business news in context, analysis with attitude

MNB reported earlier this week that Walmart would expand its grocery delivery test from San Francisco to Denver, which prompted reader Matthew Heinze to write:

I will be curious if Walmart is able to make any inroads either through home delivery or small formats in San Francisco. I hadn’t internalized that they had been testing home delivery in San Francisco while you can’t actually shop at a Walmart in San Francisco. The closest Walmart is across the bay in Oakland. The closest Supercenter is about 30 miles away. Will the San Francisco shopper, whose political leaders have kept Walmart out of the city, vote with their wallet by having groceries delivered to their home? I doubt it, but if Walmart wants to adjust strategies and tactics and beta test in a challenging location, they have it. I wonder if there have been any protests of the Walmart To Go trucks parked in the city?

Regarding Walmart's decision to start using big stores as distribution depots for its smaller stores, one MNB user wrote:

MVI (now part of Kantar Retail) first discussed the idea of Wal-Mart using its large stores as a “DC” for small stores, some 8 years ago. Not only can small stores benefit from online, but also from managing bakery, deli and other high cost departments across these stores.  It will require additional WMT logistics discipline to manage shrink and other cost centers not to mention food safety tracking. In my mind, it’s a way to quickly gain some cost competitive advantage in markets where Wal-Mart has strong store saturation.

We had a piece the other day about wage disparity, pegged to a study into how many fast food employees also are on some kind of public assistance.

One MNB reader wrote:

I was at a major grocery chain late last night.  As I was walking to my car I noticed a guy working on his car. He asked me to give him a jump. After a fruitless 30 minutes I offered to give him a ride home.

During the 20 minute ride he told me he had been out of work for 1.5 years and was trying to catch up. He said the car breaking down was distressing because he had to go to his second job delivering newspapers. Then be back at the store to open in the morning. His car was about 20 years old.

Appreciate what you have. It's tough out there.

MNB reader Scott Wagner wrote:

I think you miss the key point in the entire study…68% of the fast food workers are now single or married adults.  The economy has shifted to the point that these are the only jobs available to working adults.  This is the area of the economy that we should be working to fix and not to artificially inflate wages beyond what the market will demand.  Wage increases through a robust economy will lower entitlement spending, increase economic activity and generally lead to prosperity.

No matter which side of the argument you are on there is one indisputable fact…every time government creates new regulations, business looks for ways to implement them in the most efficient manner possible.  Let’s go back to the housing bubble.  Government created rules to encourage home ownership for as many people as possible.  Lending requirements and rules were eased and a new economy boomed.  Jobs were created, housing starts were at historic highs and more people than ever were experiencing home ownership.  Banks were extremely efficient at this since it led to record profits.  The only problem was, this was not sustainable.  Increasing prices and high default rates led to the bubble bursting, the economy imploding and record unemployment.   So the admirable goal of increasing home ownership had the unintended consequence of nearly sinking the economy and ultimately led to this shift in the workforce where we find 68% of fast food workers are now adults.

We are seeing similar things with the Affordable Health Care Act as business begins to move employees to part time and cancel company health plans to move employees into the government exchanges.  These are unintended, but very real consequences of this law and the people getting hurt the most are the workers.  They are losing hours as business seeks the most efficient solution to working in this new environment.  And to make matters worse, they are also being mandated by the federal government to buy health insurance or they will be fined by the IRS.  So the worker ends up with less money and more expense and is, therefore, penalized for working in order to help pay for those who are not working at all.

In the end economics will prevail.  The more we try to legislate a working wage, the poorer we will become.  All you need to do is look at any socialist or communist country and compare the standard of living.  I agree that we need to improve the wages of our workers, but I just don’t believe that artificially increasing the wages is the answer.  Are you prepared for the unintended consequences that could accompany such a new law?  I recall reading stories about some restaurants outsourcing their drive through order taking to India.  Could you have ever believed it would cheaper to take your order from India?  In the internet age, almost anything is possible and business will continue to find the most efficient way and it will always be at the expense of the middle and working class.

I don't think I've called for legislating a "living wage." (You said "working wage." That's an interesting slip of the tongue.) I think wage disparity is an enormous problem, but I'm also pretty sure that living wage bills only address the symptoms, not the illness.

I wrote in commenting on this issue:

There is no easy solution to this, but I do think that it points up a continuing and growing problem in America - wage disparity that is creating a kind of underclass that works hard, works long, tries to raise families and impart solid values to their children, and yet cannot support itself even while doing honorable jobs. That's not just bad for this underclass, but for the retailers and manufacturers that would like to sell it products and services that they cannot afford.

MNB reader Christine Walsh responded:

Couldn't agree with your more.

It seems today, we lack insights and foresights about the ramifications of our decisions.  There is a connection here -- that if we do not pay hard working people a livable wage they cannot afford to take care of their families.  Even in this nation that expresses the virtues of a family values we should surely see the cause and effect of low wages on the family, the business, the community and the nation at large.

This is a socio-economic issue in that we are only as strong as our weakest link.  If we continue to provide opportunities - and livable wages - to the smallest percentage of Americans we leave the rest to fend for themselves which in turn will require support from the rest of society.  A successful nation (and company) should raise all ships for long-term prosperity.

As the great George Carlin stated…

People say if you don't give the rich more money, they will lose their incentive to invest. Then they say, as for the poor, they've lost all incentive because we've given them too much money.

Regarding ongoing management instability at Delhaize, one MNB reader wrote:

This is a dead company walking.  I tired to tell you that months ago.  How long it will take to fall over is anyone's guess, but the pace seems to be picking up.

At least in the case of Hannaford, the Belgians managed to screw up what was once a great company.  Food Lion is its own challenge, but blaming Cathy Green for the mess there was misguided at best.  But Smith needed to find someone to blame.

Glad to be watching this ... from the outside now.  I feel sorry for my friends in both Scarborough and Salisbury who are having to endure the constant turmoil, but there are fewer of them remaining as each week goes by.

Once the Sweetbay/Harvey's/Reed's sale is consummated, there will be another round of layoffs that will sweep through the organization again.  I actually wouldn't be surprised to them sell off Hannaford as it is one of the few remaining properties Delhaize has where some value could be realized.

The saga will continue.

CONTENT GUY'S NOTE: Because of an editing error that is entirely my fault, an obscenity that was in this email made it into an earlier version of this copy. I cannot apologize enough for this ... and will address it again tomorrow.

Differing opinions from MNB readers about comments I posted yesterday from a reader who I labeled as being misogynistic.

One reader (a male) wrote:

Question: How many times can he put his foot in his mouth?

Answer: Every.

Another reader (also a male) wrote:

Can’t believe you still take this guy seriously. He’s a troll. A professional troll. And he laughs his head off every time you get bent out of shape when you publish his latest drivel. Nobody can be that stupid and serious at the same time.

Just FYI ... It takes a lot more that this clown to bend me out of shape. And it is not that I take him seriously. I just think that sometimes the venom and drivel he spews reflects the thinking of more than a few people, and is worth training a spotlight on.

And still another reader (a female) wrote:

Don't stop using his e-mails.  I love reading what he has to say.  I envy his self-confidence!  But it's not entirely fair to compare him to my beloved  Don Draper, who, while horrible at times, also provided great mentorship and support to Peggy as she developed in her career. 

I had the opportunity to work with, and for many men, in my 30 years in this industry.   For sure, I have encountered many (people like him), but I always grew as a person as a result of encountering those individuals.   I wouldn't change a thing about the experiences I had.  And I'd rather deal with his overt discrimination, than much of the covert discrimination I dealt with in these 30 years.  Oh, the stories I could tell...

Which is exactly why I think that sometimes it is worth exposing certain kinds of opinions to sunlight and fresh air.

BTW...this fellow didn't much like the way he was characterized by me yesterday.

He wrote me an email in which he accused me of "trying to kiss up to the girls to win them over.  Every man has a different way of showing off for the girls.  Some is with athletics, some by making lots of money, and others appealing to their feelings.  And if it helps you score with the ladies -- go for it."

Accusation that are both funny and pathetic ... and define precisely how certain kind of people think.

I think my work here is done.
KC's View: