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    Published on: June 10, 2013

    In a time when email dominates and the slowdown of traditional mail has driven the US Postal Service (USPS) to the point where it is losing billions of dollars a year, it was inevitable that there would be collateral damage.

    Such damage could be seen in the Wall Street Journal story this morning about how the company doing business as National Envelope - which "produces more than 1,500 envelopes a second and has more than 2,200 employees and eight production facilities from California to Massachusetts" - prepares to seek likely Chapter 11 bankruptcy protection, which would be its second in three years.

    Here's why, according to the Journal:

    "Many people and companies also no longer receive monthly statements in the mail from utilities, banks and other businesses. The paper industry in particular tends to be a low-margin business, making low costs and manufacturing efficiency particularly important in keeping a company afloat. Volume in the envelope industry has declined 3% to 4% annually since about 2001, said Maynard Benjamin, president and chief executive of the Envelope Manufacturers Association."

    The bankruptcy filing, the story says, would be designed to facilitate a sale of the company.

    But even if the company through bankruptcy and is successfully sold, one has to wonder the extent to which it will have to change the way it does business ... if it is going to be sustainable.

    Just one of the ways in which the world is changing. It's an Eye-Opener.
    KC's View:

    Published on: June 10, 2013

    While the growing competition between and Walmart is the stuff to which many commentaries have been devoted, Bloomberg Businessweek has a piece that looks at the cross-town rivalry between Amazon and Costco, both of which are headquartered in the Seattle area.

    Some excerpts:

    • Costco is thriving, but Amazons’s relentless expansion looms over the second-largest retailer in the U.S., as it does every other retailer. The online giant is moving rapidly into apparel and is reportedly set to expand AmazonFresh, its Seattle-only grocery delivery business—two categories that are key to the continued vibrancy of big-box behemoths such as Wal-Mart Stores (WMT), Costco, and Target (TGT).

    • Costco executives watch Amazon closely and believe the companies share a lot of cultural values, such as frugality and an interest in building for the long term. Like everyone else, they also marvel over the fact that Wall Street allows Amazon to get away with nearly nonexistent profit margins.

    • Costco executives are not blind to the Amazon threat, and they talk in vague terms about evolving to meet the challenge. “It’s obviously a huge point of discussion around here,” says Paul Latham, vice president in charge of membership, marketing, and services. “We view Amazon as one of our primary competitors in almost every category. We all believe we are going to have to adapt in some form.” Latham also adds that “there’s a recognition that at some point Amazon has to start making money. They can’t continue on their current path of just pouring everything back into more infrastructure.”

    You can read the entire piece here.
    KC's View:
    I don't disagree with anything in this assessment. I think that Amazon is building a long-term business without much concern for immediate profit, believing that sustainability and market share are ultimately more important in the short-term. And, I think that the Costco is smart enough to know that nobody - nobody - is Amazon-proof.

    It is the companies that think they are somehow immune from any impact from Amazon, who think they will be unaffected by competitive battles being fought by the likes of Amazon, Walmart, Costco and Target, that will be at a disadvantage.

    Published on: June 10, 2013

    CNBC reports on how "customer reviews are carrying more clout than ever before—and a growing number of retailers are tracking every word that's said about them in cyberspace."

    Tod Marks, Consumer Reports senior editor, tells CNBC that "many companies now have dedicated employees who do nothing but troll the Internet for corporate references, monitor chat rooms and online forums where there could be a discussion of the brand." And, the story says, "companies will even follow what's said on marketplaces like Amazon about their products, he said. It can be imperative to intercept a potentially negative discussion and rectify a problem before it goes viral." Marks adds that "the effects can be instantaneous—especially when you add the ease of smartphones into the equation."

    The whole piece can be found here.
    KC's View:
    The simple fact is that any company not paying attention to this stuff is putting itself at a potentially grave disadvantage.

    Published on: June 10, 2013

    The New York Times had a blog posting over the weekend that had good news for those of us who drink a lot of coffee:

    "In one large-scale epidemiological study from last year, researchers primarily at the National Cancer Institute parsed health information from more than 400,000 volunteers, ages 50 to 71, who were free of major diseases at the study’s start in 1995. By 2008, more than 50,000 of the participants had died. But men who reported drinking two or three cups of coffee a day were 10 percent less likely to have died than those who didn’t drink coffee, while women drinking the same amount had 13 percent less risk of dying during the study. It’s not clear exactly what coffee had to do with their longevity, but the correlation is striking.


    "In a 2012 study of humans, researchers from the University of South Florida and the University of Miami tested the blood levels of caffeine in older adults with mild cognitive impairment, or the first glimmer of serious forgetfulness, a common precursor of Alzheimer’s disease, and then re-evaluated them two to four years later. Participants with little or no caffeine circulating in their bloodstreams were far more likely to have progressed to full-blown Alzheimer’s than those whose blood indicated they’d had about three cups’ worth of caffeine."
    KC's View:
    The piece made clear that much research remains to be done, and that cause-and-effect are hardly a scientific lock ... but that it looks like a pretty good bet that three cups of coffee a day probably are good for your health.

    Or at least wouldn't hurt.

    And since I drink three cups of coffee generally before 7:30 am as I work on MNB, I think of this as pretty good news.

    Published on: June 10, 2013

    • At Walmart's annual shareholder meeting last week, at which stars like Hugh Jackman and Tom Cruise made guest appearances CEO Mike Duke tried to put a positive spin on the company's labor policies by highlighting employees who, he said, illustrate how much opportunity the company offers.

    "No company provides more opportunity to more people to go from where they are to where they want to be than Walmart," Duke said. "Associates join Walmart for so many different reasons. When it comes to our careers, what we all have in common is that we started somewhere. What matters most is that we get the chance to go as far as hard work and talent will take us."
    KC's View:
    There apparently has been no progress made - or at least, no conclusions worth mentioning - in Walmart's internal probe into allegations of bribery of foreign officials.

    Apparently, the wagons are not yet in a tight enough circle.

    Published on: June 10, 2013

    • The Seattle Times has a piece addressing an issue much-discussed here on MNB -'s decision to embrace the idea of e-commerce companies collecting sales taxes for online purchases, even as other e-tailers fight the legislative changes necessary to make such collections mandatory. And the sense is that the beginning of a rollout of Amazon Fresh - to Los Angeles and, soon, to San Francisco - is a harbinger of things to come.

    "Analysts say that if Amazon must collect a state’s sales tax, it’s going to make sure it gets the most from doing business in that state," the Times writes. And "some believe a Fresh expansion lays the groundwork for a broad-scale same-day delivery service, something Amazon already is trying in select cities."

    And, the story says, "Amazon is testing package drop-boxes in convenience stores and malls, possibly paving the way for same-day delivery at no extra cost. The drop-boxes, called Amazon Lockers, provide a secure location for customers to pick up their online orders. The lockers also help Amazon save time and money on shipping, since it’s easier to deliver packages to a 7-Eleven or a Staples store rather than separate doorsteps."
    KC's View:

    Published on: June 10, 2013

    Last Friday, I posted my newest Forbes column, which I entitled "The Clear & Utterly Unscientific Case For GMO Transparency."

    You can read it here, if you're interested.

    This has turned out to be my most-read column to date. Not only have there been a number of comments about it on, but Mark Bittman of the New York Times, one of the best known and most intelligent writers on the subject, posted a link to my piece on his Facebook page as well as on Twitter, and said, in both places "Wish I'd written this."


    Bittman's comment and link generated a ton of response on his Facebook page, not to mention being generously retweeted. Which was really nice.

    I'll be curious to hear what you think.
    KC's View:

    Published on: June 10, 2013

    • The Los Angeles Times today has a piece about Dole Food, which has changed its business approach by selling its global CPG units and Asian fresh produce business to Itochu Corp., a Japanese firm, for $1.7 billion. That leaves Dole with a "fresh vegetable and fruit businesses in the Western Hemisphere, Europe and Africa" that it believes will have lower lower revenue and higher profits, despite the fact that what remains is potentially more volatile because of weather extremes that can affect cost and yield.

    • United Supermarkets announced that it has completed a transaction to acquire Llano Logistics, which has operated United’s two distribution centers – in Lubbock and Roanoke – since their opening. Terms of the deal, which the company said would provide significant cost savings and significant operational efficiencies, were not disclosed.
    KC's View:

    Published on: June 10, 2013

    I'm feeling much, much better after suffering from a minor case of plague last week that slowed me down a bit. (Thanks, by the way, for all of the kind notes, not to mention the plethora of remedies that you suggested.) I've now had time and energy to go through a lot of recent email...

    On the subject of GMOs, MNB user Philip Herr wrote:

    I believe that what DuPont was to napalm in the 1970’s, Monsanto will be to GMO’s in this period. The bigger fear is that we could see (and smell) napalm, but GMO’s are a lot more insidious.
    I hasten to add that I have no idea what impact GMO’s have on the human body, but without transparency there will always be uncertainty and with uncertainty comes fear and paranoia.

    This essentially is the point I think is most important - that the lack of transparency actually hurts the case for GMOs. Label them, explain them, educate people about them ... and you make your case, allowing consumers to decide. But the burden is on companies like Monsanto to teach us about GMOs, not on consumers to accept them.

    From another reader:

    Looks like there may be another reason to look for locally sourced foods from farmers and ranchers in the community.

    Hopefully they have been able to do the same for the feed they are providing their animals given the lack of transparency in the food chain.

    And another:

    Although I am not by any means an advocate for GMO usage in food, it needs to be made clear that all GMO’s are not necessarily harmful and their usage can result in increased yields and lower costs.  (In a world where hunger persists, what is the bigger danger GMO’s or starvation?)
    The issue I have with the Statist mentality is that the Government shouldn't be passing laws that limit the freedom of choice instead of getting out of the way and allowing the free market to provide solutions.  It seemed like the free market was well on its way handling this issue with the help of the Government.  The recent announcement by whole Foods is an excellent example. 
    By passing such regulations, marketing opportunities for smaller niche companies to promote their products as GMO free is taken away. Now products produced by large multinational companies (which now will move to become GMO free) will begin to roll into these higher margin segments pushing out the smaller guys.

    Responding to our piece the other day about how kids don't know how to do things like address an envelope (which certainly goes hand-in-hand with our story today about how an envelope company is going bankrupt), MNB user Kevin Watkins wrote:

    Had a very similar conversation with my daughter when she was a senior in high school a few years back (she'll be a senior in college this fall).  Her reply when I said something like, "What, you don't know how to address a letter?" 
     "Why would I?" she replied.

    From another reader:

    Thanks Kevin--so TRUE.

    They also don't know how to make change, or to set a table. Somewhere, the fundamentals have been lost.

    Weighing in on the stories about how American retailers are dealing with unsafe conditions that are being exposed in various factories outside the US, one MNB user wrote:

    Here is one way for Walmart and others to deal with this issue. Don’t buy from outside the US…. But that would cost money and profits so guess that’s out. Here one to work on, next time you in the frozen food isle or even in center store, see how many items such as coffee, rice, cashews, fish, vegetables etc are coming out of Viet Nam…. Don’t get me wrong, I get that they are a world player and the war is over (for most), but the question I have asked (my CEO and industry experts) is what is the half life of agent orange and is or has anyone test the soil and water………. The only answer I get is a blank stare and I’m not sure...

    Regarding the story about how the Chicago Sun Times has fired all its staff photographers, reasoning that it will just ask reporters to take their own pictures - a decision that I was very critical of, because, as a former newspaper reporter, I know how lousy a picture taker I was - one MNB user wrote:

    Business as we know it is phones, paparazzi, blogs, etc... unfortunately are now the way when it comes to news... I don't begrudge any business to do what is necessary to survive.

    I'm just not sure that this helps them survive. It actually reduces the gap between professional journalism and citizen journalism. Both are valuable. But they are different.

    From MNB user Darren Josey:

    I believe a have a generational different point of view on this issue, I think this can be a positive for the Chicago Sun Times and to more than just their balance sheet payroll.

    I’m 29, currently there are over 1,200 photos of me on Facebook. That’s just of me, not total that I’ve taken nor total of me pre-Facebook / non-phone digital camera. There are more photos of me in just my college years than of every generation of my family before me combined. My generation has become so good at taking photos or really the aps we have on our phones have made the photos we’re taking so good, bloggers have become anti-Instagram since it’s no longer special to take an amazing photo.
    If the Chicago Sun Times lets their young journalists take their own photos with their New York Times cover quality iPhone 5’s, they will get a very similar quality of photo than what they were getting before except faster and with one less person on the payroll. This is a savvy move, yes high price digital cameras do take high quality images but with every person on the street with a camera in their pocket you don’t need a professional photographer on staff. Pay by the photo from the public or have your staffer snap a pic from their phone, this isn’t the future, it’s the present.

    Why do we still have wait staff at restaurants? Scary thought but these jobs are the next to go, text your order to the bar or on an iPad is already out there, just a matter of time…

    I'll differ with you on the phrase "quality of photo." Amateurs may be able to take photos as easily, but you discount how great a great photographer can be.

    The problem, I would argue, is not that quality of photo has become irrelevant, but that the Sun Times allowed this point of differentiation to become less of an advantage.

    And that's a decision that has resonances in a lot of other businesses...

    We had a piece the other day about how Kmart followed up on its irreverent "I shipped my pants" video commercial with a "Big gas savings" video ... which led one MNB user to write:

    Kmart’s ad is irrelevant to half the country.  Why?  BP doesn’t sell gas west of the rockies, nor does Speedway.  They blew a good promotion by not figuring out half the country couldn’t do this promotion.  Kmart’s promotional people squandered a great opportunity by not doing their homework.

    Maybe. But I think the bigger point may have been to get people talking about Kmart in new ways, making them seem (almost) hip. The point isn't to sell gas - the point is to sell Kmart's (new) attitude.

    Gas availability is almost beside the point.

    Last week, MNB took note of a Washington Post report on a new smartphone application that "allows shoppers to compare prices at nearby grocery stores before ever setting foot out the door ... The app uses a smartphone’s global positioning technology to find nearby supermarkets and grocery store," and then compares posted prices so that consumers know where to go for the lowest prices.

    I commented:

    Somehow, this doesn't sound completely new, though if it works as advertised, it may automate the process a but for consumers. But let's ignore the app for a moment. Let's examine the whole "cherry picking" impulse ... which basically consists of consumers going from store to store to buy products that are on sale, which they do because stores have taught them, through the relentless use of price promotions, that this is what they should do. What the development of apps like these teaches us, I think, is the importance of developing key products and services that differentiate stores from other other stores - that are advantages that cannot be replicated or cherry-picked. If you tell the customers that you are all about price, price, price, then that's how customers will respond. But if you teach customers that while you are sharp on price, you also are really good at this service or are the only retailer who offers this product, then you are encouraging them to cherry-buy, not cherry-pick. Which may have a bigger impact on the bottom line than all those sales.

     MNB user Rosemary Fifield responded:

    The cherry-picker’s app should add in the estimated cost of gas and perhaps put some value to the shopper’s time to give them a clearer picture of how much they’re going to save by running all over the place.

    From another reader:

    Hum, I wonder how some companies like WalMart, who is using “Ad Match” as its main competitive program, will deal with this since, they are also pushing customers into using mobile. Bet they start rewriting the policy to state advertised prices only. As allowing a customer to match every item in their basket will not only tie up the front ends, but will hit their bottom line hard.

    On another subject, one MNB user wrote:

    Your note this morning about the French culture minister taking potshots at Amazon caught my eye, as we are just returning after living in France for five years.  Yet another example of a close-minded administration making knee-jerk reactions to things they really aren't up to speed on.

    Really interesting to see this, as NONE of the internet booksellers in France charge shipping on books -- actually, in five years, I ordered a LOT of books, in French and in English, and never paid shipping on a single one.

    This minister is going to take a swan dive with a triple half-gainer off her ethnocentric high horse as soon as she realizes that her anti-Amazon rant will also gore the sacred bull of FNAC, the French retailer who has both physical stores in every shopping mall in the country as well as an enormous position in the virtual marketplace of France.  They consistently beat Amazon on pricing for books, consistently had books that Amazon didn't have, and I received everything I ordered from them exactly as I'd ordered it (also bought electronics and things), within days. 

    The stock availability was particularly important to me as a mom -- my kids' teachers were really good at telling the kids that they needed to have a particular book on hand to read by next week, making quick availability and fast delivery a must-have. 

    I love independent bookstores, so we spent a snowy Saturday driving all around our region battling bad roads, horrible traffic, and heavy crowds to visit SEVEN local bookshops, not one of which carried the book that was needed the following week.  Learned that lesson fast -- sitting in my pajamas, I bought the book in 10 minutes flat, and it arrived in the mailbox on Tuesday.  Never went looking for another assigned book again!  Still love browsing bookstores, though, and still leave enough money behind to feel no guilt about buying schoolbooks from FNAC.

    Despite France's best intentions, buying habits are moving online, and throwing a hissy fit about the biggest name in the business isn't going to change the fact that nobody is making French buyers click over to Amazon...or to FNAC.

    We had a story the other day about an online photo that has gone viral showing a Taco Bell employee licking a stack of 25 empty taco shells ... The story says that Taco Bell's response to the picture has been to say that the shells were only used for training purposes and never were served to customers, but that it will not disclose where the franchisee was, nor what actions were taken against the employee.

    My comments, in part:

    For the record ... it is a pretty good bet that the location of the franchisee and the name of the offending employee will be a matter of public record fairly quickly. So not offering up that info only creates the impression that you're hiding something. As for "appropriate action," how about having the employee shot? Or having his tongue cut out? Or, if this somehow seems too harsh, having him eat 25 Taco Bell tacos in one sitting, all of which have been licked by random customers? (For me, having to eat one Taco Bell taco would be punishment enough...)

    MNB user Sonia Eschenauer wrote:

    Really?  Do we need to use violence rhetorically as commentary for an underpaid employee licking some tacos?  We live in a country where guns, weapons are rampant and their violent use takes away thousands of innocent lives…must you use this type of language for such a benign story?

    You are absolutely right. While I was using hyperbole, it wasn't the right turn of phrase, especially these days, when gun violence seems to be on the front pages with unfortunate frequency.

    From another reader:

    Have you not even tried the Doritos Locos Supreme Taco in either Nacho Cheese or Cool Ranch?  I don’t eat Taco Bell much either but these tacos were a surprise.  I guess the only thing that could have made this grosser would have been Michael Douglas as the featured employee.

    No comment. 

    On another subject:

    I have to just write and tell you that I've stayed up late (too late some nights) to watch the entire season of House of Cards - primarily because of your review and recommendation.

    And I have not been disappointed.  Kevin Spacey is deliciously repugnant and intriguing all at once. The writing....just spectacular.  I'm riveted.

    AND....because I can stream as much as I want, I've had major House of Cards hangovers the next day.

    Love it.   Netflix is looking up for me.

    ...From a former Redbox member.

    Responding to a story about how much Supervalu paid its three CEOs last year, one MNB user wrote:

    It's funny how easy it is to criticize these circumstances when on the outside looking in... If these executives can get someone to pay the tab, then more power to them. However, I would bet that your way would not net the results needed. You want "Captains" of industry talent theses days, you should and will have to pay to get them to leave their current positions to jump on a sinking ship.

    First of all, I make a living criticizing people from the outside looking in.

    Second, I want so-called "captains of industry" to lead. I think leaders concern themselves more with the troops than themselves. As a CEO I know once said to me, "The more you give, the more you get."

    From MNB reader Chuck Jolley:

    I’ve always been troubled by sky rocket c-level pay and plummeting ‘associate’ level pay.  It seems top execs want to be compensated at the expense of their employees, not because of their performance.  If a top level exec insists on no top end for his paycheck, it should be tied to performance.  If he or she fails to improve the bottom line (and not by trimming payroll costs to artificially boost profit margins) then that person should quietly vacate the premises sans golden parachute.

    I often quote the late, great Robert B. Parker on baseball: "It is the most important thing that doesn't matter."

    But one MNB user thought I needed some new lines...

    Kevin, Should you need more baseball quotes, here are a few I found:

    “Baseball is simple but never easy”—Roger Angell.

    “In the great department store of life, baseball is the toy department”—Anonymous.

    “Baseball is the only sport where you can do everything 100 percent right and still fail”—Wade Boggs.

    “Baseball, my son, is the cornerstone of civilization”—Dagwood Bumstead.

    “Baseball is not unlike war, and when you get right down to it, we batters are the heavy artillery”—Ty Cobb.

    “Baseball is a romance, marked by good days and bad, heartaches and thrills, ups and downs, but always with each day promising something new”—Michele Walters Costa.

    “Baseball is the only game you can see on the radio”—Phil Hersh.

    “It is said that baseball is only a game. Yes, and the Grand Canyon is only a hole in Arizona”—George Will.

    “A good friend of mine used to say, ‘This is a very simple game. You throw the ball, you catch the ball, you hit the ball. Sometimes you win, sometimes you lose, sometimes it rains.’ Think about that for a while.”—Nuke Laloosh in Bull Durham.

    “Baseball is never boring. Which makes it like sex.”—Anne Savoy in Bull Durham.

    "It breaks your heart. It is designed to break your heart. The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall all alone. You count on it, rely on it to buffer the passage of time, to keep the memory of sunshine and high skies alive, and then just when the days are all twilight, when you need it most, it stops."—A. Bartlett Giamatti.

    "Baseball is dull only to dull minds." —Red Barber

    “You may glory in a team triumphant, ... But you fall in love with a team in defeat.”—Roger Kahn.

    Finally, on Friday we took note of an AP story about how over the weekend "some of the world’s most powerful people are gathering near London for a shadowy annual gathering that has attained legendary status for anticapitalist protesters and conspiracy theorists." Included on the guest list: former US Secretary of State Henry Kissinger, International Monetary Fund chief Christine Lagarde, Amazon founder/CEO Jeff Bezos, and Google chairman Eric Schmidt. They will meet, the story said, at the annual confab "for prominent politicians, thinkers and business leaders" that "has been held since 1954 in either Europe or North America. No minutes are taken, there is no media access and the public is kept away by a large security operation." It is not secret enough, apparently, since the AP is writing about it and protestors intend to get as close to Watford’s Grove Hotel as security will let them. I imagine the group has a name. Like Spectre. Or Quantum. Or something similarly sinister. (The Trilateral Commission?)

    A number of people wrote in to note that the group does have an actual name: Bilderberg.

    Just FYI ... I knew that. I was just having some fun.

    MNB user Steve Sullivan got the joke:

    You mean it’s not KAOS??

    The first time I saw and heard Henry Kissinger, a picture of him wearing a white suit, sitting in a chair, stroking a cat flashed through my mind.  I still think I wasn’t too far off.

    Also FYI ... I tend not to be too concerned about shadowy groups controlling the world. Mostly because if such groups exist, they're doing a lousy job. Because the world is a mess. 
    KC's View:

    Published on: June 10, 2013

    At the French Open over the weekend, Rafael Nadal defeated David Ferrer in the men's singles finals 6-3, 6-2, 6-3, becoming the first tennis player to win eight singles titles at the same Grand Slam tournament.

    And, in the women's singles finals, Serena Williams beat Maria Sharapova 6-4, 6-4 to win her second French Open title. She won her first in 2002, when she defeated her older sister, Venus Williams.
    KC's View: