business news in context, analysis with attitude

Published on: May 7, 2013

by Michael Sansolo

It was a simple question and a straightforward answer that in just a few words summed up pretty much everything that’s going on these days. And it’s an answer you need to consider.

Here’s how it happened. Last Monday, I was running a panel discussion on the impact of social media on internal and external communications during a pre-Food Marketing Institute (FMI) Future Connect session. So I posed a simple question to Mark Irby, vice president of marketing for Publix and a member of the Coca-Cola Retailing Research Council that produced the social networking study.

The question: How has the social web changed how you do your job?

Irby smiled and turned toward the crowd:

“Oh, it’s only changed everything.”

He went on to explain how the advent of the social web has altered how companies communicate with shoppers, forcing them to listen more, understand the changing nature of value and recognize that today shoppers, not marketers, are in control.

It was a perfect bookend for Future Connect, matched with one of the closing speakers, Doug Stephens, president of Retail Profit. In his speech, Stephens talked about the way the world is changing, especially the shifts in the economy, the key changes in demographics and the advent of simple and ubiquitous technologies.

In short, Stephens said, everything has changed. He explained that too many companies continue to change incrementally, while the world is changing exponentially.

Stephens’ points should not be taken lightly. He talked about how the current economic state isn’t about the Great Recession or even the tepid recovery. Rather, he called this period a "great reset," with a wide scale remaking of the economic truths of the past 50 years. Middle skills jobs are disappearing, in favor of high- or low-skill, creating great economic inequality and a shrinking middle class.

That economic truth, he said, is why success in retail today is largely coming from companies at the extremes who excel at convenience or high-service offerings and earned customer loyalty. The middle, in contrast, is shrinking, increasingly claiming companies like JC Penney, for example.

In addition the primary demographic trends he cited are the growth of single-person households, the increasing economic power of women and the aging of the population. In all three cases the challenge facing marketers in every field is understanding that the traditional offerings of value, selection and even solutions may be out of sync with tomorrow’s shoppers...and many of today’s.

Lastly he talked about the technological revolution and the incredible speed with which smart phones and mobile technology in general has given customers access to incredible amounts of information, putting them increasingly in greater control of every decision they make. (Kevin made a great point about this yesterday, talking about the stunning acceleration in downloads of apps.)

Stephens’ point (which I believe our social media session also captured) is that the managers and leaders of the future face a far different world than today. The heightened pace of change shows no sign of letting up, meaning the challenges a manager is likely to face and the skills he or she might need in five, 10 or 25 years are going to be very different than current experience allows.

One study Stephens cited spoke of how most school-aged children will likely work in careers that don’t currently exist and that even college freshmen study a significant amount of material that is obsolete by the time they graduate four years later.

Certainly there are countless important lessons from the past and they must be learned. Lessons in customer service, ethics and even history teach us many things about the path forward. But the reality is that tomorrow’s successful companies and leaders will need something entire different.

They will have to be prepared for exactly what Irby said: things changing completely. In a time of revolutionary changes, evolutionary thinking can fall far short of what’s necessary.

Or, as we've often said here on MNB: In a time of fundamental change, incremental actions rarely suffice.


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

Published on: May 7, 2013

by Kevin Coupe

The Serious Eats website reports that Italy is likely to suffer from an alarming shortage of pizza makers.

That's right. "According to the Italian business organization FIPE, the country is in serious need of experienced pizzaioli ... This isn't to say that jobs in the sector aren't being filled, but rather that increasingly fewer Italians are taking on the crucial role of training new employees, let alone making pies themselves."

The numbers speak for themselves: Italy has 25,000 pizzerias, but is short roughly 6,000 pizzaioli.

The story goes on: "Explanations for the deficit vary widely. Some claim that Italians are simply disinterested in the long hours and low pay; others argue that immigrants, willing or forced to work for less money, have swept up most of the jobs. It's not an uncommon story in Western Europe, particularly in the face of economic crisis. Whether the issue will see its resolution in a growing class of non-Italian pizzaioli or a re-entry of Italian citizens into the industry remains to be seen."

I don't know about you, but this is the kind of economic shortfall that really concerns me. It's an Eye-Opener.

Published on: May 7, 2013

Notes & comment by Kevin Coupe

PORTLAND, Ore. -- Stories abounded here at the 18th annual Executive Forum run by Portland State University's Center for Retail Leadership.

Laurie Demeritt, CEO of the Hartman Group, told a story about how, despite tough economic times that might have been expected to slow down consumer interest in local products that often can be more expensive, exactly the opposite has happened: 42 percent of shoppers say they are buying more local products, and 50 percent say they are buying the same amount as before the recession. Consumers, she said, are viewing food differently than they used to, and this is reflected in the expanded appeal of food seen as real, fresh and less processed. "This is an advancing trend," Demeritt said, "and nobody is going back."

And then, in a panel discussion that I was privileged to moderate, three retail buyers - Paul Enderle of Kroger/Fred Meyer, Denise Breyley of Whole Foods, and Ryan White of New Seasons Markets - all emphasized how important it is for local vendors looking to get shelf space to tell their stories effectively, to talk about how and why they products are manufactured locally, and what makes them authentic and differentiated. Telling a compelling story to the retailer, they said, is the essence of helping that retailer to tell the story to shoppers.

In another panel discussion that I moderated, two retailers - Rob Stern of Starbucks and Vincson Green of Target - joined with Robin Russell, an executive search expert to talk about what companies are looking for when hiring both entry level and executive level employees. Again, the emphasis was on story - that candidates need to understand how to craft and build their own stories,need to understand the story being told by the companies interviewing them, and then match those stories up in a way that shows what they bring to the table.

David Lundahl, CEO/founder of InsightsNow, delivered a presentation on "the power of moments," suggesting that retailers need to drill down deeper than ever to understand that consumers can be motivated ... and, after all, moments strung together become often complex stories about what specific shoppers want.

And finally Sam Martin, president/CEO of A&P, came to the Pacific Northwest to tell the story of the troubled retailer, emphasizing that the culture there had become so corrupted that mediocrity was accepted, lack of accountability was standard, and lack of achievement was routine. It took bankruptcy and and economic quicksand to force a near complete replacement of the management team and the installation of new executives who understood the importance of a new cultural story - one that embraces engagement, evaluation, training and recognition.

One terrific story that Martin told was how, when he got to A&P, he discovered that top executives had a parking lot closest to the front door, where a mechanical arm stopped anyone else from parking there. (Execs were also driving expensive foreign company cars - the absolute wrong message to send, he said.) That arm was taken down, he said, and a new story was told: if you want the best parking space, no matter who you are, you have to get to work early.

All compelling stories, speaking to the importance - whether you are selling a product, a cultural imperative, or yourself - of creating a strong and enduring narrative.

And exactly what I've come to expect of events run at PSU - sessions that are provocative, timely and thoughtful.

Published on: May 7, 2013

The US Senate yesterday voted 69-27 to compel online retailers to collect sales taxes and pass them along to state and local governments, sending the legislation to the House of Representatives.

However, the bill is seen as being in trouble there, with anti-tax and GOP forces pledging to kill it. However, as the New York Times reports, "Hundreds of retailers are flying to Washington this week to pressure House lawmakers and counter the arguments of small government groups, including Grover Norquist’s Americans for Tax Reform, which wields great influence in the House ... The Internet sales tax bill - called the Marketplace Fairness Act - is a rarity in Washington these days, a significant tax measure that has split antitax groups in Washington from reliably Republican Main Street businesses beyond the capital. That divide has given the measure at least a chance to reach President Obama, who supports it."

Supporters of the bill say this is not a taxation issue but rather a fairness issue; opponents simply object to any new taxes being levied on the American public.

Published on: May 7, 2013

The Associated Press reports that Chinese authorities have uncovered a criminal conspiracy there that engaged in the killing of rats and passing off their meat as lamb.

According to the story, "Among those arrested were 63 people who allegedly ran an operation in Shanghai and the coastal city of Wuxi that bought fox, mink, rat and other meat that had not been tested for quality and safety, processed it with additives like gelatin and passed it off as lamb."

The conspiracy is just another in a long line of food safety issues that have emerged over the years in China, a country that has seemed unable to control, manage and monitor its food chain.

Published on: May 7, 2013

In Toronto, the Globe and Mail reports that Loblaw Cos. "is betting on a digital loyalty program" that will allow it "to reduce its print flyer costs, and shift those expenses to its new PC Plus smartphone loyalty program – and eventually shave those costs considerably." Or completely. Eventually.

"Loblaw’s latest initiative signals an attempt to target customers more tightly with offers that are more apt to respond to particular needs, based on past shopping preferences," the paper writes, adding, "Loblaw launched its PC Plus smartphone rewards program on Friday, with offers that are tailored to individual members ... It is counting on being able to collect better information from its customers, tracking customer shopping behaviour to help understand what it should stock on its shelves or what it should ditch."

Published on: May 7, 2013

Marketing Daily reports that "new research from Forrester finds that when it comes to building loyalty, people respond more to the experience they have with the retailer than with their perception of price ... The study reports that for stores, customer experience accounts for 47% of loyalty; when price/value is factored in, it rises to just 47.2%."

Key to delivering a positive customer experience, the story says, is a) delivering on customer needs, b) keeping things easy, and c) making it enjoyable. And while retailers like Costco may be perceived as primarily delivering on price, the study suggests, the fact is that "the amount they spend training their employees to be more knowledgeable makes the experience more pleasurable."

Published on: May 7, 2013

Walmart has returned to the top of the Fortune 500, courtesy of revenue that grew almost six percent in 2012 to $469.2 billion. Exxon Mobil dropped back to number two.

Rounding out the top 10: Chevron, Phillips 66, Berkshire Hathaway, Apple (a big leap - last year it was # 17), General Motors, General Electric, Valero Energy and Ford.

Published on: May 7, 2013

• The city of San Francisco is suing the Monster Beverage Corp., charging that the company is deliberately marketing high-caffeine energy drinks to children who might be damaged by them.

“Monster Energy is unique among energy drink makers for the extent to which it targets children and youth in its marketing, despite the known risks its products pose to young people’s health and safety,” says Dennis J. Herrera, the city attorney.

The New York Times writes that "the lawsuit, filed in San Francisco Superior Court, aims to restrict the way the company markets its drinks, and seeks civil penalties. It follows a recent lawsuit against Mr. Herrera by Monster Beverage that seeks to block an inquiry into the company by his office, arguing that he lacks authority to regulate it."


• The Dallas Morning News reports that "Trader Joe’s will open its first Texas distribution center in Irving later this year, allowing the popular grocery chain to ratchet up its Texas expansion ... Trader Joe’s opened its first Texas store in Fort Worth in June and now has five stores open in the state, in Plano, San Antonio and two in Houston."


• Target announced the "soft opening" dates for its first 24 stores to open in Western Canada, including 11 in Alberta, 10 in British Columbia, and three in Manitoba, all of which will open on either May 7 or May 14.

The retailer has promised to open 124 stores in Canada this year alone.


• Unionized Kroger employees in Houston who are members of the United Food and Commercial Workers (UFCW) have ratified a three-year contract that covers more than 13,729 associates working in 109 stores.

Published on: May 7, 2013

• Tom McGough, president of Grocery products at ConAgra Foods, has been promoted to be president of the company's Consumer Foods group. He succeeds André Hawaux, who is leaving the company for another opportunity "in another industry."


• The Grocery Manufacturers Association (GMA) announced that it has added two new directors to the association’s federal affairs staff.

Nancy Kohler joins GMA from the Corn Refiners Association (CRA) where she was assistant director for policy and operations for six years. 

David Prestwood joins FGMA having most recently served as senior policy advisor to Senator Patty Murray (D-Washington). 

Published on: May 7, 2013

...will return.