business news in context, analysis with attitude

Published on: November 25, 2013

by Kevin Coupe

Think of this is a spat that went straight into the toilet.

Salon reports on how rapper Kanye West recently went "on a rant" against e-tailer Zappos on a podcast.

West said that Zappos CEO Tony Hsieh "told him to stick to music and not get into fashion at a recent business meeting. 'I got into this giant argument with the head of Zappos that he’s trying to tell me what I need to focus on. Meanwhile, he sells all this (expletive that is a synonym for crap) product to everybody, his whole thing is based off of selling (expletive that is a synonym for crap) product.”

Some might be offended. Some might turn the other cheek. (Pun intended.)

But not Zappos, which at the end of the week added a new product to its pages: a $100,000 toilet.

Here's what the promotional copy said:

Interested in buying Sh-t product? You’ve come to the right place! Here at Zappos.com, we happily sell Sh-t products to everybody! This is the throne, everyone has been watching. Whether you’re #1 or #2, your clique will show no mercy, even in Paris.

The perfect gift for the man that has everything.

Requires lots of 'focus' for most productive use.

Considered a 'safety zone' when in arguments.

Makes giant arguments seem much smaller.

Caution: Do not place our Sh-t product near any fans.

Avoid storms.

I gotta love a company with a sense of humor, and a willingness to engage.
I give this round to Tony Hsieh…

Published on: November 25, 2013

The New York Times reports that while US retailers that had products being made at factories in Bangladesh - where conditions related to safety violations led to thousands of deaths and injuries - are working to help improve safety conditions in such facilities, they have not demonstrated a willingness to contribute to compensation funds for the families of those who died or were injured there.

Here's how the Times frames the story:

The International Labor Organization is working with Bangladeshi officials, labor groups and several retailers to create ambitious compensation funds to assist not just the families of the dead, but also more than 1,800 workers who were injured, some of them still hospitalized.

"A handful of retailers — led by Primark, an Anglo-Irish company, and C&A, a Dutch-German company — are deeply involved in getting long-term compensation funds off the ground, one for Rana Plaza’s victims and one for the victims of the Tazreen fire, which killed 112 workers last Nov. 24.

"But to the dismay of those pushing to create the compensation funds, neither Walmart, Sears, Children’s Place nor any of the other American companies that were selling goods produced at Tazreen or Rana Plaza have agreed to contribute to the efforts.

"Supporters of compensation plans say they are needed to pay for medical care for those who are paralyzed or otherwise badly injured, to provide income after a vital breadwinner died and to give families enough income so that children are not forced to quit school and go to work."

Published on: November 25, 2013

Amazon announced over the weekend that for the first time it will allow shoppers to buy Prime memberships as gifts.

Amazon Prime is the highly successful service that offers two-day shipping on purchases for $79 per year, plus access to Amazon's various streaming services.

Published on: November 25, 2013

Chicago Grid.com has a story worth taking a look at: it explores what it might be like to go grocery shopping while wearing a pair of Google Glasses.

The broad impact: in the long run, the technology will make shoppers more informed and even more in charge of the shopping experience.

You can check out the entire piece here.

Published on: November 25, 2013

The Chicago Tribune has a piece analyzing what it suggests is the great lie of Black Friday - that retailers offer deals on that day that are not available at any other time.

"Many characterize the shopping bonanza as an expertly marketed ploy to capitalize on shoppers' fear of missing out," the Tribune writes. "By dangling a small batch of irresistible savings, stores land hordes of hopeful shoppers all scheming to score the retail version of Willy Wonka's golden ticket … The weekend is crowded with misleading promotions, including deceptive discounts off misstated 'original' prices and deals that could have been had a year earlier, according to NerdWallet. More than 90% of Black Friday ads this year feature items being sold at exactly the same price as they were last Black Friday, the financial advice website said.

"And some door-buster prices are available throughout the year, including a $79.99 Tommy Hilfiger jacket at Macy's that NerdWallet said was also offered during the retailer's Veterans Day sale. At Target, researchers discovered a KitchenAid mixer selling for less than its advertised Black Friday sale price."

Published on: November 25, 2013

The New York Times reports on how, "as the holiday shopping season gets underway, same-day delivery has become a new battleground for e-commerce."

The Times writes:

"It wasn’t so long ago that overnight delivery seemed amazing enough. Then Amazon started building huge warehouses — what it calls 'fulfillment centers' — near major cities to be, in a spokeswoman’s words, 'as close to customers as possible.' With 40 such centers in the United States encompassing more than 80 million square feet of storage space and employing 20,000 full-time workers, Amazon offers same-day delivery in 11 cities.

"EBay, which last month announced plans to expand eBay Now to 25 cities, and other businesses, including Google’s nascent shopping service and start-ups like Deliv, have a different model: Use existing stores or 'retail partners' as distribution centers and beat Amazon in the race against the clock."

The story goes on:

"Years ago, similar endeavors imploded. Webvan, UrbanFetch and Kozmo (which was backed by a $60 million investment from Amazon) were seen as follies of the early dot-com era, brought down by high labor costs and unrealistic pricing.

"Today companies are scrambling to find the right new formula. Deliv uses a crowdsourcing approach, tapping students, real estate agents, aspiring actors and others with spare time and a vehicle. EBay recently announced plans to acquire for an undisclosed price Shutl, a London company that uses technology to pair couriers at hundreds of firms with local orders for delivery. Postmates, a start-up that operates in New York, San Francisco and Seattle, has been adding 100 to 200 couriers a week, but it recently instituted 'surge pricing,' higher prices for customers, when demand for deliveries outstrips the supply of couriers."

Published on: November 25, 2013

The Salt, on National Public Radio, had a story the other day posing the kind of question that would have been unimaginable - or maybe even unimportant - just a few years ago: Can farmed fish be certified as organic?

The story notes that coming up with organic labels for aquaculture "is not coming easy," with the process having taken up more than decade without answers being arrived at.

Environmentalists, The Salt reports, "say fish farms shouldn't quality for an organic label if they rely heavily on feed that can't be verified as organic. And they cite other problems on fish farms, including pollution and disease, that make them less sustainable than the typical organic farm."

The US Department of Agriculture's National Organic Program (NOP), together with industry groups, has been developing guidelines that "would allow up to 25 percent conventionally grown material — specifically fishmeal — in the diets of farmed fish certified as organic. The plan would be to slowly scale this amount down over the years, though critics say they doubt this process would occur."

But environmentalists and consumer advocates suggest that such an approach would essentially compromise the spirit of organic certification procedures.

Published on: November 25, 2013

• In the UK, the Guardian reports that when Morrisons begins its grocery delivery service in early January, it will offer "a virtual butcher and a grading system for fresh food, (and) will allow shoppers to immediately hand back food they don't think is good enough."

According to the story, CEO Dalton Philips "is hoping an array of specialist services can draw in shoppers who will spend more online with Morrisons than they do with other grocers and keep them loyal. Those services include expert quality ratings on all produce, special packaging to prevent damage to fragile items such as bananas and the ability to return and receive money-off vouchers for fresh goods found not be up to standard on the doorstep. It will also offer steaks in a variety of thicknesses and bread and cakes baked fresh in Morrisons stores. The retailer is hoping these ideas will help it become profitable online, unlike other grocers, by boosting sales of fruit, vegetables, meat and fish – which make more money than general groceries."


• CNBC reports that Gap Inc. is offering a new service - customers can go online and reserve items, and then can go into a store, pay for them and pick them up within 24 hours.

After a test in 40 Gap and Banana Republic stores that began over the summer, the company is rolling out the program to the entire Banana Republic fleet of more than 400 stores, and almost a third of the nation's Gap stores.

One caveat - shoppers can't use the service on Thanksgiving or Black Friday, days on which management wants employees focused on shoppers who actually are in the store.

Published on: November 25, 2013

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Wall Street Journal reports that the decision by Sprouts Farmers Market to delay its initial public offering (IPO) last week is "a rare occurrence in capital markets," but that the delay should only amount to a week or two: "The offering, originally slated to price late Thursday, was postponed to Monday night in part because a Sprouts peer, Fresh Market Inc. reported disappointing quarterly results, people familiar with the matter told The Wall Street Journal late Thursday. The sellers worried the news might weigh on grocery stocks broadly, these people said."

It always worries me when I see this kind of stuff, but not because such hiccups affect Sprouts' stock price (not to mention the share prices of competitors like Fairway and Fresh Market). No, it's because such stories just reinforce for me the possibility that these chains are going to be more focused on Wall Street than Main Street, which means that they might be making short-term financial plays rather than long-term investments that build sustainable enterprises.


• The Post and Courier reports that "two months after selling the majority of its tri-county stores to Bi-Lo and Harris Teeter," Piggly Wiggly "will shut down its warehouse in North Charleston and the 612,000-square-foot distribution center in Jedberg near Summerville."

Piggly Wiggly reportedly will use "New Hampshire-based C&S Wholesale Grocers to supply groceries to its remaining stores. The transition from the locally based distribution will be completed in about three to four months."


• The Wall Street Journal reports that it looks like two Amazon distribution centers in Germany will face a strike by employees today, with employees facing off against the company over wages and benefits and promising more such actions as the Christmas season approaches.

According to the story, "Amazon has been a target of repeated strikes this year in Germany, its largest European market. The union wants the world’s biggest Internet retailer to adopt industry-wide wage agreements for employees in Germany, rather than using its own pay scale … In addition, the union wants Amazon’s Germany-based employees to be paid in line with the retail and mail-order sector, rather than the logistics sector."

Amazon has defended its pay policies and generally refused to negotiate with the German unions.

Published on: November 25, 2013

Ah, technology…

MNB reader Jim Van Gorkom wrote:

It’s just amazing how fast technology is changing the shopping experience. Your report that Macy’s will use your location in a store to send personalized offers to your smartphone reminded me of your November report about Tesco scanning your eyes to send personalized advertising. It’s not hard to envision walking through any store or shopping area being bombarded with offers and other information. Some people may like it. For others it will be information overload. We Boomers are all thinking, “Toto, we’re not in  Kansas anymore”.

Extra points for the movie reference.





BTW…speaking of movie references, thanks to all the folks who caught the Princess Bride and Trading Places call-outs last week.




On the subject of NYC raising the age at which you can buy tobacco products to 21, one MNB reader wrote:

I don't smoke and  don't know much about the price of cigarettes state to state, city to city  etc. [In Ohio a pack is between $5 and $6.]  But if a pack of cigarettes costs $10.50 in NYC I am sure those with higher incomes will easily find a way to buy their smokes  elsewhere.  With the resources to buy several cartons they will find it worth their while to make a trip outside the city to purchase their cigarettes and perhaps other things while they are there.   Commuters from Connecticut, New Jersey etc. will bring them in for their NYC resident co-workers.  The poor, however, will have to buy them one pack at a time in the city.   I hear there may also be Indian Reservations not far from NYC that sell tax free smokes…

While I find aspects of these new rules a little troubling - 18-year-olds can fight for their country, but not buy a beer or buy cigarettes - I refuse to bow to the economic argument. The moral argument here - that tobacco kills, that tobacco companies make money on death, and that such companies have traditionally lied in search of profits - is, in my view, incontrovertible.

From another reader:

Once again Mayor Bloomberg is overstepping his authority and prerogatives. People must be allowed to exercise their rights to make decisions for themselves even if they can be unhealthy. As a high school graduate in 1968 I could have served 2 tours in Viet Nam before I would have been allowed to vote, drink or even get married without the signature of my father. Incidentally, my dad had to sign for me as I was married at 20 yrs 4 months. Outrageous to think that we are going backwards in personal accountability. I hope these draconian exercises of power are abated by more clearly thought-out plans.




Along these same lines, one MNB reader wanted to address our story about how kids today are in worse physical condition than their parents were at their age:

I read this article and couldn't help being disappointed because it reminded me of the article I just read yesterday that said a Long Island NY elementary school banned the use of balls in the school even during recess because someone could get hurt.  I believe it also said the school frowned upon cartwheels and jumping jacks or somersaults, I can't remember which.  I couldn't believe that something this idiotic could actually stick.  The article said they weren't alone, meaning the school.

There are 2 major points in this that drive me nuts.

• The US is slowly becoming a nation of babies.  We are so afraid of hurting people and hurting people's feelings that we blind ourselves to the simple facts right in front of us.  Seriously, so what if your kid gets hit in the head from a ball, even if it's being mischievously thrown at them.  That's how you learn how to duck and how to deal with people that come after you.  We can't keep our children in bubbles and I won't keep mine in one.  We play outside as much as we can.  They trip and fall sometimes, and then they get up and play some more.  It's called resilience.  It's called drive.  It's called motivation to keep going.  It's what made America great.

• At a time when NYC seems to be going overboard with banning certain soda sizes under the premise that it's to help combat obesity, their suburbs are eliminating and restricting play time in the school yard.  I just don't understand where our minds are as a country.  Health Care costs are a huge issue, but rather than truly helping the problem, we put a Bandaid on it while also creating another law and another way to take freedom away from the healthy.  Talk about government being short sighted?  Simply put diet + exercise = good health.  Sure it's not going to save you from the reaper but it's the most basic equation to healthy living.

Instead of banning things for the whole population, we should be encouraging exercise and encouraging healthy eating in schools.  Instead of taking things away, give people the opportunity to do the right thing.  Give kids play time, heck, give grown ups play time.  Instead of charging people more for bad health care habits, give them something to make them healthier.  Give, instead of take.  Our leaders would be much better leaders if they realized this.

Published on: November 25, 2013

In Week 12 of the National Football League…

Minnesota 26
Green Bay 26

Carolina 20
Miami 16

Jacksonville 13
Houston 6

Pittsburgh 27
Cleveland 11

NY Jets 3
Baltimore 19

Dallas 24
NY Giants 21

Tennessee 23
Oakland 19

Indianapolis 11
Arizona 40

Chicago 21
St. Louis 42

San Diego 41
Kansas City 38

Tampa Bay 24
Detroit 21

Denver 31
New England 34

Published on: November 25, 2013

• RETAILER TO RETAILER tactical education sessions on Merchandising, Fresh Foods, Operations, Financial Controls, Digital Marketing and Store Management.

• EXPANDED EXPO FLOOR with more suppliers and pavilions in categories such as Produce, Meat, General Merchandise & Health Care, and Technology.

• OPENING GENERAL SESSION featuring Pulitzer-Prize winning journalist Bob Woodward.

• CHAIRMAN’S DINNER AND GALA with entertainment by award-winning country stars Thompson Square!

For more information please visit www.TheNGAShow.com .

Published on: November 25, 2013

Walmart announced this morning that Mike Duke, 63, is retiring from his job as CEO of the company, and will be succeeded by Doug McMillon, 47, who has been running Walmart's international business.

The change is scheduled to take place February 1. McMillon will be just the fifth CEO of the company founded by Sam Walton since it went public in 1970.

Duke will stay with Walmart as chairman of the executive committee. No replacement for McMillon in the international job has yet been named.

Bloomberg Businessweek writes that "McMillon, who first worked at Wal-Mart as a summer employee in 1984, will grab the reins as the retailer tries to restore U.S. sales growth with Amazon.com Inc. and dollar stores luring away its customers. Overseas, where McMillon was in charge, Wal-Mart has been accelerating its expansion in China and other emerging markets while probing allegations of bribery in Mexico and possible violations of the Foreign Corrupt Practices Act … The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores in the country. Federal and local government agencies in Mexico also are involved in investigations. Wal-Mart has said that it also has started inquiries into potential violations of the FCPA at operations in Brazil, India and China."

The Wall Street Journal reports that McMillon "has served on the board of Wal-Mart de Mexico since 2009 as the company has worked to deal with a federal investigation into possible violations of the Foreign Corrupt Practices Act in the country in the middle of the last decade. The company has said it is cooperating with the investigations by the Securities and Exchange Commission and Justice Department."


The Businessweek story notes that McMillon was one of three people in line for Duke's job, with one other prominent name being Bill Simon, who runs Walmart's US business. McMillon is said to be close to the Walton family, which may have tipped the scales in his favor, despite the cloud that seems to hanging over the company's international expansion efforts.

In a statement, Walmart's chairman, Rob Walton, said in part that, "a merchant at heart, Doug has both a long history with our company and a keen sense of where our customers globally are heading next."