drug retail division for H-E-B, tells the paper. “If we stay focused on that, the rest of it all kind of falls into place. We've never said we want to be the biggest, but we do want to be the best.”

The story notes that "H-E-B long has dominated the San Antonio market. The company bases its stores in a tight geographic region, which includes Austin, Dallas, Houston, South Texas and northern Mexico. H-E-B has not yet moved into El Paso, the Texas Panhandle or neighboring states ... Ranked the 12th-largest private company in the U.S., H-E-B's sales revenue exceeded $18 billion last year, according to the company. H-E-B has been in operation in the state for more than a century, building its brand loyalty over that time."

That approach, the Express News writes, means that:

• "The grocer designs the smallest details of each location — from produce and meat selections to alcoholic beverage variety — to the demographics of the surrounding community. H-E-B even modifies the physical construction and interior design of each store to its neighborhood."

• "As part of its goal to cultivate customer loyalty, H-E-B also promotes its private label brands, a profit driver utilized by virtually all retailers."

And, H-E-B has "launched a new line of 'Primo Pick' specialty items that H-E-B said are available exclusively at its stores."

You can read the whole story here.

Published on: October 30, 2012

The Sacramento Bee reports that in the wake of the decision by Raley's management to unilaterally impose the terms of its most recent contract offer on its unionized employees, those workers are "gearing up for a possible strike - the first in the West Sacramento grocer's 77-year history."

Management complained that a) it needs the new contract terms in order to remain financially viable in the face of growing non-union competition, and b) the union did not vote on the offer when it was made. The combination of these two factors, management said, forced its hand.

The union says the last offer was "confusing and vague."

According to the story, "About three dozen members of the United Food and Commercial Workers gathered at the Sacramento Central Labor Council offices in Natomas to staple picket signs and plot strategy. Similar meetings were scheduled for today in Modesto and Stockton."

Published on: October 30, 2012

John Browett, the former Tesco and Dixon's executive who was brought in earlier this year to succeed Ron Johnson as the person in charge of Apple's fleet of retail stores, has been fired by the company.

In addition, the New York Times writes, Apple fired Scott Forstall, described as "an Apple veteran who for several years ran software development for Apple’s iPad and iPhone products."

The reasons appeared to be very different.

In Browett's case, the firing appeared to be related to the fact that he never quite fit in with the Apple culture, with the perception being that his experience was too down-market for the company's retail stores.

AppleInsider writes this morning that "Browett's performance began to cause complaints from Apple retail workers within a few months, with sources telling AppleInsider this summer that Browett had frozen all hiring at the beginning of August and initiated a series of efforts to scale back payroll expenses.

"Sources also complained that Browett had started deferring facilities repairs as 'not business critical' and advising employes to 'get creative' and to fix things themselves." The story also cites an report that claimed "Browett had told Apple's retail outlets to learn to 'run leaner' in all areas, even if the customer experience is compromised."

Forstall, a longtime Apple insider, is described by the New York Times as "an important executive at the company and the one who, in many respects, seemed to most closely embody the technology vision of Steven P. Jobs, the former chief executive of Apple who died a year ago.

"But Mr. Forstall was also known as ambitious and divisive, qualities that generated more friction within Apple after the death of Mr. Jobs, who had kept the dueling egos of his senior executives largely in check ... While tensions between Mr. Forstall and other executives had been mounting for some time, a recent incident appeared to play a major role in his dismissal. After an outcry among iPhone customers about bugs in the company’s new mobile maps service, Mr. Forstall refused to sign a public apology over the matter, dismissing the problems as exaggerated, according to people with knowledge of the situation who declined to be named discussing confidential matters.

"Instead, Timothy D. Cook, Apple’s chief executive, in September signed the apology letter to Apple customers over maps."

In his announcement about the executive departures, Cook said that his goal is to "encourage even more collaboration between the Company’s world-class hardware, software and services teams."

Published on: October 30, 2012

Interesting piece from Reuters suggesting that the e-reader, which has experienced "heady growth" over the past five years, may in fact be just "transitional technology," supplanted by the increasingly popular tablet computers that people seem to prefer.

According to the story, "A recent survey by the Pew Research Center found that of those Americans over 30 who read e-books, less than half do so on an e-reader. For those under 30, the number falls to less than a quarter." And, the story says, the market for the monochrome, reflective displays has collapsed, as people seem to prefer "backlit displays, power-saving technologies and new smaller tablets."

Reuters goes on to say that "not all the news is bad. A new generation of e-readers with front lighting, which allows reading in the dark, is hitting the market. The Kindle Paperwhite sold out quickly and that device and the basic $69 Kindle e-reader are the No. 2 and No. 3 top selling products on Amazon, based on unit sales. Amazon also recently launched Kindles in two big new markets - India and Japan."

But the day of the e-reader as a single-purpose, dedicated technology device may be numbered.

Published on: October 30, 2012

Add Google to the list of internet companies testing same-day delivery.

According to a New York Times story, "In San Francisco, some people affiliated with Google can buy a product, using their phones or computers, and have it delivered to their homes in a matter of hours.

"Plans for the new service have been under way for more than a year. But it recently went live for some Google employees and their friends, according to two people briefed on the service who were not authorized to discuss it because Google has not yet publicly introduced it. At least one national apparel chain is involved, one of these people said."

The story goes on to make several points about the service:

• "Though the service propels Google into commerce, the company does not intend to operate warehouses or a shipping service but to team up with retailers and delivery companies. Several San Francisco retailers, including national chains, are participating in the program already. For shoppers, the service means they can avoid the trouble of driving to the store and some of the wait for items ordered online.

"Same-day delivery could help physical retailers, which have been under siege from e-commerce companies that offer the convenience of shopping without leaving home. But online retailers offering same-day delivery could make life even harder for physical retailers, because letting people own something the same day has become physical retailers’ biggest remaining advantage."

And...

• "Retail ads are a huge portion of Google’s business, but they are under threat from companies like Amazon, where shoppers increasingly go to search for products, bypassing Google. Also responding to the threat from Amazon, Google recently tried to improve its comparison shopping service by charging retailers to list their products there. It says retailers are more likely to list accurate and up-to-date items if they are paying.

"Additionally, Google has been trying to bridge the gap between the digital and physical worlds to better understand and profit from mobile ads. On computers, Google and advertisers know if a user clicks on an ad and visits or buys on another Web site. But they lose track of customers who look up a business or product on their phone and then put their phone away, walk into the store and buy something. Online ordering and delivery could help solve that problem."

Published on: October 30, 2012

The New York Times has a piece about how American retail has shifted from a predominantly full-time workforce to one that is dominated by part-timers, with "stores changing many of their workers’ schedules week to week."

“Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry,” Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm, tells the Times.

Excerpts:

"While there have always been part-time workers, especially at restaurants and retailers, employers today rely on them far more than before as they seek to cut costs and align staffing to customer traffic. This trend has frustrated millions of Americans who want to work full-time, reducing their pay and benefits."

"Technology is speeding this transformation. In the past, part-timers might work the same schedule of four- or five-hour shifts every week. But workers’ schedules have become far less predictable and stable. Many retailers now use sophisticated software that tracks the flow of customers, allowing managers to assign just enough employees to handle the anticipated demand."

You can read the entire story here.

Published on: October 30, 2012

• Bloomberg reports that Walmart has asked a federal judge "to deny a bid by 11 women to pursue gender-discrimination claims on behalf of female employees who worked for the retailer in Florida, North Carolina, Virginia and four other southeastern U.S. states."

The company cites the 2011 US Supreme Court ruling that a national class action suit was too broad to be certified, and asks the court "to reject the women’s bid to create a smaller, regional suit and asked him to limit participation in the case to those who brought it."

The plaintiffs, on the other hand, seem to feel that they are just doing what the Supreme Court said they had to do - create smaller, regional suits with limited claims that could be certified.

The story notes that "U.S. District Judge Reed O’Connor in Dallas on Oct. 15 dismissed a bid by women from Texas and neighboring states to sue the company as a group, ruling the class claims were filed too late.

"The original ... case is still pending in San Francisco, where a federal judge last month said a group could be certified if it meets criteria outlined by the Supreme Court. Another case has been filed in Tennessee."

Published on: October 30, 2012

• MLive.com reports that "Meijer Inc has made a deal with Supervalu to buy a 580,000-square-foot distribution complex in Wisconsin."

Financial terms of the deal were not disclosed, but the story does say that "Supervalu will continue to operate this facility into early 2013."

• Computerworld reports that "Boston-area Starbucks stores are the first in the nation to take part in a pilot program of Duracell's Powermat wireless charging technology ... The Duracell Powermat wireless charging technology is being built into some of the tables, which will eliminate the need for mobile devices that are configured for wireless charging to have to plug into wall outlets for power.

"Each store will have roughly eight charging stations that will remain up through the holidays and into early 2013. Duracell's Powermat technology uses inductive magnetic wireless charging technology, which means a mobile device must come in contact with the charging surface."

• Acosta Sales & Marketing announced "the acquisition of two Western foodservice companies: Bay Brokerage Company and Encore Sales & Marketing. Integrating with Acosta’s rapidly growing foodservice division, the combined organizations extend the coverage of the company’s sales and marketing services across the West Coast."

• It is a measure of the power of Hurricane Sandy that it got both the New York Times and the Wall Street Journal to drop their paywalls, making all of their content free of charge to any user until the weather emergency is over.

Both papers have instituted restrictions on their content in recent years as a way of getting readers to actually pay for online content.

Published on: October 30, 2012

Responding to our story the other day about retailers that made the annual Fortune list of best places to work, MNB user Mark Walton wrote:

I spent last Wednesday touring independent Retailers in the Sacramento area.  I understand why Nugget made the list.  I was warmly greeted by several employees in all 5 stores I visited.  It went beyond the normal “hello” and was more conversational and engaging.  It is obvious by the outstanding store conditions that employees take pride in such beautiful and polished stores.  A great example of happy employees making a difference.




On a different subject, one MNB user wrote:

Walking many retailers across the US and seeing that they are putting holiday items out on the shelf’s earlier this year the ever. Seeing all the free shipping, ad match, 5% off, etc etc., and given the fact that beside the Apple iPad mini there not much new, seems to me this is going to a soft holiday season. You have the fiscal cliff, more layoffs, smaller bonuses for most companies will also affect sales. The big hit will be on margin and profit, with add matching and free shipping. Plus pushing more to online will take away those impulse buys as well.

If we don’t get cold weather like last, apparel sales will also suffer. I now have seen all the toy catalogs and price will be the only thing that will make someone go to one retailer vs. another, and with price match, mobile online sales so much for that. You can bet that retailer marketing teams will be extra busy this year than last with Facebook and Twitter sending out there sales tweets to try to convince the customer to come to their stores (poor customers, thinking that these are real customers tweeting this). Nope, not seeing a great sales season.




I mentioned yesterday that I'd been to a Taylor Swift concert, which led one reader to shoot me the following email:

I have also been in the position of feeling like the oldest male at a concert attended with my college-aged daughter.  Those in clubs without assigned seats are the best.  My daughter goes her separate way and I find myself at the bar with other dads.  Concerts at clubs with bars (Stone Pony, here at the Jersey Shore!) that are attended by kids mostly under 21 are the best.  Only a few people can actually belly-up to the bar.
 
When all is said and done, I would rather see a good concert performed by energetic young musicians than over-pay to see over-aged rockers.

I don't know. I have a soft spot for overaged rockers.




And from another reader, an email that made me laugh out loud:

Good luck to you, and especially your family as Sandy approaches.
 
You know, I dated a girl named Sandy back in high school. It doesn’t sound like she’s changed much.

Been there.




And from another MNB user:

Your winning mantra so simple yet so profound.  Excellent choice.

Thanks to all of you who wrote in about the MNB Mantra Contest winner. I'm glad you like it as much as I do...

Think.  Provoke.  Laugh.  Repeat.

There was one reader who asked why "laugh" was relegated to third.

At one point, I actually considered a slightly longer version...

Think.  Provoke.  Laugh.  Eat. Drink. Repeat.

But I thought that was too many words for the back of a t-shirt.

Besides, I like simplicity and elegance. Which I think the winner has.

Published on: October 30, 2012

In Monday Night Football, the San Francisco 49ers defeated the Arizona Cardinals, 24-3.

Published on: October 30, 2012

This photo was sent to MNB by a reader who was shopping at a ShopRite store in New Jersey, and thought that it speaks volumes.

He was right.

Be safe, everyone. And if you have pictures from that show how your store, or someone else's store, is responding to Hurricane Sandy, send them in and we'll try to post them here on MNB.