business news in context, analysis with attitude

Published on: April 17, 2013

by Kate McMahon

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

As the Boston Marathon tragedy unfolded, social media played a crucial role in disseminating breaking news, connecting loved ones and allowing the nation to voice its heartbreak and concern for the victims and the stricken city.

The first reports of the explosion near the finish line were broadcast on Twitter, followed by graphic video clips and photos. Shortly thereafter cell phone networks were overwhelmed and many informational websites crashed due to heavy internet traffic. The public was encouraged to use texts, Twitter, Facebook, Instagram and others to communicate.

From a public safety perspective, Twitter allowed the Boston Police Department to immediately issue minute-by-minute updates, cautions, and requests for any footage, photos or eyewitness reports that may aid the investigation.

Both the Red Cross and Google were quick to tweet links to sites enabling marathon runners and spectators to connect with concerned friends and family across the world.

For the corporate sponsors of the event – including the official shoe and apparel provider Adidas, John Hancock Insurance, Gatorade, Samuel Adams beer, PowerBar, Poland Spring Water and JetBlue – the shocking explosions had a ripple effect.

First and foremost was concern for employees volunteering and teams running in the storied 26.2 mile race. The next step was responding to the crisis on Facebook and Twitter, further proof that the speed and power of social media today demands that companies react and address real-time events immediately. There are no playbooks for a crisis such as this.

The most prominent logo in the race was the three stripes from Adidas, which outfitted 8,500 volunteers and 3,500 others in Boston Marathon jackets. In the photo emblazoned across the front page of the New York Times, the Adidas banner “All in for Boston” was the backdrop to a bloodied victim being treated on the sidewalk.

After accounting for the 100 employees at the race, Adidas somberly posted “We are shocked by the terrible news from Boston” above previous posts sharing in the excitement of the day and promoting an app to track runners.

The John Hancock Facebook page had been updated throughout the early afternoon with upbeat photos of its employee team prior to the start and congratulations to the jubilant victors of the race. That all changed an hour later and its cover photo became a darkened Boston skyline with an expression of sympathy superimposed on the picture. The insurer yesterday announced it has donated $1 million to The One Fund to help affected families.

There was also an immediate response from Poland Spring Water, which had been lambasted in the media a few months ago for failing to respond via social media after Florida Sen. Marco Rubio took a swig of its product during his response to the president’s State of the Union address. Above photos of runners, the brand said: “Our thoughts are with everyone.”

Monday’s post on the Sam Adams page said, “We are heartbroken.” Yesterday the Boston brewer announced it will be donating all profits from its limited release Boston 26.2 Brew to help relief efforts, prompting hundreds more comments from Sam Adams fans across the country expressing support.

It is instructive.

In recent tragedies such as the Sandy Hook shootings and Monday’s attack, social media creates for us a virtual neighborhood. So it only seems fitting that as we all struggled to find words, the phrase that went viral on Facebook and Twitter was from "Mr. Rogers' Neighborhood." To quote Fred Rogers:

“When I was a boy and I would see scary things in the news, my mother would say to me, ‘Look for the helpers. You will always find people who are helping.’ ”

In Boston, people ran to help.

On a personal note, I was part of the cheering throng at four marathons while a college student in Boston from 1974-78. Three years later I had the thrill of covering the event for United Press International. I rode tin he press truck ahead of the race for the entire route. It was an unforgettable experience. I know I join everyone who has ever celebrated a Patriot’s Day in Boston in sharing my thoughts and prayers with the victims, their families and that great city.

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

Published on: April 17, 2013

by Kevin Coupe

The impact of technology on a single industry, and the way it can establish dominance for one or two aggressive companies, can be seen in a set of market share statistics.

Billboard reports that Apple's iTunes store has a 63 percent of the US market for digital music downloads, while Amazon has a 22 percent market share of unit sales.

And, the story says: "Though digital downloads are perceived to be a maturing market, it is still growing while sales of physical albums continued to decline. Last year, digital download sales grew 8.9% to $2.9 billion in the U.S., according to the Recording Industry Assn. of America. NPD estimated that the average buyer spends 6% more on music downloads in 2012 compared to the prior year. Surprisingly, part of that growth comes from teens buying more music than before. In addition, higher sales of full albums are also contributing to the growth, NPD said."

It's an Eye-Opener.

