business news in context, analysis with attitude

Published on: January 7, 2013

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Published on: January 7, 2013

by Kevin Coupe

He who lives by social media also, apparently, will die by social media.

The Washington Post reports that an Oregon teen who drove dunk and then wrote about it on Facebook has been arrested by local police.

What happened, apparently, is that 18-year-old Jacob Cox-Brown wrote on his facebook page: “Drivin drunk ... classsic 😉 but to whoever’s vehicle i hit i am sorry. :P”

Two of this kid's friends saw the message, alerted police, who investigated, matched forensic evidence from Cox-Brown's car to evidence let on a car that had been hit, and then arrested the teen and charged him "with two counts of failing to perform the duties of a driver."

It is only unfortunate that they were unable to charge him with multiple counts of stupidity. One would be for driving drunk. And another would be for posting details online, forgetting that what you say on the internet stays on the internet ... meaning that it is out there for a lot of people to see.

BTW...

According to the story, "There is growing precedent for law enforcement officials using public social media disclosures in legal cases ... For example, a 2009 Facebook post served as an alibi for a Brooklyn teen accused of a robbery. As the New York Post reported at the time, Rodney Bradford was released from jail when prosecutors discovered that he’d posted a status update to his account from his father’s apartment in Brooklyn a minute before the robbery took place. Backed up by other witness accounts, the post was enough to exonerate the teen."

It just goes to show the extent to which Facebook and other forms of social media have been integrated into our lives and laws. And the extent to which people have to be careful about what they say in such forums. And, finally, the extent to which society can make informed decisions about people and institutions.

Published on: January 7, 2013

The US Food and Drug Administration (FDA) on Friday proposed two major food safety rules that, as the New York Times put it, are "aimed at preventing the contamination of produce and processed foods, which has sickened tens of thousands of Americans annually in recent years."

The two new rules are seen as an important step toward putting into practice the provisions of a new food safety law that was approved by Congress two years ago, though news reports note that there is no guarantee that the new Congress will approve the money necessary to implement these new provisions.

"Changes," the Times writes, "include requirements for better record keeping, contingency plans for handling outbreaks and measures that would prevent the spread of contaminants in the first place. While food producers would have latitude in determining how to execute the rules, farmers would have to ensure that water used in irrigation met certain standards and food processors would need to find ways to keep fresh food that may contain bacteria from coming into contact with food that has been cooked.

"New safety measures might include requiring that farm workers wash their hands, installing portable toilets in fields and ensuring that foods are cooked at temperatures high enough to kill bacteria.

"Whether consumers will ultimately bear some of the expense of the new rules was unclear, but the agency estimated that the proposals would cost food producers tens of thousands of dollars a year."

The Times continues: "One in six Americans becomes ill from eating contaminated food each year, the government estimates; most of them recover without concern, but roughly 130,000 are hospitalized and 3,000 die. The agency estimated the new rules could prevent about 1.75 million illnesses each year."

The Associated Press story frames the rules - and the reaction to them - this way: "The produce rule would mark the first time the FDA has had real authority to regulate food on farms. In an effort to stave off protests from farmers, the farm rules are tailored to apply only to certain fruits and vegetables that pose the greatest risk, like berries, melons, leafy greens and other foods that are usually eaten raw. A farm that produces green beans that will be canned and cooked, for example, would not be regulated.

"Such flexibility, along with the growing realization that outbreaks are bad for business, has brought the produce industry and much of the rest of the food industry on board as Congress and FDA has worked to make food safer."

Responding to the FDA announcement, Leslie Sarasin, president/CEWO of the Food Marketing Instritute (FMI), said: “The proposed rules – Preventative Controls for Human Food and Produce Safety – are important components to implement the FDA Food Safety Modernization Act, which FMI supported when it was enacted by Congress and signed into law two years ago. The food retail community shares the commitment to selling safe, quality food to its customers.
 
“Food safety is the highest priority for FMI and its members, and FMI appreciates the opportunity to review and comment on the proposed rules, in order for the final standards to properly safeguard the risk of product contamination.”

