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    Published on: September 12, 2017

    by Michael Sansolo

    When things aren’t going well there are two clear paths of action.

    First, you can try to identify and fix the problem.

    Or, you can find someone else to blame.

    There is a line in the movie Rising Sun in which Sean Connery, as detective John Connor, notes that “the Japanese have a saying - ‘fix the problem, not the blame’.” He’s right, but it is not always the path taken by executives and companies.

    That seems to be exactly what is happening in Hollywood these days, proving us with yet another lesson from the movies. (Have I mentioned lately that Kevin and I wrote a book on this subject?)

    The fact is that the movie business had a terrible summer. Despite a handful of blockbuster hits, led by Wonder Woman, ticket sales were off nearly 15% during the summer season when movies usually pull in nearly half their annual receipts. As the New York Times reported recently, that got the studios focused on what went wrong.

    Their answer was simple and surprising. They collectively concluded that the culprit is the popular website Rotten Tomatoes, which aggregates movie reviews from a wide range of critics and to provide a rating for each picture. The studios apparently feel Rotten Tomatoes permits input from too many people, which in turn leads to an abundance of negative commentary and scores.

    According to the studios, those scores lead to poor performance at the box office. Inane concepts like The Emoji Movie or endless sequels to, say, Pirates of the Caribbean couldn’t possibly be to blame, right?

    Here’s the thing: we now live in a world where everyone can be a critic of virtually everything. If you have a bad experience in a hotel, then write a review on Trip Advisor. Don’t like the work a home repairman did for you then write a review on Home Advisor.

    The same holds true for restaurants, teachers and, of course, supermarkets or any retail establishment.

    Think about it. One of the core innovations that Amazon brought to retailing was the prominent use of customer reviews on its site, which also are being used in its bricks-and-mortar bookstores.

    More than ever businesses need to be aware of this new power. No one suffers in silence anymore, which means that even the trivial actions of a single surly cashier can now take on a life of its own in cyberspace.

    No doubt many of you consider this highly unfair, but the reality is that this is THE reality.

    That, in turn, means we all have the same choices the movie studios have. The question is whether we choose more wisely.

    As some social media experts have cautioned, there are good ways to respond to negative reviews. On public sites like Yelp that may require a quick and caring response to the complaint to demonstrate that your business is listening. And try, as best as possible, to move the discussion off the social space into something more private.

    Studies have shown that such a response can frequently turn a negative review around. In addition, your supporters are likely to jump in especially if they think the negative review is unfair or atypical.

    In addition this endless stream of open feedback can actually be helpful. It might point out the need to do some additional training of staffers or the need to step up performance overall. Although social media has opened the floodgates to such discussions, it is worth remembering that only a small fraction of your shoppers will actually ever post a complaint.

    So when you get a complaint that means you might have a much deeper and more important problem to resolve. Treat the feedback as useful insight.

    Or you can follow Hollywood’s script and blame the messenger.

    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 on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
    KC's View:

    Published on: September 12, 2017

    by Kevin Coupe

    There is a really good piece by retail futurist Doug Stephens in Business of Fashion that recalls Ron Johnson’s aborted attempt to re-engineer the economics and culture at JC Penney. Stephens argues that while Johnson’s approach to change management may have been ill-conceived, he understood something important and essentially true - that “in order for the new JCPenney to be born, the old JCPenney had to die. In order to pump oxygen into an entirely new era of department store retailing, he would have to once and for all turn off the respirator that was keeping this old brand barely alive.”

    It was, Stephens suggests, an approach that almost had to fail since customers, shareholders and JC Penney’s board didn’t “have the stomach for what Johnson would ultimately have to do in order to revive the ailing retailer.”

    He goes on: “It’s six years later and a similar malaise poisons the broader retail industry. Everyone is talking about the need for disruption, innovation and change, yet most stop well short of actually doing anything about it. Many retail brands talk about game-changing innovation but what we see are lukewarm iterations of existing concepts and old ideas. Retailers, it seems, lack the will or sense of urgency to effect significant and radical change.” And Stephens writes that too many retailers and even pundits believe that while there’s a lot of tumult in retailing, “the sky isn’t falling and we need not be overly concerned.”

    Stephens believes that there are fundamental and revolutionary changes taking place in retail, and argues that “until we let go of the old era we can never fully move forward into a bright new age. If we really want to save retail, we’ve got to let it die.”

    It is a really good piece that you should read here. And it definitely is an Eye-Opener.

    (BTW…extra credit for readers who get the movie reference in the headline.)
    KC's View:

    Published on: September 12, 2017

    The Associated Press reports that Benny’s - a 93-year-old general merchandise retailer with 31 locations in Southern New England - has decided to shut down operations by the end of the year. More than 700 employees will lose their jobs.

    In a prepared statement, the company wrote, in part:

    Many of you may have already heard the news: Benny’s, after 93 years in business, plans to close all retail locations by the end of 2017 as our ownership family has decided to retire. In a short period of time, the retail landscape has changed dramatically – especially for “brick and mortar” businesses. The decision to retire was strongly influenced by this changing face of retailing.

    We will miss our employees who have been such a big part of what has made Benny’s successful for so many decades. And of course, we’ll miss our many loyal customers who have supported us over the years. We have never tired, in all of those 93 years, of hearing the stories of a child’s first bike bought at Benny’s or “if Benny’s doesn’t have it, you don’t need it.”

    KC's View:
    I don’t want to be insensitive here, nor do I wish to speak ill of the almost-dead.

    But … it seems pretty clear to me that for too m any shoppers, Benny’s no longer was their favorite store. And I guess I am wondering if ownership ever really came to terms with how the world changed, and if they tried to adapt.

    I’ve never been inside a Benny’s, to my knowledge. But I’ve seen pictures, and one of the things that I’ve noticed is that underneath the name of the store there is a slogan, “Famous For Low Prices.”

    That’s a tough proposition, especially if you are competing with Amazon and Walmart. I fervently believe that with few exceptions - WinCo would be one - retailers have to avoid being compared only on price. They can’t make price the core argument. They should be more focused on value, but need to expand the definition of what that means in the mind of the shopper.

    Published on: September 12, 2017

    The Associated Press reports that Target is lowering prices on thousands of items, even as it “is spending billions to remodel stores and strengthen its online business. It said Friday it will continue ‘to offer additional savings on the right products at the right times’.”
    KC's View:
    Target certainly is in a better position to make a low price argument than Benny’s, which I wrote about above. But I still think that in the end, price will be less important to Target’s resuscitation than value and a strong customer experience.

    Target’s problem is that when it makes moves like these, it often is punished by analysts and the stock market, which creates all sorts of other pressures.

    I also noticed that in the Reuters story, Target said that it “spent months reassessing the prices of everyday items such as milk, eggs, razors and bath tissue.” Maybe I’m wrong, but it occurs to me that spending months on reassessing prices is way too long, especially since the items mentioned are largely commodity products carried by everybody. You can’t make a real difference in customers’ lives by focusing on the items that you have in common with the competition … you have to focus on where you are different.

    That’s not to suggest that a competitive price on milk, eggs and toilet paper isn’t important. But it’s the price of entry, not a differential advantage.

    Published on: September 12, 2017

    Bloomberg reports that Foursquare Labs has “compiled location information during the first two days” after Amazon completed its $13.7 billion acquisition of Whole Foods and concluded that the was a customer traffic increase of 25 percent.

    “The traffic data is an optimistic sign that Amazon can succeed in the brick-and-mortar world,” the story says. “In some areas, the jump in customers was dramatic. At stores in Chicago, 35 percent more shoppers visited Whole Foods stores, Foursquare found.”

    And, “Amazon has had success selling the Whole Foods 365 Everyday Value brand through its website. It put about 2,000 private-label products on the site after the deal closed and sold out of almost all of them, according to One Click Retail. The company said web sales of Whole Foods branded items through Amazon totaled $500,000 in the first week.”
    KC's View:
    No surprise here. The question is whether the traffic increase is sustainable, and what Amazon and Whole Foods will do together to continue to drive refreshed customer interest.

    Published on: September 12, 2017

    Spoiler alert: Amazon’s second headquarters, dubbed HQ2, which will bring a $5 billion investment and at least 50,000 new jobs to some lucky metropolis, is going to be located in Denver.

    At least, that;’s the conclusion reached by the New York Times, which did an analysis of Amazon’s stated requirements and preferences, started with 25 metropolitan areas that seem to fit the bill, and then started winnowing them down.

    The process is fascinating, as the Times comes up with a final four - Denver, Portland (Oregon), Boston, and Washington, DC - and then identifies the place that it thinks will be the winner.

    You can read it here.
    KC's View:

    Published on: September 12, 2017

    Advertising Age reports that Jolt Cola, described as “the supercharged cola that woke up a generation of computer nerds with promises of ‘all the sugar and twice the caffeine,’ and that “rose to popularity in the 1980s with its unabashed unhealthy positioning that captured the hearts of computer programmers and gamers,” is coming back.

    Jolt will come back via Dollar General, which has exclusivity on the brand for a year, the story says.
    KC's View:

    Published on: September 12, 2017

    Yesterday, we posted an email from a reader who complained that when I suggested that in looking for a site for a second headquarters Amazon was likely to pick a blue state or a blue city in a red state, I was unnecessarily injecting politics into the discussion. I disagreed with that assessment. (By the way, I should have added “purple state” to my original argument.)

    MNB reader Rich Heiland, I think it is fair to say, agreed with me:

    Concerning the reader who has had enough of "politics." Politics, business and culture are intertwined. They cannot be separated.

    Here in Texas, business was massively against the "bathroom bill" proposed by conservative legislatures to keep transgender people out of the restroom they identify with. The same thing happened in North Carolina.

    Big business, including the Koch Brothers, has stood against the repeal of the Dream Act and as a collective is calling for Congress to act.

    When businesses relocated or expand, it's not taxes that tops the list. It is the ability to either recruit employees from an area or move existing employees into areas they will be comfortable with. You captured that spot on in your comment.

    Until social justice becomes blind, and corporate money is kept out of politics, we will continue to have business and politics intertwined.

    KC's View:

    Published on: September 12, 2017

    In a Monday Night Football doubleheader, the Minnesota Vikings defeated the New Orleans Saints 29-19, and the Denver Broncos beat the Los Angeles Chargers 24-21.
    KC's View: