business news in context, analysis with attitude

Published on: November 7, 2012

by Kate McMahon

It’s been a week of reflection for those of us left in the dark by Hurricane Sandy, the third storm in the past 14 months to knock much of my small Connecticut community off the power grid.

Once again, we were fortunate compared to our neighbors along the East Coast who suffered such devastating losses and are struggling to rebuild their lives. Without electricity or internet, we learned yet again to appreciate the simple things. The morning newspaper delivered in the driveway. The ring of a landline telephone. Mail delivery. A cup of hot coffee. Businesses doing the right thing for their customers and community. And, in the wake of all the storm damage, the stoic linemen from Texas and Missouri who traveled across the country to reconnect us.

Happily, examples of the “right thing” have outnumbered stories of unscrupulous business practices, but the balance may be tested in areas where recovery could take months and even years. The threat of a Nor’easter slamming the area today has only heightened concerns.

What has become clear is that meaningful and relevant outreach engenders good will that will be remembered long after the storm has cleared. As Michael Sansolo noted on MNB yesterday, supermarkets and hardware stores performed admirably in a most difficult time. Small businesses once again made a huge impact by quickly responding with the basics: free coffee, water, ice, access to charging stations and wifi. Spas and private fitness facilities opened their doors to anyone who needed a shower. Volunteers fanned out with supplies and helping hands.

Major corporations also showed innovative outreach. The folks in hard-hit New Jersey flocked to Tide’s Loads of Hope, a mobile laundromat stationed in a Lowe’s parking lot providing free laundry service to those impacted by the storm and relief workers. Created after Hurricane Katrina, Loads of Hope has helped more than 38,000 families in 13 states.

Other examples include:

• U-Haul is offering affected families 30 days of free storage.

• Lowe’s, Home Depot and Wal-Mart are providing supplies and sizable contributions to the Red Cross.

• Many major banks, including Chase and Wells Fargo, are waiving fees on ATM withdrawals, overdrafts and late payments.

• Airbnb, an online booking site for inns and bed-and-breakfasts, waived all fees for 20,000 listings in affected areas.

• Duracell sent out its "Power Forward" centers give Hurricane Sandy's electricity-less victims the chance to charge phones, as well as to grab free batteries for flashlights and lanterns.

• Chevrolet donated 50 large vans to the Red Cross to deliver supplies.

• Anheuser-Busch switched a line at its Cartersville, Ga., brewery from beer to potable water to produce more than a million cans of emergency drinking water for those in need.

• Goya Foods donated over 300,000 pounds of Goya products and over 25,000 meals to victims of Hurricane Sandy in New York and New Jersey.

• And in a development meaningful to already stressed-out college applicants (including my daughter), many schools extended the Nov. 1 deadline for early decision and early action applications.

Now to the other side. Michael’s column yesterday noted the ill-timed Hurricane Sandy sales pitches by American Apparel, Gap and Urban Outfitters. I was particularly offended by the American Apparel ad which targeted the nine hurricane-stricken states and read: “In case you’re bored during the storm, just enter SANDYSALE at Checkout.”

After an intense backlash on Twitter, an American Apparel marketing rep attempted to spin the reaction and told the Fashionista site “we never meant to offend anyone.”

It gets worse. Today I read that CEO Dov Charney was unmoved and unapologetic about his marketing staff capitalizing on the hurricane, noting the online sale would only generate tens of thousands while the storm would cost his stores a million dollars at a minimum. “We’re here to sell clothing,” he told Business Week. “I’m sleeping well at night knowing this was not a serious matter."

Are you kidding me? You’re sleeping well while 115 known victims are mourned, thousands of people have lost their homes and thousands more are huddled in a cold dark dwelling or apartment fearing the next storm? Is that really the message you want to send to customers?

Maybe I’m tired and grumpy after a week of no power, but my feeling is this: American Apparel blew it. In its cavalier attitude toward people who were hurting, it demonstrated anything but a typically American compassion. Unlike, say, those linemen from Texas and Missouri, who demonstrated the best.

Comments? Send me an email at kate@mnb.grocerywebsite.com .

Published on: November 7, 2012

The Sacramento Bee this morning reports that California voters have defeated the Proposition 37 referendum, which would have mandated the labeling of foods containing genetically modified ingredients.

Here's how the paper describes the vote:

"Proposition 37 played out like a fight between a small health food store and a big-box grocery.