Consumer Union, the advocacy arm of Consumer Reports, praised the FDA action. Jean Halloran, Director of Food Policy Initiatives at Consumers Union, said, “We look forward to analyzing FDA's proposals.  These rules really go to the heart of the problems we’ve had with food safety in recent years.  The produce rule should take aim at serious problems like the 2006 outbreak of E. coli in spinach, which caused several deaths.  The ‘preventive control’ rule should help put a stop to incidents like the salmonella outbreaks at the Peanut Corporation of America in 2009, which killed nine people, and the Sunland plant last year, which left hundreds of people sick.”

And, Caroline Smith DeWaal of the Center for Science in the Public Interest (CSPI), said, "The new law should transform the FDA from an agency that tracks down outbreaks after the fact, to an agency focused on preventing food contamination in the first place."

Published on: January 7, 2013

Bloomberg reports that Cerberus Capital Management is close to making a bid to acquire some of Supervalu's assets - such as the Albertsons and Save-A-Lot chains - while at the same time investing in what remains of Supervalu, becoming a major shareholder in the company.

According to the Bloomberg story, the deal could still fall apart, but there is optimism that the two sides could be ready top announce a deal by the end of the week.

There had been reports that Cerberus had been having trouble lining up financing to make the deal happen, and the Bloomberg story suggests that it had to change the structure of the deal - buying only part of the company - in order to make it happen.

Published on: January 7, 2013

The New York Times reports this morning that the Walt Disney Co. is making a major, $1 billion technology investment in its theme parks that is designed to reshape the customer experience.

Essentially, the initiative will give park users who opt in the ability to wear a rubber bracelet equipped with an RFID chip that is part of a system called MyMagic+, which will create a "less daunting and more amenable" experience," as the Times describes it.

The bracelets will, when the system is fully implemented, allow people to get into the park and onto rides, pay for food and souvenir purchases, and even get into their hotel rooms (if they are staying on the premises). In exchange, to the extent that consumers are willing to allow it, the bracelets will provide Disney with highly specific information about where people are at any given time, what rides and experiences in which they are investing time, and where the company needs to deploy its labor resources.

Here's how the Times describes the initiative:

"Disney World guests currently plod through entrance turnstiles, redeeming paper tickets, and then decide what to ride; food and merchandise are bought with cash or credit cards. (Disney hotel key cards can also be used to charge items.) People race to FastPass kiosks, which dispense a limited number of free line-skipping tickets. But gridlock quickly sets in and most people wait. And wait.

"In contrast, MyMagic+ will allow users of a new Web site and app — called My Disney Experience — to preselect three FastPasses before they leave home for rides or V.I.P. seating for parades, fireworks and character meet-and-greets. Orlando-bound guests can also preregister for RFID bracelets. These so-called MagicBands will function as room key, park ticket, FastPass and credit card.

"MagicBands can also be encoded with all sorts of personal details, allowing for more personalized interaction with Disney employees. Before, the employee playing Cinderella could say hello only in a general way. Now — if parents opt in — hidden sensors will read MagicBand data, providing information needed for a personalized greeting: 'Hi, Angie,' the character might say without prompting. 'I understand it’s your birthday'."

And, the story says, "Prodding guests to do more advance planning, combined with the tracking of guests as they roam the parks, will help Disney manage its work force more efficiently. More advance planning will also help lock visitors into Disney once they arrive in Orlando, discouraging people, for instance, from making impromptu visits to Universal’s Wizarding World of Harry Potter."

Published on: January 7, 2013

The Los Angeles Times reports that "for the first time since the recession began, the unemployment rate for adult women surpassed that for adult men, indicating that while the U.S. might have been a 'mancession,' it also appears to be experiencing a 'mancovery'.

"The unemployment rate for women 20 years and older rose to 7.3% in December, from 7% the month before. Unemployment for men of the same age remained at 7.2% in December."

According to the story, "Women occupy about two-thirds of public sector jobs," and "the persistently high unemployment rate for women is likely a result of the large cuts in state and local governments that have come over the last year as lawmakers slashed jobs to close budget gaps. The economy lost 13,000 government jobs from November to December, and has lost 68,000 since December 2011 ... As the government struggles to come to agreement on how best to handle the deficit, there will likely be more government jobs on the chopping block. That could be bad news for the 5.1 million women, aged 20 and over, who are still out of work."

Published on: January 7, 2013

• AllThingsDigital reports that a new analysis from Citibank suggests that during 2012, between five and 10 percent of Amazon.com's sales were generated via mobile devices, though the report concedes that it is hard to be specific since Amazon does not break out these numbers.

In addition, the estimate does not include digital downloads, such as books and magazines that are digitally downloaded onto Kindles.

Published on: January 7, 2013

• Advertising Age reports that Mondelez International "has picked nine startups to participate in an ambitious new mobile-technology initiative aimed at driving more impulse purchases and better in-store marketing ... The startups will not only get a chance to create new applications for big brands such as Oreo and Trident, but also could play a role in creating one or two new mobile-focused tech companies that Mondelez hopes to launch at the end of the process."

• The Wall Street Journal reports that Flowers Foods and Grupo Bimbo "are in discussions to acquire pieces of Hostess Brands Inc.'s bread business, as the maker of Wonder Bread and Twinkies sells off assets and liquidates, said people familiar with the talks.

"Hostess could disclose Flowers, Grupo Bimbo or others as opening bidders in a looming bankruptcy-court auction for the assets as soon as next week, the people said. Hostess, whose bread brands include Wonder Bread, Nature's Pride, Home Pride, Merita and Butternut, is still determining how to split up assets and package them for buyers, one of the people said."

• Weis Markets has announced "the launch of its 10th round of price freezes, effective in all 163 store locations. More than 2,000 products have been reduced in price and will stay at these discounted levels for 90 days. Since the company began its price freezing initiative in January 2009, Weis customers have saved more than $40 million dollars," the company says.

• This is going to give Charlie the Tuna even more of an inferiority complex.

According to the Associated Press, a bluefin tuna has sold at a Tokyo auction for $1.76 million - described as a record achieved because of bluefin tuna becoming rare over the last 15 years due to overfishing: "Stocks of bluefin caught in the Atlantic and Mediterranean plunged by 60% between 1997 and 2007 due to rampant, often illegal, overfishing and lax quotas. Although there has been some improvement in recent years, experts say the outlook for the species is still fragile."

The story notes that "the fish's tender pink and red meat is prized for sushi and sashimi," and that patrons of Japanese restaurants owned by the high bidder, Kiyomura Co., are already eating the meat from the prize bluefin tuna.

Published on: January 7, 2013

• A gentleman named Michael Cronan, described by the New York Times as "a San Francisco-based graphic designer and marketing executive," has passed away at age 61 of colon cancer.

Why is Cronan a significant figure? Because he came up with the names of two pieces of technology that have helped change how people consume various kinds of content - the TiVo and the Kindle.

The Times notes that "for all his devotion to marketing and branding, Mr. Cronan felt that sometimes the demands of commerce went too far, as in the often changing corporate names attached to sports stadiums and concert halls."

“There was a time in American life where going to a sporting event or a concert was sort of magical, because a lot of these places had these fun names,” he told The Denver Post in 2010. “But these days, with the amount of people craving advertising exposure, the sponsors have found a way to sell everything. They’re selling our nostalgia, and it’s sad.”

Published on: January 7, 2013

Last week, MNB took note of a Wall Street Journal report that a number of retailers - including Best Buy, Toys R Us, and several regional supermarket chains - have filed complaints with the attorneys general of a half-dozen states, saying that Walmart was guilty of misleading and deceptive advertising.

The chains say that Walmart "cites inaccurate prices and compares differing products, such as laptop computers with separate specifications." The chains also say that Walmart advertised price for products that it knew it did not have sufficient supplies to meet demand, which forced competitors to lower their own prices and lose expected profits.

Walmart said that it was "confident on the legal, ethical and methodological standards associated with our price comparison ads."

My comment:

Really? The ads meet Walmart's "legal, ethical and methodological standards"?

Love to know what those are, exactly.

Because I have a feeling that when exposed to, say, my "legal, ethical and methodological standards," they might have to settle for one out of three.

Then again, nobody has named me king. Or emperor.

One MNB user responded:

I’ll acknowledge that retailers should not be deceptive in their advertising, but it goes back to a common warning for me.  Once you’re competing on price alone, you’ve already lost.  Best Buy and Toys R Us are the category “specialists” that have more opportunities to provide value-add services than Walmart (or Target) can.  Their focus should be there, not on price alone. 

This complaint is also very similar to the many retailers complaining about showrooming.  If you’re losing customers solely on price, you deserve to.  Focus on the customer experience, on providing added value to the store visit.

Another reader wrote:

Anytime a competitor files a complaint against Walmart or any company, claiming something is unfair, it just show a complete lack of class on the part of that competitor.  Instead coming up with a clever way to beat Walmart, they file a complaint.  Filing a complaint is their way of declaring they are inept operators. Filing a complaint is the coward's way to competing.  Wow, imagine that, Walmart advertises their prices and competitors are mad because they have lower their prices so not to get beat.  Boo hoo big babies, welcome to retailing 101.

I don't entirely disagree with your premise, except for the use of the word "anytime." By saying that, you are suggesting that the world of commerce ought to be an unregulated free for all, with no rules other than the survival of the fittest. I can't quite go that far ... I think that when companies violate the law, they ought to be held accountable ... and that companies ought not be able to advertise products that they know they cannot provide to shoppers, at prices they do not have to live up to because they don't actually have the product. That is a kind of consumer fraud, a bait-and-switch approach that doesn't meet my idea of an ethical standard.

But you're right that the minute a complaint is filed, it does sort of look like a white flag.

Another MNB user wrote:

Nobody has named you king or emperor…yet.

And from still another reader:

In light of all the recent attention to Walmart's international practice standards in developing and expanding it's store base abroad, I too thought the exact same thing as you while reading your article about Best Buy et all filing illegal advertising/marketing practices against them.

As such, I now pronounce you King Kevin of Coupeland.

Thanks. But let me tell you, the domain over which I probably have the least control is Coupeland. Just ask my wife and kids...




I wrote last Friday about Feargal Quinn, who was named by by small and medium business owners in Ireland as their "most admired entrepreneur":

Forget just being an entrepreneur. In my book, Feargal Quinn is one of the people I admire most in the world in any category ... and I've met a lot of people doing my job over the past 30 years or so. He's smart, innovative, charming ... and just a nice guy. Every once in a while, some boob will write me an email and suggest that I'm wrong for describing people in the industry as being "nice," because nice people rarely make great business leaders. Feargal Quinn is one of the people who prove this to be wrong - that nice people actually can finish first.

Which led one MNB user to write:

In over 35 years in this business, I’ve run across all sorts, from nice guys and nice ladies, to the extreme opposite end of the spectrum.  I can say I’ve net a number of nice, considerate, successful people.  Many of them are tough, hard – nosed people who expect me to do my job, but to a fault they tend to be fair, and many of them, if I need a special favor from them, will bend over backwards for me.

That's generally been my experience. Being nice is not necessarily antithetical to being tough. In fact, it is a lot easier to accept toughness from someone who is an essentially decent human being. Jerks who are tough are, in the end, just tough jerks. And people who think that toughness is more important than decency and niceness are people with misplaced priorities, people who find that it is easier to be grumpy than pleasant.

Which is very much not my experience.



From another MNB user on an entirely different subject:

A little anecdote for why Barnes & Noble will not survive...

This Christmas my daughter wanted the full Chronicles of Narnia series.  I went online and liked the “look” of the set better at Barnes & Noble than at Amazon as we were going for aesthetics when buying the full set.  I saw that Barnes & Noble had an option to pick up in store and so I decided I could go pick up the set on my lunch break rather than have it sent to my home.  I reserved in store and was excited as they offered an option to receive a text when your requested books were reserved.  Convenience!!  However when I received my text I was surprised to see that my boxed set was $11 more expensive than the price quoted online.  I called my local Barnes & Noble to ask about this and was told that they do not match their online prices.  Why??!!  Why would I ever go to a bricks and mortar Barnes & Noble again if I can get the books cheaper from their own online store (or Amazon that had a cheaper but uglier set)?

I think that unless Barnes & Noble can better integrate their channels they should abandon their bricks and mortar locations and stick with a business model that seems to work better – online.  Then maybe they could dedicate more resources to promoting their Nook and digital content.  By the way I cancelled my reservation and had the books shipped to my home for free.




We reported last week that Tully's Coffee has been acquired by an investment group fronted by actor Patrick Dempsey, for $9.15 million. The deal includes the chain's 47 stores, as well as franchise rights.

Dempsey plays Dr. Derek Shepherd (nicknamed "McDreamy") in the TV series "Grey's Anatomy," which is set in a fictional Seattle hospital.

MNB user John A. Conroy wrote:

In the movie Made of Honor, Dempsey’s character made his fortune by inventing the coffee collar…seems like he has a history with this industry.

Absolutely right. I forgot about that.

Extra credit for making a movie reference...




And, speaking of movie references....MNB user Craig Espelien wrote:

I watched Moneyball for the first time over the weekend and was very impressed.  I was even more impressed when I was able to take a piece of the movie and apply it to business.  It was interesting to see them break down a metric – runs scored – into how those runs were generated settling on OBP (On Base Percentage) as the main driver of the necessary success metric (runs scored).

I got to wondering about our business – selling products for our supplier partners into our retailer base (our customers) so they can get their consumers to buy them.

We measure success by top line sales – and bottom line revenues (commissions) and I got to thinking about how to best define how we make that happen – and the one word answer is:  Distribution.  From getting items from existing suppliers into retail distribution to getting an expanded footprint into additional retailer DC’s to making sure each item is on the store shelf to identifying other potential items from suppliers (items formulated but not yet commercialized) into distribution to creating custom items with new manufacturers.  This seems (even after a couple of days of soul searching) to be a simple way to define our business – and drive our sales teams to better performance.

That got me thinking about that one thing that drives anyone’s business – and working that backwards into the most basic item that drives that metric.  I wonder how many folks truly understand what their OBP is…I think we now know what ours is.

As Michael Sansolo and I always say ... movies generally provide the answer to almost every business question. But then again, we would ... since we wrote a book on the subject.




Regarding the acquisition of Al Gore's CurrentTV cable network by Al Jazeera, MNB user Clayton R. Hoerauf wrote:

I was (evidently) one of the few people who went through the trouble to add Current TV to my cable package when I learned Keith Olberman was going to have a presence on it. We all know how that worked out. I continued to watch even after his departure because I appreciate diverse opinions. Not so with Time-Warner I am sorry to report. By 8:00 am this morning Current had gone dark. I guess T-W wanted to get it off the air before we Americans had a chance to be corrupted by those radical Muslims.




We reported last week about how Starbucks, long criticized for the sheer bulk of disposable cups that it sends into the nation's dumpsters, landfills and garbage dumps, is introducing a $1 plastic reusable cup.

I commented:

Maybe I'm wrong on this, but I have a hard time believing that this is anything more than a public relations effort. I try to think about these issues, and I have plenty of travel mugs at my disposal, but I never remember to bring them to Starbucks. Hard to believe that a $1 reusable cup will change my habits.

One MNB user responded:

Will wonders never cease....KC, you and I agree on this issue. This is nothing but a public relations ploy.... As with most of these efforts to move to reusable anything, if you really look at the advantage and/or the environmental impact, they amount to nothing over the long term. This is just "feel-good" policy.

