business news in context, analysis with attitude

Published on: September 25, 2015

by Kevin Coupe

It was just yesterday that I noted that a comment by Walmart CEO Doug McMillon - "there are no cash registers in the home office" - made me think about the legendary Feargal Quinn, who used to insist that his Superquinn head offices in Ireland be thought of and referred to as "the support office," because the stores are where the action is.

So it was ironic to see a column in Ireland's Independent yesterday, authored by Feargal Quinn, in which he answers questions by Irish consumers. (Quinn now serves as a Senator in Ireland's Seanad Éireann.)

Superquinn was sold by the Quinn family to an investment group in 2005, which then sold it to Musgrave Group in 2011. The Superquinn name has been taken down as Musgrave rebranded the stores under the Supervalu banner ... and a reader wanted to know how Quinn felt about this.

"We are now in a different era and change is always inevitable so while it would be great to still have the Superquinn name in the marketplace, we also have to be realistic and recognise that a brand name is only exactly that, a name," Quinn writes. "The Superquinn philosophy and culture lives on among the many staff who continue with the new owners and the thousands of customers who still remember what Superquinn was."

But perhaps even more importantly, Quinn offers his perspective on what makes for great customer service ... and anyone in the customer service business should take notice:

"Much of our success in Superquinn in gaining a global reputation was driven by staying very close to our customers, understanding their needs and reacting with simple solutions which made a real difference to their shopping experience," he writes.

"I like to divide customer service into two different parts. There is the overt service of greeting and wishing the customer farewell and use of lots of tangible and verbal ways to deliver that service.

"There is also silent service, which is more about having the correct things in place and ensure that the customers shopping experience is pleasant i.e. they can get a parking space, there are no big long queues etc.

"The second, and equally important, element will be that you create the correct culture within your business ... The culture extends way beyond empowerment, and it is about you as owner of the business making staff feel special, recognising important milestones in their work and personal lives and generally recognising that a motivated team will tend to deliver world-class service without too much prompting or managing.

"Finally, as you know during my time in Superquinn I spent lots of time at the back of the checkouts packing bags. I didn't pack any bags better than anyone else but it sent a signal right through the organisation that customer service was critically important to me and this set the tone for our managers and staff. Leading by example should certainly be high on your agenda."

As always, from the iconic Feargal Quinn ... an Eye-Opener.

Published on: September 25, 2015

Haggen, which has faced myriad problems in what now seems like an ill-advised effort to grow virtually overnight from 18 stores to 164, said late yesterday that it plans "to exit from the Pacific Southwest market and realign its operations around 37 core stores and one stand-alone pharmacy in the Pacific Northwest as part of the Chapter 11 process."

The company said that it has asked "the Bankruptcy Court for approval to conduct Store Closing Sales. All employees of the non-core stores and the Pacific Southwest support office will receive 60 day notice of the pending store and office closures. During this process, all stores will remain open. Employees will continue to receive their pay and benefits through the normal course of business as previously approved by the court."

The announcement went on to say that "as part of its previously announced plan to right-size the Company, Sagent Advisors, LLC has been actively working to explore market interest for its store locations in California, Arizona, Oregon, Washington and Nevada." Sagent Advisors, it has been noted here and elsewhere, is the same company that worked on Haggen's sale to the Comvest private equity group in 2011, and Haggen's acquisition of 146 stores made available when Albertsons bought Safeway and the Federal Trade Commission (FTC) deemed that stores had to be sold for competitive reasons.

Haggen said that the core stores that will remain "include 16 of Haggen’s historical stores, one stand alone pharmacy and 21 stores acquired in the 2015 Albertson’s transaction. Haggen’s historical stores have seen strong sales growth over the past year. The 21 newly-acquired stores have proven successful under the Haggen banner and the Company anticipates they will continue to see increased customer counts and sales growth as Haggen continues its original mission of adding more fresh, local, and exclusive items to these new stores and expanding on its successful Pacific Northwest strategy."

