business news in context, analysis with attitude

Published on: November 12, 2013

by Michael Sansolo

Stew Leonard’s unique supermarkets offer up an obvious statement of customer service right at the front door. Each Stew’s features a large rock inscribed with the company’s policy:

Rule #1: The customer is always right. Rule #2: If the customer is ever wrong, re-read rule #1.

Chip Wilson, a businessman from Vancouver, BC, needs to visit that rock. In the meantime, all of us need to learn his story as a painful reminder of how easy it is to blame, antagonize and possibly lose the customer.

Wilson is the co-founder of Lululemon, a stunningly successful retailer of high-end workout clothing. Lululemon’s stores are nicely merchandised and the products, such as $100 yoga pants, are apparently the favorites of the rich and famous and more.

At my gym it’s fairly commonplace to see women wearing tops and shorts with the distinctive Lululemon logo. A few women I talked to say the fit is simply the best, making each of them willing to pay the high prices.

Sadly, Lululemon actually has had a difficult year with product quality, a painful stumble for a company whose reputation rested on the durability and fit of its products. In late 2012 there was a problem with the dyes used on some products, which raised concerns that the company was having trouble managing its growth.

The second problem was even worse: women noticed that certain yoga pants became too sheer when stretched in common yoga positions. That problem led to a spate of bad publicity, a product recall, slumping sales and stock price. The company’s CEO resigned in June, largely because of the problem.

Those were the days.

This past week, after reports that the yoga pants were pilling, Wilson, as we reported yesterday at MNB, sat down for an ill-fated interview on Bloomberg TV’s Street Smart

Asked about the problem, Wilson said, “There’s always been pilling. Women will wear a seat belt that doesn’t work. Or a purse that doesn’t work and quite frankly, some women’s bodies just don’t work for (our pants)."

You can see this wasn’t going well.

Pressed on that point, he continued: “They don’t work for some women’s bodies. It’s really about the rubbing of the thighs, how much pressure is there over a period of time, how much they use it.”

As one reader commented on one of the countless websites worldwide that are featuring this interview, “Why don’t you just say it: Our pants aren’t made for fat people.”

I think I am supposed to write: Oh snap!

Wilson is obviously having a tough year. Quality, his company’s calling card, has been questioned three times and he’s probably unsure that Lululemon can weather another storm. But blaming the customers’ thighs? Surely there was a better way.

The truth is we know the customer is frequently wrong. There are countless times poor cooking causes food to taste less than perfect, yet retailers find a way to cheerfully refund money to keep a customer. Worse yet, we know that many (if not most) food safety problems are caused after the product leaves the store. Leaving perishables in hot cars, cross-contamination, under-cooking or poor refrigeration happen far too often.

But we can’t blame the shoppers. We have to try to educate them to make it better the next time.

Some of these are extremely complex issues, which makes the discussions even harder. And we know harder ones—think of nutrition or GMOs—are yet to come. These discussions will be difficult, frustrating and more, but good merchants find a way to educate and illuminate and possibly build customer loyalty in the process.

Now there’s no telling what will happen to Chip Wilson’s company because of his comments. One of the Lululemon fans at my gym said the comments wouldn’t stop her from buying Wilson’s products. Yet even this very slender woman told me, insulting women’s thighs is never a winning strategy.

And I should add that Lululemon has a special emotional tie to the area in Maryland where I live. A few years back, the company’s store in Bethesda was the scene of a brutal murder and the company showed incredible sensitivity in the aftermath and reopening of the unit.

This much we do know—and we can thank Wilson for the reminder: If the customer is wrong, re-read rule #1 again. And don’t ever blame their thighs.

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: November 12, 2013

by Kevin Coupe

You gotta love this kind of symmetry.

Variety reports that Blockbuster has rented its last video, at a store in Hawaii. It happened at 11 pm last Saturday.

The movie: This Is The End, the apocalyptic comedy written and directed by Seth Rogen and Evan Goldberg, and starring Rogen, James Franco, Jonah Hill, Jay Baruchel, Danny McBride, and Craig Robinson.

Blockbuster this week will begin the process of liquidating its inventory. The company;'s demise stands a s symbol of a corporate leadership unable or unwilling to recognize fundamental consumer and technology shifts, and a management philosophy best described as "epistemic closure" - the people in charge of the company saw the world they wanted to see instead of the world the way it actually was. By the time Blockbuster was sold to Dish Network, which hoped to revive the brand, it was too late.

It is an Eye-Opener.

Published on: November 12, 2013

The Detroit Free Press has an interview with Whole Foods co-CEO Walter Robb, in which he says that the retailer's new urban store there is "in a far better place than I thought we would be. It’s far above our modest projections. And more importantly, I told the team that a year down the road what I want to know is are we still serving the entire community. We came here to serve the whole community and to try to make a contribution. I feel like we’re doing that so far. We’ve just added another 30 jobs, so it’s 130 jobs now. We started with 100 jobs. My goal here is much broader than that. I want to dive into these questions of accessibility and affordability. We’re trying to see what works and how we can help. Our (food stamp customers) are much higher here, three to four times higher than the rest of the region. I’m glad about it. It makes me happy that we’re able to stretch a bit."

And, he says, Whole Foods' success should have a broader impact: "I think the dollar invested in this will create a return very quickly in terms of the economy overall. Michael Porter of the Harvard Business School, who has studied economies and what produces momentum in the economy, says the food sector is one of the most productive elements of an economy."

Published on: November 12, 2013

The Nielsen Co. is out with a new survey about the upcoming end-of-year holiday shopping season, revealing:

• "Nearly 50% of consumers say they will shop online this Cyber Monday, a 16 point increase from 2012."

• "51% say they will do their Black Friday shopping online – Black Friday might be merging with Cyber Monday as consumers search for deals in comfort."

• "Big ticket items top the list such as electronics like phones, computers, laptops, iPads and eReaders (70%), apparel (59%) and toys (46%).

• "Nearly a quarter (22%) of US consumers report that they have already started their holiday shopping.

• "US consumer sentiment is at its highest point in 5 years: 98 on the Nielsen Consumer Confidence Index but consumers are still feeling the sting of the recession and of rising inflation."

Published on: November 12, 2013

Online Media Daily reports that Andrew Lipsman, VP of marketing and insights at comScore, is saying that while there are not any official predictions about how high e-commerce sales could go during the fourth quarter, he expects them to exceed $9 billion, "with an outside shot at hitting $10 billion."

According to the story, "comScore Friday said Q3 2013 U.S. desktop-based retail e-commerce sales grew 13% year-over-year to $47.5 billion, marking the sixteenth consecutive quarter of positive year-over-year growth and the twelfth consecutive quarter of double-digit growth … Mobile commerce spending on smartphones and tablets grew 26% compared with the year-ago quarter, for a total of $53.2 billion in Q3 for digital commerce spending."

At the same time, Internet Retailer reports that an Accenture survey suggests that "about half (47%) of shoppers will make purchases through their PCs or laptops during the holiday season and that consumers will make purchases and research gifts via tablets more than smartphones. 19% of respondents say they will buy or research via tablets this holiday season, up from 15% last year."

And, the survey says, "one-third of those who say they planned to shop by smartphone say they will use their mobile phones to compare prices in a store."

Published on: November 12, 2013

Walmart said yesterday that it plans to open its stores at 6 pm on Thanksgiving, and will hold special pre-Black Friday sales events at both 6 pm and 8 pm, as well as Black Friday specials the following day.

According to MarketWatch, Walmart is bringing back its "one-hour guarantee. Customers have to be in designated lines at certain times to buy special sale items. This time, Wal-Mart will organize that by handing out wristbands, which will mean people have that item reserved and can keep shopping until the event starts. The promotion will expand from three to 21 items, with the 6 p.m. event offering a 16GB Apple iPad mini for $299 with a $100 Wal-Mart gift card, while on the 8 p.m. watch, customers in line can choose from such items as a RCA 7″ dual-core tablet for $49 … Wal-Mart also plans what it calls 'smoking hot' offers for Black Friday, starting at 6 p.m.. These list video games for $10, $15 and $25; home appliances for just under $10; and so-called “Manager’s Specials”, with price drops on categories and brands throughout the stores from 8 a.m. to 2 p.m. on Friday, Nov. 29."

"Black Friday is our day — our Super Bowl — and we’re ready to prove once again that no one does it better than Walmart," Bill Simon, president and chief executive of Wal-Mart U.S., said in a statement.

Published on: November 12, 2013

Barnes & Noble, the bookstore chain that has seen its sales and profits hit hard by the impact of e-railers such as Amazon, has announced what it is calling "Discovery Friday," which it says has been created" to serve as the official launch of the holiday shopping season and help customers experience the thrill of discovering the perfect gifts for friends and family. On Discovery Friday, which falls exactly one week before Black Friday, Barnes & Noble’s booksellers will be on the front lines to provide personalized recommendations. Every one of its nearly 700 stores nationwide will feature games, activities and giveaways, and hundreds of special guests, including bestselling authors and other notables. Customers can also enter for a chance to win a $1,000 Barnes & Noble shopping spree, with five lucky winners to be chosen from across the country."

Published on: November 12, 2013

In the UK, the Mirror reports that Tesco "is poised" to begin offering customers the option of having their receipts e-mailed to them, instead of receiving paper receipts at checkout.

The company that would provide the service is eReceipts, which is chaired by Lord Ian MacLaurin, the former CEO of Tesco, who tells the Mirror, "We started it two years ago and it is accelerating away. We’ve had successful trials and the future is very rosy. It’s very exciting."

Tesco has not confirmed the report.

Published on: November 12, 2013

Vending Times reports that a company called Farmer's Fridge "has begun offering a unique healthy vending concept in the Chicagoland area. The company makes its salads, sides and snacks from scratch each morning, using organic ingredients from local farms when possible. It packages them in recyclable plastic jars and delivers them to its machines by 10 am … Menu selections range from a "high protein" salad -- with spinach, corn, peas, pumpkin seeds, figs, broccoli, chickpeas, shredded Parmesan and quinoa -- to heartier meals like lemon pepper chicken, baked tofu and poached salmon."

You can see a picture and more details here.

Published on: November 12, 2013

• The Baltimore Sun reports that "workers for Giant Food and Safeway supermarkets in the Baltimore-Washington area could vote on a new labor contract as early as Wednesday. Negotiations continued Monday between management for the two chains and union representatives for 28,000 Giant and Safeway workers in the region. An 18-month contract with the United Food and Commercial Workers expired Oct. 31 but was extended to Nov. 15."


• The Associated Press reports that "more than 90 tons of ready-to-eat salads and sandwiches by a California catering company are being recalled after 26 people in three states were sickened by a bacterial strain of E. coli linked to its products, federal health officials said Sunday. Richmond-based Glass Onion Catering are recalling approximately 181,620 pounds of salads and sandwich wraps containing cooked chicken and ham, the USDA's Food Safety and Inspection Service said … The Contra Costa Times reports the company supplies food to Trader Joe's, Super Fresh Goods and Delish."

Published on: November 12, 2013

Chiming in on the discussion about how Black Friday has expanded into Thanksgiving, and whether the old days when stores were not open on Thanksgiving were actually the "good old days," one MNB reader wrote:

These are the “Good ‘ole Days”….we just don’t know it yet.

Wait about 20 yrs, and we’ll all be talking about how great it was when you actually had to drive the car and you couldn’t text while doing so, or exceed the speed limit for risk of ticket.  These days the car drives itself, but I can’t speed to beat everyone to the next light….How I long for the “Good ‘ole Days"…

From another reader:

I was a kid clerk working for Finast in the 60!s My Dad was store manager with them . Yes, there is no reason to be open on Thanksgiving. What are customers in the store for Frozen turkeys that take days to defrost ? Where did the customer go to shop on Sundays and Holidays to purchase pepper or Pie Crust? Why, the Mom @ Pop Superette. They paid a premium for it.  Two Days a year is not much to ask off. Perhaps the young female who wrote to you, should sit down and read Dickens' "A Christmas Carol." Because she could learn a valuable lesson from it.

As far as store being greedy, they are not. All they have done is raise costs by spreading out the business from big Friday evenings and huge Saturdays at regular time to Time and a Half on Sundays to Holiday and Double time and a half on Holidays. Then blame the union for their own stupidity.

MNB reader Chris Reading offered:

Why don’t the Brick and Mortar’s ramp up their online presence and remain closed during Thanksgiving?

From another:

You say "But the thing is, Amazon and its online brethren will be open all day on Thanksgiving … and traditional retailers have to compete with that. I feel their pain."

I'd give Bezos a lot of credit if he gave his warehouse workers the day off and shut down his site for the day. We think its all automated, but there are plenty of folks working hard at Amazon on Thanksgiving as well. Perhaps he could lead the groundswell to give people the day off. Starbucks too. These are two iconic companies, when their CEO's speak, others listen.

7 day work weeks for bricks and mortar means 7 day work weeks for those of us that support them in the back office.

In addition, many of your readers offer up the same point- 30 years ago I didn't starve as a child because the local store was closed. My parents stocked the pantry ahead of time, we cooked a meal together, and ate a meal together. Being open on Sunday means two things- you're shifting your own dollars off of Monday-Saturday. If you're lucky, you'll steal some other retailer's dollars, but likely they are stealing yours as well. Isn't this the least common denominator you always refer to?

And another:

I am one of the consumers that is appalled at stores being open on Thanksgiving, but to your point, the online stores never close.  What are bricks and mortar supposed to do?  What if, as a society, we all encourage our families to spend the holiday “unplugged” as well and completely in each other’s presence? How many people will have their iPad and smartphone out while sitting in the living room of an in-laws house, desperately trying not to hear the 8th telling of Aunt Mildred’s hip surgery?  Want to change the trend?  Change your actions.  My phone and tablet will be put away on Thanksgiving and not a single holiday purchase will be made either in person or online.  I can afford an extra $2 on a gift for a family member if it means someone else has the choice to spend the holiday with their family.  Am I going to change this trend by myself?  Most certainly not, but maybe enough people will make the same choice that retailers will see being open on Thanksgiving as a cost, not a profit center.

Isn't it pretty to think so?

Published on: November 12, 2013

In Monday Night Football, the Tampa Bay Buccaneers defeated the Miami Dolphins 22-19.

Published on: November 12, 2013

The Nielsen Co. is out with a new survey about the upcoming end-of-year holiday shopping season, revealing that of the consumers surveyed, 17 percent said they were planning on hitting the stores on Black Friday, "and those shopping said that they would be spending close to 50 percent of their total holiday shopping budget on Black Friday."

In addition:

• "Nearly 50% of consumers say they will shop online this Cyber Monday, a 16 point increase from 2012."

• "51% say they will do their Black Friday shopping online – Black Friday might be merging with Cyber Monday as consumers search for deals in comfort."

• "Big ticket items top the list such as electronics like phones, computers, laptops, iPads and eReaders (70%), apparel (59%) and toys (46%).

• "Nearly a quarter (22%) of US consumers report that they have already started their holiday shopping.

• "US consumer sentiment is at its highest point in 5 years: 98 on the Nielsen Consumer Confidence Index but consumers are still feeling the sting of the recession and of rising inflation."