Published on: April 17, 2013

Tesco said this morning that when it leaves the US - though it has not yet been determined how that exit will be achieved - it will cost the company $1.8 billion (US), coming after a six-year period during which Tesco opened Fresh & Easy Neighborhood Markets in California, Arizona and Nevada, only to find that it seemed to have largely misjudged the habits and desires of American consumers.

“With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers,” Tesco CEO Philip Clarke said in a statement. “Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns.”

The New York Times reports this morning that the US debacle is not the only place where Tesco is feeling the pain: "Reporting a drop in profit for the year that ended Feb. 23, Tesco said business in South Korea and Europe was difficult. The economic crisis in Europe meant that consumers were cutting back spending and in South Korea, new restrictions in opening hours hurt sales.

"Even in Britain, Tesco is slowing its expansion. It said it decided not to go ahead with planned expansions of about 100 properties here, adding to a total write-down on its real estate of 804 million pounds. Tesco has been losing market share in Britain to cheaper rivals like the discount retailer Aldi, and it was affected by the horse meat scandal earlier this year, which forced it to withdraw some products."

The Financial Times reports that Tesco's finance director, Laurie McIlwee, "said efforts to extract Tesco from the US were 'going well,' but it could be 'at least another three months before we are able to conclude the process'."

And Reuters writes that McIlwee "said Tesco had received 'a lot of interest' in Fresh & Easy, both for the whole business and parcels of stores. 'What we're most interested in is those buyers that are interested in buying the complete business,' he said, noting that a clean sale would remove redundancy and onerous leasehold issues."

FT quotes Clarke as saying that Tesco “fought hard in the US," adding, "When I became chief executive I really did give it all I had. In the end, I’m responsible to investors and I know I can deliver more for them by leaving than I could by staying."

Published on: April 17, 2013

• Walmart president/CEO Mike Duke said yesterday that the company is taking a series of steps to achieve its goal of being 100 percent dependent on renewable energy, including driving "the production or procurement of 7 billion kWh of renewable energy globally every year, a 600 percent increase over 2010 levels," and reducing "the kWh/sq. ft. energy intensity required to power Walmart's buildings globally by 20 percent compared to 2010 levels."

"More than ever, we know that our goal to be supplied 100 percent by renewable energy is the right goal and that marrying up renewables with energy efficiency is especially powerful," Duke said. "The math adds up pretty quickly - when we use less energy that's less energy we have to buy, and that means less waste and more savings. These new commitments will make us a stronger business, and they're great for our communities and the environment."

The plan is to achieve these new goals by 2020.

"When I look at the future, energy costs may grow as much as twice as fast as our anticipated store and club growth," Duke said in his prepared statement. "Finding cleaner and more affordable energy is important to our every day low cost business model and that makes it important to our customers' pocketbooks. Our leadership in this area is something our customers can feel good about because the result is a cleaner environment. And savings we can pass on to them.

Published on: April 17, 2013

A couple of stories this morning concerning troubled JC Penney:

• Reuters reports that a New York appeals court judge has temporarily blocked JC Penney from selling products designed by Martha Stewart Omnimedia, but not branded with the style doyenne's name. The reason: Macy's is appealing another judge's ruling that JC Penney can sell the goods without violating Stewart's contract with Macy's.

The appeals court judge is expected to make a decision tomorrow about whether to extend the block.


• The New York Times has a piece noting that returning CEOMyron E. Ullman III has decided to borrow $850 million from a line of credit available to the company. Added to $900 million in cash that JC Penney has on hand, and a possible investment that the company could take from other sources, the goal is to shore up the chain's finances in order to reassure vendors that they will be paid for shipped merchandise.

At the same time, there have been reports that JCP plans no layoffs and no store closings - that the goal is to build the existing business and try to grow sales rather than cut its way to prosperity.

Published on: April 17, 2013

Consumer Affairs reports on a new Harris Poll, which "found that despite professed desires to support beneficial environmental policies, many consumers are skeptical of food products that are labeled organic. In fact, the survey found that 59% of consumers believe labeling a food as 'organic' is simply an excuse to charge more for it.

"What surprised us most was that while Americans are showing more concern for the environment, they aren't necessarily willing to pay more to do anything about it," Mike de Vere, President of the Harris Poll, tells Consumer Affairs. "While Americans feel better about the economy, many are wary of the 'greenwashing' concept that gives companies a chance to cash in on consumers who want to help the planet but are confused by all the eco-friendly jargon."

Published on: April 17, 2013

The Wall Street Journal has a piece suggesting that the American cupcake craze may be slowing down or ending, using as its evidence declining sales at Crumbs, the 67-unit cupcake chain that expects its 2013 sales to be $57 million, as opposed to a previously estimated $73 million.

Published on: April 17, 2013

SymphonyIRI announced yesterday that it "is embracing its founding name of Information Resources, Inc. and rebranding as IRI.

"The embrace of the IRI brand is underscored by a business strategy and mission to deliver growth for clients across the globe by pinpointing what matters and illuminating how it can impact their businesses," the company said in the announcement.

“IRI has a rich heritage of innovation and going beyond the data, leveraging advanced analytics and enabling technologies to help our clients excel and win,” said Andrew Appel, IRI’s president/CEO. "We have the leadership, the people, the unique assets and the distinctive capabilities to deliver on our new strategy and make a real difference for clients."

Published on: April 17, 2013

• The St Louis Post Dispatch reports that "as many as 2.4 million credit and debit cards used at 79 Schnucks stores may have been compromised over a three-month period, leading to widespread fraudulent charges at locations around the globe," the company has revealed.

According to the story, Schnuck Markets "has been under fire since late last month when reports of unauthorized card use started emerging, with customers seeing charges from a couple of dollars at convenience stores to thousands for high-ticket items at bigger retailers ... But customers, meanwhile, said they were frustrated with the company for failing to inform them of the problem, both before and after the breach was identified. Many expressed outrage over the breach, accusing the company of poor data security. Law enforcement authorities, at one point, urged customers to pay with check or cash."

While Schnuck Markets moved to contain the breach and enhance security after the problem was discovered, "data security experts interviewed by the Post-Dispatch say those standards are not stringent enough to foil the increasingly sophisticated hacker gangs working to steal data. Experts said the problem is so great that the data security industry is scrambling to get ahead of hackers — and, in many cases, the hackers are winning. Regional chains and stores are, increasingly, becoming targets for hackers because they’re perceived as having less formidable security systems."


• The Chicago Tribune reports that "Dollar Menu emphasis, increasing competition and general frustration with a changing business trajectory have made for tension between McDonald's and its U.S. franchisees, according to a survey released Tuesday by Janney Capital Markets.

According to the story, franchisees complain about things like "couponing like there is no tomorrow," and that "every quarter we sell a smaller percentage of our menu at full (and profitable) price." And, the story notes, "Operators also noted increasing competition. Some said the new McWrap sandwiches, grilled or fried chicken with lettuce, tomato, cucumbers and a choice of sauces, was performing well, and likely to help margins. But they also complained that it was "an operational nightmare" and slowing service."

Published on: April 17, 2013

• The Produce Marketing Association (PMA) said yesterday that it has hired Dr. Jim Gorny for the new position vice president of food safety and technology, responsible for strengthening PMA’s initiatives to "build member value in the areas of science and technology, including food safety research, biotechnology, agricultural innovations, process and packaging technology and environmental sustainability."

Most recently, Gorny was senior advisor for the Office of Food Safety at the US Food and Drug Administration (FDA).

Published on: April 17, 2013

• Pat Summerall, who with his NFL broadcast partner John Madden defined Sunday afternoons for generations of Americans, has passed away. He was 82, and experienced cardiac arrest while in the hospital recovering from a broken hip.

Summerall was perhaps the best example of an athlete transitioning into the broadcast booth, bringing a honeyed voice and minimalist's approach to his play-by-play and analysis, first for radio and then on television. Before he became a broadcaster, Summerall was a placekicker for the New York Giants, retiring after scoring 563 points from field goals or extra points (except for one touchdown scored on an interception return).

Summerall didn't just broadcast football. For years, he also called the Masters golf tournament and the US Open tennis tournament.

And, he was a recovered alcoholic who went public after his recovery, sharing stories from a troubled past and what happened after an intervention by friends and time spent at the Betty Ford clinic.

Published on: April 17, 2013

MNB user Chuck Burns had some thoughts about a study saying that what people really want from their retailers is a seamless shopping experience that cuts across bricks-and-mortar stores, online, and mobile:

Regarding consumers who want a more seamless shopping experience I would say the online Gold Standard is Amazon Prime with one click. That borders on making it too easy to spend money!

By far the most frustrating online shopping "feature" of many web sites, whether on computer, tablet or phone, is having to go through myriad steps before you can find out what the shipping charges are. I want to know what the charges are upfront before being forced to enter pages of information. We commonly leave shopping carts with items in them and do not complete the purchase when we see that the shipping charges are unreasonable.

In regards to a good shopping experience in store company's need to emphasis to their employees that they are paid to help customers and not talk to each other. I went in a store recently and was looking at several similar products by the front counter. Three employees were hanging around the counter gabbing with each other. I thought it was obvious that I needed assistance. Finally I turned and asked if they were going offer help or continue to talk to each other. One responded "we're helping each other". Thankfully one of them woke up and offered help. They were about 5 seconds from my walking out and sending an email to corporate. The worst habitual offender in this regard is Best Buy; they have a corporate culture that is not sufficiently customer focused.

There is a new store that opened in town called Tractor Supply; it is a farm and ranch store and has around 1300 locations. My wife walked in, past three people up front, and past several other employees. Not one greater her or asked if they could help her. She says she was the only customer in the store at the time. Is management stupid? Do any of them get out from behind their desks and computer spreadsheets and walk into random stores in grubby clothes and without an entourage?

I fear that our retailers own worst enemies are themselves. I think I am one of Amazon's best customers. If they get local delivery of groceries down and if the price is reasonable I could see 75% of our retail dollars going to Amazon.




Responding to Michael's column from yesterday about a supermarket exec who got some hard lessons on "Undercover Boss," MNB user Doug Campbell wrote:

No matter how big, or small, a company is, the top brass really need to understand what is going on with the frontline people and stop treating them as disposable pieces.  They are often the first, and most important, impression a potential customer has of your company.  Every CEO should be concerned that his employees are treated well, since happy employees reflect well on the company as a whole.  The inverse is also true.  Executives who fail to accept this should be allowed to take their talent elsewhere.

Agreed.

And from another reader:

"Undercover Boss" is one of my favorite shows. What attracts me most to the show is what the CEO learns when (s)he is on the front lines. They see how important these people are. They see that these employees contribute so much to the success or failure of the company and how much valuable input they can give. I hope what many CEOs learn from Mr. Davidson’s experience and that of the other undercover bosses, is to listen to what your underlings are telling you they need. You don’t have to experience it in order to believe it. Trust your employees that they have valuable input and that they are valuable to the company. And treat them that same way when it comes to paying them a fair wage and treating them with the respect they deserve. It takes a lot of people to make a company successful, just as it takes a complete team to win a game. And each and every one of them deserves respect and decent pay.

Also agreed.




Responding to yesterday's commentary about the tragic events in Boston, MNB user Mike Franklin wrote:

Mother nature can be both glorious and devastating…it is up to individuals, connecting with other individuals, to weave a cloth of civilized decency and morality, however defined, to cope with mother nature.  Yesterday we saw both glory and devastation. Even through the horrific images, I kept reminding myself that evil still makes up only a small fraction of a small fraction of civilization…and that gave me comfort. As a marathoner that would have been finishing around the four hour mark, I understood each runners emotions, only 20 feet from the finish line, tired and exhausted, having left the thousand miles of training fitness on the course, with family and friends waiting at the finish line, when their world was turned into momentary chaos. You can’t train for that moment, but a civilized person knows how to react. And they did react with all the instincts of glorious civilized people. I don’t know the right words to thank them.




Finally, I got a bunch of emails yesterday regarding the following comment, which I made about a particularly cheeky and successful commercial from Kmart:

I feel like paraphrasing Lou Grant when I say to Kmart, "You got spunk. I like spunk."

I got a lot of email reminding me that in the pilot episode of the "Mary Tyler Moore Show," Lou Grant (Ed Asner) actually said to Mary: "You got spunk. I hate spunk."

I know that. I knew it. Which is why I used the word "paraphrasing."

Hell, I figured I was pushing the envelope a bit because a sizable part of the MNB audience wouldn't even know who Lou Grant was.

Much less remember a line from a show first aired in September 1970.

But this is what makes the MNB community my kind of people.