"On one side were organic food producers, alternative health website Mercola.com and hundreds of individual donors who believe genetic engineering is unnatural. They argued that consumers should have more information when they shop - and pointed out that more than 40 countries require labeling genetically modified food. Some supporters fear that GMOs cause health problems, though that hasn't been scientifically proven.

"On the other side were conventional growers, large grocery chains, pesticide companies like Monsanto and DuPont - and many familiar brands such as Pepsi, Nestlé, and Kraft. They poured tens of millions of dollars into defeating the measure, funding a campaign that flooded airwaves, websites and mailboxes with messages that cast Proposition 37 as a confusing rip-off that would lead to frivolous lawsuits and higher grocery prices."

Published on: November 7, 2012

Amazon.com announced yesterday that for the first time, it will offer its Prime membership - which gives subscribers automatic two-shipping and free online streaming of movies and television programs - on a monthly basis for $7.99 per month. Previously, Prime was sold only on an annual basis for $79 per year.

Analysts say that the move is designed to position Amazon as being more competitive with streaming services offered by Netflix and Hulu.

Amazon isn't saying much about the move. A spokesperson tells the Seattle Times, "We are always looking at ways to improve the shopping experience for our customers. We are testing a monthly Amazon Prime subscription. Beyond that we don't have anything further to offer."

The Times writes that "adding a more accessible monthly Prime option just before the busiest retail season of the year could substantially boost Amazon's merchandise sales ... The strategy may be expensive for Amazon, though. The company assumes more shipping costs with Prime, but as an annual program, it enticed people to become more regular, long-term customers."

Published on: November 7, 2012

In Canada, the Financial Post reports that Walmart and Mattel "have launched a virtual toy store on a wall in Toronto’s business district that allows passersby to shop for toys with their cell phones.

"Consumers walking by the promotion in the PATH underground commuter walkway are able to scan QR codes to buy popular Mattel items this season from Barbie, Hot Wheels, and more. It includes free shipping."

The story says that it is projected that the virtual toy store will be up and running for four weeks. It also notes that "in April, Canadian online retailer Well.ca teamed up for eight weeks with Procter and Gamble Canada to create a similar digital store underground in Toronto, selling 120 virtual products via QR codes including Crest White Strips, Pampers diapers and Tide detergent."

Published on: November 7, 2012

by Kevin Coupe

It was exactly a week ago that MNB reported that the Walt Disney Co. is acquiring Lucasfilm from its founder, George Lucas, for more than $4 billion in cash and stock, with one goal to be to release a new "Star Wars" film in 2015, and henceforth add to the saga every two or three years.

But it is also worth noting that the Hollywood Reporter is reporting that Lucas will donate most of the money to an educational foundation that he has established.

"For 41 years, the majority of my time and money has been put into the company," Lucas said in a statement. "As I start a new chapter in my life, it is gratifying that I have the opportunity to devote more time and resources to philanthropy."

The story notes that Lucas previously made the following statement: "I am dedicating the majority of my wealth to improving education. It is the key to the survival of the human race. We have to plan for our collective future - and the first step begins with social, emotional and intellectual tools we provide to our children. As humans, our greatest tool for survival is our ability to think and to adapt - as educators, storytellers and communicators, our responsibility is to continue to do so."

Worth noting.

Published on: November 7, 2012

Sky News reports that Terry Price, a former Walmart executive who has been running Tesco's "hardlines" business - which includes nonfood items such as electricals, toys and sporting goods - is leaving the company after just 18 months in the job. He previously had been working for Tesco's China business.

The story says that Price is leaving because of "the lacklustre trading performance of the division ... Philip Clarke, Tesco chief executive, is responding to the decline by combining responsibility for general merchandise under Neela Mukherjee, a Tesco Direct executive."

The story also notes that "earlier this year, Richard Brasher, the group's UK boss, left after Mr Clarke said that there 'could not be two captains on the bridge'."

Published on: November 7, 2012

Forbes has a piece in which it suggests that the dollar stores segment - which has been growing in a down economy - is "turning to so-called 'sin items' to churn even more sales," and is "angling for fatter profit margins with a bold push into cigarettes, wine and beer."

While the segment has been growing, the current issue is how to sustain it, especially as the economy gets better. "That question has become more pressing as Dollar General and Family Dollar look to fend off the accelerated expansion of Wal-Mart’s answer to the dollar store: Its small format Neighborhood Market spin-off," Forbes writes.

"One counterattack is to add 'sin items' like cigarettes and liquor, which are 'always a great traffic driver' and generate higher profit margins than food ... As part of Family Dollar’s strategy to expand merchandise that generates the most frequent purchases, such as food and healthy and beauty items, Family Dollar added cigarettes to approximately 6,000 of its 7,300-plus stores this summer via a partnership with McLane, the nation’s largest distributor of tobacco products.

"Cigarettes are also filling an unmet shopper desire, Bryn Winburn, public relations manager for Family Dollar, told Forbes.com.

Today, Family Dollar carries all of the major cigarette brands and 'we price them competitively,' Winburn said. What’s more, rivals Dollar General and Dollar Tree don’t sell cigarettes, which gives Family Dollar a competitive edge."

Published on: November 7, 2012

National Public Radio reports that while a study suggesting that the artificial sweetener aspartame could be a possible cancer risk was scheduled to be published this week in the American Journal of Clinical Nutrition, it was pulled at the last minute by the hospital sponsoring the study. The reason: Brigham & Women's Hospital, which is connected to Harvard University, decided that the research was too weak to be released, and that the findings had been promoted prematurely by the hospital's media relations department.

Experts called the decision a victory for "evidence-based science."

Published on: November 7, 2012

• Bloomberg reports that in Spain, the chicken is taking it to the pig.

According to the story, "  Spain’s passion for the dry-cured meat known as jamon, cultivated for centuries and inextricably tied to its culture, has been severely tested by the nation’s prolonged economic slump and soaring costs for pork across Europe. It’s gotten so bad that the Spanish, Europe’s biggest pork eaters, consumed more chicken than pig last year for the first time ever,
according to market researcher Euromonitor."

Interestingly, there also is a demographic shift at work here. " It’s not just economic distress and rising prices that have curtailed pork sales," the story says. "Spain’s burgeoning population of Latin American immigrants favor poultry over pork, while the elderly tend to choose leaner proteins such as fish."

• The Allentown Morning Call reports that Wegmans is planning to open a Pub restaurant and bar at its store there, probably in June 2013. The retailer already has "three of the Irish-pub-style restaurants open, in King of Prussia, Collegeville and Malvern," the story says.

The new Pub is part of a 15,000 square foot expansion of the Allentown store, which also will include a much bigger craft beer section, keyed to the craft beers that will be sold on tap in the Pub.

Published on: November 7, 2012

On the subject of Amazon installing lockers in Staples stores all over the country, MNB user Ken Wagar wrote:

Interesting to me that Amazon which is a company I really like and shop very frequently is now doing business with a company that in my opinion does a terrible job of being in stock, eliminates valued brands in favor of 2nd rate private labels, and often has employees who are neither friendly nor courteous.

I would much rather wait an extra day to have something shipped to my home than to enter a Staples for anything.

I suggested yesterday that Staples might be letting the fox into the hen house, making the same strategic mistake that Borders and Toys R Us did when they did business with Amazon.

MNB user Stephen Cordova responded:

It makes tons of sense for Staples to put Amazon boxes in their stores.  It is all about getting customers into their stores, and while there they will find instant gratification of other items they may want to buy.  It’s like the Mall Theory.  Whatever will bring in customers should increase sales.  It is good for Amazon, Staples and ultimately good for the consumer.

Another MNB user wrote:

The difference I see between Staples and TRU/Borders...people buy toys and books on the internet all day every day...pens and basic office supplies...not so much.  As a small business owner, I buy just about everything from Amazon, but still make a trip to OfficeMax (closer than Staples).  In a world of, "How do I get one more visit from my customer base", package pick-up could be an option.




On the subject of emailed receipts, a trend that seems to be gaining traction, one MNB user wrote:

I love this too!  And anything else “green”.  I view my email as a survival tool, keeping things from years ago organized by topic and date.  I shop online a lot, so this will add to my e-confirmation files.  It’s so much easier to find a receipt in email vs. a pile papers.

But...it is kind of annoying that retailers (and other industries) find ways to save money, call it “going green”, and don’t pass any of the savings on to the consumer.  They most times position it as they are doing us a favor.  Yes, e-receipts are good for the earth but they also save the company a boat load of the actual green paper money.  They aren’t fooling me!

From another reader:

I agree that online receipts are more convenient and user-friendly than paper receipts.

However, I had a baggage loss experience with JetBlue airlines, who will not reimburse for lost luggage without a physical receipt. I submitted the copy of the invoice I got from the retailer, only to be denied that portion of my claim. (All physical receipt copies were paid.) I protested this decision to JetBlue management, only to learn that JetBlue believes “online receipts can be altered”, therefore, they will not honor online receipts if submitted to prove the cost paid or ownership of an item in a lost bag.

Their decision cost them a frequent flier (or certainly when I must bag check). But, it also served as a reminder for me to get physical receipts for any item of value that might go in my suitcase. Since lost bags happen so rarely, I can’t expect JetBlue to come out of the dark ages on this policy anytime soon….

This is a case where JetBlue is guilty of 20th century thinking. Hopefully, sufficient pressure can be brought upon it to change this policy.




Yesterday, I wrote about how Anheuser-Busch InBev, the maker of Budweiser beer, has gone to Paramount Pictures to ask the film studio to remove its product - or at least obscure its label - from all future digital copies of the movie Flight, which, as the Hollywood Reporter writes, "centers on an alcoholic pilot who guzzles alcohol and takes drugs both before and after he takes prevents a malfunctioning airplane from crashing."

Budweiser isn't the only label seen in the film, which also shows products such as Rolling Rock, Yuengling, Smirnoff, Absolut and Stolichnaya being abused by the main character. According to the Hollywood Reporter, none of those brands were asked for or gave permission for their brands to be used in the film.

I commented:

While I understand Anheuser's objections, I think the company is making a mistake. I was aware of the fact that Budweiser and the other labels were in the movies, but it wasn't like I ever thought that the brands were endorsing alcoholism or addiction. If I were the filmmaker, I would have insisted on using real brands, too ... fake brand labels always call more attention to themselves, especially if they are designed to mimic real brands.

So this is one of those cases where me thinks they doth protest too much ... and actually are creating more awareness of the brands presence in the movie than the movie actually did. (Maybe that's the point?)

MNB user Chris Weisert responded:

I have to wonder if product placement fees were asked for and declined so Anheuser-Busch InBev decided to turn the tables when the film producers used the brand anyway.

The stories I've read suggest that the producers never asked. (If I were the producer, I would not have. I would have just used the brands and invoked the Fair Use doctrine.)

And MNB user David peterson wrote:

Then why didn’t they use a real airline brand?

I suspect that there's a good reason for that. While the producers used real alcohol brands, there was never any suggestion that the brands were responsible for the character's addiction issues.

However, there would be a good argument that by allowing that pilot to fly the plane, and airline did bear responsibility for events transpiring while he is sitting in the captain's seat. So they could not use a real airline brand - that would have been charging a real entity with negligence, which would have crossed a line.




Finally, an MNB user criticized me yesterday for using the word "detritus" in a commentary, accusing me of "showing off" and playing "SAT vocabulary games."

I responded that this was not my intent:

I'm not a particularly smart guy, but I read some, and so I'm often learning words that I might not otherwise know. When I write, they sometimes pop out, hopefully when appropriate.

MNB user John R. Hurguy wrote:

As a long time reader, I couldn’t possibly disagree more with the individual’s comments that you’re showing off and playing SAT vocabulary games.  Your word usage is just one of the many things that makes your writing interesting and fun.  And, it certainly is not something you just implemented..  In fact, proof of your commitment to “new and different words” goes back about 5 years ago when you shared with the MNB community a website that allowed us an opportunity not only to increase our personal vocabularies but also to indirectly contribute food to the needy… The site was called appropriately, “Free Rice.”

Keep up the great work and please continue to share the new words you come across as many of us appreciate the opportunity to learn new words that we might not otherwise know…

Another MNB user wrote:

I enjoyed your word “detritus” and don’t actually believe the comment that you were showing off. A good friend of mine who isn’t at all driven by his ego, loves to read and he remembers every word he reads and its meaning. Every now and then he throws out a word that I’ve never before heard of and it’s always fun and interesting because he’s not doing it in a manner to make himself look superior.
 
Thank you for allowing us to learn and use new words!

And, from another reader:

You weren’t showing off – you were educated by old-school nuns and Jesuits; therefore, you are familiar with the English language.   No need to apologize and, once again, you were able to use MNB as a learning tool to expand that poor reader’s limited vocabulary.   Well done.
 
Never forget the wisdom of Sir Winston Churchill: “Naturally I am biased in favor of boys learning English. I would make them all learn English: and then I would let the clever ones learn Latin as an honour, and Greek as a treat. But the only thing I would whip them for is not knowing English, I would whip them hard for that.”