business news in context, analysis with attitude

We've had several reports this week about a union convention in San Francisco at which there has been significant discussion about how to face off against Wal-Mart.

One MNB user responded:

I was appalled by the July 30, 2003 FastNewsBeat section detailing Union activity aimed at slowing down Wal-Mart. It seems that unions have still not shed themselves of their past affiliation with the mob, unless of course they feel extortion and racketeering are not mob related. It is sad to think that the only thing that is going to slow down Wal-Mart is not the competition, but potentially its own workforce if these thugs get their way.

While I am not a big fan of Wal-Mart (nor are my accounts), I can appreciate the business as a whole and how it has managed to stake out a dominant position in the retail world. Unions need to wake up and accept the fact that innovators wait for no one. I still recall my uncle telling me how his union had grandfathered in their contract caboose riders long after railroads got rid of the caboose or how about the dockworkers being afraid of using computers to track inventory. Unions need to wake up and get out of the dark ages. Why would Wal-Mart want to deal with organized labor elements that are indirectly helping the competition with their activity?

We suggested at one point that it is possible that some US retailers would root for the union against Wal-Mart because a union victory might level the playing field. But MNB user Glenn Cantor disagreed:

In many ways, trade unions are, themselves, in business. With their business in decline, and many US union jobs being lost overseas, the impetus is strong for trade unions to target Wal-Mart's many million strong US work-force fast and heavily.

And, no, it would not be a good thing for US business to allow unions to help them knock down Wal-Mart. That would only perpetuate the lack of creativity and segmentation in the US retail industry.

We also received an email from MNB user Steve Panza about a customer experience related in an earlier email:

You had a comment by Ed Nalley regarding a return of an item to Wal-Mart because parts were missing. I have found the same is true for Target. Unless somebody at the returns desk is diligent, the item that is broken or is missing parts will end up back on the shelf.

And a comment by Brad Morris where he said "Wal-Mart, generally speaking, is very protective of their shelf real estate, and rightly so. The chances of a new product getting on shelf broadly are actually very slim unless the manufacturer can show Wal-Mart that there will be demand..." Isn't this true for any retailer? If a retailer doesn't think an item will have any demand/make enough profit to pay for the space on the shelf, why should they purchase it? Buyers are always under the gun to make sure their categories are making a profit. On the other hand, we have been very successful in bring in new items with very little sales history or marketing and making them successful at Wal-Mart. You have to have a good, unique item along with a good sales and support team.

We had a story earlier this week about the growing Oklahoma wine industry, to which MNB user Westall Parr responded:

You asked: Is the day too far off when we'll be ordering a nice Tulsa chardonnay?

And I respond: It is as close as the day you enjoy a fine New Jersey Reisling.

We had a story earlier this week about the growth of e-commerce, which prompted several emails. MNB user Robert Hemphill wrote:

I'm very much in agreement with your point about Internet growth not being the grandiose variety, but rather that it will be linked to traditional commerce. Unfortunately, nearly every article and opinion piece implies that the Internet EQUALS ecommerce, an extremely limited point of view. The reality is that perhaps 2% of a typical grocery retailer's customers will be willing to buy their groceries online this year. The costs of building a robust, complete, customer-friendly ecommerce offering and running it is still very high. And although third party web offerings lower the up front costs, it may still cost $5,000/year per store just for website capabilities. Assuming 10,000 regular customers per store, 2% of the shoppers equals 200 customers, so the web investment would be roughly $25 per customer.

But what are retailers doing with the Internet for the other 98% of their customers? Grocery websites that provide savings, information value, customer assistance, sweepstakes, community programs, loyalty good news is that the costs for even the most advanced website features that focus on such website features as recipes, personal shopping lists, web only specials, weekly ads, email newsletters and so on is very low cost in comparison, especially on a per customer basis. Behind the scenes, some retailers have web-based community programs that in the past were a paper and administrative nightmare.

So the trends we're seeing in growth of ecommerce is the little story - the big story is that retailers are instead investing where it makes sense - websites for the vast majority of their customers, who happen to shop in their stores.

And MNB user Gary Savoy wrote:

On-line will always be a challenging sales channel for CPG's. The important metric to consider is the direct impact that on-line representation has on off line sales. Research has shown a major increase in off line sales due to effective on-line brand representation. "Destination Branding" is becoming more and more essential for Manufacturers to connect with their current or potential consumers.

Many CPG's have been slow to jump into the online market, those that have are seeing incredible brand lift and increased market share. While I agree that "slow and steady wins the race" when it comes to growing a successful and sustainable business model, marketers that continue to take a wait and see attitude as it relates to on-line marketing will be pay a major price of reduced market share.


We had a story earlier this week about RFID tagging, and in our commentary suggested that the "industry has to do a good job of educating the public about how the RFID tags will be used, and how they will not be used. Don't let the anti-technology advocates control the debate and the spin. Be aggressive, be upfront, and be factual."

MNB user Jim Swoboda responded:

KC is right on target. To often, in any endeavor, we allow the pundits and the naysayers to have the loudest voice. Of course, the technology could be mis-used. However, so could many of the technologies that we use today be used in ways that they were not intended to and yet people use them without giving it a second thought.

Take cell phones for instance. Not many people understand that while one is "on" it is constantly broadcasting to the network, "here I am" so a persons movements can be tracked if that were something someone wanted to do. Does it happen, probably in some limited circumstances, but with hundreds of millions of them, we all get lost in the digital noise.

The ID tags are no different.

However, the industry totally is aware of the concern and has already defined steps the will "destroy" the tags when they are purchased. Our industry does need to take the offensive and educate and share along the journey what the benefits are and work to alleviate the concerns of shoppers. The technology will be embraced once the fear is put to be and the benefits are apparent.

Let's not let the naysayers kill a very promising revolution in how the supply chain is managed.

Home Depot announced that not only will it expand its testing of Dunkin' Donuts shops inside its home improvement stores, a program that has been successful in three New England units, but now is testing small-scale McDonald's operations inside its stores as well; we suggested that the company would be better served by more knowledgeable and friendly people in orange aprons than donuts and golden arches.

MNB user Bill Gardner wrote:

I think the folks working at Home Depot are, for the most part, friendly and knowledgeable. It's the number of folks working there that's the problem. Their "sales equals hours" policy just isn't working. How can they generate sales when there aren't enough people? Store associates, especially the specialists like kitchen designers, are constantly having to cover for someone else and can't get their work done. And management wonders why sales aren't what they'd like them to be. I'm afraid the big orange box ain't what it used to be. They've lost the employee loyalty that the founders worked so hard to build. Sad.

MNB user Brian Richardson added:

In regard to your story (and commentary) about Home Depot's experimentation with new offerings, I couldn't agree with you more. Being an avid Home Depot shopper, I often question the cause of my loyalty. It has been reduced to location. I have an HD about 1 mile from my house and a Lowe's about 8 miles. Inevitably, I find myself at Home Depot at least once a weekend. My question is this: in these test marketing stores, do people have to stand around and wait for a key-lime donut or a quarter pounder, because I sure as @#$! have to wait about 15 minutes to get a stinking key made, or to ask a question (in which I often end up giving the sales person on the floor a lesson in plumbing or whatever), or even find someone to have them get a load of 4 X 4's down from the rack, because they only have 1 and a half and both pieces are dog-legged beyond recognition.

What ever happened to their strategy last year about increasing customer service? If you ever find the stuff you need, you can usually count on 2 out of the 15 lanes being open (no matter the time of the day) and another 15 min. wait…

Can you say "@#$!" on a family website?

Another MNB user put a cap on it:

Have you been to a Home Depot lately? I don't know about the rest of the country, but in Dallas all the Home Depots have bird infestations. Every several feet there is a bird's nest in the ceiling supports. It's like a Hitchcock movie! Now would you like to buy a donut or a burger in a place like that?! YUCK! Can you say health department?

We thought those were sprinkles on our donuts…
KC's View: