business news in context, analysis with attitude

Published on: November 21, 2013

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.by Kevin Coupe

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

I don't know about you, but it isn't even Thanksgiving yet, and I'm already sick and tired of Christmas. It's not that I'm a "bah, humbug" kind of guy. It's just that I know the flood of stories about holiday sales have only just begun, and I'll have to dutifully report on them, because, in fact, they are important to the retail and manufacturing communities.

But that doesn't mean I have to be happy about it.

I'm not going to launch into some sort of whine about the commercialization of Christmas. (And by the way, a note to all those folks who will spend so much time over the next few weeks caterwauling about the so-called "war on Christmas." There is no such thing, unless you count the fact that what everybody celebrates as Christmas would appear to have little to do with the original meaning of the holiday. That's what they ought to be ticked off about — too many people celebrating something that has little or no resemblance to the spirt of the holiday.) In fact, I like many of the commercial elements of Christmas … few things compare, for example, to looking at store windows at Christmastime, or going to see the tree at Rockefeller Center. I even like shopping for Christmas presents, though I'd rather have a colonoscopy that visit a Toys R Us store between Thanksgiving and New Year's.

It's just that, with some justification, everybody is jockeying for position during the holidays. Sure, the success or failure of a year can be determined for many companies by how well they do over the coming month. But so much of it has to do with cutting prices, then cutting them again, and engaging in lowest common denominator tactics just to make the next sale. It seems like a time when long-term vision gets tossed out the window by many companies, because it is all about short-term gratification. I see stories about how JC Penney, for example, may have a better holiday than expected … but to me, this is like going on life support, when the actual business model may well be terminal. We all ignore the big stories because the little stories get in the way.

That's too bad. I think that for the retailer that is really doing its job, Christmas ought to be a time when it builds on the brand equity that it has built during the preceding 11 months, not a time when it gets a chance to make up for the inadequacies of the past 11 months.

Maybe that's unrealistic. Maybe we live with such a short-term mindset that it is impossible to view the holidays as anything but a mad dash for the finish line, which is why so many companies seem to be moving the starting line in the hope of getting a head start and some sort of advantage.

But that's too bad. Not to sound cranky, but there are days when I think that the holidays cannot come and end fast enough.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: November 21, 2013

by Kevin Coupe

From a Southern California Costco store comes a story that illustrates not just the power of religious sensibilities, but also the power of social media.

It all started when Caleb Kaltenbach, pastor of the Discovery Church, was perusing the Costco's book selection. And found a stack of Bibles. In the "fiction" section.

Uh-oh.

The Los Angeles Times reports that Kaltenbach took a picture of the display and posted it with a comment: "Costco has Bibles for sale under the genre of FICTION Hmmmm…"

Needless to say, the picture and comment went viral, and Kaltenbach found himself being interviewed on Fox News, where he said, “It probably was a mistake, I have no idea, but a couple of things. One, I think that Christians in America do need to stand up for our faith. We’re not persecuted like our brothers and sisters in the Middle Eastern countries or North Korea or other places, but we do need to be vocal about our faith. And I do believe it shows how polarizing the Bible and Jesus are."

Costco has apologized, saying that it was a matter of distributor mislabeling, and that the mistake has been corrected.

Kaltenbach had a legitimate complaint, but it's not like Costco was trying to make a political or religious statement. It sounds like a mistake, pure and simple … albeit one that gets much greater legs because of social media.

The thing is, had social media existed 2,000 years ago, the three wise men would have been snapping selfies in the manger, the Sermon on the Mount would have been delivered in snippets of 140 characters, and Pontius Pilate would have polled his Facebook friends before pronouncing sentence.

Of course, if social media had existed 2,000 years ago, it also would have meant a dramatic difference in the history of technology….

Published on: November 21, 2013

Amazon said this morning that it will begin its Black Friday promotions a day earlier this year than last year - on Sunday, November 24 - and will feature new deals as often as every 10 minutes.

Craig Berman, Vice President, Amazon Global Communications, said that "beginning this Sunday, customers can expect to find a new deal every 10 minutes, including electronics, toys, books, movies, tools and much more - and all these deals can be scooped up from the comfort of home or while on the go through our mobile shopping app."

Published on: November 21, 2013

Bloomberg reports that Whole Foods, "facing intensifying competition from organic and natural-food chains, is testing a loyalty program that gives customers a 10 percent discount on its '365' private-label line of groceries."

It is a limited test - the "Hello 365" loyalty program ids only available in eight stores in Illinois, Indiana and Florida. The company says there are no plans for a rollout, but says it could happen if the program is successful.

Bloomberg notes that "Whole Foods, which has about 360 stores, is grappling with rising competition from such specialty grocers as Sprouts Farmers Market Inc. (SFM) as well as mainstream chains such as Kroger Co. that have added upscale provisions to their shelves. Meanwhile, the chain’s 'Whole Paycheck' reputation may be a turnoff at a time when many households are budgeting."

Meanwhile, Austin Culture Map reports that Whole Foods is testing a “click and collect” system that allows customers of a store in Plymouth Meeting, Pennsylvania, to order products online and then pick them up at the store. The test, according to the story, "will be expanded in early 2014 to the Whole Foods store in Laguna Niguel, Calif., near Los Angeles."

Walter Robb, co-CEO of Whole Foods, tells the site that the “'click and collect' system bridges the 'physical world' and the 'digital world' of grocery shopping.

"Based on the results of this pilot program, Whole Foods eventually could roll out the concept at its more than 320 stores throughout the United States."

Published on: November 21, 2013

The Washington Post has an analysis of same-day delivery programs that seem to be cropping up with greater frequency, as companies that include Amazon, Walmart and eBay are offering the option as a way of competing even more effectively with bricks-and-mortar retailers.

The general sense seems to be that the long-term prospects are more rosy than in the short-term, and that it will be more effective in heavily populated markets where there is a) greater competition and b) enough density to make economic sense.

"According to the National Retail Federation," the story says, "only 4.2 percent of consumers used same-day delivery frequently during last year’s holiday shopping crush. Just 7.2 percent used such a service once or twice." However, "while a relatively small share of shoppers are expected to use same-day delivery this holiday season, analysts say it will eventually gain more traction as retailers expand and improve the experiences of those who use the service.

"Also, millennials are more likely than other shoppers to use same-day delivery, according to the National Retail Federation. In 2012, 12.4 percent of consumers ages 18 to 34 used such a service, and another 17 percent used it occasionally, compared with 4.2 percent and 7.2 percent for all shoppers. Since this generation is just beginning to exercise its purchasing power, their interest in same-day delivery also suggests that demand could grow for the service over time, the trade group said."

Published on: November 21, 2013

Forbes has a piece in which Andy Sussman, President of Minute Clinic and SVP, Associate Chief Medical Officer of CVS Caremark, talks about how the walk-in clinic "has become a rapidly emerging trend" that not only has reshaped his business, but also "could help eliminate more that 50 percent of the primary care physician shortage that the U.S. is expected to face by 2025."

Sussman notes that "MinuteClinic is still in investment mode. As you can imagine, we’re doing this massive expansion around the country, and we’re see very brisk growth in revenue upwards of 30% a year in the last five years, which obviously contributes to the overall enterprise."

But, he adds, "A RAND-sponsored study showed that our care was equal in quality to physician’s offices, emergency rooms and urgent care clinics — and 40-80% less expensive."

Forbes writes that there currently "are 743 MinuteClinics in the nation — with a goal of 800 by the end of this year and 1500 by 2017. The total number of walk-in medical clinics "is expected to increase from about 1,400 in 2012 to more than 2,800 by 2015 and save $800 million per year in overall healthcare expenditures, according to a recent Accenture report."

Published on: November 21, 2013

• Poor Walmart.

Normally, it just has to face off against union organizers, anti-big box forces, and even bribery investigators.

But this week, it found itself fighting online with one of the stars of "Two and a Half Men" and "That Seventies Show."

Ashton Kutcher - who also happens to be known as a savvy technology investor who has more than 15 million followers on Twitter - decided to use the social media platform to criticize Walmart for low wages.

He tweeted, in part: "You had 17 billion in profits last year. You're a 260 billion$ company. What are we missing?"

Interestingly, Walmart was paying attention, and tweeted back: "We think you're missing a few things. The majority of our workforce is full-time and makes more than $25,000/year."

Kutcher's response: "Walmart should be the leaders not the low water mark."

And Walmart's rejoinder: "We know you believe in opportunity like we do & we'd love to talk to you more about it."

Published on: November 21, 2013

The Los Angeles Times reports that "with a plastic-bag ban set to go into effect in Los Angeles on the first of the new year, city officials are launching a campaign to get residents in the habit of using reusable totes.

"The city has teamed up with environmental groups and nonprofit organizations that work with veterans and former gang members to produce a line of bags made from recycled or repurposed materials … Making the bags will cost about $5 each, according to Jim Cragg, who runs a nonprofit that puts veterans to work. His group, Green Vets L.A., will construct the bags out of donated material. Homeboy Industries, an organization that provides jobs and other services to ex-gang members, will screen-print designs on the totes."

Published on: November 21, 2013

The Washington Post that the US Postal Service (USPS) "plans to open pilot units at 82 Staples locations throughout the nation, with the potential for expansion to some of the office-supply company’s other domestic locations, the agency said. The first centers opened earlier this month."

According to the story, "The new centers will be operated by outside employees, offering most postal products including stamps, mail services and package delivery … USPS will be the exclusive mailing and shipping option at those Staples locations."

Published on: November 21, 2013

• National Public Radio reports that now that Spartan Stores and Nash Finch have merged into one company worth more than $7 billion, it has been disclosed that The Right Place, an economic development group that works with the state of Michigan, has offered close to $2.75 million in grant money to keep the company headquarters in Michigan.


• The National Retail Federation (NRF) issued a report yesterday saying that "positive retail sales numbers in the month of October point to a good holiday sales season ahead … October retail sales, excluding automobiles, gas stations and restaurants, increased 2.5 percent seasonally adjusted over September, and 4.2 percent unadjusted from 2012."


• The Ansonia, Connecticut, public school system announced that it has adapted the NuVal Nutritional Scoring System, working with grocery retailer Big Y Foods to provide labeling that allows students to make informed purchasing decisions.

According to the announcement, "Ansonia is one of several Connecticut school systems to adopt the NuVal System, the others being in Derby and Mansfield. NuVal Scores are also available at cafeterias in Missouri, Minnesota, and Tennessee. Funding to support the implementation of NuVal in the Ansonia School District was provided by a grant from the Connecticut State Department of Education."

Published on: November 21, 2013

I mentioned yesterday that the rapid sales of Sony's PS4 demonstrate what seems to be a successful product introduction, which led MNB reader Jesse Ehlen to write:

Regarding the Playstation 4 launch, before you call it a successful one, keep an eye on the cost of the day one glitches, both to Sony’s pocket book and to their brand image.  This story is going to get a lot bigger and a lot more expensive as time progresses.  The blowback will be especially severe given that these day one purchasers will have to wait until February at the earliest to get a replacement console.  For historical perspective, do a Google search on what the ‘Red Ring of Death’ cost Microsoft a few years ago.

Secondly, the seven years between PS3 and PS4 is about standard in the gaming console universe (it’s been that long between Xbox versions as well).  It’s not so much about the technology not evolving as it is about giving software developers ample time to create games and get the most of out the existing architecture - development of triple-A games can take as long as two years.  The slowest-evolving part of this whole equation is probably the graphics engines (created by game developers) that power the games.  Gamers that are hung up on hardware specs are likely to prefer PC gaming over a Playstation or Xbox.

Well, I did say I know almost nothing about gaming. I guess that now has been proven out…




MNB took note yesterday about a Wired report that Costco "is joining the Google Shopping Express same-day delivery service. It’s the highest-profile new partnership for the program since Shopping Express came out of private testing and became available to the San Francisco Bay Area public in September."

I commented:

It isn't just Amazon that is being targeted here … it is virtually every retailer selling the same stuff that Target and Costco sell. Which is why every retailer that fits that definition has to either figure out a way to get into this game, or figure out what differential advantage it has that will keep people coming into the store on an ongoing basis. It seems to me that becoming a destination shopping experience with every passing day is becoming more of a price of doing business.

MNB reader Herb Sorensen responded:

Note that Costco is the #3 global retailer now, behind two behemoths who cannot move with efficiency: Walmart and Carrefour.  Costco's continuing globalization matches well with Google's already global presence and strategy.  This doesn't mean they will be able to "roll" Amazon.

The clash of the Titans continues apace!

MNB reader Joan Kelley chimed in:

There are many items I buy from Amazon that I used to purchase from Costco, even though I love shopping Costco.  Having moved to CT a few years back from Seattle the nearest Costco is over an hour away from the beautiful CT River shoreline.  I do order some items from Costco online but find the selection very limited. I  have emailed Costco many times about their online selection but always get back one of their "form" responses.  Too bad, I love Costco and am a walking advertisement for their warehouses….




Regarding Amazon, one MNB user wrote:

I know you are enamored with e-retail and often discuss that stores need to figure out how to live with e-commerce and in general I agree.  However, on Nov 11th I ordered a large screen TV from Amazon instead of going to the local electronics big box retailer.  It is now Nov 20th and I still don’t have my TV.  So much for the myth of same or second day delivery.   This a great example of the risk associated with over-promising and under delivering.  It will take a lot of soul searching before I would consider a large purchase like this from the online world again.  The physical store still offers the instant gratification and security of knowing exactly when and what you are going to get.  I still use online retailers for small items like shirts and such.

Listen, if I asked for same day or next day delivery - and paid for it - and did not get a product for nine days, I'd be ticked off, too.

Though to be fair, you don't say that you did that.

Still, nine days is a long time. I'd be curious what happened when you complained to Amazon. What was their response? Because I've always found Amazon to be fast and responsive when I've had problems, though I've never ordered a TV from the site.