business news in context, analysis with attitude

On the subject of the increasing homogenization that affects the supermarket industry, we got the following email from a member of the MNB community:

“In my neck of the woods, only those with deep pockets can play the game. So what do we get? Retailers that look the same because only those with the money can play. Then those manufactures and retailers who can afford to spend the money, purchase competitors, get more distribution, and then spin the figures in their favor keep things looking the same, and continue the "homogenization" we see in retailing today.

In my view this has taken the creativity out of the merchandising. Don't get me wrong, category management has its place, but most often it is the only tool that is used. What happened to that "gut feel" that retailers of vision used to possess? Too afraid to make a mistake? They hire numbers crunchers who make the decisions and the artists start new retailing concepts. Hopefully these early adopters who are paving the way don't sell out to the larger retailers which will continue to perpetuate the process.”

The dominance of accountants in retailing leadership positions -- as opposed to marketers -- may be the central reason that traditional retailing seems to be in such a downward spiral these days.

We got a number of emails on the subject of the jury finding Wal-Mart guilty of forcing workers to put in unpaid overtime.

One MNB user wrote:

“I believe that the company as a whole had to know that the employees were doing work without over time pay. The production level of work would show this. They have to be able to add 2 + 2 still = 4. If max output was occurring but the actual clock shows otherwise, well, HELLO? It is not rocket science. You certainly know in any realm that customer service (which is a big variable) plus physical output is not going to get everything done everyday without any overtime get real.

“They all had to know.”

Another MNB user wrote:

“It reportedly took $50 million to settle with the workers in Colorado 2 years ago. Of course Wal-Mart was disappointed with the verdict and claimed that while the instances did occur, company policy strictly prohibited it and that they had a strong policy of paying associated for time worked...Sound familiar? More than just a little blood in the water, I smell a "trend" in the unwritten policies that are finally coming home to roost.”

And yet another MNB user wrote:

“When I started working in the food industry in 1959 working off the clock was required if you wanted to progress or work any of the shifts that paid premium rates. Over the years, because of the unions & Federal Wage & Hour laws that has been almost eliminated from the Co. I worked for . I had a good friend that was a store manager terminated for altering time cards.

“If Wal-Mart is sincere about no free time, getting rid of a couple of store managers that allow it will solve most of the problem real fast.”

Excellent point. To this point, Wal-Mart seems to be falling back on the direct opposite of the “he was only following orders” defense. In this case, the defense is “he wasn’t following orders.” But for many on the outside peering in, it seems like a hollow defense at best.

We had a story last week that Australian scientists have found a new way to treat chickens so they don’t get sick without using antibiotics. This could be a significant development in view of current concerns that chickens are being given so many antibiotics that new strains of disease are evolving that are resistant to them.

The piece prompted an email from a member of the MNB community:

“Yes, it is true that both in Australia and in several research centers in the US that there are experimental additives given to poultry that increases the 'normal flora' in the intestine, making it more difficult for pathogens to survive (read Salmonella or Camphylobacter) in the chicken's intestine. To date, nothing is approved in the US.

“The Birckenstock-wearing, tree-hugging liberals have recently gone on a warpath, extolling the horrors of antibiotic use in animal agriculture and stating that increasing disease resistance in humans is because of use of antibiotics in animals. I need to raise some very valid points:

    a.) There have been no scientific, statistically valid tests that show there is correlation between human disease resistance and use of antibiotics in animal agriculture.

    b.) Increasing antibiotic resistance in humans is most likely due to the gross over prescription of high-powered antibiotics for a runny nose. We can thank HMO's stretching US physicians thin to spend minimal time with patients, then throwing a pill at them to appease them.

    c.) It would take a crow-bar to open my mouth to put a piece of 'organic chicken' in it. Recent reports show that 'organic' chicken from the UK is filthy with Salmonella as opposed to production-raised poultry.

On the subject of the $51 million in fees that Kmart has paid to lawyers and advisers since it filed for bankruptcy protection, one MNB user wrote:

“Having recently experienced a smaller corporate bankruptcy ($600,000,0000 retail co.) the CEO does not have the control you seem to expect. Outside forces, vendors, unsecured creditors, banks, lenders and shareholders all hire "experts" to protect their interests but the company must pay all the bills. The company may oppose the amount paid to an attorney, but the unsecured creditors, if they don't get who they want, threaten liquidation, and for the long term good of the whole, the CEO is forced to agree. In bankruptcy, business people with business understanding don't run the process. Often the CEO/CFO are the only business people in a room watching attorneys, accounting firms and bankers do everything they can do to impede the process to increase fees at the cost to the companies balance sheet and hurting the customers and employees. The bankruptcy court must take a leadership role to stop this typical type of procedure.”

Based on the story we reported above, it sounds like that may be happening. On the other hand, the judge is a lawyer, too…

We reported last week that that Dunkin' Donuts will require its 5,300 locations in 32 countries to stop making its signature “donut with a handle” product. Because of changes in batter and production methods, the doughnut that had an appendage for dunking was the only one that had to be made by hand.

In our commentary, we noted that because of competition from Krispy Kreme, Dunkin’ Donuts seems to feel it can’t afford to waste product, time, or money. But, we think that you don’t get more competitive by eliminating a signature product. That’s just a way of eliminating the little touches that make you unique…, which allows the competition to define the game.

On this subject, one MNB user wrote:

“Great marketing idea. Do away with the "Dunkin" donut. Instead of intensely marketing, "the only donut with a handle" and taking Krispy Kreme head on, they relegate themselves to a poor wanna-be. I'll miss that handle as I am among the dunkin' minority. Imagine getting beaten by a company that can't even spell!”

MNB user Charles Young chimed in:

“I have never seen the donut with a handle. If it existed I might have tried the curiosity for fun... but after the fad you have to question is this a product or just a bunch of oddly bent dough?

“Time was that you went to a baker or a diner for a donut, then came the Entenmann man to supermarkets, then Dunkin appeared. They were a company that "shaped" eating habits... they were fresh and sticky, sweet and good. They innovated by making coffee better, guaranteeing a fresh pot. Then they seemed to stop.

“Oh yes there were donut holes and muffins, etc, but the basic product remained the same, the stores were the same. For many years, it seemed the company sat on its laurels (read keister) and rolled out locations. They saw sleepy little Krispy Kreme growing in the South... they watched Starbucks "heat-up" a coffee revolution... breakfast sandwiches hit them with a Mac attack.
“In some ways Dunkin' reminds me of the Post Office, lots and lots of good to great locations, essentially a single product line, counter people who don't care very much. They are in a changing marketplace filled with people looking for new and different products... what are they waiting for?”

The only part of this that we’d disagree with in this email is the line about indifferent counter people. The folks who work at the Dunkin’ Donuts across the street from MNB World Headquarters are terrific. There’s little turnover, they are terrific with kids, and when they see us coming across the street they make our coffee before we get to the front door.

Another MNB user wrote:

“I couldn't agree more with your thoughts on Dunkin Donuts eliminating "the Original"! I'm going over to the local DD now and express my concerns. I hope all the faithful do the same! Maybe the folks at DD responsible for reaction will talk some sense into those responsible for strategy!!”

But not everyone agrees…

“Regarding Dunkin' Donuts losing its signature appendage...Get a grip, man! Seize that next glazed wonder firmly and dunk it to your heart's content.

“We've lost many wonderful things in the name of advancement or because the market no longer held these things viable. I am not saying that is necessarily right, but that is capitalism for you.”

MNB user Michael Twitty wrote:

“Sorry to hear that losing that classic donut is causing you heartburn! Is the disappearance of the iconic Dunkin Donut differentiator really that significant to a business that has, of late, built traffic by pushing so many other items in the store?

“More to the point, it seems as though this signature item has lost relevance. For me, and I suspect many others, Dunkin is a coffee shop that sells donuts. The coffee is the source of my emotional connection. It's the essential part of a fast, satisfying, effective, honest and reliable start to the day.

“If they are not already doing this, in the face of the Krispy Kreme advance, Dunkin may wish to understand how consumers relate to their store TODAY and elevate that part of their proposition that is MEANINGFULLY DIFFERENT from the competition... maybe even single-mindedly wrap themselves in this difference in every communication and consumer touchpoint for the foreseeable future.”

While the suggestion that the doughnut-with-a-handle may actually be irrelevant certainly is a valid one, we were talking to our friend and associate Jim Roxbury (known around MNB World Headquarters as “the marketing guy”) about this, and he noted that this isn’t the first time that Dunkin’ Donuts has eliminated a signature touch. Years ago, it used to have a specific box that it would put a dozen doughnuts in…it was deep, and doughnuts were side-by-side. Now, it has changed to a flat box similar to that used by Krispy Kreme.

This discussion really isn’t about doughnut handles and boxes. It is about signature touches and differential offerings…and avoiding a “me, too” approach to business.
KC's View: