business news in context, analysis with attitude

Regarding the self-heating, self-contained pre-brewed coffee cup about to hit the market courtesy of celebrity chef Wolfgang Puck and some technology partners, MNB user John B. Lightfoot wrote:

(1) The idea of self-heating, contained liquid product is not new. (2) It
was tried at least once ( for a short time ) in Europe. (3) The product was
canned soup. (4) Technology was similar. It was offered at the German
world food fair, ANUGA, in Cologne, by a British food company, in the early
1980's. (5) It bombed then. (6) Cost was prohibitive. (7) Quality wasn't
consistent. Nice try, but producer could have saved a lot of money if he
(she) did (his or her) homework and avoided the idea of trying to create a
market when the market didn't exist. Oh well.

The question, we suppose, is whether there is a market for this product here and now. We’re guessing yes.

MNB user Bob McMath seems to agree:

I worked with the predecessor company to the new one offering self-heating coffee brands. The potential for this invention is enormous – into the hundreds of millions of dollars -- because you can get a cup of coffee whenever you want it, and no matter where you are! Sure, there are always offices that like to have executives get together over the coffee bar and chat, taking breaks from the daily grind. But having a good tasting (and this is the challenge) cup of coffee handy in cars or desk drawers will possibly even cut into the business of Starbucks if the coffee tastes are right for the majority of coffee drinkers.

There are going to be a number of brands of coffee (and other beverages) using this new self-heating system. I just wish I had the chance to buy into the company. Prices of more than $2.25 for a cup of coffee have not held Starbucks back. It shouldn't on this one -- especially with known brand name recognition!

In yesterday’s MNB, Jeff Folloder wrote in to say that Walgreen was making a mistake in deciding not to accept the American Express card anymore, while Fitzhugh Elder III wrote to say that he felt Walgreen was right, and that Amex has an “unsustainable pricing model going forward.”

Now, MNB user Folloder wrote in with some further thoughts:

It's obvious that he doesn't understand the Amex model! Amex is not, predominantly, a credit card. It's a charge card. The largest part of the user base always has, and likely always will, paid their balance in full at the end of the month. That means that Amex does not have an income stream from interest charged on everyday purchases. Yes, Amex does have a credit facility, but most charges on Amex are not under a credit term. Without this income, Amex must sustain the model differently. How did they do it? They decided to charge merchants who accept the card more. Some merchants chose to accept Amex, some do not.

But how can Amex justify charging merchants a higher rate? Easy. The typical Amex customer has a much higher spending limit than a "regular" credit card holder (remember the "no pre-set spending limit advertising tag?). That translates into bigger spending. Amex customers have a tremendous amount of spending power and fierce loyalty to their card. A merchant needs to think twice about turning them away. Clearly, Amex isn't going away.

And to be sure, everywhere that I want to go, the merchant takes American Express. For my annual fee, I get a monster spending limit (the top end of which I have yet to discover), travel insurance, car rental insurance, a real voice when I call customer service, lightning fast fraud detection, passport services, buyer protection on purchases, and a whole lot of reward points.

Their pricing model works just dandy for me. Unsustainable? Give me a break!

Responding to our story about the salaries and bonuses being awarded to both the outgoing and incoming CEOs at Winn-Dixie, one MNB user wrote:

The saddest part of the whole Winn Dixie thing is that no matter who they wish to spend exorbitant amounts of money on, the company is in a downward death spiral from which not even God almighty can save them. Our country is littered with companies like this once-great southern retailer who fail to see what is the most important thing in our (or any retail) business, and that is customer service.

You cannot go into any Winn Dixie in the chain that is not dirty, understaffed and with employees that have poor attitudes. Their commitment to the consumer went away long ago. You could blame a lot of things for the company’s demise including poor site selection, not embracing technology quick enough or even non-visionary leadership. The truth is, however, they quit seeing their own associates and their customer.

When people like C.W. Waldorf and Frank James left that company, the emphasis at retail ceased to exist. When the company quit concerning itself with the people it employed and taking care of the consumer, the fat lady was warming up.

Turn out the lights boys, the party is over.

But MNB user Thomas D. Murphy had a slightly different perspective on the compensation question:

While I am often surprised at the excessive pay that executives receive upon leaving a job where they did "not get the job done," I also recognize the position of Peter Lynch at Winn-Dixie. This is a sinking ship that is leaking oil. The store assets are distressed, the brand (if any remains) is tarnished, and their future against much better competitors is bleak at best.

Makes you wonder if Peter should have asked for more. Better yet, it makes you wonder about his mindset in taking on this effort in the first place.

Maybe the theory is that if Lynch can’t save Winn-Dixie, it’ll be because the company was beyond redemption. And if he does, he’s a miracle worker.

On that basis, with the right compensation, maybe his mindset is completely understandable.

We had a pair of obesity stories yesterday. One focused on a study suggesting that obesity is a greater issue today because so many people have stopped smoking, which led MNB user Tom Russell to write:

A doctor friend explains part of the increase on the change in the standards. It used to be so many pounds for a man or woman with small, medium or large frame. The "frame" notion has gone away and the new way of looking at obesity uses a one-fits-all measurement. The result is that the change in standard has pushed more people into the obese range.

We also had a piece about how general Mills is going to launch a consumer weight loss initiative; we suggested that this is the sort of thing that retailers ought to be doing. Which prompted this email from MNB user Denise Remark-Lundell:

Kevin, when you can't even find someone with a modicum of intelligence in the aisles to answer basic questions, how can you expect grocery stores to engage in an on-going, interactive weigh-management program? (You realize of course that I don't mean places like Heinen's, Wegmans, Whole Foods, right?)

Right. And the problem you point out needs to be addressed. Seriously.

One of the great things about the MNB community is that you folks feel free to file your own reports about great stores and great shopping experiences…like this one, offered by an MNB user:

With the impending holiday season, I am sure no one is really thinking about great retailing. But I have to take a moment to rave about the new Home Depot in NYC. Located in the new Bloomberg building on Manhattan's upper east side and juxtaposed to longtime premium retailer Bloomingdale's, this tri-level retail environment is damn near the best store I have ever visited.

I am not sure, but I think Nordstrom’s director of customer service trained each and every employee of this store because customer service was at a level I have never experienced. From the doormanesqe greeters at the front, to the employee that walked my wife and newborn child from the elevator to the exact tools we were looking for, I was in awe. Not only this, but two Home Depot employees working in the section we ended up in, actually moved my daughter's stroller in fear that it might be too close to the tools (believe me it wasn't).

Having grown up in a family that owned several local Ace Hardware stores on the south side of Chicago in the 70's and 80's, I know how difficult it is to shop a hardware store. I also know how important personal customer service and overall industry knowledge is to this business. This Home Depot surpassed my every expectation.

I even pried several employees to tell me the difference in SKU's between this store and other Home Depot's including the differences between this one and the other "small box" store in Manhattan (22nd Street). Every one of them could!

CONCLUSION - Home Depot clearly gets that customer service is what is going to differentiate them in an intensely fickle market like Manhattan. Not only have they championed that theme but it really has been woven into the fabric of who they are and what they do. Hopefully they can continue to exceed the expectations. Either way, i know where I am going to shop for Home Goods.
KC's View: