business news in context, analysis with attitude

We reported yesterday about voluntary buyouts being offered by Safeway in Northern California, as it tries to replace experienced and pricier employees with less experienced workers who will make less money and earn fewer benefits.

To which one MNB user offered the following analysis:

The problem with buyouts is that they usually entice the best, most skilled workers to leave a company. These are the employees who have the greatest marketability and have more employment options.

Safeway should be careful what they ask for. If they replace higher wage employees with lower wage earners, they will have to increased training expenses and create a more unstable work force. Safeway should embrace their more experienced employees rather than chase them away.

Of course the UFCW is neutral on this issue. The buyout benefits many of it members. Jumping for joy is usually a dead giveaway that your adversary has made a bad move.

We should have written this yesterday:

The move by Safeway is proof positive that it is a chain that views its experienced employees as costs, not assets.

It is proof positive that Safeway may be good at saving money, but that its strategy in the long-term will leave it with real estate and products, but, quite possibly, people who will not represent it well.

This way madness lies.

Responding to yesterday’s piece about line extensions by Coca-Cola that, in our view, need to walk the tightrope between being too much for the consumer to absorb and proving continuing vitality to fickle shoppers, MNB user Paul Schlossberg wrote:

This is about branding and new product (versus line extension) strategies for manufacturers. The point of the article you cited is "whether or not all of the SKU proliferation within a core brand makes it difficult for people to figure out what it stands for."

One question that arises for the stores and the brand's sales reps is "Where does the shelf space come from for the new item?" Does it come from core brand Coca-Cola in this case? If you watch the CSD category, look at what is up and what is down. Maybe the customers are getting confused by all of the news within the core brand line-up.

One of our MNB users offered the following assessment of a new Sears Essentials store:

I found it to be very bland, nothing innovative, and that view was shared by a number of vendor CEOs, some of whom supply Sears.

What Sears Essentials will do, if rolled out as planned, is bring Craftsman products, DieHard batteries and Kenmore appliances much closer to the consumer in urban areas. Instead of 870 mall stores, there could be hundreds of Sears Essentials, plus some Kmart stores, carrying these products.

Also, originally we were told by Ksears officials that the company had identified "up to 400" locations for Sears Essentials. I have since learned that the number is now "close to 900", but any expansion, I would think, depends on sales.

What is most interesting, with the space devoted to Craftsman tools, garden equipment, paint, etc., is that a Sears Essentials is less able to satisfy homeowner DIY needs than a Kmart--very little plumbing,
electrical or hardware--far less than hardware stores or home centers and nowhere near the assortment Wal-Mart offers, though it does offer more than Target--at least in tools and paint.

Assessing the report that some 20 million Visa and 13.9 million MasterCard accounts may have been compromised by a computer security breach at a payment processing company, perhaps the single largest case of stolen consumer data to date, MNB user Thomas D. Murphy wrote:

The grocery industry is probably at greatest risk of a similar incident with consumer information, be it credit, debit, check or just personal information from customer loyalty and pharmacy programs. Having worked with a number of grocery clients, I can tell you that some (not all) of them struggle with how much time, energy and money to spend on security.

The impact of a breach by a grocer would be near total loss of trust and confidence. Years and even decades of brand, however weak it might be, would be destroyed. This is merely Russian roulette being played with five rounds in the six-shooter!

Finally, MNB user Dan Vogler responded to yesterday’s story about efforts by Seattle University School of Law to get its students to stop patronizing expensive coffee shops at a time when they are ringing up enormous debt to pay for their educations:

The professors should be mindful that, even if a student graduates cum laude, it’s likely that they’ll be hired by a successful firm that will compensate them enough to buy a coffee house within a few years. For most of these kids, it’s law and little else for three years. Some of their cars might not have cup holders. Give ‘em one affordable luxury—bono dei!

The more we think about what the Seattle university School of Law is trying to do, the more annoyed we get. It is such a classic case of misplaced priorities and a lack of understanding. These students aren’t drinking and carousing and losing track of their studies – they’re ingesting caffeine so that they can work harder and get better grades.

The school ought to be talking to Starbucks and other area coffee retailers about finding ways to work together, not suggesting that students find another way to fuel their ambitions.

We repeat yesterday’s offer:

If one of our kids would like to go to law school and graduate summa cum laude, we’ll volunteer to pay for one venti latte or cappuccino per day for the entire three years of law school.

In fact, we’ll even do it for magna cum laude.
KC's View: