business news in context, analysis with attitude

Published on: June 4, 2015

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

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

Regular MNB readers will know that I'm a huge fan of Jerry Seinfeld's web series, "Comedians In Cars Getting Coffee," which is yet another "show about nothing" that actually ends up being about an awful lot. Essentially, it has Jerry picking up some comedian in a car that he deems suitable to their personality, and then they drive to a coffee shop, where they drink coffee. And talk. And talk. And talk.

That's what I love about the show. It has comedians, who tend to be very observant, pretty smart and very fast on their feet, engaged in conversation ... almost all of which I find to be enlightening, often touching, and usually very, very funny. The website can be found here

In a New York Times piece about Seinfeld last weekend, the new show was described as "free-form conversations with peers and pals," and the story made the point that the show has "helped its creator fit into a post-Internet world and a popular culture that could have moved on without him."

While "Comedians In Cars Getting Coffee" episodes have been streamed close to 100 million times since the show's debut, the fact is that in some ways the content and form are counterintuitive. They tend to run 15-20 minutes apiece, longer than most web-centric video segments. While there are hot young comedians like Amy Schumer, there also are segments with people like Carl Reiner and Mel Brooks, for whom Seinfeld clearly has enormous affection.

And maybe that's the key to what really makes the enterprise work - Seinfeld is talking to people who interest him about a subject that he finds endlessly fascinating - the nature of humor, the structure of jokes, and the internal wiring of people who are funny for a living.

Jerry Seinfeld, who apparently knows a lot about how to put on a hit show, did it the first time with "Seinfeld," in which he flaunted the conventions of situation comedy to create a program about "nothing," and now he's doing it with a web series that once again challenges the traditions of the form (even though the form is so new that it hardly has had time to develop traditions).

In the Times interview, Seinfeld makes another important point about comedy and comedians - he believes that each one tends to walk a very singular road, and that there isn't all that much that one can learn about career development from others.

Which ultimately means, I think, that Jerry Seinfeld doesn't believe in formula ... which is why some of his friends tell the Times that there "is some irreducible part of him that craves reinvention and untried experiences," even as he "understands that retaining one’s cultural relevance is a continuing pursuit."

That's a good lesson for any business.

Or to put in a way that only Jerry Seinfeld could: "“The less you know about a field, the better your odds. Dumb boldness is the best way to approach a new challenge.”

In fact, there's absolutely nothing wrong with that.

It is what is on my mind this Thursday morning. As always, I want to know what is on your mind.

Published on: June 4, 2015

by Kevin Coupe

Advertising Age reports on a new study by PricewaterhouseCoopers saying that "spending on movie downloads and video streaming subscriptions in the U.S. will surpass purchases and rentals of DVDs for the first time this year."

According to the story, "Electronic home-video revenue will climb 13% to $9.5 billion this year, while physical sales drop to $7.8 billion, the consulting firm said. By 2017, the electronic revenue will reach $12 billion, at which point it will exceed the U.S. film box office."

Here's another fascinating projection about content consumption - that "music streaming ... will overtake the still relatively new business of digital purchases of songs by 2018."

In addition, "digital revenue will account for 45% of all spending on books by that date."

Wow.

Think about that for a second. Consumer behavior when it comes to content consumption is changing in fundamental ways - people are watching more movies at home than in the theaters (placing enormous challenges in front of theater chains, by the way), and shortly will be streaming more than watching DVDs...which is a relatively new business. Plus, they're streaming more than downloading, and soon, inevitably, will be buying more digital books than physical copies.

Anyone who thinks that their businesses may be immune from these kinds of shifts is kidding themselves.

This should be an Eye-Opener. To everyone.

Published on: June 4, 2015

Walmart announced this week a series of decisions designed to make its stores more employee-friendly, including adjusting the air conditioning in many stores to make them less cold, relaxing the dress code so that store employees can wear jeans or denim pants, and bringing back a music service that uses a DJ to play a variety of songs and not just the same Celine Dion and Justin Bieber albums that often play all day.

The New York Times writes that "the overtures - however small they seemed - are part of Walmart’s effort to project an image of a more caring employer." And they come in concert with pay increases for some half-million employees around the country.

The Times writes: "Long a target of protests over low wages and rigid work schedules, Walmart is appearing to appease employees in the face of rising competition to hire and retain workers as the job market rebounds. Other retail chains, like Ikea and Gap, have also started to offer higher wages for store employees.

"Walmart is also trying to cast off an image as an exploitative employer with an army of minimum-wage workers, some of whom reportedly depend on food stamps or other government aid. Now, after the latest wage increases, all Walmart workers make above the minimum wage, the retailer says. Walmart also is trying to improve customer service as it struggles with sluggish sales at its supercenters and neighborhood markets."

Walmart U.S. CEO Greg Foran, in a speech to about 3,000 employees who came to Bentonville for the company's annual shareholders meeting, said that "there is nothing I like better than hearing about your jobs, your ideas, your hopes and dreams, your frustrations and listening to how we can make your lives easier."

Walmart U.S. COO Judith McKenna added: "You told us we've made it harder for you to do what you do best, which is serving our customers. Your feedback is helping us understand how we support you better and remove the distractions that get in your way. Taking care of our customers begins with taking care of you. It's that simple. My commitment to you is that we will continue to listen, and, more importantly, act on what we hear."

The Fortune coverage of the meeting reports that Foran "will need to have these workers on side as he looks to build on the three straight quarters of comparable sales growth, a streak that started after nearly two years of stagnation. And more shoppers have been coming into stores for two quarters running. But the recovery is fragile, and Walmart knows it needs to keep improving customer service.

"Foran also talked about a new push he called the '10-feet rule.' Associates must greet customers and make eye contact when they are within 10 feet as a way to lift sales. He also announced an extension of a tactic implemented during the holiday season that called for all registers to be staffed at peak hours. Walmart will now keep more registers open during the busiest hours on weekends outside the Christmas period."

Published on: June 4, 2015

The Boston Globe reports that the Daily Table, a new grocery store created by Doug Rauch, the former president of Trader Joe’s, is scheduled to open its doors today. However, it isn't just a new grocery store - it is a store that "bills itself as the first not-for-profit grocery store in the country with a mission to provide nutritious and affordable meals for low-income families."

“Our job at Daily Table is to provide healthy meals that are no more expensive than what people are already buying,” Rauch tells the Globe. “We’re trying to reach a segment of the population that is hard to reach. It’s the working poor who are out buying food, but who can’t afford the food they should be eating.”

Rauch says that his goal is to break even. “That would be fantastic," he says.

According to the story, the store is sourcing products from a wide variety of places that would be sending it to the dump - it isn't bad food, or out-of-date food, but just food that they don't want to sell anymore. You can learn more about the sourcing process - and challenges - by clicking here.

The story notes that "one in six Americans, or roughly 49 million people, are 'food insecure,' defined as lacking reliable access to healthy and affordable food, according to Feeding America, a national nonprofit network of food banks. Poor access to nutritious food can lead to a number of health issues, from obesity to diabetes, as consumers opt for cheaper options, such as fast-food or other overly processed meals ... At the same time, the Natural Resources Defense Council estimates that 40 percent of the food produced in the United States is wasted every year."

Published on: June 4, 2015

The New York Times reports that Tesco plans "to introduce a pilot scheme at 10 of its UK stores to give away each day's unsold food to charities such as women's refuge centres and children's breakfast clubs" as a way dealing with the "30,000 tonnes of perishable food such as bread, fruit, vegetables and sandwiches" that have been thrown out just by its stores over the past year.

However, the Times also points out that this is not exactly innovative thinking: "British rivals Sainsbury's and Morrisons already run similar schemes. Sainsbury's has a network of over 300 stores connected to local charities making food collections." And Tesco's Irish division already has a similar program.

Published on: June 4, 2015

The Associated Press reports that Taco Bell is going to serve beer, wine and what it calls "mixed alcohol freezes" at a new store it plans to open in the Chicago area later this year.

The move, the story says, "is an additional sign that Taco Bell is working to shed its fast-food image and appeal to millennials, who marketers say prefer places and products that seem less standardized and more authentic." However, Taco Bell is saying at least for the moment that this is a one-shot, with no plans to rollout the program to other locations around the country ... though it has already tested the concept in South Korea, Japan and the UK.

Published on: June 4, 2015

USA Today reports that "the first 7-Eleven in a U.S. airport opened in the pre-security/arrivals area of the Tom Bradley International Terminal at LAX ... Open from 6 a.m. to midnight and designed to serve departing and arriving passengers as well as airport employees and all the people who come to the airport to meet and greet passengers, the 950-square-foot shop is stocked with magazines and newspapers, travel-size personal care products and a variety of over-the-counter medicines for motion sickness and other ailments."

The story says that the store also stocks a variety of food and drink products, ranging from pizza to Big Gulps, tacos to sandwiches, and even Dodger Dogs.

The move seems to be part of a broader strategic move: "A 7-Eleven is scheduled to open post-security in Terminal A at Dallas/Fort Worth International Airport this fall and another in DFW Terminal E sometime in the future."

The concept of airport terminal 7-Elevens has been used in 12 other countries, including Canada.

Published on: June 4, 2015

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

• The Tampa Bay Business Journal reports that a Publix employee in Tallahassee has launched "an online petition on Coworker.org to allow Publix employees to have beards. As of Tuesday afternoon, more than 6,700 people had signed the petition."

"I believe that the majority of the people I work with at Publix also believe that we should be allowed to have some facial hair besides only a mustache," Brandon Wesley wrote in his petition. "We should be allowed to have a beard, with limitations on how long it can be and a beard net for the employees who work with food."

The Business Journal quotes Publix spokesman Brian West responding to the petition:

"As a food manufacturer and retailer, hair presents challenges. In limited work areas, facial hair is allowed and we require all associates to wear beard guards and/or hairnets to help prevent product contamination. We do operate three Publix GreenWise Markets. In these stores, we tested customer offerings and associate appearance guidelines, including uniforms and grooming standards. While not every test was successfully rolled out companywide, these tests did provide important learnings. We continuously re-evaluate our policies to ensure that we are able to carry out the policies in our more than 1,100 store locations."

In other words, Brandon, it may be too soon to throw out your razor...

Published on: June 4, 2015

• The Financial Times reports that four years after Walmart's purchase of a controlling stake in Massmart, the South African retailer that it hoped to use to propel it to significant growth on that continent, Kenya has proven to be a particularly tough nut to crack.

According to the story, "The US retail giant has spent the past few years trying — and failing — to crack the east African hub, whose growth is fuelled by aspirational consumption ... Although Kenya is richly coveted by retailers and the foreign investors who back them, entry into the sector is notoriously difficult, thanks to a series of tightly held family-owned supermarket chains and a dearth of affordable space."

FT goes on: "Massmart’s chain Game already has 172 other outlets in 11 African countries, but Kenya has long been the prize beyond its reach. It is also a potential pathway for expanding Walmart’s existing presence in east Africa, a region of 240m people.

"At $53bn, Kenya’s economy is far smaller than Nigeria’s $509bn economy — Africa’s largest — where Game already has stores. But it holds the retail crown for the continent. While only 5 per cent of Nigeria’s retail sector consists of formal shopping, rather than open-air markets and small kiosks, in Kenya the proportion is 30 per cent."

Published on: June 4, 2015

Regarding my belief that increased wages can result in a more motivated, productive and invested workforce - a notion with which some MNB readers disagree - one MNB user wrote:

You’re not smoking anything. Being in favor of a higher minimum wage proves that you have good business sense and that you were just raised to have empathy, also good for business. Both do not have to be mutually exclusive, which is where most people go off track.



On another subject, one MNB user wrote:

Interesting story about Wal-Mart wanting to take on HEB in San Antonio.  That is a battle that has gone on for over 20 years, and I have not seen a single victory for Wal-Mart yet.  In Houston, HEB is priced lower than Wal-Mart across the board and provides a great shopping experience with excellent service.  As you often point out, a retailer needs to have a point of difference.  Wal-Mart has none in markets where HEB operates once Wal-Mart loses the price battle.  I have seen no indication that Wal-Mart possesses the operational talent to be a competitive winner in San Antonio or Houston.  Wal-Mart’s only attribute seems to be that they can open a lot of stores.

If I had to place a bet, I'd bet on HEB. Always.




On the subject of the proposed merger of Ahold and Delhaize - which I've suggested seems more focused on efficiency than effectiveness - MNB reader Tom Murphy wrote:

Over the years, I have been involved in a lot of M&A efforts, some small (125 stores from ABS to Save Mart), some large (Kroger acquiring Fred Meyer), and some international (FedEx acquiring Flying Tiger and multiple European companies) ... I am always amazed by three things:

The executives usually pop the champagne corks and sing Kumbaya when the paperwork is signed with little idea of how to accomplish what they have signed for and little realization that the easy, 1% of the effort has just been accomplished.

Executives always see financial synergies, as you noted – concentrating of savings, not growth & opportunities – maybe because they think that is the quick way to appease shareholders.

And finally, probably most importantly, executives fail to understand that success is all about cultural integration – “culture eats strategy for lunch.” (Jack Welch said that, I believe.)
 
In every M&A, when these thoughts have been shared, the executive response is generally…”but we are different”!  Any wonder that more than 60% of all M&A’s fail to achieve their stated objectives!

From another reader:

Totally with you on your comments about this merger and nothing be said about learning etc. from each other.

If this happens I wonder what will happen to Ahold’s new small format Everything Fresh. The first store in Philly is great. Downtown, lots of fresh vegetables, homeopathic remedies, even hardware…in a 3,000 sq. foot store. I’ve been in several times, it’s always busy with a lot of young shoppers. Good Energy, enthusiastic employees. They have more planned. But I wonder if this merger goes through….everything may just stop while the executives figure what should stay and what should go.

It would be shame to see this promising start…stop.

It would.




On the subject of yesterday's "Eye-Opener" about an interview on "The Daily Show" with retired Gen. Stanley McChrystal, one MNB user wrote:

You shared some fascinating insights from Gen. Stanley McChrystal from his new book, "Team of Teams: New Rules of Engagement in a Complex World." On the one hand, it was nice to see a military leader who "gets it"...a forward-thinking leader who is much more reassuring and visionary when it comes to an ISIS strategy than anything we hear out of our President or either political party. On the other hand, I was disheartened when I re-read your eye-opener and realized (I think I already knew it) that Gen. McChrystal is retired. 

From what I understand Gen. McChrystal was basically forced out after some unflattering comments he made came to light. However, I sure hope that the US military practices practices effective succession planning for the next generation of military leaders because we need more like Gen. McChrystal to face today's complex challenges from ISIS, Iran, N. Korea, etc. Or at the very least, I hope that the current military leadership (including our Commander in Chief) is listening to the valuable advice of Gen. McChrystal and putting him on the military equivalent of their Board of Directors. Whether it's the military or in business, don't cast off and dismiss the wisdom of great leaders after they retire.  I think there is another business lesson in there somewhere!

There is.

I have no idea whether the Obama administration uses McChrystal as a sounding board or not ... but I agree that it should.

For the record, McChrystal resigned after being quoted in a magazine article as being disappointed in the Obama administration's national security team. Whether you agree with Obama's policies or not, he is the Commander in Chief, and McChrystal acknowledged that his comments reflected "poor judgment and should never have happened. Throughout my career, I have lived by the principles of personal honor and professional integrity. What is reflected in this article falls far short of that standard."

Ironically, of course, he was succeeded in his role by Gen. David Petraeus, who later resigned from the Army to become CIA Director ... and then had to resign from that job after it became public that he'd had an affair with his biographer; later, he pled guilty to a misdemeanor charge of mishandling classified information.

My general (no pun intended) feeling is that while maybe these guys deserved to be taken out to the woodshed, they also probably deserved to be allowed to come back. (That would be the case whether the officer in question had criticized a Republican or Democratic president.) Then again, I'm not the best judge of issues of military discipline, seeing that everything I know about it I learned from The Caine Mutiny and A Few Good Men.

From another reader on the same subject:

It struck me immediately that Gen McChrystal’s diagram reflected the situation of the American Revolution; the British troops were the regimented, the colonists were the disorganized guerrilla force. How far we’ve come in two centuries to be the ones trapped in the past.