The Seattle Times writes this morning that "California will bear the brunt of the closings, but 14 stores in Washington are on the list, mostly former Albertsons and Safeways in the Puget Sound region. Haggen said in court filings that no third party is likely to make an offer for these stores. A terse memo given to employees of the Haggen store in Shoreline on Thursday afternoon said that 'this store is not part of the ongoing business model,' and that it’s expected to close around Nov. 24. A store employee said the memo was read 'verbatim, no emotion, no apology'."

And, the Times goes on: "Haggen wants to begin closing the stores as soon as possible because right now those locations are collectively losing $400,000 a day, it said in court documents. The closures would save it nearly $60 million for the remainder of the year. The liquidation, which involves the sale of all inventory, property and furnishings in the stores, would raise $125.6 million, 'a necessary and significant cash infusion' as it struggles to pay its debt."

Published on: September 25, 2015

The Huffington Post reports that nine companies - including Walmart, Starbucks, Nike, Goldman Sachs and Johnson & Johnson - said this week that they have "committed to using 100 percent renewable energy, with several expecting to reach their goals within the next decade."

According to the story, "That these Fortune 500 firms have thrown their significant weight behind RE100, a global campaign to cut down on CO2 emissions by turning to renewable sources of energy, suggests a major shift in corporations' awareness of their responsibility to lead their respective industries away from carbon.

"And companies are realizing the business boost gained by placing financial incentives on themselves to use renewable sources. A recent report by the environmental nonprofit CDP, which organizes RE100 in partnership with The Climate Group, found that the number of companies putting a price on their carbon emissions has tripled since last year."

Published on: September 25, 2015

Market research publisher Packaged Fact is out with a new report saying that "social media marketing strategies are an undeniable force in today's world, and retail food industry must make social platforms a part of their marketing strategy. But rather than being a mere presence, they must actively engage followers." Especially men.

According to the report, "Almost inherently, social media is far more likely to influence Millennials' grocery purchase decisions. The generation has grown up on social media and continues to be ahead of the curve in using this media and adopting new social media platforms. A closer look at the Millennial age group shows that social media is particularly influential among men, $50K+ household income adults, and those who are married with kids."

The research shows that "Millennial men emerge as 165% more likely than average to say social media advertising from supermarkets influenced their decision to buy a food/grocery product in last 12 months, followed closely by social media posts from friends/family, and social media post from supermarkets.  Similarly, middle-aged men skew higher in allowing social media to influence their buying habits. While women are often thought of as the social media mavens, it's clear that men are prime targets for social media advertising."

The report goes on: "Millennial dads in particular are exhibiting behaviors that are a significant departure from previous generations. While younger men are certainly shopping more than their older counterparts, being a parent is a key driver in their likelihood to grocery shop. Millennials dads are significantly more likely than the average to shop for groceries 4+ times a week. And frequent social media posts are effective in influencing Millennials who are married with kids to purchase food/grocery products. When considering these facts in tandem, it is clear that supermarkets can leverage social media to influence the Millennial dad."

Published on: September 25, 2015

• Time reports that "Wal-Mart wants to leverage the falling price of the yuan to get its products on the cheap. The retail giant is asking for price cuts from its suppliers that have production facilities in China. If Wal-Mart gets its way, the cost cuts, in the range of 2% to 6%, will affect home furnishings, electronics, apparel appliances and other merchandise. It’s unclear whether the cuts would lead to cheaper prices for consumers, though they would likely help Wal-Mart at least maintain its generally low price points."

Published on: September 25, 2015

• The Los Angeles Times reports on how Costco's approach to offering free samples is an example of "a particularly effective technique to get shoppers to try something new, especially a food product they might not usually buy," with the added bonus that "retailers that offer free samples, such as Trader Joe's or Sam's Club, seem more generous or consumer-centric."

Of course, it has to be managed: "Just how out of hand free samples can get was shown this week when a 78-year-old shopper said he was punched in the face after confronting a 24-year-old man about taking too many Nutella samples at a Burbank Costco."

Published on: September 25, 2015

• Kroger said yesterday that Scot Hendricks, vice president of operations for the company's Cincinnati/Dayton division, has been promoted to the presidency of its delta division, based in Memphis and overseeing stores in western Tennessee, Kentucky, Mississippi, Arkansas and Missouri.

Hendricks succeeds Tim Brown, recently named president of Kroger's Cincinnati/Dayton division.


• In Minnesota, the Star Tribune reports that Target Corp. has hired Anu Gupta for the new position of senior vice president of operational excellence, charged with working "to improve its operations, such as keeping shelves stocked and simplifying its processes."

Gupta "joins Target from private equity investment firm Hellman & Friedman, where she was a senior operating executive in charge of improving productivity and business processes," the story says, adding that previously, "she was vice president for process and profit improvement at Michaels, the arts and crafts retailer, from 2008 to 2013 and held a leadership role at grocery chain Safeway for three years before that."

Published on: September 25, 2015

Got the following email from MNB fave Glen Terbeek, responding to yesterday's references to Feargal Quinn and Doug McMillon's saying that there are no cash registers at headquarters:

I have always wondered why retailers' merchants (category managers, or what ever) are located together in a head office, often connected to the DC, rather than spread across the chain in the stores, closer to the shoppers and the marketplace.  What is more important, buying and logistics or selling?

Can you imagine the merchants being able to walk past their sections daily to see what is happening?  Or can you see part of each vendor meeting being held on the store floor in front of the category being managed looking at the planogram, shopper reaction, etc?

Of course big chains should have merchants for each market definition for the category ( I e, there might be 5 or 6 market definitions for a category across the chain based on the stores' markets defined by shoppers and competitors) 

This is now very possible with today’s technology available.  The "demand chain" can and should be more decentralized closer to the action, while the "supply chain"  should continue to be managed centralized.  Why not break a larger chain down into market modules similar in size of Superquinn responsible for maximizing the market performance of each store?  As Feargal says,  "the stores are where the action is”.  The market modules would then drive the supply chain, not the other way around.

You'd think that companies would adopt 21st century approaches to dealing with such problems. But old habits die hard.




Regarding the cultural and ethical problems that suddenly have been made clear at Volkswagen, one MNB user wrote:

Our son is at about the same point in college as your daughter…….he is pursuing a Bachelor of Business degree in Supply Chain Management and is working as an intern at a Bosch auto parts distribution center.   Given all of its different international businesses, Bosch claims to be the largest supplier of auto parts in the world.

He called me from his office yesterday to tell me that his superiors have wasted no time in throwing their fellow German company under the bus. Bosch released a statement explaining that while the sensor and the software used in the “clean diesel” cars was theirs, Volkswagen made the alterations that allowed it to cheat on the emissions tests.

Sounds like this could get even uglier.

And MNB reader Jim Mahern wrote:

Your last few reports on the recent ethical problems in business decisions lead me to share some wise observations I have learned over the years from others.

"The person with insight enough to admit personal limitations, comes nearest to perfection" (Goethe).

" Always take your job seriously - never yourself". (Gen. Fox Conner - aide to Dwight Eisenhower).

" Live so that when your kids think of fairness and integrity, they think of you". (Source unknown).




Responding to our piece about the documentary produced about Food Lion founder Ralph Ketner, designed to be used in North Carolina schools, one MNB user wrote:

Regardless of what medium is used to present the lessons from Food Lion’s Ralph Ketner to North Carolina’s high school students, I truly hope the teachers of those classes are permitted to use the videos as part of their curriculum.   They may not have that option.

I spent two hours last night in a meeting for our school district regarding the future direction of its educational process for our students.   It appears that so much of what teachers can or cannot do in the classroom is dictated to them because they are required to teach to a test…..and the results of that test is now the sole measure of the success of a teacher’s work with their students.   There no longer seems to be room for individual thought or personal opinion in leading a classroom because teachers are obligated to follow whatever standards are required for No Child Left Behind.

I’ll bet Mrs. Content Guy can attest to this.

You probably don't want to get her started. Trust me on this. (Though she'd also argue that this is not a black-and-white issue.)




On another subject, one MNB user writes:

I did find the admissions from Starbucks that it had fallen short of its goals to improve conditions for its workers and that it still has work to do to be a refreshing (and somewhat rare) example of transparency.  In these days when corporate and political spokespeople stand in front of naked emperors and describe their wardrobe in great detail an open admission of failure and the need to do better stands out.  While it is actual results, delivering on promises, that will ultimately win employee loyalty, at least the admission that work is ongoing brings credibility.




Yesterday's FaceTime talked about the fact that the digital apocalypse is not taking place on schedule, and that the growth of e-books has leveled off as people seem to continue appreciating physical hardcovers and paperbacks; at the same time, libraries are having to think about their role in communities, because a digital evolution is taking place.

MNB user Daniel Hogan wrote:

You love the smell of disruption, and I love the smell of musty old books. Until the technology becomes available to recreate that, I’ll stick with physical books. I’m a Millennial in his mid-20s, and completely agree with your sentiments on purchasing based on the author. I am also part of the so called “Vinyl Revival” in the music industry; vinyl sales have increased every year since 2006, and are still growing at a TREMENDOUS rate. I now own 250+ records (95% of those being less than 10 years old) by small nationally touring bands that will never make it to the radio. Why do I buy records? Because I want to support the musician creating art. Why do I buy books? Because I want to support the author creating art. But do I still download e-books and use Spotify daily? Absolutely. I personally believe (and to some extent, hope) that we’ll hit a ceiling & start reverting back to using less technology. New doesn’t necessarily mean better; nostalgia is more important to me than convenience.

From another reader:

My wife is a children’s librarian at a local, public library.  Her degree is a Masters of Information Sciences, which trains her to create and access information more than it does find books.  Her library is much more of a community center than it is a traditional library.

She obtained special training and certification in a program called Library Family Place.   Although literacy based, the program provides parental training and services to help young parents in raising their children.  The program provides guest speakers and programs that address health and development.  Family place also gives local parents the opportunity to network with other new parents.
 
This is merely one example of the broad-based, community services provided by this library.  The library is more a community center that offers books and resources.  This is necessary because the taxpayers pay for the library system.  They need to justify the cost. 
 
And, by the way, my wife loves her job.

And from MNB reader LuRene Dille:

The D-Apocalypse may have happened as scheduled if the cost of e-books had remained low.  It seems silly to pay full price for an e-book when there are no printing costs.

MNB reader Paul Schlossberg wrote:

I've come to love digital books instead of lugging bulky tomes, especially when traveling.

There are, however, value and access challenges.

You're spot on about living in the exurbs. Our local library has very few digital book licenses (compared to big city and suburban libraries).

The pricing for digital books, for me, is not reasonable. Maybe book sellers like it, but I don't. Are they seeking to get the same "penny profit" they make in traditional book sales? The direct costs of digital books, e-books, is much less when you remove the printing, binding, packaging, physical distribution costs of shipping, warehousing, handling in stores, etc.

Looks like there is room for someone to do some channel disruption, call it disintermediation for books.

Here's what I think all these opinions add up to...

People continue to read ... and they read what they want to read, how they want to read, where they want to read, at a price that seems appropriate to them.

But what's most important is that they're reading. Books are not defined by their physicality - a thing is not more a book because it is between musty or non-musty covers, or less a book because I read it on a Kindle. Books are ideas. Words. Sentences. Paragraphs. Strung together, they can be magic ... however or wherever one reads them.

There is a lovely scene in Tom Stoppard's play "The Real Thing" in which the lead character, a writer, talks about the importance of words and language ... it is one of my favorite speeches from modern theater:

“Words... They're innocent, neutral, precise, standing for this, describing that, meaning the other, so if you look after them you can build bridges across incomprehension and chaos. But when they get their corners knocked off, they're no good any more... I don't think writers are sacred, but words are. They deserve respect. If you get the right ones in the right order, you can nudge the world a little or make a poem which children will speak for you when you're dead.”




By the way, about words...

Yesterday I reintroduced a phrase I've used a lot here on MNB over the years:

"Compete" is a verb.

Prompting one MNB reader to write:

You keep saying that.  What else could "compete" possibly be?

Exactly. It is a verb, an action word. To compete, one must act. One cannot be complacent. One cannot accept the status quo.

If you are going to compete, you must do things.

You're right. The notion is self-evident. But not every competitor acts to the degree that is necessary in today's competitive environment.

So I'm going to keep saying it.

"Compete" is a verb.

Published on: September 25, 2015

In Thursday Night Football action, the New York Giants defeated the Washington Redskins 32-21.

And, with a 10-4 victory over the Seattle Mariners, the Kansas City Royals clinched the American League Central championship - the first team to clinch a division championship this year.

Published on: September 25, 2015

Amazingly, it's only been three weeks since Stephen Colbert took over "The Late Show." I already find myself staying up to watch because the interviews tend to be more than fluff and promotion - they've been with interesting people about interesting subjects. I also find myself remembering Johnny Carson early in his "Tonight Show" run, when he'd engage in actual conversations with all manner of smart people.

Plus, Colbert looks like he's having a really, really good time.

My favorite moment of the three weeks was during his interview with Sen. Ted Cruz (R-Texas), who, you may have heard, is running for the Republican presidential nomination. Cruz was making a point, and the audience was clearly hostile to his words and perspective, but Colbert stopped, looked at the audience and said, "Guys, guys, however you feel, he’s my guest, so please don’t boo him.”

Wow. Civility. Intelligence. Charm. Wit.

The mind boggles.




Lee Child is back with a new Jack Reacher novel, and all is right with the world.

"Make Me" starts as many Reacher novels do. Reacher - a retired Army MP who wanders the country with only the clothes on his back, a passport and a toothbrush, getting into trouble, righting wrongs and often saving damsels in distress - finds himself in a small town. He's there only because the name of the town intrigues him, and he wants to know how it got the name. And, Reacher has nothing else to do, so why not?

Soon, he finds himself helping out a female FBI agent turned private detective who is trying to track down a missing colleague. He's driven by curiosity, but also a sense of justice and a confidence in his own skills, strength and ability to make things right. In "Make Me," however, there are intimations of Reacher's mortality. Child is allowing him to age a bit; he notes at one point that his hair is slightly thinner than it used to be, and the physical challenges take their toll.

As always, Child is a compelling writer with a strong instinct for how to spin a yarn ... the chapters unfold quickly, and the story has real momentum. I continue to think that one of the real appeals of Child's Reacher novels is that they tend to unfold in places that many of us just see from 30,000 feet, or from train or car windows ... they look benign, but Child persuades us that there are malevolent things taking place behind those closed doors and locked windows. And then he stirs it all up and make sit irresistibly entertaining.

Check out "Make Me." It's terrific.




Summer is over, but there was one warm evening this week when Mrs. Content Guy and I decided it was perfect for some Rosé ... so we pulled out a bottle of the 2014 Rosé of Pinot Noir from Willamette Valley Vineyards that I brought home this summer from Oregon. It had a nice fruitiness to it without being cloying, and was a perfect way to end the summer. Glad I have another bottle or two stashed away, just in case...




That's it for this week. Have a great weekend, and I'll see you Monday.

Slàinte!

Published on: September 25, 2015

SALT LAKE CITY -- ReposiTrak Inc., the leading provider of Compliance Management and Track & Trace solutions for food, pharma and dietary supplement safety, announces that Bristol Farms has chosen ReposiTrak(R) to manage regulatory and business documentation compliance within their supply chain. Based in Carson, California, Bristol Farms operates a chain of thirteen
specialty grocery stores in Southern California and San Francisco. The company provides a premium shopping experience with a wide assortment of high quality fresh, natural and organic foods from local producers as well as gourmet and specialty foods from around the world. From its first store in 1982 through today, Bristol Farms has placed a significant emphasis on superior quality, freshness and service.

"Our top priority is to provide safe food for our customers at Bristol Farms," noted Kevin Davis, Chairman, President and CEO of Bristol Farms. "As our industry continues to focus on bringing consumers more and better locally-sourced products, we needed an automated system to help us manage the complexity associated with the Food Safety Modernization Act. ReposiTrak gives us that ability."'

"Bristol Farms has done an amazing job of bringing a myriad of exciting food products to its customers," said Randall K. Fields, Chairman and CEO of Park City Group, which owns ReposiTrak. "Kevin Davis is a well-known advocate for food safety and we are proud to have him utilizing our system."

For more information about what you need to know about FSMA and ReposiTrak, click here.

Published on: September 25, 2015