business news in context, analysis with attitude

Got the following email about Supervalu:

For twenty-plus years I worked for companies providing services to American Stores, Albertsons, and Supervalu. During that time the competitive sets in markets where their banners operated changed dramatically, as did those sets in virtually all US markets. Not too many years ago, for instance, Jewel and Dominick's combined shares were upwards of 70% of the Chicago market, a far cry from today when relative newcomers Target, WalMart, Trader Joe's, Whole Foods, Supervalu's own Save-A-Lot, and more, as well as a vastly expanded Aldi's, have brought more locational convenience as well as shopping niches to the marketplace. Competitive changes clearly have affected existing business operations. But they have, too, in markets where Safeway and Kroger and others operate seemingly with greater success than Supervalu and its direct predecessors. Why?

In one manner or another, Supervalu and its predecessors have attempted to succeed by saving their way to salvation. Corporate American Stores management was most often characterized by employees as bean counters with no vision for development. Albertsons was a successful, mostly smaller cities and towns operator that got in over its head with the acquisition of banners in major markets. It didn't compete successfully against bigger players. Supervalu operated and had a virtual lock with its Cub retailing operation in the Twin Cities but was essentially a successful wholesaler with not much hardball retailing experience. Its Board and corporate management saw an opportunity to accomplish a ten-year growth objective in one fell swoop by acquiring several Albertsons banners in major markets. It made an enormous financial investment, the adverse effects of which are still a major burden. Among management decisions by all three owners, staffing cuts were executed as an important part of the way to improve profitability.

Not surprisingly, in every instance, business and store operations and profits suffered even as competition increased, notwithstanding the efforts of dedicated, capable in-market employees among all banners.

What's the future? Quite possibly the acquired banners will be sold off to competitors. Kroger, for instance, might find Jewel attractive, and possibly Acme as well. And Supervalu would be free to re-focus on its wholesale operation.

Regarding one of Amazon’s key programs, MNB user Karyn Chenoweth wrote:

We have used Subscribe and Save and love it, for the most part.  The part I don't love is that of the 4 items we have on the S&S plan, 3 have been discontinued.  We get an email saying that particular variety of coffee or towels or whatever is no longer available but hope we can find something else that works.  Where I think Amazon misses here (and I am a HUGE Amazon fan, so while this is a minor inconvenience in the scale of things, I have high expectations for them) is that the "discontinued" email could and should also contain other available options and easy choice.  Rather than make me go search for a different variety and figure out what's similar, provide options that are available and give easy continuation of the service. 

We had a piece yesterday that took note of how Jim Koch, founder of the Boston Beer Co., decided to give preferential treatment to beer-drinking customers as opposed to wine-drinking investment types when he took the company public 17 years ago ... a move that I said reflects putting a greater emphasis on Main Street rather than Wall Street.

To which MNB user Ron Sarasin responded:

I am one of the guys who took advantage of Jim Koch’s IPO offer which allowed the purchase of 33 shares at $15 per share ($495).  (Jim is a friend and I was president of the National Beer Wholesalers Association at the time).

I still own the shares and haven’t thought much about them in the interim.  After reading your article I looked them up and they closed yesterday at $104.58.

Happy days are here again!

And MNB user Karen Shunk wrote:

I’ve always been a big fan of Jim Koch, but I watched with interest an episode of Bloomberg’s The Mentor where he mentored the guys who run Oceanside Ale Works in Oceanside CA (near San Diego).  If you haven’t seen it, you can check it out here.

He listened very carefully to them and tried to offer insights not just based on how he did things, but in a manner that related to what was important to them and their environment.  I was greatly impressed by Jim.  Although I (sadly) live nowhere near them, I now follow Oceanside Ale Works on Facebook and I am very impressed in their growth and the connections they have forged with their community.  And I look forward to trying their beer!

I’ve never met Jim Koch, but always have wanted to. He’s always struck me as the prototypical example of the enlightened CEO ... and he makes a product I very much enjoy drinking.

One of these days...

We also wrote yesterday about a New York Times interview in which ad agency CEO Steve Stoute talked about having people sign the company’s mission statement in the same way they might sign a constitution, because adherence to a company’s culture and belief system is critical to success.

MNB user Jarrett Paschel wasn’t buying:

Re: Steve Stoute’s bragging about the “belief system,” he has created for his organization - a sort of mission statement that he requires his team members to sign. It’s precisely this kind of messianic, delusional crap that causes team members to become cynical and bail from organizations.

Team members in great organizations don’t want to have to pretend to subscribe to some phony mission statement or ideology, they want concrete actions like profit sharing, selling great products and services and, most importantly, autonomy to do their job well. That’s what keeps Zappos together. They have the authority to solve problems. Ditto for Whole Foods, whose informal mission statement is “we have no mission statement.” Please.

And nowhere is this more evident than the Millennials. As you pointed out yesterday, most don’t want a career in retail, and many complained of dishonesty. Well duh! Millennials see right through this pretense. Over on reddit, one of the Internet’s largest communities, I’ve read dozens and dozens of threads written by employees of places like Best Buy. These kids actually love(d) their jobs and really liked helping people. Yet as a group they almost always end up quitting because they were constantly being pressured to up-sell to meet store quotas—rather than helping customers—while simultaneously having to clap hands and pretend to “believe” in some kind of mantra dreamed up on a corporate retreat. Honestly. Do we really think so little of the same kids that we raised to be bright and clever?

Despite what (some!) aging boomers want to “believe,” building a great culture is about concrete action. None of Stoute’s team members are going to “catch a cold” if they have great jobs with tangible outcomes. And by the way, this is precisely what Jim Koch did do. He didn’t ask anyone to subscribe to his belief system, He took action.

You make a legitimate point...except that I think you make a mistake by casting this as an either-or decision.

Stoute wasn’t bragging, it seems to me, as much as he was responding to questions. And I’m not sure that he doesn’t do the things you suggest.

I think there is room for both approaches within enlightened organizations.

I took a shot the other day at Taco Bell, which reportedly will shortly offer a new innovation - it plans a line of Doritos Locos Tacos with shells made entirely from Doritos” described as “Taco Bell on the inside and Doritos on the outside.”

I wrote: That sounds really, really disgusting. Though somehow fitting as Taco Bell looks to celebrate its 50th birthday.

Which led one MNB user to write:

Any chance you could quit hating on Taco Bell long enough to view them realistically for what they are, which is a very innovative, low-cost provider of the lowest common denominator of fast food?  This is a company that is constantly bringing in new, cost efficient menu items that are helping to drive positive comps,  YUM brands is up over 28% this past year.  We keep hearing so much around "innovation" these days and TB is clearly a leader in this category. This is a company that's helping to keep the dining room lights off in many American
homes.  They have a terrific "drive-through diet" menu that cuts much of the fat and calories out of the typical fast food item.  Mountain Dew specifically designed their Baja Blast for TB food, that's innovation and a differentiator (whether you like the drink or not-I've never had it.)  A Doritos shell taco?  That's brilliant and I'm sure will spike enough interest to at least drive a ton of trial. It may only last a month but I can't wait to see what's next.  Drop some change, literally and figuratively, and go grab some lunch.

I’d rather discuss philosophy with Madonna.

Sorry. But you lost me at “lowest common denominator.”

Inevitably, the debate continues about whether Pete Rose should get into the Hall of Fame.

MNB user Pat Patterson wrote:

Points about Rose not being elected to the Hall of Fame that I haven't seen expressed come directly from Pete Rose's agreement with Bart Giamatti, then the baseball commissioner, negotiated in 1989.

From point 4 of their agreement "Peter Edward Rose acknowledges that the Commissioner has a factual basis to impose the penalty provided herein, and hereby accepts the penalty imposed on him by the Commissioner and agrees not to challenge that penalty in court or otherwise." 

The penalty referenced is outlined in point 5 of the document as follows: "the Commissioner, recognizing the benefits to Baseball from a resolution of this matter, orders and directs that Peter Edward Rose be subject to the following disciplinary sanctions, and Peter Edward Rose, recognizing the sole and exclusive authority of the Commissioner and that it is in his interest to resolve this matter without further proceedings, agrees to accept the following disciplinary sanctions imposed by the Commissioner.

Peter Edward Rose is hereby declared permanently ineligible in accordance with Major League Rule 21 and placed on the Ineligible List.”

The document further allows that Rose can request reinstatement under provisions of the major league baseball contract which he has done at least twice and failed to be removed from the "permanently ineligible list.  In 1991 the Hall of Fame voted to ban players on the permanently ineligible list.  At the last nominating session the BBWAA, by rule, could not nominate anyone who last played prior to 1992.  The Veteran's committee is also bound by rule from nominating any player on the permanently ineligible list.

In a nutshell, finally, Rose agreed to being placed on the permanently ineligible list for whatever reason(s) he had at the time.  He has followed the rules attempting unsuccessfully to being removed from the list.  He has since gone the "Mea Culpa" route to try and generate some support, again to no avail.  Do his accomplishments merit Hall of Fame?  No doubt, but after breaking the rules he agreed to this path and should grow up and accept the price for his actions.  Life can be unforgiving.

From another MNB user:

My dad, born in 1910, was a long time Cincinnati Redlegs (now the CIncinnati Reds) fan and had tickets to every season opener.  I got to go with him on many occasions.  I am not a great fan of Pete Rose in part because I don't think he is a very nice person (be prepared to pay for any autograph).  But from what I know he never did anything to influence (fix) the outcome a game he had a bet on, and did not bet against the Reds when he was part of that organization as a player or manager.  Now, illegal use of steroids can be said to have influenced the outcome of many games.  For that reason I'd distinguish what Rose did from what the drug users did.

I believe we only have Pete Rose’s word for it that he did not bet on Reds games. Which is sort of the point. He casts a shadow on the integrity if the game.

As for steroids...I’ve gone on record to say that if I had my way, people like Barry Bonds and Roger Clemens would not get into the Hall of Fame.

Call me a purist. But these guys have hurt my game. Not their game. My game

I have to admit that the following email really is my favorite kind...and not just because MNB user Christina Harrison said nice things about me:

Morning!  I’m the woman who wrote in a while back about her brother-in-law buying the blueberry pancake mix at Cub that had no  blueberries in it – just chunks of dextrose.  You are fabulous and EVERYBODY in our office reads you every day.

I just saw your comment about your daughter finally expressing an interest in the classics.  My 10 year old son and nephew, Ben & Nick, have recently expressed the same interest and I’m struggling with what classic movies would be appropriate for them.  I went to the library and found several versions of Top 100 films, but there were none oriented to kids.  To be clear, I’m no prude.  We actually had both boys sit down after the Oscars last year and watch The King’s Speech including the f-word scene because we thought it was important to show his breakthrough.  On the other hand, horse heads in peoples beds might be too much. 

Something fast paced to keep their attention?  Suspenseful, yet not gory?  Philadelphia Story might be too hokey?  All About Eve is my favorite classic and that might be okay.  Maybe Hitchcock?  Rear Window or The Birds?  I love musicals, but as soon as Gigi breaks into “The Night They Invented Champagne” (our fave) they will run out of the room.  I would greatly appreciate any advice you could share.

I can’t tell you how thrilled I am that you asked.

Ten is actually a tough age for this. You want to protect them, but then again the odds are that they’ve seen and heard things you’ve never seen and/or heard, and video games have sort of destroyed their ability to appreciate pacing. Also, I’m not sure what the definition of “classic movies” is. Does this have to do with how old it is? Or just the sensibility?

If I were putting together a film festival of older films for 10 year old kids, there’s probably what I’d start with...

From Hitchcock, you can choose from North by Northwest, The Birds or Psycho. (Sort of depends on whether they scare easy.)

Jaws. (Again, how easily to they scare? This is just a great monster movie at its core...)

In sports movies, I’d pick Rocky and/or Hoosiers.

In westerns, go with Butch Cassidy and the Sundance Kid.

In older stuff, go with Casablanca and His Girl Friday (though I may be pushing my luck here).

How about American Graffiti? Or even Raiders of the Lost Ark? Or Tootsie? Or The Great Escape? Or The Sting?

Young Frankenstein is a great choice that seems to appeal to kids of all ages.

You want a musical, go with Singin’ in the Rain...which I think is pretty accessible to kids.

The thing is, I’m not sure there is an ultimate list of great movies for kids. You have to sort of get a feel for their sensibilities and tolerances, and then try to push the envelope a bit without making it seem like homework. Like I said yesterday, this was always a lot easier with my sons (especially my oldest, who at a young age liked watching movies like The Third Man) than my daughter.

I think what is most important is expanding their range of interest a bit, helping them understand that movies like Transformers and Fast and Furious, while they have their place, are not what movies at their best are really all about.

The coolest thing is when you find something they like, and you get to sit there together and share it. So make some popcorn, and let me know how it goes.
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