business news in context, analysis with attitude

Regarding the Target CIO who is leaving he company in the wake of the major data breach there, one MNB user wrote:

As the CIO of a retailer during a frighteningly similar credit card breach, I have some empathy for the ousted CIO at Target.However the latest breach clearly demonstrates that retailers have learned NOTHING about data security in the past several years. I'll try to help.

PCI compliance is no barrier to a hacker. It's about as useful as antilock brakes on black ice; a false sense of security that is deadly dangerous. My company was re-certified as PCI compliant the same day our breaches started. Retailers need to go WAY beyond PCI.

There is no such thing as a secure network. Assume bad guys are in your network already and take steps to minimize exposure/damage.This is the same advice I would have given the Trojans.

On the same subject, another reader chimed in:

I’m sure someone had to be the fall guy for this, but please, if you read what has been written on this its clear that several years ago the CEO and board didn't approve the funds to update their system to the new chip that they are now doing. So to throw the CIO under the bus…… well, the Board and CEO need to go as well. Maybe all need to give back their bonus for the oversight here….

Now you're talking crazy talk.

We had a story then other day about what it takes to appeal to Millennials, which led MNB reader Rich Heiland to write:

To add to your Millennial post...when working with managers on managing in 2014, I point out we have, maybe for the first time, the potential for five generations in the work place, creating a new world for how to manage.

When it comes to Millennials another maybe staggering stat came from an Atlantic article a few months ago. We use automotive and housing as our traditional economic engines that will pull us out of down times. Yet the article pointed out that not only are Millennials going to the city, as you noted, they are opting for "small" as in housing of 1,000 sqf, sometimes less. But, they are filling that space with really cool stuff. And, they don't buy cars in urban areas, which could be why ZIP and its relatives are the biggest growth sector in urban automotives. So, impact on our economic engines?

I'm also wondering about your field - is there a rebirth of the corner green grocer going on or coming on as a part of this, ala European neighborhoods where limited space means smaller Fridges (old fart talk) which means more daily buying of groceries?

Finally, I have seen studies that forecast that as these urban millennials wed, have kids they will move to larger housing so maybe you and Mrs. Content Guy can work out a housing swap at some point. 🙂

One can hope.

Related to this story was a piece about how Costco is trying to appeal to Millennials online, since increasingly they are not living in the suburbs where the Costco clubs are. Which led MNB user Glenn Cantor to write:

As a long-time Costco member, it seems to me that Costco generates profit by selling 1) memberships and 2) all of the expensive, impulse stuff in a retail warehouse that people did not originally intend to buy.  They need shoppers to pay for memberships and then regularly shop in their retail locations.  It is a destination outing, rather than merely a shopping trip.  Their dilemma in attracting a younger demographic lies in attracting these people to their warehouse locations, rather than irregular web purchases.  Costco should be asking themselves what can we offer, in our warehouse locations, that no one else offers.

For me, it is the price of normally expensive, but high quality, products.  For example, the quality of their meat is unsurpassed, especially for the value.  Another example is bountiful sampling- we call it the “geezer buffet.”  Costco’s unique proposition lies in getting their members to leave the house and experience their stores.    Retail solutions cannot always be about the web.  Internet shopping is a complement and not always a replacement.

On another subject, from another reader:

I recently went to a Staples store for a printer cartridge.  It was obviously a popular cartridge as they had an entire shelf dedicated to it, but the shelf was empty.  After searching for nearly 10 minutes, I found an employee (Assistant Manager) that took me to the empty shelf (I guess he didn’t believe me).  He then went into the back of the store and brought out a ladder – minimum 12 feet – and climbed a wall on the side of the store to get to the extra stock of these cartridges.  He then proceeded to bring exactly 1 down the ladder to give to me, instead of brining a box or two down to refill the shelf.  Sadly, he was very proud of himself for the good work he had completed.  If this is the type of quality service the store is providing, maybe Staples will be better off as an online retailer.

Regarding the sale of Safeway to Cerberus/Albertsons, one MNB user wrote:

As a long-time follower of the CPG industry, this “news” could have been ripped from a mid-‘90s press release:

“this merger will improve our competitive position.” (we’ll be bigger)

“our customers will benefit from significant cost saving synergies” (we can make more money on the ‘buy’ and pass a bit of that savings to consumers)

"a stronger management team” (we’ll see who survives a more political corporate office in the short term)

There is no mention of focusing on store-level staff (training, hiring, etc.) to enhance the shopping experience. The only time they mention customer service is in the context of "adapting to shopping preferences”. I read that to mean crunching the numbers to focus on store level assortment, a largely corporate and technology-driven exercise. They do, however, plan to focus on creating marketing programs that “contribute to shareholder value”.  So we know where their primary focus is.

I may be wrong (have been many times), but this feels like a short term investment to freshen a few banners, then a relentless focus on squeezing every bit of profit out of the enterprise. Not a long-term bet in my book!

MNB reader Don James wrote:

Go back to Michael Porter, HBS Distinguished Professor - there are only 3 Strategic Options…

Low Cost - Wal-mart.

Differentiation - Kroger (trying).

Niche - Whole Foods or Regionals like Brookshires.

Safeway will probably remain - Stuck in the Middle - a losing proposition.
KC's View: