business news in context, analysis with attitude

One MNB user responded to yesterday’s interview with Frank Dell about private label strategies:

The law of unintended consequences applies to private label strategies: HEB has been very active in the private label arena for the past 3-4 years, apparently having decided that this is one tool they can use to survive in a Wal-Mart world. For price conscious consumers they are correct. However, BRAND-conscious consumers are being forced to shop at Wal-Mart to find brands that HEB used to carry. I don't have any idea how significant the impact has been on HEB's bottom line, but I DO know that the impact on my immediate circle of family and friends has been dramatic, and in our eyes HEB's image is moving downward toward becoming "the place you have to go to buy groceries". A little more attention to store-level preferences would have been helpful...

Our general feeling is that whatever HEB does makes sense. Then again, we do most of our grocery shopping at Stew Leonard’s, Trader Joe’s and Costco – all stores that essentially have limited assortments when it comes to grocery selection. We simply choose the stores where we shop based on the choices they make in terms of the products they carry.

Another MNB user wrote:

I couldn't agree more with Mr. Dell. He is right on target. On the subject of Kirkland tuna costing more than the national brand, may I point out that the quality of Kirkland is far superior. It was the forerunner of Bumble Bee introducing BB Prime Fillets and at a much higher retail than Kirkland. It is sold in traditional supermarkets. The BB on the shelf at Costco is an inferior product compared to Kirkland.

As a final note - as in anything - QUALITY WINS OUT EVERY TIME. Talking about quality - your e mail newsletter is QUALITY.

We’re blushing. But thanks.

We noted yesterday that Wal-Mart has introduced a new online strategy, offering customers free delivery – as long as shoppers pick up the merchandise at a local Wal-Mart as opposed to having it delivered to the home or office.

Our comment: Sounds good for Wal-Mart, but we’re not sure why this makes life easier for consumers. If we order via the Internet, we generally are doing so in part because we want to avoid the teeming mass of sweaty, bargain-hunting humanity that congregates in big stores. Making us go to the store and probably wait on line to pick up said item just seems counter-intuitive.

Amazon’s “Prime” shipping program, which has an annual fee that guarantees two-day shipping on any item ordered from the online retailer, is a much better deal for e shoppers…and it works for Amazon, too, because it encourages frequent shopping.

One MNB user responded:

I am not, nor have I ever been a big proponent of Wal-Mart’s customer service, but when I needed several good sized items that were not in stock in my neighborhood store in Florida, it was very easy to have the items shipped to my local store for me to pick up close to my home.

Another member of the MNB community wrote:

I’ve found that this model works very well for me. I have used it in the past with Sears. I bought my brother in law’s Christmas present on their website and picked it up at the local store. The pickup was easy with the customer pickup “loading dock” located in a place where I didn’t have to actually enter the store or the mall to pick it up. I was able to get the item I wanted and was guaranteed it would be at the store when I picked it up. If you don’t spend most of your time at home working from the home office then it is really a valuable service. You don’t have to worry about a package sitting on your front porch all day or having to pick up the package at UPS or FedEx if the package requires a signature (winery shipments) and more often than not I find myself in the vicinity of a store location without having to go out of my way. I am not a Wal-Mart shopper so I won’t use their service but I will use the service when offered at the stores that I shop at.

When it comes to online grocery shopping, the two reasons I don’t do it is that you have to be home for the delivery and I just don’t trust someone else to pick my perishable items. An online grocery model that I would use would be one that allowed me to place an order for the center of the store items that I always purchase and take me a fair amount of time to find in the aisles; if the store staff would have them bagged and ready for me to pick up then I could spend a few minutes selecting perishables and reduce my shopping time by at least 75%.

We just disagree on this. We love ordering our non-perishables from Amazon and having the boxes waiting for us when we arrive home.

MNB user Robyn Lydick wrote:

Didn’t we call this special ordering (which a store should do to keep customers happy) or before that, catalog shopping?

I well remember going to the Sears and Montgomery Ward catalog outlets (or in the “big city,” the catalog order desk) in the mid 1970s.

REI also offers free shipping to stores, and while REIs are large they are not as far out of human scale as Wal-Marts are.

I’m sorry, I don’t see myself ordering from wal-mart dot com, using a credit card online and THEN driving to the local…store.

Funny, I can get a special order at most shops, and I don’t have to use the ‘Net. It’s called customer service. I can get it on the phone for convenience. And this includes King Soopers (a Kroger company).

We objected vociferously to a Bush administration decision to fight a court decision allowing a small meatpacking company to test its own products for bovine spongiform encephalopathy (BSE) commonly known as "mad cow disease.” The USDA argues that such private tests could create so-called “false positives” that could alarm the public. In addition, USDA is siding with larger meat packers, which apparently feel that they will be at a competitive disadvantage if they don’t do the same kind of testing as Creekstone.

The US currently tests less than one percent of the nation’s cows for BSE.

We commented: This isn’t as much about false positives and false negatives, and the USDA trying to protect itself from the embarrassment of finding out that just maybe it has been underestimating the level of mad cow disease in the US. The Bush administration isn’t taking the scientific approach, but rather a “CYA” approach that has far more to do with commerce – and its efforts, we believe, in the long run will not be good for consumers, for the meat industry, or even public confidence in the government.

One MNB user responded:

I would rush to buy any beef brand that tested every single cow for mad cow disease. I would also be willing to pay a premium for that brand. Perhaps the meat industry should consider that...

I would probably also consume more beef than I do now, if every US cow was tested. Right now I don't consume beef in restaurants or in other peoples' homes, and I only purchase grass-fed beef for home consumption.

Perhaps I'm the exception in my purchasing habits, but once CJD cases start turning up in humans, the meat industry will regret that they did not take this step now. It is literally insane to believe that every country in the developed world has a mad cow problem except for the US. We just choose to ignore facts, and hide behind the belief that we don't have a problem. And that is definitely bad for consumers.

Another MNB user wrote:

“Test Verified – BSE Free” seems to me like an honest approach to food safety. Isn’t testing inherently safer? This should be constitutionally challengeable and therefore allowable.

And what of Organics? Under their logic the feds would need to shut down all the organic farming operations to protect the legitimacy of their theory that using pesticide is 100.00% safe.

Organic farming and BSE testing are similar approaches to achieving higher standards of food quality and safety, which is what consumers want. The feds need to get out of the way on this one and let market forces decide.

Dig a little deeper, follow the money and I’ll bet you’ll find that the Beef Lobby is lining some pockets about now.

We also wrote yesterday that we’re beginning to like the approach taken by the Chinese court system, which has sentenced to death a food safety official there who was found guilty of corruption charges.

One MNB user wrote:

Wonder if this should be considered for the public officials in high places who take bribes, etc.....WOW what a change that would be especially since they usually get hands slapped and then they resign with a pay-off.

Or they go on a speaking tour making mega-bucks.

We also objected to an email written to us by MNB user David Livingston, which responded to our observations that if Wal-Mart’s top executives are found to have violated the company’s ethical code, they ought to be horsewhipped. (Not really, but you get the point.) Livingston’s point was that senior executives ought not to have the same restrictions on them as lower-level employees, especially if they are rainmakers for the business.

We wrote: We believe that in any company or organization, it is senior management’s sacred responsibility not just to adhere to all of the same rules as everyone else, but actually to show greater fidelity to moral and ethical standards. It ought not just be about rainmaking and profits, but about meeting and exceeding standards. Leaders who believe they are immune from the same rules they set for their subordinates are not leaders at all, but simply self-serving, ego-driven managers who have no right to lead anyone or anything.

Sure, society is filled with people who think they don’t have to behave the same way as the people they are supposed to be leading. They can be corporate executives, politicians, priests, military officers, journalists.

And we are tired of all of them. And even more tired of people making excuses for them. It is inexcusable. And intolerable.

One MNB user wrote:

So glad you fervently disagreed with Mr. Livingston’s position on double standards for rainmakers. That was horrifying.

MNB user Geoff Harper wrote:

Couldn't agree with you more, Kevin. If the top people don't hold themselves to a higher standard, the company is doomed. It is only a matter of time.

MNB user Robert Wheaton wrote:

In a private equity operation, Mr. Livingston is privileged to determine the rules, regulations, ethics and morality standards for his practice. Mr. Livingston is free to create for his associates standards, rules, etc. different from those that apply to him. To the best of my knowledge, Wal-Mart has not created two or more 'rule books'. I would hope that is a road Wal-Mart has chosen not trod…

In my opinion, unless otherwise stated, Policies and Procedures apply to everyone and position and worth of an individual to a company merit zero consideration and mitigation.

I hope the lessons learned from Tyco, Enron, MCI, etc. have not been ignored nor forgotten.

Another MNB user wrote:

I think applying rules differently for different employees is a terrible idea. First of all, it breeds low morale. Second of all, nobody really knows what is expected of them, and the game becomes to see how much you can get away with. I also think that this would make it more difficult for the employer, because he would have to make a decision each time a rule was broken, to decide if it was punishable or not. I mean I wouldn’t make a federal case out of an employee who was 5 minutes late for the first time in 25 years, but there does have to be consistency for everyone in the rules.

MNB user Ron Losch wrote:

Great come back. It is time everyone takes accountability for what they do.

Another MNB user wrote:

It is a good thing (Livingston) works for himself because if he was in management in a corporation it wouldn’t be too long before he had his name on some type of discrimination lawsuit. Thanks for taking him to task!

MNB user Renata E. Muller wrote:

I don' t always agree with your position on matters, but I need to tell you that almost daily, I cheer for your efforts at being Aristotle's "gadfly on the horses back" for our food and retail industry. Thank you for taking the high road as often and as boldly as you do. To me, the saddest thing about business today is the wide deterioration of values and morals and despicable behavior. Too common are people/entities not doing the right thing and, instead, do the selfish and short-sighted thing. Worse is our general acceptance of the standard that bad acts are ok cause the other guys are doing it and, especially, because one can get away with it. Keep nipping at the collective hind quarters.

Better to be nipping at it than kissing it.

By the way, we completed our response to Livingston’s email with the following quote:

What does it profit a man if he gains the whole world, but loses or forfeits his own self?

Which led one MNB user to write:

Why is that people will quote scripture, but don’t want to go on record as quoting scripture? Even journalists or other people who would consider it unprofessional to not reference a source… The verse itself is very fitting…

Hey, we figured that most people would know that the verse was Biblical. We use Jimmy Buffett quotes all the time, too – italicized but not necessarily attributed – because we think they’re so recognizable.

Then again, we know a lot more Buffett lyrics than we do Biblical passages…
KC's View: