business news in context, analysis with attitude

Published on: September 3, 2013

by Kevin Coupe

Interesting piece in the Wall Street Journal the other day about innovations taking place in the bicycle shop industry, as retailers look for new ways to attract customers and business.

According to the story, "Around the country, bike shops are shifting gears. The National Bicycle Dealers Association 2013 survey of 4,000 establishments found that 12% have coffee bars, 11% offer spinning classes and almost 5% serve beer. About 1% offer massages, yoga or full-service restaurants ... For some shops, diversification is a survival strategy. While more people are riding bikes - cycling in New York City alone has more than doubled since 2005 - fewer are buying new ones. And recently added bike-sharing programs in cities like Boston, New York and Chicago have put a dent in shop-based rentals. Now, the $6 billion U.S. bicycle market is trying to lure new customers, especially women and families, with extras ranging from poetry readings to open-mic nights and even weddings."

What's intrigues me about this is not just the notion that in order to compete, retailers have to expand the kinds of products and services that they offer. There's also the structure of the retail bike business itself - while mass and discount retailers and toy store sell almost three-quarters of all bikes in the US, for an average price of $78, they also represent less than a third of industry volume.

The National Bicycle Dealers Association website says that "the approximately 4,100 specialty bicycle retailers commanded approximately 15% of the bicycle market in terms of unit sales in 2012, but 52% of the dollars, a dominant dollar share. Dealer price points generally start at around $200, with the average at $673, though prices can range into the thousands. While the number of specialty bicycle stores has declined in recent years due to consolidation, they are responsible for approximately the same amount of business through these fewer (but larger) stores today."

The lesson is instructive, I think.

It is an Eye-Opener.

Published on: September 3, 2013

Fabulous piece in the New York Times painting a complex picture of how the process of auditing and inspecting foreign factories is often problematic at best.

An excerpt:

"An extensive examination by The New York Times reveals how the inspection system intended to protect workers and ensure manufacturing quality is riddled with flaws. The inspections are often so superficial that they omit the most fundamental workplace safeguards like fire escapes. And even when inspectors are tough, factory managers find ways to trick them and hide serious violations, like child labor or locked exit doors. Dangerous conditions cited in the audits frequently take months to correct, often with little enforcement or follow-through to guarantee compliance."

The story goes on to say that "major companies including Walmart, Apple, Gap and Nike turn to monitoring not just to check that production is on time and of adequate quality, but also to project a corporate image that aims to assure consumers that they do not use Dickensian sweatshops. Moreover, Western companies now depend on inspectors to uncover hazardous work conditions, like faulty electrical wiring or blocked stairways, that have exposed some corporations to charges of irresponsibility and exploitation after factory disasters that killed hundreds of workers.

"The Rana Plaza factory collapse in Bangladesh, which killed 1,129 workers in April, intensified international scrutiny on factory monitoring, and pressured the world's biggest retailers to sign on to agreements to tighten inspection standards and upgrade safety measures. While many groups consider the accords a significant advance, some longtime auditors and labor groups voice skepticism that inspection systems alone can ensure a safe workplace. After all, they say, the number of audits at Bangladesh factories has steadily increased as the country has become one of the world's largest garment exporters, and still 1,800 workers there have died in workplace disasters in the last 10 years."

The entire sobering story can be read here.

BTW...Bloomberg reports that Walmart has announced that it is "lending $50 million to Bangladesh factory owners, joining global retailers in a push for safer plants in the country after the April collapse of a garment complex killed more than 1,000 ... The loan is part of a combined amount of more than $100 million that a group of North American retailers, including Wal-Mart and Target Corp., pledged in a pact announced in July. Called the Alliance for Bangladesh Worker Safety, the group has said it will set safety standards by October and refuse to buy from factories deemed unsafe.

Published on: September 3, 2013

Fortune reports that 7-Eleven "is dipping its toe into the venture capital business, with plans to invest small amounts of money into startups within the retail and food spaces," via a new business development entity called 7-Ventures.

The story says that 7-Ventures "so far has made two investments.

"The first was in an undisclosed coffee company, as part of 7-Eleven's efforts to improve its fresh food and beverage business.

"The second is in Belly, a Chicago-based customer loyalty and marketing platform."

Published on: September 3, 2013

ThisIsMoney reports that a computer application in the UK called "MySupermarket.co.uk" has added discount retailer Aldi to the list of retailers for which it compares prices on a broad range of items. To this point, the application included Tesco, Walmart-owned Asda, Sainsbury, Waitrose and Ocado in its retailer listings.

According to the story, since most of Aldi's products are own label, "MySupermarket will compare them to the equivalent own label products at other retailers ... The tool could go some way to helping shoppers discover if they really could be saving money by shopping at the discount supermarket. Aldi has become a darling of the recession-hit middle classes, seeing sales rise by 31.5 per cent in the last year and massively outpacing the big four of Tesco, Asda, Sainsbury’s and Morrisons."

Published on: September 3, 2013

The Los Angeles Times reports that "consumers' optimism about the economy unexpectedly dropped this month after hitting a six-year high in July as worries increased about government efforts to boost the economy, according to survey results released Friday by the University of Michigan and Thompson Reuters.

"The widely watched consumer confidence index was at 82.1 in August, down from 85.1 the previous month. The reading still was up sharply from a year earlier, when it was 74.3, and indicates increased consumer spending in the coming months ... The Michigan/Reuters survey found consumers' views of current economic conditions and their outlook for the coming months slipped as they anticipated battles over government spending in Washington and a decision by the Federal Reserve about reducing its stimulus efforts."

Published on: September 3, 2013

Business Insider reports that Target is getting ready to launch a new video streaming service designed to compete with the likes of Amazon, Netflix and iTunes. Target Ticket, the story says, has been tested by employees but now will be rolled out across the country.

The story reports that "Target Ticket promises instant access to 15,000 movie titles, new releases, classic movies and next-day TV shows. Target says it will work with Windows, Macs, Xbox, iPhone/iPad and Android ... A bunch of content providers have already agreed to participate including ABC, AMC, CBS, CW, Fox, FX, HBO, The WB, NBC, Showtime, Starz, and USA."

Precise pricing details have not yet been disclosed.

Published on: September 3, 2013

In the UK, Retail Week reports that Walmart-owned Asda Group has unveiled a program that allows consumers to pay a monthly fee - the equivalent of about $7.75 (US) - to place as many orders as they wish and have access to preferred delivery windows.

The fee is said to be significantly less than a similar program offered by Tesco and Ocado. It is, however, just an introductory offer; on September 14, the fee will go up to the equivalent of $12.45 (US), which is still less than the Tesco and Ocado fees.

And, upon close examination, there are caveats - it is limited to orders above the equivalent of $38 (US), and customers can only place one order per day.

"Competition," the story notes, "in the online grocery sector is heating up as Morrisons and the Co-op prepare to enter the rapidly growing market."

Published on: September 3, 2013

The Charlotte News & Observer reports that "Harris Teeter’s top executives are warning the grocer’s employees about unions after its acquisition by Kroger Co., a supermarket company whose workforce is largely represented by the United Food and Commercial Workers union."

In a letter sent to the company's employees, Harris Teeter warned that labor unions will try to use the acquisition as a way to organize Harris Teeter's non-union workforce. "We believe strongly that it is best for you to interact directly with your managers at Harris Teeter who are there to help and support you,” the company wrote. “We always have worked together as a team, without the interference of an outside third party like a union.”

Published on: September 3, 2013

The Associated Press reports that Human Rights Watch, an advocacy group, has described a "called on Dunkin’ Donuts to withdraw a 'bizarre and racist' advertisement for chocolate doughnuts in Thailand that shows a smiling woman with bright pink lips in blackface makeup. The Dunkin’ Donuts franchise in Thailand launched a campaign earlier this month for its new 'Charcoal Donut' featuring the image, which is reminiscent of 19th and early 20th century American stereotypes for black people that are now considered offensive symbols of a racist era.

"A poster and television commercials show the woman with a shiny jet black, 1950s-style beehive hairdo biting into a black doughnut alongside the slogan: 'Break every rule of deliciousness'."

The story says that the "campaign hasn’t ruffled many in Thailand, where it’s common for advertisements to inexplicably use racial stereotypes," and quotes the CEO for Dunkin’ Donuts in Thailand as saying that the criticism represents “paranoid American thinking.” Nadim Salhani says that "not everybody in the world is paranoid about racism ... I’m sorry, but this is a marketing campaign, and it’s working very well for us."

Published on: September 3, 2013

• This happened while I was off last week, but I cannot help but take note of Walmart's decision, as reported by Bloomberg Businessweek to "extend health-care benefits to workers’ same-sex partners," a move, the story says, that "removes one of the biggest holdouts and adds pressure on other resistant companies to follow suit."

According to the story, "Wal-Mart, the largest U.S. private employer and a frequent target of labor-rights groups, described the change yesterday mainly as a path to a consistent policy as some states alter the definition of marriage."

Bloomberg goes on to say that "the number of Fortune 500 companies offering health-care benefits to same-sex partners has surged in a decade, to about 62 percent last year from 34 percent in 2002, according to the Washington-based Human Rights Campaign."

Published on: September 3, 2013

• The Baltimore Sun reports that Ahold-owned Giant Food "is expanding store pick-up sites for consumers who shop through online grocer Peapod.

"The Landover-based supermarket chain said this week it has added supermarkets in Bowie and in Sterling, Va., to a growing list of stores where Peapod orders can be delivered. In just the last four months, Giant has added pick-up locations to 20 stores in Maryland and Virginia. The retailer also recently opened a pick-up and fuel station facility in Chevy Chase."

Published on: September 3, 2013

• The Washington Times reports that later this week, Washington, DC, Mayor Vincent Gray will get on his desk a "living wage" bill would force certain retailers above a certain size to pay a "living wage" of $12.50/hour, above the minimum wage of $8.25.

Walmart has said that if the bill is signed into law, it will not build three of six planned stores there, and will consider its options for the other three.

Gray will have 10 days to sign or veto the legislation. He is under pressure from both sides - Gray is seen as an ally of union interests, but he also was part of the effort to attract box box retailers such as Walmart to DC.


• The Los Angeles Times reports that a federal appeals court has ruled that California's state-wide ban on the sale of foie gras, which is made through force feeding birds in a process that opponents say is cruel and inhumane, is constitutional.

The original ban want into effect in July 2012.

According to the story, "Out-of-state foie gras producers and a California restaurant group challenged the ban on the grounds it was unconstitutionally vague and regulated interstate commerce."


• The Cincinnati Business Courier reports that Kroger has announced that it has "reached an agreement with more than 4,800 workers who are part of the UFCW Local 400," which "provides associates with wage increases, affordable health care and a stable pension fund."


• Cub Foods, a division of Supervalu, has announced that it is celebrating a major milestone this month - it is 45 years since "Cub Foods was founded by Stillwater-based brothers Charles and Jack Hooley, brother-in-law Robert Thueson, and friend and business partner Culver Davis, Jr.

According to the company, "throughout September, Cub will be giving away gift cards and other prizes totaling more than $100,000. Each day from Sept. 1 to Sept. 28 at each of Cub’s 67 stores, one customer will be awarded a surprise, instant-win $45 store gift card. Winners will be selected at random and notified daily between September 1st and September 28th. Cub also is inviting local residents to submit via Facebook a photo or video representing their favorite Cub moment or why they love Cub for a chance to win a year’s worth of free groceries valued at $4,500 in the form of Cub gift cards."

Published on: September 3, 2013

• Grocery Shopping Network (GSN) announced the addition of Jeff Zoss as Vice President of National Sales. Zoss is a former executive with ValueClick and My Points.

In addition, GSN said that it has hired Scott Simerlein as its Vice President of Technology and Development. The company said that Simerlein’s prior experience includes being VP of IS & Process Improvement at the North American Membership Group, described as "a $250MM multi-channel database marketing & affinity organization."

Published on: September 3, 2013

• David Frost, the British interviewer/entertainer who began his career in the UK as the host of the satirical TV program "That Was The Week That Was," and later became a talk show host in the US as well as the interviewer who got disgraced former President Richard Nixon to (sort of) apologize for his actions during a series of programs (dramatized in the great Frost/Nixon), has passed away. He reportedly suffered a heart attack while sailing on the Queen Elizabeth between Southampton and Lisbon, where he was going to deliver an after-dinner speech.

Published on: September 3, 2013

...will return.

Published on: September 3, 2013

• Jon Stewart returns to "The Daily Show" tonight on Comedy Central, after having spent the summer directing his first film. John Oliver did a noble and outstanding job substituting for him, but it will be good to have Stewart back in the anchor chair. (Especially because there is so much crap hitting the fan these days...)

• And Tony Kornheiser returns to his eponymous Washington, DC, radio program this morning, after having taken the summer off. (Those not in DC can listen to the podcasts on iTunes.) It is, without a doubt, my favorite radio show ... and as I was driving cross-country with my son last week, I listened to all of the shows he did last June. (I'd saved them for just this reason.)

Published on: September 3, 2013

Michael Sansolo is off today. "Sansolo Speaks" will return...

Published on: September 3, 2013

Tim Tebow, the celebrated if sometimes ineffective quarterback who made a name for himself with the University of Florida, went on to help the Denver Broncos to get into the post-season only to be traded to the New York Jets for a season during which he was practically invisible, and then was released and signed by the New England Patriots, was released by the Pats just a few days before the beginning of the 2013 season.

Tebow pretty much played himself out of a job with an underwhelming performance during the preseason.