Another MNB user wrote:

Since sustainability is my “thing” I thought I would offer some ideas to help you to remember your reusable coffee mugs since you seem genuinely interested in trying to use them.
 
Since you  have a lot of them, if you are driving, when you come home, immediately put a clean, empty one back in the car.  Or put a bag of clean ones in the car.
 
I believe you carry a Timbuk laptop bag – if yours has a  pouch on the end, same thing – when you pack up your laptop, add a clean mug.
 
Lastly, if there is space in your house, you can hang a reusable bag with clean coffee mugs/water bottles by your door for an easy reminder.
 
One small act, one person CAN make a difference.

MNB user Jon Pauss wrote:

I will admit that I was a little irritated by your response this morning to the Starbucks reusable cup story. I think your response illustrates the biggest problem with recycling, cutting down on waste, cutting down on CO2 emissions, etc. At the end of the day, it is a personal choice, and unless every individual steps up and takes on personal responsibility, then the problems will never get solved. In this case, you have a company (Starbucks) that is making a big step to try and help cut down on waste, and you say it won’t make a difference because you can’t change your habits. This obviously isn’t about the $1 for the cup, it’s just about you personally (and a lot of other people) being too lazy or not caring enough to put in the (very) minimal effort to remember to bring in a cup when you get your coffee each morning. Come on, my friend, you’re better than that! If you subscribe to the concept that “your vote counts” during an election, then you should subscribe to the concept that each individual can make a difference when it comes to the environment. Both concepts are built on the same foundation.
 
It’s funny to me how everyone says we have to cut down on the national debt for “our children” or “our children’s children”, but then so many people care so little about the environmental issues I point out above. In many ways, these environmental issues, if not addressed, will have far greater negative consequences on future generations than our country’s national debt problem.
 
And for the record, I’m far from perfect myself. I drive long distances often and pollute the environment with my car, sometimes don’t want to walk an extra 25 feet to recycle a cup, and many other things I’m sure. This is an area where almost all of us could improve, including myself.

Fair enough criticism.

MNB user Theron J. Knapp wrote:

I would be happy to find and use a travel mug, but Starbucks never seems to have Venti mugs for hot drinks available.  In fact, I checked their website before writing this and there is not a single venti mug available, only cold venti sized straws.
 
Reusable will be big saver as I usually order an Americano which many Baristas will pour into one venti cup and add an extra venti cup for insulation against the heat.

MNB user Christina Daugert wrote:

This is a lot like the reusable grocery store bags.  Once you get into the habit it becomes 2nd nature if you set it up right in your mind.  If it were part of my daily morning routine to leave the house and drive to a Starbucks, I would put the clean cup near my keys or whatever items I grabbed in the morning on the way out of the house.    If I were walking to a Starbuck's it would be easier yet since I would know I was heading there.  

The monetary incentive is a boost but overtime it is a good feeling overall to know you are helping the planet in some small way.

And MNB user Brian Anderson had what I think is a great idea:

If Starbucks offered a washing or rinsing service before they refilled your cup this might actually work.  You could just leave it in your car.




And finally, I did a commentary last week about the importance of thinking long-term and trying to do things right, and used continuity goofs on the old "Mannix" TV series as an illustration. Which led MNB user Stewart Sundholm to write:

I'm TOTALLY watching a Mannix re-run next time I see one on TV to see those continuity goofs.

Hilarious.

I watched a couple more episodes over the weekend and had a surreal moment. In one episode, there was a witness being interviewed on a beach ... he has a mustache, curly hair and was wearing a bathing suit ... and I suddenly realized it was Tom Selleck in a small, one-line role. And then, in the very next episode, a hit man was played by John Hillerman.

Pop culture geeks of a certain age will understand why this was a weird overlap. But fun.

Published on: January 7, 2013

It was the first week of the National Football League (NFL) playoffs, AKA Wild Card Weekend...

Cincinnati 13
Houston 19

Indianapolis 9
Baltimore 24

Minnesota 10
Green Bay 24

Seattle 24
Washington 14