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    Published on: January 21, 2014

    by Michael Sansolo

    My local all-news radio station had an interesting interview last week with Dr. John Foreyt of Baylor University that included a startling revelation: The only way to lose weight is to eat fewer calories.

    Forget the low-carbs, the Paleo diet and all that other stuff. Simply eat fewer calories and, oh yes, get a little exercise too. Start with walking.

    Now we all know that isn’t startling information at all. It’s the simple truth that, if followed, puts a quick end the world of Newest, Greatest Diets! But my favorite line from the interview can at the end, when Foreyt, who studies behavioral medicine, offered the simplest truth of all.

    “If it were easy, I think, everyone would be skinny. So it’s not easy.”

    That’s a basic truth for everything in life and business, and things only seem to be getting harder. Take for example one story from MNB last week.

    Giant Food caught flack in Washington, DC, for running an ad targeted at the returning students of Howard University. The problem was the picture accompanying the ad: a smiling white woman. Howard’s student population is more than 85% African-American.

    As one student said: "A simple Google search would show Howard is an HBCU."

    I’m betting a lot of you stopped on that sentence and thought like I did: what the hell is an HBCU?

    Thankfully, the student explained: historically black colleges and universities. The acronym makes sense, but it reminds me that no matter how much I read or view, there is always so much more I don’t know.

    I’m thinking I am not alone on that either.

    Which is why the mistake Giant made is such a good topic for discussion at every company. The truth is, we simply don’t know an awful lot.

    At last week’s FMI Midwinter Conference, Jason Dorsey spoke about the challenges of both serving and employing Generation Y, when most members of the group frustrate and annoy their Baby Boomer bosses and parents. Some of his advice is incredibly simple and yet, it will challenge many of us.

    For instance, the best way to talk to Gen Y is text. E-mail is far less urgent and e-mail won’t work at all unless the subject line is compelling. Even an e-mail to your staff or the latest edition of MNB doesn’t get read if the subject line isn’t interesting. (Okay, MNB is always interesting.) Sounds irritating, of course, but the truth isn’t always easy to handle.

    Dorsey also reminded the group that Gen Y is the most diverse ever, yet most advertising either misses that point or panders. I think he’s got a point.

    Reading through my local newspaper, the Washington Post, I noticed that most ads feature white men, women and children. That’s a mistake I thought, until it occurred to me that probably no member of Gen Y is reading the Post, so how could they get offended. In fact, most newspapers and magazines would love it if Gen Y got offended because it would mean they are actually reading newspapers and magazines.

    Yet most other ads I see on television or the Internet are similar or feature clusters of “friends” that seem magically mixed from a census study. When an ad seems to make a sincere attempt at diversity - think of the Cheerio’s ad featuring a mixed race couple - the Internet lights up with controversy.

    Which takes us right back to Dr. Foreyt’s point: this stuff is hard. Whether it’s losing weight or marketing to today’s population. Getting it right on subject lines for e-mails or the racial mix of models in ads is endlessly complex and someone is always ready to criticize.

    But, of course, if it were easy, we’d all have done it already and we’d be skinny. It never, ever gets easy and that’s good. Because as they remind us in A League of Their Own, “it’s the hard that makes it great. If it were easy, everyone would do it.”

    Michael Sansolo can be reached via email at . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: January 21, 2014

    by Kevin Coupe

    Among the things that I love finding for this space are instances when fundamental changes take place in industries … changes that perhaps might not even have been expected just a few years ago.

    Just such a case has been highlighted by the Los Angeles Times, which reports that Paramount Pictures has informed theater owners around the US that Anchorman 2: The Legend Continues was the last movie that it will release in 35-millimeter film. The Wolf of Wall Street, the studio's holiday release, was released only in digital format.

    The story notes that "Paramount’s move comes nearly a decade after studios began working with exhibitors to help finance the replacement of film projectors with digital systems, which substantially reduce the cost of delivering movie prints to theaters.
    In addition to relying on digital hard drives, theaters are installing satellite systems to digitally beam movies into cinemas. That could significantly lower the cost of delivering a single print, to less than $100 from as much $2,000.

    "Digital technology also enables cinemas to screen higher-priced 3-D films and makes it easier for them to book and program entertainment. As a result, large chains have moved quickly to embrace digital technology: Ninety-two percent of 40,045 screens in the U.S. have converted to digital, according to the National Assn. of Theatre Owners."

    Of course, this means that eight percent of the nation's theaters now cannot show Paramount films. (This means, for example, that they can't show any new Star Trek movies.)

    The Paramount decision is seen as significant because it now seems more likely that other studios will do the same thing, now that Paramount has given them cover. Some are suggesting that by 2015, film - at least when it comes to major releases - will be a thing of the past.

    The Times notes that there is a certain irony about the timing, since Martin Scorsese, director of The Wolf of Wall Street, has been an enormous advocate for film preservation … and now, it is his movie that is blazing the all-digital trail.

    The central business lesson here, it seems to me, is the importance of recognizing that technology was changing what many would have seen as one of the industry's core values, and then embracing that change with investment dollars. It ends up that film is not what makes film special … and that content may be more important than delivery systems. What makes movies like Philomena, Inside Llewyn Davis, and Nebraska special is not how they are projected on the screen, but the direction and the writing and the performances and the music and all the other work that goes into crafting such works of art.

    But one other point. This shift works against small independent theater owners, which are less able than the big chains to convert to new technologies. And I can tell you that more often than not, I will drive past a dozen or more movie screens to go to the great Loew's/AMC multiplex in Port Chester, NY, which is the best place in the region to see movies. But … I also can tell you that there are weekends where we will go to the Garden Cinema, in Norwalk, CT, a smaller, dingier theater where old-fashioned film projectors are still used … and we go there because the Garden generally has smaller, more specialized releases that don't do enough business to be interesting to the bigger guys.

    Content matters. Having a differential advantage matters.

    That's the real lesson that every business needs to remember.

    It is an Eye-Opener.
    KC's View:

    Published on: January 21, 2014

    An update on the Target credit/debit card breach, in which the personal and credit information of tens of millions of shoppers was obtained by hackers…

    • The New York Times this morning reports that "account information stolen during the Target security breach is now being divided up and sold off regionally," with two Mexican citizens being arrested at the border when they were found to have 96 fraudulent cards.

    The couple reportedly had used the cards to purchase products at stores like Walmart and Best Buy.

    Bloomberg reports that Target is now saying that the breach also may have affected some of its Canadian shoppers, though at this point, the retailer says, it appears to be a "small number" of its "guests" north of the border.

    The story notes that Canada currently is the only foreign country in which Target operates, having started opening stores there just last year.
    KC's View:
    There is a lot here for Target to be worried about, but one of the things that would really concern me is the Associated Press story the other day suggesting that even an email that Target sent out to shoppers last week was viewed with some suspicion by people who worried that it was yet another scam attempt.

    The email was not very reassuring; many people saw it as looking like a boilerplate response to questions about what to do after a data breach. And, in fact, there reportedly have been some emails sent out by scammers looking to take advantage of consumer uncertainty. But there apparently have been a number of people - like me - who questioned why they were receiving emails from Target when they hadn't shopped at one of its stores in years.

    The AP story notes that consumers have "been warned to be on alert for possible follow-up attacks that could come in the form of phishing emails, electronic messages designed to implant malicious software on their computers or draw them to websites that prompt them to enter personal information."

    It seems to me that Target should be very concerned that this whole incident will cause shoppers to go elsewhere, simply because they don't trust Target anymore.

    Published on: January 21, 2014

    The New York Times has a story this morning about pasture-raised pork is increasing in popularity, as "consumers are increasingly aware of and concerned about the conditions under which livestock is raised, and somewhat more willing to pay higher prices for meat certified to have come from animals that were humanely raised."

    The number of "pigs on hoof" is still said to relatively small, compared to the number being raised in barons and confinement stalls. But consumer concerns have translated into special interest pressures on suppliers and restaurants to change their approach to raising pigs. (Or maybe special interest pressures have translated into consumer concerns. It doesn't really matter to the pigs.)

    According to the story, "Big food businesses from McDonald’s to Oscar Mayer and Safeway have promised to stop selling pork from pigs raised in crates over the next decade. Smithfield Farms, one of the country’s largest pork processors, announced this month that it was encouraging all contractors raising hogs on its behalf to move to the use of group pens, which have to be big enough for several pigs to live in comfortably, with space to walk around and bed down."

    There are, of course, potential problems. The Times writes:

    "The big pork producers raise several concerns about the growing number of pastured pigs, including potential health problems from exposure to the elements and the increased risk of diseases like trichinosis.

    "Farmers raising pastured pigs acknowledge that pigs raised outdoors have a higher risk of coming into contact with rodents and other animals that carry the pathogen for trichinosis (one of Wilbur’s closest friends in 'Charlotte’s Web' was Templeton the rat).

    "That said, the number of cases of trichinosis in the United States has plummeted as the number of pastured pigs has increased, with most cases attributable to consumption of meat from other wild animals like bears. According to the Centers for Disease Control and Prevention, of the 10 cases of trichinosis attributed to pork products from 2002 to 2007, seven were linked to commercially raised pigs and two to 'wild boar meat.' The centers could not link one case to either commercial or pastured pigs."
    KC's View:
    First of all, you have to love a new story that uses "Charlotte's Web" as a cultural reference. It just doesn't get any better than that.

    Ironically, Jon Stewart made the same reference on last night's "Daily Show," in a very funny segment about a different pig-related issue - a porcine diarrhea epidemic that threatens Super Bowl bacon stockpiles. (You can check it out here.

    The bigger lesson here is that many consumers do think about these issues. They may not be willing or able to pay more for ethically raised products, but the issues are on their minds. And suppliers and retailers need to think about the raised consciousness that shoppers have about these issues.

    Published on: January 21, 2014

    The Chicago Tribune reports this morning that 7-Eleven is banking on consumers' desire for fresher convenience foods as it "ups its fresh food offerings, including a push toward more healthy snacks. With more consumers willing to pop in to a convenience store for a quick meal, 7-Eleven is aiming to build a name for itself in the competitive sector, much as Starbucks and Walgreens have made bigger pushes into food. What's more, officials say food sales are helping offset sagging tobacco sales."

    Among the offerings: Pillsbury cinnamon rolls, mozzarella sticks, a $1 chicken biscuit sandwich, hash brown bites, chicken with Sriracha sandwiches on a pretzel bun, a better quality pizza, and an egg white sandwich.

    According to the story, "Officials say they're pleased with the results. Same-store fresh food sales grew by 11 percent from 2009 to 2013. Overall, during the same period, fresh food sales grew 58 percent, largely because of the chain's growth."
    KC's View:
    This has been true for years … that convenience stores no longer can depend on tobacco and beef jerky sales to drive profits and growth. And while 7-Eleven is getting into the act, there have been other companies - like Sheetz and Wawa - that have been aggressively working the fresh foods field for years.

    Published on: January 21, 2014

    Reuters reports that "the Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment came in at 80.4, down from 82.5 in December." The number seems to weighed down, the story suggests, "by lowered expectations among lower- and middle-income families," which are concerned "about lackluster growth in employment and income, and anticipated less improvement in long-term prospects for the economy."
    KC's View:
    I have to wonder if the lowered expectations among lower and middle class families have something to do with all the stories being dedicated to income disparity in the US and throughout the globe.

    There is a story in the Los Angeles Times this morning that says that "the 85 richest people on Earth now have the same amount of wealth as the bottom half of the global population, according to a report released Monday by the British humanitarian group Oxfam International."

    It would be completely natural for a lot of people to read that and feel lowered expectations because they sense that the deck is stacked against them. And I continue to feel like this is going to be an enormous public policy debate, especially as we move into mid-term elections later this year and a presidential election in 2016.

    Published on: January 21, 2014

    CNBC had an interview with Thomas Stemberg, co-founder of Staples, in which he advised retailers about how to do battle with Amazon: "You have to go down there and fight in the trenches." He argues that retailers have use low prices as their best weapon, suggesting that when Amazon has to collect sales taxes around the country, it will level the playing field in a way that will hurt Amazon and help competitors.

    Stemberg also tells CNBC that "the big issue here is that Amazon is selling products at margins that are not sustainable. And for the longest period of time, they've been able to convince Wall Street—'Trust us, we'll make money some day.' At some point in time, there's a day of reckoning."
    KC's View:
    First of all, let me make something clear. I'm aware of how accomplished Tom Stemberg is. He created Staples. All I've done is create MNB.

    But … if the CNBC story accurately reflects his views, I'm afraid I disagree with him.

    Sure, pricing is important. But I feel strongly that most retailers are going to have to find and exploit differential advantages that have nothing to do with price if they are to compete with entities like Amazon. (By the way…this is what Staples appears to be doing.)

    I'm not persuaded that the sales tax issue is going to be significant. That's not been Amazon's experience, for the most part.

    And finally, Amazon has profits. It just invests them in growth, in laying the infrastructure that essentially raises the bar on service and value and availability, making it harder and harder for other companies to compete with them effectively. That's different from not making money. I suppose there will come a point when it cannot do that anymore, but in the fast-evolving 21st century economy, that point may not be now.

    Published on: January 21, 2014

    Interesting story in the New York Times the other day about how Johnson & Johnson has changed its Baby Shampoo formula so that it no longer contains "two potentially harmful chemicals, formaldehyde and 1,4-dioxane, that have come under increasing scrutiny by consumers and environmental groups."

    This move, the Times writes, "is the first step in a companywide effort to remove an array of increasingly unpopular chemicals from its personal care products, and is the biggest yet by a major consumer products manufacturer … In doing so, the company is navigating a precarious path, investing tens of millions of dollars to remove the chemicals while at the same time insisting that they are safe."

    The response highlights "a fundamental shift in consumer behavior," the Times writes, "as an increasingly informed public demands that companies be more responsive to their concerns, especially when it comes to the ingredients in their products." These demands are being felt not just by manufacturers, but also by retailers that sell such products and are being targeted by special interest groups.
    KC's View:
    Just another example of how consciousness raising affects the transaction of commerce.

    I only hope that the elimination of these two chemicals doesn't affect the efficacy of the shampoo, which J&J assures us it won't.

    I have some self-interest here. In fact, I've used Johnson's Baby Shampoo on my own hair every morning for the past 40+ years. I'm not saying that there's necessarily a connection, but of my two brothers and my father, I'm the only one with a full head of hair. And at this point, I'm not changing - it may be more superstition than science, but if it ain't broke, don't fix it.

    Published on: January 21, 2014

    The Packer reports that "the number of U.S. households saying they’ve purchased blueberries within the past month — 69% — has nearly doubled since 2008, according to research sponsored by the U.S. Highbush Blueberry Council. Americans are also nearly twice as likely to buy blueberries now as nine years ago, Hebert Research found in its May survey of 3,765 primary household shoppers."
    KC's View:

    Published on: January 21, 2014

    I used yesterday's "Eye-Opener" section to highlight a series of stories yesterday about what I see as a fast-changing retail dynamic in which competitors must constantly be considering the big idea, looking for the big opportunity, and being far more targeted and precise in how they define themselves.

    To which MNB reader Alison Kenney Paul responded:

    I read your ‘eye opener’ this morning and couldn’t agree more…..having spent last week speaking and learning at the National Retail Federation ‘Big Show’ in NY, it is clear to me that Retail is in the midst of a massive transformation… A transformation that has been underway, but somewhat ignored, by many ‘brick and mortar’ retailers over the last 10 years.  The answer to this sea change?  You, or more precisely, Steve Jobs, said it….Innovation is the key to the future (and survival!) and without it, many retailers, in fact, many businesses, could be the next buggy whip shop.

    But chasing one’s tail and trying to do what every other ‘innovator’ is doing won’t work….retailers need to look deep inside – understand their brand essence, their differentiator, and yes, their customer, and tack toward that ‘north star’….sounds simple…and it might be….but that does not mean it’s easy.

    Today’s ‘Eye Opener’ nailed it Kevin….well done!

    Thanks, Alison.

    BTW…you get extra credit for making a movie reference (though I'm not sure if you did it on purpose). It was the movie Other People's Money where Danny DeVito's character asked the question: Does it matter if you are the world's best buggy whip manufacturer in a world that no longer needs buggy whips?

    We reported yesterday about Amazon's new patent on "anticipatory shipping" software: Amazon reportedly has filed for and received a patent for a process that would allow it to use a number of factors - ranging from what products a person is looking at online and how often, what products the person has searched for and purchased in the past - to figure out what needs to be positioned in locations that will enable it to get things to customers more efficiently and less expensively. This could mean getting appropriate products to the warehouses it is building all over the country, or even, in the most extreme and predictable cases, onto trucks with labels attached, just waiting for someone to click "buy."

    MNB user Marty Ramos wrote:

    Hmm….Amazon patents anticipatory shipping…or per WSJ, “Amazon Wants to Ship Your Package Before You Buy It”…isn’t this just moving product to their local “store” based on historical demand such that it’s “on the shelf” when a customer wants it?, i.e. demand driven supply chain?

    MNB user Mike Franklin wrote:

    So…each morning, I pour my cup of coffee and go to the front door to collect all the packages of things I wanted to buy that day. Awesome! What happens to this system when I buy only from local crafts people?

    You have to anticipate your own needs. Like the old days.
    KC's View: