business news in context, analysis with attitude

On the subject on Winn-Dixie’s severe downsizing in the face of tremendous financial pressures, one MNB user wrote:

Winn Dixie is in an interesting time in their history. They can either make the bold decisions necessary to pull themselves out of the situation they find themselves in, or they can be another me too operator and end up as the latest chapter in the used to be good and now gone anal of supermarket retailers. Some of those decisions will be difficult because of the impact on people and some will be difficult because they require innovative thinking that too few food retailers are willing to embrace. None of that has to do with retention bonuses for executives, it has to do with bright people willing to step out there and make the decisions that set them apart from the crowd.

If we see nothing but fresh paint, and an attempt to get that operation cash flow positive with no tangible change in their go to market strategy all in an attempt to do nothing but position it for sale, then the worst things thought about WD’s executives and their retention bonuses were true. Time will tell.

During the late 90’s and early 2000’s I worked for a chain that competed with WD in the heart of the Southeast and I could never figure out why people would shop in their stores. They were dirty, had poor service and their produce departments were absolutely deplorable, but they were doing about the same amount of volume as we were. And I thought we did all the basics pretty well. It really made me question what was important to our customers.

The one reason I could come up with for the WD business was very good center store pricing. As the company I worked for bluntly moved from EDLP to HI-Lo and introduced a card, WD moved to a hybrid EDLP format and had very good success with it. In the vast majority of the Southeast, price rules. Just ask the Walmartians in the South and Southeast that flock to Wal-Mart overlooking long check out lines, mediocre perishables, less that clean facilities, and of course employees with less than sufficient benefits to take advantage of EVERY DAY LOW PRICES! Not super high one day and low the next; low every time they shop there. Now WD got stupid and started trying to be something that culturally, they were not prepared to be by introducing new service departments. Ultimately they had to raise prices to support new found labor requirements, floundered, and failed. You know the rest.

Now there is a lesson there somewhere; I wonder if the people running WD today are perceptive enough to learn it.

We suggested the other day that perhaps the downsizing will keep Winn-Dixie alive just long enough for senior management to collect their retention bonuses…a cynical suggestion, we know, but what the hell.

One MNB user responded:

You are half correct about executives keeping the ship afloat for their retention payments. The other half is the “professionals” which include lawyers, accountants, re-structuring experts and others who look at this case as one big pot of money for them to keep sucking some out each month. Sometime, look at the fees given out in these cases – hundred’s of millions of dollars. They’ll keep this going for at least 3 years and they really don’t care about the long term business strategy.

Heck, if they can liquidate it in 2 or 3 years there will be more fees. Mr. Lynch needs to cut deeply, get a new viable strategy, get rid of a lot of the “old guard” in middle management, a new store level incentive compensation and move very quickly in doing this. Time is not on his side.

And another MNB user wrote:

A&P has been downsizing since about 1925. They used to have thousands of stores and now just a few hundred. I think most people have long written off A&P, yet their stock is over $25 a share now. As Winn Dixie continues to shed its low volume stores they might end up just being a local chain in Jacksonville, south Florida and the Bahamas with perhaps 100-150 stores. However A&P can hide from Wal-Mart in the NYC area. You can't hide from Wal-Mart in the south.

We had a story the other day about a group of Democratic senators introducing federal legislation in the US that would require companies to disclose what percentage of their employee base gets federal assistance instead of employer-provided health care.

One MNB user wrote:

Are these Senators prepared to face the consequences of their actions targeting one of the largest employers in the country? There are a lot of voters who might not feel that the goal of the Healthcare Accountability Act justifies the potential loss of thousands of jobs in their state. One would have to wonder how much it would cost the taxpayers to provide total unemployment benefits rather than just subsidized health care.

And another MNB user wrote:

Wal-Mart offers health insurance that is about the same as every other company offers. The problem is Wal-Mart hires a lot of low wage producers who think they cannot afford to buy insurance. They are not going to pay $155 a month in premiums. In fact, they are not going to pay $5. The only way they will in enroll is if Wal-Mart enrolls them and pays the full tab.

The next issue is employees who use government health care programs. Just about every state sponsored plan states that if your company offers you a health plan, you are not eligible for a state sponsored plan. So who are these Wal-Mart employees on state plans? Most likely full time workers with less than 6 months seniority or part timers with less than 2 years. Given the size of Wal-Mart that is a lot of people

Health Insurance is a $10,000 per year cost for most companies. Wal-Mart, or any company would go broke quickly if they had to provide free health insurance the first date of hire. It would be the same as paying every new employee a $10,000 hiring bonus. This hurts, especially when they hire a lot of low level economic producers. With Wal-Mart only earning about $7,000 per employee a year I think they will continue to fight having to pay welfare/health benefits to employees who cannot pay back to shareholders the same amount in productivity. Before Wal-Mart starts handing out about $8,000 of their own money to employees to pay for health insurance, I think its reasonable and fair that the employee to at least show some loyalty by being employee for 6 months. Especially in a high turnover industry like retail.

All this nonsense about getting Wal-Mart to provide free health insurance is nothing more than feel good political rhetoric.

And another MNB user wrote:

How many of these employees are retirees with a part time job at Wal-Mart that would be using government healthcare anyway?

We had a piece the other day about how more and more college students are choosing to vegans and vegetarians, which prompted one MNB user to write:

The other thing driving this is the distrust of the meat products on campus. I ate less meat during college than any time of my life…but I eat meat now because it actually tastes good…

On the subject of the estate tax, which looks like it may be reduced rather than permanently eliminated if a US Senate compromise works out as expected, one MNB user wrote:

This is the most onerous tax that we have. A person's estate is taxed throughout their lifetime, but for some reason, the federal government believes that when a person dies, they should become the majority partner in that estate. When I ran for the U.S. Senate, I proposed that the unified credit be raised to $5 million per person and the balance of the estate be taxed at the then long-term capital gain rate. Elimination of this tax completely would be better, but this would be a very good first step.

We got a number of emails in response to last week’s story about the Michigan legislature considering a bill that would ban all in-state direct shipments of alcohol, including those from the state’s own wineries – many of which say such a bill would put them out of business. The move by the lawmakers is in response to a US Supreme Court decision saying that they cannot allow in-state direct shipments and ban them from out-of-state; saying they fear that allowing all direct shipments will enable minors to get their hands on more liquor, the legislators want to ban all such shipments.

MNB user Carol Edinger wrote:

Picture, if you will, a Michigan teenager selecting wine as their adult beverage of choice when they could buy cheap whiskey at the same price. Then imagine them ordering it via the Internet where the purchase would be traceable via payment and delivery records. Think of the logistics involved in arranging to have someone receive the shipment and store it until it could be distributed or consumed. Get real! It's so much easier to try to dupe an unsuspecting retailer with a fake ID, pick up the goods and go directly to the party or, even easier, arrange for a buyer of legal age to assist in the transaction. I've spent years working with legislators on many issues but this one is personal! You can bet I'll be in touch with the Representative tomorrow!

One MNB user responded:

This just shows how uninformed legislators are. Do they really think kids are sitting at home waiting for UPS to get alcohol when kids can get it on the street quite easily? More bloviating with little effect in the end except ruining businesses.

Bloviating politicians? Hard to imagine.

And another MNB user chimed in:

How many under-21 year olds do you know that enjoy a nice pinot? I highly doubt that kids will be flocking to pay the high prices of wineries when they'd rather try to find some beer! Unwarranted worries.

We would agree. The problem is that you take this position, and some people accuse you of being soft on teen drinking.

Regarding the new vending machines that will dispense prescription medicines, one MNB user wrote:

If they can figure out a way to sell prescriptions in a vending machine, can’t they also figure out how to sell OTC cold remedies that contain psuedoephedrine in a more convenient way than to make me go to the pharmacy and stand in line?

And MNB user Paul Schlossberg wrote:

This is a great example of applying technology to routine consumer transactions. It goes beyond what traditional vending delivers. Variations of these machines have been dispensing prescriptions for patients in hospitals for some time.

What we have here is an automated store within a store. It saves time for refill customers and allows pharmacists to spend more time with those who require personal attention - for initial prescription orders and for questions relating to a medication.

But MNB user Sue DeRemer disagreed:

Taking my prescription from a vending machine just doesn't feel appropriate. I would definitely miss the interaction with a pharmacist, even if I were only getting a routine antibiotic. Perhaps a better solution to long lines in the pharmacy department might be more pharmacists!

Which would be a good idea, except that it is our understanding that there is a shortage of pharmacists in the US…which is one of the reasons that the vending machine probably was created to begin with.

And, on the subject of the USDA deciding against a national ban on junk food sold and served by schools getting federal meal subsidies, one MNB user wrote:

I am sure that the moneyed interests in Washington are influencing the USDA to withhold support of a ban on junk snacks in schools. Much of government policy is based on who puts money into the politicians' campaign treasury. They need this money to get re-elected so they have to make policy for those who put them in office. Of course the children are left with tempting junk food in schools where they haven't other choices. Perhaps the parents should request a ban in the schools. At least they care about the health of their children.

But MNB user Joe Lackey wrote:

Regarding USDA’s announcement that they will not implement Commercial Alert’s demand that foods of “minimal nutritional value” be banned from schools, USDA made the right decision. The Food Nazi groups would have you believe that only “healthy foods” should be sold in schools (or to anyone for that matter) and that foods or beverages that are of “minimal nutritional value” are unhealthy foods. That is simply wrong. Beverages such as water or diet soft drinks are considered “minimal nutritional value” but they certainly are not unhealthy. The point is because a food or beverage is not designated healthy does not mean it is unhealthy. Additionally, the groups like Commercial Alert expound on the problem of childhood obesity but they immediately move to a healthy foods campaign; two different but not unrelated issues. If one’s objective is to combat obesity why would diet or light foods and beverages not be included? If one’s objective is an idealistic mandated healthy foods only goal then diets will not be included. By the way, that mandated healthy foods only objective may be instituted with the schools because kids and parents, in their opinion, aren’t smart enough to make decisions about consumption but their ultimate goal is to tell retailers what can be sold and consumers what can be bought.

Everybody is entitled to his or her opinion.

But y’know what we’re getting really tired of? This “food Nazi” crap.

We are a parent and taxpayer. We think that our tax dollars ought to be used to buy healthier food than the slop served in school cafeterias, but that doesn’t mean we are an extremist. We’re actually fairly moderate – but because we’re in favor of any restrictions or rules, we get hit with this Nazi label.

It is wrong and it is distasteful.

We don’t refer to people who disagree with us as “free choice Nazis.” We, in fact, respect their feelings about freedom of choice – and in most things would probably agree with that perspective.

In this case, though, we’re talking about something that our tax dollars are helping to pay for – and therefore we think it is responsible and prudent to suggest that we ought to have a say in how those dollars are spent.

Okay, we’ve done our rant for the day.

Maybe we really do need a vacation…
KC's View: