business news in context, analysis with attitude

Lots of reaction to the legislation being considered by the city of Chicago that would create a higher minimum wage for “big box” stores larger than 75,000 square feet and owned by chains generating more than $1 billion a year in sales.

MNB user Thomas D. Murphy wrote:

While I have a deep appreciation for a true "living wage & benefits", nothing good ever comes from the government (at any level) trying to help out on this. They can only convolute the process resulting in an eventual mess, unexpected (usually negative) economic impacts, and often multiple & contradictory rules, e.g., your example of multiple minimum wage guidelines

It usually takes longer for the market to balance itself out, but really, Wal-Mart is having no problems getting new hire the wages and benefits must be in balance with the market forces. In truth, I believe most of these efforts are the result of union-sponsored lobbyists working at all levels...and that is never good!

MNB user Joe Fraioli wrote:

I am no fan of Wal-Mart and their business practices; however things need to be fair across the board for all companies. This proposal does not seem fair as it is targeting bigger companies simply for the fact that they are bigger. What’s next if a company does over $5 Billion in sales all employees must get a company car?

Another MNB user wrote:

The city just can't help itself. It's a big union town and since W-M won't throw in the towel, they are going to punish them and others by writing rules that will apply only to big retailers. Well, the big boxes can always go outside the city, then the city council can get something new...that big sucking sound as those highly prized tax dollars start flowing out...this will match the sucking sounds from Orlando and Las Vegas that are capturing the convention business. Extortion is can run in both directions.

MNB user Douglas F. Gray wrote:

Last time I checked we were still a capitalist society. Enough is enough and these cities and States have no business dictating what business needs to provide what level of wages and benefits.

If like South Florida, folks in Chicago cannot afford basic necessities on the minimum wage than I would support a change. This change needs to be applied to all companies, not just the strongest. We have McDonald's paying starting wages of $12.00/hr in areas where minimum wage workers will not work in what my son calls "the Burger mines". That is the way it should be and for the record they still serve up the full Dollar Menu.

How does the average person reconcile shopping at Wal-Mart to save money and yet feel it is fair to make them pay a different wage and benefits package than another business.

This is just one more example of why trade associations need to Boycott this corrupt city.

Wake up America! If you don't like Wal-Mart's business model you can simply vote with your own hard earned money and spend it somewhere else. As for me, I'll take, low prices, clean stores and average customer service.

Yet another MNB user wrote:

I worked for Wal-Mart for 11 years ( it put me through college, sent me to Australia, paid for me to do studies in Marine Biology, and has paid for my trips all over the world!) and I loved working for the company by the time I left I was at 15 bucks an hour, but I truly loved the managers I worked for and they treated everyone very well. I understand what Chicago is doing but I can not accept that the city would rather watch people suffer instead of giving them the opportunity to work for a good company.

We got an email yesterday from an MNB user about our story on Costco’s quarterly results, and it ties into all the stories we’ve been doing about absurd executive compensation schemes:

I can't quote the source, but I read onetime a CEO's remark, "I don't pay good wages because I have a lot of money…I have a lot of money because I pay good wages." I always remember that anytime I read about Costco.

Agreed. We wrote yesterday that Costco CEO Jim Sinegal, who has an annual salary of $350,000 a year, is a bargain. Which prompted one MNB user to argue:

No bargain, window dressing. (His) probable earnings have to be far more, in my opinion.

Of course they are. Most of us probably would be thrilled with one percent of his Costco stock position.

But our point is that Sinegal’s earnings are tied to the performance of the stock...and, in fact, Wall Street continually devalues the Costco stock price because it feels Sinegal pays his people too much money and keeps his margins too low. In other words, catering to actual customers rather than to the stock market...even though his personal revenue is tied to the stock price.

Isn’t that the kind of CEO you’d want for a retail company?

We had a story yesterday about a study suggesting that we Americans are an impatient breed, and that we hate grocery checkout lines most of all – even more than the post office or motor vehicles bureau.

One MNB user responded:

I do find myself growing impatient while on line at a store but only if there are not enough registers open, the associate is not working hard, they do not acknowledging I am waiting ,etc. If all is well then I don’t mind waiting a few minutes because they are doing their best. A good retailer in this scenario is Trader Joe’s, they are fast, friendly, and I don’t mind the wait when there is one. Waiting in line at the bank is where my blood starts to boil, it is like they don’t even want your money!

Another MNB user weighed in:

What's even worse is calling a retailer and getting the phone tree. It infuriates me to go through three or four levels and finally find out how to talk with a real person. Oh I try to circumvent the system with using the * or # or 0 but that only works once in a while or only if you are on the proper level. Yes I'm a baby boomer leader and yes I hate lines. (Retired
military might have something to do with it,,,)

We’ve been writing recently about the decision by the California community of Hercules to try to use the power of eminent domain to take over property where Wal-Mart wants to build a store. We noted that we’ve never been to Hercules, so don’t have a real sense of how such a store would affect the area…but the good news is that there are MNB users who seem to know the region well.

One MNB user wrote:

Hercules is not a small rural town but rather a small community in the middle of the very urban San Francisco Bay area. This is all about a community having the right to create a vision for their town. The town has grown rapidly in the last few years in an area where housing prices are routinely reach the $800,000 to $1,000,000 price range and the residents want to create an atmosphere that is small town oriented. The most common reference they use is that they want to create an environment like Sausalito across the bay where small business reigns supreme. The town feels that a Wal-Mart in any format would create a huge amount of traffic and detract from the overall ambience they are trying to create. Bottom line is the Anti Wal-Mart sentiment in this area is so strong that unless the courts get involved this store is doomed.

Wanting to be like Sausalito is one thing. Actually being like Sausalito is another…which is the point made by another MNB user:

I was born in the SF Bay Area and currently live in the city of SF. For my entire life, the northeast shore of the bay from Richmond to the big Chevron refinery at the Carquiniz Strait has been a pit with crappy schools, crappy homes and high crime.

Over the hears there have been some "new" developments that were going to "turn things around", but as long as the Chevron Refinery is there and the area (almost) always smells things will never get better. There are a few new residents who paid a lot of money for new homes that think the area will be the "New Sausalito"…

We gather you aren’t one of them…

Continued email about the Albertsons sale, from a number of perspectives.

MNB user Mark Heckman wrote:

I have generally good feelings about Supervalu and have respect for their recent track record. However, there is no doubt that they are entering into uncharted waters with the Albertson’s deal. I am not at all sure that they have right corporate culture or even business acumen in the area of integrating new stores, new people and new marketing areas into their mix so quickly.

Many accomplished retailers have shown in the past that while they may be very good at being who they are, they have no idea how to create synergy and growth from an acquisition. Time will tell, but the numbers and the bravado that Jeff Noddle is reverberating now, will be much harder to execute than to articulate.

Another MNB user wrote: we all know what Supervalu will be doing to their stores. Now what about the other 655 other stores that are here in what we all call the Rocky Mountain Division? We’re all still kind of shaken up some what that the company has split up and this end got Cerberus & Kimco...Basically as we see it a salvage company and reality company. Do I need to say more....But we all still wake up and head off to work everyday. Loyalty. Some stores sit on prime land that Joe (Albertson) would buy instead of leasing back in the day and some are leased. Life does go on. There's just a curve in the road to a future is all. One that everyone has taken in their life's, except for Larry. He still has a job sitting on the board of Home Depot.

Another MNB user chimed in:

My wife works for Shaw's Supermarket's and she received a letter in the mail yesterday stating that Albertson's was moving all Shaw's associates over to the ABS 401K plan and at the same time would be enacting a "cessation" of all future ABS contributions to the Shaw's pension plan.....albeit putting an end to the long standing, lucrative pension plan at Shaw's (Shaw's had, a few years back, stopped allowing new entrants into the plan but had still been contributing to existing plan member's plans)....

I understand this is a trend for larger companies......but no meetings with ABS HR people with opportunities for comments, Q/A......just a strategically written letter that showed up in associate's mailboxes.....

I guess we can blame Larry Johnston for this one too.....

It is the near-anonymous letter that is both dispiriting and illustrative about how these organizations function.

We know a guy who worked for the same food industry organization for more than a half-dozen years, and was, as far as we could tell, both professional and effective in his job. He recently got laid off when his supervisor sent him a letter, which arrived at his home while he was on vacation.

Now, this guy will move onto bigger and better things. He’s young and talented. But what the organization involved doesn’t realize is that while the letter went to one person, it sent a message to almost everyone who works there about how they are viewed as people and valued as professionals.

We received several emails about the new and higher bid made for Marsh Supermarkets, and the possibility that the board might accept it – even though the original bidders want to keep the stores operating and the new bidder may be more interested in the real estate.

MNB user David Livingston wrote:

Generally when a company accepts a lower offer there is usually some extra financial consideration given to the senior staff. Often it is cheaper for the acquiring company to pay a lower share price but to offer a few million more in golden parachutes to the executives. Why do you think these lowball offers are so easily accepted?

Another MNB user wrote:

I would hope this difference between the bidders WOULD make a difference to the "folks at Marsh".

Given the fact that Sun Capital intends to continue to operate supermarkets-actually, not just operate, but run good supermarkets that the community will strongly support and the with the type of leadership that fosters positive morale and employee retention- perhaps Marsh stockholder's will accept the bid because (and forgive me if this sounds a bit naive) while it may not reap the greatest financial gain, it's the right thing to do.

Don’t hold your breath.

We had a story earlier this week about how Tesco’s insurance arm in the UK was offering lower life insurance rates to people who quit smoking, and we idly speculated that it might be interesting – and even a little scary – if it linked its systems so that if someone getting nonsmoker insurance rates from Tesco would be flagged if they bought tobacco products at a Tesco retail store.

At least one MNB user – David Diamond – thought that this wasn’t such a bad idea, especially if people could opt into such a program so that the threat of being caught smoking actually served as a way to keep them from buying and using tobacco.

However, MNB user Philip Herr sort of has a problem with this logic:

I am sitting here asking, what are you smoking? I feel both incredulous and deeply disturbed by this possible invasion of privacy. Weren't we just raging against the phone companies for supplying data to help root out potential terrorism, while in the next breath happily allowing our behavior to be monitored for "improper" purchases? Where does it stop, our church or synagogue asking for reminders if we purchase "The DaVinci Code"? Our spouses if we rent an X-Rated movie?

The argument has always been that consumers will happily give personal information if it benefits them. I have not subscribed to that view -- even if I trust the retailer. Who is to say the information won't fall into other hands? I haven't felt this degree of paranoia for quite some time.

By the way, in a Your Views exchange yesterday, one MNB user noted that such a system would not work because people often buy tobacco for friends, not necessarily for their own use…and asked (rhetorically, we think) if we’d ever done so.

We responded (not rhetorically): Never. We’ve never smoked, and have never bought cigarettes for anyone. Not even for our mother, who was a two-pack-a-day smoker for most of her life, and wasn’t pleased when we refused to buy her what she wanted. (She died of lung cancer of a few years ago, proving that we were right, which doesn’t make us feel any better about it.)

If we burn in hell, it’ll be for other reasons. It won’t be for providing anyone with cigarettes, and we won’t be in the smoking section.

To which MNB user Al Kober responded:

What a shame you do not know for sure that if you die (and you will) that you would not be going to Hell. It is possible to know and if you don't know for sure, without a single doubt that you will spend eternity in Heaven you probably are not. The problem is you are somehow or some way trusting in your own efforts or hoping your good out weights your bad. It doesn't, because the only people going to heaven are those whose sins have been forgiven, totally. Even one small sin is enough to keep you out of heaven. Why not be sure and live with the absolute assurance that if I would die today, I will spend eternity in Heaven with Jesus Christ, who paid the price for my sin and I can stand before God clothes in the righteousness of Christ. It all about what Jesus did, not what you did or didn't do.

You need to be sure not hope when it come to something this important.

“If we burn in hell” actually was just meant to be a clever turn of the phrase. But now you have us worried.
KC's View: