business news in context, analysis with attitude

In lauding Wal-Mart for its hurricane relief efforts, we urged the company to be careful not to develop shoulder problems from patting itself on the back too much. Which, according to one MNB user, may be what is happening:

The fact that Wal-Mart has been so helpful for the victims of Katrina is greatly appreciated. They have shown a side of their business that most people weren’t aware of. This has proven to be a positive thing for their public image.

However, while in a Wal-Mart recently, I was a little offended by the rather large sign that was on every check out lane proclaiming what a wonderful company they are because of all the money that they had given to Katrina.

My view is that they slipped off the tightrope that you referred to and fell into their own bucket of ‘I am the greatest’ hooey.

Regarding the complaints raised by Sainsbury that Tesco has managed to almost monopolize many commercial retail sites in the UK, MNB user David Livingston wrote:

I can sort of understand where the CEO of Sainsbury is coming from when he says he does not have equal access to property. This happens all the time in the US, but so far it has not gotten as out of control as in the UK. Perhaps because we are a newer country, a significantly larger country, and still have a lot of undeveloped land. However, look at markets where one competitor has over 40% market share such as Cub in the Twin Cities, Pick N Save in Milwaukee, Publix in Miami, and HEB in San Antonio. All are well run chains and certainly deserve those high market shares. However when a real estate developer has a good site, he is always going to go to the market share leader first.

Generally the best developers have cozy relationships with the market share leaders. If the market share leader passes on a site, most likely it isn't an "A" location so the inferior location is passed down the line.

The weaker chains then end up with the inferior locations, which often contribute to further problems. One of the worst mistakes a chain can make is to make deals on bad sites just to score points with the real estate developer, hoping he will come to them first next time. Dream on, it won't happen. Its not working for Rainbow in the Twin Cities, it got Albertsons laughed out of San Antonio, and it has contributed to Winn Dixie's bankruptcy. A&P's Farmer Jack in Detroit is another good example. When these chains can't get the best site, they end up taking any old site. Often an "A" operator can take a "B" or "C" site and make it work, but it never works for a "B", "C", and "D" operator. In professional sports, weaker teams always get first pick in the college draft, but in the business world, the best company always gets first pick of the best real estate. We may someday see laws passed that once a competitor gets 40% market share, they cannot build more stores unless the property has been refused by two other competitors.

We responded to the story by saying, Didn’t they have equal access? Didn’t local planning and zoning boards have a chance to review Tesco’s proposals? Didn’t Tesco just move faster, more efficiently and more effectively than anyone else?

We sympathize. After all, it was Tesco’s aggressive pursuit of real estate in Ireland that led the Quinn family to sell Superquinn…thus ending the clan’s reign as the sole owners of one of the world’s great food retailers. But it is hard to condemn Tesco for being better than everyone else.

But MNB user John Bigler wasn’t buying…

Why not blame Tesco for being better – you blame Wal-Mart for it on a daily basis? But, after reading your page for about a year it is clear that being consistent in your opinions or overall philosophies isn’t something you strive for…

Actually, we do strive to be consistent. We’re sure that we fail, and often. But we do try.

We take issue with Wal-Mart about a lot of stuff, but we’ve always said that the real enemy of Wal-Mart’s competition is themselves…that Wal-Mart forces them to be better or die.

At least, we think we’ve always said it. Maybe we’ve almost always said it.

We had a story last week about how a poll in the UK said that retail employees find music choices made by the stores where they work to range from annoying to irritating – and how they say that customers often complain about the music being played. The problem isn’t just the choice of music, but also that a single CD or song often is played over and over.

This story gave us an idea: What if store managers actually allowed employees to program the music selections in the stores where they work? There would have to be some restrictions on language and content, but employees are familiar with the idea of programming their own radio station because they all have iPods. It could be a reward for a job well done…or just a way to get employees to feel like they are part of the team.

It was, however, not an idea that everybody thought was a bright one.

MNB user John Welsh wrote:

Sorry, Kevin, but I have a different opinion about store music. The purpose of store music is to make a customer's shopping trip a pleasant one and, supposedly, music soothes nerves and relaxes the customer. Employees may not demographically match the neighborhood where they work, and their choice might turn off the store's customers. Most often, store employees are usually younger than the customer base, at least in supermarkets.

The type of music should be a decision of management, and management should tailor-make the music to fit the customer base. Elevator-music has its place; salsa has its place; light rock has its place. There may be a place for rap, but I don't know where that might be; at least not in any store I patronize.

MNB user Chris Utz wrote:

Allowing employees to program a retailer's music selection might make the work environment more conducive to having happier employees; especially if they all have the same taste in music. Having happier employees could conceivably help drive improved customer service. But, what if the music choice is agreed upon, but creates a cliquish environment. Most of us have walked away from retail environments where we have been rudely ignored by snobbish employees. What if an employee based music choice creates conflict? Country music, hip hop and punk rock fans may not wish to suffer having to listen to each other’s music.

The bottom line is: Don't forget the customer. I doubt that Grandma would be impressed by many of the new music genres.

And another MNB user wrote:

Not a good idea. The most common complaint I heard about the music occurred when the night stocking crew changed the satellite station to their favorite, and thoroughly annoyed customers until we changed it back. The programs should be what the customers want to hear - if you can figure out what that is.

Here’s another perspective from an MNB user:

How about getting the customers input, as well? I have actually hurried out of stores because the music was too loud and very annoying. I would rather have none than that raucous racket. My guess is that they try to have music to appeal to their selected demographic. That is oh so wrong. It drives out the other folks who came to spend money despite demographic enticements.

But at least one MNB user agreed with us:

Your idea about store employees programming the music is great. For me, even though the selections would almost certainly differ from my own taste in music, the variety alone would be worth it. I work at a grocery retailer's corporate headquarters, where the same music played in the stores is piped throughout the building (except in the executive suite) all day long. It appears to be considered a courtesy to us. The repetition is irritating and often makes the music impossible to ignore, which in my case is anti-productive. Some of the same songs have been played for years. When I stop at the store and hear the same stuff, it just makes me want to get out of there as fast as I can. It says a lot about a company's commitment to diversity when the assumption is made that all its customers and associates will enjoy listening to the same kind of music all the time.

Look, it isn’t a perfect idea. You’d have to be careful not to choose stuff that would drive the customers out of the store…but maybe one of the things one could do is use the experience to teach employees about how to cater to customers.

We’re just looking for new and interesting ways to engage both the employee and the shopper.

Regarding the Federated decision to change Marshall Field’s to Macy’s, one MNB user wrote:

As a Midwest native who first visited Marshall Field's at age 4 with my grandmother (when we took the train in from her home in Gary), I mourn the demise of the name. As a marketing researcher, I cringe at how consumer research was used to justify the decision, and it DID smack of what Coke said about New Coke. To justify that change by saying that "2/3 of Chicagoans were positive or neutral toward the change" is ridiculous. It says nothing about the passion or the spending power of that other 1/3.

Can Federated say with confidence that the bottom line lost by alienating its base (and the negative buzz that carries over to those other 2/3) will be replaced by new business (+ cost savings) generated by making the change? Chicago is not Dallas or Seattle. I've lived through the change out here of Bon Marche to "Bon Macy" to Macy's...but Chicago is a place MUCH more rooted in tradition than Seattle. Going to Chicago to shop at Field's has been passed down to generations; I'll now be saving time and $ when I go to Chicago, because I have a Macy's here.

We had a story last week about how Australia’s Yellow Tail wine is the number one imported wine sold in the US, in part because it has appealed to twentysomething consumers with less knowledge and experience in the wine category.

One MNB user wrote:

I find in amusing when CEOs take success and spin it as resulting from some deep insight into marketing and understanding some important consumer segment. I think the success for Yellow Tail can be attributed to the fact you can buy it for $5.99 a bottle, and it’s not merchandised next to the Blue Nun!

Another MNB user wrote:

I am over fifty and I buy and drink Yellow Tail Shiraz. Several of my friends do, too. We drink it because it is a good hearty wine for the money. Many labels in this price range are much less potable. For special occasions or for guests, I buy a better label. My budget doesn’t allow for a high priced label when I’m just enjoying a glass at home alone. I could care less about the animal (label) aspect.

MNB user Kate Childress wrote:

The article about Yellow Tail wine and Thomas Summer’s comments caught my interest as I have been a fan of both the wine and the brand’s marketing platform for a few years now. As a twentysomething in the marketing industry as well as a novice (dare I say a younger twentysomething?) yet passionate wine connoisseur, I was first introduced to Yellow Tail at a local restaurant where it peaked my interest as a decent tasting wine from an interesting place other than California or Italy.

From there, I could not help but notice the advertising campaigns which were sharply targeting my generation of consumers; magazine ads in fashion and entertainment magazines, promotions and distribution in the restaurants and bars which I frequented. The ads were simple and to the point; a wine from Australia, black animals with yellow tails. It doesn’t take a genius to put two and two together, but the equation is unique and different and communicates the simple points about the product: it is a wine, from Australia, with the name Yellow Tail. To a twentysomething, novice yet passionate wine connoisseur, it doesn’t take much more than that. Effective communication to the right target equals a new loyal consumer.

I think that Yellow Tail is doing a great job and was glad to read your article and hear the company’s point of view. Thank you for providing an invigorating wake-up call every morning… you are helping to continue the education of a new professional in the retail marketing industry.

Our pleasure.

We reported last week that 16 of Nash Finch’s top executives have been signed to retention contracts that give them between one and two year’s salary and benefits if they are fired by the new CEO hired to replace the departing Ron Marshall – thus giving them a reason not to start sending out resumes.

We suggested that if the company has so little confidence in its management team that it believes these executives will be replaced by a new CEO, one has to wonder about the company’s overall belief in its quality of leadership.

One MNB user wrote:

I find it disgraceful that prepackaged parachutes are being passed out ahead of time for a select group at Nash-Finch. They should be focusing on adding value and making their retention a non-issue. This very behavior says much about exactly why they may have something to fear.

And another MNB user wrote:

Being Ex-Fleming, I believe Nash is doing the right thing. The last Fleming CEO systematically got rid of most of the long time top management who knew how the grocery industry worked and how to make money for the company. They invested most of their life to build the company to world class, respected by their customers, vendors, and competition. The last CEO brought in his own management team who helped bring Fleming to where it is today.

I only ask the Nash Finch Board of Directors to be very careful picking a new CEO, and very vigilant reviewing their actions.

We got some email about Sears notifying its retirees that it will make further cuts to their medical benefits, citing rising health-care costs and competition from retailers that provide little or no medical coverage to retired employees.

One MNB user wrote:

I wish there was some way to get an employer to give back the hours and years that someone has worked under the misapprehension of receiving a certain set of benefits.

This is always like a retroactive pay cut. It’s hardly fair to tell someone to plan their life and work hard for X reward, and then snatch it away after decades of service. They earned it. It is exactly as though a customer bought something, took it home, and discovered the merchandise wasn’t as advertised.

It may not be illegal but it sure as hell is immoral and I try to avoid giving patronage to any company that does it. It’s become acceptable for some reason, I think it stinks.

And another MNB user wrote:

My mother is 87, and a former Sears employee. They have raised life insurance premiums each year. What started out to be a small outlay of money is now huge. After paying in for more that 20 years, her insurance amount for payoff is down by several thousand dollars.

If she drops out now, she still stands to loose too much to do so.

Expenses continue to climb for seniors while income does not rise to meet inflation rates. This greed involves taking from those least able to pay -the elderly.

And finally, we joked on Friday about being in Seattle and seeing an ad for Stefanie Powers starring in “The King & I”…and wondering how she could play the role since by now she must be in her nineties.

Not funny….at least not to MNB user Anita French:

Boy, Kevin, that was a cheap shot you made this morning about Stefanie Powers. As a matter of fact, she was born in 1942, the same year I was, and we both have a ways to go before hitting “90 years old.” But that is besides the point. It's not like you, I thought, to make disparaging remarks about how old someone is and whether their age disqualifies them from doing their job. I'm still working as a journalist, although retirement sounds good now and then. As a long-time reader and occasional correspondent, I'm kind of disappointed in you.

You’re right. It was a cheap shot, and probably not at funny as we thought it was.

But as for age discrimination, we think the only time it is acceptable is when you are casting a part. In “The King & I,” Anna is supposed to be the mother of a six-year-old son…which seems at best unlikely for a woman who is 63 years old.

You’re right, though. Just because Stefanie Powers is 63 doesn’t mean she can’t play a woman who is, say, 33. (In the ad, she was looking pretty good…)

Our favorite case of weird age casting is “North by Northwest,” the 1959 Alfred Hitchcock movie starring Cary Grant, who was born in January 1904. His mother was played by Jessie Royce Landis…who was born in November 1904.

Talk about “at best unlikely…”
KC's View: