business news in context, analysis with attitude

Published on: March 6, 2013

by Kate McMahon

"Kate's Take" is brought to you by Wholesome Sweeteners, Making The World a Sweeter Place.

If you thought Twitter was a passing fad or the province of teenagers and pop stars, consider this:

Since its launch in 2006, Twitter has amassed more than 500 million registered users, now generating almost a half billion tweets daily – up from 140 million a day in 2011. The majority of Twitter users are working adults aged 35 to 49.

I thought it time to revisit this social networking phenomenon when in the course of one day retiring Pope Benedict’s final message to his flock was a tweet, a headline in Advertising Age read “When did Twitter grow up? Answer: Now” and a quick check of Starbucks on Twitter revealed it has a whopping 3.5 million followers. When I first wrote about Twitter here in 2009, Starbucks had 262,375 followers.

All grown up is right.

Just as websites and a Facebook presence have become mandatory, so Twitter should be for a savvy retailer, brand or service provider. And increasingly so, as the 140-character message are tailor made for mobile communication.

As recently noted in this space, a timely tweet by Oreo was the talk of the Super Bowl advertising wrap-up, and a failure to tweet tarnished Poland Spring after Florida Sen. Marco Rubio hydrated during Republican rebuttal to the president’s State of the Union speech. Also making headlines in the past month – the hacking of both Burger King's and Jeep’s Twitter accounts.

While teen heartthrob Justin Bieber just surpassed Lady Gaga to rule the Twitter universe with more than 35 million followers, let's focus on the brands and retailers that are a part of the MNB world.
Starbucks, with 3.555 million followers, is followed by Whole Foods Market’s main twitter feed with 3.25 million. Starbucks has Twitter accounts for Canada and the United Kingdom, and WFM takes localization one step further, with separate accounts for individual stores.

By comparison, retail giants Target and Wal-Mart weigh in the 530,663 and 311,777 followers, respectively. Supermarkets in the mix include Kroger (24,375), Meijer (20,317) and H.E.Butt (20,993).

But the numbers are only a part of the equation. Effective social media is essentially customer service delivered via a smart phone or computer. It does not require a sophisticated digital marketing agency or extensive social media team.A perfect example is PCC Natural Markets, a certified organic coop with nine stores in the Seattle and Puget Sound area. Small, but connected, with 11,646 followers on Twitter. Each PCC store has one or two “specialists” who are focused on customer service, whether it is the old-fashioned front of the store interchange or in a dialogue on Twitter.

PCC’s social media director Ricardo Rabago noted that its website and Facebook page reached people connected to their laptop. “Twitter is the best way to distribute quick bursts of content to drive our consumers to a store or a promotion,” he said. “It’s more mobile.”

Twitter also allows companies like PCC to compete effectively for attention with big retailers, which is not always possible in the physical universe.

It’s all grown-up, and it’s a game-changer.

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

Published on: March 6, 2013

by Kevin Coupe

So much for flexibility.

At Best Buy, management has decided to end the Results Only Work Environment (ROWE) policy that, as the Star Tribune writes, "evaluated employees solely on performance versus time worked and office attendance. Employees worked when they wanted and wherever they wanted just as long as they got the job done.

"Now most corporate employees will work the traditional 40-hour week, though managers still have discretion to accommodate some workers. ROWE, which the company launched in 2005, did not apply to Best Buy’s store employees, who make up the lion’s share of the retailer’s 168,000-person global workforce."

The move comes just a week after Yahoo announced that it was ending its policy allowing employees to telecommute and now will require employees to work in the office, believing that proximity will breed greater innovation.

Liker Yahoo, Best Buy has been having tough times, and future threats could certainly make things tougher. In threatening times, the instinct always is to circle the wagons. So I get why Best Buy is making this move.

But, here's an interesting passage from the story:

"Last year, 63 percent of companies allowed employees to work some hours from home, compared with 34 percent in 2005, according to a study by the National Study of Employers, which was produced by the Society for Human Resource Management and the Families and Work Institute.

"In 2010, 54 percent of women 16 years and older participated in the labor force, with 71 percent of those women raising children, the study said."

One of the things that Best Buy - and every employer - has to think about when making these decisions is that they may hurt some people more than others. Context is important, and should not be ignored as they evaluate their employment policies.

It is more complicated. But worth it.

Published on: March 6, 2013

The Wall Street Journal reports that Bill Simon, CEO of Walmart US, told an investors conference yesterday that "its smaller-format stores are making inroads against competitors like dollar stores, supermarkets and pharmacies, and that the locations will play an integral role in the company's future ... This fiscal year, Wal-Mart will open its largest amount of smaller format stores to date, about 115. The Neighborhood Market and Express locations will account for about 40% of stores the retailer opens."

Simon said that he expects that the company will have at least 500 Neighborhood Markets by 2016.

Walmart defines "small format" as less than 60,000 square feet.

Simon said, "We can deliver price, and assortment and fresh food and Rx ... You'll see us increasingly moving into smaller formats."

Published on: March 6, 2013

The Wall Street Journal reports that US Department of Agriculture (USDA) Secretary Tom Vilsack said yesterday that sequestration-related furloughs for government meat inspectors "are months away," and "disruptions related to spending cuts would be staggered if the government pulled back on inspections."

The comments are at odds with those made previously by Obama administration officials, who said that there could be widespread shutdowns of food inspection facilities, leading to food shortages and rising prices, when the automatic budget cuts required by sequestration were put into place.

Published on: March 6, 2013

The Federal Reserve Board said yesterday that it is leaving in place rules saying that debit card issuers cannot charge interchange fees for transactions that are more than "21 cents plus 5 basis points multiplied by the value of the transaction, plus a 1-cent fraud-prevention adjustment, if eligible."

The American Banker reports that "the decision came attached to a biannual survey that found that 33% of debit card issuers averaged transaction fees above the cap. Surprisingly, that figure was even higher than the 20% of issuers that averaged fees higher than 21 cents before the Fed's cap was in place."

The average cost to process a debit transaction is 5 cents, the report found, yet the average actual fees collected on such transactions is 24 cents.

“This report shows that the Fed made a mistake in implementing an effective law. Consumers and merchants should be benefiting more from the reforms," said Jennifer Hatcher, Senior Vice President, Government and Public Affairs, Food Marketing Institute, and a member of the Merchants Payments Coalition. "No merchants in a competitive marketplace mark up their products and services by 500 percent. They would be put out of business. It should be the same for banks and credit card companies."

Published on: March 6, 2013

Reuters reports that "Frozen food maker Birds Eye said horse meat DNA found in two of its products came from an Irish meat processor that is part of one of Ireland's largest agricultural businesses ... The company said investigations had found its Belgian supplier Frigilunch NV had unknowingly sourced meat with horse DNA from Irish meat processor QK Meats."

QK Meats says it didn't incorporate horse meat into its beef products on purpose and is investigating the allegations.

The story notes that "the horsemeat scandal erupted in Ireland after its food safety authority discovered horse DNA in frozen beef burgers and the Birds Eye investigation brings more unwanted attention on the country's reeling beef industry," and that now it has spread to a number of companies and countries around Europe.

Published on: March 6, 2013

The Wall Street Journal this morning has a piece suggesting that if JC Penney CEO Ron Johnson cannot turn things around at the retailer - which has responded to his to-date turnaround efforts by losing market share, sales and consumer traffic - the board of directors is likely to either replace him or sell the company.

Johnson, who received much acclaim for his stewardship of the Apple Store chain, has been with JC Penney for a year. When he came to the company, he said - and the board agreed - that it would take five years to turn things around.

However, the dismal impact of Johnson's strategy - which focused on eliminating sales and promotions and focusing on EDLP, until that effort went so south that he had to reverse himself - apparently has led the board to reconsider that timetable.

Published on: March 6, 2013

• The Dayton Business Journal reports that Walmart "is working to install solar panels on 12 Walmart stores and Sam’s Clubs throughout Ohio, including several in the Dayton region.

"The solar panel installations will add approximately 6 million kilowatt hours of generation production – enough energy to power more than 820 homes – and are expected to supply approximately 5 percent to 20 percent of each store’s overall electricity use."


• In Florida, USA Today reports, the acceptability of internet coupons at a Crawfordville Walmart got a little contentious when the store manager refused to accept them, and had a 51-year-old woman escorted from the store when she got verbally abusive. The woman then decided that the best response to that was to pull a loaded Smith & Wesson .38 Airweight and start waving it around, threatening four employees.

The woman drove away from the store, but was stopped by police, who had been called by the manager. When asked if she had a gun, she replied that she did, but that she also had a concealed weapon permit and would not give it up. The woman refused to get out of the vehicle, and had to be stunned with a Taser; she later was charged with four counts of battery, for allegedly ramming an assistant manager with a shopping cart. She was also charged with resisting arrest and battery of an officer.

Published on: March 6, 2013

• The Boston Herald reports that Ahold-owned Stop & Shop has reached a tentative agreement with the United Food and Commercial Workers (UFCW) on a new contract that, if ratified, would cover 40,000 employees in Massachusetts, Rhode Island and Connecticut. Terms of the deal have not yet been disclosed.

The previous contract expired last month, and the union never actually held a threatened strike vote.


• Acosta Sales & Marketing said yesterday that it has acquired two foodservice companies: Juhl Brokerage and Mid-State Food Brokers, which it says will be integrated into its "rapidly growing foodservice division and will extend the coverage of the company’s sales and marketing services across the East and Midwest."

Published on: March 6, 2013

The US Transportation Security Administration (TSA) announced yesterday that it is revising its security policies and now will allow airline passengers to bring knives on board, as long as their are no longer than 2.36 inches and no wider than a half inch, and do not have molded handles, fixed blades or blades that lock into place.

The TSA also will allow fliers to carry ski poles, pool cues, hockey sticks, lacrosse sticks, Wiffle Ball bats and up to two golf clubs through security checkpoints.

However, passengers will still only be allowed to carry toiletries onto planes that are in containers 3.4 ounces or smaller that fit into quart-sized clear zip bags.

The TSA says that the changes, which will go into effect on April 25, are designed to make the security system more efficient and targeted, not just relax restrictions that were put into place after the 9-11 terrorist attacks.

Published on: March 6, 2013

Regarding Whole Foods' plans to open a store in Detroit, one MNB user wrote:

Opening a store in Detroit make no sense for the people there.... Whole Foods offers nothing to the community other than a perception of good will. Their pricing is off the charts. Detroit would be better off talking with regional chains that can offer the same selection but with better value.

I wrote the other day that I thought that based on some terrific food stores that I've seen in Detroit, Whole Foods may actually find a consumer base there. Which led an MNB user to write:

Thank you for your continued kind words about your visits to Metro Detroit. Westborn Market is one of the most exciting food places I've visited throughout our state. On my last visit there wasn't an item in the store that was not presented in such a way that you simply wanted to buy it. A fair warning however, if you purchase anything from their incredible bakery you may not return from orbit for a while and you might be able to predict the future! I can vouch for that personally...:-)

There are some great food retailers not only in Metro Detroit, but throughout the state, such as Holiday Markets, Russo's, Papa Joes, Horrocks, just to mention a few of the unique stores. There are many others as well.

It is easy to bash Detroit. Yet, in Michigan we are ALL Detroit. Whole Foods will do just fine in the section they are located in Detroit. Just fine. There are a lot of underlying great things happening in Detroit with the continued investor passion of Dan Gilbert, the Illitch family, and others.

Thanks for coming and taking a real look.

My pleasure. I had a great time there.




We've been having some discussion about new fee policies being implemented by airlines and the impact they may have on frequent flyers and best customers.

One reader wrote:

In the 'your views' area an MNB community member complained that after the door closed he asked if he could move to an exit row and was told no because there was a fee for the seat.  You commented that the airline should let the folks in back have a free upgrade now and then.

First off as one from the back of the plane I am overjoyed that you frequent fliers feel that we should occasionally be thrown a bone I would feel lucky to benefit from your benevolent attitude.  But more to the point if you were not a frequent flier and actually had to pay for your upgrade would you want the airline to refund your fee if a member of the cabin crew allowed someone from the back of the plane to have the seat next to you for free????  Policy is policy and to protect those that actually pay for upgrades the cabin crews cannot and should not allow people to use an upgrade seat for free.

I would actually argue that it is on the airlines' long-term best interests not to charge fees for better seats in coach, but rather to give those seats to best customers and then, if there are any left, offer them to folks further back. It creates good will, which can create loyal customers.

By the way, you call this "throwing a bone," like I'm somehow being condescending. Which strikes me as totally uncalled for.

Another MNB user wrote:

Since the airlines are now making flying all about price and not the total experience the consumers are starting to decide which airline to fly as determined by PRICE.  Live by the sword, die by the sword.  What happened to the Price/value relationship?




Responding to Michael Sansolo's column yesterday, one MNB user wrote:

Michael, you nailed it about the boomers, birth rates, and growing Hispanic influence all going on at the same time.  I recently heard an alarming statistic about the price of gasoline.  A study was done by Deutsche Bank that found that for every penny increase in a gallon of gas it takes $1.4 billion out of the economy.  We saw an average increase of $0.46 over the past year which equates to $46.4 Billion fewer dollars in circulation.  The discontinued Social Security tax relief has ended taking additional funds out of every pocket and the economy.  Furthermore the Fed’s continues its policy of quantitative easing that keeps borrowing rates artificially low further hurting seniors and will eventually lead to inflation.
 
And, all of this on a day when investor groups are predicting a record day on Wall Street that will surpass the previous record set in 2007. 
 
Is there a disconnect on Wall Street as well?  I’m not so sure what news they are looking at to be so enthused about our future?  But I sure hope they are right!

MNB user Elaine Howard wrote:

Great brief and to-the-point summary of the tidal wave heading our way. I haven’t seem a more accurate and succinct summary of facts that support what I have been feeling and reading is coming. As a boomer, I ‘m afraid to say many of my friends are in the very bleak economic picture you paint. And as a speaker of Spanish, I have been recruited spontaneously in doctor’s offices, banks and other businesses when I have stepped in to help translate for a struggling Hispanic trying to do business with a Caucasian in charge… All the while I am eating mango and guava and watching the explosion of tropical and spicy foods out there…My friends kids are all over 25 and most over 30, and only one I can think of is married, and she is childless. I think you are right on.




On another subject, MNB user Clay Dockery wrote:

This morning’s Eye Opener was a fascinating article on many fronts, but none particularly more so than the comment below.
 
And the thing is, to a large degree the traditional networks did not see the fresh competition coming, and have been in denial about the impact it could have on their businesses.
 
Why do I say this?  After a year of watching an outstanding cable program, "Sons of Anarchy," I was simply amazed about the use of profanity, sexual situations, violence, etc.  There is still a regulatory body that will tell the traditional networks what they are allowed to do and not do and yet the cable stations have license for far more provocative programming.  So a question has to be asked; are the network channels in denial or is the FTC preventing them from following the consumers changing expectations?  Is a level playing field being prevented and if so, why?

Translating the same thought to our industry, we are facing unprecedented scrutiny over the obesity epidemic while only a handful of states are trying to understand how the other 50% of food dollars in the food away from home segment are impacting the same issue.  It is sad commentary to recognize that it was less than 50 years ago that McDonalds developed a hamburger for the hearty appetite; the Quarter Pounder.  A quick reference to average hamburger sizes today make a quarter pound patty seem like an appetizer!




Yesterday's MNB had a basketball story with a baseball movie reference, and MNB user Steve Yandel got it:

Despite the “mixed metaphor” so to speak of quoting a baseball movie in a story about high school basketball, I love that you snuck in a reference to Bull Durham in your “Business Lesson from the MNB Sports Desk” this morning (“Sometimes you win. Sometimes you lose. Sometimes it rains.”)

Just remember – You're gonna have to learn your clichés. You're gonna have to study them, you're gonna have to know them. They're your friends.

Hey, it's an simple game. You throw the ball, you catch the ball, you hit the ball.

And most important? It is a game that you have to play with fear and arrogance.




And finally, from still another MNB user:

I used to work in the grocery business on the PR side of things which is where I first learned about MNB. Now, I am just being a stay at home mom for awhile but I still keep up with my morning news beat updates, and I just think you do an awesome job. Not only do I love your constant commentary on the USPS and frequent flier programs but this mornings piece about the basketball player who hit the final shot was awesome. What a great reminder of what we should all strive for everyday. Thanks again for your great wit and unique perspective. You are really great at what you do!

Awww....

I always say that one of the reasons that I enjoy MNB so much is that I get more positive reinforcement than anyone has a right to expect.

And that in itself is a great business lesson.

Almost everyone has a person who reports to them, or who works with them. When was the last time that you looked at that person and complimented them on their efforts?

Because let me tell you ... just a simple word of encouragement, or a moment of connection, can serve as fuel that can propel a person for days and weeks and sometimes months.

It's one of the things that defines leadership.

Published on: March 6, 2013

Citizens who turn to Jon Stewart on "The Daily Show" each evening for irreverent context and perspective on the day's headlines will have to get used to another voice for three months this summer.

The Hollywood Reporter has a story saying that Stewart, who just signed a new contract, will take a sabbatical in order to direct a film entitled "Rosewater," based on a screenplay he wrote based on a book called “Then They Came for Me: A Family’s Story of Love, Captivity and Survival,” by Maziar Bahari and Aimee Molloy.

Stewart will be replaced for the summer by John Oliver, a Brit who is a regular contributor to the program.

The report notes that Stewart connected to the book because 'The Daily Show" actually played a role in it. Bahari is a Canadian-Iranian journalist and documentarian who was jailed in Iran for four months, with comedic footage from a "Daily Show" appearance used against him in court.